Technology decisions at AT&T (NYSE: T) are a financial gamble that the operator tries to place at the latest stage possible to get the biggest return on its investment, AT&T CTO John Donovan told investors and analysts at Goldman Sach’s Communacopia this morning: “Being right and being early is comfortable technologically, but the returns aren’t promising.” (That’s one way to explain the slow rollout of U-Verse compared to Verizon’s (NYSE: VZ) FiOS.) Customers’ expectations are growing substantially and for AT&T that means increasing bandwidth and network capabilities before demand outpaces reliable delivery of richer media. As such AT&T is focused primarily on two themes: mobility and video. Donovan: “As little as three years ago video was negligible traffic on our network.” Video now comprises roughly 40 percent of AT&T’s traffic overall (the number isn’t as high on mobile obviously).

—iPhone: “We view that as the tip of tremendous customer change in how they consume their content and applications.” As for the heavily reported problems with the Apple (NSDQ: AAPL) device, Donovan pointed back to Apple for their responsibilities, but said things are improving with each software update. “We now have 55 3G devices on the network” and 21 percent of AT&T’s users are on 3G devices. The carrier anticipated a 5X growth in data consumption over the 2G iPhone, but it’s been closer to a 3X jump. When asked about post-device launch upgrades to network infrastructure due to the iPhone, Donovan said AT&T has improved everything from radios to towers and backhaul where usage surged due to overwhelming iPhone use in specific regions: “The only thing that is an emergency is the sense of urgency that we apply to it.”

—Is AT&T in a peak investing phase? Donovan sidestepped the question: “I think the explosive growth in mobility and video really drives us toward more IP techniques… our investments are heavily focused in those areas.” The biggest investment shift is coming from TDM (time division multiplexing) to IP.

—LTE: Donovan: “We’re going to be trialing it in 2010.” AT&T will prepare to launch LTE, but try to manage timing to hit desirable returns. “There’s others that are going to have to be on the bleeding edge of this one.”