But before you envision the rollout of a nationwide Google pay TV service, consider: Building out and maintaining a cable TV (and broadband) service is enormously time-consuming, expensive and messy.

Think, for example, of all those angry/confused service inquiries your local cable guy has to deal with. And recall that last year, when Google tried to sell its own line of smartphones, it was hoping to get by without setting up a customer service operation that gave buyers the ability to talk to a real live human.

Verizon spent some $23 billion on its FiOS rollout, and by the time it stalled out last year, it still wasn’t clear if it was a good idea for the telco to build out a cable/broadband service. So why does Larry Page think it makes sense for him?

He doesn’t, according to Sanford Bernstein analysts Craig Moffett and Carlos Kirjner in a note this morning. Instead, they argue, Page and Google have to be thinking about Kansas City as an R&D experiment meant to accomplish three things:

First, it helps Google (slightly) on the public policy front as it promotes the agenda of faster broadband, and it potentially adds to their status in promoting net neutrality. Faster broadband means more Internet usage, more searches, and more ads. Of course, the real regulatory game is a few orders of magnitude more sophisticated, but every little arrow in the quiver helps.

Second, it is a laboratory for Google to learn about technology and consumer behavior, ranging from the impact of higher speed access on Internet usage to the potential and economics of different ad formats and models, on different platforms, particularly when it comes to advertising associated with video and TV.

Third, it is an opportunity for Google to learn about the economics of deploying and running infrastructure. And learn they will…

Analysts like to pull their punches, but Moffett and Kirjner are crystal clear here: There’s no way they think Google becomes the “world’s biggest cable company” or anything like that.

Just to beat this into the ground, here’s another excerpt from their report (well worth reading the whole thing) where they spell out just how ugly the economics of this kind of venture would be:

From a [return on invested capital]-based perspective, the difference between Google’s current business model and that of a facilities-based wireline service provider like Verizon could not be starker. In 2011, we expect Google to post an ROIC of 56%, or 38% when including goodwill. In 2010, Verizon’s wireline segment (which includes FiOS) sported an ROIC excluding goodwill and “one-time items” of… wait for it… just 1.6%. Including goodwill and similar intangible, and smoothed one-timers, it was -1.0%.

Still. It’s quite obvious that something has changed in Google’s thinking over the years.

The company that strove to stay away from anything approaching the content business has now leapt in with both feet. See, for example: Google Music, Google Books, YouTube, and YouTube’s new “channels” project. And recall that Google just made a plus-sized bid for Hulu.

So the notion that Google is now willing to consider even testing out life as a cable TV service is still telling. As is the notion, buried lower in the Journal piece, that Google has floated the idea of turning YouTube into an “over the top” cable service, though that doesn’t seem like it’s on the table right now.

Android boss Andy Rubin even spelled it out at the AsiaD conference in Hong Kong last month: “Google is in the very, very early phases of adding consumer products to our portfolio.” So even if that doesn’t mean it’s ready to become a cable guy, it’s still going to evolve into something much broader than a search company.

In a note to clients today, Sacconaghi says that HP is the “most inexpensive tech stock in the S&P 500 and the 10th most inexpensive stock overall.” There are very few precedents, he says, for large-cap technology stocks trading at HP’s current valuation. Before this month, there had not been a large-cap tech stock that traded at less than 5.5 times earnings — not in the last 20 years.

At that level, he says, HP’s current valuation implies that its annual free cash flow will decline by 9 percent a year forever or, put another way, that HP will be half its size within seven years. Usually companies that trade so low have significant structural problems. HP, for all its faults, doesn’t meet that standard. It’s not “a broken company,” he says, it’s on track to grow earnings by 6 percent this year, and it leads in three of its four key lines of business — PCs, printers and servers.

So why the crazy-low valuation? “Investor exasperation.” (There’s that word again!) Investors have discounted it too much given all the drama, making it, believe it or not, a buying opportunity for “patient investors.” He rates HP an “outperform” with a price target of $37. Investors seemed to warm to the idea. HP shares finished the day up more than 3 percent.

It’s a mixed bag. While they all seem to agree that HP’s board is right to push out CEO Léo Apotheker, especially in light of the stock performance, a confused strategy and a jarring change in emphasis, none seem ready to endorse the ascendance of Meg Whitman, the former eBay CEO and current HP director, to that company’s top job. Yet like it or not, the HP board meeting that will make it all official is underway, and as AllThingsD has reported, Meg Whitman will be named HP’s CEO at the close of markets today.

Toni Sacconaghi of SanfordBernstein, the author of a widely circulated note last week describing how “exasperated” HP investors are, weighed in again. “We are not surprised by HP’s stock’s reaction yesterday, given that our conversations with shareholders and investors over the past month revealed a level of exasperation that we have not seen directed at HP or any other company in our universe in our 13 years following the sector,” he wrote in a note today.

He also slammed HP’s board. “Our conversations with major shareholders also indicate that they have been disgruntled with the board, given it has made and approved a series of decisions” — including the ouster of the prior CEO Mark Hurd, the Autonomy deal, the premature announcement of the PC-spinout — “that many shareholders believe were poor decisions and misaligned with their interests,” he wrote.

Nor is he a fan of the Whitman hiring. HP needs to search far and wide and also internally for another CEO, Sacconaghi says. “We would view any decision not to conduct a comprehensive search of internal and external candidates for a permanent CEO role as unsatisfactory and unnecessarily hasty,” he wrote. “We also believe that shareholder reaction to Whitman as a permanent CEO would be mixed.” He also thinks CFO Cathie Lesjak, notable for filling in as interim CEO during the Hurd-to-Apotheker transition, may be leaving.

Shaw Wu of Sterne Agee is pretty much in agreement with Sacconaghi. “Given the disappointing financial performance over the last few quarters and some questionable decision making including the high purchase price of Autonomy, handling of the spinoff of its PC operation, and abrupt shutdown of its webOS hardware business, we are frankly not surprised that a change is being considered,” he wrote in a note to clients today. “So far, investors and even some customers we have talked to don’t seem confident in where HPQ is heading so a change is likely needed.”

But he’s not sold on Whitman. “While we believe she has proven to be a very capable manager helping grow eBay from a start-up into one of the largest internet companies, we think an ideal candidate for HPQ should have extensive experience in the enterprise market. In addition, we believe expertise in supply chain management would be helpful as well.” He goes on to name a handful of insiders and outsiders he’d consider possible successors: Dave Donatelli, who runs HP’s enterprise business; Todd Bradley, who runs the personal systems group and would be a likely CEO of that unit if it’s spun out; Steve Mills, who runs software and hardware at IBM; and Gary Moore, the COO of Cisco Systems.

Wu also says it might be a good idea for HP to keep its PC unit after all is said and done. “We estimate the business generates $2 billion in operating income per year and is the second most profitable behind Apple,” he wrote. Also the PC business isn’t so bad when you think of it as being one and the same with the tablet market. He maintained a neutral rating on HP for now.

Lou Miscioscia of Collins Stewart isn’t encouraged by the shake-up, either. Many of HP’s problems aren’t necessarily Apotheker’s fault, he says in a note to clients issued today. And he’s not sold on Whitman, arguing that she’s never run so large a company as HP and has never run one focused on the enterprise before. He maintained a neutral rating.

And while a post-Apotheker HP may undo some of his decisions, like spinning off the PC business, one thing it probably can’t do is walk away from its $10 billion purchase of Autonomy Software, says Jeffries and Co. analyst Peter Misek. Corporate takeovers are governed by strict laws in the U.K., making it nearly impossible for HP to pull out of the deal now. He rates HP shares a buy.

Everyone has something to say about today’s speech by FCC Chairman Julius Genachowski on the subject of net neutrality (video below). Having been blocked in the courts from imposing sanctions on Comcast for throttling users of BitTorrent, the commission has been spinning its wheels trying to find a way to nudge the broadband industry in a direction toward treating all Internet content fairly.

To Genachowski and network neutrality proponents, a bit is a bit is a bit, and your broadband service provider should have nothing to say in blocking you from using the services and applications that you choose and saying what you want to say so long as you’re not breaking any laws.

It makes sense until you hear rebuttals from the providers who spend billions to build the networks, arguing that they should have some right to protect their networks from cases where the heaviest users–video-downloading BitTorrent users are the classic example–can degrade the experience of other users. Think of it as “My network, my rules.”

Without the legal authority to force net neutrality on the providers, Genachowski has circulated draft rules that would instead require them to disclose what they intend to throttle and why, so that consumers can more intelligently choose whom they’re going to do business with. If there are going to be rules, put them on a sign where all can see them before walking in the door, he’s saying here.

Gone is the talk of reclassifying broadband, which some had described as a sort of “nuclear option” that would potentially give the FCC the authority to force net neutrality on the carriers, and would have probably led to more pointless, expensive lawsuits.

The big shift came when Genachowski said he’d be open to “business innovation to promote network investment and efficient use of networks, including measures to match price to cost such as usage-based pricing.”

That means broadband providers can start creating variable price plans under which consumers will pay more for using more.

Oh, and the wireless Internet? It’s too early in its lifetime to impose any rules on it. The FCC, he said, “would closely monitor the development of the mobile broadband market and be prepared to step in to further address anti-competitive or anti-consumer conduct as appropriate.”

The reactions have been predictable:

It’s “not perfect,” but it’s reasonable, says Kyle McSlarrow, president of the National Cable & Telecommunications Association. If the order changes materially, however, the group reserves the right to fight it.

It’s a step in the right direction but needs to be “strengthened,” says Gigi Sohn of Public Knowledge, a Washington, D.C., public interest group.

Tyrone Brown of the Media Access Project says he is “very disappointed.” By taking the reclassification option off the table, the FCC loses a key piece of the legal authority it would otherwise need to require service providers to extend broadband service to people who don’t currently have access, which has been a key objective of the Obama administration.

Josh Silver, president of FreePress, another policy organization that advocates for net neutrality, called it “fake Net Neutrality” and said that “Genachowski is taking the same exact approach to splitting the open Internet into fast and slow lanes that Verizon and Google proposed last summer.”

Republican FCC Commissioners Robert McDowell and Meredith Attwell Baker essentially promised to vote against the proposal when it comes before the commission on Dec. 21. Only Congress, Baker said, should decide if the Internet is to be regulated. Unlikely with the GOP taking control of the House in less than a month. “We don’t have authority to act,” he said.

After all that: Comcast stock is up 4 percent today; Verizon shares up one percent; Time-Warner shares are up more than two percent; Cablevision shares are up about 1.5 percent. This news will be a boon to broadband providers, says Sanford Bernstein analyst Craig Moffett in a research note issued today.

Usage-based broadband plans are probably soon to follow, which would be good for business because consumers would probably embrace them. One question for all the critics: Would that be so bad?

Here’s the video of the speech:

First item: Results from Bernstein’s “Ad Tracker” index that show the rate of decline slowing in the last quarter. Bernstein figures overall ad spending dropped by 16.5 percent in Q2, which is lousy, but it’s still better than the 19.5 percent drop we saw in Q1. (Click chart to enlarge)

Second item: Bernstein thinks online ads are also going to start improving. In the chart below, see how the online ad dollars plummet, then plateau? In this economy, flat-lining like that is progress.

Even better, Bernstein predicts that the chart will start moving up, if just a bit, for the rest of the year. The firm predicts that sales will drop a mere four percent in the current quarter and be flat in the fourth quarter.

Granted, those numbers are against horrible comps, since the economy tanked in the second half of last year. And they’re not going to help everyone equally; for instance, Google (GOOG) is likely to recapture search dollars before Microsoft (MSFT) and Yahoo (YHOO) do. But progress is progress.

In a Sanford Bernstein survey, conducted in April, more than half (58 percent) of the 384 respondents said that they watched professionally produced regular TV programs when asked what they viewed online. A quarter (24 percent) said they sought out amateur or user-generated clips, and 18 percent watched professionally produced movies.

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While Comcast (CMCSA) had forecast a slowing of subscriber growth in its second quarter, the decline it’s now seeing is far worse than expected. “It is across all units,” said Roberts. We’re really not seeing a surging of disconnects. We’re just not seeing a surging of orders.”

Is that entirely econalypse-related? Or might it be due to competitive pressure from telcos? Roberts conceded that the market is an “intensely competitive one, but said Comcast has really just been dragged down by the souring economy. “I think there’s a general slowing of consumer expectations….” he said. “There are fewer opportunities to sell things.”

PlentyofFish has long been a free site, which has made it hugely popular. It claims on its Web site that members will go on 18 million dates with each other this year.

In a February report, Sanford Bernstein analyst Jeffrey Lindsay called it “the most successful of a new generation of ‘free’ or advertising-supported dating sites,” and one whose growth could pose a “Craigslist-like disintermediation” threat to established players like Yahoo Personals (YHOO) and IAC’s (IACI) Match.com.

By wading into the paid arena, it may lessen that disintermediation risk, but compete on more even terms with those sites.

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“Never before has the divergence between the high end and low end of the wireless market been so stark,” writes Moffett.

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Given all this then, why are Apple shares trading down this morning? Seems concerns about CEO Steve Jobs’s gaunt appearance at Apple’s World Wide Developers Conference in June have not subsided, nor will they, now that The New York Post is questioning his health. “Apple’s hedge fund investors are very worried,” said a Wall Street source who has spoken with some of the company’s stakeholders,” the Post reports. ” … Multiple sources who have met with–and in some cases even dined with–Jobs in the weeks surrounding the introduction of the iPhone 3G on July 11, said they came away troubled by his thin appearance.”

Given all this then, why are Apple shares trading down this morning? Seems concerns about CEO Steve Jobs’s gaunt appearance at Apple’s World Wide Developers Conference in June have not subsided, nor will they, now that The New York Post is questioning his health. “Apple’s hedge fund investors are very worried,” said a Wall Street source who has spoken with some of the company’s stakeholders,” the Post reports. ” … Multiple sources who have met with–and in some cases even dined with–Jobs in the weeks surrounding the introduction of the iPhone 3G on July 11, said they came away troubled by his thin appearance.”

But I seem to be in violent agreement with Sanford Bernstein analyst Jeff Lindsay of late–at least with a recent report he just did calling for Yahoo to abandon its slower-moving strategies and get much, much bolder much, much quicker.

Suggestions by Lindsay included outsourcing its search business, making deep cuts in staff and also doubling down on its bets in its ad network businesses like Right Media.

(Frankly, I’d just like to see the company immediately-if-not-sooner roll out innovative email features like CEO and Co-Founder Jerry Yang showed at the Consumer Electronics Show last week.)

If you recall, Lindsay penned a previous report last October on the worth of Yahoo by parsing out its various assets. It was instructive in its focus on the value of Yahoo’s somewhat liquid holdings like investments compared to its core business.

The message at the time: Yahoo had some valuable assets–such as its stake in China’s Alibaba.com–and its stock did not reflect these gems. It even suggested the company be split into parts to unlock value.

But his most recent piece is less sanguine–a kind of flip side to the first, noting that the operations side of the business was not up to snuff, causing the valuation of Yahoo to fall. Bernstein blames Yahoo’s too-careful management, as well as its declining share of the search market.

Whatever you think about Yahoo, its still lackluster stock price–it hovers in the low $20-range–make reports like Lindsay’s interesting reading. See also this Motley Fool report yesterday, naming Yahoo the “Worst Stock for 2008.”

Nonetheless, all this bearishness could foretell some bullishness on Yahoo, which appears to simply refuse to move faster than it wants to.

Consider a largely positive piece on Yahoo’s fine-tuning of its business in the New York Times yesterday, which chronicled Yang’s turtle-versus-hare approach to the company’s future.

The article quoted Yang’s I’m-still-here intro to the CES speech (pictured here in this AP shot by Paul Sakuma), which kind of says all you need to know: “I’m guessing that a lot of you are here today to see what the new look and new face of Yahoo is all about…well, I’m sorry to disappoint you. It’s still the same old face. I’ve been around since the beginning.”

And, I have no doubt, until the bitter, sweet or even bittersweet end.