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Qwest weighing broadband video
Shift is away from failed efforts to get pay-TV franchise
Published March 17, 2007 at midnight
Qwest Communications, which has been struggling to get pay-TV franchises, might skip an expensive investment in cable technology altogether and instead offer video over the Internet.
Qwest is betting that viewers are shifting away from the traditional TV broadcast service and toward an a la carte delivery system, similar to buying music on Apple's iTunes music service.
"It's the ability to watch precisely what you want to be watching when you want to," said Dan Yost, Qwest's executive vice president of product. "We recognize that there are a lot of shifts that are happening" with viewing habits.
Yost emphasized that an on-demand delivery system is still under consideration, and while the technology is ready in the lab, Qwest has no immediate plans for a rollout.
Shifting to a broadband video strategy would allow Qwest to avoid the time-consuming process of seeking permission from individual municipalities to offer cable-TV service. Qwest's attempt to secure a statewide franchise in Colorado died in the legislature last month, and the company hasn't fared much better in other states. A video bypass would also cost less than following in the footsteps of Verizon, which is spending $18 billion to connect many of its customers homes with a higher- speed Internet service and television service similar to cable.
Still, Qwest would need to bring significant portions of its network up to the minimum speed of 3 to 5 megabytes per second to stream video online. Qwest offers DSL service to about 83 percent of its 14-state territory. Of those, some 25 percent have maximum Internet speeds of 1.5 megabytes per second.
"It sounds pretty conceptual right now. They need to offer better bandwidth to do it," said Donna Jaegers, a telecommunications analyst for Janco Partners in Greenwood Village.
Qwest and other telco companies are moving into the pay-TV market to counter pressure from cable companies, which are aggressively marketing new phone services. Qwest is able to offer a "triple-play" bundle of Internet, phone and television services thanks to its partnership with satellite-TV provider DirecTV.
DirecTV will likely play a role in Qwest's broadband TV strategy, similar to AT&T's recently launched HomeZone service with EchoStar, Yost said. The HomeZone set-top box melds EchoStar's live satellite-TV feeds with AT&T's DSL service.
"HomeZone basically is a nice integration of broadband with the dish service, and that kind of capability certainly is an opportunity we think is out there," Yost said.
DirecTV spokeswoman Jade Ekstedt didn't return a call for comment.
Janco's Jaegers is skeptical of how concrete Qwest's video plans actually are. The company has earned a profit the past four consecutive quarters, but the profits and cash flow have come mainly through cost-cutting and frugal spending.
"The challenge they face is they're trying to get their stock price up by focusing on free cash flow," she said. "If they have to spend on their network, how do they keep their stock price up?"
davisj@RockyMountainNews.com or 303-954-2514
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