Line loss is still a problem, but Qwest CEO Ed Mueller still has his sights set on data and video as the future focus for the Bell operator.
Mueller told a group of analysts at the Goldman Sachs Communacopia XVIII Conference that the telco is focusing on the copper line as a data rather than voice vehicle going forward. To date, Qwest’s 1.5 Mbps DSL service is available to about 85% of its territory. But “we frankly don’t think 1.5 Meg in our total network would be adequate in our network, and that’s why we went to fiber to the node,” he said.
The FTTN buildout is projected to reach 3 million homes passed by year’s end, and that could expand to as much as 5 million in 2010. Mueller said that with current economics that could reach 50% of homes passed, and over a five year term “it would reach a 70% mark, I’m guessing.”
“I think as time rolls on it will make economics even better for those areas that are hard to serve, and I don’t think 70% is out of the question,” he said.
Mueller said uptake for data has trended toward the higher 7 Mbps, 12 Mbps and 20 Mbps services, and new VDSL 2 technology will boost that bandwidth even higher.
“We will be putting in our network 40 Meg capability going forward, and that is more than enough we believe to be a good provider of video and anything you might want in the home,” he said.
Internet video is still in Mueller’s gunsights, even though Qwest recently opted to renegotiate a new five-year extension with DirecTV Inc. to continue co-marketing its satellite TV services. Mueller said it was only a question of when rather than if Internet video comes to Qwest DSL customers, but he also argued the two don’t have to be competitive.
“We think there is going to be both in the future, with one not taking the place of another,” he said. In fact, consumers may access both platforms simultaneously, and it is possible in the near future that “if you were a NASCAR fan and you had on your TV the race, that you would have the ability with the internet with a device or a laptop to be watching online the driver.”
Although the FTTN buildout would support such a future service, Mueller once again dismissed the idea of speeding up the network buildout.
“We think we are on pace both on our build and our capital structure – it’s a mix. We don’t feel the need to move any faster,” he said. Instead, Qwest now is going back and hitting its early FTTN markets launched up to 18 months ago, reseeding them with new offers.
“I think that’s plenty good for us – I don’t think we need to accelerate,” he said.
Qwest is doing well with its data products, but it still faces continued line loss. On the voice side, Qwest holds about a 70% market share on voice, “and we don’t think it will deteriorate much more,” Mueller said.
“About 25% of our base or households served are wireless-only households, and we really don’t know where that will bottom out,” he added said. “There are projections that by 2012 it will be as high as 35 to 40%.”
At the same time, Mueller echoed what is fast becoming a mantra among telco providers faced with continued access line loss: It is no longer important to us.
“At the end of the day the landline as we know it today is less relevant,” he said. With data services taking over as the primary service delivered via that copper phone line “the wireless is the wild card for us as it moves down.”