Qwest recently followed up on its announced fiber to the node (FTTN) strategy with two high-speed broadband services for residential and small business customers that can offer up to 20 Mbps download speeds.
| The million dollar question is why do they need a high-speed fiber network if they're not going to offer video‾ Bruce McGregor Senior Analyst-Digital Home ServicesCurrent Analysis | |||||
| The million dollar question is why do they need a high-speed fiber network if they're not going to offer video‾ Bruce McGregor Senior Analyst-Digital Home ServicesCurrent Analysis | ||||||
But in a market focused on rolling out IPTV and video services over high-speed fiber observers waiting for Qwest to do the same may have been disappointed.
Qwest plans to get a return on its $300 million fiber investment this year through monthly service fees whereas other major telecom providers are looking to offer content to offset declining wireline revenues.
Qwest's new services will be available to 2 million customers in 23 major markets in its Western territory by the end of 2008 according to Travis Leo director of product management for high speed Internet services at Qwest. 'As we deploy faster speeds we are generating additional ARPU from customers and we think we'll see customers in bigger numbers signing up ' Leo said.
For customers bundling high-speed access with a voice line the 20 Mbps Qwest Connect Quantum service sells for $99.99 a month and the 12 Mbps Qwest Connect Titanium service for $46.99. If customers don't bundle in Qwest voice service monthly prices are $109.99 and $56.99 respectively. Either way ROI could take a while.
'It is unclear if Qwest can make its fiber to the neighborhood (FTTN) pay off with just faster downstream speeds ' said Current Analysis Senior Analyst of Digital Home Services Bruce McGregor. 'The million dollar question is why do they need a high-speed fiber network if they're not going to offer video‾'
But from the CEO on down Qwest maintains it is happy with its DirecTV partnership repeating that when DirecTV rolls out a video-on-demand service its network will be there to handle the load. Verizon's FiOS offers video content over its fiber-to-the-home buildout while AT&T uses an FTTN strategy for U-Verse (its fiber to the curb plus DSL) for its IPTV offering.
Yet replacing wireline telephone revenue with video services is no slam-dunk. Qwest may be waiting for the technology to mature before it jumps into video or maybe it really has made peace with offering commoditized broadband services.
'You have to look at what they're getting for the $300 million Qwest has committed to spending ' said Yankee Group Program Manager-Enabling Technologies Vince Vittore. 'They're passing 1.5 million living units which are likely to be higher than average ARPU homes and opening up the possibility of a future triple play offering.'
As for a fiber-to-the-home strategy Qwest is reserving that for new builds where it can futureproof the network in states including Arizona Utah Washington State and Colorado Leo said.