Qwest CEO: No IPTV For You

Qwest Communications International has scrapped plans to develop its own Internet Protocol TV service, with CEO Edward Mueller saying such a deployment would be too expensive.

Instead, Qwest -- the third-biggest telco in the United States after AT&T and Verizon -- will continue to rely on its partnership with DirecTV to resell satellite TV service, Mueller said.

 In 2008, Qwest will spend close to $300 million in 2008 to build out its fiber-to-the-node network to reach 1.5 million additional homes.

However, “our fiber-to-the-node deployment is not intended as a deployment of IPTV,” Mueller said, on a conference call Monday with financial analysts. “We do not believe that our scale and the current capital and labor requirements of this type of product support this approach.”

Qwest had been seriously eyeing Portland, Ore., as a potential market to offer an IPTV service akin to AT&T’s U-verse TV. The telco won a local video franchise from the city last month, and had even picked a name for the prospective service: Qwest Choice TV.

But for the foreseeable future, Qwest will be concentrating on fostering its DirecTV relationship. At the end of the third quarter, Qwest had 634,000 video subscribers through DirecTV, up 81% from the third quarter of 2006 and a fivefold increase in two years. Mueller noted that the figure represents 9% video penetration of its primary access lines.

Qwest’s planned fiber-to-the-node expansion – part of its expected $1.8 billion capital spending for next year – will cover 20 markets and provide Internet access speeds up to 20 megabits per second.

Currently the telco has a 23% penetration rate of high-speed Internet products. Mueller said the company anticipates 40% penetration rate for broadband products by 2011.

Mueller added that Qwest will provide a “more in-depth discussion” of its strategy at the scheduled Feb. 25 analyst meeting in New York City.

Denver-based Qwest provides local service in 14 states: Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, South Dakota, Oregon, Utah, Washington and Wyoming. At the end of the third quarter, Qwest reported 13.0 million business and residential access lines.