Tuesday, December 18, 2007

Qwest Says "No" to IPTV

Qwest has gone on record as saying that it will not include IPTV as a part of its intended VDSL rollout to pass 1.5 million homes in 20 markets. It believes that it can pay back its expected $300 million VDSL investment with an increase of $10 per month in ARPU. It expects that other applications other than IPTV such as gaming would generate the additional revenue. Based on its current VDSL/IPTV trials in Arizona and Colorado, it expects that its VDSL service will achieve a 40 percent market penetration.

Qwest is taking on a significant strategic risk by not going against its cable competitors head on. The cable companies can provide all of the services that Qwest's subscriber's want - voice, data, and video. Qwest will only be able to offer the first two. Its video offering will depend on reselling satellite services. This may not be strong enough.

Qwest has had long running IPTV trials in Phoenix and areas near Denver. It understands how to offer these services. It is also interesting that it is acquiring video licenses in cities such as Portland, Oregon, but will not use them. Strong success by ATT and Verizon could cause Qwest to change its strategy.

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