Fat Internet pipes to access VoD, not IPTV, will meet consumer demands of the future, new Qwest leadership believes

DENVER--While AT&T and Verizon aggressively deploy video services via their U-Verse and FiOS TV offerings, respectively, Qwest Communications is pursuing a very different video strategy. It may appear to be no strategy at all – but that’s a misconception. Qwest is, in fact, expecting the fat broadband pipes that it is developing to become the conduit for a wide range of video-on-demand offerings, including high-definition video.

What Qwest is not interested in pursuing, according to its Chairman and CEO Ed Mueller and its CTO Pieter Poll, is a service that duplicates today’s cable or satellite service content.

“We believe very much in video, and we also believe in the power of the Internet,” Poll said in an interview Thursday. “We are trying to look a little ahead. The young consumers of the future will want broadband on demand, and they are more interested in interaction and in the symmetry of the service. We have a great relationship with DirecTV [Qwest resells that service], and they have a core competency in content. What we want to be able to provide is that 20-Megabit Internet connection that is more important to the younger consumers of today. They not only don’t want a wireline phone, they also don’t want to have a TV – because they use video on demand.”

Ultimately, what Qwest expects to deliver is an Internet connection at speeds of up to 38 Megabits per second, using VDSL 2 technology and pair-bonding, and offering much faster upstream bandwidth than Internet services do today. And instead of using up part of that bandwidth to deliver its own IPTV service, Qwest will be open to allowing its customers to find what it believes will be available HD VoD on the Internet.

There are still challenges along the road to that destination, not the least of which is developing the user interface that will enable that kind of VoD to the home, Mueller said. But he is convinced it makes more sense to pursue this strategy than to develop an IPTV service.

“I don’t want to do IPTV – it’s too expensive, and there’s not enough scale,” Mueller said in an interview Thursday. “We won’t be able to keep up on content. I love DirecTV. We have more subscribers that we’ve signed up to DirecTV than Verizon has on FiOS or AT&T has on U-Verse. We believe [consumers] will want a customized ability to get HD video on demand. And the only way to do that is to have enough bandwidth so it’s real time.”

Mueller believes Qwest can make its money selling the high-bandwidth services to consumers and selling high-bandwidth capacity to content developers as well. “I will have leverage because I will own [the consumer],” he said. “I want to be agnostic and get to anybody at any time.”

(continued on next page)