Qwest Communications will invest an extra $300 million in capital to build fiber-to-the-node networks to reach 1.5 million homes in 20 markets but is not planning to deliver IPTV service over those networks, Qwest Chairman and CEO Ed Mueller told the investment community today. He also promised more details about Qwest’s plans in late February of 2008 when it hosts an analysts’ day.

“Our fiber-to-the-node network is not intended to deploy of IPTV,” Mueller said. “We do not believe the scale and current capital and labor requirements of this type of product support this approach.”

Instead, Qwest will continue to resell DirecTV satellite video service while pushing to offer high-speed data at speeds up to 20 Mb/s, Mueller said, drawing on the experience Qwest gained from building FTTN networks in Denver and Colorado Springs. Based on that experience, Qwest would expect to double the penetration of higher speed Internet service and its ARPU, Mueller said.

“We have 23% penetration within the planned FTTN footprint today,” Mueller said. “We expect penetration rate to improve to 40% by 2001. With a modest $10 increase in ARPU, we would have an anticipated payback in five years.”

Mueller said other applications, such as gaming, would generate other revenues. Qwest is targeting homes within its largest 10 markets and 10 other markets that it believes can most quickly generate a return, Mueller said, instead of blanketing the markets. Investment in ’09 will depend on how the 2008 work goes, he said. Qwest will maintain “a disciplined approach” to how it expands its network, Mueller said.

Qwest does plan to launch a fixed-mobile convergence product in late 2008, Mueller said. The company doesn’t own a wireless company but resells Sprint Nextel’s service. Qwest will continue to count on its partnerships with companies such as DirecTV and Sprint Nextel, and will look for other partnerships, Mueller said.

At least one industry analyst was hoping for more from Mueller. Jeffrey Kagan said in an email blast that hearing a general outline of Qwest’s plans was “frustrating,” given earlier promises of greater details to come.

“Qwest had two big jobs ahead of it several years ago,” Kagan wrote. “Job one has been finished during the last year or two. It is profitable and it offers high quality services to customers who are generally happy with them. During the past year or so we have been waiting for job two to begin. That is the rub. This is the time. But where is Qwest?”