For Qwest, FTTN Not An Option, Necessity

Larry Dignan, who writes at the Between The lines blog, talked to Qwest CTO Pieter Poll about company’s future plans including fiber-based broadband. Unlike Verizon, Qwest has opted for fiber-to-the-node strategy. The company is pushing fiber to a point where it can feed 350 homes using VDSL2 over copper.

Some highlights from the conversation and my take on why faster broadband isn’t just an option but a necessity for the company below the fold.

  • Qwest can offer 12 Mbps and 20 Mbps and using pair-bonding, it can squeeze around 30 Mbps from copper. It really wants to do 35 Mbps downstream so it can offer 3 to 4 HD streaming channels and other services.There is a shortage of VDSL2 modems limiting their ability to pair and offer higher speed services.
  • The company is not going for all-fiber because its plant is buried (unlike Verizon, which was aerial) and it would involve massive scale digging.
  • For now, Qwest is sticking to DirecTV for the TV part of its triple-play service. (Of course; who wants to give up the subscription service revenues that come with a DirecTV deal?)
  • He dismissed cable’s DOCSIS 3.0 and 100 Mbps talk as “all hype.”
  • Qwest is doubling capacity every 15 months on its backbone network.
  • Qwest is saying “no” to network management, though it doesn’t rule out bandwidth cap-limits.

Many of these points were made earlier when I chatted with Qwest CEO Edward Mueller last year. That said, I wanted to point out a couple of things. All these moves, including FTTN are aren’t optional for Qwest; they’re a necessity. The economic downturn and current demographic shifts are impacting the company drastically. For the second quarter of 2008, look at the numbers that read like a synopsis of a Charles Dickens’ novel.

  • Revenue down 2.3 percent vs. 1.4 percent drop in first quarter. Total revenue decline for the year: up to 2.5 percent this year.
  • 10.2 percent decline in retail residential access lines vs. 9.7 percent decline in first quarter and an 8.3 percent decline a year ago.
  • A mere 31,000 new DSL additions, a third of the 100,000 added last year. Of the 31,000 net adds, around 19,000 were in Qwest’s FTTN footprint. Broadband subscriber growth came at 13.6 percent vs. 17.2 percent last quarter and 33.8 percent a year ago.

What can the company do? Push higher bandwidth and pricier services and sell them to potential customers before they decide to switch to cable broadband, buy cable telephony or just drop wireline connections all together.