Qwest Continues Line Loss, Targets FTTN
Qwest Q3 profit was down six percent year-over-year to $136 million due to economic headwinds and cost-cutting charges, it said. CEO Ed Mueller underlined his confidence, saying the company’s not so concerned about some regulatory debates like net neutrality. Mueller continued to be bullish on fiber-to-the-node (FTTN) instead of fiber-to-the-home (FTTH).
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Whatever net neutrality rules are put in place will be adequate for Qwest to operate, Mueller said during the company’s earnings call Wednesday. The company would benefit from universal service fund reform, which is yet to occur, and isn’t alarmed about potential changes over special access rules, he said. Overall consumer access lines were 5.4 million for the quarter, an annual decrease of 12 percent. Voice revenue continued to suffer from wireless substitution, increased unemployment, low business formation and soft housing trends, the company said. Chief Operating Officer Teresa Taylor is confident the company can continue to cut costs at the same pace as the decline in revenue. Businesses were starting to make quicker decisions on orders, helping Qwest’s enterprise business, Taylor said.
Expressing enthusiasm for fiber-to-the-node (FTTN), Mueller stuck to his position that FTTH and terrestrial video offerings aren’t necessary for Qwest in the foreseeable future. The company is slowly upgrading its network with fiber, and Mueller said he liked the pace of the rollout. As Qwest exits its retail wireless business this week, it’s talking to wireless carriers about using its FTTN network to bring fiber to mobile base stations, Taylor said. Total FTTN subscribers equaled more than 11 percent of Qwest’s total high-speed Internet customers. But it’s too soon to estimate the potential benefits from this fiber backhaul initiative, Taylor said. Total net broadband subscribers in Q3 increased 5.7 percent year-over-year to 2.95 million, fueled by the demand within the FTTN footprint. Qwest has been transferring its own wireless customers to other carriers (including to Verizon Wireless, whose service Qwest resold) before it discontinues service Saturday.
Trends suggested Qwest stick with its satellite partnership for video rather than launching its own terrestrial offering, Mueller said. “You are seeing breakthroughs every day in video over the net,” he said. It’s too early to know yet how the video will be monetized, but it could be a mix of ad-based and subscriber-based, he said. During the quarter, Qwest disconnected 6,000 subscribers from a terrestrial VDSL-based video service that the company has been phasing out since late last year. The operator lifted its earnings forecast to the upper end of its previous estimate, which called for a range of $4.25 billion to $4.4 billion.