Up Close & Personal with Qwest’s Mystery Man

CEO Mueller Takes on FTTN, Out-of-Region Expansion

However, Mueller indicated that Qwest’s plan to invest in FTTN doesn’t necessarily translate to IPTV and/or TV-based services.

A couple of days after the third-quarter earnings call, Mueller told xchange that the FTTN buildout is about speed, starting with the Internet. “I think speed in any network today is essential for the future.” But is that a roundabout way of referring to IPTV? “No,” he says firmly. “The kind of speed we’re building out there will allow transmission of video.”

If that means Mueller’s FTTN plan is focused specifically on being a conduit for Internet-based video, as opposed to creating a platform for a multifaceted, facilities-based video strategy revolving primarily around the TV, then this would be a departure for an incumbent telco.

“I see a convergence … of you and your home, wanting multiple ways to get to video,” says Mueller. “That doesn’t mean IPTV. I mean, you may want to go get something off the Internet that’s live, streaming video — YouTube’s just a forerunner.”

Eric Paulak, a Gartner Inc. analyst, isn’t sure where Mueller is headed with this residential video strategy. Either way, he says, Qwest probably won’t imitate its fellow RBOCs.

“Right now, AT&T and Verizon think that they need to own the content. Qwest doesn’t necessarily think that,” Paulak says. “Qwest thinks that they’ll make plenty of money bringing in a fiber network to the customer, and if you follow what Google ultimately wants in the world, it’ll be the content owners that will just access those customers over the network.”

Mueller reaffirms that Qwest’s television delivery method is DIRECTV. “I think they have a great offering. It’d be awful hard for us to duplicate that.”

Mueller seems to know what he’s doing, Paulak says. “His biggest mess-up would be going in and making a radical change, and spending a lot more money.” The FTTN announcement is safe because it doesn’t comprise “huge sums and it’s just reallocating what they’re doing. The key is going to be how do they actually differentiate themselves in the marketplace.”

One of the best ways Mueller can help Qwest do that is to keep supporting out-of-region growth, Paulak says, especially when it comes to winning the government’s Networx contracts. Networx is the $20 billion network infrastructure upgrade that spans 135 federal bureaus. Some, like the National Weather Service and the Nuclear Regulatory Commission, still use outdated analog data services.

“[Mueller’s] got to get those Networx deals, period. That is it,” Paulak says. If that happens, Qwest will have the income to fund fiber expansions, and to acquire small companies such as security and hosting firms to better target enterprise and other business customers, he adds.

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