Qwest Communications held a strategy update call (webcast here) this morning and revealed that it will expand its fiber-to-the-node initiative to boost the number of homes in its territory that are capable of buying higher speed broadband service. Although not a surprising development, Qwest confirmed that it is not upgrading facilities so that it can offer video services over its telephony plant, as its fellow telcos AT&T and Verizon have done.
Because bandwidth demands are on the upswing, with streaming video services the largest portion of Internet traffic, Qwest will accelerate its fiber-to-the-node (FTTN) build-out in 2008, CEO Edward Mueller said during the call. The telco will spend $300 million to increase broadband capacity to 1.5 million homes, with download speeds increasing to 20 Mbps.
The average cost per upgraded home is $175 and Qwest expects to generate an additional $10 per month in revenue per home as a result of the upgrade, with a payback period of only five years. It's little surprise, then, that Mueller believes "the business case is super-conservative" for this initiative.
Mueller said the areas for upgrading will cover selective pockets of 20 markets, ten of those consisting of Qwest's top ten markets. "We're picking our high-return runs," he said, meaning that the areas slated for upgrade are the best financial performers, and likely the most upscale territories, for Qwest.
Qwest has no ambitions to offer facilities-based video. "Our fiber to the node deployment is not intended as a deployment of IPTV," Mueller said. "We're staying with DirecTV," Qwest's video partner.
How will Qwest get the extra $10 per month then? One obvious answer is that the higher speed service will carry a bigger price tag, although Mueller didn't say that specifically. Another new revenue generating service that might accompany or be used to justify the faster broadband option is gaming. "Gaming alone is surpassing Hollywood's revenues," Mueller said.
Qwest also plans to step up its mobile broadband efforts. Qwest plans to launch a fixed-mobile convergence product in 2008 and will expand its high-bandwidth mobile offerings. Unlike AT&T and Verizon, Qwest doesn't own a mobile carrier. Qwest's mobile partner is Sprint-Nextel.
Posted by Cynthia Brumfield at 3:46 PM | Print | Comments (0)Although it may seem that Hollywood has the upper-hand in the stalled contract talks with the Writers Guild, the writers have a lot more power than the studios think. The rise of the broadband Internet has given creative talent freedom to forge ahead on their own.
This LA Times' piece today says that seven groups of striking writers are in the midst of planning Internet-based ventures to reach the viewing public directly without the studios' help. Unlike in the pre-YouTube days, venture capitalists are now all ears when it comes to the risky business of video entertainment -- blue-chip firms Accel and Spark Capital are in talks with some of these new ventures.
Meanwhile, David Letterman's production company, Worldwide Pants, is pursuing a side deal with the Guild to get The Late Show with David Letterman back on the air. Such a deal cuts CBS, the program's network, out of the loop. Other similar talk show side deals are in reportedly in the works.
With writers decamping to the web and side deals bypassing the studios, this strike is eating away at the power of the big studios. What isn't clear is whether these tentative moves to cut out the middlemen, so to speak, are leaks in the dike, poised to suddenly tear down Hollywood's retaining walls, or simply the continued slow erosion of centralized control of video programming.
Unlike in the past, TV and screen writers had nowhere else to go (although side deals between independent production companies and the writers' union are nothing new). Now, however, writers can start their own little studios on the web. The Times' piece even likens one of the new writers-backed venture to the creation of United Artists by Charlie Chaplin, Mary Pickford, D.W. Griffith and Douglas Fairbanks.
Once writers become free agents, can they ever go back to being team players?
Posted by Cynthia Brumfield at 9:25 AM | Print | Comments (0)
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