released today and the results aren’t thrilling. Like most local telcos, Qwest is losing access lines and broadband growth is slowing significantly. Unlike it’s “baby bell” brethren, Qwest does not have its own wireless assets to rescue the day. Here’s a snapshot at some of the numbers:

  • Lost 235K (2.8%) total switched access lines from 1Q08 and 799K (8.8%) from 2Q07
  • Only gained 31K new broadband customers from 1Q08, or 1.14% and 327K over 2Q07, or 13.6%
  • Total revenue of $3.8 billion for 2Q08 is down 2.3% from 2Q07, and among mass markets, business, and wholesale, the business segment is the only one that achieved growth (4.6%) over 2Q07

The results aren’t too uncommon from Verizon and AT&T results, with the exception of the missing aforementioned growth engine of wireless. Qwest made some strategic decision recently, where they are pursuing resale strategies for both and . It’s too early to determine whether those moves are the right ones. We’ll have to watch this play out over multiple quarters and years to come to see if reselling (rather than building one’s own means) the two growth engines of wireless and video makes long term sense. We may find out that Qwest has the last laugh because they’re able to extract decent enough commission revenue to justify not investing the billions necessary to offer those services themselves. Maybe it makes sense to get a buck or two per DirecTV and Verizon Wireless resale customer per month than to build up billions in debt building your own capacity in the hopes that your ROI will eventually pay off. But of course, maybe it doesn’t. Maybe Qwest will find themselves watching on the sidelines, unable to act, as their competitors leverage their more robust networks for more value, revenue, and margin, and cherry pick Qwest’s best customers. We should all thank Qwest, because their alternative approach gives our industry some variety relative to long term strategies. Stay tuned.

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One thought on “Qwest Feeling Competitive Heat

  1. Personally, I think Qwest is right. I might be old school, but if I can get margin now through resale versus betting the bank in the hopes that I might get a decent return years from now, I’ll go for the resale today. It gives me time and options to adjust if resale is the wrong decision. But if betting the bank is the wrong decision, my hands are tied and I have less/no opportunity to adjust and refocus. This game is about options and resale gives me options.

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