$15 a month for slow pokey 1.5MBPS service isn’t a bad deal for single line VoIP, basic surfing and the occasional video download. Actually, we’ve seen this before, but not lately since US broadband providers have been inching prices upward the last couple of years. It’s should be a real money maker too, considering the cost of delivering this service level is pennies and it could capture the remaining dial up hold outs. There’s one gotcha – the bill automatically goes up after 12 moths, so mark you calendar if you sign up. I wonder if the cable guys will respond or ignore.
In an apparent response to a souring economy and strong triple play competition from cable operators in some markets, Qwest appears to be bringing back some promotional DSL tiers for new customers. According to the telco, they’re once again offering their 1.5Mbps Qwest Connect Silver High-Speed DSL service for $14.99 a month for a year — after which users will pay $39.99 a month. The telco is also offering their 7Mbps Connect Platinum DSL tier for $24.99 a month for a year — after which users pay regularly priced at $49.99 a month. (DSL Reports)
“Business is soft and we have too many people”. It’s a standard announcement made in the fourth quarter of every year by the telcos who still have an unbelievably bloated payrolls. I’m actually surprised that the number is only 1200. The media is (hopefully inaccurately) predicting a radically anti-growth, anti-business group will be running the Federal government come January, and many busineses are radically downsizing in anticipation of this.
Qwest may have been the first this year, but they will not be the last telco to announce layoffs. While it’s bad news for those affected, if Qwest is an indicator, there will be more staying at work than I would have expected.
“We had a good revenue performance, but profitability was soft,” new chief operating officer Thomas Richards said during this morning’s call. (See Qwest Appoints COO.)
Qwest shares trade at around $2.40 these days, having lost 70 percent of their value in the past 12 months.
The carrier saw business revenues grow 7 percent versus the same quarter a year ago, contributing to a 4 percent increase in data, Internet, and video revenues.
But landline disconnections continued to pile up — 320,000 of them in the third quarter, leaving Qwest with 11.8 million phone customers left. Revenues from voice services were down 9 percent from the previous year and down 2 percent from the second quarter.
About 5 percent of Qwest’s wireless customers have been moved to Verizon Wireless under the carriers’ new partnership. (See Qwest, Verizon Partner.) Qwest also noted that it added 40,000 new fiber-to-the-node subscribers during the quarter. (Light Reading)
In this world where the customer has figured out the game of ETF’s and contract invalidation due to the carrier not living up to their end of the deal. You would think that somebody upstairs would not be that surprised to lose 45000 customers in a quarter. —
Brand-switching appears to have tripped up Qwest Communications International Inc. — the carrier lost 45,000 of its 800,000 wireless customers in the third quarter and blamed the deficit on its recent migration to Verizon Wireless.
Qwest in July dropped its mobile virtual network operator relationship with Sprint Nextel Corp. in order to become an agent for Verizon Wireless. Qwest said the move — which included dropping Qwest-branded wireless service in favor of Verizon Wireless-branded offerings — would expand its service footprint and boost its finances.
Thus, the loss of customers may have come as a surprise to Qwest. Indeed, John Gonner, director of Qwest’s wireless product management, said in July that the transition “won’t be a churn situation.”
Well if losing 5.5% of your customer base in a quarter is not cause for alarm on your churn rate well hey, sail on dude. Though I have to say Mr. Gonner’s name seems apt considering the situation.
After playing chicken with Verizon and winning, the unions are feeling confident as they take on Qwest. Qwest has little to gain from a strike and with it’s very old infrastructure is more reliant on big labor than the other two big telcos. Union bosses are easily smart enough to know this and are likely to demand more.
While Verizon avoided a strike by making the labor unions happy, Qwest may not be so lucky. Verizon agreed to pay 100% of health insurance premiums and dole out more FiOS installation work to unions, but Qwest is on a tighter budget with no wireless revenues and a far less aggressive next-generation broadband deployment plan. Qwest says they have a contingency plan in place where managers will step in to do work should there be a strike, but the company remains “hopeful we’ll reach an agreement in a timely fashion.” (DSL Reports)
The telcos have been very slow to upgrade broadband networks. The few enhanced speed offerings have been in very limited areas or as an adjunct to a pay TV system. Consumers are now leaving for higher speeds where they have a choice. Verizon and Qwest are facing potentiual strikes, and AT&T’s pay TV take rates has been abyssmal. Does this sound bad? There’s more:
The second-quarter 2008 financial reports are in –- and the tea leaves aren’t showing a sunny future for phone companies. While their financials today look bearable, economic and demographic trends are acting as gale-force headwinds for the future. Here are some of the major issues they’re facing:
- A slowing economy means people are choosing wireless phones over landlines, resulting in increased access line losses. That, in turn, is reducing the number of people the phone companies can convince to switch to their higher-speed networks and video services.
- Cable’s triple-play bundles, which include higher speeds and voice, are starting to resonate with the residential customers, leading to further landline losses.
- Phone companies’ own higher-speed services are starting to cannibalize their installed base instead of luring customers away from cable companies. (GigaOM)
To the Telco suits: we told you this was coming, time and time again. The world wants a big dumb pipe. Time to invest in that. It will require fewer resources and fewer people to operate. Flat rate billing will provide dramatic decreases in both cost of billing and customer service. Your high gross margin with lower operating costs, and growth of market share will reverse the negatives. If you get a clue and get with the program, and your companies still have a chance to survive.
After being defanged for some time in the legal quagmire of being punished for operating illegally, the evil Q is making a comeback.
The boated, inefficient, yet predatory regional monopoly the began life as a well meaning fiber backbone company and lost its way by merging with an RBOC now wants more from the USF pot for the few remaining rural areas it has not already sold off. Few businesses have the luxury of demanding help from the taxpayer instead of solving their own problems, but such is the case with the telcos.
Qwest Communications International Inc. is asking a federal agency to obey a 2005 court order for reforms that Qwest hopes will give it more access to a pot of money subsidizing rural phone and broadband service.
The Denver-based telecommunications company petitioned the Federal Communications Commission on May 5 to follow a 3-year-old 10th Circuit Court of Appeals ruling ordering reforms in a program reimbursing telephone companies billions of dollars for serving rural areas. The agency hasn’t formally responded. (Denver Business Journal)
A the risk of repeating myself: The USF needs to end. It’s mission was accomplished some time ago and it has done very little to improve the availability of world class broadband access to lower density population areas. The reason of course is that it is now treated as the private taxpayer money pot for incumbent telco monopolies who have no motivation to improve service. It’s time to end the USF and introduce open market competition to the marketplace. Unbundling the local loop would be a darn good place to start since the taxpayer footed the bill to build it in the first place.
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