Qwest Hopes to Restart DSL and Video Engines

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After suffering engine trouble in 2002, Qwest Communications International Inc. is hoping to hit the accelerator on its digital-subscriber-line business — and possibly shift into a new video gear.

That's part of the message a team of Qwest executives put out during a day-long media briefing in Denver April 1. It was no April Fool's endeavor: After a year in which Qwest generated more news attention for financial investigations and executive indictments, the Baby Bell has reformed its management team and product lines in hopes of reconnecting with consumers.

One of the first things to go was Qwest's old, fiber-optic boasting "Ride the Light" slogan, in favor of the more customer-aimed "Spirit of Service." That idea also drives Qwest's broadband efforts, as the company funnels an additional $75 million into plant upgrades this year to extend DSL's addressable footprint by 20 percent throughout its 14-state territory.

DSL is now available in 4.2 million homes and businesses in Qwest territory, but the company has not set a figure as to what percentage of its network will be DSL-capable after the upgrade.

In a little more than one month, Qwest plans to hit the road with a broadband-focused marketing campaign. That will hopefully add some gas to Qwest's DSL engine, which idled in neutral during the fourth quarter with only 10,000 new customer additions.

It turns out that was by design — at the time, Qwest was working to integrate with its new resident ISP service, provided by Microsoft Corp.'s MSN. The two companies were attempting to knit together billing, provisioning and customer-care systems.

Qwest chairman and CEO Dick Notebaert said that was the wiser strategy. "I felt we were getting negative testimonials from customers, so we needed to slow that down."

Nor were the integration issues unexpected, according to executive vice president of products Theresa Taylor.

"That's pretty typical as you start out in these relationships," she said. "We had some things we had to work through — how do we do customer relationship, how do we do billing? That has now completely stabilized and now we are ready to ramp that up."

On the video front, Taylor noted that Qwest has maintained its video DSL rollout in Phoenix, along with limited market trials in Boulder and Highlands Ranch, Colo. But as programming and equipment costs remain high, don't look for further VDSL rollouts elsewhere in Qwest territory.

"I will tell you the customers love that product," Taylor said. "It just isn't a profitable business we can roll out in 14 states."

Instead, Qwest is doing what other Baby Bells have done — looking for alternatives, including partnership deals with satellite providers.

"We are in the same discussions everyone is. We are all trying to solve the same problem, which is how do we bring video into the home?" Taylor said. "But the fact is we don't have a satisfactory alternative at this point."

Qwest already has a contract with Hughes Electronics Corp.'s DirecTV Inc. to provide satellite video to multitenant housing developments, and Taylor said the company is actively exploring the idea of expanding such an arrangement.

"The exciting thing about it right now is when you have a common goal — their broadband-over-satellite hasn't worked and our video product hasn't worked," Taylor said. "We need each other to get into customers' homes."

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