New Qwest FTTN Plan

Though it might be said to be a baby step, Qwest Communications has decided to up capital spending by an incremental $200 million over the next two years to bring 20 Mbps service to 1.5 million customer dwellings. The fiber-to-node plan obviously will rely on Digital Subscriber Line of some sort for the drop, but Qwest did not specify which particular approach it has in mind. It could use ADSL2 or VDSL, of course.

Basically, the company, which normally spends between $70 million and $100 million on fiber-to-node access plant, is incrementally spending the extra $200 million to pick up the tempo.

In a bit of a twist, Qwest will not deliver linear entertainment video over the network, relying instead on its DirecTV satellite service for that. Instead, it really sees the FTTN upgrade as a data services play.

As is always the case, investors seem not to like the idea. They didn't like Verizon's FiOS plan or fiber-to-customer plans launched by independent providers in France, for example. Investors fear Comcast and other cable companies will wind up spending more money on upgrades of their own as well.

Qwest is doing the right thing. Bandwidth is the reason any terrestrial wireline network has for existing. Failure to invest in bandwidth means business death. Sure, investor expectations have to be managed. But were in up to the investors Qwest would pay out a dividend and condemn itself to ulimate bankruptcy.

The program is not nearly as sweeping as upgrade programs underway at Verizon and at&t. Qwest simply can't afford that. But neither can Qwest sit still and do nothing. Investors might finally be seeing the fruits of at&t and Verizon investments in broadband infrastructure. They will see the same at Qwest, as unpopular as the investments are.