Qwest Wireless to shutter in 60 days
Filed under: Company News
The Denver, Colo. telecom, Qwest, announced today that it would stop providing wireless services in October and would offer its customer an option of switching over to Verizon Wireless. Customers would pay no termination fees in either case. Qwest's move comes as no surprise. Qwest (Q) and other carriers that are reselling wireless services, have struggled mightily to gain a critical mass of customers. Qwest, which was founded in 1996 by billionaire Philip Anschutz, operates its wireless business as a Mobile Virtual Network Operator (or MVNO). This means Qwest did not actually have its own network. Rather, the operator leased space on Verizon's (VZ) network and used Verizon's services. (Correction: Qwest leased space on Sprint' Nextel's (S) network, not Verizon's). The idea was that Qwest could then sell a bundle of services including wireless, long distance, and residential, to customers. Bundles are more lucrative for phone and cable companies because the marginal cost of selling an additional service to an existing customer is very small. But bundling has not gained as much traction as the telcos and cablecos had hoped, in part due to the strength of national wireless brands like Verizon and AT&T (T). Verizon and AT&T have heavy retail presences that are expensive to maintain but essential for building foot traffic. Qwest had lagged in this department.
In May 2008 Qwest and Verizon announced a five-year deal to provide wireless services to Qwest customers and give them bundling discounts and a single bill. But as of the second quarter of 2009, according to GigaOm, Qwest had only signed up 185,000 wireless subscribers on its own branded MVNO service. The MVNO arrangement only contributed $10 million in revenue to Qwest during the second quarter of 2009, and Qwest was probably losing money on the deal. While Qwest could and did fall back on its Verizon deal, the company is probably getting a less advantageous revenue share for reselling Verizon branded wireless services. (Verizon is known for driving extremely hard bargains -- witness its dealings with Apple).
For long distance and residential carriers like Qwest, a wireless MVNO failure is a very bad omen. The wireless part of the picture is the fastest growing segment in the telecom universe. Provision of high-speed wireless broadband is expected to continue to drive growth in the segment as more people buy netbooks and smart phones that make it much easier to use the mobile Internet. While Qwest is still offering some bundled discounts to customers - including up to $25 off a bundle with wireless, TV (from DirecTV), broadband, and voice services - relying on another brand name for wireless could make it harder to hold onto those customers over time and in the face of hard competition from cable companies for other parts of the Qwest bundle.
Qwest can take some solace in the fact that it owns a host of other businesses including a Content Delivery Network that helps speed delivery of chunks of Internet data and its own fiber optic network. But without a wireless future, the future for Qwest appears considerably dimmer. Looming over the horizon are national WiMax services which will provide high-speed wireless broadband everywhere and cause even more problems for Qwest in the still lucrative residential broadband space. Without its own brand of wireless, the firm will struggle to hold onto existing retail customers in an increasingly competitive telecom landscape.
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Reader Comments (Page 1 of 2)
8-18-2009 @ 1:58PM
Jason said...
Years back Qwest used Sprint for it’s MVNO. They left thinking they’d be better accommodated by Verizon…….Fools.
Reply
8-19-2009 @ 9:52AM
Richard said...
Amen Jason. Sprint Was A Much Better Company Than Verizon. I Got Sucked Into Verizon, Now Am Waiting For Contract To Expire So I Can RUN Back To Sprint!
8-18-2009 @ 2:58PM
Scott said...
Where's the Wireless Telco Bailout?
Reply
8-19-2009 @ 7:49AM
Luke Easter said...
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Although an American company the focus is world wide,
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There’s a new site, new functionality, new look & info,
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Check out futuristic communications today, (BKA) Sanswire.
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Investor Relations Group is now working with this company,
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Reply
8-19-2009 @ 9:04AM
Bud Maxwell said...
A brilliant ode for the commode. LOL
8-19-2009 @ 7:48AM
gosein said...
I support the idea of death panels--not for the elderly, but for intellectually retarded folks like whataboutob, whose DNA should clearly be extinguished before it has the chance to replicate and spawn more simple-minded automatons incapable of reasoned thought.
Reply
8-19-2009 @ 8:11AM
BL said...
What really turned me off from contract cellular service is: Cellular One.
We went through **** with that company and I have never signed another contract again.
Plus, the additional unexplained charges on our bills and the charge to stop the contract.
We dropped them about 12 years ago and I have never looked at another cell phone contract since.
Reply
8-19-2009 @ 8:15AM
kevin said...
Who needs long contracts, pre-paid is the way to go.
Reply
8-19-2009 @ 8:54AM
YEPPER said...
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Reply
8-19-2009 @ 9:59AM
Alberto said...
"MagicJack" along with anyones Broadband is the cheapest way to Communicate ! All we need is High Speed Broadband, Anywhere, Anytime.
Reply
8-25-2009 @ 8:58AM
Buyout said...
Watch for AT&T to buy out Qwest. They love grabbing new markets. And by Qwest bailing out of wireless with Verizon, makes the deal more lucrative for AT&T
Reply
8-19-2009 @ 11:16AM
rw said...
Qwest's website is STILL offering Wireless! as of 9:15 am. MDT.
The IT guys are the last to find out everything!!!
Reply
8-19-2009 @ 11:21AM
Sherri said...
Just amazing..that Q-west still is attempting to offer wireless in my state of Montana! Just received a flyer offering services and I was just about to try it again! Well I do know now I will also cancel my land line..so I cand "bundle" with another serve option.
Reply
8-19-2009 @ 11:40AM
Jim said...
I started with Cell 1 and it became something different here. AND it was terrible. I went to GTE that was bought by Verizon. I know several people that have Sprint. It SUCKS. I have had very few problems with Verizon (5 cell phones) for the last 15 or so years. Yeah, I wish they were less money. And I don't like the idea of getting a new phone requires a new 2 year contract and billing contract. I think I'll just shut my business down and start with the pre-paids. I don't like the dam phones anyway but I need them in case of a road emergency.
Reply
8-19-2009 @ 11:48AM
Joe said...
When all is said and done, the governmental destruction of Bell is the cause of all this chaos. Had AT&T and Bell not been forced to 'downsize' and split-up into subdivisions none of this dreadful waste of time, energy, and money would have resulted. Ma Bell had it working right until Uncle Sam stepped in.
Reply
8-19-2009 @ 9:24PM
Mike said...
The "government" did not force att to break up. It was a court monopoly verdict. The government was not involved at all. If you think we would have all the advances that have come along with COMPETTION, without it, I think you are sadly mistaken. There was never any incentive for Bell to make advances or lower costs, they had no competitors.
8-19-2009 @ 12:21PM
Gregman2 said...
This is just part of ongoing consolidation in the industry and comes as no surprise. Aggregagtors have long seen their margins rising due to competition from the internet and iPhone, especially.
Reply
8-19-2009 @ 12:29PM
Christopher said...
And we should give a damn because?!
Reply
8-19-2009 @ 12:49PM
johnmarge said...
Thank Judge Green and govt. who think they knew better than AT&T and the Ma Bell how to do business. And you want the govt to handle health care????
Reply
8-19-2009 @ 1:17PM
Jason said...
Hey Kissboy!!! You and a couple other idiots on aol keep posting websites about meeting rich people; are you one of them? I didn't think so. Knock it off!!! Nobody gives a rats ass about your stupid fraudulent, ripoff,lying, crap website!!!
Reply