What's left for Qwest?

Earlier this week, Qwest Communications abandoned the bidding battle for MCI it was waging with Verizon. Carol Wilson's Broadband Reality newsletter on Monday outlined the reasons and the likely impact a business services duopoly will have on enterprise telecom options.

It's certainly a compelling issue, as is the question of what advantages Qwest really has left in such a scenario. The day after its withdrawal from the MCI bidding, Qwest reported its first-quarter earnings and tried to put a brave face on its prospects. That's a tall order, especially given the fact that the carrier doesn't own significant assets, or have any announced plans to own significant assets, in the technology areas that currently have significant growth revenue potential--namely, wireless and video.

The press release accompanying Qwest's Q1 earnings is telling: Not only did the carrier finalize the sale of its wireless licenses to Verizon Wireless during the quarter, it also showed flat revenue and declining customer numbers for its wireless resale strategy--down 11,000 to 743,000. The company outlines the robustness of its wireless offerings, but the wireless market being what it is, it's difficult to see a resale strategy being robust enough for Qwest to be a mobile contender.

Qwest is also reselling video service via a relationship with DirecTV. Like wireless, video is an application that requires a facilities-based strategy and a brand of its own. Resale is a stop-gap that doesn't translate well into a long-term service bundling strategy.

Finally, there's voice over IP. The company's Q1 earnings release states that "Qwest continues to rollout its OneFlex suite of VoIP services, including Integrated Access and Hosted VoIP" and that "Qwest offers its OneFlex VoIP communication services in more than 200 cities across the U.S." But no customer numbers are cited and the company has been fairly mum on the topic--not good signs for a service area of such importance for all carriers.

As Carol pointed out in her column Monday, speculating about what company Qwest might choose to combine forces with is good sport. For the sake of survival, the carrier should hurry up and get in that game.

E-mail me at jmeyers@primediabusiness.com.