Mueller: Qwest looking at hybrid video strategy

Qwest Communications (NYSE:Q) is considering a video strategy that combines digital broadcast television with on-demand video via a broadband pipe, Qwest Chairman and CEO Ed Mueller said in today’s second-quarter earnings call.

Mueller said, in response to an analyst question, that Qwest is “more bullish” about the possibilities of leveraging its broadband pipe to deliver a video service including high-definition video, without becoming a content broker, as both AT&T and Verizon have become with their U-Verse and FiOS TV services, respectively. And, Mueller said, there are trials going on that would enable Qwest to “provide everything to our customers” through a combination of digital broadcast, over-the-top video and on-demand programming via what amounts to a “HOV lane” on a Qwest broadband connection.

A Qwest spokesman said the trials to which Mueller referred were the recent promotional effort that gave new Qwest High-Speed Internet customers in Arizona; Boise, Idaho; and Colorado Springs, Col., new Roku boxes as incentives.

“We believe there is an over-the-top video strategy,” Mueller said. “Our research shows it is getting better.”

Qwest offers video through a resale agreement with DirecTV that Qwest recently extended for five years and beefed up through greater integration.

Other options Mueller mentioned include services that combine linear programming, such as that available through digital broadcast, with broadband capabilities, to deliver video-on-demand or pay-per-view programming. Sezmi and ZillionTV are two companies who have announced very different approaches to this combination. The third option, Mueller said, is pure over-the-top video, which takes advantage of Qwest’s increased broadband offering of up to 40 Megabits-per-second over its fiber-to-the-node network.

“All of these are proceeding, and 40 Meg is icing on the cake; we think 20 Meg does it,” Mueller said. “The lynchpin is what the content developers and the studios do. We see them worrying that one linear programming path isn’t the way to go.”

If one content developer is willing to test the waters of a new approach, others will be as well, Mueller added.

“Some of the stuff that is out there, with Netflix and Amazon is pretty impressive, in terms of the quality of the picture,” Mueller said. “More and more will come with what you want when you want it.”

Qwest’s strategy has consistently been to stress the high-speed Internet access service, in belief that it is the key offering to consumers. Earlier this year, Qwest announced VDSL2 trials to deliver more bandwidth for video over its FTTN network. Qwest Executive Vice President and COO Tom Richards reinforced that strategy with analysts, saying HSI sales continue to be a key in reducing wireline attrition.