from: Desmoines Register [1]

Qwest says it's not ready to make the call on cable TV
A new law makes it easier for phone and cable companies to enter new markets.

By WILLIAM RYBERG
REGISTER BUSINESS WRITER

June 7, 2007

Qwest, Iowa's largest local phone company, is studying whether to get into the cable TV business in Iowa, but it's not ready to say that it will for sure - even though the company was a major backer of a bill designed to open the door for more competition.

"We're evaluating the opportunity," said Max Phillips, president of Des Moines-based Qwest Iowa.

Gov. Chet Culver signed the bill into law last month. The measure, which takes effect July 1, will allow companies to get a franchise from the state to offer cable TV service, rather than have to negotiate agreements with individual cities as required under current law.

Backers of the new law say it will create competition, leading to lower prices and better service. Opponents fear it could leave some areas without service.

Mediacom Communications, Iowa's largest provider of cable TV service, says it's ready for the competition whether it comes from Qwest or smaller phone companies.

Cable operators and telephone companies increasingly cross over into each other's turf, offering customers high-speed Internet access, telephone service and video service.

Some smaller telephone companies already offer cable TV. Qwest and Newton-based Iowa Telecom, offer package deals that include satellite TV.

Iowa Telecom, the largest provider of phone service to rural Iowa communities, says it has no plans to get into the cable TV business at this time.

A couple of independent phone companies, however, have already expressed interest in the Cedar Rapids market, said Stefani Millie, director of government relations for the Iowa Telecommunications Association, a group of primarily rural independent phone companies.

Qwest hasn't made up its mind yet about its plans, said Phillips. In an interview, he answered questions about the issue.

Q. Why does Qwest want to get into the cable TV business?

A. I'm not sure that Qwest wants to get into the cable TV business, but we recognize that video is a key component of the way technology is going, the way viewer-consumer habits are going. Eventually, what we think will probably happen is that people will choose the entertainment venues they want to subscribe to. They may download entire seasons of television programs. Cable television systems are kind of the transition step to getting there, and it's anybody's guess as to when we get fully into that new era. So what Qwest is really doing is positioning itself for the future, which recognizes that video is an important component of any entertainment-communications bundle that's out there.

Q. So you guys envision the day when a person would download the entire season of his favorite TV show? Before it's ever broadcast?

A. It could be before it's broadcast, or simultaneously, or shortly thereafter. All that depends on higher and higher broadband kinds of speeds. And what this bill really will do, I think, will be to bring higher and higher speeds to Iowans.

Q. For now though, are you going to do cable TV?

A. We're evaluating the opportunity right now. The bill was just signed. We're beginning the process of trying to analyze the Iowa market and how it might make sense in our plan. This is the first state in the Qwest footprint that has passed a statewide video franchise bill. So we'll evaluate the opportunity and figure out how we match our funding plans to it, and at some point we'll have some announcement that we plan to pursue that down the road.

Q. Realizing that you're examining the market, do you think it's likely that you'll end up offering some kind of video in Iowa?

A. I don't really know how to answer that. I think we're evaluating the opportunity.

Q. If Qwest did decide to offer video, what cities would you go into? Would Des Moines be one of them?

A. It's too early to tell right now. But Des Moines would be one that we'd carefully consider.

Q. How does this fit in with your business model?

A. It fits in well. Today, we recognize the value of being able to offer our customers the broadest suite of products possible. We incorporate today, not only our land-line local service, our high-speed Internet service, our wireless telephone service and our long-distance service, but we also incorporate into our bundle satellite television service. This would allow us to have all of those services from a Qwest source and not in a partnership with like a DirecTV, although we'd still be a valuable partner with DirecTV in a lot of areas for a long time.

Q. Would offering cable video require installing new lines?

A. Not necessarily new lines, but new capabilities or capacities. That's electronic equipment attached to lines and pushing fiber (optic cables) farther out into neighborhoods. The goal is to get (broadband) speeds up (on phone system lines). We offer up to seven megabits (a measure of broadband speed) in Des Moines. You've probably got to get those speeds up somewhere in the 25-megabit range to make this product work.

Q. Have you thought about how much you might have to spend to do this?

A. We haven't put a price tag on it. It depends on what markets we would tend to look at and how quickly we'd look at rolling that out.

Reporter William Ryberg can be reached at (515) 284-8104 or bryberg@dmreg.com