Forget landline voice: I want data, video and wireless

Wireline landline voice loss? Who cares?

It's hard to imagine that even five or 10 years ago, we would ever hear any leader of a Regional Bell Operating Company (RBOC) turn their back on the service that helped make the telephone a part of every U.S. home, yet that's the tack the leaders of Qwest and Verizon are now taking.

Traditional voice service revenue continues to be displaced every quarter by two obvious, but inevitable factors: cable telephony adoption and an increase in cellular phone substitution.

It's hard to dismiss cable's voice efforts.

As my fellow Irishman Dan O'Shea pointed out in his weekly Editor's Corner, Cox, BrightHouse and Wide Open West all ranked high on J.D. Power's 2009 Residential Telephone Customer Satisfaction Study. What's interesting was that although Qwest came in second place in the West region, neither AT&T nor Verizon were cited at the top in any of the four regions.

Guess cable is doing something right?

Such facts really don't bother Ivan Seidenberg, Verizon's CEO, who was quoted in a Reuters article as saying that his "thinking has matured" around landline loss and that even spending a minute thinking about when landline loss would level off "is like the dog chasing the bus."

Well, Verizon is chasing two new buses whose routes are leading to build a fiber-based network to support video and then integrate that with its wireless service. Verizon does have one of the largest wireless networks and during the second quarter it added 300,000 FiOS TV subscribers.

Amidst ongoing reports that Verizon is going to continue to shed more of its workforce in the next year, Seidenberg said that video, not landline voice, will be its primary wireline service. What's more, the service provider went on to say that they want to reorganize the company around video. "Video is going to be our core product in the fixed-line business," he said, adding that it will focus its bundled efforts on video and cellular service.

Qwest's CEO and Chairman Ed Mueller struck a similar tone. Although Qwest lacks a wireless component, it too wants to focus more of its attention on leveraging its copper lines to deliver more data-centric services including online video and high speed data.

However, the Colo.-based telco's approach to getting there couldn't be any different. Ever the conservative carrier, Qwest has settled on a hybrid copper/fiber Fiber to the Node approach that delivers services via ADSL2+ and VDSL2.

Qwest hopes to have 3 million homes passed by the end of 2009 with FTTN service, a figure it said could be closer to 5 million by 2010. The ILEC said that it believes that today's economics will enable it reach 50 percent of homes passed and possibly 70 percent over the next five years.

Thus far, Qwest's FTTN bet has been paying off with many of its customers purchasing speeds ranging on average 7-20 Mbps. Of course, its migration to VDSL2 will increase those speeds.

Mueller believes that the optimal number is 40 Mbps. Qwest wants to augment its satellite resale business with Internet speeds to handle more online video. Okay, that's great Ed, but cable is right on your tail.

Not long after Qwest launched its VDSL2 40 Mbps service in select markets, Cox unveiled its DOCSIS 3.0 service in Phoenix, Ariz.  Cox and its other large MSO brother are already delivering 50 Mbps and 100 Mbps over existing coax in various markets, respectively.  

And while Qwest's approach may differ from Verizon's, Mueller also knows that it's no longer business as usual.

"At the end of the day the landline as we know it today is less relevant," he said.

Alexander Graham Bell might have a fit to see that his invention is being disrespected, but I think it's more likely he might be saying something like ‘Watson, come here. I need you to see this new video on my new netbook.'

--Sean

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