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One of Qwest's video bets may be struggling to get
streaming By Andy Vuong March
4, 2010 During a keynote speech in December, Qwest
then-executive vice president Neil Cox boasted about a strategy
of delivering movies, shows and other video content to
television sets over the broader Internet. Qwest favors
such "over-the-top" video services over IP-TV, a more expensive
technology embraced by AT&T that distributes content over a
dedicated network. "We see these walled-garden IP-TV plays or
cable-television models kind of breaking down," Cox said at an
industry conference in Orlando, Fla. "All of this over-the-top
stuff is coming, and we at Qwest aren't going to stand in the
way." As it turns out, one of Qwest's early bets on
over-the-top video — ZillionTV — may break down before it
launches. Qwest poured $10 million into the Sunnyvale,
Calif.-based startup in February 2009, according to court
documents tied to a discrimination complaint filed in January
against ZillionTV. A former contractor claims ZillionTV made
"serious misrepresentations and false claims" about its
financial backers, technology and other information. The company
allegedly had just 170 set-top boxes in test markets in late
2009, not the 20,000 it publicly stated. ZillionTV's set-top box connects to a TV set,
and ad-supported video is streamed on-demand through a broadband
connection. The company has delayed its commercial launch
from the end of 2009 to the second half of this year, and in
October it replaced its chief executive and reportedly laid off
a third of its staff of about 100. Spokeswomen for ZillionTV and Qwest declined
to comment. Cox, who oversaw Qwest's product development,
was ousted in January as part of an "organizational
realignment." With $12
billion in annual revenue, Qwest has said its investment in
ZillionTV is "very small, or immaterial." But the As customers continue to drop land lines,
having a video offering as part of a bundle of services is key
for phone companies. AT&T and Verizon are spending billions of
dollars developing their video services. Qwest, which resells DirecTV service, stopped
developing its own video play in December 2007. Qwest CEO Ed
Mueller shifted the company's focus to technologies such as
over-the-top video. While Roku's set-top box has garnered some
success by providing access to Netflix and Amazon's online video
libraries, broader adoption of Internet TV may be years away. "There are
several obstacles still facing providers such as Roku and
ZillionTV," said Ronald Lewis, an independent Acquiring the rights to broadcast content from
HBO and others is expensive, said Kurt Scherf, principal analyst
for research firm Parks Associates. It's unclear what type of deals ZillionTV has
secured, though the company's website says it is working with
the likes of NBC and Warner Bros. "It is going to be a challenge for any kind of
upstart to get a toe in the door of providing pay-TV services,"
Scherf said. Andy Vuong:
303-954-1209,
avuong@denverpost.com
or
twitter.com/andyvuong
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