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Quietly, Qwest invests in other people’s tech

Denver Business Journal

Greg Avery

February 24, 2010


Qwest stopped putting money into its Internet-delivered video after CEO Ed Mueller arrived in mid-2007, so it may surprise some that the Denver-based telecom invests in other company’s Internet video technology.

Multichannel News, a television trade magazine, unearthed Wednesday that Qwest Communications International Inc. is among several telecoms to put money into startup ZillionTV, a Sunnyvale, Calif. company.

Qwest invested $10 million in Silicon Valley in exchange for exclusive use of the technology in its service territory, the magazine said.

ZillionTV expects to start delivering 15,000 movies, TV shows and other videos in the second half of 2010 and “has distribution agreements with several studios including Walt Disney Co., 20th Century Fox Television, NBC Universal, Sony and Warner Bros.,” Multichannel News said.

The information about the telecoms’ investment in ZillionTV came out in a lawsuit filed by a former employee of ZillionTV.

Qwest spokeswoman Kate Oravez issued a statement late Wednesday about its investment in ZillionTV.

“In 2009, Qwest made a very small investment in Zillion, which was developing a new approach to video technology. Qwest is always looking into new and innovative ways to perfect its customer experience.”

The company has, from time to time, invested in technology companies. It makes sense that Qwest would have an interest in fostering technology to deliver video over its network.

The company’s invested hundreds of millions of dollars extending its fiber optic network deeper into neighborhoods so it can offer residential speeds of up to 40 megabits-per-second. Increasing consumer use of bandwidth for things like video is primary reason for the investment.

Qwest’s souped-up, “fiber-to-the-node” deployment passes 3.5 million households in its 14-state territory with now, and the company continues to expand it.

This comes as Qwest finishes shutting down its Choice TV service that it offered for a decade. It had 42,000 customers for the Internet television service — most of them in suburbs south of Denver and around Phoenix — but it turned off Choice TV for good at the end of 2009.

That service made Qwest a video distributor much like a cable company is, and similar to what AT&T does with its UVerse service and Verizon does with FIOS in their local phone territories.

Zillion would simply ride across Qwest’s network, offering its customers content but not involving the telecom in the expensive and sometimes nasty business of negotiating content distribution deals.