The Association of U S West Retirees



Six questions for Ed Mueller
Qwest CEO looks to the future
By Jeff Smith
Rocky Mountain News
Wednesday, February 27, 2008

Qwest CEO Ed Mueller took a few minutes with Rocky Mountain News reporter Jeff Smith after hosting an analyst meeting Monday in New York.

He told nearly 180 analysts and bankers that Qwest has a $1 billion consumer broadband opportunity but also has a wireless hole that he hopes to fill quickly.  That would mean restructuring the current deal to resell Sprint wireless services or forging a partnership with T-Mobile, AT&T Mobility or Verizon Wireless.  Excerpts from the interview follow:

1.  Can you explain why the Sprint (wireless) partnership is not working out?

I think it worked out what it was intended to do.  After our strategic review, we want a retail partner, one that we can have the latest, greatest devices and services.  Wireless is a national brand;  it's hard to brand Qwest Wireless.  (Typically, Qwest can't offer the latest gadgets immediately because of 120-day exclusive deals between cell-phone makers and Sprint.  Also, Qwest can't get the volume discounts a large carrier could.)

2.  What does Qwest bring to the table (in such a partnership)?

Customers.  Reduced price for you because we will bundle (with other products such as DSL Internet).  We'll give you a discount.  And we're probably stickier.  With a bundle, the (customer) churn rate is going to be better (lower).

3.  I know DirecTV is your primary video strategy.  But how far down the road before we see Qwest offering video on demand (over a high-speed Internet connection)?

I think that depends on the external environment.  Part of our fiber to the node (neighborhood) strategy is that we'll have the capability.  It's just a matter of who wants to provide it.  We're not driving that.  It's content providers such as Blockbuster, Netflix, who knows?  Yahoo?

We may do deals, but we're not going to go out and be broadcast-content providers.

4.  Why do you still have such a good opportunity in consumer broadband (to take market share)?

Because (consumers) will pay for speed. The market is only 55 percent penetrated today (55 percent of the households have high-speed Internet from Qwest or cable or another provider).  It's easy for me to see 70-plus percent.  And that's a 15 percent market uplift.  And who knows what the applications are going to be later?  Video on demand (for example).

5.  How important is a meeting like this -- to meet face to face with analysts?

I think it's very important to me, and hopefully the investment community, to put a face and name and be able to focus -- in not a pressure earnings release -- and say, "This is our plan."

6.  How would you characterize the main difference in your strategy from Dick Notebaert's (Mueller's predecessor)?

I just think it evolved.  There were different things to be done (by Dick).  (Mueller mentioned during the meeting that Notebaert had to increase Qwest's coverage of high-speed Internet service.  Now, Mueller is focusing on accelerating speeds).