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CenturyLink And Qwest Probably Won't Pursue Wireless
'We are not going to go out and buy shirt factories,' says CEO

Karl Bode

April 23, 2010

As we mentioned yesterday, Qwest and CenturyLink have announced a merger valued at around $23.4 billion dollars (half of that being Qwest debt). As we also mentioned, neither company has a wireless division that will help them mitigate landline defections or help pay for necessary upgrades for the outdated last-mile copper infrastructure serving most of their residential customers. So will the new company try to get into wireless to help fund upgrades? All signs point to no, according to executive comments and analyst opinion.

"We are not going to go out and buy shirt factories," CenturyLink President and CEO Glen Post told analysts on Thursday’s conference call, hinting at any big play into businesses seen as veering too far from core terrestrial data. "We are going to be in the communications business, said Post -- reiterating that "the future of our company is really in data" when speaking to the Financial Times.

So the company's "future is in data," yet they'll probably be nursing last-mile copper for the next decade if not more in most markets. Bonded 25/2 ADSL2+ may be as good as it gets (assuming a market sees competition) -- with no wireless play. Of course while the company will have Qwest's long haul network, a good fiber core, and a business providing backhaul bandwidth -- they're going to need lots of cash to be competitive residentially.

While CenturyLink does offer limited TV services, Qwest repeatedly insisted an "over the top" solution (IP Internet video of the consumer's choice) was best -- so that is a debate that will need to shake out as well. Qwest's opinion on that front was partially due to their interest in eliminating debt so they could make this very deal happen. Things could change on the IPTV front but again -- that's going to require a significant amount of money.

So where is the money for expansion going to come from? You, probably. A primary motivation for the merger was to create a new telco big enough to get a lion's share of broadband stimulus subsidies. The new, bigger company also has its eyes on the USF program -- which is being revamped with a focus on broadband -- but also on giving more of these USF funds to bigger carriers (something AT&T and Verizon have spent several years lobbying very hard for).

Meanwhile, from talking with people within the two companies, we're pretty sure that the new company will take on the newer CenturyLink brand. It's a blank slate for most people (we saw more than a few reporters yesterday call the company "CenturyTel," the name they had before merging with Embarq) and a lot of effort has been put into the new brand. A newer name can also help the company distance itself from the Qwest financial accounting scandal associations of a few years ago (or, possibly, even more recently).