Qwest fading away into the future

Forget 'plain old' telephone lines — data is the plan as Louisiana's CenturyLink takes over in Minnesota.

 

Pioneer Press

By Leslie Brooks Suzukamo
March 25, 2011

Minnesota, prepare to say goodbye to Qwest and "the phone company" next week.

Denver-based Qwest Communications International, the state's largest phone provider, on April 1 will officially be sold to CenturyLink Inc. of Monroe, La. The two companies cleared their last legal hurdle Thursday when Oregon regulators approved the deal, which had a net value of $10.6 billion when it was unveiled almost a year ago.

The combined company will be called CenturyLink, and both companies have stressed that they expect a smooth transition. Service will continue as usual and CenturyLink has agreed with federal and state regulators to make no rate changes for consumers or small businesses through the end of 2012.

"There should be little to no impact to consumers," agreed Christopher Larsen, an analyst with Piper Jaffray who follows both companies.

Job losses usually follow acquisitions such as this, but the jobs lost will be mostly at Qwest headquarters in Denver as administration shifts to Louisiana.

CenturyLink also forged an agreement with the Communications Workers of America to get regulatory approval, but Qwest already is pretty lean, and the union doesn't expect major cuts that could hurt service in the field, said Al Kogler, CWA spokesman. The union has 13,705 Qwest workers, including 2,009 in Minnesota, he said.

What changes will occur will be more subtle. CenturyLink is emphasizing that it no longer is just about connecting a phone call, which is known

in telecommunications as "POTS," or "Plain Old Telephone Service."

CenturyLink has pledged to expand its high-speed Internet offerings in underserved rural areas, and analysts believe it also may bring Internet-based TV service to the Twin Cities in the near future to compete with cable operators like Comcast.

"To look at us as a traditional telephone company — that's not who we are. Broadband is our future," said Duane Ring, CenturyLink's new regional president, who is moving from La Crosse, Wis., to Qwest's downtown Minneapolis offices next week.

Qwest and CenturyLink serve a combined 1.4 million voice calling lines in Minnesota, with 1.3 million of those lines belonging to Qwest alone. Old fashioned telephone calling is still its core business, but that's drying up as people drop traditional home phone lines for cellphones or alternatives from cable and broadband calling services.

Qwest reported it lost 12 percent of consumer and small-business telephone lines in its 14-state territory in 2009.

For the same period, CenturyLink said it lost 7.6 percent of its lines in 33 states.

Both companies are gaining broadband customers, but at a much slower rate. Historically, both CenturyLink and Qwest have delivered mainly voice services for much of their lives because of the high cost of laying broadband across sparsely populated territories.

Now the companies realize there is no future but in high-speed Internet. In Minnesota, CenturyLink pledged to spend $50 million over five years to provide faster Internet connections to underserved areas, meaning areas with less than 1.5 megabit-per-second downloads.

Critics noted that Qwest spent more than that on broadband deployment in Minnesota over the previous five years, but company officials said much of that involved wiring the Twin Cities metro area with ultra-fast fiber-optic lines to neighborhoods that then push the signal along slower copper phone lines into the home.

Within seven years, CenturyLink must make ultra-fast broadband service with download speeds of 12 megabits-per-second or higher available to twice as many Qwest customers as have that kind of service today, according to an agreement it made with the Federal Communications Commission for regulatory approval last week.

That should speed up the deployment of fiber-optic broadband that is capable of carrying TV into the home, said Donna Jaegers, an analyst with D.A. Davidson & Co. in Denver.

"Qwest has been doing fiber-to-the-neighborhood but they've been rolling it out slowly," Jaegers said. She believes CenturyLink will introduce its Internet TV service, called Prism, to the Twin Cities in the near future to compete with cable TV.

CenturyLink so far has deployed Prism to only five markets, though one of them is LaCrosse, Wis. It has plans to add three more this year.

Larger rivals ATT and Verizon Communication have Internet TV services more widely launched in their territories. Qwest dropped similar plans years ago.

"I think there's room for a company like Qwest but not on voice services," Jaegers said. "It's high-speed data."

Leslie Brooks Suzukamo can be reached at 651-228-5475.