A Week of Responses 4
April 24, 2009
The last in this week’s installment of response to readers–
Response to “Why I’m Bullish on Qwest”:
Dave,
Verizon was not forced to sell any of its rural properties – Hawaii, KY, or New England. It did it purely to get out of rural was the story. To get out from under the responsibility that Qwest, Windstream and Embarq have: how do I leverage my current aged copper plant in rural land to forestall declining revenue? In other words, I can’t or won’t roll out FTTx because there isn’t enough return.
–Reader
Dear Loyal Reader,
Verizon was smart, they purposely exited remote business areas in relative comparison to their footprint. They got out from underneath a lot of high maintenance network, limited copper infrastructure and a high cost per mile to serve. Verizon is smart. If you go back to the mid-1990’s, cable companies did something similar by swapping properties with each other to consolidate a footprint. Cable companies are not dumb either. As the saying goes inside the
beltway — never waste a good crisis — the monopolist, never waste a good opportunity to concentrate.
–Dave
Dave,
What does Qwest (or US West) do without a national fiber network? It loses all that IP and LD revenue as well as its long-haul wave revenue and probably its CyberCentre money.
–Reader
Dear Loyal Reader,
I don’t run Qwest, but I would sell off a few rural states (like Verizon did) — pare down some more debt. I would consolidate local fiber assets in more lucrative markets and become a consolidator and wholesale provider of local connectivity and IP. The business model is simpler and needed.
–Dave
Dave,
$2-3B against a debt of $14B. It would be better off spinning off the LH business like Alltel or Sprint did. IPO it and pay off that debt. Even in this market it would probably work.
–Peter
Peter,
There is no IPO market. Long haul was sexy in the 1990’s, that is long over.
–Dave
Posted by wbrache | Filed Under Dave's Corner, Telecom Blogs, Telecom bloggers, Telecommunications bloggers, Telecommunications blogs
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