Qwest ends wireless service but turns to WiFi

Qwest this week announced it will discontinue its branded mobile voice and data service by Oct. 31, ending its off-and-on again affair with wireless. It now appears the former regional bell operating company's new wireless strategy is WiFi.

Qwest has a history of entering the wireless business and then selling it off only to enter the wireless business again. After it finally sold all of its wireless licenses a few years back, it set up a mobile virtual network operator (MVNO) agreement with Sprint and last year ended that agreement in favor of an agreement with Verizon Wireless. 

Qwest, which recorded 763,000 mobile subscribers in the second quarter, isn't spelling out its reasons for ending the service, but it has been trying to retain customers by offering packages of phone, television, Internet and wireless service. It will continue its agency relationship with Verizon Wireless so it can still offer a quad-play bundle to its customers. So apparently that strategy wasn't hugely successful.

But based on the aggressive marketing campaign I'm seeing here in the Denver market, WiFi may be the company's strategy to grab and retain customers. In May, the company rolled out free WiFi to its fixed high-speed Internet customers. The company is offering free access at 17,000 hotspots nationwide operated by AT&T via an MVNO deal of sorts. Qwest's move followed the likes of AT&T, which offers free WiFi to certain smartphone and fixed broadband users, and Cablevision, which has launched a free WiFi network to its broadband customers in New Jersey and New York. 

The second quarter revealed that Cablevision is holding its own against Verizon's FiOS service in New York. Analysts believe its WiFi strategy is a big reason why. In June, Cablevision announced its broadband customers accessed the Internet more than 2 million times for free over its Optimum WiFi service and averaged more than 1 million minutes online per day since rolling out the service in the fall of last year.

Those statistics are certainly something Qwest would like to mimic. As the smallest of the three remaining RBOCs, Qwest has struggled to remain viable amid strong cable competition and wireless substitution. It no doubt wants to create more value for its Fiber to the Node network, which passed about 2 million homes as of July. Interestingly, the company did something that we've seen mobile operators do for mobile broadband: subsidize laptops. Any customer who signs a two-year broadband service contract (7 Mbps, 12 Mbps or 20 Mbps service packages) receives a Dell Inspiron Mini netbook for $199. Having yet another incentive such as a netbook with WiFi capabilities could help attract users over competing cable services.

I'm interested in seeing how WiFi will impact Qwest's metrics in the coming quarters. Might it be convinced to embark on its own company-owned WiFi strategy if it pays off?--Lynnette

P.S. I recently took over as editor of FierceMobileIT, which covers the enterprise wireless business. You can check it out here.

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