March 13, 2007 Tuesday
FINAL EDITION
By Kimberly S. Johnson, Denver Post Staff Writer
From Lexis Nexis

Qwest may be looking at delivering TV service in an on-demand fashion, as an alternative to securing state or local TV franchise deals.

The Denver-based telecommunications company wants to better compete against cable companies, such as Comcast, and may take an unorthodox approach – offering television programs on-demand over its high-speed Internet connection.

Qwest, which is upgrading its high-speed Internet network to handle video, has expressed frustration with the cumbersome pace of crafting local franchise agreements to offer video.

“Qwest is looking at what other options it has for video where there are no video-franchising fees,” said Qwest spokesman Nicholas Sweers.

It has also attempted to get statewide franchise legislation passed in six states, with three states – Colorado, Utah and Idaho – either killing or holding those bills.

Legislation in the other three states – Washington, Minnesota and Iowa – is pending.

Telecom competitors AT&T and Verizon are planning full-fledged cable systems, spending billions of dollars to either lay fiber-optic lines to individual homes or upgrade existing systems.

Video-on-demand services – available to customers with digital cable-TV packages – are booming in popularity. From $4 movies to free children’s shows and local high school sports, people are consuming a greater portion of their TV on-demand. In February, Comcast’s 800,000 customers in Colorado ordered 6 million on-demand programs.

In an interview with Dow Jones Newswires last week, Qwest chairman and chief executive Dick Notebaert extolled the virtues of video-on-demand and “time-shifting,” or using a digital video recorder to watch programs at a later time.

He speculated that there might be little need for live TV programming three years from now.

“I don’t need 200 channels,” Notebaert told Dow Jones. “I don’t even need 20. I only need the programs I watch on occasion.”

Speaking to The Denver Post in December, Notebaert was enthusiastic about the convergence between devices such as cellphones and home phones.

“We’ll see a day when your cellphone goes off net and you use the minutes on your phone at home. It just automatically switches,” he said. “We, as consumers, will get used to having content on-demand. We won’t need to stream it. We’ll download it and time-shift it.”

But many consumers differ from Notebaert, preferring to watch live TV, said Bruce Leichtman, president and principal analyst for Leichtman Research Group. Consumers enjoy their digital video recorders and on-demand programs in addition to traditional TV broadcasts.

“He’s certainly talking about himself, not the masses,” Leichtman said. “Video-on-demand as a stand-alone model is not what consumers are craving. It’s a model that’s highly flawed. … TV viewing isn’t down in any way, shape or form.”

Qwest already offers cable-TV service in parts of Lone Tree, Highlands Ranch and Phoenix but has not said anything about expansion plans. Offering a video-on-demand-only system poses challenges, particularly getting programmers to sell their content piecemeal instead of on a live network.

Staff writer Andy Vuong contributed to this report.