Qwest Begins WiFi Hotspot Service Free for Its Broadband Customers via AT&T WiFi

| May 8, 2009 | Digital Home - U.S. | Competitive Intelligence Report

| Analyst: Bruce McGregor

Current Perspective: Positive
Vendor Importance: High
Market Impact: Moderate/High

Event Summary

May 7, 2009 -- Qwest announced effective immediately that all its residential and small business High-Speed Internet subscribers have free unlimited access to 17,000 Qwest WiFi hotspots nationwide. This is made possible through a partnership with AT&T to share the AT&T WiFi network, which also grants free access to AT&T broadband customers.

Analytical Summary

• Current Perspective: Positive on Qwest to rollout a WiFi hotspot service because the new service comes at a great value since it is free with unlimited usage to all Qwest High Speed Internet subscribers. Qwest WiFi has been quickly deployed since it is in actuality the existing AT&T WiFi service with 17,000 public hotspots nationwide.

• Vendor Importance: High to Qwest because it has been able to immediately launch a new value-added service for all its broadband customers that is something they have been requesting. Qwest recognizes this through a recent market study it conducted indicating almost half of respondents put a high value on remote WiFi access for “freedom and flexibility” to remain connected outside the home or office. Qwest WiFi could act as a retention tool to keep broadband customers who feel that free WiFi access when they travel away from home is a significant benefit.

• Market Impact: Moderate to high on cable rivals of Qwest because no cable modem service inside Qwest’s service territory today offers free WiFi hotspots in popular locales like Starbucks and McDonald’s. The exception would be a non-competing cable company to Qwest, Cablevision, recently in the last year deploying a WiFi network inside its New York metro footprint. Qwest customers also have the benefit of receiving free WiFi access in many locations outside Qwest’s territory that could be a plus for avid travelers.

Recommended Competitor Actions

• Cable companies in Qwest’s territories need to look at developing a competitive response to Qwest offering its High-Speed Internet customers free remote WiFi access in 17,000 U.S. locations. They already have a similar threat in AT&T’s DSL and U-verse territories through the very same AT&T WiFi network.

• Verizon should address the growing speculation and reports it is soon also deploying a free WiFi hotspot network for its DSL and FiOS customers. Currently, Verizon offers usage-based EVDO mobile data plans for a laptop at average download speeds of 600 kbps to 1.4 Mbps and at average upload speeds of 500 kbps to 800 kbps. Yet the mobile wireless monthly prices are high starting at $39.99 to download 50 Mbps of data and $59.99 to download 5 Gbps.

Recommended End User / Customer Actions

• Qwest broadband customers should note that the new Qwest WiFi service might not be available in their local neighborhood -- especially if they live in a rural area. Prospective Qwest WiFi users should check the Qwest website to pinpoint free WiFi hotspots near them. In addition, the service could prove useful on extended trips out of state since it is a nationwide offering available at many airports and hotels.

• Consumers in Qwest's local service territory should have the carrier on their short list for all of their communications needs and shop Qwest's services against those of their local cable provider and other carriers. The Qwest Choice discount bundles combine local calling with unlimited long-distance voice, DSL, wireless, and DIRECTV satellite TV on a single bill.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

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