Qwest Stimulus Thoughts: Closer to $500M Than Reported $3B
Monday, 30 March 2009 11:48
sargeant_qwest_open_mouth
Qwest's Sarjeant
Larry Sarjeant told the Columbia-Georgetown stimulus conference that it would cost $3B to offer 7 megabits to 2/3rds of the homes they don’t serve today, about 200,000 families. Reporters, myself included, inferred from that Qwest intended to request $3B from stimulus funds, about $1,500 per home passed. Bob Crandall pointed out that was $4,000 per home served or more at likely take rates.

My calculation, working with data from the FCC, the states, and wall street analyst Craig Moffet, is that a strong majority that are not served by Qwest in fact can get multi-megabit service from cablecos. That’s possibly 80% of the homes in the $3B figure referenced in his speech. If so (the numbers are soft) something closer to $700m, not $3B, would cover the completely unserved among those that Qwest seemed to be discussing, even at Qwest’s estimate of $1,500/home. At an 80% subsidy rate, that would be about $500M.

Larry was misinterpreted as saying that 14% were unserved with broadband ; actually, Larry’s comments were meant to imply that 14% are unserved by Qwest, although others may - I believe do - offer those homes broadband. Tom McMahon of Qwest reiterated to me that Qwest believes the stimulus money should be spent first for people without service.

Which is why the AT&T and Verizon advocates in California are trying to yank the money away from “unserved” and make it available for other programs they support. The 4-7% unserved (best guess) are scattered and overwhelmingly uninteresting to most carriers, even with large government subsidies. That has to be firmly resisted by Strickling and Adelstein if they want to honor the President’s pledge to connect the unserved.