Qwest/CenturyTel merger: do you, Triceratops, take this Brontosaurus to be your lawfully wedded wife?

It was announced yesterday that Louisiana-based CenturyTel is buying Qwest, marking the second major takeover in ten years for the Denver telco. I have some history with the US West iteration of the company, having worked there from 1997 until the ill-fated Qwest “merger” in Summer 2000.

I was fortunate enough to be a part of USW’s PR group, which remains the best large corporate communication division I have ever seen (and in that role I got to do some interesting, groundbreaking work). I’ve continued to watch the company fairly closely through the years, especially as the unfortunate Nacchio affair unfolded (and am proud of the repeated stompings we here at S&R have administered to that amoral cur along the way). I have hoped for the best over at 1801 California for a number of reasons. I have friends (and at least one student) there still, and also we’re talking about a company that occupies an important place in the local economy.

So yesterday’s announcement finds me a tad ambivalent. On paper it seems like a move that will provide some stability for customers in the 14-state region. On the other, it seems unlikely that one or two folks I know are going to survive the inevitable downsizing. Losing a major corporate headquarters will cost the region some money and jobs, for sure, and perhaps a measure of prestige (if, in fact, Joe Nacchio didn’t destroy it all). And so on – for more on the business details, have a look at the Denver Business Journal’s coverage, linked above.

The main problem I have with the deal is ultimately the same problem I’ve had with Qwest for most of a decade now. Let’s roll back, briefly, to 1999 and 2000. US West, under CEO Solomon Trujillo (a man who has gone on to encounter difficulties in other places around the globe since then) was an odd, almost bizarre admixture of two things that we were told were mutually exclusive. On the one hand it was an old-economy, slow-moving, entrenched dinosaur of a regulated legacy telecom. POTS – “plain old telephone service” – encumbered with (gasp) a unionized employee base and no interest in joining the rest of the world in 20th Century, let alone the 21st. Some of this was true – it depended on which business unit you happened to be dealing with at the time.

On the other hand, US West was among the most innovative companies in the entire information / communication sector. For instance, it wasn’t a small, entrepreneurial start-up that first went to market with DSL, it was US West. At the time of the Qwest merger the company was planning to roll out an advanced VDSL offering in Phoenix (with other markets to follow), and it was also building a solid mobile service around some creative features that let you integrate your cell and landline services in ways that nobody else was even thinking about yet. Some days Trujillo was a bonehead (like when he decided to spin off the company’s cable unit) and other days he was a fecking visionary.

Once the merger happened and Nacchio got his hands on the operation, though, things went rapidly to hell. His criminal behavior (and that of his henchmen) notwithstanding, the brilliant young vibrant innovative next-generation vital entrepreneurial nothing-like-that-evil-old-US-West customer-focused company-of-the-future never quite materialized. While I’ve never been entirely clear on who clocked whom in what room with the candlestick, the mobile focus disappeared. Qwest’s mobile play was quickly reduced to rebranding and reselling Sprint Wireless, and more recently they’ve dropped all branding pretense – today, if you get mobile through Qwest, you’re getting Verizon, period. If you’d like to bundle your television service into the package, they’ll send over a nice technician from Direct TV. Hell, Qwest might as well be Radio Shack.

This, unfortunately, was all happening at a time when more and more people were going mobile-only. I’m one of those people (I abandoned the landline in 2007) and if you’re not one, as well, odds are you know people who are. Which meant that someone had settled on a strategery that focused heavily on…the one thing that fewer and fewer customers wanted?

This oversimplifies a bit, of course – truth is that Qwest has an excellent business data unit (they may even be number one in the country on that front). And business services are extremely important for a national telco.

But in today’s telecom landscape, if you want to effectively compete in the consumer marketplace you need to be able to fulfill the following:

  • Mobile
  • TV (digital, HD, cable, satellite, whatever)
  • Internet
  • Landline
  • Integration (that is, you need to be able to bundle these services in ways that are cost-effective for the consumer and operationally efficient for yourself)

Which brings me back around to CenturyTel + Qwest. I’ve been yarping for years that Q needed to get in bed with a mobile provider – either buy a national mobile footprint, merge with one, sell to one, something. The most obvious dance partners seemed to be Sprint and T Mobile, although I realize that neither of those options would be without hurdles. And for all I know, Qwest execs may have pursued those possibilities and couldn’t work it out. No idea.

But I’m looking at the newly merged company and seeing the same gaping void where the 21st Century ought to be. A quick glance of the CenturyLink Web site (that’s the CenturyTel consumer brand) suggests that they’re even further behind on the mobile question that Qwest – heck, they’re not even pretending. It’s as though mobile doesn’t exist.

If my fears are correct, the headline at the Denver Business Journal should have read something like “Dinosaurs marry, ignore meteor hurtling toward Earth.” I’d love to be wrong, but this looks like a business predicated on a rapidly eroding market, and I’m not sure I see much reason for long-term optimism.

4 replies »

  1. This appears to be a “doh!” moment for those on the outside looking in. Usually, the race to the bottom is a tie among those who don’t grasp the notion of “giving consumers what they want and need.”

  2. sam,

    very nice piece. i also appreciate dr. denny’s recent comments to me by Skype (no, i’m not a shill) eventually leading me to your commentaries. this one in particular is insightful (base word …incite? not really, but it should be), and informed by your very unique background that we should pay attention to.

    It’s always been cool knowing you and where you come from. it allows me a sense of trust I cannot extend to many other commentators.

    greg stene
    there’s always a better idea
    assistant professor, advertising
    northern arizona university