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Qwest Communications International and Microsoft have inked a five-year strategic alliance that offers Qwests broadband customers content and gives Microsoft an outlet to once again offer high-speed Internet access.
Qwest has been expanding the content offerings of its service, Qwest.net, which currently serves 500,000 customers in 14 states and is also building out in 25 cities outside its territory. Qwest plans to stop developing content on that service, make The Microsoft network its preferred Internet service provider and return to its core competency as a telecommunications provider.
“At the end of the day, were not a content company and were not a software company . . . to compete with the likes of MSN is kind of crazy,” Qwest Chairman and CEO Joseph Nacchio said on a conference call.
Starting in early summer, Qwest customers who either dial-up or access the Internet through DSL will have the option of purchasing MSN Internet Access, which features MSN content and the MSN Explorer software. Neither the price of the service nor financial terms of the deal were disclosed.
Microsoft does not currently offer high-speed Internet access. The DSL service that it launched in September through NorthPoint Communications shut down in March just before the wholesaler shuttered its network. Since then, high-speed customers have been diverted to dial-up access, but the new deal means those who live in Qwests 14-state area will be able to regain DSL service.
Microsoft CEO Steve Ballmer said no plans exist for an MSN high-speed cable offering. “The cable infrastructure isnt available to us like DSL,” Ballmer said on a conference call.
As part of the deal with Microsoft, Qwest will promote its services on MSN Internet sites and market the MSN Internet Access through its sales channel.
Microsoft will purchase broadband capacity, DSL, dial ports, and billing and collections services from Qwest. Nacchio estimated the sales could total $1.3 billion to $1.5 billion in revenue for Qwest over the term of the deal.