Qwest Communications (Q) has released its capital expenditure (CapEx) guidance for 2010. The local and long-distance telephone service provider expects its CapEX to remain at par with the estimated 2009 level of $1.7 billion.   
Qwest continues to invest in building necessary infrastructure to boost network capacity and availability. Historically, the company has allocated a major portion of the overall CapEx in deploying additional fiber-to-the-node (“FTTN”) capacity to increase the performance of its broadband network. Moving forward, Qwest plans to increase spending on deployment of fiber optic cable to support wireless services.
The company recently introduced a new fiber-based Ethernet backhaul wholesale service for wireless operators. The service (called Qwest Mobile Ethernet Backhaul) leverages Qwest’s FTTN network to extend fiber connections to cellular sites. This will enable wireless operators to upgrade their existing copper-based wireless backhaul networks to faster fiber optic connections, which will expand capacity to meet the requirements for bandwidth-intensive multimedia devices and applications.
The wireless backhaul upgrade will also facilitate smooth transition to fourth-generation (4G) wireless networking. Leading US wireless carriers are aggressively upgrading their backhaul networks to support increasing data traffic as they prepare to launch 4G services in 2010. Qwest is well positioned to address this opportunity with its new wireless backhaul solution.
Leveraging the technology of Alcatel-Lucent (ALU), Qwest is also upgrading its fiber-based long-haul network infrastructure to offer top Internet speed of 100 gigabits per second (Gbps), a significant increase from the current peak speeds of 40Gbps. The company aims to be the first carrier to commercially offer this network advancement in the US.
Qwest remains more challenged than the other US regional telephone companies such as AT&T (T) and Verizon (VZ) due to lack of its own wireless and video services. The company’s traditional local phone operation remains under pressure due to the growing presence of cable TV and other competitive services. Expansion of fiber-based network capabilities coupled with the wireless backhaul opportunity is expected to drive the company’s growth prospects moving forward.
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