Qwest Wireless to shutter in 60 days


The Denver, Colo. telecom, Qwest, announced today that it would stop providing wireless services in October and would offer its customer an option of switching over to Verizon Wireless. Customers would pay no termination fees in either case. Qwest's move comes as no surprise. Qwest (Q) and other carriers that are reselling wireless services, have struggled mightily to gain a critical mass of customers. Qwest, which was founded in 1996 by billionaire Philip Anschutz, operates its wireless business as a Mobile Virtual Network Operator (or MVNO). This means Qwest did not actually have its own network. Rather, the operator leased space on Verizon's (VZ) network and used Verizon's services. (Correction: Qwest leased space on Sprint' Nextel's (S) network, not Verizon's).

The idea was that Qwest could then sell a bundle of services including wireless, long distance, and residential, to customers. Bundles are more lucrative for phone and cable companies because the marginal cost of selling an additional service to an existing customer is very small. But bundling has not gained as much traction as the telcos and cablecos had hoped, in part due to the strength of national wireless brands like Verizon and AT&T (T). Verizon and AT&T have heavy retail presences that are expensive to maintain but essential for building foot traffic. Qwest had lagged in this department.