April 26, 2001 8:50 AM PDT
Microsoft, Qwest ink Net access pact
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Under a five-year pact, Microsoft and Qwest will bring together the software maker's MSN Internet access, content and services with the phone giant's high-speed Internet network and communications services for consumers in Qwest's 14-state region.
Qwest plans to market the MSN service to new and existing customers. In turn, MSN said it will purchase from Qwest high-speed network capacity, digital subscriber lines, dial ports and billing services to support the delivery of MSN content and services to joint customers.
Under the terms of the agreement, Qwest said it will spend about $100 million on marketing and advertising to promote the new offering. The two companies expect to generate about $1.5 billion in revenue from the five-year deal.
Like many communications companies, Qwest has been pursuing ways to drive growth in its digital subscriber line business. DSL offers a high-speed link to the Net over ordinary phone lines.
Although DSL enjoyed explosive growth in recent years, the economy's downturn has prompted some consumers to shy away from the higher-cost service for the time being. That's meant bad news for some companies with a heavy reliance on the technology, such as Covad Communications and Rhythms NetConnections, both of which face delisting from the Nasdaq.
Denver-based Qwest, on the other hand, has projected growth in its DSL business. On Tuesday, the company hit first-quarter earnings targets and said that Internet and data services, including DSL, grew 44 percent, totaling 25 percent of the company's revenue.
Beginning this summer, Qwest and Microsoft said they will provide their new joint DSL offering to Qwest's existing Net subscribers and start pitching it to new customers. Qwest plans to market MSN Internet Access alone, or in packages with its products and services. MSN Internet Access includes content and services from Microsoft's MSN portal site and from MSN Explorer, which combines the company's various Internet products and services such as messaging and music software.
The agreement also calls for Qwest to promote its services on several MSN Web sites as well as on Microsoft's small-business portal bCentral.
Qwest and Redmond, Wash.-based Microsoft have formed ties in the past. In late 1998, they teamed up to provide business customers with services including Web hosting, software management and streaming media.
