Qwest, Comcast duel over DSL ads; cable operator won't run them
Copyright 2003 Gannett Company, Inc.
April 29, 2003, Tuesday, FIRST EDITION
Qwest Communications fired the first shot Monday in a potentially important fight over Comcast's refusal to air its DSL ads. DSL is the top rival to cable's lucrative high-speed Internet offering.
"By denying us access, you are blocking a customer's ability to learn about all the choices in the marketplace and to make an informed decision," Qwest CEO Dick Notebaert wrote to Comcast CEO Brian Roberts in a letter obtained by USA TODAY. "It smacks of censorship."
Notebaert didn't specify DSL; he mentions only "services." But he cites what Qwest says is a Jan. 28 memo from Comcast stating it will not accept "DSL only" ads. Ads for service bundles, the memo says, must limit references to DSL to 20% of the ad. Also, ads can't demean cable services or mention price.
Seizing on Notebaert's vague wording, Comcast says it "currently accepts advertising for Qwest services including products that are competitive with Comcast."
But that could mean local phone service, which Comcast offers in some markets.
As for the memo Notebaert cites, Comcast said, "It would be irresponsible to react to (it) when we don't know to whom it was sent or when it was sent."
Cable operators have long refused to air DSL ads, arguing that the First Amendment protects that right — and that phone companies can still reach potential customers via local TV, radio and billboards.
But critics say that antitrust considerations may now come into play as cable operators consolidate. Comcast became No. 1 last year when it acquired AT&T's cable operation, giving it more than 21 million subscribers.
"There's no First Amendment protection to use a monopoly to violate the antitrust laws," says Media Access Project CEO Andrew Jay Schwartzman.
About 67% of Qwest's customers live in areas served by Comcast, according to Credit Suisse First Boston. Qwest is the dominant local phone company in 14 Western and Midwestern states.
Qwest is counting on DSL growth to counter a decline in local phone lines because of competition.
While Qwest was considered a DSL pioneer in the late 1990s, it had just 535,000 DSL customers at year's end — far fewer than its peers.
"Qwest is really playing catch-up to cable," says Mark Kersey, a broadband analyst for Current Analysis. "They need every outlet and vehicle for advertising."