Covad Files For Bankruptcy Protection

xnuandax writes: "Well, it's finally happened, DSL provider Covad Communications has buckled under its post-tech-bubble debt load and filed for Chapter 11 (See this c|net article). While this doesn't mean that Covad is turning off the lights on its 330,000+ customers, things are not looking so rosy for the last competitive (non-Bell) DSL provider left standing. Seems that the USA is setting herself up for a broadband cartel (of Baby Bells) that's going to make OPEC look like a poster child of free market competition." The announcement is from earlier this week, but they've been acting bankrupt for a while. Just like with Loki though, this doesn't mean they're out of business, at least not yet.

Comments

other dsl providers

[neurocide]

i'm on ATG (www.callatg.com) and it's working great. any speed i can get for $49/mo line and isp cost.

they also offer local/long distance telephone service here, and its cheaper than qworst. guess someone needs to realize that covad wasn't the last non-bell provider left.

dsl sux0rs.

[jon_c]

Nov 1: Move to Austin from Seattle.

Nov 2: Call speakeasy to request DSL

Nov 3: Get off the phone with speakeasy.

Nov 15: Speakeasy puts in order with southwestern bell

Dec 25: Southwestern bell hooks up the loop, but does it wrong.

Jan 15: Southwestern bell hooks up loop correctly.

Jan 25: some dude comes to my house to install stuff, but can't get it working becaues my house was built around the 1850's or some such crap. Tells me i -might- be able to get DSL but it requires sacraficeing a chicken around the next full moon, and thats not for another 15 days!!

Jan 26: I call about Road Runner cable, after ONE ring a person answers the phone and tells me I can have a STUPID FAST connect TOMMOROW.

Jan 27t: I get my cable modem with NO PROBLEMS, and bitchin 250k sec d/l speeds for 50 bucks a month. w00t!

-Jon

Re:dsl sux0rs.

[libre lover]

I have Road Runner in San Antonio and I can attest to their service.

One time I called to complain about dropped packets. The person who answered the phone asked me for my IP address, pinged me for a few minutes, then told me that my machine was dropping packets, not my cable modem. Turns out this was a known issue with certain 3c905 cards in Linux; I replaced it with an eepro which fixed the problem.

Also, these guys will not hesitate to replace bad cable, even if it's in your yard or home to fix a service issue. They have handheld spectrum analyzers and can haul out a TDR if necessary, and they know how to use them. I can't even imagine this level of service from the phone company.

BTW, it's 250K, not 250k :)

Re:Broadband USA

[Anonymous Coward]

Amen Brother Beavis, AMEN!
The main reason you are seeing all these little DLECs go under is they are trying to offer a service that is clearly work hundreds of dollars a month for free... So they are operating at a loss with no other means of funding (other than selling stock/VC Money). And they are expected to go up against Bell... You know, the company That Never Really Broke Up? ;)

If I were still in the ISP business, MY DSL service would be in about the price range you suggest, and it would never go down, or have bandwdith contention issues...

The fundamental rules of the game are set by those that own the copper. If you don't change those rules to level the playing field, you will LOOSE. The funny thing about all the govermental regs involved in 'opening up' access to the copper so DLEC can screw themselves are written by industry experts... ex Bell-Heads!!! Things that should only take 2 steps take 20 or 30, so that it can be demonstrated to the Government that the owners of the copper don't have an unfair advantage... Which creates so much paperwork, and so many delays, that is exactly what the incumbent gets! an unfair advantage...

Go play in your Sand Box...

[QwkHyenA]

If you want to live with a crappy 'Terms of Service' that states you won't run servers at your house, install someone else's software that could/couldn't be spying on you, and limits your upload speeds to the equivalent of a 56k dialup modem, you go right ahead buddy!

That's the kind of service I would recommend for my parents.

Myself, I'd get the Covad SDSL service.

No limitations on what I can/can't do.

Can run sweet unix based servers at home

Will have sweet upload capability that won't hinder my websites

Don't have to worry with dynamic IPs or installing someone elses software on my systems

NO BLOCKED PORTS

Oh yeah, BTW, Could you move over? My Mommy wants to play in your 'Safe' Sand box too.

Ewww...What's that cat doing in there??

This is a good thing

[Anonymous Coward]

This is not an ordinary chapter 11 bankruptcy proceeding, it's a negotiated deal. The chapter 11 is just a formality required by law. Under the terms of the deal, covad sheds 1.1 billion in debt by paying off bondholders at the rate of 19 cents on the dollar.

Covad ends up with 250 million in cash and no debt. Covad now has an excellent chance of surviving. Since SBC, the parent company of Ameritech (a baby bell company) owns aprox 30 percent of covad, there is an excellent chance SBC may buy covad outright.

Re:This is a good thing

[mellonhead]

I'm skeptical that they'll survive. From an earlier c/net article:

In September, SBC Communications agreed to invest $150 million for a 6 percent stake in Covad. On the surface, SBC's move looked like a vote of confidence.

But there may have been other motives. Analysts said SBC's investment in Covad had more to do with creating the appearance of competition than holding out hope for a Covad recovery.

"The (Bells) are a lot smarter than people think," one analyst said. "It's a travesty and a tragedy in some ways. By keeping a handful of competitors alive, they can show that they're leaving the market open to competition while maintaining higher prices."

From the current article:

Covad expects to pay a total of $283.3 million to bondholders and have $250 million in cash remaining that will enable it to keep running until the beginning of next year. The company estimates it will then need $200 million more in financing to reach a positive cash flow by the third quarter of 2003.

I also wonder about how they treat customers when they have spokespeople making statements like this:

Some customers who used Covad's service, directly or indirectly, said the company was slow to react to frequent service outages, consistently blamed local phone companies for glitches, and generally delivered poor service.

Covad spokeswoman Martha Sessums dismissed the complaints from current and former customers, saying "there will always be crybaby boobies who are unhappy with any company.

"I'd be happy to provide you with many, many customers who are extremely happy with our service," she said.

Re:Why DSL ? Surely there must be something better

[Mr. Slippery]

The engineer who installed my DSL connection claimed there is a better technology in the pipeline called the 'ATM - Asynchronous Transfer Mode'

ATM is hardly "in the pipeline" - it's been deployed for years.

If fact, some DSL networks are based on ATM - ATM is a circuit switching technology used to concentrate a bunch of DSL lines into one upstream link.

But, as far as I can figure out, ATM isn't a "last-mile" technology. The advantage of DSL and cable modems is that they use existing last-mile infrastructure to reach you.

But then, maybe that's what was being referred to, a way to use POTS lines to being ATM to your desktop. Anyone know more?

Re:Why DSL ? Surely there must be something better

[ethaz]

Flabdabb Hubbard wrote:

The engineer who installed my DSL connection claimed there is a better technology in the pipeline called the 'ATM - Asynchronous Transfer Mode'. This is faster than DSL because it is a synchrounous system based on 53 byte cell switching. He explained that speeds of upto OC3 (200TB/sec) and above are possible with ATM, and it is even faster than the current fastest network - Synchronous Digital Highway (SDH).

ATM is a common technology for DSL backend networks. However, ATM overhead at speeds of DS-3 or greater gets to be quite a problem. In fact, it is referred to as the "cell tax". Major ISPs who run big national backbones (OC-48/OC-192) use POSIP (Packet over Sonet IP).

IF you are buying large pipes (DS3 or larger), make sure you are getting POSIP not ATM.

DSL is not a cost effective technology

[hillct]

DSL is not a cost effective technology. It was antiquated the day the first installation was performed, and the hardware requirements together with the service and support costs make it an unatractive business proposition. The only reason the phone companies are in it is because federal regulations require that they provide broadband where possible. I'm certain that if DSL technology hadn't been developed, we'd have fiber to our houses right now.

DSL was developed in the days when it was thought that it would be impossible to lay fiber throughout the country in any short period of time. Ir REQUIRES copper between the CO and the customer, which means that anyone living in a development between 5 and 10 years old who has a couple T1s terminated at an older DSLaM outside their community is out of luck and will have to settle for the nightmare that is Cable Modem Service. This severely limits that market for DSL, which makes it all the more difficult to amortize the exhorbinent equipment costs. These issues combine to deter telcos from rapidly deploying DSL. Rather they choose to deploy it at the slowest rate possible under federal legulations, because once it is deployed, they will have incurred sunk costs which won't be recoverable for at least a decade, which means all those clamoring for fiber to their houses will have to wait until the telcos decide they've recovered their investment in DSL. All in all, it's vary disappointing.

--CTH

Re:What's left for DSL + static IP's?

[neafevoc]

Try Qwest. A sales rep from there kept bugging me about Covad was going down (I'm with Covad on their business DSL... SDSL to be exact) and I asked Qwest about their policy with static IPs.

For a one time fee of 50 bucks, I can get a block of five. (That's the same deal I made with Covad.) Now that Covad is defiantly going bunkrupt, I better call Qwest tomorrow :)

BTW... that wasn't the only reason I'm moving over to Qwest... Covad doesn't offer 512/512 and dropped me from 768/768 down to 384/384 because they say that Pacbell re-routed the phonelines... now I'm even further from the CO :(