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

Familiar tale from across the pond as well

[Rogerborg]

Just as an FYI, this mirrors the situation in the UK. The incumbent monopoly, British Telecom (or just "BT" as they now style themselves) has been stalling and foot dragging on DSL as well.

• They claimed they'd roll out DSL fast, then spent years testing to make sure they'd "get it right first time.". They then delayed further to switch to a screwed up USB (rather than ethernet) system that nobody wanted, and kicked off with massive installation delays, broken promises and network snafus. If this was them getting it right, god knows what they'd have done if they'd rushed it.
• They went with a weedy 512/256Kbit/s ADSL system with a maximum 2.5km range from the exchange, meaning only urban customers can get DSL. They're now pushing this to 3.5km (woo hoo), but still have no concrete plans to bring affordable broadband to low density suburban or rural areas, other than a prohibitively expensive satellite solution.
• When they were finally forced to open their exchanges, they claimed that there was no space. They then offered local loops in the 50 or so least profitable exchanges, while selling off exchange space in the others as luxury flats!
• Despite the market and local loop being opened, try actually getting DSL from anyone other than BT. They've made the process of taking a local loop so expensive and awkward that nobody can compete that way. They rent DSL loops wholesale at £35~=$53 a month plus a connection fee, while retailing at £40~=$60 a month, which precluding any competition from resellers. Their biggest DSL reseller customer, Freeserve, has recently had to hike their retail price from £40 to £50~=$75 just to break even. So, you can pay £40 to BT or £50 to Freeserve for exactly the same service. Tough choice, huh?

It sounds like the same sorry mess you have with the Bells. On the bright side, the UK's two main cableco's have just teamed up to market broadband cable together, so at least there's some competition, even if it's not in the DSL space.

Re:Time for Bush admin to step up to the plate

[scoove]

The government should have nothing to do with bailing out companies that invested too much in tech with the wrong ideas in mind.

That's nice, in theory. However, the government created this mess in the first place.

Consider the state of the RBOCs in the first place - a monopoly granted a hundred years ago had at least a bit of time to get entrenched. Breaking up AT&T only segmented the monopoly into smaller (but also less dormant) entities.

The Internet nearly came under the same monopolistic jurisdiction back in the early 90s (namely ANS and the "Baby Bell NAP" architecture - thanks to UUNET, PSI and Sprint for killing this animal). Again, government (then (D) Sen. Al Gore and the NSFNET folks) promoted the vision of a Bell-centric model.

Now we've got plenty of (D) Senators and Representatives, like the Swamp Thing from Bellsouth (evidently a foreign nation within national bounderies) and a few (R) types on the paid Bell lobby working hard to fix what Gore couldn't complete. Bell dominance of the Internet last mile is a key component.

Per a few other points:

What's the long distance market have to do with an ISP like Covad?

Well, for one, Covads and other "OSI 2+ last mile" entities can help slaughter the long distance toll model, at least domestically. Don't forget that the Bells are still hungry for the long distance market - mostly since their upper management is still about 10 years behind (hey, they used to be 40 years behind - that's progress!).

government...bailing out companies that invested too much in tech with the wrong ideas in mind

What bailing out? Much of the problem comes from exclusive local partnerships with the Bells and cable providers, limiting right-of-ways to a single entity in exchange for a lucritive franchise agreement (read "bribe to the government"). Bailing out DSL providers - how? Through chapter 11? By demanding a community resource be opened to competition (which calls that franchise agreement network what it should: public property).

Seriously, how would you feel if I entered into an agreement with your community to be the exclusive grocery store provider, in exchange for giving 3% of the profits to the city government? What a deal for me: no competition, high margins, and the government gets to beef up its budgets (building bigger political empires!). I'll even throw in a donation to your re-election campaign too, and there's no quid pro quo (wink!). What this regulation proposes is recognizing the grocery store for what it is: community granted property that belongs to the community. It's a lousy way to fix the problem created by an unethical prohibition of competition, but there probably isn't a pretty way to get out of this Bell mess.

bail out monsters like Chrysler or Continental

And how many hundreds of thousands of dot-com jobs have been lost, in many cases thanks to the unethical action of the Bells?

rework federal law simply because yet another dot-com servicer went belly-up

Yea, you probably wouldn't want to change the pollution laws either even though all the fish in the ocean were floating belly up. Really, the only laws that need "changing" are the ones protecting bloated monopolies from complying with the law mandating they open up their community-granted networks.

Unfortunately, as long as these Bell congresshacks keep getting re-elected, we can expect the government to keep rigging the system in the Bell's favor.

*scoove*