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

Time for Bush admin to step up to the plate

[revscat]

Well, everyone says that the Pres. Bush administration is married to big money interests. Now would be a perfect time to prove all those people wrong. If Pres. Bush can get the FCC and/or Congress to rework the Telecommunications Act of 1996 to reflect the current situation of the telecom market (namely that long distance is no longer an attractive market), he could prove himself to be an astute leader and someone who is truly dedicated to free market principles, not someone who is dedicated to campaign contributors.

I doubt it will happen, but I'm hopeful.

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*

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

[Cramer]

Face facts, some things simply are monopolies -- the "natural monopoly". We call them utilities and regulate them. Grocery stores don't present a conciderable infrastructure like a water company or power company.

How would you like having nine (9) local water companies competing for business? Each one will have to bury their own water mains and distribution lines. In the process, they will certainly end up screwing things up -- cutting people's water lines, cutting through distribution lines, etc.

How would you suggest we deal with this mess? Have the government install and manage the utilities infrastructure? Oh, that'd be funny.

The phone companies are smart.

[Perianwyr Stormcrow]

The fines for their anti-competitive practices appear to be far less than what they stand to gain in the future if they destroy all competition...

One would almost think that things were engineered this way from the beginning.

Everyone who I've talked to who has gotten DSL service from anyone other than the phone company has related a tale of delays and ball-dropping by the phone company... which are believable, since they are the ones with the incentive to do so! If Covad provides bad service, it will drive them out of the market. If the phone company provides bad service... well, isn't that what phone companies are known for?

All in all, it makes me wonder if the last mile shouldn't be a truly public utility, with all companies at an equal footing outside of it.

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

Broadband USA

[qwerty123]

I think this just goes to show that the internet industry is very very dependent on government support. Without government intervention the internet would not have been created; furthermore, time and time again, government intevention was crucial to make sure the internet ran/runs smoothly. and there needs to be large over seeing force (and I'm not talking Mr. Smith's hand). Broadband is no different. The Internet is like a highway. Business and people use it, but ultimately the government must over see it.

Re:Broadband USA

[dada21]

This is totally incorrect. What we need is FULL government deregulation of the phone industry.

At this point in time, the government STILL regulates the industry. There are still price caps, still difficulties in setting up an infrastructure.

If the gov't keeps price caps up, it will be near impossible for ANY company to set up infrastructure. Because of this, the costs for companies WITH current infrastructure are low (the bells) but for others are high (the competitors).

The bells lobbied VERY hard (check www.opensecrets.org and see your local bell chairpeople) to make sure it stays this way. People believe that the gov't is staying out of the phone business, but they are 100% not.

If the gov't had stayed out in the first place, there would never have been this kind of trouble. What really troubles me though is that everyone believes having a phone or DSL is a right, not a priviledge. You get what you pay for.

I wish they never gave away free installs, free hardware, etc etc. 768k of ADSL should have cost, no matter what, $300 to install, $200 for hardware, and $100-$150 a month. Then we'd have people STILL happy to have the speed and good service. But free hardware, free install, $50 a month? Where's the profit so they can branch out?

Regulation is not the answer

[iamklerck]

While there are indeed many problems in the US broadband market, regulation simply is not the answer. Government regulation and subsidizing of telephone is what got us into this mess in the first place. Government is the same reason we haven't seen any kind of advance in non-portable telephone technology almost since its invention.

The real solution to the problem is a completely open and free market. Let the consumers and the market dictate the answer. Whatever you do, though, keep the government out of it.

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.

I don't get how there's such a huge problem.

[Telek]

Seriously not trolling here, but up in the Great White North I have had a cable connection at home now for > 2 years with very few problems at all, took 2 days to get it set up and I regularily see 250k download speeds. Actually there's this one site that has this insane connection that can upload to me at 350kb/s. I have also had DSL, had it set up in under 3 days without issue, and don't have any problems. And all this for $50/month (that's $33USD) with no contract, quit anytime, and your first 2 months free! And the 3rd-6th months are at $40CAD ($27USD) because we don't get charged for the cable modem until after that. If you're a student, you get an additional $5CAD off the price. (Plus there is $0 install fees, and you get a free 3com network card)

So why is it then that we're being charged much less than the US, and yet the US is falling left/right/center when it comes to providers?

I could see maybe it being because it's our telco and our cable providers, but this has been going on for years, and they do make money off of it. Plus it's not only those. You can get P2P satellite as well for very reasonable prices and exceptionally high transfer rates.

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.