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Covad Set To Emerge From Bankruptcy

Posted by ryuzaki0 on from the yahoo-my-dsl-will-stay dept.

powerlord writes "All of us still rooting for Covad can let out that deep breath we've been holding. According to an article on the Seatle IP Wire Covad is set to emerge from bankrupcy. They claim they've managed to shed most of their debts and are concentrating on 50 major metropolitan areas right now. They expect 40 of the markets to be cash positive by year end, with the entire company cash positive by mid 2003. Their stock rose $0.75 to $1.39."

8 of 94 comments (clear)

  1. This is great news by bconway · · Score: 4, Informative

    As a user of SpeakEasy.net, one of the few good DSL providers left who don't use the broken-by-design PPPoE protocol, I'm definitely relieved to hear that Covad will be sticking around for a while. SpeakEasy assured all of their customers that in the event of Covad going under they would provide service by some other means, though that's always questionable at best. Great job, guys!

    --
    Interested in open source engine management for your Subaru?
    1. Re:This is great news by nicedream · · Score: 2, Informative

      I am very satisfied with my DirecTV DSL (formerly Telocity).

      I get a static IP and I am allowed to run anything I want, no firewalls, no port blocking.

      $50/month. I couldn't be happier (especially since I live 2 blocks from the nearest DSL switch).

    2. Re:This is great news by rekoil · · Score: 2, Informative
      Depending on the LEC involved, this is not as easy as it seems, and you really have to understand exactly what Covad does to understand this.

      Covad is NOT and ISP, they do the dirty work of connecting ISPs to DSL end users. They do this by colocating their DSLAM hardware in the LECs' central offices, which the LECs are required by law to allow them to do at prices typically set by the state PUC. Covad then provisions residential lines from the LEC, having them terminate into their DSLAM instead of (or in addition to, via a signal splitter) the LEC's own POTS switch. From there, Covad connects the DSLAMs into their switched ATM network, which Covad's client ISPs also connect circuits into. Covad then routes the data streams from the ISP to the end user and back.

      Some LECs, most notably SBC, have a similar service, although not offered in all areas. In this case, the ISP can, and does, order connectivity to the end user directly from the LEC. However, Verizon doesn't do this, so without Covad (or Northpoint or Rhythms, pre-crash), the ISP would be forced to colocate DSLAM hardware and provision trunk circuits into every LEC central office in the area they wish to service. This, as you might expect, is extremely expensive, and few ISPs can achieve the per-DSLAM customer density to make it remotely profitable, epecially low-margin ADSL customers.

      In the Washington DC area, only Network Access Solutions is taking this route, to the best of my knowledge. They only offer business-class SDSL service, which is premium priced, and probably the only was NAS can hope to recover the cost of putting a DSLAM in every CO in the area.

  2. Re:Was debt the problem? by Error629 · · Score: 3, Informative

    I work with Covad, and a big part of it is is their lineshare ADSL Customer base, SDSL and IDSL through them are fine. They lose customers who have ADSL on lineshare, because if the phone line starts having problems, the ILEC's rarely fix it, since they aren't providing the DSL. Even if the customer has had it for a year through Covad, they've lost a customer. So yeah, I guess that amounts to your customer base getting screwed by the LEC's. :/

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    _________
    The world doesn't just disappear when you close your eyes, does it?
  3. Re:80% isn't enough? by arget · · Score: 2, Informative

    *ding, ding, ding* Drop that duck. You said the phrase of the day: "interesting accounting"

    While the markets may be cash flow positive, the administration overhead is the big sucking sound that's draining off that cash. The company hq, the salaries, etc. In essence, everything but the colocated equipment and a techie or two.

    With accounting like that, why only 40/50?

  4. this post courtesy covad, may they live long and.. by neilv · · Score: 4, Informative

    Well, I for one am impressed both with covad, and with speakeasy. I ordered DSL 3 weeks ago, and here it is (the service man left 10 minutes ago)! No hassles or problems, delivery on time, I'm very pleased.

    My understanding of Covad's strategy, which seems good, is this: they buy only business lines from Ameritech, making them a priority customer, and getting correspondingly great response from Ameritech. But, because of the magic of bulk buying, Speakeasy ultimately is providing me with residential service and pricing. Essentially, buying a premium service at a discount, then recategorizing and re-pricing for the home market. It's working well enough that Ameritech bailed out Covad by making them responsible (pre-buying) for Ameritech's business DSL lines. I mean Verizon. OR is it SBC? Anyway, hooray for Covad.

    Here's hoping they stay around!

    neil

  5. Other notable articles by ackthpt · · Score: 2, Informative
    XO agrees to takeover, Nov. 30th. This has been my ISP for 5 years and I'm probably bolting soon.

    Covad getting some cash back in Nov. 14th

    Covad sorting out finances Aug. 8th. $1.4 Billion debt with bondholders.

    Looks like an uphill battle, but, if the economy does improve, expect the fortunes of these to follow. I'd just hate to think either would sell out and lock users into something like MSN...

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    A feeling of having made the same mistake before: Deja Foobar
  6. Re:Was debt the problem? by rekoil · · Score: 3, Informative

    A lot of lawsuits and state PUC rulings have gone a long way into improving this picture. I remember reading an article a few weeks ago that quote a Covad exec as saying that their average per-line LEC charge has gone from approx. US$20/month, which is the same amount Verizon charges for a standard voice line to around US$5/month.

    Remember, the LEC is either handing the copper pair off directly to Covad, bypassing the POTS network, or splitting it in front of their POTS switch and running a "splice" to Covad. In neither case is $20/month justified.

    Also, the LECs seem to have figured out that (a) many state PUCs are serious about not letting them sell inter-LATA services (long distance, multi-state IP backbones) until they learn to play fair with CLECs and DLECs, and (b) Tauzin-Dingell, the LECs' best, last chance at getting rid of Covad et al, won't be signed into law anytime soon. Hence, the increased cooperation.

    The switch to line-sharing DSL has helped a lot as well, since a LEC truck roll isn't needed to deliver a new copper pair, and because the line also carries dialtone, there's no way it can be "mistaken" for an available pair by a telco tech.