Covad Set To Emerge From Bankruptcy

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."

Comments

Congrats, but

[Erasei]

I worked with a company that partnered with Covad a few years ago. With any past partner, you wish them the best, and hope they do well as a company.

But the reason (well, one of the many) reasons they went bankrupt in the first place was the old problem known as 'the last mile'. In the DSL world, the telco still has to be involved. So, how can a company like Covad, basically a reseller, expect to survive against the telco selling DSL themselves?

This is great news

[bconway]

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!

80% isn't enough?

[cperciva]

They expect 40 [out of 50] of the markets to be cash positive by year end, with the entire company cash positive by mid 2003.

Either there's some interesting accounting going on, or they'r expecting to lose *lots* of money in the remaining 10 markets -- like over four times as much as the average profit from the profitable markets.

Reselling CAN be profitable.

[Tsar]

So, how can a company like Covad, basically a reseller, expect to survive against the telco selling DSL themselves?
One word—volume.

All kidding (well, most kidding) aside, I recently saw an article referenced on DSLReports that makes an excellent point—in general, DSL customer service sucks. Installation can be time-consuming without a guarantee of eventual success, service is occasionally spotty, and online help can be hit-or-miss. Work-at-home folk who depend on their broadband for their livelihood, as well as those of us who are just willing to pay a bit extra for good service, would likely do business with a reseller who would wrap a telco's DSL line in better support for a slightly higher monthly fee.

On the other end of the spectrum, a reseller could purchase DSL service wholesale and provide stripped-down service (no email, Usenet, or toll-free support) for less than the full-service products offered by the telco. Many of us geeks would go ga-ga for such a service, especially if all extra services (such as static IP's) were offered a la carte.

Proud owner of a self-restored 1968 Ford Fairlane, 302 V8, 9" 4.11 geared...
Self-restored? Wasn't this the setup for a Stephen King novel?

this post courtesy covad, may they live long and..

[neilv]

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

Strange

[yoink!]

I find it really strange to hear about all these high speed service provider bankruptcies in the US. It seems like every few days or so, /. is running another story about a failed Cable or DSL provider.

What puzzles me even more is the widespread success, at least here in Montreal, Quebec, of high speed internet (both G.lite DSL and Cable.) In fact the biggest provider, Bell Canada, is going to RAISE it's dial-up rates in January, lower it's DSL rates (via a few special sign up offers) and attempt to force the remaining dial-up users over to domesticated dedicated internet connections. It must be getting to costly to keep up all those modem pools with fewer and fewer users on them.

Learned their lesson?

[YouAreFatMan]

"Covad said it has learned from the past and will not expand until it can afford it."

And it took how long and how much wasted money to realize a principle that a 8 year-old with a lemonade stand has figured out?

On the plus side for Covad, they managed to outlast their competition both on the DSL side (Northpoint, Rythms) and cable (Excite), so they've got the opportunity for a bigger share of the pie, and a better chance of staying afloat.