SBC, Covad strike $600 million DSL alliance
By Corey Grice
Staff Writer, CNET
September 11, 2000, 5:15 p.m. PT
today agreed to invest
in Covad Communications and signed a six-year, $600
million agreement with the company to jointly deliver
high-speed Internet connections.
SBC will invest
$150 million in Covad, which represents about a 6
percent minority stake, and settled several legal
disputes as part of the plan.
Beginning Oct. 1,
SBC, which has a broad plan to offer digital
subscriber line (DSL) connections to consumers and
businesses called "Project Pronto," will resell Covad DSL
connections both in and out of the Baby Bell's 13-state
region. Covad will receive a guaranteed $600 million in
revenue over six years.
The deal marks the latest
major alliance in the DSL sector and raises questions
about whether Rhythms NetConnections, a comparable
competitor, will seek a similar partnership.
month, local phone company Verizon Communications agreed
to merge its DSL assets with those of NorthPoint
Communications, a DSL wholesaler and Covad competitor. The deal
leaves Rhythms as the last of the triumvirate of
national DSL competitors without a significant Baby Bell
The deals are intended to provide Verizon
and SBC with an avenue for providing high-speed Net
access beyond their geographic regions. NorthPoint and
Covad have spent the past two years building DSL
networks in some of the nation's largest cities, giving
the Baby Bells a broader reach.
For the DSL
upstarts, the Baby Bell alliances provide them with a major
resale partner with a large base of potential customers
and deep financial backing.
"It's a help to
both of our business models," said Terry Moya,
executive vice president of external affairs for Covad
Communications. "We're building a relationship between the two
companies so we can do some joint planning."
part of the Covad-SBC deal, the two companies settled
several legal issues, including an antitrust lawsuit by
Covad against Pacific Bell and parent company SBC. The
companies also settled their differences over line
sharing--the process of delivering high-speed Internet access
over the same phone line customers use for voice
service--and agreed upon pricing for line sharing.
had 435,000 DSL customers as of mid-August and
expects to reach 1 million by the end of the year. Covad
today raised its DSL installation estimates to 200,000
by the end of the quarter.
Now we know that
VZ will not be looking into DSLN since they got a
deal with NorthPoint Communications, a competitor to
Covad which is what DLSN is reselling. RTHM is trading
around 9.5 today way under it's $50 high.
The Bells are looking to
make money in DSL, 'cause margins in voice are getting
worse and worse. They will steal business from all
resellers and use infrastructure big-guys to help them do
No-name DSL resellers with few customers are dead meat.
DSL.net is frozen out. A reseller with bleeding red ink
and a biz model in trouble.
That's why it
tanked 11% today on this news. THIS IS NOT GOOD NEWS FOR
not exactly thxrum a bad news. If both SBC and
Covad raised their estimates for number of customers by
the end of the year, then it means that DSLN will
also have a broader base of customers by then. Why?
Cause it resells what COVAD makes. Same exact thing
that SBC will be doing. Covad will take care of
technical stuff and maintanance and SBC & DSLN will take
care of marketing it and selling to customers. Now
here is the fun part. SBC - will market it to the
residential customers, DSLN - Businesses only!
of BBOX? They are added value reseller and they are
good at it, DSLN is getting there.
As you'd say "You are a major Dumbshit....Do you
not look at the volume at at all.
>>The only short positions that occurred was from 8 1/8
to 7. <<
Sorry but 9 to 5 is a lot better
than 8 to 7.
>>Most shorters that are
smart lefted during that time. <<
If you could
speak English someone might believe you had a
>>The price is reflective from the panic sellers you
and the other shorters influenced. <<
as the insiders who filled to sell over 2M shares
since the pump, right?
>>To all longs, do
not let this retards influence you.
Again, if you could speak English someone might believe
you had a clue.
>>This company is still
growing and DSL services are not going away.
Yep, its losses are still growing. There are over 50
DSL providers and DSL.net ranks nearly daed last in
service and is dead last in price. Everyone knows the
weak die even in strong markets (which DSL is
>>Worse case they would be bought out or merged.
Nope, there will be no buyut. No one wants 3rd teir
You are a major Dumbshit....Do you not look at
the volume at at all. The only short positions that
occurred was from 8 1/8 to 7. Most shorters that are smart
lefted during that time. The price is reflective from
the panic sellers you and the other shorters
influenced. Also, maker condition are the other factor. To
all longs, do not let this retards influence you.
This company is still growing and DSL services are not
going away. Worse case they would be bought out or
I am just trying to understamd what is going on
here. As of June 30, the Company has $138.9M in cash
which is $2.89 per share. More than 100% sequential
revenue growth and bandwith pact with IBM. This is a
great opportunity for acquisition just for the cash in
the bank. Should be other reason for the drop in
price. According to the amount of posts here, there are