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Covad: Broadband Demand 'Exploding'

By Sean Michael Kerner

Broadband provider Covad Communications plans to increase its coverage to nearly 50 million homes and businesses in a 2004 network expansion announced today.

This move comes days after the company said that in 2003 they grew subscriber lines in service by 36 percent to more than 517,000.

"Broadband demand in this country . . . is an exploding marketplace," Jason Oxman, Covad's vice president and assistant general counsel, told internetnews.com. "That's true both in residential, and it's particularly true in the small business marketplace, which is Covad's focus."

By mid-2004, Covad expects to have 200 additional broadband equipment installations, bringing its total broadband network to more than 2,000 central offices. The expansion is an attempt to grow Covad's addressable market to increase revenue and to more efficiently utilize its core ATM network.

Covad sells DSL services across the United States directly and through its partner network.

"This addressable market makes us extremely valuable to our partners like AOL, AT&T and MCI as well our ISP partners like AOL and Earthlink," Oxman said. "It means we're the one-stop shop for broadband services."

Covad has had a number of partner-related announcements in recent weeks. For example, it was named the National DSL provider for Global Crossing Frame Relay, IP-VPN, Dedicated Internet Access and VoIP services. Before that, Covad expanded its partnership with AT&T to bundle DSL and voice services in three additional states.

Covad expects to meet or exceed its fourth-quarter financial guidance and be cash-flow positive by mid-year. According to Oxman, "that is a very important turning point particularly for a company that has a stellar balance sheet." He added that Covad has a comparatively low debt of $50 million. Year-end results are expected to be announced in late February.

Besides meeting financial milestones, Oxman said the company's other focus is further capitalize on its relationships with partners.

"As broadband continues to be adopted at a record pace we think we're going to be very successful at doing what we do best which is providing DSL services," Oxman said.