Covad: Riding in the Net Fast Lane
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The company is a leading provider of DSL (Digital Subscriber Line), which uses the traditional telecom network to allow for high-speed Net access. Of course, everyone detests dial-up and DSL is a great alternative, especially for those who do not want to spend a bundle on T-1 lines.
True, the DSL market is crowded, but also fast growing. As for Covad, it is methodically building its infrastructure, as well as expanding its product offerings. For example, Covad has struck key agreements with BellSouth and US West. These line-sharing agreements mean a reduction in the cost of service and faster installations. This also means Covad can sign-up more and more customers. So far, Covad services are available in 63 of the top Metropolitan Statistical Areas (this is expected to reach 100 by the end of 2000).
Further, Covad is a full-service provider, catering to both residential customers and small businesses. These services are offered primarily from Internet Service Providers. But with the recent LaserLink.net acquisition, Covad will be able to allow companies to provide branded DSL services to its customers (this is known as a Virtual Internet Service Provider).
The demand for broadband is seemingly insatiable and Covad is taking advantage of this. Agreements with BellSouth and US West add tremendous credibility. Such agreements should help the company land other deals in the future and put the stock back in the fast lane.
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