RealTime IT News

AOL Signs Up For Covad DSL

America Online signed a deal to provide nationwide digital subscriber line (DSL) service through Covad Communications, officials announced Thursday.

In addition, AOL was issued warrants to purchase 3.5 million shares of Covad common stock at an aggregate value of $3.5 million. It would give the ISP a 1.5 percent share in the company, if officials decide to go through with the stock purchase.

That's good news for AOL Broadband customers, who have watched DSL pricing at the Baby Bells steadily increase over the past two years. Covad, on the other hand, is taking the risky chance of dropping pricing to grab more customers.

The largest Internet service provider (ISP) has offered DSL through the incumbent telephone companies for years now, which were regional deals that didn't migrate past the carrier's borders.

Charles Hoffman, Covad chief executive officer and president, said its the reason AOL went with a nationwide provider.

"(The contract) gives America Online the flexibility and scalability of a single, national resource for millions of customers who want to upgrade from dial-up to a high-speed, always-on broadband connection," he said.

AOL, though it has delayed broadband promotion to keep its dial up customers, seems to be making more of an effort to migrate its dial up customers to broadband.

Jonathan Miller, AOL's new chief executive officer, has been moving quickly to sign deals to get the ISP division of AOL Time Warner back on track. Last month, AOL penned a deal to provide broadband service to potentially 10 million Comcast Corp. customers.