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Covad Continues Network Expansion

Covad Communications, Inc. Wednesday connected four new metropolitan markets to its digital subscriber line services in Bell South Corp. territory.

Covad successfully deployed broadband services in Louisville, KY, New Orleans, La., Jacksonville and Tampa, FL.

Tom Wagner, Covad president and general manager, said expansion into the Bell South region further builds out its network of more than 100,000 DSL connections nationwide.

"This expansion will enable Covad to bring high-speed Internet access to an additional 1.4 million households and 150,000 businesses," "Our recent rollout announcements in the Bell South region is a continuation of Covad's mission allow business and residential customers nationwide to harness the power of the Internet."

Covad DSL service will ultimately be available to more than 26,000 businesses and 257,000 households in Louisville, 41,000 businesses and 352,000 households in New Orleans, 26,000 businesses and 262,000 households in Jacksonville, and 55,000 businesses and 561,000 households in Tampa.

Covad sells DSL services through both local and national Internet service providers in the U.S. Its aggressive deployment of DSL services is due in large part to the Federal Communication Commission's line-sharing order made late last year. The federal regulator ruled that incumbent phone companies must unbundle elements of their networks and share high-speed DSL access to create competition in the broadband market.

Covad offers two different DSL products designed for business and home high-speed connectivity. But Covad could incur a bit of consumer fallout from free DSL offers if the advertising-based providers can establish services.

According to Cahner's In-Stat Group, free DSL service providers that fall short of meeting customer service expectations have several major hurdles to overcome in nabbing a piece of the market.

In-Stat research indicates that despite public enthusiasm, free DSL has proven to be less glamorous than once heralded. While the service itself will be free, consumers will still have to purchase DSL modems. Additionally, subscribers are subject to a constant barrage of advertisements and bandwidth-hogging streaming messages that could slow down network performance.

Even if consumers accept these potential privacy and speed-inhibiting conditions, businesses will not. Consumers may have to wait a while before they can get free DSL service, as providers like Digital Broadband Group, Inc., iNYC Corp., and Staruni Corp. remain in the early testing phase and have yet to deploy fully free high-speed Internet access in any U.S. market.

Although some of the free DSL companies report thousands of users have lined up for service, In-Stat foresees that free DSL providers will have a difficult time meeting both customer satisfaction an business profit expectations.

In-Stat also forecasts that the DSL market will experience exponential growth, amounting to approximately 5.4 million ADSL and 3.1 million SDSL subscribers by 2003. That equates to a 77 percent growth rate year-over-year in a market that Covad, and other fee-based DSL access providers are better prepared to serve.

The study indicates that it costs $150 to $200 per year plus initial installation costs to support a single DSL user, a cost that cannot be supported solely by advertising revenues collected by free DSL providers, which leaves fee-based DSL services to initially dominate consumer and business market segments.



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