Courts Grant Zyan Customers To Covad

The U.S. Bankruptcy Court for the District of California Tuesday cleared the way for Covad Communications to buy up the digital subscriber line customers from one of its defunct Internet service providers.

For an undisclosed amount of cash and debt forgiveness, Covad bought the rights to snare Zyan Communication’s 11,000 broadband subscribers in the Covad Safety Net program, a process that begins immediately.

The actual cash amount paid to Zyan depends on the number of customers who successfully migrate using the safety net program.

According to the announcement, Zyan customers will receive an e-mail or be notified via snail mail in the next couple days. From there, it’s a matter of whether the former Zyan customer wants to be a Covad subscriber or go through one of Covad’s partners.

Martha Sessums, a Covad spokesperson, said that since Zyan customers are already on the Covad network, the switch from one provider to the other is relatively painless.

“We hope to get these people moved over as quickly as possible, but in the past it’s only taken us a few weeks,” Sessums said.

Of course, if the customer wants to move to another provider entirely, that’s fine. But a move outside the Covad network likely means another wait of weeks or months as they start from the beginning of the DSL line provisioning process, a process that has been touch and go in recent times.

Telephone companies are able to make “hot cuts,” which switches the customers to another provider seamlessly, with no service disruption. But they are under no obligation to do so, and have given no indication they plan to do that for Zyan customers.

“(Hot cuts) are not an issue here because Zyan customers are already on the Covad network,” Sessums said. “All we’re doing is moving the ISPs in the network, so the phone companies are not involved at all. It’s an easy switch that we have control over.”

ISPs have been leery of Covad since it started its safety net program late last year. Many thought the program was designed to cut them out of the loop, since the company also provides its own DSL service directly to customers.

Since its inception, the data competitive local exchange (DLEC) carrier has been using the program to successfully switch customers from defaulting ISPs to another provider on the network.

Zyan is one of four ISPs which partnered with Covad to provide DSL service and filed for bankruptcy after failing to pay for the lines it had provisioned.

In February, the bankruptcy courts cleared the way for Covad to migrate the 24,500 Flashcom customers left stranded after the ISP filed for bankruptcy protection.

Chuck McMinn, Covad chairman, said in a statement that the buyout is another sign of his company’s commitment to the DSL subscriber.

“We continue to show that we are willing to work with our partners to maintain the DSL user’s connection,” McMinn said. “Fortunately for the end users, we have established a program that is readily available to provide a relatively seamless migration to a Covad partner or to Covad.net. It is important that the migration process happen quickly to minimize the impact on end users.”