Covad Communications is bringing the Internet to a new type of customer,
penning a deal recently to provide Covad-powered dial-up and broadband
services to Sony employees.
It also marks the broadband provider’s entrance into end-user services,
when visitors to Sony’s new e-commerce Web site, SonyStyle, subscribe to
dial-up and broadband access co-branded and powered by Covad.
The service is expected to begin in early 2001, with Covad providing
services like connectivity, back-office billing and email.
If you think this sounds familiar, you’re right. The agreement is a copy
of the model used so successfully by free Internet service provider
Spinway, which marketed its free service to big-name corporations like
Ford, KMart and Costco. The model paid dividends, as Spinway is now the
sixth-largest ISP in the nation with 2.8 million active subscribers.
This presents a huge potential windfall for the troubled data local
exchange carrier, which has seen profits dwindle from Internet service
providers who can’t pay its bills.
Sony, the huge international media giant, has been spending the past couple
years tying its product line in with Internet services. Depending on the
success of the Sony Style Connect program, Covad could see its company’s
connectivity offerings on Sony Internet appliances. Two of Sony’s products
that have been met with overwhelming consumer demand since released, VAIO
and PlayStation2, have been marketed heavily with the Internet in mind.
Abhi Ingle, Covad director of product marketing, has been at his job as
director for about a year. Much of that time, he said, has been spent in
talks with companies like Sony to provide Covad-powered Internet
connectivity.
Covad has been in talks on an off for about six to eight months, he
said. Only recently, around April and May, did talks begin in
earnest. The result is an agreement that could mean salvation for this
company.
“Of course, we are very excited about what this agreement means to our
company,” Ingle said. “Companies like Sony offer much more beyond just
content; they offer bundled entertainment services that ISPs just can’t
offer at this scale, with the exception of companies like (America Online,
Inc.).”
For now, though, the Covad service will be offered to Sony employees. When
SonyStyle Connect is launched next year, officials expect the Covad service
to play an integral part in its e-commerce solution.
Robert Ashcroft, Sony Electronics e-Solutions Co., LLC, president and chief
executive officer, said Sony is positioned well to capture a large Internet
market.
“E-commerce is about lifestyles, possibilities and convenience, not just
price and comparisons,” Ashcroft said. “SonyStyle.com breaks the
boundaries of traditional e-commerce sites and is a place where digital
lifestyles come alive. As a company at the crossroads of technology and
entertainment, Sony is well-positioned to redefine e-commerce for the
connected future.”
The agreement also marks what could be a departure in Covad’s current
strategy. Currently, the DLEC provides wholesale digital subscriber line
connectivity services for ISPs throughout the country.
But despite its status as the fourth-largest DSL provider in the U.S.,
Covad has had revenue troubles throughout the year, mainly because of ISPs
who couldn’t sign up the customers it had promised it would. As such,
millions in uncollected revenues are outstanding, with Covad footing the
bill for the provisioning.
Ingle said his division is in talks with companies like Sony, with
agreements likely to be announced in the near future. He declined to name
names, however.
“If this deal (with Sony) works out, we could go as far as bundling our
modems into the PlayStation line down the road,” Ingle said. “Covad has
been looking at ways to diversify, and we are a
lways in talks to find new
ways. We are in a position now to get away from depending on our ISPs for
revenues which, quite frankly, has been troubled this year.”
