Covad will pay $3.75 million cash for the accounts and release Qwest from an earlier contract that would have required Qwest to buy Covad services valued at nearly $9 million. Qwest may receive up to $1.25 million more, depending on the success of the migration.
“This agreement represents a significant inorganic growth opportunity,” Covad CEO Charles Hoffman said. “We have the ability to add up to 23,000 new business-class customers to our nationwide network at a very reasonable cost.”
The affected customers will be offered similar service. There will be a 105-day transition period for the Qwest customers. Santa Clara, Calif.-based Covad will mail information to each customer and place calls to answer questions.
For Qwest, the sale was made with the bottom line in mind.
“Qwest is continuing with our strategy to make smart, disciplined decisions to help grow profitable revenue,” said Thomas F. Gillett, a Qwest senior vice president. “We believe this agreement with Covad is another step in our execution on that strategy.”
Qwest, based in Denver, will continue to offer an high-speed broadband services to customers outside its 14-state region including dedicated Internet access, Frame Relay, ATM, private line, and virtual private networks.
In other sector news, Verizon
today said it will offer new “integrated access” T-1 service. It allows small and medium businesses (SMBs) to consolidate data, Internet, local and long-distance services on one circuit.
Integrated Access service runs over a T-1 circuit that contains 24 digital channels. It can be designed for voice services, high-speed data or both. Verizon is offering promotions to attract users.
“Until now, these circuits were economically feasible only for large businesses,” said Michael Hassett, a Verizon vice president. “But the communications requirements of small and medium-sized businesses have grown increasingly complex so that today, a T-1 makes sense for many of these businesses as well.”