Covad Offers Small Business Bundles

Covad Communications is augmenting its digital subscriber line offerings with long distance and local calling as part of a new bundled service for small businesses.

Initially, the package — featuring high-speed Internet access, e-mail, Web hosting, and service for up to eight phones — will be available in the San Francisco area. If successful there, Covad is eyeing an additional 15 markets for 2003.

“This is the next step in our campaign to popularize broadband,” Covad’s Todd Kiehn said in an interview with

Covad’s goal is two-fold: sign new customers interested in simplifying their business services; and upgrading existing DSL customers with phone service, thereby boosting Average Revenue Per User (ARPU) — an important telecom industry metric.

By winning regulatory approval to offer voice service in California, Covad, which scratched its way out of Chapter 11 bankruptcy this year, gains new ammunition in its war against its Baby Bell competitors, such as Pacific Bell and Verizon Communications.

Here’s how the service works. A box (which Covad calls an Integrated Access Device) is installed at a customer’s office. It comes with four or eight phone ports as well as an Ethernet connection for a local area network.

The box combines voice (both compressed and uncompressed) and data trafic and then sends it out over a symmetric digital subscriber line to the network.

In addition to local and long distance, Covad is offering no-frills options most commonly used by small business owners: call waiting, directory assistance, operator services and international calling. Packages will also be sold with an allocation of minutes much like wireless plans.

As for pricing, Covad said the voice portion of the service will be 20 percent less than competing offerings. The four line package is expected to cost $379 per month ($200 for phone, $179 for DSL) while the eight-line option will run $579 per month ($400 for phone, $179 for DSL).

Because Covad’s network is already equipped to carry voice traffic, the capital investment needed to launch the program is relatively low, Kiehn said. Training of call center and field service representatives is nearly complete.

Customers get one-bill and contact for all question for both voice and data service. There is a five-day wait after the service is first installed before it goes live.

Competitors are offering bundled packages, however, Covad believes it can provide a better price. The Santa Clara, Calif., company says its research shows there is little customer loyalty to phone service providers.

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