Covad Secures BellSouth Line Sharing Pact

Covad Communications Inc. Thursday
forged a line sharing agreement with BellSouth that secures its ability to
provide Digital Subscriber Line services around the country.

The broadband service reseller entered into a regional agreement to share
phone lines with BellSouth (BLS)
and provide DSL access throughout the telecom company’s nine-state territory.

Covad (COVD)
is the first competitive carrier to reach a line-sharing agreement with
BellSouth. Earlier in the week Covad signed a similar deal with US WEST (USW).

Catherine Boone, Covad regional counsel for the territory, said Covad seeks
a speedy implementation of line sharing throughout the South.

“The primary benefit of this agreement is a quicker, easier DSL
installation for consumers at a more competitive rate and with a greater
choice of providers,” Boone said. “Another benefit of both the BellSouth
and US WEST contracts is that we have stronger footing in our negotiations
and arbitrations with the remaining incumbent carriers.”

Under the agreement, Covad has locked in an interim monthly loop rate of $6
per line. Ultimately, the final costs associated with line sharing will be
set by individual state Public Utility Commissions and interim costs will
be adjusted retroactively.

Covad estimates that the final cost for the shared lines should be zero
dollars each month. The agreement will allow Covad to begin ordering
line-shared loops early in June and anticipates full implementation
throughout BellSouth’s territory by the end of July.

The deal marks another win for the Federal
Communications Commission
November 1999 ruling that requires local
incumbent phone companies share existing phone lines with competitive carriers.

Although Covad has experienced service pitfalls in its rush to resell DSL
services nationwide to business and Internet Service Providers, the Bell
South deal firmly establishes its broadband industry leading position in
the high-speed Internet access arena.

BellSouth Wednesday entered into a deal with SBC Communications Inc. (SBC)
to create a new company from their combined wireless assets. BellSouth has
focused on its wireless connectivity more so than its wired services
because the company faces an uphill batter to rev its copper lines to carry
DSL high-speed access. As much as 65 percent of BellSouth’s central offices
need to be overhauled in order to facilitate DSL access to the Internet.

According to a 1999 U.S. Commerce
study, North Carolina is BellSouth’s worst case scenario for
Internet access. The state ranks 46th in the nation for Internet services,
due in part to the geographical complexities of offering wired line
services to the area.

BellSouth, faces its greatest challenge to accelerate deployment of basic
local phone services in North Carolina, let alone high-speed Internet
access. Currently less than 20 percent of the households in North Carolina
have Internet access.

North Carolina Governor Jim
Wednesday called upon the state’s three major communications
companies to work with the state to bring affordable, high speed Internet
access to all North Carolinians within three years.

The agreement between BellSouth, Sprint
and GTE is a first in

the U.S.
The initiative is designed to provide rural parts of the state with
Internet service at no cost while providing access speeds comparable to the
state’s urban areas.

Under the agreement, BellSouth, Sprint (FON)
and GTE (GTE)
plan to work with Internet service providers, telephone cooperatives, and
the state government to provide affordable, high-speed Internet access to
all areas of the North Carolina within three years. In addition, the
communications companies agreed provide local dial-up Internet access from
every telephone exchange within one year.

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