Covad Brings The Internet To Sony
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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