Covad/DSL.net Both Win With T-1 Deal

Covad Communications continues to diversify its business model, renting out
T-1 POPs to DSL.net, Inc. , officials announced Wednesday.

The contract, which officials on both sides declined to elaborate on, lets
DSL.net sell T-1 business-class lines to a greatly expanded customer base,
thanks to Covad’s nearly 600 POPs nationwide. It’s been a busy week for
DSL.net, which penned a deal Tuesday with Allegiance Telecom to resell T-1
lines at the carrier’s 800 POPs.

Covad, on the other hand, has another revenue stream pumping funds into its
accounts to avoid a repeat of the fiasco that led to its Chapter 11 bankruptcy
last year and subsequent redemption.

The data competitive local exchange carrier (DLEC) relied almost solely on
wholesale digital subscriber line (DSL) agreements with Internet service
providers (ISPs), many which reneged on the number of lines it promised to
sell. Covad officials, who had already paid for the lines to the incumbent
LECs (ILECs), quickly got into financial trouble.

The contract is further expansion of DSL.net’s diversification, also,
branching out from strictly distance-limiting DSL and into T-1s. It’s
business service, dubbed NETgain-T, will launch next month.

“In combination with our prior T1 announcements, we will be able to offer a
more complete set of T1 offerings, under our NETgain – T product umbrella,
to an expanded set of service areas,” said Keith Markley, DSL.net president
and chief operating officer. “And, the beauty of T1 service is that we can
offer businesses the Internet accessibility they require and the quality of
service they demand, regardless of their distance from the central office.”

Covad, fresh from escaping bankruptcy court, has quickly proven itself a
money-maker in the competitive carrier industry. Last month, the company
reported a net income of more than $858 million in the fourth quarter of
2001, a far cry from the net loss of nearly $1 billion a year prior.

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