SBC Communications Inc. and Covad Communications Co. Monday unveiled an agreement that should allow SBC to offer its customers better business-class DSL nationwide and enable Covad to better service residential users in SBC territory, according to an industry analyst.
The agreement makes Covad an in-region and out-of-region DSL provider for SBC. In addition, SBC will invest US$150 million to acquire a minority stake of 6 percent in Covad, pending regulatory approval and the resolution of several antitrust and regulatory legal issues.
Adam Guglielmo, an analyst with consultancy TeleChoice in Denver, says the deal should be welcome news for SBC enterprise customers looking for business-class synchronous DSL (SDSL) services. SBC, which did not have a strong business-class DSL offering, will now be able to offer SDSL service provided by Covad. Also, Guglielmo notes, SBC will now be able to give its large enterprise customers nationwide reach through Covad.
The agreement includes a guaranteed $600 million in resale revenue for Covad, which will be phased in over 6 years, beginning Oct. 1.
SBC will continue to provide DSL services in its own region through its affiliate Advanced Solutions.
The Covad/SBC agreement comes almost exactly one month after Verizon announced it would merge with Covad competitor NorthPoint Communications.