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COVAD AND SBC FORM MARKETING AGREEMENT TO DELIVER
BROADBAND NATIONWIDE
$600 MILLION CONTRACT STRUCK OVER SIX YEARS;
SBC PLANS TO INVEST $150 MILLION IN COVAD;
VARIOUS LEGAL ISSUES SETTLED
SANTA CLARA, CA AND SAN ANTONIO, TX (SEPTEMBER 11, 2000) - Covad Communications
(NASDAQ: COVD) and SBC Communications, Inc. (NYSE: SBC) today announced an
agreement making Covad an in-region and out-of-region DSL provider for SBC.
SBC also announced plans to invest $150 million to acquire a stake in Covad.
In addition, the companies said that several pending antitrust and regulatory
legal issues were settled and terms were established regarding unbundled network
element pricing, line sharing, provisioning, operational support system (OSS)
development, remote terminal access and other proceedings.
"This changes the market dynamics and demonstrates that customer demand for
broadband is so strong that two industry leaders can set aside past disputes and
cooperate to deliver DSL faster and to a wider range of customers," said Robert
E. Knowling, Jr., chairman, CEO and president of Covad. "This deal is the
Telecom Act in action, proving that it works.
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COVAD AND SBC FORM MARKETING AGREEMENT TO DELIVER BROADBAND NATIONWIDE - PG. 2/
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Everyone wins here, especially customers who are waiting to experience high
speed Internet access. We welcome working closely with SBC."
"We are very pleased to strategically align ourselves with Covad in this rapidly
growing sector of the industry," said Edward E. Whitacre Jr., chairman and CEO
of SBC Communications. "Although we will continue to be vigorous competitors,
this agreement allows us to work together to fulfill the exploding demand for
broadband for both businesses and consumers nationwide."
The commercial agreement includes a guaranteed $600 million in resale revenue to
Covad which will be phased in over six years starting October 1, 2000. The
agreement also provides incentives for SBC to sell business lines provided by
Covad. SBC will begin marketing both symmetric business service DSL and
asymmetric consumer service DSL provided by Covad throughout the US. The
companies will work together on network, provisioning and product planning
activities needed to support this agreement.
SBC also announced plans to take a minority ownership position in Covad, pending
regulatory approval. SBC would acquire an ownership interest position
approximately equivalent to six percent. This investment would increase Covad's
cash balance to continue the rapid deployment of its service across a nationwide
broadband network that is nearing completion.
Regarding pending legal matters, Covad's antitrust suit against SBC and Pacific
Bell and Covad's arbitrations against SBC affiliates Southwestern Bell and
Pacific Bell were settled, including Pacific Bell's claim for alleged past due
service fees. In addition, the parties resolved several critical issues in
line-sharing disputes in Texas, Kansas, Illinois, Michigan, Ohio, Wisconsin,
Indiana, Connecticut, and California, plus key issues in pending interconnection
arbitrations in Texas and Kansas. Further, performance standards in all 13 SBC
states were agreed upon, which will further reduce regulatory disputes.
Standards for SBC performance were agreed upon so that both companies will
operate under a standard set of measures and remedies in all SBC states, which
include California, Nevada, Texas, Oklahoma, Arkansas, Kansas, Missouri, Ohio,
Indiana, Michigan, Wisconsin, Illinois and part of Connecticut (SNET territory.)
These standards include stand-alone and line-shared loop provisioning intervals,
collocation intervals, repair and maintenance, and access to loop plant data. In
addition, the parties agreed upon a 13-state, line-sharing price consisting of a
$10 non-recurring charge and a $5.75 monthly recurring charge for all physical
elements of the line-sharing UNE, including installation.
SBC and Covad also agreed to continue joint OSS development to support SBC's
resale of Covad products, including the fully automatic loop ordering
provisioning process pioneered by Covad. By working closely with SBC to
integrate both companies' OSS systems, Covad intends to simplify the ordering
process and improve DSL provisioning times. Covad's OSS system currently is
integrated with Pacific Bell and has shown improved installation rates of 25
percent and higher.
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COVAD AND SBC FORM MARKETING AGREEMENT TO DELIVER BROADBAND NATIONWIDE - PG. 3/
SEPTEMBER 11, 2000
In region agreements also include continued access to neighborhood gateways
utilized in the recently announced Project Pronto, competitively neutral terms
and conditions for spectrum management and agreements regarding the collocation
of equipment in SBC central offices.
Nothing in the agreements announced today would hinder or prohibit SBC and Covad
from competing against one another in any market.
SBC will continue to provide DSL services in-region primarily through its
affiliate, Advanced Solutions, Inc.
ABOUT SBC
SBC COMMUNICATIONS INC. (www.sbc.com) IS A GLOBAL COMMUNICATIONS LEADER. THROUGH
ITS SUBSIDIARIES' TRUSTED BRANDS - SOUTHWESTERN BELL, AMERITECH, PACIFIC BELL,
SBC TELECOM, NEVADA BELL, SNET AND CELLULAR ONE - AND WORLD-CLASS NETWORK, SBC'S
SUBSIDIARIES PROVIDE LOCAL AND LONG-DISTANCE PHONE SERVICE, WIRELESS AND DATA
COMMUNICATIONS, PAGING, HIGH-SPEED INTERNET ACCESS AND MESSAGING, CABLE AND
SATELLITE TELEVISION, SECURITY SERVICES AND TELECOMMUNICATIONS EQUIPMENT, AS
WELL AS DIRECTORY ADVERTISING AND PUBLISHING. IN THE UNITED STATES, THE COMPANY
CURRENTLY HAS 61.2 MILLION ACCESS LINES, 12.2 MILLION WIRELESS CUSTOMERS AND IS
UNDERTAKING A NATIONAL EXPANSION PROGRAM THAT WILL BRING SBC SERVICE TO AN
ADDITIONAL 30 MARKETS. INTERNATIONALLY, SBC HAS TELECOMMUNICATIONS INVESTMENTS
IN MORE THAN 20 COUNTRIES. WITH APPROXIMATELY 219,000 EMPLOYEES, SBC IS THE
13TH-LARGEST EMPLOYER IN THE U.S., WITH ANNUAL REVENUES THAT RANK IT AMONG THE
LARGEST FORTUNE 500 COMPANIES.
ABOUT COVAD
COVAD IS THE LEADING NATIONAL BROADBAND SERVICES PROVIDER OF HIGH-SPEED INTERNET
AND NETWORK ACCESS UTILIZING DIGITAL SUBSCRIBER LINE (DSL) TECHNOLOGY. IT OFFERS
DSL, IP AND DIAL-UP SERVICES THROUGH INTERNET SERVICE PROVIDERS,
TELECOMMUNICATIONS CARRIERS, ENTERPRISES, AFFINITY GROUPS, PC OEMS AND ASPS TO
SMALL AND MEDIUM-SIZED BUSINESSES AND HOME USERS. COVAD SERVICES ARE CURRENTLY
AVAILABLE ACROSS THE UNITED STATES IN 98 OF THE TOP METROPOLITAN STATISTICAL
AREAS (MSAS). BY THE END OF 2000, COVAD SERVICES ARE EXPECTED TO BE AVAILABLE IN
165 MSAS (WHICH INCLUDES MSAS THAT WILL BE ADDED AS A RESULT OF THE ACQUISITION
OF BLUESTAR COMMUNICATIONS). AT THAT TIME COVAD'S NETWORK IS TARGETED TO REACH
MORE THAN 45 PERENT OF ALL US HOMES AND 50 PERCENT OF ALL US BUSINESSES.
CORPORATE HEADQUARTERS IS LOCATED AT 4250 BURTON DRIVE, SANTA CLARA, CA 95054.
TELEPHONE: 1-888-GO-COVAD. WEB SITE: www.covad.com.
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COVAD SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995
The statements contained in this release which are not historical facts
may be deemed to contain forward-looking statements, including but not limited
to statements regarding the intention to deploy our network in new and existing
MSAs, the timing and breadth of coverage in each MSA, and our ability to provide
high-quality, media-rich content. Actual results may differ materially from
those anticipated in any forward-looking statements as a result of certain risks
and uncertainties, including, without limitation, the company's dependence on
incumbent local exchange carriers for collocation, unbundled network elements,
transport and other facilities, development of necessary technologies and
operations, ability to manage growth of our operations, and the need to raise
additional
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COVAD AND SBC FORM MARKETING AGREEMENT TO DELIVER BROADBAND NATIONWIDE - PG. 4/
SEPTEMBER 11, 2000
capital. For other risks and uncertainties applicable to our business refer to
the Company's Securities and Exchange Commission filings.
