Covad Reaches SBC/AT & T Deal

Fiber Optics Weekly Update, May 13, 2005

SBC Communications Inc. and AT & T Corp. together have reached a services agreement under which Covad Communications Group Inc. would extend broadband access to the merged companies, which would help the combined entity expand Internet protocol (IP) services, including voice-over-Internet-protocol (VoIP), out-of-region to consumers and businesses. The deal, effective upon completion of the SBC and AT & T merger, demonstrates the parties' commitment to promoting vigorous competition in the telecommunications industry among product and service providers.

"Consumers will continue to benefit from competition in the provision of telecommunications services, making them the real winners here," said Mark Keiffer, senior vice president-business marketing for SBC. "And agreements such as these will be especially important in enabling SBC, post-merger, to become a more effective out-of-region competitor. We look forward to working with Covad not only in offering services to consumers and businesses outside of our territory, but in building on the excellent relationship that exists between AT & T and Covad today to work to bring additional services to the market, post-merger."

AT & T entered into a long-term commercial agreement with Covad on January 1, 2002, buying high-speed Internet access services for resale. SBC entered into an agreement for similar services with Covad on November 12, 2001. This new commercial agreement, along with the current contracts, would continue past the completion of the SBC-AT & T merger.

SBC and Covad also signed a separate commercial agreement that covers the provision of line-sharing over copper and remote-terminal facilities in SBC's territory for a four-year period. Line-sharing allows communications providers like Covad to deploy high-speed DSL broadband on the same line customers use for their voice phone services.

"These agreements are very important to Covad as they ensure that we will continue to be a strong competitor and supplier to AT & T and SBC now and after their merger," said Charles Hoffman, president and chief executive officer of Covad. "It allows the provision of a robust suite of voice and data services over Covad's extensive network of collocated facilities. In particular, we look forward to supporting the combined company's out-of-region competitive efforts. We are pleased about the opportunity to continue working with SBC and AT & T, and to be a key supplier for the combined entity."

Covad, based in San Jose, California, is a leading nationwide provider of broadband voice and data communications for small and medium-sized businesses, and is a key supplier of high-speed Internet access for competitive voice and Internet services providers. Founded in 1996, Covad owns and operates the only nationwide DSL broadband network in the United States.

"Covad has been a valuable supplier," said Regina Egea, AT & T vice president of global access strategy and bandwidth product management. "We're very pleased that we will continue to utilize the competitively priced and high-quality services and capabilities of Covad once our merger with SBC is completed and the combined company competes to deliver IP, including VoIP, services around the nation."

Other specific terms of the agreements are not disclosed. Completion of the SBC-AT & T merger is expected by the end of this year or early 2006, following all regulatory and governmental approvals.