COVAD COMMUNICATIONS GROUP, INC.

COVAD COMMUNICATIONS GROUP, INC.

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Company Overview
Covad Communications Group, Inc. is a publicly quoted company engaged in the provision of broadband communications services. The company was founded in 1996 in California. It was formerly known as Covad Communications Company and changed its name to Covad Communications Group, Inc. in 1997. The company has a registered head office located in San Jose, California.
Covad Communications Group is the first company to commercially deploy Digital Subscriber Line (DSL) in the United States. The group owns and operates the largest national broadband network and the leading provider of data, voice, and wireless telecommunications solutions for small and medium-sized businesses.
Covad Communications Group, together with its subsidiaries, provides integrated voice and data communications in the United States. Its products and services primarily include high-speed or broadband, data communications, Internet access connectivity, voice over Internet protocol telephony (VoIP), fixed wireless broadband, and various related services. In addition, the group offers line-powered voice access service, which enables a wholesale partner to combine analog voice service with the company’s consumer-grade data services.
Covad Communications Group converts conventional copper wires for quick connectivity. The company uses DSL and T-1 technologies to provide broadband Internet access such as web hosting, managed security, Internet protocol and dial-up, and bundled voice and data services, leasing phone lines from local phone companies. The company supplies high-bandwidth access for telecommunications and Internet service providers like EarthLink, AOL, AT&T, and other resellers.
Covad Communications Group works in partnership with AT&T, EarthLink, MCI, AOL, XO, MegaPath Networks, Speakeasy, Sprint, Verizon Business, Siemens, Netopia, Cisco, and Broadxent. The company markets its wireline services under the brand names TeleSpeed, TeleSoho, TeleXtend, and TeleSurfer; and fixed wireless services under the brand name NextWeb. Covad broadband and voice over Internet protocol (VoIP) services are available in 44 states and 235 major markets and can be purchased by more than 57 million homes and businesses.
Covad Communications Group aims to create and offer products and services that meet customer needs. The company seeks to innovate in all aspects of its business to ensure that customers always have a better choice in communications services.
Business Summary
Covad Communications Group, Inc. provides voice and data communications products and services to consumers and businesses throughout the United States in approximately 235 metropolitan areas in 44 states. Its products and services include high-speed, or broadband, data communications, Internet access connectivity, voice over Internet protocol telephony, fixed wireless broadband and a variety of related services. It leases network elements, such as telecommunication lines and central office facilities from the traditional local telephone companies, and then combines these network elements with its own nationwide facilities. It has two segments: Wholesale, which provides high-speed data and voice connectivity services to Internet service providers and telecommunications carrier customers, and Direct segment, which sells VoIP, high-speed data and voice connectivity, fixed wireless broadband, and related value-added services. In April 2008, Platinum Equity Holdings acquired Covad.
Description and history
Covad Communications Group, Inc. (Covad), incorporated in October 1996, provides voice and data communications products and services to consumers and businesses throughout the United States in approximately 235 metropolitan areas in 44 states. The Company’s products and services include high-speed, or broadband, data communications, Internet access connectivity, voice over Internet protocol telephony (VoIP), fixed wireless broadband and a variety of related services. Covad primarily uses digital subscriber line (DSL) and T-1 technologies to deliver its services. It also uses fixed wireless broadband technology to deliver services in six of its metropolitan areas. In order to provide its services, the Company leases network elements, such as telecommunication lines and central office facilities from the traditional local telephone companies, which are often referred to as the incumbent local telephone companies and other carriers, and then combine these network elements with its own nationwide facilities. As of December 31, 2007, the Company had approximately 487,000 broadband access end users, approximately 2,300 VoIP business customers with a combined total of approximately 4,000 VoIP sites, and approximately 3,600 fixed wireless broadband customers in service. In April 2008, Platinum Equity Holdings completed the acquisition of Covad.

The Company operates in two business segments: Wholesale and Direct. Wholesale provides high-speed data and voice connectivity services to Internet service providers and telecommunications carrier customers. As of December 31, 2007, Wholesale had approximately 416,000 digital subscriber line (DSL) and T-1 lines in service. The Direct segment sells VoIP, high-speed data and voice connectivity, fixed wireless broadband, and related value-added services. As of December 31, 2007, Direct had approximately 71,000 DSL and T-1 lines in service. The Company’s service offerings can be grouped into two main categories, data and voice services. Within the data suite of services, the Company offers a variety of business and consumer-grade broadband access services, e-mail, Internet security and hosting services. Business-grade wireline data services are sold under the TeleSpeed, TeleSoho and TeleXtend brands and business-grade fixed wireless services are sold under Covad Wireless brands. Consumer-grade wireline services are sold under the TeleSurfer brand. Voice services are sold under the Covad ClearEdge brand. A line-powered voice access service (LPVA) is also offered.

TeleSpeed

The Company provides TeleSpeed services through the symmetric DSL and integrated services digital network (ISDN) DSL technologies. These services are offered in a variety of speeds ranging from 144 kilobits to 1.5 megabits per second. TeleSpeed services are intended to connect individual end users on previously unused conventional telephone lines to the Company’s DSL equipment in their serving central office and from there to the Company’s network serving that metropolitan statistical area. TeleSpeed services are offered with specific service levels of performance and repair times based on service level agreements (SLAs).

TeleSoho

The Company has designed TeleSoho for the Small Office/Home Office customer segment. The service offers speeds up to 15 megabits per second downstream and up to one megabit per second upstream. Second-line TeleSoho services are provided over a dedicated line instead of a shared line. These services provide features similar to TeleSoho line-shared services, but allow a customer to purchase the service without purchasing telephone service from the local telephone company.

TeleXtend

TeleXtend services allow end users to connect to the Company’s network equipment in their local central offices over a digital signal (DS)-1 line, or a T-carrier 1 (T-1). The availability of TeleXtend services is not limited by distance from the servicing central office and is accompanied with SLAs. In May 2007, the Company began offering bonded T-1 services, which provide for symmetrical speeds of three megabits per second.

TeleSurfer

TeleSurfer, designed for consumers, is asymmetric, offering speeds up to 1.5 megabits per second downstream and up to 128 kilobits per second upstream and uses dynamic Internet protocol (IP) addressing. Second-line TeleSurfer services provide features and performance similar to the TeleSurfer line-shared services, but allow a customer to purchase this service without purchasing telephone service from the local telephone company.

Fixed Broadband Wireless

Through its wholly owned subsidiary, NextWeb, Inc., which does business under the name Covad Wireless, the Company is offering business-grade, fixed-broadband-wireless services to customers in certain areas in the United States. The Company offers speeds of up to nine megabits per second downstream and upstream using unlicensed spectrum and up to 100 megabits per second downstream and upstream using licensed spectrum.

Voice over Internet Protocol for Businesses

The Company has introduced its business-class VoIP services to small- and medium-sized businesses. It sells two VoIP services, Covad ClearEdge Pro and Covad ClearEdge Integrated Access. Covad ClearEdge Pro is intended as a substitute for a small business’s telephone private branch exchange (PBX) system. Covad ClearEdge Integrated Access has some of the same features as Covad ClearEdge Pro service, but it works with an end user’s existing PBX system to deliver local, long distance and Internet services over one managed network connection.

Line Powered Voice Access

In January 2006, EarthLink, Inc. began offering a consumer-grade bundled voice and data service deployed over the telephone lines that the Company leases from the regional bell operating companies (RBOCs) to provide data services, referred by the Company as line powered voice access (LPVA). EarthLink adds local and long distance voice and related services to the Company’s LPVA service, which includes high-speed Internet access, using consumers’ existing wiring, telephone and computer equipment.

Asynchronous Transfer Mode Network Services

The Company provides DS-3 and optical carrier (OC-3) circuit backhaul services to its wholesale customers that resell wireline and fixed wireless services under their own brand names. These asynchronous transfer mode (ATM) network services backhaul data traffic from the Company’s regional network to a reseller’s site. The service uses ATM protocol that operates at up to 45 megabits per second for DS-3 circuits and up to 155 megabits per second for OC-3 circuits.

Broadband Internet Access Service

The Company’s Broadband Internet Access Service allows resellers to sell broadband to their end-user customers without having to invest in network facilities. This service bundles IP services with the Company’s high-speed connectivity services to provide a complete connection to the Internet. Additional IP services include end-user authentication, authorization and accounting, IP address assignment and management, domain name service and IP routing and connectivity.

Value-Added Services

The Company offers value-added services to its wholesale and direct customers who directly purchase services. These services include e-mail and Web hosting, security services and installation services. The e-mail and Web hosting services allow small and medium-sized businesses to have a custom domain name. Under security services, the Company resells McAfee anti-virus software, as well as Covad-branded firewall and VPN services to its direct customers. It also offers professional installation services to its wholesale and direct customers in connection with its services. In some cases, the Company’s customer may request that it installs additional equipment, services or software, such as a firewall or a virtual private network, for an additional fee.

The Company competes with Verizon, Qwest, AT&T, Comcast Corporation, Cox Communications, Time Warner, Inc., Charter Communications, MegaPath, XO Communications, Sprint, Level 3 Communications, M5 Networks, PingTone, cBeyond, Nortel, Avaya, Cisco, Lucent, EarthLink, Speakeasy.net, AOL, Google, MSN, T-Mobile, StarBand Communications Inc., DirecTV, EchoStar Communications Corporation, Globalstar, Lockheed, NextLink and Teledesic.

Formerly known as Covad Communications Company

Business Line
Engaged in the provision of broadband communications services
Subsidiary
GOBEAM INC
Advisor
PRICEWATERHOUSECOOPERS LLP
IPO date
1/1999
US SIC Code
4813
Company Address
110, Rio Robles Drive

City province or state postal code
95134, SAN JOSE, CA
Phone: +1 408 952 6400
Fax:
Country address: UNITED STATES OF AMERICA
Website url: www.covad.com