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Blog 'covad' » Covad takes fast track to convergence

By Tim Greene

Network World Fusion, 03/12/04

Covad Communications has been taking bold steps to establish itself as an early participant in selling converged network services to small and medium-sized businesses.

The most significant of these is the purchase of GoBeam, a provider of voice-over-IP services to businesses. In combination with Covad's established DSL Internet access business, the merged entity will have a leg up on the data/voice market.

The $48 million stock deal comes at a time when Covad's bottom line has been red - net loss was $12.8 million in the fourth quarter of last year - but the company has also raised $125 million to fund its strategic convergence push.

The company's CEO Charles Hoffman says VoIP is the key to reshaping the company, which is rebounding from a Chapter 11 filing and expects to be profitable by mid-year. "This is a major step in transforming Covad from a broadband company to an integrated voice and data communication provider," he says.

Covad says it wants to act fast, hence buying GoBeam, which already has 250 customers and the technology in place for delivering VoIP. Covad plans to push these offerings into its nationwide service area as soon as possible, with services scheduled to be available after mid-year. Residential services will follow early next year, Hoffman says.

Curently 66% of Covad's business comes from business customers, so it wants to address their needs before pushing into residential voice services, he says.

The success of Covad's effort rests in how aggressively it pursues voice customers in regions where GoBeam doesn't offer voice now, the company says.

Also helping this effort is a new partnership with America Online to offer a broadband service for residential customers.

The partnership can only drive more customers to Covad, which will be a plus when it rolls out residential VoIP services next year. The more data customers they have at that point, the more potential customers they'll have for converging their voice onto the same access line.

Story at Network World Fusion
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