Qwest invests $15 million in Covad
By Corey Grice
Staff Writer, CNET News.com
January 19, 1999, 5:00 p.m. PT
update Qwest Communications International today invested $15 million in Covad
Communications and will, for the first time, market high-speed Internet service
through the company.
The investment gives Qwest Communications, one of a new breed of carriers building an
IP-based fiber optic network, a high-speed Internet service offering for its customers.
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Using Covad's digital subscriber line (DSL) service, Qwest will offer DSL in 22 major
metropolitan markets by the end of the year. DSL is a technology that allows high-speed
data transfers over standard copper telephone wires.
Qwest, which is building an 18,500-mile fiber network, intends to offer data services to
corporate customers and long distance voice services to
consumers and businesses.
"This is our first step toward local Internet service," said
spokesman Mike Tarpey.
The partnership gives Qwest access to the coveted "last
mile" networks into homes or businesses.
"They have an ISP now, and they have the backbone...but
until this point in time they didn't have a portion of the
network that connects to the customer, the local loop or last mile," said Claudia Bacco,
senior DSL analyst for communications consulting firm TeleChoice. "It could allow them to
provide the complete solution."
Covad, a competitive local exchange carrier (CLEC), provides DSL to Internet service
providers (ISPs) and corporate customers. The company received similar investments
earlier this month from AT&T and Nextlink Communications.
"In my mind this potentially positions Covad to offer more than just DSL," Bacco said.
To be survive long-term, CLECs such as Covad need to offer virtual private networks
(VPNs), IP faxing, or video-conferencing in addition to DSL, she said.
The companies also announced a "multimillion-dollar, multi-year" deal under which Covad
will buy network capacity from Qwest. Further details were not disclosed.
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