EarthLink and Covad Announce Additional Markets for Innovative Bundle of Voice Services and High-Speed Internet
Thursday March 16, 7:00 am ET
EarthLink Investment to Bring Voice and High-Speed Bundle to 8 Additional Cities
SAN JOSE, Calif. and ATLANTA, March 16 /PRNewswire-FirstCall/ -- Covad (Amex: DVW - News), a leading national provider of integrated voice and data communications, and EarthLink (Nasdaq: ELNK - News), the nation's next generation Internet service provider, today announced expanded Voice over IP (VoIP) market availability that will give EarthLink the ability to offer customers low-cost phone services bundled with high-speed Internet access in eight additional cities. EarthLink has agreed to provide Covad with $50 million in debt and equity financing to fund additional network build-outs that will bring Covad's line-powered voice access to Atlanta, Chicago, Los Angeles, Miami, New York City, Philadelphia, San Diego, and Washington, D.C. Already, EarthLink provides DSL and Home Phone Service in Dallas, TX, San Francisco and San Jose, CA, and Seattle, WA.
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Made possible through Covad's line-powered voice access, EarthLink DSL and Home Phone Service provides an alternative to the local phone companies. Customers can sign up for a bundle of local and long distance phone service and high-speed Internet access using their existing phones, wiring and computer equipment. Like traditional phone service, EarthLink's voice services will operate during a power outage, support enhanced 911 calling and offer custom calling features.
"With our Internet voice initiatives, we are reshaping our position in the marketplace and redefining what it means to be an ISP," said Garry Betty, EarthLink's president and chief executive officer. "EarthLink DSL and Home Phone Service strengthens our role as a 'Total Communications Company' by delivering one of the industry's most comprehensive portfolios of voice and data products to meet our subscribers' growing communications needs."
"This agreement demonstrates the success of our strategy to target the residential market through strategic partnerships," said Charles Hoffman, president and CEO of Covad Communications. "By strengthening our relationship, Covad and EarthLink are better able to provide a consumer VoIP service that far exceeds the competition in both voice quality and features."
Covad's line-powered voice access marries the "last mile" of traditional telephone copper wiring with EarthLink's advanced VoIP features by taking advantage of the next-generation Digital Subscriber Line Access Multiplexer (DSLAM) technology that will enable Covad to offer higher-speed broadband access (ADSL 2+, G.SHDSL) and new business-class services such as metro Ethernet and bonded T1.
EarthLink customers will enjoy high quality service because their calls will be delivered over Covad's and EarthLink's managed national networks rather than the public Internet. Subscribers will also receive EarthLink's award-winning customer service and Internet tools and services like spamBlocker, VirusBlocker(TM) and Spyware Blocker(TM).
In exchange for EarthLink's new financing for Covad, EarthLink will receive $10 million in common stock and $40 million in convertible debt, due in 2011. Additional details on the investment will be disclosed by Covad and EarthLink in Form 8Ks to be filed with the Securities and Exchange Commission. This investment is subject to customary closing conditions. The closing is expected to occur before March 31, 2006.
