Covad Counting on Ethernet Growth
Covad Communications Inc. is a classic example of a service provider that has been willing to change -- sometimes dramatically -- in order to survive. The success (or not) of its latest transformation should be evident within the next year, as Covad moves into Carrier Ethernet and more advanced services.
Originally a competitive provider of DSL access over leased lines in the mid-90s, Covad today boasts a national footprint reaching 4,400 central offices in 45 states and a service portfolio that includes traditional T1, DS3, and DSL offerings but also Ethernet, voice, and wireless. When its merger with MegaPath Inc. is completed, Covad will feature managed and value-added services as well. (See Covad/MegaPath Will Keep Buying.)
The most recent reinvention of Covad began in 2008, when Platinum Equity took the company private in a $470 million transaction. Covad at that time launched a transformation of its national network, moving to an IP/MPLS core, and dislodging the legacy ATM gear originally deployed to support DSL.
A prime reason for that transformation was to set up Covad's push into business and wholesale Ethernet offerings. (See Covad's Brad Roldan: Ethernet Makeover.)
"We have taken an aggressive Ethernet strategy targeting the wholesale space, to be a last-mile metro provider," says Jeff Brown, vice president of Covad Carrier Services. "In the greater Los Angeles area, for example, we have launched an Ethernet-over-copper service that has a deep and wide presence with service in more than 100 central offices. So the actual number of buildings we cover is in the hundreds of thousands."
To broaden that channel further, Covad connected with the CENX Inc. Ethernet exchange, beginning in Los Angeles, to make it easier for its wholesale customers to reach even more endpoints. (See CENX Signs Up Covad.)
"Currently, the engagement process time is lengthy," Brown says. "The timeline from when a customer shows interest to when they can place orders can be long. There is interoperability testing and vetting of the service characteristics to be done, because there are often very subtle differences between one service offering and another."
Working with an Ethernet exchange like CENX lets Covad advertise its service, so to speak, so partners can see where it's available. Covad can also use the exchange to mediate any differences in service, Brown says. That lets Covad provide service more quickly and generate revenues faster as well.
"We have seen interest from foreign carriers who haven't shown an interest in Covad in the past. There are multinational companies who need broadband speeds and want last-mile Ethernet services. We can be a good fit for them."
The CENX connection complements the work Covad has been doing over the past year to build up its Ethernet presence, says Cindy Whelan, analyst with Current Analysis .
"Covad is starting to see more takeup of its service, more interest in their services, in part because they provide an extensive footprint, and they have been focusing on Ethernet for almost a year now, rolling out that service," Whelan says. "The CENX connection will help them."
For CENX, Covad provides a quick expansion of its Ethernet end points in the Los Angeles area, and wherever else the two companies end up connecting. CENX's marketing stresses the number of endpoints connected to its exchange, rather than the number of service providers, says Eric Gillenwater, CENX VP of worldwide development. (See Size Matters, Says CENX Founder)
Because Covad is now a private company, it doesn’t share revenue or market share data, but the company seems to be on target with its growth plans, Whelan says.
"They seem to be doing well," she comments. "Covad has some advantages for smaller carriers. They are a smaller company themselves, but they have great reach in terms of footprint, and they are national, not regional. That has a strong appeal."
— Carol Wilson, Chief Editor, Events, Light Reading