CLEC, ISPs partner on DSL: Covad's wholesale DSL means added value for ISPs

Competitive local exchange carriers that find it hard going head-to-head with incumbent carriers should take a hint from Covad Communications.

The 15-month-old CLEC is partnering with 10 Internet service providers to provide digital subscriber line (DSL) Internet service to telecommuters and small businesses in Northern California.

Covad collocates DSL equipment from hardware vendor Diamond Lane in more than 60 central offices and outsources DSL modems to its ISP partners.

The ISPs, connected to Covad's network via a DS-3 or OC-3 asynchronous transfer mode pipe, offer value-added services such as Web hosting, e-mail and virtual private networks along with the high-speed local loop technology.

ISPs, including Concentric Network Inc. and Verio Northern California, are offering Covad's Telespeed DSL Internet access at rates from 144 kb/s to 1.5 Mb/s under their own names.

The setup helps ISPs reduce capital costs while allowing them to sell cutting-edge technology. "We want the maximum possible footprint rather than [investing] in infrastructure," said Mark Fisher, vice president of corporate marketing at Concentric, Cupertino, Calif.

The partnership emphasizes each service provider's area of expertise. "We do what we do best, which is Internet service, and they do what they do best, which is DSL connectivity," said Isabel Ehringer, president of Verio Northern California, San Francisco.

Covad is unique because it focuses on outsourcing DSL to corporate networks and ISPs and does not sell competing local loop technologies such as T-1 or ISDN.

Although Covad poses a territorial threat to Pacific Bell, Covad's relationship with ISPs is still only part of the picture, said John Hunter, an analyst at TeleChoice. "There are a lot of links in the chain. They'll still have to compete with the [incumbents] in other markets to succeed," he said.