PARTNER CHANNEL: Covad Rolls Out 2 Services, New Distribution Structure

Posted: 6/2003

Covad Rolls Out 2 Services, New Distribution Structure

By Tara Seals

Covad Communications Co. says it's in trials with voice service, but still is deciding how to approach the market and which channels to utilize, says Ivan Montoya, director of channel marketing for the DSL provider. While voice remains under wraps, the company has introduced the indirect channel to two new services: Web hosting and upgraded ADSL. It also unveiled reduced pricing on SDSL services and has been talking up its recently formalized company structure.

The Web hosting packages, based on technology from Netopia Inc., have prices starting at less than $20 per month when bundled with access service. The services target small businesses and include e-mail, Web mail, a simple-to-use Web site builder and Web reports. The plans also feature free anti-virus and spam protection, an online account management tool and round-the-clock live customer phone support.

"To be successful, small businesses need to spend more time focusing on their bottom line and less time worrying about their Internet service," says Pat Bennett, executive vice president and general manager for Covad Broadband Solutions. "We want our customers to be able to take advantage of the popular uses for broadband that can help their business grow and utilize easy-to-use Web-based services."

Covad offers an e-mail-only plan for $9.95 per month, while the Web hosting plans range from $19.95 a month to $79.95 a month when bundled with access services.

The Covad Web Builder is a new tool for users with no prior Web design experience. It provides more than 50 point-and-click templates, each with a unique set of customizable images, pages and formatting.

The company also has rolled out an enhanced ADSL service, TeleSoho 3.0, with speeds up to 3mbps download and 384kbps upload. The service is "meant to compete with the ILECs," says Montoya. TeleSoho 3.0 starts at $149.95, while the existing TeleSoho 1.5 (at half the upload speed) starts at $69.95.

With speeds ranging from 144kbps to 1.5mbps, the SDSL TeleSpeed service's pricing has been reduced to $139.95 per month. Small businesses can select the speed they need and upgrade at any time.

Covad also showed off its new formalized business structure at the show. Montoya says the company now has a two-pronged structure meant to canvas the market and avoid channel conflict. Its Strategic Partnerships prong includes its consumer and enterprise businesses, as well as large wholesale relationships with service providers such as Worldcom Inc., XO Communications Inc., AT&T Corp. and Earthlink Inc. The Broadband Solutions, "direct" wing includes small business, agent and VAR partner programs, and smaller resellers such as ISPs.

"Wholesale support is more managing traffic and relationships - there are five or six of the big ones with wholesale DSL at their core," says Montoya. Meanwhile, the direct side consists of three channels that focus on offering Covad services to the SMB space: In-bound Web sales/telesales and direct e-mail campaigns geared to the SOHO market; outside sales and telemarketing to reach distributed enterprises such as restaurant chains, property management firms and fitness centers; and the agent/VAR/ISP programs.

"Agents are the fastest growing channel," says Montoya. "They are a very important part of our strategy."

Since launching the channel in January 2002, the company has grown to 1,400 agents as of March. Montoya says Covad hopes to double or triple that this year. To prepare for growth the company recently upgraded its systems with a partner relationship management system from ChannelWave Software Inc.

"We grew by 30 percent-and a six-time increase in sales," says Montoya.

As for channel conflict, Montoya says the wholesale and "direct" [agent] sides of the house have different purposes.

"[Wholesale customers] are working it from a high end," he explains. "They offer complex, integrated service in which DSL is only one part. But the SMB space is wide open -- penetration is limited so we don't run into each other very often."

When asked about the ramifications of the FCC's ruling that sunsets line sharing, Montoya explains the development affects only the consumer side. "It certainly doesn't kill our model," he says and notes business DSL will remain a big focus for the company.