SBC, AT&T Look to Covad for Out-of-Region Broadband Reach

Counting on an approved merger, SBC Communications Inc. and AT&T Corp. have agreed to use Covad Communications Group Inc. for extended broadband services.

Such an announcement could strengthen SBC’s argument before the U.S. government that it plans to compete for residential and business customers throughout the country, ending what critics say has been an implicit agreement among the regional phone companies not to compete with each other. And indeed, SBC and AT&T assert the move will promote competition among telecom service providers.

Consumers will continue to benefit from competition in the provision of telecommunications services, making them the real winners here, said Mark Keiffer, senior vice president of business marketing for SBC, in a statement. [A]greements such as these will be especially important in enabling SBC, post-merger, to become a more effective out-of-region competitor.

If the merger is approved, Covads role will be to help the combined carriers expand IP services to subscribers. The deal adds significantly to AT&T and SBC’s reach out of region. Covad brings extensive access network assets for DSL and T1 in 24 states outside the SBC service region. According to Covad, though, this will not include selling AT&Ts newly announced hosted IP service, since Covad has its own, thanks to its acquisition of GoBeam.

AT&T has been using Covads services since January 2002. Covad recently renegotiated its line-sharing agreement with SBC until May 2009, which provides significant security for Covad.

These agreements are very important to Covad as they ensure that we will continue to be a strong competitor and supplier to AT&T and SBC now and after their merger, remarked Charles Hoffman, president and CEO of Covad, in a statement.

The companies would not disclose other terms of the agreements. SBC and AT&T expect to complete their merger by the end of this year.

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