http://news.com.com/Covad+tries+an+end+run/2100-1034_3-5306231.html
By Jim Hu
Kicked around for years by regulators and local phone giants,
broadband pioneer Covad is taking its future into its own hands.
Covad -- one of the few start-ups to survive the telecom shakeout --
on Tuesday said it had begun selling Internet phone service to
customers in 42 cities. At first glance the announcement read like
another product release, but Covad's entry into the VoIP (voice over
Internet Protocol) market underscores the company's efforts to
preserve its future as its present business is threatened by an
uncertain regulatory landscape.
Born from the Telecommunications Act of 1996, Covad has made a strong
run at selling broadband DSL access to consumers and small
companies. But much of this consumer business is in jeopardy because
parts of the Telecom Act are being dismantled.
"The problem for Covad is they've been a regulatory football," said
Scott Cleland, chief executive at market research firm Precursor
Group.
Covad's rise, fall and resurgence mirror the convoluted course of the
nation's telecommunications laws. The Telecom Act, which forced the
Baby Bell phone companies to lease their copper lines to start-ups at
regulated rates, allowed Covad to tap into the growing demand for fast
Internet access.
The Federal Communications Commission hoped the Telecom Act would
allow a hundred start-ups to blossom on the backs of the Baby Bells'
copper wire networks. But the Bells, which built these networks, were
not happy about it and complained to regulators that supporting these
start-ups hurt their businesses.
Eight years later, the pendulum is swinging favorably for the Bells, a
group that includes SBC Communications, Verizon Communications and
BellSouth. Many of the rules spelled out by the Telecom Act are in
preliminary stages of elimination. Most pressing for Covad is the
threat to pull back "line sharing" and to remove regulated lease rates
for third parties. If line sharing disappears, Covad would have to
hike prices for new DSL customers.
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