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Covad Guarantees It In Writing for Clients

5/26/2002 8:00 PM Eastern

Anxious to assure business customers that there's no risk in getting broadband Internet access from a competitive digital subscriber line provider, Covad Communications Inc. is now putting it in writing.

The Santa Clara, Calif.-based DSL competitor now offers its business customers stricter service-level agreements that guarantee more than 99 percent uptime, as well as installation within 30 days.

That raises the bar substantially for enterprise DSL service, and could go a long way toward easing the fears of customers who've watched other competitive providers implode within the last year, including NorthPoint Communications Inc. and Rhythms NetConnections Inc.

Covad itself filed for Chapter 11 bankruptcy, but unlike other competitors, it emerged from the process.

Covad offers a range of business broadband hookups, from TeleSOHO Asymmetric DSL packages at $89 per month for a one-year contract to faster TeleSpeed DSL connections that range from $149 to $369 monthly.

This year, it also introduced TeleXtend fractional and full T-1 service, which ranges from $499 to $749 for a one-year contract.

The expanded service-level agreement includes individual guarantees for its direct customers, as well as those served through a wholesale provider. It the latter case, the wholesaler or ISP is the liaison, passing through Covad's SLAs to the end customer.

"Previously, we had offered them to our wholesale customers or ISPs on an aggregate basis," said Covad senior product manager of business services Todd Kiehn. "Now, we are expanding them to include the actual performance of every end-user they have with Covad."

The DSL provider will also guarantee its new business customers installation within 30 days for DSL or T-1 based service. If that commitment isn't met, the customer gets half off the first month's subscription fee.

When the service goes down, Covad now guarantees restoration time within four hours for T-1 customers and 24 hours for DSL customers. If it takes longer, customers receive an additional 10 percent credit to their monthly bill.

Overall, Covad is assuring 99.9 percent monthly service for its TeleSpeed DSL customers, and 99.99 percent for TeleXtend T-1 users. That translates to about 40 minutes of downtime for DSL and 4 minutes for T-1 service.

"That is a very aggressive target for us," Kiehn said. On the DSL side, that is "by far the strongest metrics you will see in the marketplace."

Combined, the new SLA terms may tip the scales back in Covad and DSL's favor when businesses consider their broadband-access options.

"That should be a real sea change in the way that they view DSL, versus the way that they see some of the other access technologies they may have gotten," Kiehn said. "It should really help shift some decision making between other technologies and our DSL services."

SQUABBLES END?

It also signals the end of the infamous blame-game squabbles that occur between the incumbent Bell operators and competitors when DSL lines falter.

"Traditionally the response has been, if your DSL loop went out or you didn't get installed, to blame the phone companies," Kiehn noted. "This marketplace has matured enough now and we've gotten good enough at our jobs to get away from that excuse and say, 'We're your vendor for all aspects of your service, and you should have faith in us to get it done properly.' "

He believes his competitors will answer this move.

"I expect the competition to react, and I would welcome a competitive battle on this access," Kiehn said.

That's already started, according to Pat Hurley, a DSL analyst for Telechoice Inc. Several of major telephone carriers have recently beefed up their own service-level agreements with business customers, he noted. The most recent was BellSouth Corp., earlier this month.

Though other companies' moves have not been as wide-reaching as Covad's SLAs, "I think they are reacting to what Covad did, to a certain degree," Hurley said. "I do think Covad has the widest-reaching and most stringent SLAs in the DSL industry right now, with that package of SLAs they came out with."

Covad is strengthening its SLAs at a time when it still must deal with wariness from enterprise customers burned by the competitive DSL implosion last year.

"I think that is probably the biggest issue left for Covad to overcome right now," Hurley said. "They seem to be doing OK financially, but I think that they have to get the message out and get people to believe that 'Yeah, we're going to be in business in a year or two years, and you can sign up with us and feel comfortable.' And personally, I think they are in a good position."

 

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