Covad Unveils MPLS Backbone

Covad continues to transform itself into a national network operater, seeking to transcend its DSL and T-1 roots.  Today the company announced completion of a series of capacity upgrades and a nationwide MPLS deployment.  I have always watched Covad but never understood it well.  When the company sold out to private equity a year or so ago they mostly dropped off my radar screen.  Their new owners obviously needed to find a new direction for the company, and they are apparently ready to show off their new look.

Covad leases fiber and wavelength IRUs to run its network, both longhaul and metro.  The strategy is reminiscent of PAETEC (news, filings), i.e. lease the capacity and own the equipment.  It’s really not that different than their old strategy as an ISP, it’s just that the target is different.  Rather than DSLs to the consumer and T-1s to the SME, Covad is looking to sell MPLS services to businesses – presumably the SME also.

Covad says more announcements are in the wings as it rolls out its new product portfolio.  If memory serves, Covad had $400-500M in annual revenue that came almost entirely from DSL and T1 sales, it seems like it would take quite some time for their MPLS offerings to become relevant.  But one has to start somewhere, and since copper’s lifetime is getting shorter all the time I’m not terribly surprised they are heading this way.  As always, it should be interesting to watch.

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Categories: CLEC · Internet Backbones