Covad settles antitrust suit against Verizon

Covad Communications Group Inc. on Wednesday settled an antitrust suit and other disputes with Verizon Communications Inc.

Covad was among the first of the competitive local exchange carriers formed in the wake of the U.S. Telecommunications Act of 1996, which called for regional incumbent carriers such as Verizon to let other companies offer services over their lines. Covad sued Verizon, then Bell Atlantic, in 1999 alleging practices such as price-gouging, price discrimination and obstructing access to the carrier’s facilities. In 2001, Verizon sued Covad alleging the company had falsified trouble tickets concerning Verizon phone lines.

The settlement agreement announced Wednesday ended all litigation between the companies, as well as billing disputes, according to a joint statement. The companies did not disclose any financial terms of the settlement.

In a related deal, Covad’s existing wholesale customer agreement with Verizon was expanded, allowing Covad to offer services over lines being used by resellers of Verizon voice services. For example, a company that today offers a voice service over Verizon’s lines could now also sell a DSL (digital subscriber line) service provided by Covad on those lines, said Eric Rabe, a Verizon spokesman.

Also Wednesday, Covad announced a separate agreement with MCI Inc., now being acquired by Verizon, in which Covad will become a preferred provider of local access and network services to MCI’s DSL customers, the companies said. Verizon expects its acquisition of MCI, already approved by the U.S. government, to close in January, Rabe said.

Based in San Jose, California, Covad provides DSL, T-1 leased line, VOIP (voice over Internet Protocol) and Web hosting services. It had about 580,000 broadband lines in service at the end of 2005’s third quarter, about 230,000 of those for businesses and the remainder for consumers, according to the company. The expanded wholesale relationship with Verizon could expand the provider’s addressable market. Its network reaches 44 U.S. states and passes more than 50 percent of the country’s population, according to Covad.