Covad drops lawsuit against Verizon, reaches deal with MCI |

Covad drops lawsuit against Verizon, reaches deal with MCI

SAN JOSE, Calif. – Shares of Covad Communications Group Inc. jumped nearly 51 percent Wednesday after the high-speed Internet access company announced it resolved an antitrust lawsuit and other disputes with Verizon Communications Inc.As part of the deal, Covad expanded its line-sharing agreement with Verizon, allowing it to offer its Digital Subscriber Line services over lines sold by Verizon voice resellers. It also announced a line-sharing agreement with MCI, which is being acquired by Verizon.Terms of the settlement, which resolved all legal issues between the companies, were not disclosed.Shares of Covad jumped 34 cents, to $1.01, in Wednesday morning trading on the American Stock Exchange. Shares of Verizon, which is expected to close its MCI deal early next year, lost 21 cents, to $30.23, on the New York Stock Exchange.”These agreements build a new, positive relationship with Verizon,” said Charles Hoffman, Covad’s chief executive officer.San Jose-based Covad was formed as an independent provider of DSL service, but it ran into trouble in 2000 as competition with regional phone companies increased and capital dried up amid the high-tech downturn.It emerged from bankruptcy in December 2001 but has continued to struggle. In October, it reported a loss of $15.8 million, or 6 cents per share, on sales of $112.1 million. Covad said it has 578,400 broadband lines in service at the end of the period.The long-running legal wrangling stems from the fact that Covad, in order to provide high-speed Internet access over copper phone lines, must work closely with traditional phone companies. Phone companies offer their own DSL service, too.Covad originally filed its antitrust suit against Verizon predecessor Bell Atlantic Corp. in 1999. Two years later, Verizon sued Covad, alleging it had filed 22,000 bogus trouble ticket reports that cost the phone company millions of dollars to check out.”We look forward to a continuing relationship with Covad as a valued supplier and customer to MCI,” said Randal Milch, a senior vice president and deputy general counsel at Verizon. “We are also pleased to begin this new chapter in the Covad-Verizon relationship.”

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