20041019Application.pdf

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Ms. Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington
Statehouse
Boise, ill 83720-0074
RE:Application of Covad Communications Company for a Certificate of Public
Convenience and Necessity to Provide Resold and Facilities-Based Local Exchange
Telecommunications Services within the State of Idaho
Dear Ms. Jewell:
Enclosed are the original and three (3) copies of the application, including proposed Local
Exchange tariff, of Covad Communications Company for a Certificate of Public Convenience
and Necessity to Provide Resold and Facilities-based Local Exchange Telecommunications
Services within the State of Idaho.
Please acknowledge receipt of this filing by returning a date-stamped copy of this letter in the
return envelope provided for this purpose.
If you or your staff have any questions regarding this application, please contact me at (407)
740-8575 or via email at mbyrnes(illtminc.com. Thank you for your assistance in this matter.
Sincerely,
7U-e
Monique Byrnes
Consultant to
Covad Communications Company
MB/spcc: Gregg Hyde - Covad
file: Covad - ID Localtms: idfD400
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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Application of
Covad Communications Company
Provide Resold and Facilities-based Local
Exchange Service Throughout Idaho
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Case No.~ V 0 - f, 0'-1 -
APPLICATION FOR CERTIFICATE OF PUBLIC
CONVENIENCE AND NECESSITY TO PROVIDE
RESOLD AND FACILITIES-BASED LOCAL TELECOMMUNICATIONS SERVICES
Pursuant to Procedural Order No. 26665 in Case No. GNR-96-41 and Section 253 of the Federal
Telecommunications Act of 19962 ("Act"), Covad Communications Company ("Covad") respectfully requests
that the Public Utilities Commission ("Commission ) grant Covad a Certificate of Public Convenience and
Necessity to include authority to provide local exchange telecommunications services within the State of Idaho.
In support of its Application, Covad submits the following:
Introduction
Covad is requesting authority to provide basic resold and facilities-based local exchange services to
both residence and business customers throughout Idaho in all exchanges which are not exempt from
competition. The services that Covad intends to offer will be an adjunct to the long distance services
that the Company has filed and requested authority to provide statewide. Should its Application be
granted, Covad plans to commence offering service immediately upon the establishment of the
appropriate and necessary network arrangements.
Title 61 of the Idaho Code ~~61-256 through -528 and IDAPA 31.01.111 (Rule 111).
Telecommunications Act of 1996,46 V.C. ~253 (1996).
Idaho Local Application of
Covad Communications Company
Page 1
II.Description of the Applicant
(a)
(b)
Covad Communications Company is incorporated in the State of California. The main address
of the corporation is:
Covad Communications Company
110 Rio Robles
San Jose, California 95134-1813
Telephone: [phone]
Facsimile: [phone]
Toll Free: [phone]
Website: www.covad.com
All correspondence, notices, inquiries and other communications regarding this Application
should be addressed to:
Monique Byrnes
Consultant to Covad Communications Company
Technologies Management, Inc.
O. Box 200
Winter Park, Florida 32789
Telephone: [phone]
Facsimile: [phone]
(c)The Applicant is authorized by the Idaho Secretary of State to transact business within the
State of Idaho. Please see Exhibit A.
(d)Covad Communications Company is a wholly-owned subsidiary of its parent corporation
Covad Communications Group, Inc., a telecommunications services business. Covad
Communications Company sister company, DIECA Communications, Inc. is also a
certificated telecommunications service provider authorized to operate in several states.
Covad Communications Group, Inc. owns other subsidiaries as well, but with the exception of
Covad Communications Company and DIECA Communications, Inc. they do not provide
telecommunications services.
Idaho Local Application of
Covad Communications Company
Page 2
III.
IV.
Exhibits
In support of this Application, the following exhibits are attached hereto:
Exhibit A -
Exhibit B -
Exhibit C -
Exhibit D -
Exhibit E -
Exhibit F -
Certificate of Incorporation;
Certificate of Authority to Transact Business in the State of Idaho;
Financial Statements
Profiles of Senior Management Key Personnel
Proposed service area map (Rule 112( c ))
Proposed Tariff
Financial, Technical and Managerial Qualifications
Covad possesses the managerial, technical and financial ability to provide local telecommunications
service in the State of Idaho. Covad has strong financial resources to enable the Company to
successfully provide local telecommunications service in the State of Idaho and the management team
in place to manage this operations.
IV.A. Financial Qualifications
IV.
(a)By utilizing its current customer servIce, operations and management workforce and
infrastructure supporting its existing operations, Covad is financially and otherwise capable
and qualified to offer and maintain all of its tariffed services in its territories.
(b)Initially Covad operations in Idaho will be limited to resale arrangements with facilities-based
Idaho Competitive Local Exchange Carriers ("CLECs ). No new funds or capital will be
required to expand the Company s services in Idaho.
(c)COY AD provides the financial statements of its parent company, Covad Communications
Group, Inc. as proof of its financial stability to provide the required services within the State
of Idaho as Exhibit B.
Managerial Qualifications
(a)Covad possesses managerial qualifications to operate a Competitive Local Exchange Carrier
within the State of Idaho. Biographical summaries of the managerial experience ofCovad are
found in Exhibit C.
Idaho Local Application of
Covad Communications Company
Page 3
(a)
IV.C. Technical Qualifications
Covad's services will satisfy the minimum standards established by the Commission. The
Company will file and maintain tariffs in the same manner and form as required of incumbent
local exchange telecommunications companies with which Covad seeks to compete.
(b)Covad Communications Company is a leading national broadband service provider of high-
speed Internet and network access utilizing Digital subscriber line ("DSL") technology. It
offers DSL services, T -1 services, managed security, hosting IP, dial-up services and bundled
data and local & long distance voice services directly through Covad's network and through
Internet Service Providers, resellers, and to small and medium-sized business and residential
users. Covad operates the largest national DSL network with services currently available in 96
of the top MSAs and is one of the largest facilities-based providers in the country. Covad'
network currently covers more than 45 million homes and businesses throughout the
contiguous United States and reaches approximately 45 percent of all US homes and
businesses.
(c)Covad Communications Company entered into an Interconnection Agreement with Qwest
communications Corporation on January 15 , 1999 and this Agreement continues in effect.
Idaho Local Application of
Covad Communications Company
Page 4
VI.
Customer Service
Covad understands the importance of effective customer service for local service consumers. Covad
provides a toll free customer service telephone number that is available with live operator response 24
hours per day, 7 days per week. Covad's toll free telephone number for customer inquiries, complaints
and repair is 1-800-462-6823. In addition, customers may contact the company in writing at the
headquarters address.
The name, number and electronic mailing address of the person designated as a contact for the
Commission Staff for complaint resolution, inquiries and matters concerning rates and price lists or
tariffs:
Karen S. Frame, Senior Counsel
7901 Lowry Boulevard
Denver, Co 80230
720-670-1069
kframe(illcovad. com
Service Description and Anticipated Service Date
Covad Communications Company plans to provide telecommunication services to residential and
business consumers in rural and urban areas throughout the State of Idaho.
Covad intends to initially offer resold service throughout the entire State of Idaho, to small businesses
with five (5) service lines or less, through marketing via television, internet and radio advertisements.
At a later point in time, Covad intends to install network transmission equipment and provide
facilities-based services. Covad has not previously provided service in the State of Idaho.
Idaho Local Application of
Covad Communications Company
Page 5
VI.Public Interest Standard
Grant of Covad's Application to provide facilities-based local exchange services is in the public
interest and serves the public convenience and necessity. In enacting the Federal Telecommunications
Act of 1996, the United States Congress determined that it is in the public interest to promote
competition in the provision of telecommunications services, including local exchange services.
Experience with competition in other telecommunications markets, such as long distance, competitive
access, and customer premises equipment, demonstrates the benefits that competition can bring to
consumers. Consumers are enjoying increased services, lower prices, higher quality, and greater
reliability. This is true not only with respect to the service offerings of the new entrants, but also as a
result of the response of incumbent monopoly providers to the introduction of competition.
Covad plans to bring the benefits of competition to Idaho consumers. Covad's proposed services will
provide multiple public benefits by increasing the competitive choices available to users in Idaho.
Enhanced competition in telecommunications services likely will further stimulate economic
development in Idaho. In addition, increased competition will create incentives for all carriers to offer
lower prices, more innovative services, and more responsive customer service.
Idaho Local Application of
Covad Communications Company
Page 6
IX.Conclusion
This Application demonstrates that Covad possesses the technical, financial and managerial resources
to provide local exchange service in Idaho. Covad Communications Company has reviewed the
Commission rules and agrees to comply with them.
Wherefore, Covad respectfully requests that the Commission:
grant Covad authority to operate as a provider of resold and facilities-based basic local
exchange telecommunications services in the State of Idaho;
Respectfully submitted
Covad Communications Company
' aT. n S. Frame
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~r "ounsel
7901 Lowry Boulevard
Denver, Colorado 80230
Idaho Local Application of
Covad Communications Company
Page 7
COV AD COMMUNICATIONS COMPANY
Exhibit A
Certificate of Incorporation
It
SECRETARY OF STATE
CORPORATION DIVISION
COVAD COMMUNICATIONS COMPANY
BIU JONES, Secretary of State of the State of California
hereby certify:
That the annexed transcript was prepared by and in
this office from the record on file , of which it purports
to be a copy, and that it is full , true and correct.
IN WITNESS WHEREOF, I execute
this certificate and affix the Great
Seal of the State of California this
J A N 2 9 1997
Secretary of State
SeelState Form CE-108 (rev. 6/96)
96 32740
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In the' orfice or t;.. Sec,eta,., of S'ateof ti,e ~tate of California
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ARTICLES OF INCORPORATION OCT - 7 1996
COVAD COMMUNICATIONS COMPANY
The name of this corporation is Covad Communications Company.
The purpose of this corporation is to engage in any lawful act
or acti vi ty for which a corporation may be organized under the
General Corporation Law of California other than the banking busi-
ness, the trust company business or the practice of a profession
permitted to be incorporated by the California Corporations Code.
III
The name and address in the State of California of this
corporation s initial agent for service of process is Mark
Ostler, Cohen & Ostler, 525 University Avenue, Ste. 410, Palo Alto,
California 94301.
This corporation is authorized to issue only one class of
shares of stock; and the total number of shares which this
corporation is aut~orized to issue is Ten Million (10,000 ,000) .
Section 1. Limitation o Directors . The liability
of the Directors of this corporation for monetary damages shall be
eliminated to the fullest extent permissible under California law.
Sec~ion 2. ~icatioI1 of Corporate Agents This
corporat ion is authorized to provide indemnification of its agents
(as defined in Section 317 of the California General Corporation
Law) for breach of their duty to this corporation and its share-
holders through bylaw provisions or through agreements with the
age~t3, or both, in excess of the indemni f ication otherwise permit-
t ed by such Sect ic:1 317, subj ec i:. to the imi ta on such excess
indemnif ication set forth in Section 204 of the California General
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Articles of Incorporation
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Section 3. ReDeal or Modification Any repeal or modifica-
tion of the foregoing provisions of this Article V by the share-
holders of this corporation shall not adversely affect any right or
protection of an agent of this corporation existing at the time
such repeal or modification.
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COV AD COMMUNICATIONS COMPANY
Exhibit B
Certificate of Authority to Transact Business in the State of Idaho
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Office of the Secreta ry of State
CERTIFICATE OF AUTHORITY
caVAe COMMU NfCA TIONSCOMPANY
File Number C 155464
I, BEN YSURSA, Secretary of State of the State of Idaho. hereby certify that an
Application for CertifIcate of Authority, duly executed pursuant to the provisions of the
Idaho Business Corporation Act. has been received in this office and is found
conform to law-
ACCORDfNGL Yand by virtue of the authority vested ~n me by law, I issue thts
Certifrcateof Authority to transact business in this State and attach hereto a duplicate
of the application 'for such certificate.
Dated~ 12 July 2004
SECRETARY OF STATE
By
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APPLICATION FOR CERTIFICATE
OF AUTHO.RITY (For Profit)
(Instructions on Ba~k of Application). Ji l2 'p If:)(,
:'t.Cb(( tARY OF STATEThe undersigned Corporation applies fora Certificate of Authorilyandstatesas fellows: S r-A fF. OF IDAHO
1. The name of the corporation is:
Covad Communications Company
2. The namB which it shall use in Idaho is:
3. It is incorporated under the taws of:California
Covad Communications Company
4, Its date of incorporat~on is:October 7, 1996
5. The address of its prfncipatoffice is:
110Rio Robles, San Jose , CA 95134
6. The address to which correspondence should be addressed, rfdifferent from itam 5. is:110 Rio Rooles, San Jose, CA 95134t Attn: Debra J. McManaman
, ,
-u:National Registered Agents, Inc.e s rea a ress 0 I S reg sere oruce In ,a a IS:.
and its registered agentin Idaho atthat address is: 1423 Tyrell Lane ,Boise I 10 83706
8. The names and respective business addresses of its directors and officers are:
Name
Charles E. Hoffman
Office
Director/President
Address
110 Rio Robles. San Jose, CA95134
110 Rio Robles, San Jose, CA 95134Mark A. Richman DireGtor/EVP & CFO
Mark L. Brandt Director/Treasure r 110 Rio Robles, San Jose. CA 95134
110 Rio Robles. San Jose, CA95134Douglas Carle Assistant Secretary
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Dated: July 2, 2004
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Signature:
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i Typed Name: Douglas Carlen
C~paclty: Assistant Secretary
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SECRETARY OF STATE
CERTIFICA TE OF STATUS
DOMESTIC CORPORATION
" KEVIN SHELLEY, Secretary of State of the State of California, hereby certify:
That on the 7th day of October, 1996, COVAD COMMUNICATIONSCOMPANY became incorporated under the laws of the State of California byfiling its Articles of Incorporation in this office: and
That said corporation corporate powers rights and privileges are notsuspended on the records of this office; and
That according to the records of this office, the said corporation is authorized toexercjseall its corporate powers, rights and privileges and is in good legalstanding in the State of California; and
That no infonnation is available in this office on the financial condition, businessactivity or practices of this corporation.
IN WITNESS WHEREOF, I execute this
certificate and affix the Great Seal
of the State of California this day
of July 7. 2004.
KEV IN SHELLEY
Secf('tary of State
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CERTIFICATE
, BEN YSURSA, Secretary of State of the State of Idaho, hereby certify that I am
the custodian of the assumed business name records of this State.
I FURTHER CERTIFY That the records of this office show that a certificate of
assumed business name for COV AD COMMUNICATIONS COMPANY was filed by
DIECA COMMUNICATIONS INC, as owner(s).
I FURTHER CERTIFY That the certificate of assumed business name was filed
in this office on 7 January 2000, under the file number D 31914 , and that the certificate
of assumed business name has not been canceled.
Dated: 29 June 2004
SECRETARY OF STATE
~~~~
COV AD COMMUNICATIONS COMPANY
Exhibit C
Financial Statements
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Table of Contents
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM to-KIA
AMENDMENT NO.
(MarkOne)
(8)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from
Commission file number 000-25271
COY AD COMMUNICATIONS GROUP , INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction
of Incorporation or Organization)
77-0461529
(I.S. Employer
Identification No.
110 Rio Robles, San Jose, California 95134
Registrant's telephone number, including area code:
[phone]
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $0.001 Per Share
(Title of Class)
Stock Purchase Rights Pursuant To Rights Agreement
(Title of Class)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15( d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (8) No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S- K is not contained herein
and will not be contained, to the best of registrant's knowledge , in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. 0
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Table of Contents
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Covad Communications Group, Inc.
We have audited the accompanying consolidated balance sheets of Covad Communications Group, Inc. as of
December 31 , 2003 and 2002, and the related consolidated statements of operations, stockholders ' equity (deficit), and cash
flows for each of the three years in the period ended December 31 2003. These fmancial statements are the responsibility of
the Company s management. Our responsibility is to express an opinion on these fmancial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
fmancial statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the fmancial statements referred to above present fairly, in all material respects, the consolidated fmancial
position ofCovad Communications Group, Inc. at December 31 2003 and 2002, and the consolidated results of its operations
and its cash flows for each of the three years in the period ended December 31 , 2003, in conformity with accounting
principles generally accepted in the United States.
As discussed in Note 15, the consolidated financial statements for the year ended December 31 2003 have been restated.
Isl Ernst & Young LLP
Walnut Creek, California
February 12 2004
except for Note 15
as to which the date is May 11, 2004
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COY AD COMMUNICATIONS GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share amounts)
December 31,
2003 2002
(Restated, see Note 15)
ASSE TS
Current assets:
Cash and cash equivalents
Short-tenn investments
Restricted cash and cash equivalents
Accounts receivable, net of allowances of $4 951 at December 31 , 2003
($5 388 at December 31 , 2002)
Unbilled revenues
Other receivables
Inventories
Prepaid expenses and other CUITent assets
376
969
892
94,416
108 076
576
528
127
637
335
761
746
921
385
096
524
Total CUITent assets
Property and equipment, net
Collocation fees and other intangible assets, net of accumulated amortization
of $49 698 at December 31 2003 ($32 372 at December 31 2002)
Investments in unconsolidated affiliates
DefeITed costs of service activation
DefeITed customer incentives
Other long-tenn assets
160 625
279
848
242 740
108 737
31,486
431
042
284
026
286
540
548
Total assets 334 711 442 161
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable
Accrued compensation
CuITent portion of capital lease obligations
Accrued collocation and network service fees
Accrued transaction-based taxes
Accrued interest
Accrued market development funds and customer incentives
Unresolved claims related to bankruptcy proceedings
Other accrued liabilities
Total liabilities
Commitments and contingencies
Stockholders ' Equity (Deficit):
PrefeITed stock, $0.001 par value; 5 000 000 shares authorized; no shares
issued and outstanding at December 31 , 2003 and 2002
Common stock, $0.001 par value; 590 000 000 shares authorized; 230 163 012
shares issued and outstanding at December 31, 2003 (223 182 511 shares
issued and outstanding at December 31 , 2002)
982 915
661 774
165
714 537
268 426
683 683
024 422
378 381
607 581
114 317 113 884
000 000
258 191
963 972
726 815
340 264 359 862
Total CUITent liabilities
Long-tenn debt
Collateralized customer deposit
DefeITed gain resulting from deconsolidation of subsidiary
Unearned revenues
230 223
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Common stock Class B, $0.001 par value; 10 000 000 shares authorized;
no shares issued and outstanding at December 31, 2003 and 2002
Additional paid-in capital
Deferred stock-based compensation
Accumulated other comprehensive loss
Accumulated deficit
Total stockholders ' equity (deficit)
Total liabilities and stockholders ' equity (deficit)
See accompanying notes.
Page 45 of 121
651 267 612 319
(14,459)(160)
(953)(747)
641 638)529 336)
553)299
334 711 442 161
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Table of Contents
COY AD COMMUNICATIONS GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share and per share amounts)
2003
Year ended December 31,
2002
Revenues, net
Operating expenses:
Network and product costs
Sales, marketing, general and administrative
Provision for bad debts (bad debt recoveries)
Depreciation and amortization of property and
equipment
Amortization of intangible assets
Provision for restructuring expenses
Provision for long-lived asset impairment
Litigation-related expenses, net
(Restated, see Note 15)$ 388 851
288 122
140 081
559
325
235
Total operating expenses 503,421
Loss from operations
Other income ( expense):
Interest income
Realized gain (loss) on short-term investments
Other than temporary losses on short-term
investments
Provision for impaIrment of investments In
unconsolidated affiliates
Equity in losses of unconsolidated affiliates
Gain (loss) on disposal of investments in
unconsolidated affiliate
Interest expense (contractual interest expense was
$142 356 during the year ended December 31
2001)
Miscellaneous income (expense), net
Reorganization expenses, net
Gain on extinguishment of debt
(114 570)
105
(747)
(279)
526)
715
Other income (expense), net 268
Net income (loss)(112 302)
Basic and diluted per share amounts:
Net income (loss)(0.50)
11 11
Weighted average common shares used in computing
basic and diluted per share amounts 224 949 891
See accompanying notes.
383,496
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298 336
150 373
319
112,438
650
(11 628)
564,488
(180 992)
122
(17)
(388)
(806)
(636)
581)
(1,530)
836)
(184 828)
(0.84)
JJf1
219 743 662
2001
332 596
461 875
199 908
(658)
13 7 ,920
919
364
988
31,160
869 476
(536 880)
593
909
311)
(10 069)
(13 769)
178
(92 782)
218)
( 62 620)
033 727
881 638
'" ."
344 758
1.94f!
177 347 193
III
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COY AD COMMUNICATIONS GROUP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQillTY (DEFICIT)
(Amounts in thousands, except share amounts)
Preferred Stock
Notes Accumulated
Common Stock Additional Deferred Receivable Other Stockh.
Paid-In Stock-Based From Comprehensive Accumulated EqlShares Amount Capital Compensation Stockholders Income (Loss) Deficit (DefShares Amount
Balances at
December 31
2000 171,937,452 $172 $1,509,365 $(3,067) $(423) $556 $(1,689,266) $ (182
Issuance of
common
stock 010 000 579
Issuance of
common
stock upon
exercise of
options 100 979 109
Repurchase of
common
stock (67 500)(172)
Issuance of
common
stock upon
emergence
from Chapter
11 bankruptcy 292 800 568
Deconsolidation
of subsidiary 423
Stock-based
compensation 439
Issuance of
common
stock for
business
acquisition 268 481 062
Reversal of
deferred
stock-based
compensation 213)213
Amortization of
deferred
stock-based
compensation 597
Unrealized
losses on
available- for-
sale securities 327)
Foreign
currency
translation (588)
Net income 344 758 344
See accompanying notes.
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COY AD COMMUNICATIONS GROUP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQillTY (DEFICIT) (Continued)
(Amounts in thousands, except share amounts)
Preferred Stock
Notes Accumulated Tota
Common Stock Additional Deferred Receivable Other Stockhol
Paid-In Stock-Based From Comprehensive Accumulated EquHShares Amount Capital Compensation Stockholders Income (Loss) Deficit (DeficShares Amount
Balances at
December 31,
2001
Issuance of
common
stock
Issuance of
common
stock upon
exercise of
options
Issuance of
common
stock
following
emergence
from
Chapter 11
bankruptcy
Issuance of
warrants
Stock-based
compensation
Deferred
stock-based
compensation
Amortization
(reversal) of
deferred
stock-based
compensation
U mealized
losses on
available-
for-sale
securities
Foreign
currency
translation
Net loss
Balances at
December 31
2002
Issuance of
common
stock
Issuance of
common
- 216,542 212 359) (1,344,508)259,216 1,606,737 (257)
5,417 251 303
005 937 398
217 111 261
,/,
790
285
,/,
290 (290)
745)387
270
,/,
342
(184 828) (184
- 223,182 511 (747) (1,529,336)223 1,612 319 (160)
996 222 721
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stock upon
exercise of
options
Issuance of
warrants
Stock-based
compensation
Deferred
variable
stock-based
compensation
(restated
see Note 15)
Amortization
of deferred
variable
stock-based
compensation
(restated
see Note 15)
Amortization
of deferred
stock-based
compensation
Unrealized
losses on
available-
for-sale
securities
Net loss
984 279 6,453
640
356 1 ,
778 (26 778)
371
108
(206)
(112 302) (112
Balances at
December 31
2003
(restated
see Note 15)- 230 163,012 $ 230 $1 651 267 $ (14 459) $(953) $(1,641 638) $
j J
See accompanying notes.
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COY AD COMMUNICATIONS GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
Operating Activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Provision for bad debts (bad debt recoveries)
Depreciation and amortization
Loss on disposition of property and equipment
Non-cash reorganization expenses
Non-cash litigation-related expenses
Provision for long-lived asset impairment
Amortization (reversal) of deferred stock-based
compensation, net
Other stock-based compensation
Other non-cash charges
Accretion of interest on investments
Accretion of debt discount and amortization of
deferred debt issuance costs
Other than temporary losses on short-term
investments
Provision for impairment of investments in
unconsolidated affiliates
Equity in losses of unconsolidated affiliates
Miscellaneous income from internal-use software
license royalties
(Gain) loss on disposal of investment in
unconsolidated affiliates.
Gain on extinguishment of debt
Net changes in operating assets and liabilities:
Restricted cash and cash equivalents
Accounts receivable
Unbilled revenues
Inventories
Prepaid expenses and other assets
Deferred costs of service activation
Accounts payable
Umesolved claims related to bankruptcy
proceedings
Collateralized customer deposit
Accrued restructuring expenses
Other current liabilities
Unearned revenues
Net cash used in operating activities
Year ended December 31
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2003 2002 2001
(Restated, see Note 15)
(184 828)(112 302)
884
112
319
127 088
712
(11 628)
12,479
367
749
(1,090)
358)
305
803
(209)
747
279
388
806
606)
636
(316)627
881)180
(1,206)043
(239)153
995 159
800 676
067 927)
(3)930)
933)809)
(1,466)366)
(12 089)(24 882)
(45 553)(76 042)
See accompanying notes.
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344 758
(658)
150 839
679
856
801
988
597
439
136)
845
311
069
769
(178)
033 727)
103)
532
282
748
163
131)
(53 652)
200
024
(22 291 )
777
(455 199)
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COY AD COMMUNICATIONS GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Amounts in thousands)
Investing Activities:
Cash relinquished as a result of deconsolidating a
subsidiary
Purchase of short-tenn investments
Maturities of short-tenn investments
Sale of short-tenn investments
Redemption of restricted investments
Purchase of restricted investments in connection with
bankruptcy proceedings
Redemption of restricted investments in connection
with bankruptcy proceedings
Purchase of property and equipment
Proceeds from sale of property and equipment
Recovery of internal-use software costs
Payment of collocation fees and purchase of other
intangible assets
Proceeds from sale of investments in unconsolidated
affiliates
Decrease (increase) in other long-tenn assets
Net cash provided by (used in) investing activities
Financing Activities:
Proceeds from collateralized customer deposit
Proceeds from issuance of long-tenn debt
Principal payments oflong-tenn debt in connection
with bankruptcy proceedings
Other principal payments oflong-tenn debt
Principal payments under capital lease obligations
Proceeds from common stock issuance, net of
repurchase
Net cash provided by (used in) financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the year for interest
Supplemental Schedule of Non-Cash Investing and
Financing Activities:
Equipment purchased through capital leases
Year ended December 31
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2003 2002
(Restated, see Note 15)
(131 903)
191 894
(237 088)
165 526
017
(44 142)
181
345
(22 782)
451
814
(14 889)782)
360
371
508 (40 113)
(165)(328)
170 089
005 761
(29 040)(113 394)
94,416 207 810
376 94,416
510
'Tif
482
See accompanying notes.
2001
(1,599)
(638 096)
547,477
329 458
875
(257 202)
270 698
(15 732)
280
000
940)
225
(206)
258 238
000
000
(271 708)
393)
089)
521
(153 669)
(350 630)
558,440
207 810
051
11111
IZI
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COY AD COMMUNICATIONS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003, 2002 and 2001
(Amounts in thousands, except share and per share amounts)
1. Nature of Operations and Summary of Significant Accounting Policies
Organization, Business and Basis of Presentation
Organization and Business
Covad Communications Group, Inc. ("Covad") is a provider of high-speed connectivity services. These services include a
range of high-speed, high-capacity Internet and network access services utilizing digital subscriber line ("DSL") technology
and related value-added services. Covad's high-speed connectivity services are sold to businesses and consumers directly and
indirectly through Internet service providers ("ISPs ), enterprises, telecommunications carriers and other customers. These
services are sold directly to business and consumer end-users through Covad's field sales force, telephone sales, third party
referrals and Covad's Web site. ISPs purchase Covad's services in order to provide high-speed Internet access to their
business and consumer end-users. Enterprise customers purchase services directly or indirectly from Covad to provide their
employees with high-speed remote access to the enterprise s local area network. Other telecommunications carriers purchase
Covad's services for resale to their ISP affiliates, Internet users and enterprise customers.
Basis of Presentation
The consolidated financial statements include the accounts of Covad and its wholly owned subsidiaries (collectively, the
Company ), except for the accounts of BlueS tar Communications Group, Inc. and its wholly owned subsidiaries
(collectively, "BlueStar ), which have been excluded from the Company s consolidated fmancial statements effective
June 25, 2001 (Note 4). All significant intercompany accounts and transactions have been eliminated in consolidation.
The Company s 2004 business plan includes certain discretionary spending that is based on several assumptions
including growth of the Company s subscriber base with a reasonable per subscriber profit margin and improvements in
productivity. If necessary, the Company will curtail this discretionary spending so that it can continue as a going concern at
least through December 31 , 2004 using only the Company s unrestricted cash, cash equivalent and short tenn investment
balances in existence as of December 31 2003. Additionally, on August 21 2003, the Federal Communications Commission
FCC") issued its order in the Triennial Review of its rules for network unbundling obligations of Incumbent Local
Exchange Carriers ("ILECs ). Among other things, that order will phase-out the FCC rule requiring line-sharing over a three-
year period. The ultimate impact of the Triennial Review order on the Company s business, which currently relies to a large-
extent on line-sharing to serve the Company s consumer end-users, will depend on the Company s ability to negotiate fair
and reasonable prices substantially lower than the whole loop cost that will ultimately be permitted under the FCC's rules.
The Company does not believe the FCC's revised unbundling rules will have a material adverse effect on the Company
ability to continue as a going concern at least through December 31 2004, but the Company s operating results and fmancial
condition may be adversely affected over time if the new rules result in substantially higher prices for access to the ILECs
telephone lines.
During the year ended December 31 , 2003, a matter was identified related to prior financial reporting periods that
necessitated the recording of additional expense. Such matter was related to the modification of stock options granted to
certain employees in prior years. These modifications occurred upon the separation of such employees from the Company,
principally during 2000. Accordingly, for the year ended December 31 2003, the Company recorded additional stock-based
compensation expense in the amount of$1 236 ($0.01 per share). Such amount is reflected in the Company s sales
marketing, general and administrative expenses for the year ended December 31 , 2003. The Company does not believe this
amount is material to the periods in which it should have been recorded
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nor does it believe it is material to its consolidated operating results for the year ended December 31 , 2003. This adjustment
is principally related to 2000, the impact of which would have been to increase sales, marketing, general and administrative
expenses and net loss by $1 236 ($0.01 per share) for such year. As explained below, certain other adjustments were recorded
during 2002 that related to prior periods. $1 139 of such amounts pertained to 2000, the effect of which would have been to
decrease the Company s 2000 net loss by $0.01 per share. The aggregate effect of the adjustments recorded during the year
ended December 31 , 2003 and 2002 to the previously reported results of operations for the year ended December 31, 2000
would be to increase net loss by $97, or $0.00 per share, for such year if these adjustments had been recorded in 2000.
As part of the Company s continuing evaluation of its network assets during the year ended December 31 2002, certain
matters were identified related to prior financial reporting periods that necessitated the recording of adjustments to certain
expenses. Such matters were related principally to (i) changes in the Company s network configuration, which necessitated
reductions of the remaining estimated useful lives of certain network equipment, (ii) the capitalization of certain network and
product costs that should have been charged to operating expenses when they were incurred and (iii) various restructuring
activities that resulted in the abandonment of certain network equipment and leasehold improvements. Accordingly, for the
year ended December 31 2002, the Company recorded additional (i) depreciation expense of $6 989 ($1 306 of which was
recorded during the fourth quarter of 2002), (ii) network and product costs of $2 635 ($1 930 of which was recorded during
the fourth quarter of 2002), (iii) loss on the disposition of property and equipment of$635 (all of which was recorded during
the fourth quarter of 2002), and (iv) interest expense of$51 (all of which was recorded during the fourth quarter of 2002). In
addition, as part of the Company s fmancial statement close process for the year ended December 31 2002, the Company
discovered that it had overstated its amortization expense relating to non-cash deferred stock-based compensation in prior
periods by $3 213. Therefore, for the year ended December 31 2002, the Company recorded reductions of (i) network and
products costs of$320 (all of which was recorded during the fourth quarter of 2002) and (ii) sales, marketing, general and
administrative expense of $2 893 (all of which was recorded during the fourth quarter of 2002). Furthennore, as part of the
Company s review of its December 31 , 2002 tax accruals, it detennined that it had overstated its transaction-based tax and
other tax accruals in prior periods by $4 804, which the Company adjusted during the year ended December 31 2002 (all of
which was recorded during the fourth quarter of 2002). The adjustment was primarily driven by various complex rules
surrounding the Company s estimated liability to the Federal Universal Service Fund ("FUSF"). The Company does not
believe any of the aforementioned amounts are material to the periods in which they should have been recorded, nor does it
believe the prospective correction of such amounts during the year ended December 31, 2002 is material to its consolidated
operating results for such year (the prospective correction of the aforementioned amounts relating to prior periods increased
the Company s 2002 consolidated net loss by $2 294, or $0.01 per share, and decreased the Company s 2001 net loss by
$3,433 or $0.02 per share).
Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States
requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results
may differ materially from those estimates. The Company s critical accounting estimates include (i) revenue recognition and
the establishment of accounts receivable allowances (Notes 1 and 2), (ii) inventory valuation (Note 1), (iii) reorganization
and restructuring liabilities (Notes 3 and 4), (iv) useful life assignments and impainnent evaluations associated with property
and equipment and intangible assets (Notes 1 and 5), (v) anticipated outcomes of legal proceedings and other disputes (Notes
4 and 10), (vi) transaction-based tax and employment-related tax liabilities (Note 10) and (vii) valuation allowances
associated with deferred tax assets (Note 12).
Cash Equivalents and Short- Term Investments
The Company considers all highly liquid investments with a maturity of three months or less from the date of original
issuance to be cash equivalents. As of December 31, 2003 and 2002, cash equivalents consisted principally of money market
mutual funds. All of the Company s investments are classified as available-for-sale and stated at
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their fair market values, which are determined based on quoted market prices. The Company s short-tenn investments had
original maturities greater than three months, but less than one year, from the balance sheet dates. The Company determines
the appropriate classification of investments at the time of purchase and reevaluates such designation at the end of each
period. Unrealized gains and losses on available- for-sale securities are included as a separate component of stockholders
equity. Realized gains and losses on available-for-sale securities are detennined based on the specific identification of the
cost of securities sold.
Short-term investments consisted of the following:
December 31 2003
Gross Gross
Unrealized Unrealized
Gains Losses Fair Value
968
001
969
Amortized
Cost
S. Government agency securities
Certificates of deposit
$ 38 961
000
Total available-for-sale securities $ 48 961
Total available-for-sale securities
December 31,2002
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
$ 107 867 209 $ 108 076
$ 107 867 209 $ 108 076
S. Government agency securities
As of December 31, 2003 , the contractual maturities of all available-for-sale securities are between January 2004 and
September 2004.
Realized gains and losses resulting from the sale of available-for-sale securities were as follows:
Year ended December 31,
2003 2002 2001
373
(17)(464)
(17)909
Gains
Losses
Restricted Cash and Cash Equivalents
As of December 31 2003 and 2002, the Company held $2 892 and $2 576, respectively, in money market mutual funds
which (i) collateralize irrevocable letters of credit pertaining to certain operating lease commitments (Note 7) or (ii) are
restricted for the payment of unresolved bankruptcy claims (Note 2).
Other Investments
Other investments consist primarily of strategic investments in privately held entities. These investments in privately held
companies are accounted for under either the cost or equity methods of accounting, depending on the Company s ability to
significantly influence these entities.
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The Company performs periodic reviews of its investments for impairment. Impairment write-downs create a new
carrying value for the investment and the Company does not record subsequent increases in fair value in excess of the new
carrying value for these types of privately held investments accounted for under the cost or equity methods. The Company
recorded write-downs of $747, $388 and $10 069 during the years ended December 31, 2003, 2002 and 2001, respectively,
related to impairments of its privately held investments.
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Concentrations of Credit Risk, Significant Customers, Key Suppliers and Related Parties
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and
cash equivalents, short-term investments and restricted cash and cash equivalents. The Company s cash and investment
policies limit cash equivalents, short-term investments and restricted cash and cash equivalents to short-term, investment
grade instruments. Cash and cash equivalents, short-term investments and restricted cash and cash equivalents are held
primarily with various domestic and Canadian financial institutions with high credit standings. The Company has not
experienced any significant losses on its cash, cash equivalents or restricted cash and cash equivalents. However, during the
year ended December 31, 2001, the Company recognized other than temporary losses on certain available- for-sale securities
aggregating $1 311. No similar losses were recognized during the years ended December 31 , 2003 and 2002.
The Company conducts business primarily with ISPs, enterprise customers and telecommunications carrier customers in
the United States. As more fully described in Note 2, the Company has concentrations of credit risk with a small number of
customers, and certain of the Company s customers were experiencing financial difficulties as of December 31 , 2003, 2002
and 2001 and were not current in their payments for the Company s services at those dates. The Company performs ongoing
credit evaluations of its customers' financial condition and generally does not require collateral. An allowance is maintained
for estimated credit losses. During the years ended December 31, 2003, 2002 and 2001, the Company wrote-off certain
accounts receivable balances aggregating $385, $2 652 and $10 371 , respectively, against the allowance for credit losses.
During the years ended December 31 2003 2002 and 2001 , the Company recovered $374, $684 and $2 037, respectively, of
accounts receivable balances previously written-off against such allowance.
The Company is dependent on a limited number of suppliers for certain equipment used to provide its services. The
Company has generally been able to obtain an adequate supply of such equipment. However, an extended interruption in the
supply of equipment currently obtained from its suppliers could adversely affect the Company s business and results of
operations.
The Company s former vice-chairman and former interim chief executive officer, Frank Marshall, who was also a
member of the Company s board of directors from October 1997 to December 2002, was a minority stockholder and former
member of the board of directors of one of the Company s former ISP customers, InternetConnect, which filed for
bankruptcy protection in 2001 (Note 6).
The Company acquired an equity interest in a supplier during 1999 and disposed of this interest in 2001. Purchases from
this supplier totaled $8 346, $5 774 and $13 928 for the years ended December 31 2003 2002 and 2001, respectively. The
Company also purchased certain products from a company in which Mr. Marshall serves as a director. Purchases from this
vendor totaled $269, $258 and $140 during the years ended December 31 2003 2002 and 2001, respectively.
A member of the Company s Board of Directors, Richard Jalkut, is the President and CEO of TelePacific, one of the
Company s resellers. The Company recognized revenues from TelePacific of$611 , $1 311 and $1 822 for the years ended
December 31 2003 2002 and 2001 , respectively. Another member of the Company s Board of Directors, L. Dale Crandall
is also a director of BE A Systems, one of the Company s vendors. The Company paid $2 232, $121 and $214 to BEA
Systems during the years ended December 31 2003 2002 and 2001, respectively.
The Company believes the terms of these transactions are comparable to transactions that would likely be negotiated with
clearly independent parties.
Inventories
Inventories, consisting primarily of customer premises equipment, are stated at the lower of cost, determined using the
fust-, fust-out" method, or market.
" ,
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Property and Equipment
Property and equipment are recorded at cost, subject to adjustments for impairment, and depreciated or amortized using
the straight-line method over the following estimated useful lives:
Leasehold improvements
Computer equipment
Computer software
Furniture and fixtures
Networks and communication equipment
5 years or the term of the lease, whichever is less
2 to 5 years
3 to 5 years
2 to 5 years
2 to 5 years
The Company incurs significant costs associated with internal-use software, which consists principally of the Company
operational support systems ("aSS") software and Web site. The Company charges the costs of research to expense as they
are incurred, including pre-development efforts related to determining technological or product alternatives, and costs
incurred for training and maintenance. Software and Web site development costs, which include direct costs such as labor
and contractors, are capitalized when they can be segregated from other non-capitalizable labor activities and when it is
probable that the project will be completed and the software or Web site will be used as intended. Costs incurred for upgrades
and enhancements to the Company s software or Web site are capitalized when it is probable that such efforts will result in
additional and significant functionality. Capitalized software and Web site costs are amortized to expense over the estimated
useful life of the software or Web site. Amortization of internal-use software costs was $3 336, $6 030 and $9,433 during the
years ended December 31 2003 2002 and 2001 , respectively. The Company accounts for incidental sales oflicenses to itsass software on a cost recovery basis (Note 6).
The Company leased certain equipment under capital lease agreements. Assets and liabilities under capital leases are
recorded at the lesser of the present value of the aggregate future minimum lease payments, including estimated bargain
purchase options, or the fair value of the assets under lease. Assets under capital leases are amortized over the lesser of the
lease term or useful life of the assets. Amortization of assets under capital leases is included in depreciation and amortization
expense.
Collocation Fees and Other Intangible Assets
Collocation fees represent nonrecurring fees paid to other telecommunications carriers for the right to use central office
space to house equipment owned or leased by the Company. Such nonrecurring fees are capitalized as intangible assets and
amortized over five years using the straight-line method. The Company s collocation agreements also require periodic
recurring payments, which are charged to expense as incurred. All such collocation agreements are cancelable by the
Company at any time.
Other intangible assets consist of a customer list acquired from a third party (Note 6). Such customer list is being
amortized over twenty-four months using the straight-line method.
As of December 31 2003, the Company s estimated annual amortization expenses associated with collocation fees and
other intangible assets for the next five years were as follows:
2004
2005
2006
2007
2008
$ 17 236
$ 14 769
$ 5 067
$ 2 332
$ 1 444
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Change in Accounting Estimate
In addition to the changes in accounting estimate described above under "Basis of Presentation " effective January 1
2001, the Company reduced the remaining estimated useful lives of all long-lived assets, excluding a building and leasehold
improvements, that previously had estimated useful lives in excess of five years such that the residual balances and any
subsequent additions are now depreciated or amortized over five years using the straight-line method. This change in
accounting estimate decreased the company s net income by $14 006 ($0.08 per share) for the year ended December 31
2001.
Impairment of Long-lived Assets
The Company periodically evaluates potential impainnents of its long-lived assets, including intangibles. When the
Company determines that the carrying value oflong-lived assets may not be recoverable based upon the existence of one or
more indicators of impairment, the Company evaluates the projected undiscounted cash flows related to the assets. If these
cash flows are less than the carrying value of the assets, the Company measures the impainnent using discounted cash flows
or other methods of determining fair value.
Long-lived assets to be disposed of are carried at the lower of cost or fair value less estimated costs of disposal.
Stock-Based Compensation
The Company accounts for stock-based awards to (i) employees (including non-employee directors) using the intrinsic
value method and (ii) non-employees using the fair value method.
Under the intrinsic value method, when the exercise price of the Company s employee stock options equals the market
price of the underlying stock on the date of grant, no compensation expense is recognized. The following table illustrates the
pro forma effect on net income (loss) and earnings (loss) per share for the years ended December 31 2003 2002 and 2001
had the Company applied the fair value method to account for stock-based awards to employees:
2003 2002 2001
(Restated, see Note 15)
Net income (loss), as reported (112 302)(184 828)344 758
Stock-based employee compensation expense (reversal)
included in the determination of net income (loss), as
reported 715 112)849
Stock-based employee compensation expense that
would have been included in the determination of net
income (loss) if the fair value method had been
applied to all awards (20 507)(28,471)(66 751)
Pro forma net income (loss)(119 094)(216,411)279 856
Basic and diluted net income (loss) per common share:
As reported (0.50)(0.84)1.94
Pro forma (0.53)(0.98)1.58
The weighted-average grant date fair value of stock-based awards to employees was $1.76, $0.83 and $1.38 per share
during the years ended December 31 2003 2002 and 2001 , respectively. Such weighted-average grant date fair values were
estimated using the Black-Scholes option valuation model and the assumptions listed in Note 13 under the caption "Pro
Forma Stock-Based Compensation Information.
Advertising Costs
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The Company charges the costs of advertising to expense as incurred. Advertising expense for the years ended
December 31 2003 2002 and 2001 was $7 650, $27 083 and $16,467, respectively.
The Company makes market development funds ("MDF") available to certain customers for the reimbursement of co-
branded advertising expenses and other purposes. To the extent that MDF is used by the Company s customers for co-
branded advertising, and (i) the customers provide the Company with third-party evidence of such co-branded
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advertising as required by Company policy and (ii) the Company can reasonably estimate the fair value of its portion of the
advertising, such amounts are charged to advertising expense as incurred. Other amounts payable to customers relating to
rebates, customer incentives and nonqualified MDF activities are recorded as reductions of revenues as incurred.
Income Taxes
The Company uses the liability method to account for income taxes. Under this method, deferred tax assets and liabilities
are determined based on differences between fmancial reporting and tax bases of assets and liabilities. Deferred tax assets
and liabilities are measured using enacted tax rates and laws that will be in effect when the differences are expected to
reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be
realized.
Fair Values of Financial Instruments
The following methods and assumptions were used to estimate the fair values of the Company s fmancial instruments:
Cash, Cash Equivalents, Short Term Investments and Restricted Cash and Cash Equivalents. The carrying amounts of
these assets approximate their respective fair values, which were detennined based on quoted market prices.
Borrowings. The fair values of borrowings, including long-tenn debt and capital lease obligations, are estimated based on
quoted market prices, where available, or by discounting the future cash flows using estimated borrowing rates at which
similar types of borrowing arrangements with the same remaining maturities could be obtained by the Company. The
aggregate fair value of the Company s long-tenn debt was $58 646 as of December 31 2003, as compared to the aggregate
carrying amount of $50 000 as of such date. The aggregate fair value of the Company s long-tenn debt and capital lease
obligations was $59 140 as of December 31 , 2002, as compared to the aggregate carrying amount of$50 165 as of such date.
Foreign Currency
The functional currency of the Company s unconsolidated affiliates is the local currency. The investments in these
unconsolidated affiliates are translated into U.s. dollars at year-end exchange rates, and the Company s equity in the income
or losses of these affiliates is translated at average exchange rates prevailing during the year. Translation adjustments are
included in "Accumulated other comprehensive loss " a separate component of stockholders ' equity (deficit).
Per Share Amounts
Basic per share amounts are computed by using the weighted average number of shares of the Company s common stock
less the weighted average number of common shares subject to repurchase, outstanding during the period.
Diluted per share amounts are determined in the same manner as basic per share amounts, except that the number of
weighted average common shares used in the computations includes dilutive common shares subject to repurchase and is
increased assuming the (i) exercise of dilutive stock options and warrants using the treasury stock method and (ii) conversion
of dilutive convertible debt instruments. However, diluted net income (loss) per share is the same as basic net income
(loss) per share in the periods presented in the accompanying consolidated statements of operations because loss from
operations is the "control number" in determining whether potential common shares are included in the calculation.
Consequently, the impact of (i) including common shares subject to repurchase, (ii) the assumed exercise of outstanding
stock options and warrants and (iii) the assumed conversion of convertible debt instruments was not dilutive to loss from
operations.
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The following table presents the calculation of weighted average common shares used in the computations of basic and
diluted per share amounts presented in the accompanying consolidated statements of operations:
Weighted average shares of common stock outstanding
Less weighted average shares of common stock subject
to repurchase
Weighted average common shares used in computing
basic per share amounts
Comprehensive Income (Loss)
Year ended December 31,
2003 2002 2001
224 949 891 219 750 287 177 489 090
625 141 897
224 949 891 177 347 193219743662
Significant components of the Company s comprehensive income (loss) are as follows:
Net income (loss)
Unrealized gains (losses) on available-for-
sale securities
Foreign currency translation adjustment
Cumulative
Amounts
(Restated, see
Note 15)
(1,641 638)
(962)
642 591)Comprehensive income (loss)
Recent Accounting Pronouncements
Year ended December 31,
2003 2002 2001
(Restated, see
Note 15)
(112 302)(184 828)344 758
(206)270 327)
342 (588)
(112 508)(183 216)341 843
IIIL III I
On May 15 2003 , the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting
Standards ("SFAS") No. 150
, "
Accounting for Certain Financial Instruments with Characteristics of both Liabilities and
Equity". SFAS No. 150 establishes standards for classifying and measuring as liabilities certain financial instruments that
embody obligations of the issuer and have characteristics of both liabilities and equity, such as mandatorily redeemable
equity instruments. SFAS No. 150 must be applied immediately to instruments entered into or modified after May 31 2003
and to all other instruments that exist as of the beginning of the fIrst interim fmancial reporting period beginning after
June 15, 2003, except for mandatorily redeemable instruments of non-public companies, to which the provisions of SF
No. 150 must be applied in fiscal periods beginning after December 15 2003. The application of SFAS No. 150 to pre-
existing instruments should be recognized as the cumulative effect of a change in accounting principle. The adoption of
SFAS No. 150 had no effect on the Company s consolidated financial statements.
In January 2003, the FASB issued Interpretation ("FIN") No. 46
, "
Consolidation of Variable Interest Entities " an
interpretation of Accounting Research Bulleting No. 51
, "
Consolidated Financial Statements." FIN 46 applies to any business
enterprise that has a controlling interest, contractual relationship or other business relationship with a variable interest entity
VIE") and establishes guidance for the consolidation of VIEs that function to support the activities of the primary
beneficiary. FIN 46 was effective March 31 2004 for enterprises with VIEs created after January 31 2003, and will be
effective March 31 2004 for enterprises with VIEs created before February 1, 2003. The Company does not expect the
adoption of FIN 46 will have an effect on its consolidated financial statements.
In December 2002, the FASB issued SFAS No. 148
, "
Accounting for Stock-Based Compensation Transition and
Disclosure." SFAS No. 148 amends SFAS No. 123
, "
Accounting for Stock-Based Compensation " to provide alternative
methods of transition for an entity that voluntarily changes to the fair value method of accounting for stock-based employee
compensation. In addition, SF AS No. 148 amends the disclosure provisions of SF AS No. 123 to require prominent disclosure
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of the effects of an entity's accounting policy with respect to stock-based employee compensation on reported operating
results, including per share amounts, in annual and interim fmancial statements. The disclosure provisions of SF AS No. 148
were effective immediately upon issuance in 2002. As of December 31 2003, the Company has no immediate plans to adopt
the fair value method of accounting for stock-based employee compensation.
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In November 2002, the FASB's Emerging Issues Task Force ("EITF") reached a fmal consensus on Issue No. 00-
Accounting for Revenue Arrangements with Multiple Deliverables " which is effective for revenue arrangements entered
into in fiscal periods beginning after June 15 2003. Under EITF Issue No. 00-, revenue arrangements with multiple
deliverables are required to be divided into separate units of accounting under certain circumstances. The Company adopted
EITF Issue No. 00-21 on July 1 2003 , and such adoption did not have a material effect on its consolidated financial
statements.
In November 2002, the FASB issued FIN No. 45
, "
Guarantor s Accounting and Disclosure Requirements for Guarantees
Including Indirect Guarantees of Indebtedness of Others." FIN No. 45 requires certain guarantees to be recorded at fair value
which is different from current practice, which is generally to record a liability only when a loss is probable and reasonably
estimable. FIN No. 45 also requires a guarantor to make significant new disclosures, even when the likelihood of making any
payments under the guarantee is remote. The disclosure provisions of FIN No. 45 were effective immediately in 2002. The
Company adopted the recognition and measurement provisions of FIN No. 45 on a prospective basis with respect to
guarantees issued or modified after December 31, 2002. The adoption of the recognition and measurement provisions of FIN
No. 45 had no effect on the Company s consolidated financial statements. However, some of the Company s contracts with
customers have provisions that would require the Company to indemnify them in the event that the Company s services
infringe upon a third party's intellectual property rights (Note 10).
On January 1 2003, the Company adopted SFAS No. 146
, "
Accounting for Costs Associated with an Exit or Disposal
Activity." SFAS No. 146 revised the accounting for exit and disposal activities under EITF Issue No. 94-
, "
Liability
Recognition for Certain Employee Tennination Benefits and Other Costs to Exit an Activity (Including Certain Costs
Incurred in a Restructuring)," by extending the period in which expenses related to restructuring activities are reported. A
commitment to a plan to exit an activity or dispose of long-lived assets is no longer sufficient to record a one-time charge for
most restructuring activities. Instead, companies record exit or disposal costs when they are incurred and can be measured at
fair value. In addition, the resultant liabilities are subsequently adjusted for changes in estimated cash flows. SFAS No. 146 is
effective prospectively for exit or disposal activities initiated after December 31, 2002. Companies may not restate previously
issued financial statements for the effect of the provisions of SF AS No. 146, and liabilities that a company previously
recorded under EITF Issue No. 94-3 are grandfathered. The adoption of SF AS No. 146 had no effect on the Company
consolidated financial statements.
On January 1 2003, the Company adopted SFAS No. 145
, "
Rescission ofFASB Statements No., 44, and 64
Amendment ofFASB Statement No. 13, and Technical Corrections." SFAS No. 145 rescinds SFAS No.
, "
Reporting Gains
and Losses from Extinguishment of Debt " which required all gains and losses from extinguishment of debt to be aggregated
and, if material, classified as an extraordinary item, net of related income tax effect. SFAS No. 145 requires that gains or
losses from extinguishment of debt be classified as extraordinary items only if they meet the criteria of APB Opinion No. 30.
Upon adoption of SF AS No. 145 in 2003, the Company reclassified the gain on extinguishment of debt that it recognized in
2001, which was previously classified as an extraordinary item, as an element of other income (expense) in the
accompanying 2001 consolidated statement of operations.
On January 1 2003 , the Company adopted SFAS No. 143
, "
Accounting for Asset Retirement Obligations." SFAS No. 143
requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if
a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying
amount of the long-lived asset. The adoption of SF AS No. 143 had no effect on the Company s consolidated financial
statements.
Reclassifications
Certain balances in the Company s 2002 and 2001 consolidated fmancial statements have been reclassified to conform to
the presentation in 2003.
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2. Revenue Recognition
Revenues from recurring service are recognized when (i) persuasive evidence of an arrangement between the Company
and the customer exists, (ii) service has been provided to the customer, (iii) the price to the customer is fixed or determinable
and (iv) collectibility of the sales prices is reasonably assured. Revenues earned for which the customer has not been billed
are recorded as "Unbilled revenues" in the consolidated balance sheets. Amounts billed in advance of providing service are
deferred and recorded as an element of the consolidated balance sheets caption "Unearned revenues." Included in revenues
are FUSF charges billed to customers aggregating $4 993 , $8 233 and $13 277 for the years ended December 31 2003 2002
and 2001, respectively.
The Company recognizes up-front fees associated with service activation over the expected tenn of the customer
relationship, which is presently estimated to be 24 months, using the straight-line method. The Company treats the
incremental direct costs of service activation (which consist principally of customer premises equipment, service activation
fees paid to other telecommunications companies and sales commissions) as deferred charges in amounts that are no greater
than the up-front fees that are deferred, and such deferred incremental direct costs are amortized to expense using the
straight-line method over 24 months.
The Company had over 300 wholesale customers as of December 31 , 2003. However, for the years ended December 31
2003 2002 and 2001 , the Company s 30 largest wholesale customers in each such year collectively comprised 93.93.3%
and 88.5% of the Company s total wholesale net revenues, respectively, and 71.6%, 79.5% and 76.0% of the Company
total net revenues, respectively. As of December 31 2003 and 2002, receivables from these customers collectively comprised
70.3% and 75., respectively, of the Company s gross accounts receivable balance.
For the year ended December 31 2003 , EarthLink, Inc. and AT&T, two of the Company s wholesale customers that are
included in the Company s Covad Strategic Partnerships ("CSP", business segment (Note 14), accounted for 21.5% and
12., respectively, of the Company s total net revenues. For the years ended December 31 , 2002 and 2001 , EarthLink, Inc.
accounted for 20.0% and 17., respectively, of the Company s total net revenues. As of December 31 2003 and 2002
receivables from these customers comprised 20.9% and 17.1 %, and 25.9% and 11.7%, respectively, of the Company s gross
accounts receivable balance. No other individual customer accounted for more than 10% of the Company s total net revenues
in 2003, 2002 and 2001.
Some of the Company s ISP and telecommunications carrier customers are experiencing fmancial difficulties. During the
years ended December 31 2003 2002 and 2001 , certain of these customers either (i) were not current in their payments for
the Company s services or (ii) were essentially current in their payments but, subsequent to the end of the reporting period
the fmancial condition of such customers deteriorated significantly and certain of them have filed for bankruptcy protection.
Based on this infonnation, the Company detennined that the collectibility of revenues from these customers was not
reasonably assured or its ability to retain some or all of the payments received from certain of these customers that have filed
for bankruptcy protection was not reasonably assured. Accordingly, the Company classified this group of customers as
financially distressed" for revenue recognition purposes. Revenues from financially distressed customers that have not filed
for bankruptcy protection are recognized when cash for those services is collected, assuming all other criteria for revenue
recognition have been met, but only after the collection of all previous outstanding accounts receivable balances. Payments
received from financially distressed customers during a defined period prior to their filing of petitions for bankruptcy
protection are recorded in the consolidated balance sheet caption "Unearned revenues" if the Company s ability to retain
these payments is not reasonably assured.
A number of the Company s customers are currently in bankruptcy proceedings. Revenues from these customers
accounted for approximately 1.3 %, 5.6% and 7.1 % of the Company s total net revenues for the years ended December 31
2003 2002 and 2001, respectively. Although MCI filed for bankruptcy protection on July 21 2002, the Company continued
to recognize revenues from MCI on an accrual basis during 2002 and 2003 based on its specific facts and circumstances in
relation to the revenue recognition criteria described above. Consequently, the disclosures in the following paragraph related
to financially distressed customers exclude amounts pertaining to MCI because the Company has not presently classified it as
a fmancially distressed customer for revenue recognition purposes. The Company continues to attempt to migrate end-users
from some of its financially distressed customers to the extent it is legally and operationally feasible.
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During the years ended December 31 2003 2002 and 2001, the Company issued billings to its fmancially distressed
customers aggregating $5 139, $42 881 and $74 928, respectively, that were not recognized as revenues or accounts
receivable in the accompanying consolidated fmancial statements at the time of such billings. However, in accordance with
the revenue recognition policy described above, the Company recognized revenues from certain of these customers when
cash was collected aggregating $4 367, $47 609 and $29 003 during the years ended December 31 2003 2002 and 2001
respectively, some of which relates to services provided in prior periods. In addition, revenues and the provision for bad debts
(bad debt recoveries) recognized during the year ended December 31 2003 and 2002 include cash collected totaling $827
and $4 427, respectively, from certain bankrupt customers that the Company received prior to the periods in which they were
ultimately recognized. The Company recorded these payments as unearned revenues in the accompanying consolidated
balance sheet as of those dates because its ability to retain the payments was not reasonably assured at such dates. However
as a result of subsequent developments in the bankruptcy proceedings of such customers, the Company detennined that its
ability to retain these payments was reasonably assured prior to December 31 , 2003. Consequently, the Company recognized
these payments as revenues and bad debt recoveries, respectively, during 2003 and 2002. No such payments were recognized
as revenues or bad debt recoveries during the year ended December 31 , 2001. The Company had contractual receivables from
its fmancially distressed customers totaling $1 093 and $6 031 as of December 31 2003 and 2002, respectively, that are not
reflected in the accompanying consolidated balance sheet as of such date.
The Company has obtained information indicating that some of its customers, including MCI, who (i) were essentially
CUlTent in their payments for the Company s services prior to December 31 , 2003, or (ii) have subsequently paid all or
significant portions of the respective amounts recorded as accounts receivable as of December 31 2003 , may become
fmancially distressed. Revenues from these customers accounted for approximately 11.6%, 34.6% and 14.2% of the
Company s total net revenues for the years ended December 31 2003 2002 and 2001 , respectively. As of December 31
2003 and 2002, receivables from these customers comprised 14.7% and 31.8% of the Company s gross accounts receivable
balance, respectively. If these customers are unable to demonstrate their ability to pay for the Company s services in a timely
manner in periods ending subsequent to December 31 , 2003, the Company, based on its revenue recognition policy described
above, will recognize revenue when cash is collected.
The Company has obtained persuasive evidence indicating that the financial condition of one of its customers, which was
designated as financially distressed in 2000, improved significantly during the year ended December 31, 2002, principally as
a result of a capital infusion during this period. Consequently, the Company concluded that collection of its billings to this
customer was now reasonably assured. Therefore, the Company resumed the recognition of revenues from this customer on
an accrual basis during 2002, which resulted in the recognition of revenues in the amount of approximately $1 542 that relate
to services rendered in periods ended prior to January 1 2002. Similarly, the Company resumed the recognition of revenue
on an accrual basis for another wholesale customer during 2002. The Company did not, however, recognize additional
revenue from services rendered in prior periods because this customer was CUlTent in its payments. No similar amounts were
recognized during the other periods reported in the accompanying consolidated financial statements.
The Company has billing disputes with some of its customers. These disputes arise in the ordinary course of business in
the telecommunications industry and their impact on the Company s accounts receivable and revenues can be reasonably
estimated based on historical experience. In addition, certain revenues are subject to refund if the end-user terminates service
within thirty days of service activation. Accordingly, the Company maintains allowances, through charges to revenues, based
on the Company s estimates of (i) the ultimate resolution of the disputes (ii) future service cancellations. These charges to
revenues amounted to $2 886, $2 322 and $11 178 during the years ended December 31 2003 2002 and 2001 , respectively.
During the years ended December 31 2003 2002 and 2001 , the Company wrote-off certain accounts receivable balances
aggregating $1 557, $3 748 and $6 701, respectively, against the allowance for customer disputes and service cancellations.
During the years ended December 31 , 2003 and 2002, the Company recovered $1 282 and $2 145, respectively, of accounts
receivable balances previously written-off against such allowance. There were no similar recoveries of accounts receivable
balances for the year ended December 31, 2001.
During the year ended December 31 , 2001 , the Company recognized $11 661 in revenue that was included in the
cumulative effect adjustment as of January 1 , 2000, which resulted from the Company s adoption of Securities and
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Exchange Commission Staff Accounting Bulletin No. 101
, "
Revenue Recognition in Financial Statements" (no similar
revenues were recognized during the years ended December 31 , 2003 and 2002). The effect of that revenue during 2001 was
to increase net income by $3 067.
3. Reorganization Under Bankruptcy Proceedings
On August 15, 2001 (the "Petition Date ), Covad, excluding its operating subsidiaries, filed a voluntary petition (the
Petition ) under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code ) for the purpose of confmning
its pre-negotiated First Amended Plan of Reorganization, as modified, on November 26 2001 (the "Plan ) with the majority
holders (the "Noteholders ) of its senior notes. The Petition was filed with the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court") and was assigned Case No. 01-10167 (JJF). On December 13, 2001, the
Bankruptcy Court entered an order confmning the Plan and, on December 20 2001 (the "Effective Date ), the Plan was
consummated and Covad emerged from bankruptcy. However, the Bankruptcy Court still maintains jurisdiction over certain
administrative matters related to the implementation of the Plan, including the unresolved claims described below.
On the Effective Date, the Company made the following distributions of cash and shares of its common stock to certain
claimants:
Common Stock
Claimant Cash Shares
Noteholders $271 708 292 800
Plaintiffs in litigation (Note 10)793 000 000
Other claimants 900
$279,401 292 800
Aggregate Fair
Market Value
Total
Consideration
$88 585
020
$360 293
813
900
$93 605 $373 006
The aforementioned distributions of cash and shares of the Company s common stock resulted in the extinguishment of
certain liabilities of Covad as of the Effective Date and the recognition of a gain on extinguishment of debt and certain
litigation-related and other general and administrative expenses in the accompanying consolidated statement of operations for
the year ended December 31 2001 , as follows:
Extinguishment of senior notes:
Senior notes
Accrued interest
351,488
532
Less consideration distributed to the Noteholders
394 020
360 293
Gain on extinguishment of debt 033 727
Settlement of litigation (Note 10):
Consideration distributed to the plaintiffs
Less amounts accrued prior to the Effective Date
813
820
Additional litigation-related expenses recognized 993
Other:
Consideration distributed to the claimants
Less amounts accrued prior to the Effective Date
900
Additional general and administrative expenses recognized 900
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There were unresolved claims related to Covad's Chapter 11 bankruptcy proceedings aggregating $8 341 and $8 344 as of
December 31 2003 and 2002, respectively. As of December 31 2003 and 2002, the Company recorded these unresolved
claims in its consolidated balance sheets based on the amount of such claims allowed by the Bankruptcy Court (adjusted for
changes in the value of the Company s common stock after December 20 2001), unless the Company has persuasive
evidence indicating that a claim is duplicative with another allowed claim that was settled previously or is otherwise in error.
In these cases, the unresolved claim does not meet the criteria for recognition in the Company s consolidated fmancial
statements. However, it is reasonably possible that the Company s unresolved Chapter 11 bankruptcy claims could ultimately
be settled for amounts that differ from the aggregate liability for "Unresolved claims related to bankruptcy proceedings
reflected in the accompanying consolidated balance sheets as of December 31 , 2003 and 2002.
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As of December 31 2003 and 2002, the Company had (i) placed $309 and $501 , respectively, of cash in a reserve fund
(this balance is classified as "Restricted Cash and Cash Equivalents" in the accompanying consolidated balance sheets) and
(ii) reserved 7 078 733 and 7 078 733 shares, respectively, of common stock pending the resolution of the aforementioned
disputed claims.
The holders of the Company s common stock issued prior to the Effective Date of the Plan retained their existing equity
interests, but were diluted through the issuance of common stock to the claimants described above. As of the Effective Date
and after the issuance of 37 292 800 shares of the Company s common stock pursuant to the Plan as described above, there
were 216 445 276 shares of the Company s common stock issued and outstanding. The holders of the Company s common
stock immediately before the Effective Date of the Plan held more than 50% of the Company s voting shares (including
shares reserved for future issuance under the Plan) immediately after the Effective Date of the Plan. Therefore, under AICP A
Statement of Position ("SOP") 90-
, "
Financial Reporting by Entities in Reorganization Under the Bankruptcy Code " the
Company did not qualify for fresh-start reporting.
In accordance with SOP 90-, expenses resulting from the restructuring are reported separately as reorganization items.
For the year ended December 31 2001 , the Company recognized expenses directly associated with Covad's Chapter
bankruptcy proceedings in the amount of $63 229 (none for the years ended December 31, 2003 and 2002). These
reorganization expenses consisted of (i) non-cash adjustments to unamortized debt issuance costs and discounts and (ii)
professional fees for legal and financial advisory services. For the year ended December 31 , 2001 , the Company recognized
interest income in the amount of $609 on accumulated cash that Covad did not disburse as a result of its Chapter
bankruptcy proceedings (none for the years ended December 31, 2003 and 2002). Such interest income has been offset
against the aforementioned reorganization expenses in the Company s 2001 consolidated statement of operations.
Operating cash receipts and payments made by Covad resulting from the Plan were as follows for the period from
August 15 2001 through December 20, 2001:
Cash receipts:
Interest received $ 2 650
Total cash receipts $ 2 650
Cash disbursements:
Interest paid
Professional fees paid
Claims paid
$ 1 509
003
277 892
Total cash disbursements $295,404
4. Other Restructuring Activities
BlueStar, which was acquired by the Company on September 22 2000 in a transaction accounted for as a purchase (Note
6), provided broadband communications and Internet services to small and medium sized businesses in smaller cities using a
direct sales model. Continued losses at BlueStar, with no near term possibility of improvement, caused the Company s board
of directors to decide, on June 22, 2001 , to cease the Company s funding of BlueStar s operations. Subsequently, on June 25
2001, BlueStar terminated all of its 365 employees. However, 59 of BlueStar s former employees were temporarily retained
by the Company for varying periods through July 31, 2001 to assist with the migration of certain BlueStar end-user lines to
the Company s network, as described below. In addition, the Company hired 69 of BlueStar s former employees subsequent
to June 25, 2001.
On June 24, 2001, the Company and BlueStar entered into a Purchase Agreement ("P A") under which the Company
purchased the right to offer service to BlueStar s customers, subject to BlueStar s right to seek higher offers. The Company
paid approximately $2 000 in 2001 (none in 2003 and 2002) under the PA and had no additional liabilities under the PA as of
December 31 , 2003 and 2002. To facilitate this migration, the Company and BlueStar entered into a Migration Agreement on
July 12, 2001 that required the Company to pay certain amounts contemplated in the P A directly to certain former employees
of BlueStar and certain BlueStar vendors, including the Assignee, as defined below. The Company made payments
aggregating $5 100 in connection with BlueStar s cessation of operations during the year ended December 31 2001 (none in
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2003 and 2002). Of this amount, $1 300
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represents employee severance benefits, $2 000 represents customer acquisition costs under the P A and $1 800 represents
legal and other professional fees. Such (i) severance benefits and professional fees and (ii) customer acquisition costs have
been charged to restructuring expenses and network and product costs, respectively, in the Company s consolidated statement
of operations for the year ended December 31, 2001.
On June 25, 2001, BlueStar made an irrevocable assignment for the benefit of creditors ("ABC") of all its assets to an
independent trustee (the "Assignee ) in the State of Tennessee. Immediately thereafter, the Assignee began an orderly
liquidation of BlueStar that was initially expected to be completed in the fourth quarter of2002. However, the Assignee has
informed the Company that it is still in the process of resolving some matters among BlueStar s creditors and that the process
may extend into the second half of 2004. An ABC under Tennessee law is a non-judicial alternative to a plan of liquidation
under Chapter 7 of the Bankruptcy Code. As a result of the ABC, BlueStar s former assets are no longer controlled by
BlueStar or the Company and cannot be used by either BlueStar s or the Company s boards of directors to satisfy the
liabilities of BlueStar. Consequently, the liquidation of BlueStar s assets and the settlement of its liabilities are currently
under the sole control of the Assignee and the control of BlueS tar s assets no longer rests with the Company. Therefore, the
Company deconsolidated BlueStar effective June 25, 2001, which resulted in the recognition of a deferred gain in the amount
of $55 200 in the Company s consolidated balance sheet as of December 31 2001. Such deferred gain represented the
difference between the carrying values of BlueStar s assets (aggregating $7 900) and liabilities (aggregating $63 100) as of
June 25, 2001. During 2003 and 2002, the deferred gain was reduced by $9 and $1 228, respectively, because certain
BlueStar assets were inadvertently not de consolidated on June 25, 2001. Therefore, the deconsolidation of BlueStar, resulted
in a deferred gain balance of$53 963 and $53 972 in the Company s consolidated balance sheets as of December 31 2003
and 2002, respectively. The Company will recognize such deferred gain as an element of other income (expense) when the
liquidation of Blue Star is complete and its liabilities have been discharged.
The following unaudited pro forma financial information presents the consolidated results of operations of the Company
as if the deconsolidation of BlueStar had occurred on January 1 2001 and does not purport to be indicative of the results of
operations that would have occurred had the deconsolidation occurred on January 1 2001 , or the results that may occur in the
future:
Year ending December 31 2001
Revenues
Loss before gain on extinguishment of debt and cumulative effect of accounting charge
Net income (loss)
Basic and diluted net income (loss) per share
$ 320 619
$(646 647)
$ 387 080$ 2.
During the fourth quarter of 2000, the Company announced a comprehensive restructuring plan that involved the
following steps:
. raising revenue by reducing rebates and other incentives that the Company provides to customers and reducing new line
addition plans for 2001 to improve margins and reduce subscriber payback times;
. closing approximately 200 under-performing or not fully built-out central offices and reducing the size of the Company
network to approximately 1 700 central offices;
. reducing the Company s workforce by 638 employees, which represented approximately 21% of the Company
workforce;
. closing a facility in Alpharetta, Georgia and consolidating offices in Manassas, Virginia, Santa Clara, California and
Denver, Colorado;
. continued downsizing of the Company s international operations and discontinuing plans to fund additional international
expansion while continuing to manage existing investments;
. enhancing productivity in the Company s operations to increase customer satisfaction while reducing costs;
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. restructuring the Company s direct sales and marketing channel; and
. evaluating and implementing other cost reduction strategies, including salary freezes and reductions in travel, facilities and
advertising expenses.
In connection with this restructuring plan, the Company recorded a charge to operations of $4 988 in the fourth quarter of
2000 relating to employee severance benefits that met the requirements for accrual as of December 31 2000. During the year
ended December 31 2001, the total workforce was reduced by 638 employees and the Company paid $3 849 in severance
benefits, which were charged against the restructuring liability recorded as of December 31 , 2000.
The Company recorded additional restructuring expenses aggregating $14 364 during the year ended December 31 2001
of which $2 140 related to the BlueStar shutdown. These expenses consist principally of collocation and building lease
termination costs that met the requirements for accrual in 2001. During the year ended December 31 , 2001 , the Company
paid collocation and building lease termination costs of$12 355, which were charged against the restructuring liabilities
recorded during 2001. During the year ended December 31 , 2001 , the restructuring liability was also reduced by $131 based
on revised estimates of the Company s restructuring expenses. No restructuring expenses were recorded during the year
ended December 31 , 2002.
During the year ended December 31 2003, the Company reduced its workforce by approximately 113 employees, which
represented approximately 10.2% of the Company s workforce. The reductions covered employees in the areas of sales and
marketing, operations and corporate functions. In connection with the reductions in force, the Company recorded a charge to
operations for the year ended December 31, 2003 of $1 ,235 relating to employee severance benefits, all of which was paid
during the year ended December 31 , 2003. The expenses associated with these reductions in force were $103 related to the
Company s CSP business segment (Note 14), and $349 related to the Company s Covad Broadband Solutions ("or CBS"
business segment (Note 14). The remaining $783 in expenses associated with these reductions in force were related to the
Company s Corporate Operations (Note 14).
Management continues to consider whether additional restructuring is necessary, and the Company may incur additional
charges to operations related to any further restructuring activities in future periods.
5. Property and Equipment
Property and equipment consisted of the following:
December 31
2003 2002
$ 10 339 276
801 206
912 486
515 785
362 910 334 001
473,477 438 754
379 198 330 017
$ 94 279 $108 737
1If !
Leasehold improvements
Computer equipment
Computer software
Furniture and fixtures
Networks and communication equipment
Less accumulated depreciation and amortization
Property and equipment, net
During the fourth quarter of 2001 , the Company determined that (i) certain of its communication equipment was obsolete
based on its discontinued use in the Company s network and (ii) it would sell (subject to the approval of the Company
board of directors) its land, building and certain furniture and fixtures located in Manassas, Virginia. In March 2002, the
Company entered into a non-binding letter of intent with a third party to sell the aforementioned Manassas, Virginia property
for $14 000. Accordingly, the Company recognized a write-down of this property and equipment in the amount of $9 999
during the fourth quarter of 2001. In April 2002, the Company received the necessary approval from its board of directors to
proceed with the sale of this property (at which time the Company suspended depreciation of the building and related
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improvements when such assets had an aggregate carrying value of$13 201). In June 2002, the Company completed the sale
of this property and recognized a gain of$133 , which
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represents the net proceeds of $13 334 less the aggregate carrying value of the property, as described above, in the
accompanying consolidated statement of operations for the year ended December 31, 2002. The Company recorded no
impairment write-downs of long-lived assets during 2003 and 2002.
6. Business Acquisition, Asset Acquisitions and Equity Investments
Acquisition of BlueStar
On September 22, 2000, the Company acquired BlueStar by issuing approximately 6 100 000 shares of common stock
(including 800 000 shares to be held in escrow for a one year period pending the Company s verification of certain
representations and warranties made to it by BlueStar at the date of the acquisition) in exchange for all of the outstanding
preferred and common shares of BlueS tar. Two of the Company s stockholders and members of its board of directors when
the acquisition occurred were also stockholders of BlueS tar, and one was a member of the board of directors of BlueStar.
This transaction was accounted for as a purchase. Accordingly, the Company s consolidated financial statements include
the results of operations of BlueStar for periods ending after the date of acquisition. However, as described in Note 3 , the
Company deconsolidated BlueStar effective June 25 , 2001.
Up to 5 000 000 additional common shares of the Company s common stock were to be issued if BlueStar achieved
certain specified levels of revenues and earnings before interest, taxes, depreciation and amortization in 2001. However
during April, 2001, the Company reached an agreement with the BlueStar stockholders ' representative to resolve this matter
as well as the matters that caused 800 000 of the Company s common shares to be held in escrow as of December 31 2000
by providing the BlueStar stockholders with 2 532 850 (which include 264 369 options and warrants which are held by the
Company in the event such options and warrants are exercised after the distribution date) of the 5 000 000 shares, in
exchange for a release of all claims against the Company. The 800 000 common shares held in escrow were ultimately
returned to the Company under this agreement. BlueStar s former stockholders received the additional shares of the
Company s common stock during 2001. Consequently, the Company recorded additional goodwill of$1 989 in 2001.
However, the Company determined that such goodwill was impaired based on BlueStar s continued operating losses, as
described in Note 3. Therefore, such goodwill balance was written-off through a charge to the provision for long-lived asset
impairment during the year ended December 31 , 2001.
Acquisition of InternetConnect Assets
On January 3 2002, the Company purchased substantially all of the assets of InternetConnect, a related party (Note 1), in
an auction supervised by the United States Bankruptcy Court for the Central District of California. The purchase price for
these assets was $5,470 in cash, $235 of which had been deposited with InternetConnect's agent prior to January 1 2002.
Under the terms of the asset purchase agreement, the Company may be required to pay additional cash of up to $1 880
depending upon the outcome of a previous post-petition bankruptcy claim filed against InternetConnect by the Company,
which is still pending before the court. The Company did not assume any liabilities or obligations of InternetConnect or hire
any of InternetConnect's employees. In addition , the Company does not believe the assets acquired from InternetConnect
constitute a self-sustaining, integrated set of activities and assets that would constitute a business.
The tangible assets of InternetConnect purchased by the Company consisted of accounts receivable, refundable deposits
and property and equipment. The Company also purchased the right, but not the obligation, to assume InternetConnect's
customer contracts. However, the Company did not exercise this right. Instead, the Company solicited the approximately
250 DSL, T-, virtual private network ("VPN") and dial-up customers of InternetConnect, and approximately 6 200 of such
customers executed new contracts with the Company or its resellers subsequent to January 3 , 2002.
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The Company has allocated the aforementioned purchase price based on the estimated fair values of the elements of this
transaction as of January 3, 2002, as follows:
Accounts receivable
Refundable deposits
Property and equipment
Customer acquisition costs
386
349
674
$5,470
The customer acquisition costs of $3 674 described above were charged to network and product costs for the year ended
December 31 2002 based on the Company s accounting policy for costs of this nature that are not accompanied by up-front
fees (Note 2).
Acquisition of Qwest Customer List
On June 5 , 2003, the Company purchased a customer list from Qwest Communications Corporation and Qwest Interprise
America, Inc. (collectively, "Qwest") pertaining to approximately 23 000 DSL subscribers who were not located in the states
where Qwest provides local telephone services (substantially all of whom were not, indirectly, end-user customers of the
Company as of June 5 , 2003 under the then-existing wholesale DSL services agreement with Qwest). In exchange for the
customer list, the Company paid $3 750 in cash and released Qwest from its obligations under the wholesale DSL services
agreement. In addition, the Company agreed to pay Qwest an additional amount of up to $1 250 if certain numbers of these
customers migrate to the Company s network within a defined period, which has now elapsed. The additional level of
successful migrations was not achieved and, consequently, the Company was not required to pay such additional amount to
Qwest. The Company did not assume any liabilities or obligations of Qwest or hire any of Qwest's employees. In addition
the Company does not believe the customer list acquired from Qwest constitutes a self-sustaining, integrated set of activities
and assets that would constitute a business. Approximately 13 000 of these customers were migrated to the Company
network as of December 31, 2003.
The Company recorded the $3 750 cash payment to Qwest for the customer list as an intangible asset, and such intangible
asset is being amortized on a straight-line basis to operations over a twenty-four month period, which is the Company
estimate of the aggregate expected term of its customer relationships.
Unconsolidated Investments in Affiliates
The following table lists the Company s unconsolidated investments in affiliates as of December 31 2003 and 2002:
Ownership Percentage Investment Carrying Value
Date of Method of
Entity Name Investment(s)2003 2002 Accounting 2003
DishnetDSL Limited February 2000 Equity
ACCA Networks Co.August 2000 Equity
Ltd.10%10%
November 1999; May Equity
Certive Corporation 2000
Sequoia Capital X May-November 2000 Equity
Loop Holdings Europe September 2000 Equity
ApS
2002
026
$ 1 026
DishnetDSL Limited
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In February 2000, the Company acquired a 6% American Depository Receipt ("ADR") equity interest in DishnetDSL
Limited ("Dishnet"), a privately held, Indian telecommunications company, in exchange for cash payments totaling
approximately $23 000, which the Company believed was representative of the fair value of such investment based on
significant concurrent investments in Dishnet made by new, non-strategic investors. The difference between the cost of the
Company s equity investment in Dishnet and its proportional share of Dishnet' s net assets ($11 963 as of December 31
2001) was being amortized using the straight-line method over a period of five years. Concurrent with its purchase of the
Dishnet ADRs, the Company also acquired, without further consideration, (i) contingent warrants for the purchase of up to
700 000 Dishnet ADRs at a price that is presently
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indeterminate and (ii) a put option (the "Put Option ) from a Dishnet shareholder and another entity that entitles the
Company to require these entities to purchase the Dishnet ADRs owned by the Company at their original purchase price for a
specified period beginning in February 2002. Because of the contingent nature of the Dishnet warrants and uncertainties
concerning the fmancial capacity of the makers of the Put Option, the Company ascribed no separate value to these elements
of the transaction. As a result of this strategic investment, one employee of the Company became a member of the board of
directors of Dishnet. (The Company s chainnan holds options to purchase shares of Dishnet and is a member of the board of
directors of Dishnet).
In February 2002, the Company s board of directors approved an offer involving (i) the sale of the Company s 6% ADR
interest in Dishnet for $3 000 in cash, (ii) settlement of a claim alleging breach of contract by the Company relating to theass license described below and (iii) relinquishment of the Put Option by the Company. Consequently, during 2001, the
Company wrote-down the carrying value of its Dishnet equity investment to its estimated net realizable value through a
charge to the provision for impairment of unconsolidated equity investments in the amount of$10 069. This transaction was
completed in May 2002, which resulted in the recognition of an additional loss in the amount of $996. Such loss included a
cumulative foreign currency translation loss in the amount of$1 342, which was included in (i) the carrying value of the
Company s Dishnet equity investment and (ii) the Company s accumulated other comprehensive income (loss) balance as of
the date of sale of such investment.
In February 2000, the Company also licensed its ass software to Dishnet and another entity for $28 000, $24 000 of
which was received in cash on such date. The Company also agreed to provide certain software support, customization and
training services to Dishnet and another entity relating to the ass license up to an aggregate cost of$2 500. Accordingly, the
Company recorded $2 500 of the ass license proceeds received from Dishnet as a liability in February 2000, all of which
has been offset by expenses incurred in 2000 and 2001 by the Company to customize the ass for Dishnet. The remaining
proceeds of$21 500 have been offset against the Company s capitalized internal-use software costs.
ACCA Networks Co., Ltd.
In August 2000, the Company acquired a 42% preferred equity interest in ACCA Networks Co., Ltd. ("ACCA"), a
privately held, Japanese telecommunications company, in exchange for cash payments aggregating approximately $11 700
which the Company believes is representative of the fair value of such investment based on significant concurrent
investments in ACCA made by new, non-strategic investors. The difference between the cost of the Company' equity
investment in ACCA and its proportional share of ACCA's net assets had been fully amortized as of December 31 2001. As
of December 31 2003, the Company s equity interest in ACCA was diluted to 10% due to ACCA's fmancings in 2002 and
2001. As a result of this strategic investment, one employee of the Company is a member of the board of directors of ACCA.
In addition, in August 2000, the Company also licensed its ass software to ACCA for $9 000, of which $2 000 and
000 was received in cash during 2001 and 2000, respectively. The remainder of $5 000, which was scheduled to be
received in 2005, was received in December 2003 in accordance with an amendment to the August 2000 ass software
license agreement. The Company recorded the $5 000 payment received in December 2003 as miscellaneous income
because the carrying value of the ass software licensed to ACCA was fully recovered at that time. The Company may also
receive certain on-going royalty payments from ACCA under tenus of the amended ass license agreement. Such payments
amounted to $2 345 and $814 during the years ended December 31 2003 and 2002 (none during the year ended
December 31, 2001). As stated above, the ass software licensed to ACCA had a net book value of zero at December 31
2003. Consequently, any additional royalty payments will be recorded as miscellaneous income in future periods. The
Company also agreed to provide certain software support, customization and training services to ACCA relating to the ass
license up to an aggregate cost of $2 000. Accordingly, the Company recorded $2 000 of the ass license proceeds received
from ACCA as a liability in August 2000, all of which has been offset by expenses incurred in 2000 and 2001 by the
Company to customize the ass software for ACCA.
Certive Corporation
As of December 31 , 2003 and 2002, the Company held a 5% preferred equity interest in Certive Corporation ("Certive
a privately held, development stage application service provider. The Company s chainnan is also the
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chairman and a principal stockholder ofCertive. During 2003, the Company determined that its investment in Certive may
impaired due to Certive s financial condition and market prospects. Accordingly, the Company wrote-off the remaining
carrying value of its investment through a charge to operations of $747 in 2003.
Sequoia Capital X
As of December 31 , 2000, the Company held a 2% limited partnership interest in Sequoia Capital X, a privately held
venture capital partnership. The Company sold its investment in Sequoia Capital X during 2001 for $1 225 in cash, which
resulted in the recognition of a gain in the amount of $178.
Loop Holdings Europe ApS
In September 2000, the Company acquired 100% of the capital stock of Loop Holdings Europe ApS ("Loop Holdings
which owns 70% (a 43% voting interest) of the preferred stock of Loop Telecom, S.A. ("Loop Telecom ), a privately held
Spanish telecommunications company. Consideration for the Company s acquisition of the capital stock of Loop Holdings
consisted of$15 000 in cash and non-recourse notes payable aggregating $35 000. In March 2001 , the Company declined to
make the first scheduled payment of$15 OOO under the terms of the non-recourse notes payable. As a result, the Company
indirect preferred equity interest in Loop Telecom was diluted to 21 % (a 21 % voting interest) and its obligations under the
non-recourse notes payable were released. Accordingly, in the Company s consolidated balance sheet as of December 31
2000, the Company netted the non-recourse notes payable aggregating $35 000 against the equity investment balance and
wrote-off its initial $15 000 investment balance in Loop Holdings through a charge to operations in 2000 due to uncertainties
concerning the recoverability of such investment.
On February 5 , 2002, the Company, via Loop Holdings, sold its equity interest in Loop Telecom to certain other
shareholders of Loop Telecom for $360 in cash, which resulted in the recognition of a gain in the amount of $360.
7. Credit Arrangements
As of December 31 2003 and 2002, the Company s long-term debt consisted of a $50 000 term note payable to SBC
(Note 11), as described below.
Immediately prior to Covad's emergence from Chapter 11 bankruptcy on December 20 2001 (Note 3), the Company
new agreements with SBC became effective (Note 11). One such agreement (the "Credit Agreement") involves a term note
payable that is collateralized by substantially all of the Company s domestic assets. This note bears interest at 11 %, which is
payable quarterly beginning in December 2003. The entire unpaid principal balance is payable in December 2005. However
the Company has the right to prepay the principal amount of the note, in whole or in part, at any time without penalty. In
addition, upon a "Change of Control" of the Company, as defined in the Credit Agreement, SBC has the option to require all
amounts due under the terms of the Credit Agreement to be paid by the Company within 30 days of the Change of Control.
The Credit Agreement contains various restrictive covenants, which, among other things, restrict the Company s ability to
incur additional indebtedness or permit liens to be placed on its assets.
As of December 31 , 2003, the Company had a $3 000 revolving line of credit with a bank that is available through
April 2004. At the Company s option, borrowings under this credit facility bear interest at certain fixed or variable rates. As
of December 31 , 2003 and 2002, the Company had issued irrevocable letters of credit aggregating $2 583 and $2 075
respectively, under this line of credit in favor of lessors of equipment and facilities.
8. Capital Leases
The capitalized costs and accumulated amortization related to assets under capital leases were $165 and $165
respectively, as of December 31 , 2003 (the corresponding amounts were $482 and $344, respectively, as of December 31
2002). All of the Company s capital leases were retired at maturity in 2003.
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9. Operating Leases and Purchase Obligations
Operating Leases
The Company leases vehicles, equipment and office space under various noncancelable operating leases. The facility
leases generally require the Company to pay operating costs, including property taxes, insurance and maintenance, and
contain scheduled rent increases and certain other rent escalation clauses. The Company recognizes rent expense on a
straight-line basis over the tenns of the respective leases. Future minimum lease payments by year under operating leases
with noncancelable terms in excess of one year, along with future minimum payments to be received under noncancelable
subleases, are as follows:
Gross Lease Less Sublease Net Lease
Payments Payments Payments
Year ending December 31
2004 $ 4 999 $544 $ 4 455
2005 3,482 3,482
2006 814 814
2007 926 926
2008 429 1,429
Thereafter 269 269
Total $14 919 $544 $14 375
Rent expense, which is net of sublease income of$533, $402 and $152 in 2003 2002 and 2001, respectively, totaled
874, $8 710 and $15,421 for the years ended December 31 2003 2002 and 2001, respectively.
Purchase Obligations
In 2002, the Company entered into a three-year, non-exclusive agreement with MCI, for the right to provide certain
network services to the Company. The Company has a monthly minimum usage requirement which began in June 2002. The
agreement expires in May 2005 and the Company has a minimum remaining aggregate purchase obligation of approximately
$11 390 as of December 31 2003. Similarly, in 2002, the Company entered into a three-year, non-exclusive agreement with
AT&T for the right to provide certain data services to the Company. The Company has an annual minimum usage
requirement which began in January 2002. The agreement expires in December 2004 and the Company has a minimum
remaining aggregate purchase obligation of approximately $11 500 as of December 31 , 2003. In addition, in 2002, the
Company entered into a four-year, non-exclusive agreement with AT&T for the right to provide long distance services to the
Company. The Company has an annual minimum usage requirement which began in April 2002. The agreement expires in
March 2006 and the Company has a minimum remaining aggregate usage commitment of approximately $2 250 as of
December 31 2003.
Aggregate payments by year for the Company s purchase obligations are as follows:
Year ending December 31
2004
2005
$20 665
475
Total $25 140
l1li1
Network and product costs, recognized pursuant to the aforementioned purchase obligations totaled $1 292 for the year
ended December 31 2003. No similar amounts for these purchase obligations were recorded during 2002 and 2001.
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COV AD COMMUNICATIONS COMPANY
Exhibit D
Profiles of Senior Management Key Personnel
Management - Covad Executive Staff
harles E. Hoffman President and Chief Executive Officer
25-year telecommunications veteran, Hoffman brings a wealth of telecom and broadband experience to Covad
rom the wireless, cable , local and long-distance sectors. He joined Covad in June 2001 , ushering the company
hrough a pre-negotiated Chapter 11 , which effectively eliminated $1.4 billion in debt. Hoffman also led Covad in
securing a $150 million investment in the company from SBC Communications and dramatically reducing
expenses leading to an expectation of cash flow positive operations in the second half of 2003.
Prior to joining Covad, Hoffman was President and Chief Executive Officer of Rogers AT&T, Canada s largest, national
wireless service provider, with over three million wireless subscribers. Under his leadership, the company grew from fourth
to first place in a market of four national wireless providers. He also successfully negotiated the sale of one-third interest in
this publicly traded company (NYSE and TSE) to a partnership of AT&T and British Telecom. While at Rogers, Hoffman also
served as a Senior Vice President of Rogers Communications, gaining extensive experience with Rogers Cable, Canada
largest cable company, and the aggressive roll-out of their high speed Internet service.
Prior to his years at Rogers, Hoffman served as President, Northeast region for Sprint PCS, a start-up company owned by
Sprint, TCI, Comcast, and Cox Communications. He was responsible for operations in the largest region in the U., and
with offices in New York City, Philadelphia, Boston, Pittsburgh , Hartford , Albany, and Washington D., he successfully
launched PCS wireless service in nine markets.
Before joining Sprint PCS, Hoffman spent 16 years at SBC Communications in various senior management positions
including regional manager, general manager, vice president, and president & general manager. While leading SBC'
Cellular One operations, he turned around the second and fourth largest SBC markets, Washington/Baltimore and Boston
from underperformers to market leaders in record time. Hoffman also spent two years leading SBC's wireless operations in
the country of Mexico. In addition to running Radiomovil DIPSA, S.A. de C.V. (Telcel), the national wireless carrier, asDirector General, he was also Managing Director-Wireless for SBC International. During this period, Hoffman increasedmarket share from 49 percent to 65 percent.
Hoffman began his career at IBM in 1976 in marketing. Prior to beginning his career in wireless, he also spent two years at
Southwestern Bell Telephone Co. and two years as a national account manager for AT&T.
Hoffman received a Masters of Business Administration degree from University of Missouri, St. Louis. He and his wife
Maureen have four children and one grandson.
Patrick (Pat) Bennett, Executive Vice President General Manager, Covad Direct
Patrick (Pat) Bennett is responsible for driving Covad'direct sales and retail channel development. This positioncompliments our existing wholesale sales and enables us to further leverage our direct sales efforts and strengthen our
existing sales channels. In this role, Mr. Bennett also manages all Covad.net direct channel sales and support, telesales and
retail channel sales and development. Mr. Bennett brings to Covad 19 years of successful sales development and
management expertise, including the development of effective customer care, sales and marketing organizations, channel
development and strategic planning. He most recently joined Covad from TESSCO Technologies, Inc., a leading provider ofwireless communication solutions, where he was senior vice president of marketing and product development. Prior toTESSCO, Mr. Bennett was executive vice president and chief operating officer of Rogers Wireless, Inc., Canada s largestwireless communications service provider. As a member of the senior management team, Mr. Bennett was instrumental in
driving significant improvements in all operating metrics of the business. Preceding Rogers Wireless, Mr. Bennett joined thestart-up organization of Sprint PCS as area vice president. In this role, he was responsible for launching service in Sprint
PCS's third largest market, Philadelphia, and later managing the Washington/Baltimore area. He was also vice president of
Sales and Marketing for Cellular One in Washington/Baltimore and president and general manager of Communications
Electronics, Inc., along with being vice president and general manager for American Beeper Associates in ColumbiaMaryland. Mr. Bennett began his career as a regional sales manager for Metromedia, the predecessor to Cellular One.
P. Michael Hanley, Senior Vice President, Organizational Transformation
Mr. Hanley functions as chief of staff to the CEO. He has overall responsibility for the Human Resource and Real
Estate/Procurement functions and oversight of strategy and organizational communications. He is responsible for driving
organizational change and ensuring the organization is optimized to achieve corporate objectives. A proven and successful
leader in high-volume, customer-focused businesses, Mr. Hanley brings 18 years of experience including a strong ability to
instill a strategic business focus within the management team and an ability to identify key business issues while driving
necessary change. Mr. Hanley most recently joins Covad from Rogers Wireless, Inc. Canada largest wireless
communications service provider. As a member of the senior management team , Mr. Hanley led a cultural shift across the
organization that provided a firm foundation of personal accountability and a clear understanding of strategic corporate
goals. Prior to Rogers Wireless, Mr. Hanley held increasingly senior roles within the Toronto-Dominion Bank, Bank of Nova
Scotia and Canadian Imperial Bank of Commerce.
Anjali Joshi Executive Vice President Engineering
Anjali Joshi directs all Covad engineering activities including the architecture, implementation and capacity management of
Covad's national network. She also leads the development of Covad's network and business operations support systems as
well as the corporate information technology infrastructure. Ms. Joshi joined Covad in early 1998 bringing extensiveexperience in the design of carrier class networking solutions for voice and data. She was instrumental in architecting
Covad's network that has proven to be the most cost effective and reliable in the industry. She is recognized as an expert in
the area of DSL networks and has influenced FCC and State PUC policies in the areas of DSL deployment, line-sharing and
spectrum management. Ms Joshi was invited by the FCC to serve on the Network Reliability and Interoperability Council
which advises the Commission on matters related to the deployment of DSL networks. Prior to joining Covad, she was at
AT&T Bell Laboratories, where she managed the planning, design and implementation of several services including AT&T's
InterSpan ATM service. Ms. Joshi holds a Bachelors Degree in Electrical Engineering from the Indian Institute of
Technology, a Masters Degree in Computer Engineering from SUNY, and a Masters Degree in Engineering Management
from Stanford University.
arol Karney, Senior Vice President, Strategic Partnerships
, Mrs. Karney, leads a team that is accountable for driving the top line of the business for Covad. She manages
Govad's wholesale sales growth by developing and managing business relationships with Covad's key strategic
partners as well as driving high-volume consumer and large business partnerships. Mrs. Karney joined Covad in
1999, as sales vice president to the Midwest. She brings a diverse background in sales, sales management, marketing and
finance. Prior to her employment at Covad, she was the global communications manager of the Mobil Oil Corporation
where she lead and developed national and regional promotions through the planning, development and execution of
integrated promotion strategies and tactics to drive consumer demand and profitability.
Beth A. Lackey, Senior Vice President, Customer Operations
Ms. Lackey is responsible for managing Service Delivery, Dispatch , Technical Assistance Center (TAC) Repair, and
Operations Support. A proven leader in all areas of Covad operations, Ms. Lackey joined Covad in 1999 as Director of
Service Delivery where she established the Denver Service Delivery center for provisioning. Shortly thereafter, Ms. Lackeywas appointed Vice President of Network Services during which time she was responsible for the T AC and Network
Operations Center (NOC) as well as Business Continuity and Disaster Recover. Additionally, Ms. Lackey held positions as
Vice President of Western Operations and Vice President, Denver Center of Excellence. With over twenty years of
experience in the telecommunications industry, Ms. Lackey initially began her career with U.S. West, where she heldincreasingly senior positions in sales, customer service, strategic and competitive analysis and network operations. Ms.
Lackey holds a Bachelor of Arts degree in business administration with a marketing emphasis from Colorado State
University and a Master of Business Administration degree in international business from Regis University.
Andrew S. Lockwood, Senior Vice President of Marketing
Mr. Lockwood is responsible for driving demand for Covad's consumer and business class services. He leads Covad'
branding efforts, advertising, and overall marketing direction for the company. Additionally, Mr. Lockwood manages core
marketing responsibilities, such as product marketing and development, marketing communications and strategic planning.
Mr. Lockwood brings to Covad 21 years of experience in telecommunications, sales and marketing. His last position was
senior vice president and general manager of Inktomi's Wireless Division where he was responsible for software
engineering, product management, marketing, sales, finance, human resources, and strategy. Prior to his position at
Inktomi, Lockwood spent eight years at British Telecommunications (BT) in a variety of senior management positions. Most
recently he was vice president of the Advance Alliance where he led the relationship between BT and AT&T Wireless
identifying and implementing joint global product developments and other business initiatives. He was also deputy COO at
Telfort Mobil Netherlands, general manager of the Retail and Logistics Sector and held senior positions in Cable Television
Services, BT Mobile and BT Cellular. Prior to his time at BT, Lockwood worked for Millicom, Hutchison Telecom, and ICI.
Mr. Lockwood was educated at University College of North Wales and Seale-Hayne College in Devon, England.
organ McChesney, Senior Vice President, Network Operations
organ McChesney is responsible for the management of Covad's network and field operations. Mr. McChesney
rings 20 years of telecommunications, broadband operations, and general management experience. Mr.
McChesney joined Covad in 1999 and, over the years, has held several different Vice President positions within
operations. Prior to joining Covad, Mr. McChesney was a Vice President at AT&T, where he was responsible for building
AT&T's local network after their aquisition of T eleport Communications Group (TCG). Mr. McChesney initially joined TCG as
the Vice President and General Manager for Atlanta and was with TCG at the time AT&T aquired the company serving as
Regional Vice President for the southeast region. He also spent a large portion of his career at Tele-Communications
Inc.(TCI), one of the nation s largest cable television companies. During his time at TCI, Mr. McChesney helped build the
company s entry into the local telephone and high speed data business as the Vice President of Operations for the
company s newly created telephony business unit. He also served as a Regional Vice President responsible for overall
management of one of (TCI)'s largest cable regions and its largest cable market at the time and was directly responsible for
turning around the Chicago market and leading the highest revenue producing unit in the company.
David McMorrow, Senior Vice President, Strategic Development
Mr. McMorrow leads a team responsible for strategic business planning and development, focused on Covad's long-termrevenue and brand objectives. With over ten years of experience in the telecommunications industry, Mr. McMorrow
experience and knowledge of sales, marketing and industry trends make him well suited to lead Covad'strategic
development. Mr. McMorrow joined Covad in 1998 and served as Vice President of Sales for the Eastern Region, managing
half of Covad's wholesale revenue. Prior to joining Covad, Mr. McMorrow spent six years at AT&T and WorldCom in various
progressively senior managerial positions. Mr. McMorrow holds a Bachelor of Science degree in Marketing from Syracuse
University.
ark Richman Executive Vice President and Chief Financial Officer
r. Richman brings over 18 years of financial management experience to Covad. He joins the company from
ainStreet Networks where he was vice president and CFO, and built the finance, accounting and IT functions
nto departments. Prior to MainStreet, Richman held senior management positions at Adecco S.A. where he was
vice president of finance and administration for Adecco U., a $3 billion operating division. He was also vice president and
corporate treasurer at the parent company where he raised over $3 billion in funding through various debt and equity
transactions. He also worked for Merisel , Inc., a global computer hardware and software distributor, and was primarily based
in London as European finance director. Prior to Merisel, Richman had held various banking positions with ING Capital
Manufacturers Hanover Trust Company and Wells Fargo Bank. Richman holds a Bachelor of Science degree in managerial
economics from the University of California at Davis and a Master of Business Administration degree from the Anderson
School at UCLA.
Martha Sessums, Vice President, Corporate Communications
With over 20 years of experience in managing technology public relations and corporate communications, Ms. Sessums is
responsible for overseeing all external and internal communications at Covad. Ms. Sessums joined Covad in 1999 and
during that time has developed a strong public relations and communications program that has moved the company from a
small start-up to an industry leader. Prior to Covad , Ms. Sessums was the Senior Managing Director at Hill and Knowlton
Inc., where she managed the high technology practice of their San Francisco office. She was also with Avalanche PR for Hill
and Knowlton and managed the corporate and alliance public relations activities for Oracle Corporation. In addition, she has
held extensive senior corporate communications, public relations, and consulting roles for companies like Brodeur &
Partners Public Relations, Network Equipment Technologies, Western Digital Corporation , Apple Computer, and Regis
McKenna Public Relations. Ms. Sessums holds a Bachelor of Arts in Communications from California State University,
Fullerton. She has a Masters of Business Administration from Santa Clara University. Ms. Sessums also serves as the
president and secretary of the Association for Continuing Education, a distance education network provider.
James Kirkland, General Counsel and Senior vice President
James Kirkland is responsible for overseeing all of Covad's legal issues related to regulatory and legislative affairs,
corporate governance, employment and finance. Kirkland brings a wealth of knowledge of both the business and regulatory
environment in which Covad operators.
COV AD COMMUNICATIONS COMPANY
Exhibit E
Proposed Service Area Map
Covad seeks statewide authority to offer its services.
COV AD COMMUNICATIONS COMPANY
Exhibit F
Proposed Tariff
Covad Communications Company Idaho Tariff No. 2
Original Title Page
LOCAL EXCHANGE SERVICES TARIFF
IDAHO
LOCAL EXCHANGE TELECOMMUNICATIONS SERVICES TARIFF
Covad Communications Company
This tariff contains the descriptions, regulations, and rates applicable to the provision oflocal
exchange telecommunications services provided by Covad Communications Company with
principal offices at 110 Rio Robles, San Jose, CA 95134 for services furnished within the
State of Idaho. This tariff is on file with the Idaho Public Utilities Commission, and copies
may be inspected, during normal business hours, at the Company s principal place of business.
Issued:Effecti ve:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Preface
Original Page 1
LOCAL EXCHANGE SERVICES TARIFF
T ABLE OF CONTENTS
Page
PREF ACE
Table of Contents
Check Sheet
Explanation of Symbols
Application of Tariff
SECTION 1 - DEFINITIONS
SECTION 2 - RULES AND REGULATIONS
SECTION 3 - SERVICE AREAS
SECTION 4 - SERVICE CHARGES AND SURCHARGES
SECTION 5 - LOCAL EXCHANGE SERVICE
SECTION 6 SUPPLEMENT AL SERVICES
SECTION 7 - LONG DISTANCE SERVICES
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Preface
Original 2
LOCAL EXCHANGE SERVICES TARIFF
CHECK SHEET
The Title Page and pages listed below are inclusive and effective as of the date shown. Original and revised
pages as named below contain all changes from the original rate sheet that are in effect on the date shown on
each page.
SECTION PAGE REVISION SECTION PAGE REVISION
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Preface Original Original
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Ori ginal Original
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* - indicates those pages included with this filing
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Preface
Original Page 3
LOCAL EXCHANGE SERVICES TARIFF
CHECK SHEET, CONT'
SECTION PAGE REVISION
Original
Original
Original
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Ori ginal
Original
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Ori ginal
Original
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* - indicates those pages included with this filing
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Preface
Original Page 4
LOCAL EXCHANGE SERVICES TARIFF
EXPLANATION OF SYMBOLS
When changes are made in any tariff sheet, a revised sheet will be issued canceling the tariff sheet affected.
Changes will be identified on the revised sheet(s) through the use of the following symbols:
(C)To signify changed rate, regulation or condition.
(D)To signify discontinued rate, regulation or condition.
(I)To signify increase.
(N)To signify new material, including a listing, rate, regulation, rule or condition.
(R)To signify reduction.
(T)To signify a change in the word of text, but no change in the rate, rule or condition.
(M)Moved from another tariff location.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Preface
Original Page 5
LOCAL EXCHANGE SERVICES TARIFF
APPLICA TION OF TARIFF
This tariff sets forth the service offerings, rates, terms and conditions applicable to the furnishing of
intrastate end-user local exchange communications services by Covad Communications Company,
hereinafter referred to as the Company, to Customers within the state of Idaho. Covad's services are
furnished subject to the availability of facilities and subject to the terms and conditions set forth
herein.
This tariff is on file with the Idaho Public Utilities Commission. In addition, this tariff is available for
review at the main office of Covad Communications Company at 110 Rio Robles, San Jose, CA
95134.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 1
Original Page 1
LOCAL EXCHANGE SERVICES TARIFF
SECTION 1.0 - DEFINITIONS
For the purpose of this tariff, the following definitions will apply:
Access Line - An arrangement from a local exchange telephone company or other common carrier, using either
dedicated or switched access, which connects a Customer s location to Carrier s location or switching center.
Covad - Covad Communications Company, issuer of this tariff.
Advance Payment - Part or all of a payment required before the start of service.
Authorization Code - A numerical code, one or more of which may be assigned to a Customer, to enable
Carrier to identify the origin of service of the Customer so it may rate and bill the call. All authorization codes
shall be the sole property of Carrier and no Customer shall have any property or other right or interest in the
use of any particular authorization code. Automatic numbering identification (ANI) may be used as or in
connection with the authorization code.
Authorized User - A person, firm or corporation authorized by the Customer to be an end-user of the service
of the Customer.
Automatic Numbering Identification (ANI) - A type of signaling provided by a local exchange telephone
company which automatically identifies the local exchange line from which a call originates.
Commission - The Idaho Public Utilities Commission.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 1
Original Page 2
LOCAL EXCHANGE SERVICES TARIFF
SECTION 1.0 - DEFINITIONS, CONT'
Common Carrier - An authorized company or entity providing telecommunications services to the public
Company - Covad Communications Company, the issuer of this tariff.
Customer - The person, firm or corporation that orders service and is responsible for the payment of charges
and compliance with the terms and conditions of this tariff.
Customer Premises - A location designated by the Customer for the purposes of connecting to the Company
servIces.
Customer Terminal Equipment - Terminal equipment provided by the Customer.
Deposit - Refers to a cash or equivalent of cash security held as a guarantee for payment of the charges.
End Office - The LEC switching system office or serving wire center where Customer station loops are
terminated for purposes of interconnection to each other and/or to trunks.
End-User Premises - A location designated by the Customer for the purposes of connecting to the Company
servIces.
Equal Access - A form of dialed access provided by local exchange companies whereby interexchange calls
dialed by the Customer are automatically routed to the Company s network. Presubscribed Customers may also
route interexchange calls to the Companys network by dialing an access code supplied by the Company.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 1
Original Page 3
LOCAL EXCHANGE SERVICES TARIFF
SECTION 1.0 - DEFINITIONS, CONT'
Exchange Telephone Company or Telephone Company - Denotes any individual, partnership, association
joint-stock company, trust, or corporation authorized by the appropriate regulatory bodies to engage in
providing public switched communication service throughout an exchange area, and between exchange areas
within the LATA.
ICB - Individual Case Basis.
IXC or Interexchange Carrier - A long distance telecommunications services provider.
Interruption - The inability to complete calls due to equipment malfunctions or human errors. Interruption
shall not include, and no allowance shall be given for service difficulties such as slow dial tone, circuits busy or
other network and/or switching capability shortages. Nor shall Interruption include the failure of any service or
facilities provided by a common carrier or other entity other than the Carrier. Any Interruption allowance
provided within this Tariffby Carrier shall not apply where service is interrupted by the negligence or willful
act of the Customer, or where the Carrier, pursuant to the terms of this Tariff, terminates service because of
non-payment of bills, unlawful or improper use of the Carrier s facilities or service, or any other reason covered
by this Tariff or by applicable law.
LATA - A Local Access and Transport Area established pursuant to the Modification of Final Judgment
entered by the United States District Court for the District of Columbia in Civil Action No. 82-0192; or any
other geographic area designated as aLA T A in the National Exchange Carrier Association, Inc. TariffF .
No., or its successor tariff(s).
LEC - Local Exchange Company refers to the dominant, monopoly local telephone company in the area also
served by the Company.
Monthly Recurring Charges - The monthly charges to the Customer for services, facilities and equipment
which continue for the agreed upon duration of the service.
MOU - Minutes of Use.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 1
Original Page 4
LOCAL EXCHANGE SERVICES TARIFF
SECTION 1.0 - DEFINITIONS, CONT'
Serving Wire Center - A specified geographic point from which the vertical and horizontal coordinate is used
in calculation of airline mileage.
Shared Inbound Calls - Refers to calls that are terminated via the Customer s Company-provided local
exchange line.
Shared Outbound Calls - Refers to calls in Feature Group (FGD) exchanges whereby the Customer s local
telephone lines are presubscribed by the Company to the Company s outbound service such that" 1 + 1 O-digit
number" calls are automatically routed to the Company s or an IXC's network. Calls to stations within the
Customer s LATA may be placed by dialing "10XXX" or "10IXXXX" with 1 + 10-digit number.
Station - The network control signaling unit and any other equipment provided at the Customer s premises
which enables the Customer to establish communications connections and to effect communications through
such connections.
Subscriber - The person, firm, partnership, corporation, or other entity who orders telecommunications service
from COV AD. Service may be ordered by, or on behalf of, those who own, lease or otherwise manage the pay
telephone, PBX, or other switch vehicle from which an End User places a call utilizing the services of the
Company.
NECA - National Exchange Carriers Association.
Non-Recurring Charge ("NRC") - The initial charge, usually assessed on a one-time basis, to initiate and
establish service.
PIN - Personal Identification Number. See Authorization Code.
Point of Presence ("POP") - Point of Presence
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 1
Original Page 5
LOCAL EXCHANGE SERVICES TARIFF
SECTION 1.0 - DEFINITIONS, CONT'
Recurring Charges - Monthly charges to the Customer for services, and equipment, which continues for the
agreed upon duration of the service.
Service - Any means of service offered herein or any combination thereof.
Service Order - The written or verbal request for Company services by the Customer and the Company in the
format devised by the Company. A Service Order initiates the respective obligations of the parties as set forth
therein and pursuant to this tariff.
Switched Access Origination/Termination - Where access between the Customer and the interexchange
carrier is provided on local exchange company Feature Group circuits and the connection to the Customer is a
LED-provided business or residential access line. The cost of switched Feature Group access is billed to the
interexchange carrier.
Terminal Equipment - Any telecommunications equipment other than the transmission or receiving
equipment installed at a Company location.
U sage Charges - Charges for minutes or messages traversing over local exchange facilities.
User or End User - A Customer, Joint User, or any other person authorized by a Customer to use service
provided under this tariff.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 1
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS
Undertaking of the Company
1.1 Scope
The Company undertakes to furnish communications service pursuant to the terms of this
tariff in connection with one-way and/or two-way information transmission originating from
points within the State of Idaho, and terminating within a local calling area as defined herein.
The Company is responsible under this tariff only for the services and facilities provided
hereunder, and it assumes no responsibility for any service provided by any other entity that
purchases access to the Company network in order to originate or terminate its own services
or to communicate with its own Customers.
1.2 Shortage of Equipment or Facilities
The Company reserves the right to limit or to allocate the use of existing facilities, or
of additional facilities offered by the Company, when necessary because of lack of
facilities, or due to some other cause beyond the Company s control.
The furnishing of service under this tariff is subj ect to the availability on a continuing
basis of all the necessary facilities and is limited to the capacity of the Company
facilities as well as facilities the Company may obtain from other carriers to furnish
service from time to time as required at the sole discretion of the Company.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfO400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 2
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Undertaking of the Company, Cont'
1.3 Terms and Conditions
Service is provided on the basis of a minimum period of at least thirty (30) days, 24-
hours per day. For the purpose of computing charges in this tariff, a month is
considered to have thirty (30) days.
Customers may be required to enter into written service orders which shall contain or
reference a specific description of the service ordered, the rates to be charged, the
duration of the services, and the terms and conditions in this tariff. Customers will
also be required to execute any other documents as may be reasonably requested by
the Company.
Except as otherwise stated in the tariff, at the expiration of the initial term specified
in each Service Order, or in any extension thereof, service shall continue on a month
to month basis at the then current rates unless terminated by either party upon notice.
Any termination shall not relieve the Customer of its obligation to pay any charges
incurred under the service order and this tariff prior to termination. The rights and
obligations which by their nature extend beyond the termination of the term of the
service order shall survive such termination.
Service may be terminated upon written notice to the Customer if:
the Customer is using the service in violation of this tariff; or
the Customer is using the service in violation of the law.
This tariff shall be interpreted and governed by the laws of the State of Idaho without
regard for its choice of laws provision.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfO400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 3
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Undertaking of the Company, Cont'
1.3 Terms and Conditions, Cont'
Any other Telephone Company may not interfere with the right of any person or
entity to obtain service directly from the Company. No person or entity shall be
required to make any payment, incur any penalty, monetary or otherwise, or purchase
any services in order to have the right to obtain service directly from the Company.
To the extent that either the Company or any other Telephone Company exercises
control over available cable pairs, conduit, duct space, raceways, or other facilities
needed by the other to reach a person or entity, the party exercising such control shall
make them available to the other on terms equivalent to those under which the
Company makes similar facilities under its control available to its Customers. At the
reasonable request of either party, the Company and the Other Telephone Company
shall jointly attempt to obtain from the owner of the property access for the other
party to serve a person or entity.
The Company hereby reserves its rights to establish service packages specific to a
particular Customer. These contracts mayor may not be associated with volume
and/or term discounts. All service packages established by the Company will be filed
with the Commission prior to the furnishing of service.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfO400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 4
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Undertaking of the Company, Cont'
1.4 Limitations on Liability
Except as otherwise stated in this section, the liability of the Company for damages
arising out of either: (1) the furnishing of its services, including but not limited to
mistakes, omissions, interruptions, delays, or errors, or other defects, representations
or use of these services or (2) the failure to furnish its service, whether caused by acts
or omission, shall be limited to the extension of allowances to the Customer for
interruptions in service as set forth in Section 2.
Except for the extension of allowances to the Customer for interruptions in service
set forth in Section 2., the Company shall not be liable to a Customer or third party
for any direct, indirect, special, incidental, reliance, consequential, exemplary or
punitive damages, including, but not limited to, loss of revenue or profits, for any
reason whatsoever, including, but not limited to, any act or omission, failure to
perform, delay, interruption, failure to provide any service or any failure in or
breakdown of facilities associated with the service.
The liability of the Company for errors in billing that result in overpayment by the
Customer shall be limited to a credit equal to the dollar amount erroneously billed or
in the event that payment has been made and service has been discontinued, to a
refund of the amount erroneously billed.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 5
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Undertaking of the Company, Cont'
1.4 Limitations on Liability, Cont'
The Company shall be indemnified and saved harmless by the Customer from and
against all loss, liability, damage and expense, including reasonable counsel fees, due
to:
Any act or omission of: (a) the Customer, (b) any other entity furnishing
service, equipment or facilities for use in conjunction with services or
facilities provided by the Company; or (c) common carriers or
warehousemen, except as contracted by the Company;
Any delay or failure of performance or equipment due to causes beyond the
Companys control, including but not limited to, acts of God, fires, floods
earthquakes, hurricanes, or other catastrophes; national emergencies
insurrections, riots, wars or other civil commotions; strikes, lockouts, work
stoppages or other labor difficulties; criminal actions taken against the
Company; unavailability, failure or malfunction of equipment or facilities
provided by the Customer or third parties; and any law, order, regulation or
other action of any governing authority or agency thereof;
Any unlawful or unauthorized use of the Company s facilities and services;
Libel, slander, invasion of privacy or infringement of patents, trade secrets
or copyrights arising from or in connection with the material transmitted by
means of Company-provided facilities or services; or by means of the
combination of Company-provided facilities or services;
Breach in the privacy or security of communications transmitted over the
Company s facilities;
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfO400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 6
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONTJ
Undertaking of the Company, ContJ
1.4 Limitations on Liability, ContJ
ContJ
Changes in any of the facilities, operations or procedures of the Company
that render any equipment, facilities or services provided by the Customer
obsolete, or require modification or alteration of such equipment, facilities or
services, or otherwise affect their use or performance, except where
reasonable notice is required by the Company and is not provided to the
Customer, in which event the Company s liability is limited as set forth
above in Section 2.
Defacement of or damage to Customer premises resulting from the
furnishing of services or equipment on such premises or the installation or
removal thereof;
Injury to property or injury or death to persons, including claims for
payments made under Workers' Compensation law or under any plan for
employee disability or death benefits, arising out of, or caused by, any act or
omission of the Customer, or the construction, installation, maintenance
presence, use or removal of the Customer facilities or equipment
connected, or to be connected to the Company s facilities;
Any noncompletion of calls due to network busy conditions;
Any calls not actually attempted to be completed during any period that
service is unavailable;
And any other claim resulting from any act or omission of the Customer or
patron(s) of the Customer relating to the use of the Company s services or
facilities.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 7
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Undertaking of the Company, Cont'
1.4 Limitations on Liability, Cont'
The Company does not guarantee nor make any warranty with respect to installations
provided by it for use in an explosive atmosphere.
The Company makes no warranties or representations, EXPRESS OR IMPLIED
either in fact or by operation of law, statutory or otherwise, including warranties of
merchantability or fitness for a particular use, except those expressly set forth herein.
Failure by the Company to assert its rights pursuant to one provision of this tariff
does not preclude the Company from asserting its rights under other provisions.
Directory Errors - In the absence of gross negligence or willful misconduct, no
liability for damages arising from errors or mistakes in or omissions of directory
listings, or errors or mistakes in or omissions of listing obtainable from the directory
assistance operator, including errors in the reporting thereof, shall attach to the
Company. An allowance for errors or mistakes in or omissions of published directory
listings or for errors or mistakes in or omissions of listing obtainable from the
directory assistance operator shall be at the monthly tariff rate for each listing, or in
the case of a free or no-charge directory listing, credit shall equal two times the
monthly tariff rate for an additional listing, for the life of the directory or the charge
period during which the error, mistake or omission occurs.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
790 I Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 8
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONTJ
Undertaking of the Company, ContJ
1.4 Limitations on Liability, ContJ
With respect to Emergency Number 911 Service:
This service is offered solely as an aid in handling assistance calls in
connection with fire, police and other emergencies. The company is not
responsible for any losses, claims, demands, suits or any liability whatsoever
whether suffered, made instituted or asserted by the Customer or by any
other party or person for any personal injury or death of any person or
persons, and for any loss, damage or destruction of any property, whether
owned by the Customer or others, caused or claimed to have been caused by:
(1) mistakes, omissions, interruptions, delays, errors or other defects in the
provision of service, or (2) installation, operation, failure to operate
maintenance, removal, presence, condition, local or use of any equipment
and facilities furnishing this service.
N either is the Company responsible for any infringement, nor invasion of the
right of privacy of any person or persons, caused or claimed to have been
caused directly or indirectly, by the installation, operation, failure to operate
maintenance, removal, presence, condition, occasion or use of emergency
911 service features and the equipment associated therewith, or by any
services furnished by the Company, including, but not limited to the
identification of the telephone number, address or name associated with the
telephone used by the party or parties accessing emergency 911 service, and
which arise out of the negligence or other wrongful act of the Company, the
Customer, its users, agencies or municipalities, or the employees or agents of
anyone of them.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 9
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Undertaking of the Company, Cont'
1.4 Limitations on Liability, Cont'
With respect to Emergency Number 911 Service, Cont'
When a Customer with a nonpublished telephone number, as defined herein
places a call to the emergency 911 service, the Company will release the
name and address of the calling party, where such information can be
determined, to the appropriate local governmental authority responsible for
emergency 911 service upon request of such governmental authority.
subscribing to service under this tariff, the Customer acknowledges and
agrees with the release of information as described above.
The included tariff language does not constitute a determination by the Commission
that a limitation of liability imposed by the Company should be upheld in a court of
law. Acceptance for filing by the Commission recognizes that it is a court s
responsibility to adjudicate negligence and consequential damage claims. It is also
the court's responsibility to determine the validity of the exculpatory clause.
1.5 Notification of Service-Affecting Activities
The Company will provide the Customer reasonable notification of service-affecting activities
that may occur in normal operation of its business. Such activities may include, but are not
limited to, equipment or facilities additions removals or rearrangements and routine
preventative maintenance. Generally, such activities are not specific to an individual
Customer but affect many Customers' services. No specific advance notification period
applicable to all service activities. The Company will work cooperatively with the Customer
to determine the reasonable notification requirements. With some emergency or unplanned
service-affecting conditions, such as an outage resulting from cable damage, notification to
the Customer may not be possible.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 10
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Undertaking of the Company, Cont'
1.6 Provision of Equipment and Facilities
The Company shall use reasonable efforts to maintain only the facilities and
equipment that it furnishes to the Customer. The Customer may not nor may the
Customer permit others to rearrange, disconnect, remove, attempt to repair, or
otherwise interfere with any of the facilities or equipment installed by the Company,
except upon the written consent of the Company.
The Company may substitute, change or rearrange any equipment or facility at any
time and from time to time, but shall not thereby alter the technical parameters ofthe
service provided the Customer.
Equipment the Company provides or installs at the Customer Premises for use in
connection with the services the Company offers shall not be used for any purpose
other than that for which the equipment is provided.
Except as otherwise indicated, Customer provided station equipment at the
Customer s premises for use in connection with this service shall be so constructed
maintained and operated as to work satisfactorily with the facilities of the Company.
The Company shall not be responsible for the installation, operation, or maintenance
of any Customer provided communications equipment. Where such equipment is
connected to the facilities furnished pursuant to this tariff, the responsibility of the
Company shall be limited to the furnishing of facilities offered under this tariff and to
the maintenance and operation of such facilities. Subject to this responsibility, the
Company shall not be responsible for:
the through transmission of signals by Customer provided equipment or for
the quality of, or defects in, such transmission; or
the reception of signals by Customer-provided equipment; or
network control signaling where such signaling is performed by Customer-
provided network control signaling equipment.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page II
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Undertaking of the Company, Cont'
1.7 Non-Routine Installation
At the Customer s request, installation and/or maintenance may be performed outside the
Company s regular business hours or in hazardous locations. In such cases, charges based on
cost of the actual labor, material, or other costs incurred by or charged to the Company will
apply. If installation is started during regular business hours, but, at the Customer s request
extends beyond regular business hours into time periods including, but not limited to
weekends, holidays, and/or night hours, additional charges may apply.
1.8 Special Construction
Subject to the agreement of the Company and to all of the regulations contained in this tariff
special construction of facilities may be undertaken on a reasonable efforts basis at the request
of the Customer. Special construction is construction undertaken:
where facilities are not presently available, and there is no other requirement for the
facilities so constructed;
of a type other than that which the Company would normally utilize in the furnishing
of its services;
over a route other than that which the Company would normally utilize in the
furnishing of its services;
in a quantity greater than that which the Company would normally construct;
on an expedited basis;
on a temporary basis until permanent facilities are available;
involving abnormal costs; or
in advance of its normal construction.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfO400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 12
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Undertaking of the Company, Cont'
1.9 Ownership of Facilities
Title to all facilities provided in accordance with this tariff remains in the Company, its
partners, agents, contractors or suppliers.
Prohibited Uses
2.4
The services the Company offers shall not be used for any unlawful purpose or for any use as
to which the Customer has not obtained all required governmental approvals, authorizations
licenses, consents and permits.
The Company may require applicants for service who intend to use the Company s offerings
for resale and/or for shared use to file a letter with the Company confirming that their use of
the Company s offerings complies with relevant laws and the Public Utilities Commission of
Idaho s regulations, policies, orders, and decisions.
The Company may block any signals being transmitted over its Network by Customers which
cause interference to the Company or other users. Customer shall be relieved of all obligations
to make payments for charges relating to any blocked Service and shall indemnify the
Company for any claim, judgment or liability resulting from such blockage.
A Customer, joint user, or authorized user may not assign, or transfer in any manner, the
service or any rights associated with the service without the written consent of the Company.
The Company will permit a Customer to transfer its existing service to another entity if the
existing Customer has paid all charges owed to the Company for regulated communications
services. Such a transfer will be treated as a disconnection of existing service and installation
of new service, and non-recurring installation charges as stated in this tariff will apply.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONTJ
Obligations of the Customer
General
The Customer shall be responsible for:
the payment of all applicable charges pursuant to this tariff;
damage to or loss of the Company s facilities or equipment caused by the acts or
omissions of the Customer; or the noncompliance by the Customer, with these
regulations; or by fire or theft or other casualty on the Customer Premises, unless
caused by the negligence or willful misconduct of the employees or agents of the
Company;
providing at no charge, as specified from time to time by the Company, any needed
equipment, space and power to operate Company facilities and equipment installed
on the premises of the Customer, and the level of heating and air conditioning
necessary to maintain the proper operating environment on such premises;
obtaining, maintaining, and otherwise having full responsibility for all rights-of-way
and conduit necessary for installation of fiber optic cable and associated equipment
used to provide Communications Services to the Customer from the cable building
entrance or property line to the location of the equipment space described above in
Section 2.C. Any and all costs associated with the obtaining and maintaining the
rights-of-way described herein, including the costs of altering the structure to permit
installation of the Company provided facilities, shall be borne entirely by, or may be
charged by the Company, to the Customer. The Company may require the Customer
to demonstrate its compliance with this section prior to accepting an order for service.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 14
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Obligations of the Customer, Cont'
General, Cont'
providing a safe place to work and complying with all laws and regulations regarding
the working conditions on the premises at which Company employees and agents
shall be installing or maintaining the Companys facilities and equipment. The
Customer may be required to install and maintain Company facilities and equipment
within a hazardous area if, in the Company s opinion, injury or damage to the
Company employees or property might result from installation or maintenance by the
Company. The Customer shall be responsible for identifying, monitoring, removing
and disposing of any hazardous material (e., friable asbestos) prior to any
construction or installation work;
complying with all laws and regulations applicable to, and obtaining all consents
approvals, licenses and permits as may be required with respect to, the location of
Company facilities and equipment in any Customer premises or the rights-of-way for
which Customer is responsible under Section 2.D; and granting or obtaining
permission for Company agents or employees to enter the premises of the Customer
at any time for the purpose of installing, inspecting, maintaining, repairing, or upon
termination of service as stated herein, removing the facilities or equipment of the
Company;
not creating or allowing to be placed any liens or other encumbrances on the
Company s equipment or facilities; and
making Company facilities and equipment available periodically for maintenance
purposes at a time agreeable to both the Company and the Customer. No allowance
will be made for the period during which service is interrupted for such purposes.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfO400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Obligations of the Customer, Cont'
Liability of the Customer
The Customer will be liable for damages to the facilities of the Company and for all
incidental and consequential damages caused by the negligent or intentional acts or
omissions of the Customer, its officers, employees, agents, invites, or contractors
where such acts or omissions are not the direct result of the Companys negligence or
intentional misconduct.
To the extent caused by any negligent or intentional act of the Customer as described
in (A), preceding, the Customer shall indemnify, defend and hold harmless the
Company from and against all claims, actions, damages, liabilities, costs and
expenses, including reasonable attorneys' fees, for (1) any loss, destruction or damage
to property of any third party, and (2) any liability incurred by the Company to any
third party pursuant to this or any other tariff of the Company, or otherwise, for any
interruption of, interference to, or other defect in any service provided by the
Company to such third party.
The Customer shall not assert any claim against any other Customer or user of the
Company s services for damages resulting in whole or in part from or arising in
connection with the furnishing of service under this tariff including but not limited to
mistakes, omissions, interruptions, delays errors or other defects or
misrepresentations, whether or not such other Customer or user contributed in any
way to the occurrence of the damages, unless such damages were caused solely by
the negligent or intentional act or omission of the other Customer or user and not by
any act or omission of the Company. Nothing in this tariff is intended either to limit
or to expand Customer s right to assert any claims against third parties for damages of
any nature other than those described in the preceding sentence.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 16
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Customer Equipment and Channels
2.4.General
A user may transmit or receive information or signals via the facilities of the Company. The
Company s services are designed primarily for the transmission of voice-grade telephonic
signals, except as otherwise stated in this tariff. A user may transmit any form of signal that
compatible with the Company s equipment, but the Company does not guarantee that its
services will be suitable for purposes other than voice-grade telephonic communication except
as specifically stated in this tariff.
2.4.Station Equipment
Terminal equipment on the user s premises and the electric power consumed by such
equipment shall be provided by and maintained at the expense ofthe user. The user
responsible for the provision of wiring or cable to connect its terminal equipment to
the Company MPOP.
The Customer is responsible for ensuring that Customer-provided equipment
connected to Company equipment and facilities is compatible with such equipment
and facilities. The magnitude and character of the voltages and currents impressed on
Company-provided equipment and wiring by the connection, operation, or
maintenance of such equipment and wiring shall be such as not to cause damage to
the Company-provided equipment and wiring or injury to the Company s employees
or to other persons. Any additional protective equipment required to prevent such
damage or injury shall be provided by the Company at the Customer s expense
subject to prior Customer approval of the equipment expense.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 1
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Customer Equipment and Channels, Cont'
Interconnection of Facilities
Local Traffic Exchange provides the ability for another local exchange provider to
terminate local traffic on the Company s network. In order to qualify for Local Traffic
Exchange the call must: ( a) be originated by an end user of a company that is
authorized by the Public Utilities Commission of Idaho to provide local exchange
service; (b) originate and terminate within a local calling area of the Company.
Any special interface equipment necessary to achieve compatibility between the
facilities and equipment of the Company used for furnishing Communications
Services and the channels , facilities, or equipment of others shall be provided at the
Customer s expense.
Communications Services may be connected to the services or facilities of other
communications carriers only when authorized by, and in accordance with, the terms
and conditions of the tariffs of the other communications carriers which are
applicable to such connections.
Facilities furnished under this tariff may be connected to Customer provided terminal
equipment in accordance with the provisions of this tariff. All such terminal
equipment shall be registered by the Federal Communications Commission pursuant
to Part 68 of Title 47, Code of Federal Regulations; and all user-provided wiring
shall be installed and maintained in compliance with those regulations.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 18
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Customer Equipment and Channels, Cont'
2.4.Inspections
Upon suitable notification to the Customer, and at a reasonable time, the Company
may make such tests and inspections as may be necessary to determine that the
Customer is complying with the requirements set forth in Section 2A.B of this tariff
for the installation, operation, and maintenance of Customer-provided facilities
equipment, and wiring in the connection of Customer-provided facilities and
equipment to Company-owned facilities and equipment.
If the protective requirements for Customer-provided equipment are not being
complied with, the Company may take such action as it deems necessary to protect its
facilities, equipment, and personnel. The Company will notify the Customer
promptly if there is any need for further corrective action. Within ten days of
receiving this notice, the Customer must take this corrective action and notify the
Company of the action taken. If the Customer fails to do this, the Company may take
whatever additional action is deemed necessary, including the suspension of service
to protect its facilities, equipment and personnel from harm.
If harm to the Company s network, personnel or services is imminent, the Company
reserves the right to shut down Customer s service immediately, with no prior notice
required.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 19
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Customer Deposits and Advance Payments
Advance Payments
To safeguard its interests, the Company may require a Customer to make an advance payment
before services and facilities are furnished. The advance payment will not exceed an amount
equal to the non-recurring charge(s) and one month's charges for the service or facility. The
advance payment will be credited to the Customer s initial bill. An advance payment may be
required in addition to a deposit.
Deposits
The Company does not require deposits from Customers.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
790 I Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 20
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Payment Arrangements, Cont'
Payment for Service
General
The Customer is responsible for the payment of all charges for facilities and services
furnished by the Company to the Customer and to all Authorized Users by the
Customer, regardless of whether those services are used by the Customer itself or are
resold to or shared with other persons.
The Customer is responsible for payment of any sales, use, gross receipts, excise
access or other local, state, federal and 911 taxes, charges or surcharges (however
designated) (excluding taxes on Company s net income) imposed on or based upon
the provision, sale or use of Network Services.
The security of the Customer s PIN is the responsibility of the Customer. All calls
placed using a PIN shall be billed to and shall be the obligation of the Customer. The
Customer shall not be responsible for charges in connection with the unauthorized
use of PINs arising after the Customer notifies the Company of the loss, theft, or
other breach of security of such PINs.
Customers will only be charged once, on either an interstate or intrastate basis, for
any nonrecurring or usage based charges.
Taxes, Fees and Surcharges
The Company reserves the right to bill any and all applicable taxes, fees and
surcharges in addition to normal rates and charges for services provided to the
Customer, where permitted by law. Taxes and fees include, but are not limited to:
Federal Excise Tax, State Sales Tax, Municipal Tax, Gross Receipts Tax, Idaho
Telecommunications Service Assistance Program, and Universal Service. Unless
otherwise specified in this tariff, such taxes, fees and surcharges are in addition to
rates as quoted in this tariff and will be itemized separately on Customer invoices.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 21
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Payment Arrangements, Cont'
Billing and Collection of Charges
The Customer is responsible for payment of all charges incurred by the Customer or other
Authorized Users for services and facilities furnished to the Customer by the Company.
Nonrecurring charges are due and payable within thirty (30) days after the invoice
date, unless otherwise agreed to in advance.
The Company shall present invoices for recurring charges monthly to the Customer
in advance of the month in which service is provided, and Recurring Charges shall be
due and payable within thirty (30) days after the invoice date. When billing is based
on customer usage, charges will be billed monthly for the preceding billing periods.
When service does not begin on the first day of the month, or end on the last day of
the month, the charge for the fraction of the month in which service was furnished
will be calculated on a pro rata basis. For this purpose, every month is considered to
have thirty (30) days.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 22
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Payment Arrangements, Cont'
Billing and Collection of Charges, Cont'
Billing of the Customer by the Company will begin on the Service Commencement
Date, which is the first day following the date on which the Company notifies the
Customer that the service or facility is available for use, except that the Service
Commencement Date may be postponed by mutual agreement of the parties, or if the
service or facility does not conform to standards set forth in this tariff or the Service
Order. Billing accrues through and includes the day that the service, circuit
arrangement or component is discontinued.
Late Payment Fees - The Company does not bill Customers late payment penalties.
The Customer will be assessed a charge of twenty dollars ($25.00) for each check or
other payment type submitted by the Customer to the Company that a bank or other
financial institution refuses to honor.
If service is disconnected by the Company in accordance with Section 2.7 following
and later restored, restoration of service will be subject to all applicable installation
charges.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 23
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Payment Arrangements, Cont'
Disputed Bills
In the event that a billing dispute occurs concerning any charges billed to the
Customer by the Company, the Company may require the Customer to pay the
undisputed portion of the bill to avoid discontinuance of service for non-payment.
The Customer must submit a documented claim for the disputed amount. The
Customer will submit all documentation as may reasonably be required to support the
claim. All claims must be submitted to the Company within a reasonable period of
time after receipt of billing for those services and in accordance with Idaho law. Ifthe
Customer does not submit a claim as stated above, the Customer waives all rights to
filing a claim thereafter.
Unless disputed the invoice shall be deemed to be correct and payable in full by the
Customer. If the Customer is unable to resolve any dispute with the Company, then
the Customer may file a complaint with the Idaho Public Utilities Commission, 472
West Washington, P.O. Box 83720 , Boise ID 83720-0074; 208-334-0300 or 1-800-
432-0369.
If the dispute is resolved in favor of the Customer and the Customer has withheld the
disputed amount, no interest, credits or penalties will apply.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 24
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Discontinuance of Service
Service may be disconnected after seven (7) days written notice for any of the following
reasons:
The Customer did not pay undisputed delinquent bills for local exchange services or
paid a delinquent bill for local exchange services with any dishonored check.
The Customer failed to make a security deposit or obtain a guarantee when one is
required.
The Customer failed to abide by the terms of a payment arrangement.
The Customer misrepresented the Customer s identity for the purpose of obtaining
telephone service.
The Company determines as prescribed by relevant state or other applicable
standards that the Customer is willfully wasting or interfering with service through
improper equipment or otherwise.
The Customer is using service(s) for which the Customer did not apply.
At least 24 hours before actual termination, the Company will attempt to contact the Customer
affected to apprize the Customer of the proposed termination action and steps to take to avoid
or delay termination. Service will not be terminated in the event that a formal or informal
complaint concerning termination is filed with the Commission.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 25
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Discontinuance of Service
Service may be disconnected without notice and without incurring any liability for any of the
following reasons:
A condition immediately dangerous or hazardous to life, physical safety or property
exists, or it is necessary to prevent a violation of federal, state or local safety or health
codes.
The company is ordered to terminate service by any court, the Commission, or any
other duly authorized public authority.
In the event of fraudulent use of the Company s network, where the service( s) was
(were) obtained, diverted or used without the authorization or knowledge of the
Company, the Company will discontinue service without notice and/or seek legal
recourse to recover all costs involved in enforcement of this provision.
The Company has tried diligently to meet the notice requirements but has been
unsuccessful in its attempt to contact the Customer affected.
The Customer has misrepresented the Customer s identify for purposes of obtaining
telephone service and has no or an inadequate security deposit on file with the
Company and has an outstanding bill exceeding $100.
Upon the Customer s insolvency, assignment for the benefit of creditors, filing for
bankruptcy or reorganization, or failing to discharge an involuntary petition within
the time permitted by law.
Upon the Company s discontinuance of service to the Customer under Section 2.
or 2., the Company, in addition to all other remedies that maybe available to the
Company at law or in equity or under any other provision of this tariff, may declare
all future monthly and other charges that would have been payable by the Customer
during the remainder of the term for which such services would have otherwise been
provided to the Customer to be immediately due and payable (discounted to present
value at six percent).
Issued:Effecti ve:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 26
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Cancellation of Application for Service
Applications for service cannot be canceled without the Company s agreement. Where the
Company permits a Customer to cancel an application for service prior to the start of service
or prior to any special construction, no charges will be imposed except for those specified
below.
Where, prior to cancellation by the Customer, the Company incurs any expenses in installing
the service or in preparing to install the service that it otherwise would not have incurred, a
charge equal to the costs incurred by the Company, less net salvage, shall apply, but in no
case shall this charge exceed the sum of the charge for the minimum period of services
ordered, including installation charges, and all charges others levy against the Company that
would have been chargeable to the Customer had service commenced (all discounted to
present value at six percent).
Where the Company incurs any expense in connection with special construction, or where
special arrangements of facilities or equipment have begun, before the Company receives a
cancellation notice, a charge equal to the costs incurred by the Company, less net salvage
applies. In such cases, the charge will be based on such elements as the cost ofthe equipment
facilities, and material, the cost of installation, engineering, labor, and supervision, general
and administrative expense, other disbursements, depreciation, maintenance, taxes, provision
for return on investment, and any other costs associated with the special construction or
arrangements.
The special charges described in 2.1 through 2.3 will be calculated and applied on a case-
by-case basis.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 27
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Changes in Service Requested
If the Customer makes or requests material changes in circuit engineering, equipment specifications
service parameters, premises locations, or otherwise materially modifies any provision of the
application for service, the Customer s installation fee shall be adjusted accordingly.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 28
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Allowances for Interruptions in Service
Interruptions in service that are not due to the negligence of, or noncompliance with the provisions of
this tariff by, the Customer or the operation or malfunction of the facilities, power or equipment
provided by the Customer, will be credited to the Customer as set forth in 2.1 for the part of the
service that the interruption affects.
10.General
Service Outage
A credit allowance will be given when service is interrupted, except as specified
below. A service is interrupted when it becomes inoperative to the Customer, e., the
Customer is unable to transmit or receive, because of a cross-talk, static or other
transmission problem, the Company will respond to a Customer s report of such a
service outage" in accordance with IDAP A 31.41.01 Rule 503. Customer s bills will
be appropriately and automatically credited pursuant to the terms of Rule 503.
Receipt and Recording of Reports
The Company will provide for the receipt of Customer trouble reports at all hours
and make a full and prompt investigation of and response to all reports. The
Company will maintain an accurate record of trouble reports made by its Customers.
This record will include accurate identification of the Customer or service affected
the time, date and nature of the report, the action taken to clear the trouble or satisfy
the Customer, and the date and time of trouble clearance or other disposition. This
record will be available to the Commission or its authorized representatives upon
request at any time within two (2) years of the date of the record.
Repair Commitments
Commitments to the Customer for repair service will be set in accordance with Rule
503. The Company will make every reasonable attempt to fulfill repair commitments
to its Customers. Customers will be timely notified of unavoidable changes. Failure
to meet a repair commitment does not relieve the Company of the credited provisions
in Rule 503., unless the Customer fails to keep an appointment the Customer
agreed to when the original commitment was made
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 29
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Allowances for Interruptions in Service, (Cont'
10.General, (Cont'
Restoration of Service
When the Company providing local exchange is informed by a Customer of a local
exchange service outage, the Company will:
restore service within sixteen (16) hours after the report of the outage if the
Customer notifies the Company that the service outage creates an emergency
for the Customer, or
restore service within twenty-four (24) hours after the report of the outage if
no emergency exists, except that outages reported between noon on Saturday
and 6:00 p.m. on the following Sunday must be restored within forty-eight
(48) hours or by 6 :00 p.m. on the following Monday, which ever is sooner. If
the Company does not restore service within the times required by this
subsection, the Company will credit the Customer s account for an amount
equal to the monthly rate for one (1) month of basic local exchange service.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfO400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 30
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Allowances for Interruptions in Service, (Cont'
10.1 General, (Cont'
Extenuating Circumstances
Following disruption of local exchange service caused by natural disaster or other
causes not within the Company's control and affecting large groups of Customers , or
in conditions where the personal safety on an employee would be jeopardized, the
Company is not required to provide the credit referred to in Subsection 503.01 as
long as it uses reasonable judgment and diligence to restore service, giving due
regard for the needs of various Customers and the requirements of the
telecommunications service priority (TSP) program ordered in FCC Docket 88-341.
When a Customer causes the Customer s own service outage or does not make a
reasonable effort to arrange a repair visit within the service restoration deadline, or
when the Company determines that the outage is attributable to the Customer s own
equipment or inside wire, the Company is not required to provide to that Customer
the credit referred to in Subsection 503.01.
Compliance Standard
Each month at least ninety percent (90%) of out-of-service trouble reports will be
cleared in accordance with Subsection 503.01 and 503.02. The Company will keep a
monthly service record as described in Subsection 502.01 and will notify the
Commission whenever the record indicates the ninety percent (90%) level has not
been met for a period of three (3) consecutive months.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 3
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Cancellation of Service/Termination Liability
If a Customer cancels a Service Order or terminates services before the completion of the term for any
reason whatsoever other than a service interruption (as defined in Section 2.10.1 above), the Customer
agrees to pay to the Company termination liability charges, as defined below. These charges shall
become due as of the effective date of the cancellation or termination and be payable within the
period, set forth in Section 2.
11.1 Termination Liability
The Customer s termination liability for cancellation of service shall be equal to:
all unpaid Non-Recurring charges reasonably expended by the Company to establish
service to the Customer; plus
any disconnection, early cancellation or termination charges reasonably incurred and
paid to third parties by the Company on behalf of the Customer; plus
all Recurring Charges specified in the applicable Service Order Tariff for the balance
of the then current term discounted at the prime rate announced in the Wall Street
Journal on the third business day following the date of cancellation;
minus a reasonable allowance for costs avoided by the Company as a direct result of
the Customer s cancellation.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 32
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Cancellation of Service by Customer
Customers may cancel service verbally or in writing. The company shall hold the Customer
responsible for payment of all charges, including fixed fees, surcharges, etc., which accrue up to the
cancellation date. Customers that cancel the primary local exchange line will have the entire Account
disconnected, including any secondary line and all associated features. In the event the Customer
executes a term commitment agreement with the Company, the Customer must cancel service and
terminate the agreement in accordance with the agreement terms.
Transfers and Assignments
Neither the Company nor the Customer may assign or transfer its rights or duties in connection with
the services and facilities provided by the Company without the written consent of the other party,
except that the Company may assign its rights and duties:
13.to any subsidiary, parent company or affiliate of the Company; or
13.pursuant to any sale or transfer of substantially all the assets of the Company; or
13.pursuant to any financing, merger or reorganization of the Company.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfO400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 33
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Customer Liability for Unauthorized Use of the Network
Unauthorized use of the network occurs when a person or entity that does not have actual, apparent, or
implied authority to use the network, obtains the Company s services provided under this tariff.
14.1 Customer Liability for Fraud and Unauthorized Use of the Network
The Customer is liable for the unauthorized use of the network obtained through the
fraudulent use of a Company calling card, if such a card is offered by the Company,
or an accepted credit card, provided that the unauthorized use occurs before the
Company has been notified.
A Company calling card is a telephone calling card issued by the Company at the
Customer s request which enables the Customer or user(s) authorized by the
Customer to place calls over the Network and to have the charges for such calls billed
to the Customer s account.
An accepted credit card is any credit card that a cardholder has requested or applied
for and received, or has signed, used, or authorized another person to use to obtain
credit. Any credit card issued as a renewal or substitute in accordance with this
paragraph is an accepted credit card when received by the cardholder.
The Customer must give the Company written or oral notice that an unauthorized use
of a Company calling card or an accepted credit card has occurred or may occur as a
result of loss, and/or theft.
The Customer is responsible for payment of all charges for calling card services
furnished to the Customer or to users authorized by the Customer to use service
provided under this tariff, unless due to the negligence of the Company. This
responsibility is not changed due to any use, misuse, or abuse of the Customer
service or Customer-provided equipment by third parties, the Customer s employees
or the public.
The liability of the Customer for unauthorized use of the Network by credit card
fraud will not exceed the lesser of fifty dollars ($50.00) or the amount of money,
property, labor, or services obtained by the unauthorized user before notification to
the Company.
Issued:Effective:
Issued by:Karen S. Frame , Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfO400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 34
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Use of Customer s Service by Others
15.Joint Use Arrangements
Joint use arrangements will be permitted for all services provided under this tariff. From each
joint use arrangement, one member will be designated as the Customer responsible for the
manner in which the joint use of the service will be allocated. The Company will accept
orders to start, rearrange, relocate, or discontinue service only from the Customer. Without
affecting the Customer s ultimate responsibility for payment of all charges for the service
each j oint user shall be responsible for the payment of the charges billed to it.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 35
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Notices and Communications
16.2 The Customer shall designate on the service order an address to which the Company shall
mail or deliver all notices and other communications, except that Customer may also
designate a separate address to which the Company s bills for service shall be mailed.
16.The Company shall designate on the service order an address to which the Customer shall
mail or deliver all notices and other communications, except that Company may designate a
separate address on each bill for service to which the Customer shall mail payment on that
bill.
16.Except as otherwise stated in this tariff, all notices or other communications required to be
given pursuant to this tariff will be in writing. Notices and other communications of either
party, and all bills mailed by the Company, shall be presumed to have been delivered to the
other party on the third business day following placement of the notice, communication or bill
with the U.S. Mail or a private delivery service, prepaid and properly addressed, or when
actually received or refused by the addressee, whichever occurs first.
16.5 The Company or the Customer shall advise the other party of any changes to the addresses
designated for notices, other communications or billing, by following the procedures for
giving notice set forth herein.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 2
Original Page 36
LOCAL EXCHANGE SERVICES TARIFF
SECTION 2.0 - RULES AND REGULATIONS, CONT'
Universal Emergency Telephone Number Service (911)
Universal Emergency Telephone Number Service (911 Service) is an arrangement of Company central
office and trunking facilities whereby any telephone user who dials the numbers 911 will reach the
emergency report center for the telephone from which the number is dialed or will be routed to an
operator if all lines to an emergency report center are busy. If no emergency report center Customer
exists for a central office entity, a telephone user who dials the number 911 will be routed to an
operator. No call-specific charges apply to 911 calls.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 3
Original Page 1
LOCAL EXCHANGE SERVICES TARIFF
SECTION 3.0 - SERVICE AREAS
Exchange Service Areas
Local exchange services are provided, subject to availability of facilities and equipment, in areas
currently served by the following Incumbent LECs:
Qwest.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 4
Original Page 1
LOCAL EXCHANGE SERVICES TARIFF
SECTION 4.0 - SERVICE CHARGES AND SURCHARGES
Service Order and Change Charges
1.1 General
Non-recurring charges apply to processing Service Orders for new service and for changes in
servIce.
Primary Line Connection Charge: Applies to requests for initial connection or establishment
of telephone service with the Company.
Secondary Line Connection Charge: Applies to installation of a second or additional access
line.
Moves: Applies to Customer request for a move or change in the physical location of the
access line.
Transfer of Service : Applies to Customer request for a change in the service location.
Telephone Number Change: Applies to Customer request for a change of the Customer
telephone number.
Service Order Changes/Adds: Applies to Customer requests for changes in service or
additional to services, not including the addition of calling features.
Calling Feature Adds: Applies to Customer requests for addition of calling features.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company
LOCAL EXCHANGE SERVICES TARIFF
Idaho Tariff No. 2
Section 4
Original Page 2
SECTION 4.0 - SERVICE CHARGES AND SURCHARGES, CONT'
Service Order and Change Charges, Cont'
1.2 Rates
Residence Business
Line Connection Charge
Primary Line $45.$75.
Secondary Line $45.$ 7 5.
Moves, per line $25.$45.
Transfer of Service, per order $15.$45.
Telephone Number Change $15.$25.
Service Order Changes/Adds $15 .$25.
Call Feature Adds, per feature $5.$10.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 4
Original Page 3
LOCAL EXCHANGE SERVICES TARIFF
SECTION 4.0 - SERVICE CHARGES AND SURCHARGES, CONT'D.
Restoral Charge
restoration charge applies to the restoration of suspended service and facilities because of
nonpayment of bills and is payable at the time that the restoration of the suspended service and
facilities is arranged. The restoration charge does not apply when, after disconnection of service
service is later re-installed.
Residence Business
Restoration after temporary denial, but prior to completion of
order to discontinue service $15.$25.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 4
Original Page 4
LOCAL EXCHANGE SERVICES TARIFF
SECTION 4.0 - SERVICE CHARGES AND SURCHARGES, CONT'
Temporary Suspension of Service
Upon the request of the Customer and where equipment arrangements permit, service may be
temporarily suspended for a period not to exceed nine months. Suspension of service and restoral may
begin or terminate on any day of the month provided notice is given sufficiently in advance for
arrangements to be made. Service will be disconnected to the extent necessary to assure than no
inward or outward service will be available during the period of suspension. The monthly rate for
service during the period of the temporary suspension is dependent upon the service plan to which the
Customer is subscribed.
Nonrecurring Charge
Residence
$10.
Business
$25.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 4
Original Page 5
LOCAL EXCHANGE SERVICES TARIFF
SECTION 4.0 - SERVICE CHARGES AND SURCHARGES, CONT'
Public Telephone Surcharge
In order to recover the Company s expenses to comply with the FCC's pay telephone compensation
plan effective on October 7, 1997 (FCC 97-371), an undiscountable per call charge is applicable to all
intrastate calls that originate from any pay telephone used to access Company provided services. This
surcharge, which is in addition to standard tariffed usage charges and any applicable service charges
and surcharges associated with service, applies for the use of the instrument used to access Company
provided service and is unrelated to the service accessed from the pay telephone.
Pay telephones include coin-operated and coinless phones owned by local telephone companies
independent companies and interexchange carriers. The Public Pay Telephone Surcharge applies to
the initial completed call and any reoriginated call (e., using the "#" symbol). The Public Pay
Telephone Surcharge does not apply to calls placed from pay telephones at which the Customer pays
for service by inserting coins during the progress of the call.
Whenever possible, the Public Pay Telephone Surcharge will appear on the same invoice containing
the usage charges for the surcharged call. In cases where proper pay telephone coding digits are not
transmitted to the Company prior to completion of a call, the Public Pay Telephone Surcharge may
billed on a subsequent invoice after the Company has obtained information from a carrier that the
originating station is an eligible pay telephone.
Rate Per Call:$0.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 5
Original Page 1
LOCAL EXCHANGE SERVICES TARIFF
SECTION 5.0 - LOCAL EXCHANGE SERVICE
General
1.1 Call Timing for Usage Sensitive Services
Where charges for a service are specified based on the duration of use, such as the duration of
a telephone call, the following rules apply:
1.1 Calls are measured in durational increments identified for each service. All calls
which are fractions of a measurement increment are rounded-up to the next whole
unit.
1.2 Timing on completed calls begins when the call is answered by the called party.
Answering is determined by hardware answer supervision in all cases where this
signaling is provided by the terminating local carrier and any intermediate carriere s).
1.3 Timing terminates on all calls when the calling party hangs up or the Company
network receives an off-hook signal from the terminating carrier.
1.4 Calls originating in one time period and terminating in another will be billed in
proportion to the rates in effect during different segments of the call.
1.5 All times refer to local time.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfO400
Covad Communications Company
LOCAL EXCHANGE SERVICES TARIFF
Idaho Tariff No. 2
Section 5
Original Page 2
SECTION 5.0 - LOCAL EXCHANGE SERVICE, CONT'
General, Cont'
1.2
1.3
Calculation of Distance
The Company does not rate calls based on mileage or distance.
Rate Periods for Time of Day Sensitive Services
The Company does not rate calls based on time of day.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 5
Original Page 3
LOCAL EXCHANGE SERVICES TARIFF
SECTION 5.0 - LOCAL EXCHANGE SERVICE, CONT'
Integrated Voice Services 1
Integrated Voice Services 1 provides four (4) telephone lines and includes the following features at no
additional charge: Call Forwarding, Call Waiting, Block Call Waiting, 3-Way Calling, Block Caller
, Caller ID with Number, Caller ID with Name, Block 900, Block 976, and 1 line hunting group.
Integrated Voice Services 1 also includes, at no additional charge, unlimited local calling and an
allowance of 1 500 minutes of use for combined intraLA T A toll and intrastate and interstate
interLA T A toll usage, and one directory listing per service location. Any unused portion of the usage
allowances will not carry forward to the following month. For toll usage beyond the 1 500 minute
allowance, Customers can choose Covad long distance calling plans described in Section 7.3 of this
tariff. Absent the Customer s election of such a plan, Customer interLA T A and intraLA T A intrastate
toll calls are billed in accordance with Section 7.2 of this tariff.
Customers seeking to purchase Integrated Voice Services 1 must also purchase Covad DSL services
on the same line and in accordance with Covad's terms and conditions for data services.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 5
Original Page 4
LOCAL EXCHANGE SERVICES TARIFF
SECTION 5.0 - LOCAL EXCHANGE SERVICE, CONT'
Integrated Voice Services 1, (Cont'
Rates
Non -Recurring Charges
Customers with existing Covad DSL who are adding Covad Integrated Voice Services shall
be charged a $199.00 Non-Recurring Installation Charge.
Customers ordering new Covad Integrated Voice Services shall be charged a $275.00 Non-
Recurring Installation Charge.
Integrated Voice Services 1 Monthly Rates
One-year term:
Two-year term:
$200.
$190.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 5
Original Page 5
LOCAL EXCHANGE SERVICES TARIFF
SECTION 5.0 - LOCAL EXCHANGE SERVICE, CONT'
Integrated Voice Services 2
Integrated Voice Services 2 provides eight (8) telephone lines and includes the following features at
no additional charge: Call Forwarding, Call Waiting, Block Call Waiting, 3-Way Calling, Block Caller
, Caller ID with Number, Caller ID with Name, Block 900, Block 976, and 1 line hunting group.
Integrated Voice Services 2 also includes, at no additional charge, unlimited local calling, allowances
(as described below and in Section 7 of this tariff) for combined intraLA T A toll and intrastate and
interstate interLA T A toll, and one directory listing per service location. Any unused portion of the
usage allowances will not carry forward to the following month.
Integrated Voice Services 2 also includes, at no additional charge, unlimited local calling and an
allowance of 3 000 minutes of use for combined intraLATA toll and intrastate and interstate
interLA T A toll usage, and one directory listing per service location. Any unused portion of the usage
allowances will not carry forward to the following month. For toll usage beyond the 3 000 minute
allowance, Customers can choose Covad long distance calling plans described in Section 7.3 of this
tariff. Absent the Customer s election of such a plan, Customer interLA T A and intraLA T A toll calls
are billed in accordance with Section 7.2 of this tariff.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 5
Original Page 6
LOCAL EXCHANGE SERVICES TARIFF
SECTION 5.0 - LOCAL EXCHANGE SERVICE, CONT'
Integrated Voice Services 2, (Cont'
Rates
Customers seeking to purchase Integrated Voices Services 2 must also purchase Covad DSL
services on the same line and in accordance with Covad's terms and conditions for data
servIces.
Non -Recurring Charges
Customers with existing Covad DSL who are adding Covad Integrated Voice Services shall
be charged a $199.00 Non-Recurring Installation Charge.
Customers ordering new Covad Integrated Voice Services shall be charged a $275.00 Non-
Recurring Installation Charge.
Integrated Voice Services 2 Monthly Rates
One-year term:
Two-year term:
$400.
$380.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfO400
Covad Communications Company Idaho Tariff No. 2
Section 6
Original Page 1
LOCAL EXCHANGE SERVICES TARIFF
SECTION 6.0 - SUPPLEMENTAL SERVICES
Directory Assistance Services
1.1 Local Directory Assistance
General
A Customer may obtain assistance, for a charge, in determining a telephone number
by dialing Directory Assistance Service. A Customer can also receive assistance by
writing the Company with a list of names and addresses for which telephone numbers
are desired.
Regulations
There are no call allowances for Directory Assistance Services. A Directory
Assistance Charge applies for each call to Directory Assistance for telephone
number(s), area code(s), and/or general information requested from the Directory
Assistance operator except as follows:
Calls from coin telephones, including COCOTS (Customer Owned Coin
Operated Telephone Sets).
Requests in which the Directory Assistance operator provides an incorrect
number. The Customer must inform the Company of the error in order to
receive credit.
Customer experiences poor transmission or is cut-off during the call.
Customers will be provided with a maximum of two (2) telephone numbers
for each call to Directory Assistance.
Rates
Per Call to Directory Assistance:$1.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 6
Original Page 2
LOCAL EXCHANGE SERVICES TARIFF
SECTION 6.0 - SUPPLEMENTAL SERVICES, CONT'
Directory Assistance Services, Cont'
1.2 Local Call Completion
The charges as shown below apply for each request made to the Directory Assistance Operator
in which the operator completes the call to the desired number. Call Completion is only
available where facilities permit.
Local, Per Call:$0.
Issued:Effecti ve:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 6
Original Page 3
LOCAL EXCHANGE SERVICES TARIFF
SECTION 6.0 - SUPPLEMENTAL SERVICES, CONT'
Directory Assistance Services, Cont'
1.3 Nationwide Directory Assistance
Nationwide Directory Assistance is a service whereby Customers may request assistance in
determining listing information on a nationwide basis. Requests for local or intraLA T A
listings are billed under the basic Directory Assistance charges as described in this Section.
The regulations and rates set forth below apply to all calls from Customers who request
assistance in determining telephone number information of subscribers who are located
outside their LATA.
The Customer will be charged for each call. Customer may request up to two listings per call.
The nationwide listing rate applies per call whether or not a number is provided; this includes
requests for numbers which are non-published or non-listed.
There are no billing exemptions or allowances for Nationwide Directory Assistance.
Local, Per Call:$0.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfO400
Covad Communications Company Idaho Tariff No. 2
Section 6
Original Page 4
LOCAL EXCHANGE SERVICES TARIFF
SECTION 6.0 - SUPPLEMENTAL SERVICES, CONT'
Local Operator Service
Local calls may be completed or billed with the live or mechanical assistance by the Company
operator center. Calls may be billed collect to the called party, to an authorized 3rd party number, to
the originating line, or to a valid authorized calling card. Local calls may be placed on a station to
station basis or to a specified party (see Person to Person), or designated alternate. Usage charges for
local operator assisted calls are those usage charges that would normally apply to the calling party'
service. In addition to usage charges, an operator assistance charge applies to each call:
Rates
Usage Rates
Usage charges will be billed at the rate in effect for the presubscribed service plan purchased
by the Customer. See Section 5 of this tariff.
Per Call Service Charges
Calling Card - Automated
Calling Card - Operator Dialed
Billed to Third Number
Collect
Person-to-Person
$0.
$0.
$1.30
$1.30
$3.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 6
Original Page 5
LOCAL EXCHANGE SERVICES TARIFF
SECTION 6.0 - SUPPLEMENTAL SERVICES, CONT'
Busy Line Verification and Emergency Interrupt Service
Upon request of a calling party the Company will verify a busy condition on a designated local service
line. The operator will determine if the line is clear or in use and report to the calling party. At the
request of the Customer, the operator will interrupt the call on the busy line. Emergency Interruption is
only permitted in cases where the calling party indicates an emergency exists and requests interruption.
If the Customer has the operator interrupt a call, both the Busy Line Verification and the Emergency
Interrupt charge will apply.
No charge will apply when the calling party advises that the call is to or from an official public
emergency agency. Busy Verification and Emergency Interrupt Service is furnished where and to the
extent that facilities permit.
The Customer shall identify and save the Company harmless against all claims that may arise from
either party to the interrupted call or any person.
Busy Line Verification:
Busy Line Interrupt
$1.50
$3.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 6
Original Page 6
LOCAL EXCHANGE SERVICES TARIFF
SECTION 6.0 - SUPPLEMENTAL SERVICES, CONT'
Directory Listing Service
Directory Listing Definitions
Primary Listing - One listing, termed the primary listing, is included with each Customer
service with the primary line of a line hunting group and with each Joint User service.
Non-Listed Number (Private Directory Service)- A Non-Listed Number will be furnished at
the Customer s request, providing for the omission or deletion of the Customer s listing from
the telephone directory. Such listings will be carried in the Company s directory assistance
and other records and will be given to any calling party.
Non-Published Number (Semi-Private Directory Service)- A Non-Published Number will be
furnished at the Customer s request. A Non-Published Number is not listed in the telephone
Company s directories, or on directory assistance records. Listing information (name, address
and number) on a Non-Published Number is not available to the general public.
Additional Listings - At a charge, additional listings may be included in the alphabetical
directory and on directory assistance records, or appear on directory assistance records only.
The monthly rate for additional listings apply when the listings appear in Directory Assistance
records in accordance with the date requested by the Customer.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfO400
Covad Communications Company Idaho Tariff No. 2
Section 6
Original Page 7
LOCAL EXCHANGE SERVICES TARIFF
SECTION 6.0 - SUPPLEMENTAL SERVICES, CONT'
Directory Listing Service, Cont'
6.4.Rates
Primary Listing
Additional Listings
Non-Listed Number, per line
Non-Published Number, per account
Monthly Recurring ChargeResidence Business
$0.00 N/A$1.43 N/A
$0.71 N/A$1.20 N/ A
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Covad Communications Company Idaho Tariff No. 2
Section 7
Original Page I
LOCAL EXCHANGE SERVICES TARIFF
SECTION 7.0 - LONG DISTANCE SERVICES
General
Interexchange Long Distance services offered by the Company are described in the Company s Idaho
Tariff No.
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400
Issued:Effective:
Issued by:Karen S. Frame, Counsel
7901 Lowry Boulevard
Denver, CO 80230 idfD400