Businesses and Consumers Win in Minnesota and Texas.

SANTA CLARA, Calif.--(BUSINESS WIRE)--December 2, 1999--

Covad signs historic line sharing agreement with US WEST And wins major arbitration against SWBell

Covad Communications (Nasdaq:COVD), the leading national broadband services provider utilizing Digital Subscriber Line (DSL) technology, entered into a groundbreaking agreement with US WEST in Minnesota that will, for the first time, implement line sharing between broadband providers and incumbent telephone companies. Farther south, Covad, along with Rhythms NetConnections, won an arbitration case before the Texas Public Utilities Commission (PUC) that will require Southwestern Bell Telephone Company to reduce the fees that it charges for line preparation and conditioning.

The agreement with US WEST follows a September decision by the Minnesota PUC asking US WEST to perform field tests to test the feasibility of line sharing. While line sharing should be implemented nation-wide next year, yesterday's agreement should allow consumers in certain areas of Minnesota to experience cheaper and more convenient broadband internet services from Covad and other providers as early as January 10th, 2000.

The negotiated business agreement establishes interim prices for shared lines, or loops. Covad and other competitive providers will pay $6.05 per month for shared loops, which will be at least the same price that US WEST will charge its data division, until the Commission determines what the real costs are. The Commission agreed to work quickly to ascertain the real cost-based charge for all parties.

"US WEST's agreement to open up its lines to competition is a tremendous win for the citizens of Minnesota," said Terry Moya, Covad's senior vice president, External Affairs. "The Minnesota PUC should be applauded for its willingness to allow all competitors a fair opportunity to compete for broadband consumers."

The decision in Texas reduces a number of fees charged to competitors that have prevented full broadband competition to flourish. As a result of the Texas ruling, Covad will be better able to serve its customers in the state on a number of fronts. The ruling mandated the following:

- Covad is permitted to provide any DSL service of its choice.

- Reduced fees for preparing, or conditioning, phone lines for DSL service, resulting in lower costs for consumers.

- Southwestern Bell must make operational support systems (OSS) available, which will allow competitors like Covad to access the systems and provide better, real-time assistance to customers.

"This decision --which favors full, fair competition in the local communications marketplace--is precedent setting," said Dhruv Khanna, executive vice president and general counsel of Covad. "Texas is the trend setter on an issue that other states will inevitably have to deal with in the near future."

This development caps a string of recent successes for Covad and the DSL industry, including a recent decision by the FCC mandating that incumbent phone companies share their existing telephone lines with competitors.

About Covad

Covad Communications is the leading national broadband services provider of high-speed Internet and network access utilizing Digital Subscriber Line (DSL) technology. It offers DSL services through Internet Service Providers to small and medium-sized businesses and home users. Covad services are currently available across the United States in 56 of the top Metropolitan Statistical Areas (MSAs) and will be available in 100 MSAs by the end of 2000. At that time, Covad's network will reach more than 40 percent of all US homes and 45 percent of all US businesses. Covad Communications and its affiliates, doing business as Covad Communications Company, are wholly owned subsidiaries of Covad Communications Group, Inc. (Nasdaq:COVD). Corporate headquarters is located at 2330 Central Expressway, Santa Clara, CA, 95050. Telephone: 1-888-GO-COVAD. Web Site: www.covad.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

The statements contained in this release which are not historical facts may be deemed to contain forward-looking statements, including but not limited to statements regarding overall demand for and acceptance of the Company's services, the intention to deploy our network in new and existing MSAs, the timing and breadth of coverage in each MSA, and the implementation of the Texas PUC's decision and effect in other states. Actual results may differ materially from those anticipated in any forward-looking statements as a result of certain risks and uncertainties, including, without limitation, the company's dependence on third parties to market and resell our services, intense competition for the Company's service offerings, dependence on growth in demand for DSL-based services, dependence on incumbent local exchange carriers for collocation, unbundled network elements, transport and other facilities, ability to manage growth of our operations, and the need to raise additional capital. For other risks and uncertainties applicable to our business refer to the Company's Securities and Exchange Commission filings.