Covad Applauds Supreme Court Decision Upholding FCC Rulings; Confirms Pricing Based On Forward Looking Costs and Competitors' Ability to Request Bundling of Network Elements.

Business Editors/High-Tech Writers

SANTA CLARA, Calif.--(BUSINESS WIRE)--May 13, 2002

Covad Communications (OTCBB:COVD), the leading national broadband services provider utilizing DSL (Digital Subscriber Line) technology, applauds today's ruling by the US Supreme Court which upholds the Federal Communications Commission's (FCC) approach of setting the monthly price for unbundled network elements (UNEs), including loops and other services, that competing telecommunications carriers purchase from the phone companies. Importantly, the Supreme Court also confirmed that the phone companies may be required to sell bundled network elements in the combinations requested by companies like Covad.

"The Supreme Court has ruled in favor of competition and consumer choice," said Charlie Hoffman, Covad CEO and president. "The ruling provides competitors with greater certainty concerning the prices they pay the phone companies and should accelerate competition as intended by the 1996 Telecommunications Act. In addition, the ruling gives competitors greater opportunities to sell combinations of network elements that are owned by the incumbent phone companies. Choice and competition remain the law of the land."

The FCC's forward looking pricing model has been in place since the Telecommunications Act was enacted in 1996. Forward looking pricing requires the phone companies to price their network elements based on the cost of newer, more efficient and less expensive equipment rather than the generally higher prices the phone companies actually paid to install the equipment in years past. This has served as the guideline for state Public Utility Commissions for over five years and, in fact, many states such as New York and New Jersey, have reduced prices.

"Today's ruling provides greater certainty about how state commissions determine prices and we hope other states will follow the trend set by New York and New Jersey," said Dhruv Khanna, Covad executive vice president and general counsel. "We believe that the courts will continue to support competition through reasonable pricing and access. It's time for the phone companies to finally stop fighting the FCC's pro-competition rules and start competing fairly and honestly, both inside and outside of their territories."

About Covad Communications

Covad is the leading national broadband service provider of high-speed Internet and network access utilizing Digital Subscriber Line (DSL) technology. It offers DSL, T1, managed security, IP and dial-up services directly through Covad and through Internet Service Providers, value-added resellers, telecommunications carriers and affinity groups to small and medium-sized businesses and home users. Covad services are currently available across the United States in 94 of the top Metropolitan Statistical Areas (MSAs). Covad's network currently covers more than 40 million homes and business and reaches approximately 40 to 45 percent of all US homes and businesses. Corporate headquarters is located at 3420 Central Expressway, Santa Clara, CA 95051. 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 press release that are not historical facts are "forward-looking statements," including statements concerning Covad's anticipated growth, expected court rulings, regulatory developments, revenue expectations, anticipated reductions of costs and losses, expected reductions in cash usage, ability to continue as a going concern, sufficiency of Covad's cash on hand, additional capital requirements, ability to secure additional financing, ability to become cash flow positive and achieve profitability and the statements made by the president and CEO and the executive vice president and general counsel and the assumptions underlying such statements. Actual events or results may differ materially as a result of risks facing Covad or actual results differing from the assumptions underlying such statements. Such risks and assumptions include, but are not limited to, Covad's ability to continue as a going concern, to continue to service and support its customers, to successfully market its services to current and new customers, to manage the consolidation of sales to a fewer number of wholesale customers, to successfully migrate end users, Covad's ability to generate customer demand, to achieve acceptable pricing, to respond to competition, to develop and maintain strategic relationships, to manage growth, to receive timely payment from customers, to access regions and negotiate suitable interconnection agreements, all in a timely manner, at reasonable costs and on satisfactory terms and conditions, as well as regulatory, legislative, and judicial developments and the absence of an adverse result in litigation against Covad. All forward-looking statements are expressly qualified in their entirety by the "Risk Factors" and other cautionary statements included in Covad's SEC Annual Report on Form 10-K for the year ended December 31, 2001 and its Report on Form 10-Q for the period ended March 31, 2002.