Covad Commends Senator Hollings for a Measure That Would Provide More Broadband Choices for Americans.

Business Editors/High-Tech Writers

SANTA CLARA, Calif.--(BUSINESS WIRE)--May 3, 2002

Hollings' Bill Solves the Rural Broadband Deployment

Problem And Stimulates Demand for Broadband

Covad Communications (OTCBB:COVD), the leading national broadband services provider utilizing DSL (Digital Subscriber Line) technology, applauded Senator Ernest Hollings on his introduction of the "Broadband Telecommunications Act of 2002."

"Senator Hollings and the co-sponsors of the bill are the first to address the real problem facing the broadband industry today -- stimulating demand," said Charles Hoffman, Covad CEO and president. "Broadband services are available to over 85 percent of the country right now, so the discussion should be about the real issue of driving demand, not the artificial one of supply. Senator Hollings proposes an innovative means of energizing that demand and ensuring that broadband reaches every person in the country."

The bill addresses the challenges of rural broadband deployment, which has been one of the most controversial issues facing the industry. Instead of allowing the phone companies to regain their monopoly status as proposed by other prominent broadband bills, Chairman Hollings' proposal would spur rural deployment in a way that would encourage fair competition among broadband providers and ensure choice for consumers. The bill would make federal loans available to fund deployment of broadband-enabled remote terminals in rural and under served areas and ensure that those remote terminals would be available to all competitive broadband providers.

"Chairman Hollings has been one of the nation's leading champions for true broadband competition," said Hoffman. "With this bill, he has addressed some of the most fundamental problems in our industry in a way that creates winners on every side of the table -- the phone companies, competitors like Covad and, most importantly, consumers and small businesses across America."

Senator Hollings' legislation would provide a pool of federal dollars from existing telecommunications funding programs which would be used to fund a variety of innovative programs that promote the widespread availability of broadband content and applications. It would provide a combination of loans and grants to facilitate adoption of broadband services.

The demand side initiatives include:

-- $250 million to provide improved broadband connectivity to underserved
communities

-- $50 million to provide improved broadband connectivity to educational
institutions

-- $200 million in grants to digitize library and museum content collections

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, 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 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.