Covad Endorses Phased Transition to Facilities-Based Telecom Competition.

Business Editors

SAN JOSE, Calif.--(BUSINESS WIRE)--May 3, 2004

Covad Communications Group, Inc. (OTCBB:COVD), a leading national broadband service provider of high-speed Internet and network access, today announced support for a phased approach to the migration of UNE-P customers to facilities-based competition using unbundled local loops (UNE-L) over the next few years.

"To date, the debate over UNE-P has focused on continued access to and pricing of the existing UNE-P platform for local competition," said James Kirkland, general counsel and senior vice president for Covad. "It is clearly critical that the consumers served by this platform, which many of our partners use, not be subject to disruption of service or rate shock. It is equally critical that commercial arrangements provide for a reasonable transition to alternative facilities-based forms of competition using unbundled local loops in conjunction with competitive carrier facilities.

"AT&T's recent proposal provides a thoughtful framework for further dialogue and commercial negotiations on these issues, and we hope that the incumbent phone companies will give it serious consideration."

Covad has extensive experience working with UNE-L, which is the last-mile wire from the customer premise back to the central office. More than 166,000 Covad subscribers are currently provisioned through UNE-L to receive business-class broadband services that account for the majority of Covad's revenue.

Covad President and Chief Executive Officer Charles Hoffman said: "Covad is in a unique position to be able to help our partners, including AT&T, to achieve their objectives of preserving competition and customer choice through successful facilities-based transitions. This cannot, however, be accomplished overnight. Based upon our experience provisioning UNE-L facilities, Covad agrees with AT&T that an important part of the transition from UNE-P to UNE-L involves the Bell companies implementing processes to smoothly move customer lines from their own switches to the switches of competitors like Covad and AT&T.

"We stand ready to work with our partners and the phone companies to take this important next step in ensuring that competitors and the phone companies can vigorously compete in the marketplace, not the regulatory arena."

About Covad

Covad is a leading national broadband service provider of high-speed Internet and network access utilizing Digital Subscriber Line (DSL) technology. It offers DSL, T1, hosting, managed security, IP and dial-up, and bundled voice and data services directly through Covad's network 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 nation in 44 states and 235 Metropolitan Statistical Areas (MSAs) and can be purchased by more than 57 million homes and businesses, which represent over 50 percent of all US homes and businesses. Corporate headquarters is located at 110 Rio Robles San Jose, CA 95134. Telephone: 1-888-GO-COVAD. Web Site: www.covad.com.

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

The foregoing contains "forward-looking statements" which are based on management's current information and beliefs as well as on a number of assumptions concerning future events made by management. Readers are cautioned not to put undue reliance on such forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside Covad's control, that could cause actual results to differ materially from such statements. These risk factors include the impact of increasing competition, pricing pressures, consolidation in the telecommunications industry, uncertainty in telecommunications regulations and changes in technologies, among other risks. For a more detailed description of the risk factors that could cause such a difference, please see Covad's 10-K, 10-Q, 8-K and other filings with the Securities and Exchange Commission. Covad disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This information is presented solely to provide additional information to further understand the results of Covad.