Covad Enhances Strategy to Deliver Broadband DSL Directly to Small Businesses; Covad Re-names its BlueStar.net Division to 'Covad Business Solutions'.

Business Editors/High-Tech Writers

SANTA CLARA, Calif.--(BUSINESS WIRE)--Feb. 5, 2001

Covad Communications (Nasdaq:COVD), the leading national broadband services provider utilizing DSL (Digital Subscriber Line) technology, today outlined plans for its direct sales channel, Covad Business Solutions. With approximately 10,000 small business lines already installed, the subsidiary, formerly known as BlueStar.net, has been strategically enhanced to sell customized broadband solutions directly to small businesses.

"Covad Business Solutions allows us to reach out directly to small businesses, listen to their needs, and work with them closely to tailor cost-effective broadband solutions that make the most sense for their business," said John McDevitt, executive vice president of sales and marketing for Covad. "Diversifying channels of distribution is extremely important in fulfilling demand for our services, and Covad Business Solutions is a direct strategy that compliments our existing channels of distribution."

In addition to re-branding BlueStar.net to Covad Business Solutions, Covad has enhanced the way it sells directly to small businesses. The new strategy incorporates telesales and web-based sales with its existing field consultative approach. The field consultants are broadband experts dedicated to working in person with small businesses to tailor solutions for connectivity and private networking. Telesales and web-based sales offer the same options to small businesses that don't need or want to work in person with a broadband consultant.

Another key enhancement that enables Covad Business Solutions to more effectively sell directly to small businesses includes integration of Covad's fully automated operational support system (OSS). By integrating Covad's OSS, the ordering and provisioning process is more streamlined and enables small businesses to have a better installation experience.

Covad business solutions currently offers broadband solutions in various cities throughout Florida, Georgia, Indiana, Kentucky, Michigan, Minnesota, Missouri, North Carolina, Ohio, South Carolina, Tennessee, Virginia and Wisconsin. Small businesses can determine if service is provided in their area and learn more about customizing broadband solutions by calling 800/793-8490 or visiting www.covadbiz.com.

DSL is an ideal connectivity option for small businesses, remote offices and tele-workers that need cost-effective, high-speed, always-on broadband access. In addition to providing business-class DSL Internet access, Covad Business Solutions works directly with small businesses to create customized solutions, including:

-- Custom Speed -- Offers a variety of DSL speeds so that the service can be
customized for each customer's needs. As companies grow or open new offices,
Covad Business Solutions provides the appropriate type of DSL based on the
number of users, Internet usage patterns and budget considerations. For
example, a five-person law firm that uses DSL only for accessing the Web will
not need the same level of service as a design firm that constantly transfers
large graphics files.

-- Web Hosting -- Enables small businesses to host their own web sites from
their offices using their DSL connection.

-- Corporate E-mail -- Allows small businesses to choose how many email
accounts they want; enabling employees to communicate with each other and with
external recipients.

-- Domain Name -- Offers small businesses the opportunity to choose a domain
name for e-mail addresses and a web site that appropriately reflects the
company's name, image and objective. Domain names allow small businesses to
look and feel like a larger company.

-- Private Networking -- Provides secure method for small businesses with
multiple offices and tele-workers to communicate, send data, and access a
corporate network.

-- Multiple PC Connectivity -- Enables small businesses to connect multiple
computers together to create a network and share information over a single DSL
line.

-- 24x7 Customer Support & Advice -- Ensures any time, any day of the year
support from broadband experts dedicated to answering customer inquiries and
troubleshooting technical problems.

Covad is committed to providing homes and small businesses across the country with choice in buying broadband solutions. In order to fulfill the demand for its services, Covad Business Solutions has been established as a new channel that compliments Covad's other distribution methods. Covad's other primary channels include Internet Service Provider (ISP) partners that resell Covad DSL to homes and small businesses, and Covad's Integrated Services (CIS) division, which enables companies, like Sony Electronics and Avon, to become virtual broadband service providers (VBSP). By becoming a VBSP, companies and organizations can strengthen and enhance their relationship with their customers by offering fully branded Internet services, such as Internet and broadband access, email and personal web space.

About Covad Communications

Covad is the leading national broadband services provider of high-speed Internet and network access utilizing Digital Subscriber Line (DSL) technology. It offers DSL, IP and dial-up services through Internet Service Providers, telecommunications carriers, enterprises, affinity groups, PC OEMs and ASPs to small and medium-sized businesses and home users. Covad services are currently available across the United States in 109 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 U.S. homes and businesses. Corporate headquarters is located at 4250 Burton Drive, Santa Clara, CA 95054. Telephone: 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 plans to expand its network, market opportunities, the cost, timing and scope of the deployment of Covad's network and launching of its services, implementation of line sharing and self-installation, anticipated capital expenditures, expense reductions and other operating results, success of strategic relationships, and the statements made by the chairman in this release. 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 successfully market its services to current and new customers, the consolidation of sales to a fewer number of wholesale customers, Covad's ability to generate customer demand, to achieve acceptable pricing, to respond to increasing competition, to manage growth, to receive timely payment from our Internet service providers and other 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. All forward-looking statements are expressly qualified in their entirety by the "Risk Factors" and other cautionary statements included in Covad's SEC filings.