Covad and Z-Tel Extend Their Partnership; New Line Splitting Collaboration for Business-Class Local, Long Distance Voice and High-Speed Internet Services.

Business Editors/High-Tech Writers

SANTA CLARA, Calif.--(BUSINESS WIRE)--Aug. 7, 2003

Covad Communications (OTCBB:COVD) and Z-Tel Technologies, Inc. (Nasdaq:ZTEL) announced today an expansion of their partnership for business-class digital subscriber line (DSL) service that will soon give small businesses increased choice for bundled local, long distance voice and data services.

Under this new agreement, Z-Tel and Covad will have the ability to bundle Z-Tel local and long distance services with Covad's DSL broadband service based on a process called line splitting. Through this process, Z-Tel will "split" the loop it buys from local phone companies to offer Z-Tel local, long distance and Covad's DSL service on the same line. This new service offers businesses the simplicity of a single, convenient telecommunications package. Through the original agreement between the companies, Z-Tel is already able to offer small and medium-sized companies and enterprises bundled voice and broadband services. Line splitting allows Z-Tel to extend its packages to smaller businesses that need a cost-effective broadband alternative.

Z-Tel will offer DSL services under its own name. Customers will receive one bill from Z-Tel for all telecommunications services, and Z-Tel will be the first point of contact for customer service. The new service will be available by the end of 2003.

"Covad's nationwide network puts us in a unique position to partner with national and regional telecommunications providers to offer full value local, long distance and high speed Internet bundled services," said Charles Hoffman, president and CEO of Covad. "The addition of Z-Tel to our growing list of line splitting strategic partners represents a significant growth opportunity for us. In joining together, we are offering businesses the very best in telecommunications services and convenience."

Gregg Smith, president and chief executive officer for Z-Tel, stated, "We're pleased to work with Covad to add services that use line splitting to our portfolio. Coupling reliable broadband services with our existing enhanced voice services suite and unmatched nationwide local service footprint allows us to bring communications savings and simplicity to companies of all sizes, anywhere in the country."

Covad's nationwide network enables ISPs and CLECs alike to partner with Covad for their broadband needs. A growing number of companies nationwide including AT&T, America Online, EarthLink, Sprint, Speakeasy, MegaPath, XO and Z-Tel work with Covad to power their consumer and business broadband offerings.

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, managed security, hosting, IP, dial-up services 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 operates the largest national DSL network with services currently available in 96 of the top Metropolitan Statistical Areas (MSAs). Covad's network currently covers more than 40 million homes and business and reaches approximately 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.

About Z-Tel

Founded in 1998, Z-Tel offers consumers and businesses nationwide traditional and enhanced telecommunications services. Z-Tel's enhanced services, such as Internet-accessible and voice-activated calling and messaging features, are designed to meet customers' communications needs intelligently and intuitively. Z-Tel also makes its services available on a wholesale basis. For more information about Z-Tel and its innovative services, please visit www.ztel.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 expectations regarding bundling of local and long distance services with Covad DSL services 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, future FCC rulemaking, the terms and interpretations of the decision announced Feb. 20, 2003 by the FCC, 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. Covad disclaims any obligation to update any forward-looking statement contained in this press release. 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 Dec. 31, 2002 and the 10-Q for the quarter ended June 30, 2003, along with Current Reports on Form 8-K filed from time to time with the SEC.