February 28, 2001, 10:09 AM — COVAD COMMUNICATIONS ON Thursday won a potentially nasty lawsuit filed by one of its ISP customers, DSLnetworks. The latter had sought an injunction against Covad for contacting DSLnetworks' customers after having disconnected its leased broadband Internet services for lack of payment.
Covad severed DSLnetworks' connections, as well as those of ISP Internet Express, because the two companies had fallen behind in payments and could not reach agreements with Covad on payment schedules, a Covad representative said last week.
DSLnetworks filed for an injunction in a California Superior Court, trying to stop Covad from contacting DSLnetworks' customers in the wake of the service disruption, said a source at San Francisco-based DSLnetworks. Specifically, DSLnetworks unsuccessfully charged that Covad broke a nondisclosure agreement between the two companies when Covad began contacting DSLnetworks' customers about the service stoppage, said the DSLnetworks source.
DSLnetworks officials hold that Covad is seeking, in some cases, to begin providing service to DSLnetworks customers directly, the source said.
But the California judge ruled that DSLnetworks had failed to show breach of contract in the injunction the company had filed, according to a Covad representative.
"We are in a position right now where we need to make smart business decisions that will get us to profitability. Unfortunately, we can't fund other people's businesses," Covad representative Suluh Lukoskie said earlier in the week.
Santa Clara, Calif.-based Covad first cut service to Internet Express and then shut off connections to DSLnetworks on Feb. 7.
Thousands of customers of the two ISPs were left without service by the move.
In a Feb. 7 letter to DSLnetworks' end-users, Covad laid out the situation: ". . . Covad's efforts to resolve the situation without affecting you, the valued customer, were unsuccessful," it said.
Covad then directed users to visit the company's site to look over information on a program "developed to provide a solution that minimizes the impact on a customer from the loss of the customer's ISP provider."
Covad also made clear that because the company has not switched off the end-user DSL connections, users who had service disrupted could easily switch to another Covad partner ISP. Instructions for doing this are posted on Covad's Web site in a section titled "Safety Net."
"There is a simple process for getting their service back up and running within a matter of days," Covad's Lukoskie said.
Covad sells high-speed Internet connections to more than 250 ISPs, according to company officials. In October, Covad announced that a number of its channel partner ISPs were having trouble paying their bills, which was straining Covad's revenue.