June 12, 2001, 3:59 PM — The brewing broadband brawl between local phone companies and DSL upstarts got a bit nastier on Tuesday when Verizon Communications Inc. hit struggling DSL provider Covad Communications Co. with a blistering lawsuit.
New York-based Verizon charged Covad with an "intentional campaign of lies and distortions designed to deceive the public and regulators." Verizon claims Covad employees have said they made false reports to customers that Verizon had been obstructing Covad's efforts to install service.
Covad co-founder Dhruv Khanna shot back with a statement denying Verizon's charges.
"We consider this suit a harassment suit that thinly veils the fact that Verizon has a very poor service record and is inventing complaints to cover up its own ineptitude," Khanna said.
However, Verizon executives claim it is Santa Clara, Calif.-based Covad that is trying to finger others for its own shortcomings.
"The picture we have is of Covad installers being thrown into the field, undertrained and underequipped, while the company was overpromising customers delivery on a schedule it had no hope of meeting," said Verizon general counsel William Barr.
"Then, when the inevitable happened and Covad could not deliver to customers, there was a policy in place to generate false complaints of Verizon service problems in order to cover up the Covad failures," Barr continued.
Verizon filed the suit in federal court at the U.S. District Court for Northern California in San Jose on Monday.
Verizon claims to have sworn statements from 26 former Covad employees who said they were coerced into filing false reports.
The suit is just the latest of woes to hit Covad lately.
Covad recently reported a US$1.4 billion loss. The company suffered another blow on June 1, when the company got word from the Nasdaq National Market that Covad could face delisting.
Meanwhile, politics surrounding pending broadband legislation continues to unfold and now hold a degree of uncertainty given the political party power shift of the U.S. Senate. Most notably, there is pending legislation that would be favorable to regional Bell companies over upstart CLECs (competitive local exchange carriers).
Introduced by Louisiana Republican William "Billy" Tauzin, the Internet Freedom and Broadband Deployment Act of 2001 seeks to remove the authority to regulate data services from the Federal Communications Commission (FCC) and state entities.
Tauzin's broadband bill would also limit the ability of the FCC to force regional Bells to provide unbundled access to networks, which is at the heart of the current Verizon lawsuit.