AT&T tries again with DSL

AT&T plans to offer DSL services to all its consumer and business customers in 96 markets across the U.S. by extending its relationship with DSL service provider Covad Communications.

The agreement also allows AT&T to purchase 3 million shares of Covad stock that would represent just over 1% of Covad’s outstanding shares. Previously, Covad provided AT&T branded DSL service to AT&T WorldNet Internet access subscribers.

The latest deal with Covad was announced the same day that AT&T confirmed it is letting go of 3,500 employees and that it was writing off some of its DSL assets.

It may be surprising to some that AT&T is extending its relationship with Covad considering that AT&T acquired the assets of another DSL provider, NorthPoint, nearly two years ago. AT&T bought NorthPoint gear and software for about $135 million. But services based on those assets never amounted to much.

The carrier did roll out DSL services supported over the former NorthPoint gear in New York, Texas and California. AT&T says it will continue to support customers served in these three states, but that it is not “aggressively marketing” its in-house DSL service to new customers.

Apparently AT&T has found it to be more profitable to team with Covad to address its customers’ DSL needs. It makes you wonder why AT&T bought NorthPoint’s assets at all. It’s like buying a pair of shoes that really don’t match anything in your wardrobe only to find them in the back of your closet two years later. That’s not a huge deal if you spent $135 on the shoes. But the analogy goes wrong when you consider AT&T spent $135 million on assets that just never seemed to match its service rollout plans.