Case Study Title
Speakeasy Partners with Covad to Expand DSL Network, Cut Service Calls 50%
The Players
Speakeasy, Inc. and Covad Communications
The Bottom Line
With a rapidly expanding subscriber base and a large demand for its unique broadband services, Speakeasy, Inc. needed a broadband partner that would provide top-notch technology, leading customer service and a nationwide footprint. Within a year of partnering with Covad Communications, the leading national provider of broadband services utilizing DSL technology, Speakeasy had expanded its network of customers from one market to 50 markets, reduced customer service calls by 50 percent and achieved one of the lowest new customer acquisition costs of any ISP in the broadband industry.
List Key Technologies
Speakeasy Regional Data Centers, Covad OSS System, Covad Web Self Service, Speakeasy OSS, JumpStart Self-Install, and TeleXtend.
How It Happened
Speakeasy, Inc. began providing Internet access in 1995 at the Speakeasy Cafe, a Seattle coffee shop with high-speed Internet terminals. With a growing demand for Internet services, the cafe orphed into a full-service Internet Service Provider (ISP) in June 1996, offering dial-up Internet access to local residences. As Speakeasy's customer base expanded and became more Internet-savvy, Speakeasy's management team began to consider the customer service and revenue potential of offering broadband services. Speakeasy initiated a relationship with DSL provider Covad Communications in January 1999.
ISP-Wholesaler Relationship
Traditionally, ISPs providing broadband do not operate the physical lines that connect their customers to the Internet; instead, they partner with DSL wholesalers like Covad to offer the broadband access their customers demand. The ISP usually manages the customer relationship, billing and technical support and provides value-added services -- such as web hosting, domain name assignment and customized service packages -- while the wholesaler maintains the network and manages the line ordering process.
Why Covad?
Covad's DSL offering provided Speakeasy with specific options that no other wholesaler could provide at the time.
Not a Regional Bell Operating Company (RBOC)
* Operates a nationwide broadband network
* Back-end system was best suited for Speakeasy technology
* Marketing flexibility
* Totally focused on broadband services
Not a Regional Bell Operating Company
The RBOCs (Regional Bell Operating Companies), created after the Bell monopoly was split up in 1985, also offer DSL wholesale service. In 1999, when Speakeasy was looking for a broadband partner, the phone companies were not focused on broadband rollout and as a result were less flexible with their partners. The Speakeasy management team ordered residential service from the local RBOC and found it to be "a frustrating and complicated experience," said Mike Apgar, CEO of Speakeasy Inc. Speakeasy required a network that offered flexibility, reliability and easy integration with its advanced technologies. Covad's Operations Support System (OSS) was designed with these three features in mind.
A National Network
RBOCs cannot offer nationwide data service because of the terms of the AT&T monopoly break-up. In 1999, Covad was one of only three companies that offered a national network and is currently the only nationwide DSL provider.
Speakeasy decided to work with Covad because the company's business was focused on DSL technology, reassuring Speakeasy that Covad would be consistent and dedicated to the quality of its broadband offering. "It was very important that our wholesaler not spread itself too thin. We wanted a provider that focused solely on DSL provisioning," said Apgar.
In addition, because Covad has a national network covering 2400 COs in 50 markets, Speakeasy was able to offer DSL to its local-core customer base while having the option to expand to other markets.
Backend Systems Worked Together
A national footprint, high quality customer management and rapid expansion are the core of the business plan created by Mike Apgar and the Speakeasy management team. As a result, Speakeasy required a wholesale partner with backend technology systems that could easily integrate with Speakeasy's OSS system and network.
Covad's network is based on Asynchronous Transfer Mode (ATM) technology, the most adaptable broadband technology for the transfer of multiple media types (voice, video, or data). In addition, Covad's OSS system, which handles service orders and inventory management, was designed so that ISPs could integrate the ordering process with their own customer service system and obtain up-to-the-minute status reports on pending orders.
Speakeasy chose to fully integrate each of these features. By integrating the companies' two OSS systems, Speakeasy enables customers to place orders and check order status from the Speakeasy Web site, resulting in a 50 percent reduction in customer service calls. Speakeasy saw an incredible decrease in the number of order-status and installation-related service calls because the customers were empowered to monitor the progress of their own orders. Together, Covad and Speakeasy have produced an industry leading system to facilitate on line ordering, provisioning and customer service.
Marketing Flexibility
Covad's marketing team recognized Speakeasy's previous marketing success with initiatives like online niche marketing and customer/partner referral program and was very open to joint marketing initiatives. "On the marketing side, our greatest success was working with Covad on creative projects. Most providers have very rigid coop funds and don't allow you to get too creative. Covad's flexibility has been one of the hallmarks of our relationship," said Apgar.
The Result
Within a year of partnering with Covad to offer DSL service, Speakeasy grew its customer base from one market in Seattle to 50 regional markets nationwide. According to Apgar, "Thanks to a combined effort, we were able to scale rapidly with the Covad network and the OSS. Our customers were provided a dial-up account the moment that they ordered and could see the status of their installation 24x7."
Allowing customers to access their order status online proved to be a significant competitive advantage over other ISPs. As a result of the companies' integrated OSS systems, Speakeasy reported 50 percent fewer customer service calls than other ISPs once the Backhaul system went active. "We knew other ISPs were getting pummeled in their customer service ratings posted on DSLReports.com while our ratings were going up the charts," said Apgar. As a result, Speakeasy was able to re-deploy resources that were previously expended on customer service to further content development and product enhancement.
Speakeasy today serves residential and small- and-medium sized businesses nationwide, and is in fact the largest privately held broadband ISP in the country. By partnering with Covad, Speakeasy was able to offer subscribers a better experience from the initiation of the order throughout the ongoing relationship -- which ultimately helped fuel the company's explosive growth.
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