DVW Covad Communications Grp.,

ITEM 8.01: Other Events.

     On or about June 30, 2006, Saturn Telecommunication Services (STS) filed a demand for arbitration against Covad Communications Company seeking damages for Covad’s alleged failure to provide certain wholesale services to it. On or about February 9, 2007, STS amended the demand to include additional allegations and requests for relief. On December 10, 2007, the arbitrator in this matter issued an award of approximately $7.3 million in STS’ favor. On December 12, 2007, STS filed a motion in the United States District Court, Southern District of Florida, to confirm the award. Covad intends to oppose the motion to confirm the award and is evaluating its legal options to challenge the arbitrator’s decision.

     Covad does not expect the arbitrator’s award to affect the status of the proposed acquisition of Covad by entities affiliated with Platinum Equity, LLC.

      Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
The foregoing contains “forward-looking statements” that are based on management’s current information and beliefs as well as on a number of assumptions concerning future events. Examples of forward-looking statements include the company’s ability to successfully contest the motion to confirm or successfully challenge the arbitrator’s decision, as well as any potential affect the award might have on the proposed acquisition of Covad by Platinum Equity. Readers are cautioned not to put undue reliance on such forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside Covad’s control that could cause actual results to differ materially from such statements. These risk factors include our ability to rapidly expand and deploy new services and improve and upgrade our existing network and services, the impact of increasing competition, pricing pressures, consolidation in the telecommunications industry, uncertainty in telecommunications regulations and changes in technologies, among other risks. For a more detailed description of the risk factors that could cause such a difference, please see Covad’s 10-K, 10-Q, 8-K and other filings with the Securities and Exchange Commission. Covad disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This information is presented solely to provide additional information to further understand the results of Covad.