Covad and Earthlink have partnered to expand their VoIP market availability. The agreement would enable Earthlink to offer customers low cost phone services bundled with high speed internet access in eight additional cities. As per the terms of the agreement, Earthlink would be providing with $50 million in debt and financing to fund additional network build-outs in order to bring Covad's line powered voice access to Atlanta, Chicago, Los Angeles, Miami, New York City, Philadelphia, San Diego and Washington, D.C.

Certainly it seems to be strategic move for both the companies so that they can strongly compete against traditional phone services. The flexibility that the companies are offering in terms of an easy switch where new equipment and lines are not required would certainly build the road for growth and expansion.

Seems to be a smart move but why is Earthlink spending $50 million in Covad's network? It seems there is a well thought out strategy behind it.