The parties had agreed to binding arbitration subject to the commercial rules of the American Arbitration Association, and the decision, signed on December 5, 2007, by Hon. Chris Cottle, Ret., Arbitrator, follows a 10-day arbitration hearing held in San Francisco, Calif., September 17-28, 2007. Full text of the decision is available on the Internet at http://www.ststelecom.com/arbitration.html. In rendering his decision, Justice Cottle stated in part, “The testimony and documentary evidence demonstrates Covad fraudulently induced STS TELECOM to sign the BIA Agreement by misrepresenting material facts.” Characterizing misrepresentations made by Covad senior executives as “more than reckless,” the decision further stated, “The evidence shows that they were intentionally false and motivated by an opportunity of greater significance than just the financial relationship between Covad and STS TELECOMMUNICATIONS.”

STS CEO Mark Amarant indicated that while he was grateful for the outcome of the STS litigation, he believes that of equal importance is the fact that this decision will shed long overdue light on some of the misrepresentations by the Goliaths of the telecommunications industry as they compete for market share in a deregulated environment.

ABOUT STS TELECOM:

Established in 1994, STS TELECOM is a privately held provider of voice, data, and VoIP (Voice over Internet Protocol) services for business. The company is one of approximately 400 companies worldwide to be awarded the "Cisco Powered Network” status from Cisco Systems, Inc. (San Jose, Calif.). Visit www.ststelecom.com for more information about service offerings.