Cogent

Lots of stuff about Cogent in the news lately (see Forbes for instance). CEO Schaeffer will be at ISPCON. He has been saying that Internet growth is slowing (because his sales are down even at $4 per MB). Now Schaeffer is buying Cogent stock at the lower value. Some say smart. Some say he de-valued it to buy it.

"A few quick facts. Cogent acquired 13 companies during the meltdown. The most significant were PSINet and Allied Riser. PSINet was one of the 4 original Internet backbones, and exploiting their peering infrastructure is at the heart of Cogent’s go-to-market strategy. Internet transit is its primary product. Though Cogent has invested only $500M directly, the companies it acquired had consumed at least 10 times this amount. .... Cogent has 41,000 fiber route miles, including quite a bit in Europe. Its run rate revenue is approximately $220M per year and annualized EBITDA is $66M (excluding $16M of non-cash stock options)." [Bear]

I think one reason that Cogent is flat is due to the Lit Building list. Most fiber companies - AFS, XO, AboveNet, KDL, FPL and others - have lit buildings - and that is where they need to sell deep, to saturate sales. But for some these guys those lit buildings are carrier hotels like the NAP or 56 in ATL or CO's, which means that the potential client list is limited - and in fact may be saturated. There aren't that many folks willing to pay for a GigE port (or a 10GB port) to make build out worth it. And as HE and Cogent drop the per MB rate to $3 and $4 respectively, others must follow. Remember that for some fiber guys they all ride either in the same conduit or in the same sheath (like XO which buys IRU's from Level3). Makes finding route diversity difficult. But that's the value that Zayo and AFS (supposedly) bring - and why they charge way more than Qwest, Level3, XO and others. AFS, AboveNet and Zayo have the Incumbent mentality: we have exclusively what you want. [If you are looking for fiber or bandwidth or IP, give RAD-INFO a call on the telecom hotline - 813-963-5884 - for quotes from 20+ carriers including many of those listed in this post]