Cogent CEO talks metro Ethernet

Cogent Communications, which calls itself a facilities-based ISP, is offering businesses in multitenant buildings lots of bandwidth for seemingly little money - specifically 100M bit/sec for $1,000 per month.

All Cogent traffic travels over the company's OC-48 metropolitan-area networks in major U.S. cities and its 12,400-mile OC-192 national backbone. Cogent's founder and CEO Dave Schaeffer recently explained the factors that he says differentiate Cogent from other metropolitan Ethernet players in a conversation with Network World's Michael Martin.

Why are you using packet over SONET?

One reason is there's no standard for any Ethernet speed over one gigabit. It would be inefficient for us to run one gigabit over one wavelength. Ethernet also suffers from a lot of overhead. We're not using traditional telephony SONET. It's not expensive. We don't have any of the SONET redundancies.

What kind of equipment are you using?

We use Cisco equipment. We use the 2948 GL3 at the edge and the 12016 at the core. There's about one 12016 in each city. Right now we have 22.

How many markets do you offer service in?

We're in New York City, Chicago, Philadelphia and Washington, D.C. We have announced an additional nine and will be rolling those out over the next 45 days.

Can people ask for your service if their building isn't on your network?

Yes they could. There are a few factors we look at. One is proximity of the building to fiber. The second is the size of the building. The third is the number of customers in the building. We usually need a minimum of 25 customers per building. The reason is we have no long-term commitments. It's month-to-month. If a customer wanted us to commit to them without the building requirements being there, we would consider doing it if they made a long-term commitment.

How do you differentiate yourselves from other metro Ethernet service providers?

There are a lot of people lumping the providers together and calling them Ethernet service providers. I think the metro Ethernet services space is really divided into two parts. The first is those with pure Ethernet interfaces. That would include Yipes, Telseon and us.

Telseon is focused on a carrier-to-carrier collocation product. It's a cross-connect product. They sell on a purely wholesale basis. Yipes is different. They're providing basically retail LAN-to-LAN connectivity. It's metro only. Also, they sell per-megabit, and they're going after large enterprises. They have no LAN-to-LAN service over a national backbone. Cogent is the third player.

Our primary focus is LAN-to-Internet. We'll sell LAN-to-LAN, but it's not our primary service. Our first differentiator is that we do packet-over-SONET outside the building. Our second is that our network is national over our own facilities. Third, our pricing is flat rate. Fourth, our product is much less expensive than the other providers. Yipes charges $34,000 for what we offer. Fifth, we serve mostly small to midsize business.

There are other providers that have announced services. Time Warner has announced, XO Communications has announced and the [regional Bell operating companies] have announced. But as far as we know there aren't any deployments. Whether they actually get into the business remains to be seen. They would be cannibalizing their own business.

Given the problems some DSL providers and competitive local exchange carriers (CLEC) have experienced, has there been any trouble convincing customers to sign with you?

We've signed on about 1,500 customers so far. I don't think people view us as a CLEC. We certainly don't see ourselves that way. We don't do voice.

Who are your competitors?

We've run into Yipes a couple of times. Most of our competition though comes from the embedded T-1 market.

Can you offer customers the same quality of service [QoS] as a T-1 gives them?

We actually offer higher QoS. We offer a committed information rate; low latency; higher reliability because our traffic goes through fewer boxes. We also have lower jitter. What allows us to do this is it all travels over our own network.