while, Cogent undercuts the market of every other carrier who isn't as
efficient as they are, leading to massive losses, bankruptcy filing
bankruptcy filing, out of court reorganizations and purchases for
Banks and Venture Capitalists love this. They think in terms
of markets, not in terms of companies. Banks and VCs both make
more money when a market is not overcrowded with competitors.
Obviously, if you can spend a bit of money to fund a company
which will kill off all the weaker competitors, and make that
money back in a strong company who benefits from larger market
share, then it makes sense in the big picture.
I don't have any evidence that this is what is happening
in this case, however this kind of thing is done to
stabilise markets. To the winner go the spoils. All
the network assets are not destroyed. For the most part
they are aggregated into the networks of companies
who buy the bankrupt assets. Sometimes a network
operator will buy and integrate a functioning network.
Other times, the corporate customer base will buy the
boxes and become more likely to buy bandwidth from
To force either
one to peer by law or regulation would be even more disruptive to the
industry as a whole, which may even lead to a complete collapse of the
existing peering system as we know it.
I think that's too harsh. It would certainly lead to change but
that is not the same as collapse. If companies were forced by
law to peer, then they would have to do so under a settlement
system. Since IP network revenue flow is not based on the
end-point usage (per minute call charges) there is no need
to engage in massive data collection and analysis as the
voice business does. Something based simply on netflow
data from peering interconnects combined with the the average
bandwidth price on each companies top ten customer contracts
would add very little cost to computing the settlement amount.
I don't advocate one way or another. But I do expect to
see things change when there is instability.