I have been reading about Cogent Communications recently and was wondering how
they can possibly offer 100mbps for $3000 ($1000 if you are an end-user, not a
service provider). It just seems too good to be true and we know how that
Does anyone on NANOG have experience with them?
For those who don't know: Cogent offers 100 mbps at $3000 to service provider
or 1000gbps for $20,000. http://www.cogentco.com has some info but not much.
Just to test them out we ordered their "private line" service (rather than
the transit product) where it is $10/meg point to point, i.e. 100Mbps cross
country is $1,000 per end per month. Its a tunneled IP product with an ATM
They are already 90 days overdue and show no signs of delivery anytime soon.
They are heavily involved with Williams for the ATM backbone and I know that
Williams is selling IP transit to big telecom accounts for as little as
$50/meg. Since they don't seem to have a lot of peering possibly they are
filling in the gaps with Williams transit and coming up with a skewed cost
Massive oversubscription is the short answer. The long answer is that they
are a BLEC, or Building Local Exchange Carrier. The BLEC business model is
predicated on the idea that you can bring big pipes into a building or
concentration of customers and oversubscribe it. The rates for tennents are
generally quite cheap. There is generally a second oversubscription factor
applied at the city level, then sometimes a third at transit connections.
This is all generally a good deal for the average building tennant, by the
way. Oversubscription isn't bad if managed properly, and many BLECs do a
good job of it. Here are the problems with BLECs:
1) You only get the great rates if you are in a serviced building
2) BLECs usually have problems getting sufficient market penetration for a
building to break even.
3) Most BLECs are run by data-clueless voice/telco folks. (this does not
apply to Cogent, BTW. Their engineer crew are almost all from Digex, from
back when Digex was a really top-notch ISP. Their peering coordinator is
4) Most BLECs are unwilling to give you the really good rates if they think
you are going to actually use any appreciable bandwidth. The average office
tennant really uses very little.
Almost all of the original BLECs have gone under, as the business model is
VERY difficult to sustain.
I'm not sure about the specifics of Cogent's business plan, but it's
certainly a hard road. They seem to be trying very hard to get peering,
which could only help them out.
- Daniel Golding
The wierd thing here is that Williams doesn't have an overabundance of
peering either. They had been SBC's primary IP transit provider for their
DSL product, but rumor has it that SBC has selected other providers to
replace them. Perhaps Williams has massive transit contracts of their own,
and they are trying to cut their losses? Reselling transit for $50/meg is
better than not reselling it at all.
I doubt Cogent's long term plans are dependent on Williams' firesale transit
- Daniel Golding
Considering that Cogent is selling transit to ISP's for $20 less than
Williams "firesale" pricing I would hope they have found a better deal:)