Cogent Communications Holdings Profile
Cogent Communications Holdings, Inc. operates as a facilities-based provider of high-speed Internet access, private network services, and data center colocation space and power.
The company’s network is specifically designed and optimized to transmit packet switched data. The company delivers its services primarily to small and medium-sized businesses, communications service providers and other bandwidth-intensive organizations in 51 countries across North America, Europe, Asia, South America, Oceania and Africa.
The company offers on-net Internet access services exclusively through its own facilities, which run from its network to its customers’ premises. The company offers its on-net services to customers located in buildings that are physically connected to its network. As a result, the company is not dependent on local telephone companies or cable TV companies to serve its customers for its on-net Internet access and private network service. The company’s on-net service consists of high-speed Internet access and private network services offered at speeds ranging from 100 megabits per second (Mbps) to 400 gigabits per second (Gbps).
The company provides its on-net Internet access and private network services to its corporate and net-centric customers. The company’s corporate customers are located in multi-tenant office buildings (MTOBs) and typically include law firms, financial services firms, advertising and marketing firms, as well as health care providers, educational institutions and other professional services businesses. The company’s net-centric customers include bandwidth-intensive users that leverage its network to either deliver content to end users or to provide access to residential or commercial Internet users. Content delivery customers include over the top (OTT) media service providers, content delivery networks, web hosting companies, and commercial content and application software providers. The company’s net-centric customers include 7,792 access networks comprised of other Internet service providers (ISPs), telephone companies, mobile phone operators and cable television companies that collectively provide internet access to a substantial number of broadband subscribers and mobile phone subscribers across the world. These net-centric customers generally receive its services in carrier neutral colocation facilities and in its data centers. The company operates data centers throughout North America and Europe that allow its customers to collocate their equipment and access its network.
In addition to providing its on-net services, the company provides Internet access and private network services to customers that are not located in buildings directly connected to its network. The company provides these off-net services primarily to corporate customers using other carriers’ circuits to provide the last mile portion of the link from the customers’ premises to its network.
The company also provides certain non-core services as a result of certain acquisitions. The company continues to support but do not actively sell these non-core services. The company expects revenue from non-core services to continue to decline or to remain flat.
Acquisition of Sprint Communications
On September 6, 2022, Cogent Infrastructure, Inc., a Delaware corporation (the Buyer) and a wholly owned subsidiary of the company, entered into a Membership Interest Purchase Agreement (the Purchase Agreement) with Sprint Communications LLC, a Kansas limited liability company (Sprint Communications) and an indirect wholly owned subsidiary of T-Mobile US, Inc., a Delaware corporation (T-Mobile), and Sprint LLC, a Delaware limited liability company and a direct wholly owned subsidiary of T-Mobile (the Seller), pursuant to which the company will acquire the U.S. long-haul fiber network (including the non-U.S. extensions thereof) of Sprint Communications and its subsidiaries (the Wireline Business).
Strategy
The company intends to become the leading provider of high-quality, high-speed Internet access and private network services and to continue to improve its profitability and cash flow. The principal elements of the company’s strategy are to grow its corporate customer base; increase its share of the net-centric market; develop a worldwide peering platform; pursue on-net customer growth; continue to improve its sales efforts and productivity; expand its off-net corporate internet access business; and expand its product offerings to include wavelength and optical transport services.
Network
The company’s network consists of in-building riser facilities, metropolitan optical networks, metropolitan traffic aggregation points and inter-city transport facilities. The company delivers a high level of technical performance because its network is optimized for packet switched traffic. The company’s network is more reliable and carries packet switched traffic at lower cost than networks built as overlays to traditional circuit-switched telephone networks.
The company’s network consists of 3,155 buildings which are on-net and the company serve 219 metropolitan markets in North America, Europe, Asia, South America, Oceania and Africa. Important strategic components of the company’s network include 1,837 MTOBs strategically located in commercial business districts; 1,458 CNDCs located in 1,264 buildings offering its customers the largest portfolio of CNDCs of any carrier; 54 Cogent Data Centers; 1,120 intra-city networks, or rings, consisting of 42,491 fiber miles and 17,616 fiber route miles; an inter-city network of 61,292 terrestrial fiber route miles; and 197 high-capacity transoceanic circuits that connect the North American, European, Asian, South American, Oceanic and African portions of its network.
The company has created its network by leasing on a long-term basis optical fiber from carriers with large amounts of unused fiber and directly connecting Internet routers to its existing optical fiber national backbone. The company has expanded its network through key acquisitions of financially distressed companies or their assets at a significant discount to their original cost.
Inter-city Network.
The company’s inter-city network consists of optical fiber, including transoceanic capacity circuits for undersea portions, connecting major cities in North America, Europe, Asia, South America, Australia and Africa. The company’s network was built by acquiring from various owners of fiber optic networks the right to use typically two strands of optical fiber out of the multiple fibers owned by the cable operator. The company installs the optical and electronic equipment necessary to amplify, regenerate, and route the optical signals along these networks. The company has the right to use the optical fiber under long-term agreements. The company pays these providers its annual pro rata fees for the operation and maintenance of the optical fiber and it provides its own equipment maintenance.
Intra-city Networks.
In each metropolitan area in which the company provides its high-speed on-net Internet access services, its backbone network is connected to one or more routers that are connected to one or more of its metropolitan optical networks. The company created its intra-city networks by obtaining the right to use optical fiber from carriers with optical fiber networks in those cities. These metropolitan networks consist of optical fiber that runs from the central router in a market into routers located in its on-net buildings. The company’s metropolitan fiber runs in a ring architecture, which provides redundancy so that if the fiber is cut, data can still be transmitted to the central router by directing traffic in the opposite direction around the ring. The router in the building provides the connection to each of its on-net customers.
Within the cities where the company offers its off-net Internet access services, it leases circuits from telecommunications carriers, primarily local telephone companies and cable TV companies, to provide the last mile connection to its customer’s premises. Typically, these circuits are aggregated at various locations in those cities onto higher-capacity leased circuits that ultimately connect the local aggregation router to its network.
Multi-Tenant Office Buildings (MTOBs): The company has network access to a portfolio of 1,837 MTOBs which provide the company access to a highly attractive base of bandwidth intensive tenants. In MTOBs where the company provides service to multiple tenants, it connects its routers to a cable typically containing 12 to 288 optical fiber strands that run from its equipment that is generally located in the basement of the building through the building riser to the customer location. The company’s service is initiated by connecting a fiber optic cable from its customer’s local area network in their suite to the infrastructure in the building riser giving its customer dedicated and secure access to its network using an Ethernet connection.
Carrier Neutral Data Centers (CNDCs): The company’s network is collocated in and can provide connectivity to customers in 1,458 CNDCs located in 1,264 buildings across its footprint. CNDCs are an integral component of the Internet infrastructure where content providers, application service providers, carriers and corporate customers locate their server and service infrastructure. CNDCs offer highly reliable, secure, cost effective and convenient space for these operators to access important services, including connectivity, power, rack space and security all on a 24-hour basis in order to support their Internet activities, and after its anticipated acquisition of the Wireline Business, wavelength services. The company is connected to more CNDCs than any other IP transit provider, enabling it to offer greater coverage, more network configuration choices and increased reliability for its net-centric customers.
Cogent Data Centers: The company operates 54 data centers across the United States and in Europe. These facilities comprise over 606,000 square feet of floor space and are directly connected to its network. Each location is equipped with secure access, uninterruptable power supplies (UPS), and backup generators. The company’s customers typically purchase bandwidth, rack space, and power within these facilities.
Internetworking: The Internet is an aggregation of interconnected networks. Larger ISPs exchange traffic and interconnect their networks by means of direct private connections referred to as private peering. The company interconnects with the networks of its customers, which represents the majority of its interconnections and network traffic, through the sale of its transit services. The company interconnects with 7,769 networks who pay to exchange traffic with it as customers. The company supplements its customer network interconnections with settlement-free peering to its non-customer ISPs. The company has settlement-free private peering interconnections between its network and 23 other major ISPs who are not its customers.
Tier 1 ISP Status: The company directly connects with 7,792 total networks. As a result of the size and breadth of its customer base and the extensive footprint and scale of its network the company is a Tier 1 ISP. The company exchanges traffic with 23 other Tier 1 ISPs on a settlement free basis. The remaining networks are customers whom it charges for Internet access.
Network Management and Customer Care: The company’s primary network operations centers are located in Washington, D.C. and Madrid, Spain. These facilities provide continuous operational support for its network. The company’s network operations centers are designed to immediately respond to any problems in its network. The company’s customer care call centers are located in Washington, D.C., Herndon, Virginia, Madrid, Spain, Paris, France, and Frankfurt, Germany. To ensure the quick replacement of faulty equipment in the intra-city and long-haul networks, the company has deployed field engineers across North America and Europe. In addition, the company has maintenance contracts with third-party vendors that specialize in maintaining optical and routed networks. In connection with its acquisition of the Wireline Business the company will be adding network operations centers in Kansas City, Kansas, Atlanta, Georgia, Dallas, Texas and Orlando, Florida.
Customers
The company offers its high-speed Internet access and IP connectivity services to two sets of customers: corporates customers, which primarily include small and medium-sized businesses located in North America, and net-centric customers, which include, content providers, applications service providers and access networks, comprised of ISPs, cable operators, mobile operators and phone companies located in North America, Europe, Asia, South America, Oceania and Africa.
The company’s corporate customers primarily purchase direct internet access from the company on-net in MTOBs and CNDCs or off-net through other carriers’ last mile connections to those customer facilities in metropolitan markets in North America. This service enables these customers to access the Internet with a high-speed, bi-directional, symmetric circuit with a very high degree of reliability and 100% access to that contractual capacity at all times. Depending upon the geographic breadth of its customers’ footprint and their communications requirements, the company also sells these corporate customers private network services. Private network services provide connectivity on a point to point or point to multi-point basis. This service allows customers to connect geographically dispersed local area networks in a seamless manner. The company primarily offers these corporate customers speeds ranging from 100 megabits per second (Mbps) per second to 1 gigabits per second (Gbps) per second and in some cases up to 10 Gbps per second.
The company’s net-centric customers purchase IP connectivity and other services in its 1,458 CNDCs as well as its 54 data centers for a total of 1,512 data centers. The company supports these services in 219 metropolitan markets in 51 countries across the world. The company also offers a burst product that allows net-centric customers to utilize capacity when they exceed their contractual capacity. The company also offers colocation services in its data centers. This service offers Internet access combined with rack space and power in its facilities, allowing the customer to locate a server or other equipment at that location and connect to its Internet access service. The company offers lower prices for longer term and volume commitments. The company emphasizes the sale of its on-net services over its off-net services, as on-net services generate higher gross margins, and it can offer faster installation and greater reliability with its on-net offerings.
Sales and Marketing
Direct Sales: The company’s sales personnel work through direct contact with potential customers in, or intending to locate in, its on-net buildings. Through agreements with building owners, the company is able to initiate and maintain personal contact with its customers by staging various promotional and social events in its MTOBs and CNDCs. The company uses a customer relationship management system to efficiently track sales activity levels and sales productivity.
Indirect Sales: The company also has an indirect sales program. The company’s indirect sales program includes several master agents with whom it has a direct relationship. Through its agreements with its master agents the company is able to sell through thousands of sub agents. All agents have access to selling to potential corporate customers and may sell all of the company’s products. The company has an indirect channel team who manages these indirect relationships. The company uses its customer relationship management system to efficiently track indirect sales activity levels and the sales productivity of its agents under its indirect sales program.
Marketing: The company uses a limited amount of web-based advertising. The company’s marketing efforts are designed to drive awareness of its products and services, to identify qualified leads through various direct marketing campaigns and to provide its sales force with product brochures, collateral materials, in building marketing events and relevant sales tools to improve the overall effectiveness of its sales organization. In addition, the company conducts building events and public relations efforts focused on cultivating industry analyst and media relationships with the goal of securing media coverage and public recognition of its Internet access and private network services.
History
The company was founded in 1999. The company was incorporated in 2014. It was formerly known as Cogent Communications Group, Inc. and changed its name to Cogent Communications Holdings, Inc. in 2014.
