The next question in this series goes to Cogent Communications. Once again, the idea is to elicit a useful response. First though, let me add a disclaimer. Cogent's CEO Dave Schaeffer has a style that drives me nuts - like fingernails on a blacboard, and in the past that has led me to dismiss the company itself too easily. I try to look past that now, but I don't always succeed. That said, here is my question:
The costs of lighting fiber at 40G/wavelength are still similar to that of 4x10G, and it is not yet clear how this will change at the 100G/wavelength level. Because Cogent has less dark fiber than its competition, is Cogent's ability to scale its network cost effectively more dependent on that particular breakthrough than a carrier that can leverage bandwidth aggregation?
While Cogent has been challenged lately by pricing pressure for the first time lately, in general they have operated the assets they have more effectively than their competition for several years now and I think they will manage to hold their position despite the pressure. Questions regarding pricing pressure seem already well covered by the analysts and media.
For me, the main question with Cogent is strategic: at some point do fiber rich carriers have a cost advantage? It *looks* as if Cogent is dependent on technological advancement in putting more and more data on a single fiber at steadily lower cost per bit - which isn't happening at the 40G level yet, but I want to hear Schaeffer's thoughts on the subject.
As before, critiques, corrections, and alternate questions are all welcome.Financials · Internet Backbones · Telecom Equipment