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.
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Your facts are wrong if you think carriers need more dark fiber. Simply put there is plenty of fiber in the ground. You use dense wave division multiplexing to tune up the fibers or LITE them. As the color wavelengths are further broken down (you can get 300 different shades of red) more bandwidth can be shot down the existing fiber. So your argument is moot as you do not seem to understand the technology required to make dark fiber light.
Bob, rather than take a hard stand and declare Rob “wrong”, why not qualify your position by stating when it makes sense to use WDM and when it does not? Distance-bandwidth and endpoint-paring comparisons, i.e., tradeoff analyses, are used for this very reason.
Eventually, I’ll grant you, with greater economies of scale made possible through dense integration, it may make eminent sense to use photonics-based WDM for every bit of optical network capacity, since even administering traffic is better suited to wavelengths than bare-bone silica. However, for the time being, at least, some applications are still satisfied more economically through the use of naked fiber, fwiw.
Frank
Bob, I think what Rob is eluding to is that it happens to matter what you’re lighting the fiber with. Fiber rich carriers may have the luxury to stay on smaller DWDM systems longer if the unit costs remain better than the systems with better spectral efficiency. If you have to leverage spectral efficiency to continue to grow then you may or may not have the unit cost advantage when you move to a 1.6/3.2Tb system or higher while a competitor is lighting more fiber with the smaller systems. It’s not a technology question, it’s an economic one.