In sorting my lit buildings and metro fiber list, there is one clear outlier no matter how one looks at it. Cogent Communications (NASDAQ:CCOI, news, filings) at latest report had 1,326 lit buildings connected by 12,200 metro route miles. That's 9.2 miles between buildings, a sparse network that one might expect of a wholesaler or even the telecom division of an energy company. Yet Cogent explicitly hooks up mostly enterprise buildings. And while they certainly visit many carrier hotels, they have little if any use for ILEC central offices. At first glance it's quite puzzling, but it all comes down to the nature of the assets they operate and who they choose to target.
One could argue that they don't really belong on my list at all, because they lease all that metro fiber and they do it with a low fiber count. But they hook up so many buildings I feel I can't ignore them. After all, I don't have a parallel list of companies leasing metro fiber to hook up over 1K on-net buildings. Cogent's business model is unique, amongst companies its own size at the very least. With low fiber count, they can't and don't hook up lots of buildings along their routes like an EasyTEL or a Fibertech. But neither do they do what other national backbones such as Global Crossing do with leased metro fiber - larger multi-site enterprises with heavy data needs. No, they take that fiber and seek out a particular type of building in its markets, the large office complexes that have numerous small and medium enterprises. Thus, they serve lots of little companies but in only a few places.
Cogent's network was assembled out of many pieces, and if I recall correctly this particular strategy arose out of the Allied Riser acquisition. One could easily argue that this is the more dynamic of Cogent's two main segments. Its datacenter-centric IP transit business is of course very dynamic and makes lots of noise, but it faces far more competition and therefore price compression. The metro fiber business has offered much more reliable growth for the company, yet because of the nature of the assets, one has to wonder whether there is a long term future there. Continued expansion assumes a favorable market for the metro fiber they must lease to support it, since splicing has limits. It seems to be working reasonably well so far though. One wonders what obstacle prevents other providers with deeper assets from going after their target market as well.
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