Cogent courts cable

Cogent Communications is launching a U.S. initiative to attract cable companies as customers for its gigabit Ethernet service. The service provider, which has already captured major cable company business in Europe and Canada, believes its low-cost, high-capacity network can enable cable companies to compete more effectively as they add bandwidth to their cable modem services to battle DSL’s growing popularity.

The initiative includes an opportunity to use Cogent’s network without signing a term contract--a strategy that succeeded in landing Cogent about 400 university customers in the U.S., said David Schaeffer, CEO.

“With the universities, we offered them a chance to use our service, and many started out using us as a backup,” he commented. “Now we are their primary provider. This is a chance for the cable companies to try the service and get comfortable with us as a service provider, and understand the quality of what we are providing.”

Cogent is going into the market as a low-cost provider--its $10 a megabit rate is a fraction of what others are currently charging, according to Schaeffer. The cost factor is becoming more important to cable companies as they up the bandwidth on their cable modem services to 3 Mb/s and higher. Comcast, for example, just announced a 6 Mb/s service.

“As the amount of the bandwidth given to the customer goes up, then their upstream bandwidth purchase becomes a higher percentage of their costs,” he said. “We think we can entice them with lower-cost options.”

Cogent serves 90% of the cable operators in Spain and 60% to 70% of cable operators in France and Germany, Schaeffer said, but only has a few small cable operators as customers in the U.S. One reason for that, he explained, is that Comcast and Time-Warner, two of the largest cable operators, are captive customers of AT&T and AOL, respectively.

In the wake of the Brand X decision, which assured cable companies they would not have to open their cable modem networks to other ISPs, the cable companies “are putting renewed emphasis on their own broadband products,” Schaeffer said. “We think this is a good time to go after their business.”