Apr 2, 2002 12:00 PM,

Cogent finalizes deal to acquire PSINet U.S. assets

Glenn Bischoff

Cogent Communications today announced it has completed the acquisition of bankrupt Internet service provider (ISP) PSINet’s U.S. assets—including the company’s customer base, backbone network, associated equipment and intellectual property rights—for $10 million.

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Cogent acquired about 6000 customers, with an “overwhelming number of those” being small and medium enterprises, said a Cogent spokesman. Though it acquired PSINet’s backbone, Cogent will not be making use of it. “We want to use our backbone. That’s part of the secret in making this work—putting that traffic on our backbone, making Cogent’s backbone more efficient and loading traffic on it,” said the spokesman.

Another factor is that PSINet’s backbone used IP over frame relay, which is incompatible with Cogent’s IP over dense wave division multiplexing (DWDM) backbone. For that reason, some of the associated equipment also was rejected by Cogent and will revert to the PSINet estate. “That’s part of what made the deal attractive to the bankruptcy court,” said Cogent’s spokesman. Most other equipment accepted by Cogent eventually will be sold, with the exception of metro area connections.

Cogent also acquired co-location facilities in New York, Los Angeles, and Herndon, Va., as well as 60 points of presence (POP). Prior to this transaction, Cogent had 22 POPs. “Through PSINet, we’ll be able to offer T1, T3 and OC-3 services by having traditional telco facilities connected to Cogent’s backbone,” said the spokesman.

These services, as well as Internet connectivity, will be provided under the PSINet name, which Cogent called “one of the most recognizable ISPs” in the United States, despite PSINet’s well-publicized financial difficulties.

“They were the first commercial ISP in the country, plus their reputation prior to the bankruptcy was for excellence in service and connectivity,” said the spokesman. “So, that going forward, we thought, was compelling enough to survive any temporary [poor] reflection of the bankruptcy.”