Cogent Cuts Data Center Fees

When Cogent purchased PSINet for a mere $10 million in April, the focus was more on the downfall of the network pioneer than the rise of the buyer. This time, Cogent's aggressive data center pricing plan is the center of attention.

by Alex Goldman ISP-Planet Associate Editor [October 3, 2002]

This week Washington, D.C.-based Cogent Communications announced prices for data center bandwidth that sharply undercut anything else available. The company is offering bandwidth at $30 for 1 Mbps a month. Cogent offers three bandwidth options, 100 Mbps, 300 Mpbs, and 1 Gbps, that now cost $3,000, $9,000, and $30,000 a month, respectively.

Through the end of October, the company is throwing in 1U rack for free (24 inches x 30 inches x 70 inches) as a special promotion. Cogent chose not to disclose regular pricing of its PSINet rack space.

The cut rate pricing is being offered in three former-PSINet data centers that are located in New York City, Los Angeles, and in Herndon, Va.

Bruce Wagner, Cogent's vice president of sales, told us, "the data centers have a total of about 87,000 square feet, which is over 1,900 racks. The data centers were built well by PSINet. They've got everything, including diesel power backup and redundant points of bandwidth egress."

At the time of the purchase, Cogent's network connected to the cities, but not to the data centers. Since April, Cogent has built fiber connections to the three data centers.

Of course, not every customer in the ex-PSINet data centers can immediately obtain the new pricing. Those that signed contracts with PSINet will be held to those contracts for their duration, after which they will be able to switch to more aggressive Cogent contracts.

Cogent has made waves before with flat rate pricing. When the company first debuted, it was a metro Ethernet provider offering businesses 100 Mbps for $1,000 per month. At the time, analysts heralded the company as revolutionary. For example Daryl Schoolar, In-Stat/MDR analyst for ISP strategies, said, "Cogent is dropping the floor on Internet pricing. The company's offering of 100 Mbps connectivity at $1,000 per month should send the competition running."

The company proceeded to make headlines during the dot-com fallout by purchasing several rival firms, of which PSINet was the largest. Other companies purchased include Allied Riser Communications, FiberCity Networks, and NetRail.

Since its founding in 1999, the company has grown rapidly but remains a network that is not oversubscribed. Asked whether Cogent's aggressive pricing was made possible by anticipated under-utilization of the network, Wagner said "our network is definitely scalable and we do not anticipate being oversubscribed."

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