Cogent Completes PSINet Acquisition

Cogent pays $10 million for a company that could be considered the first commercial Internet backbone provider ever established.

by Roy Mark of www.internetnews.com [April 4, 2002]

Optical Internet service provider Cogent Communications Group, Inc. has completed the acquisition of the majority of the U.S. operations of PSINet, Inc., the bankrupt ISP backbone that was the first commercial Internet service company ever established. Last week, the U.S. Bankruptcy Court for the Southern District of New York approved Cogent's acquisition, clearing the way for Cogent to finalize documentation related to the closing.

In the acquisition, the Washington, D.C.-based Cogent acquires PSINet assets, including PSINet's customer base, backbone network, and associated equipment and rights to intellectual property, for $10 million.

"With the consolidation going on in the Internet service provider space, Cogent has been able to identify some excellent opportunities to accelerate its business plan," said Dave Schaeffer, chief executive officer and founder of Cogent Communications. "PSINet will enable Cogent to immediately incorporate a revenue stream from a set of products that complement Cogent's core offering of 100 Mbps Internet connectivity for $1,000 per month."

Cogent plans to support and build the PSINet brand name. Under the PSINet label, Cogent will continue offering PSINet services, including Internet connectivity.

"Cogent will continue to support PSINet's core strengths. PSINet has developed one of the most knowledgeable and trusted teams of experts in the country to build and deliver its services," added Schaeffer. "We also have found that customers have chosen PSINet due to its superior customer service, and we intend to maintain or exceed the level of service as PSINet emerges as a Cogent Communications company."

The company's network consists of a dedicated nationwide multiple OC-192 fiber backbone, multiple intra-city OC-48 fiber rings, and optically-interfaced high-speed routers. Cogent's focus has been on the multi-tenant marketplace and to service providers located in major metropolitan areas across the United States.

"By eliminating some of the high costs associated with the PSINet network combined with a reduction in staff, Cogent expects to take a business with poor operating results and turn it around," said Helen Lee, Cogent's chief financial officer. "At the same time, increasing traffic on Cogent's backbone should lead to significant economies of scale for Cogent."

— End