Cogent Communications - Dave Schaeffer, CEO - Top 10 BSPs

Cheap and dirty Ethernet-based dedicated Internet access is Cogent's business and business is good. And Cogent has the numbers to prove it. During the second quarter of 2009, Cogent saw its on-net revenue increase 4.9 percent to $46.5 million, while service revenue grew to $58.0 million.

Competing primarily with large incumbent carriers going into tall shiny buildings in major U.S. cities, Cogent continues to carry out its mission on two fronts: selling to corporate enterprises and selling wholesale raw bandwidth to other ISPs.  

All of this is driven by a man Forbes magazine once called the most hated man in telecom, Dave Schaeffer, CEO and co-founder of Cogent Communications.

Schaeffer freely admits that even though IP Internet connectivity is becoming a commodity service. However, selling fiber-based Ethernet connections to large corporate enterprises is actually the secret to Cogent's success. 

"While the majority of the sector saw declines versus revenue growth, we were able to demonstrate good growth, and I think it's because of our dependence on IP and more narrowly on IP service," he said.   

And while Cogent is a competitive provider, it controls its own destiny. Unlike traditional CLECs that are probably reselling copper-based services from the ILECs, Cogent has built an all-fiber based network that brings fiber into 1,385 on-net buildings across North America and Europe and reaches 135 markets with off-net connectivity.  

Schaeffer says that by having its own network in place it can accommodate three trends: IP and the Internet replacing other services; a network that can accommodate bit volume growth coming from Internet services; and then significant price erosion on the per-bit mile to achieve in revenue.  

"When that bit enters our network, we don't pay anyone else so we can take advantage of all the advances in technology both at the transport layer and at the routing layer," he said. "But if all you're doing is reselling you're probably reselling voice, and you don't have the operating leverage to take advantage of these technological changes. Instead, you have to wait until the underlying service provider puts in the new technology."