Cogent Communications has made strident progress in driving large ISPs and broadband providers in the United States and Europe to upgrade their last mile ports to support traffic from its customers going to consumers, but the service provider says there's still plenty of work to do.
Dave Schaeffer, CEO of Cogent, told investors during the during the Cowen and Company 44th Annual Technology, Media & Telecom Conference, that half of the ISPs it interconnects with are now congestion free.
European providers like Orange have upgraded their core network capacity, but they are still congested and have not yet entered an agreement with Cogent. Other providers such as Telefonica are still making upgrades while CenturyLink (NYSE: CTL), which still has spots where congestion is present, signed an agreement to upgrade their network.
Throughout the past year the service provider has garnered agreements with four other providers, including AT&T (NYSE: T), Verizon (NYSE: VZ), Comcast (NASDAQ: CMCSA), and Time Warner Cable, now Charter Communications (NASDAQ: CHTR), to eliminate traffic issues.
"AT&T, Verizon, Comcast, and Time Warner Cable are all congestion free at this point," Schaeffer said.
As other providers relieve congestion, Cogent could see new traffic and revenue growth whether it's a new or an existing customer that diverted traffic to other providers.
Schaeffer said that this process creates what he calls a "virtuous cycle" of traffic growth, which Cogent can capture due to its pricing strategy.
"Once a counter party agrees to upgrade capacity there becomes an agreement between the two companies on the appropriate level of expansion," Schaeffer said. "Once we gone through those multiple rounds of upgrades, we do two things: we go to existing customers to show them that there's adequate capacity to these last mile networks and many potential customers may have wish to buy from Cogent."
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