Cogent says its Ethernet VPLS service offers better pricing, experience than SD-WAN

Dave Schaeffer, Cogent Communications
Cogent’s bet to provide on-net internet connectivity continues to pay off.

Cogent has noticed all of the activity around SD-WAN, but the Ethernet-centric provider said its Ethernet VPLS service can satisfy customers' needs today.

While other SD-WAN players allow customers to use any broadband connection, Cogent is aiming its Ethernet VPLS service, which also allows customers to connect multiple sites with an Ethernet VPN, at its on-net fiber customers.

Dave Schaeffer, CEO and founder of Cogent, told FierceTelecom that by keeping the service on its own fiber network and offering simple pricing, it can better control the customer experience.

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“What makes our product a bit different is two things: One, it’s priced similar to an internet connection and we try to focus it only on our on-net footprint,” Schaeffer said. “What we don’t do is sell off-net to off-net, which I don’t think is a viable business model.”

The VPLS service represents about 15% of Cogent’s total revenue.

Cogent’s approach comes in the face of a recent surge in SD-WAN activity amongst a group of traditional ILECs like AT&T, Verizon and CenturyLink, and competitors like EarthLink and TelePacific aggressively pursuing the SD-WAN opportunity.

Unlike service providers CenturyLink and Windstream, which are in the process of conducting large-scale acquisitions of Level 3 and EarthLink to bolster their MPLS and SD-WAN capabilities, Cogent is confident that providing low-cost internet access will free it from having to pursue large deals to grow.

“Most of the companies have pinned their hopes on things like MPLS or SD-WAN, and increasingly a dumb pipe—meaning the internet—is all the customer needs,” Schaeffer said. “We’re in a good spot in that we sell the right product to people that need it at the best price point and that keeps us somewhat immune from the pressures that others are feeling.”  

Cogent’s bet to provide on-net internet connectivity continues to pay off.

In the third quarter, Cogent reported that on-net service revenues were $81.8 million, up 9% year over year.

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