Cogent scales wavelength service-capable locations to over 800 sites in 2024

Cogent continues to succeed in selling more high-speed 100 gigabit connections and 400 gigabit connections in carrier-neutral data centers, as well as 10 gigabit connections in select multi-tenant office buildings.

“We have sold waves and installed them in 280 locations,” Schaeffer said. “As we go through our existing sales funnel and backlog, some of those orders have dropped out, and at quarter-end, we still had 2,700 orders in our wavelength funnel.”

Tightening wavelength provisioning timelines

While Cogent is still early in the wavelength service race, the company has worked to shorten provisioning service times, a factor it believes will set it apart from competitors.

The service provider reduced its wavelength service provisioning time from 120 days in the third quarter to 90 days at the end of the fourth quarter.

Our wavelength ARPU increased sequentially by 9.5% and was $2,151 this quarter compared to $1,964 last quarter.

Schaeffer noted that Cogent is moving to shorten the provisioning times further.

“In this quarter, we are down to a 30-day provisioning window,” he said. “And we are continuing to refine some of the processes and field deployment mechanisms and feel comfortable that we can get down to the same 2-week average that we have in IP services, which we've been able to do now for over 20 years.”

He added that the company has set a goal to install 500 wavelength services a month.

“We are ramping up to our full install capabilities. And we have both the field resources and service delivery coordinators to support the 500 a month,” Schaeffer said. “The hard part now has been working through the backlog that we have and flushing out which orders are still available for installation [and in] which the customers had to go elsewhere.”

In the wavelength market, Cogent faces larger competitors like Lumen, Zayo, Verizon, AT&T, and Crown Castle.

Despite the lead these other providers may have in this market, according to the Vertical Systems LEADERBOARD, Cogent said its growing set of data centers and architecture will differentiate it from the pack.

Competitors like Zayo launched a New York-New Jersey 400G metro network that will be in service this year and deliver wavelength services.

At the end of 2024, Cogent had 1,646 third-party carrier-neutral data centers, 104 of its data centers, and 55 of the smaller edge data centers connected to its network.

“Zayo and Lumen have a much smaller number of data centers where they at least tell the market or advertise that they could deliver wavelength services, too,” Schaeffer said. “We were at 808 at year-end and 880 today, and we’ll be over 900 in the next few months, as we close out those remaining new data centers and bring them on to the wave network.”

He added that another thing that sets apart Cogent’s approach to wavelengths is the architecture it deploys.

“The architecture we deploy is radically different than that of Zayo and Lumen, and it allows us to provision any to any in this very rapid period with a minimum number of field dispatches and accurate fiber inventory,” Schaeffer said. “These operate disparate, unintegrated networks. For that reason, their typical wave installation takes 90 to 120 days. It typically requires six or more field visits and custom engineering, so they cannot produce an accurate route map to our level.”

Thaddeus Weed, Cogent's CFO, said the decline was due to the company's ongoing effort to eliminate legacy products.

“These decreases in corporate revenue are primarily due to the continued grooming of low-margin off-net customer connections and the elimination of non-core products,” he said. “At year-end, our network had 46,371 corporate customer connections.”

Likewise, Cogent saw challenges in its enterprise business, which represented 18.1% of its revenues for the quarter. At the end of the year, Cogent had 14,776 enterprise customer connections on its network and was worth $45.6 million.

The company’s quarterly enterprise revenue decreased by 12.8% to $45.6 million year-over-year and sequentially by $3.5 million or 7.1%, primarily due to reduced non-core and low-margin enterprise revenues.

Regardless of its challenges, Weed said Cogent “continues to succeed in selling larger 100 gigabit connections and 400 gigabit connections in carrier-neutral data centers and selling 10 gigabit connections in select multi-tenant office buildings.”

Serving customers in 3,453 buildings, Cogent’s on-net revenue was $128.8 million for the quarter, a year-over-year decrease of 6.7% and sequentially 5.7%. It had 87,500 on-net customer connections at year-end.

“Our on-net revenue results were negatively impacted by three items: the $2.6 million sequential decline in the commercial services agreement, the on-net revenue component of that with T-Mobile; a $1 million sequential negative FX; and revenue from a low-margin resale customer we acquired in the Sprint acquisition that we mentioned last quarter and terminated. That was $1.7 million of the decline,” Weed said.

Cogent did see growth in its NetCentric business. The company said this segment continues to benefit from the continued growth in video traffic, activity related to artificial intelligence, streaming, and wavelength sales, which rose 1.9% sequentially to $93.6 million.

The service provider’s NetCentric business represented 37.1% of its quarterly revenues, up 0.5% yearly and 1.9% sequentially. At year-end, we had 62,236 NetCentric customer connections on its network.

However, Weed noted that its “quarterly NetCentric revenue under our commercial service agreement with T-Mobile declined sequentially by $2.6 million and $7.1 million year-over-year, negatively impacting our NetCentric revenue results.”

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