Cogent Communications banks on Ethernet over IP
by Meghan Fuller
Cogent Communications’ (www.cogentco.com) all-optical IP-over-DWDM network currently comprises 25,000 miles of intercity fiber stretching from Seattle, WA, to Budapest, Hungary, and from Oslo, Norway, to Miami, FL. Cogent also owns another 10,000 miles of metro fiber in 100 markets, comprising 225 rings that are directly connected to 1,180 end buildings. Cogent says its North American network currently supports anywhere from eight to sixteen 10-Gbit/sec wavelengths; in Europe, the network supports six to twelve 10-Gbit/sec wavelengths-and the carrier says it isn’t finished yet.
In a recent interview with Cogent chief executive officer Dave Schaeffer, Lightwave learned more about the carrier’s network design and expansion plans, its commodities-based business model and Ethernet-based product portfolio, and its origins as a company born of forward thinking and maybe a little luck.
According to Schaeffer, Cogent will continue to expand its network in three ways: either by adding new routes, adding metro fiber, or adding additional wavelengths on existing links. Just last quarter, Cogent added new routes in Italy, extending its footprint from Milan to Venice, Florence, and Padua and back up to Rome. The carrier also extended north and west from Stockholm to Oslo. And in the U.S., Cogent’s network now includes a span from Los Angeles to Las Vegas.
Recent additions to the carrier’s metro fiber market include cities like San Antonio, TX; Cleveland, OH; and St. Louis, MO, through which the Cogent network has passed for some time. But now the carrier offers metro connectivity with either data centers or on-net buildings in those footprints.
Schaeffer confirms that Cogent is consistently adding new wavelengths. The carrier’s original network comprised a single 10-Gbit/sec wavelength; over time, Cogent has added a uniform eight 10-Gbit/sec wavelengths across its North American footprint and has added yet another eight 10-Gbit/sec waves along certain routes.
Cogent’s metro network employs a combination of CWDM and DWDM technology. Each building connected to its network features 2 Gbits/sec of home-run capacity on day one, and the carrier continues to add capacity, either by increasing line rates or adding wavelengths, until some of its largest buildings today support 80 Gbits/sec of dedicated bandwidth.
“Our footprint is very different from other providers in that it resembles kind of a gigantic corporate LAN,” explains Schaeffer. “In the metro, we have a series of rings-every building is ring-protected-but on that ring, we build a logical hub and spoke, dedicating a pair of wavelengths to a given building and then reusing those wavelengths in both the clockwise and counterclockwise direction,” he says.
Cogent performs all of its protection at Layer 3; there is no SONET or optical protection in the network. At the edge, the carrier employs Open Shortest Path First (OSPF) reconvergence and in the core, Intermediate System to Intermediate System (ISIS) reconvergence.
When asked about the recent industry buzz surrounding 100-Gigabit Ethernet (100GbE), Schaeffer says Cogent “will always look at the most cost-effective way to expand capacity.” At this point, he says it makes more sense to deploy additional 10-Gbit/sec wavelengths, simply because “we still have a pretty good cache of equipment from some of our acquisitions.” As existing inventory is depleted, however, Schaeffer says Cogent would weigh its options, but, ultimately, it will come down to “pure cost per transport.”
In operating a Layer 3 network like Cogent’s, the majority of the capital is actually in the routing layer, not the optical layer, he says, so you have to weigh the cost of the router interfaces. Long term, he believes the industry will likely move directly to 100G and probably bypass 40G, which is based on SONET architecture and SONET framers. Historically, SONET interfaces have been much more expensive than Ethernet interfaces, he notes.
“Moving to 100G interfaces will make more sense,” he contends. “And then, to get more capacity on a given route, you will do three things. You will use a broader portion of the spectrum, so you will use the entire C and the entire L bands on a given route,” he explains. “You will also look to go for tighter spacing within that spectrum.”
In first-generation DWDM systems, 200-GHz channel spacing was the norm. The industry then migrated to 100 GHz, and today, 50 GHz is fairly standard. He cites interleaving down to 25 GHz as the third method for increasing capacity. That said, he recognizes that within the 25-GHz-spaced spectrum of the ITU grid, advanced modulation will be required to support 100-Gbit/sec throughput. “And you’re going to need both a fairly robust forward error correction and fiber that is probably fairly immune to PMD [polarization mode dispersion] issues,” he adds. “So I think 100G will make a lot of sense, but it may not work everywhere.”
Cogent has productized its network using Ethernet interfaces to sell high-capacity Internet access either directly to corporate users, typically located in large, multitenant buildings, or to other service providers who purchase space in Cogent’s data centers and carrier-neutral collocation facilities. To date, the carrier says its more than 12,300 corporate customers account for more than 15% of the Internet’s traffic.
The company itself was founded on the principle that “the architecture used by everyone else for Internet connectivity would not scale,” explains Schaeffer. At that time-1999-there were 200 global backbones, he says, and the average price per megabit was around $300. “That meant you went to a data center and bought bandwidth from a company that had a network originally designed as a telephone network, and some of that surplus bandwidth was then allocated to IP services,” he recalls.
Schaeffer believes those providers who began life as a telephone company viewed the Internet as somewhat of a nuisance in that it consumed the majority of their resources and produced a fraction of their revenue. “Our belief was that the Internet did not have to be a best-efforts network but rather could deliver quality of service equal to or superior to that of other networks by over-provisioning the network,” he says. “We also believed that the Internet was inherently deflationary; it was going to drive down the cost of wireline communications, and it was going to become the dominant network architecture.”
Cogent understood that in such a crowded industry, a competitive pricing scheme was its best way to gain market share; it currently sells bandwidth at $10 per megabit. According to Schaeffer, Cogent’s core product is a 100-Mbit/sec dedicated Ethernet access service that sells for $1,000 per month. All of the carrier’s products are Ethernet-interfaced and predominantly on-net, meaning Cogent does not buy local loops from a third party.
Schaeffer says the company is able to price its Ethernet services so aggressively thanks to back office/OSS efficiency, a solid sales campaign built around its price model, and a balance sheet that is stronger than its competitors. Before the bubble burst, Cogent managed to raise $500 million-a huge sum, but a bit shy of its $2 billion goal. In the end, it turned out not to matter much. Over the next several years, Cogent acquired 13 companies that, in aggregate, had raised $14 billion in invested capital and had deployed $4 billion in property, plant, and equipment. And Cogent acquired these distressed assets for a grand total of $60 million.
And this remains a cornerstone of the carrier’s strategy. During its most recently earnings call, Cogent reported that it has acquired six data centers-in Atlanta, Chicago, Dallas, Los Angeles, Miami, and Washington, D.C.-representing $60 million in assets for no cash, just the assumption of lease obligations. These data centers add approximately 38,000 sq. ft. of space, bringing Cogent’s total collocation facilities to 34, with 300,000 sq. ft. of space.
Meghan Fuller is senior editor at Lightwave.