Cogent Communications Group Inc., an optical ISP, this week expects to win court approval for its proposed acquisition of bankrupt PSINet Inc.
The Washington-based ISP plans to use the assets gained in the deal to expand its reach throughout its 21-city coverage area and offer new business-focused hosting services, according to officials. The bankruptcy court is expected to issue its approval on Wednesday, according to sources close to the matter.
Last month, Cogent—which runs a network that has an optical-fiber backbone, multiple metropolitan fiber rings and optically interfaced high-speed routers—made a $7 million bid for PSINets assets, which include three hosting centers; an infrastructure of switches, routers and fiber; and the providers customer base.
Cogent focuses primarily on small and midsize enterprises in large office buildings. Recently, the company discovered a niche among inner-city universities, including Tufts University in Boston; Stanford University in Stanford, Calif.; the University of Pennsylvania in Philadelphia; and George Washington University in Washington.
"Because we were tending to build networks in central business districts, there are many urban universities that could take advantage of our capacity," said Dave Schaeffer, CEO of Cogent. "They become an easy adjunct to our core network. But we cannot justify the economics of serving rural universities or enterprises."
Because the network is designed expressly for IP data, it can provide up to 100 times the bandwidth of a T-1 link at two-thirds the cost, Schaeffer said. Some university customers have replaced legacy T-1 and T-3 lines, gaining as much as twice the bandwidth for one-third the cost, he said. With peer-to-peer networking increasingly popular among students, the relatively low-priced 100M-bps and 1,000M-bps Internet links are a logical fit, he said.
For several years, George Washington University has experienced 300 percent growth in Internet connectivity needs, according to Ron Bonig, executive director of technology operations at the university. In 1999, the school required 15M bps, and today it needs half a gigabit or more, Bonig said. The university purchased a 100M-bps link from Cogent for $1,000 per month and plans to increase the connection 10 times by the end of the year.
In addition to national backbone access, the deal would give Cogent strong peering agreements, which it has lacked to date.
"This will allow Cogent to get closer to customers," Schaeffer said. "We are picking up additional points of presence."