UPDATE: Cogent extends service

Washington-based Internet service provider Cogent Communications announced on Monday its On-Net 500Kbps service, intended to compete with digital subscriber line (DSL) offerings in the Toronto area.

The offering is targeted at the approximately 40 per cent of office tenants that are currently using DSL. Aimed at small- and medium-sized businesses, the service costs $349 per month, with a guarantee of installation within 17 days, the company said.

Cogent is offering its all-optical, facilities-based network in the same buildings in which it provides its current 100Mbps for $1,000 per month, the company said.

As with its original offering announced last fall, Cogent guarantees the 500Kbps connect speed. Only this time, its market interest has shifted.

“The On-Net 500 offering allows us to expand to the smaller tenants within those buildings (and) by positioning the product at $349, it allows us to serve that portion of the market,” said Dave Schaeffer, Washington-based CEO at Cogent.

Currently, the company is providing its Internet services to 31 buildings in the Greater Toronto Area, including Ryerson University, the University of Toronto and commercial heavyweight Cadillac Fairview Corp. For its new service, Schaeffer added that Herzing College has signed on. Within the next three months, the company expects to add another 25 buildings.

When Cogent first arrived in Canada, it said it had identified 3,000 buildings or 125,000 companies that would benefit from the company’s Internet-only services.

Its selling point into the Canadian market has been to guarantee higher speeds on a fibre-based network that directly compete on price with DSL. As one analyst said, this may not be the most appropriate strategy for Cogent to follow as it continues to build its brand awareness. Rather, Cogent should focus on its potential business benefits to using its services instead of just the potential cost savings.

“[It] may have to take that path instead of competing head on in terms of speed and feeds,” said Warren Chaisatien, senior analyst at IDC in Toronto.

As Chaisatien explained, if for example a company is already paying $45 for five to 10 DSL lines with lower speeds, Cogent could then come into that organization and argue that its price is competitive and that its service offers more speed. As for Cogent’s fibre network, it really doesn’t interest the consumer at the end of the day how they connect to the Internet.

“When it comes to connectivity today if you are a small- (or) medium-sized business, frankly they really don’t care what the underlying technology it is that is being connected from the site to the Internet,” he said.

For more information, visit the company’s Web site at www.cogentco.com.