Cogent Communications: Hyperscalers' Dark Fiber Demand

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It sounds like you can't get enough. There isn't enough out there.

We can’t get enough, and it’s frustrating. It really is, nationally, a duopoly between Lumen and Zayo. We work with other providers and more regional folks, depending on if you're in the Northeast versus mid-Atlantic, LA, or San Francisco, and we try to spread it around. But nationally, there are only two providers. Some of these projects, like Verizon, don't even want to look at a dark fiber construction project, and we've gone to them. Some large traditional telcos don’t even want to play the game, so we’re kind of forced to go with specific providers.

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I'm trying to understand the Sprint wireline acquisition by Cogent. They built their network using a single pair of fiber, globally. They have different services on top of it, corporate internet access into skyscrapers and the IP transit business, of course. What you do is not relevant to that business, but now they're acquiring material physical infrastructure for the first time. As I'm sure you know, their vision is to link up every carrier-neutral data center in the country, 800-plus locations, with that physical infrastructure. They plan to sell point-to-point services through the wavelength market and dark fiber routes where they have access to inventory, which, based on how they assembled the network, will be almost all of it. Does that touch your assets in places that matter to you? Is it interesting to you from that perspective, or would a lot of modification be needed to take advantage of what they’re doing by you guys?

It would be advantageous to us, as is. We would want to understand Cogent’s plans about, let's call it, the owed infrastructure. We're familiar with Cogent and the current network, the lease network you could call it. It's interesting to us. It would be a third – a distant third – player at first. I'm curious about how Cogent plans to build it out, and when they plan to build it out. It's interesting because it opens up another diverse option for us.

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I understand they're spending $50 million to $100 million to connect the networks with existing Cogent assets. That is, to connect the Sprint wireline network to all these different data centers, to physically connect everything and amplify it in all the right ways, charge existing Cogent business on those assets, and prepare it to open for business, essentially, for the first time. Talking about how far in advance you think about the network planning, if medium-term means 2028 and 2030, how much could change between here and there? Let's say they open for business at this time next year, and there are routes you'd love to have, routes available for sale. Is that something you'd move on and move on quickly, or would you integrate it into your planning for 2028, 2029, or 2030?

Yes, to both. If new routes come online or new capacity becomes available next year, we will look at that right away. To give you other examples, I'm looking at additional routes between Dallas and Des Moines going up the country, which just came in a couple of weeks ago. I'm looking at additional routes that we need fairly quickly in San Francisco, just metro. So, we try to plan and be smart and do all the textbook things we’re supposed to do to plan for the growth of our network, but stuff pops up all the time. There is additional capacity needed. We would do lit waves because there's no time to build or acquire the dark fiber we need, but when trying to be smart, we prefer the dark fiber route. So stuff comes up all the time. To piggyback on that, my group is still hiring; we're seeing engineers and technical folks to help with the workload. We do not see the slowdown that maybe some others are seeing.

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