Cogent Communications : MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cogent Communications : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


You should read the following discussion and analysis together with our
condensed consolidated financial statements and related notes included in this
report. The discussion in this report contains forward-looking statements that
involve risks and uncertainties, such as statements of our plans, objectives,
expectations and intentions. The cautionary statements made in this report
should be read as applying to all related forward-looking statements wherever
they appear in this report. Our actual results could differ materially from
those discussed here. Factors that could cause or contribute to these
differences include, but are not limited to:

The impact of the COVID-19 pandemic and the related government policies
worldwide; future economic instability in the global economy or a contraction of
the capital markets, which could affect spending on Internet services and our
ability to engage in financing activities; the impact of changing foreign
exchange rates (in particular the Euro to US dollar and Canadian dollar to US
dollar exchange rates) on the translation of our non-US dollar denominated
revenues, expenses, assets and liabilities into US dollars; legal and
operational difficulties in new markets; the imposition of a requirement that we
contribute to the US Universal Service Fund on the basis of our Internet
revenue; changes in government policy and/or regulation, including rules
regarding data protection, cyber security and net neutrality; cyber-attacks or
security breaches of our network; increasing competition leading to lower prices
for our services; our ability to attract new customers and to increase and
maintain the volume of traffic on our network; the ability to maintain our
Internet interconnection arrangements on favorable terms; our ability to renew
certain leases of optical fiber that comprise our network; our reliance on an
equipment vendor, Cisco Systems Inc., and the potential for hardware or software
problems associated with such equipment; the dependence of our network on the
quality and dependability of third-party fiber providers; our ability to retain
certain customers that comprise a significant portion of our revenue base; our
ability to make payments on our indebtedness as they become due; the management
of network failures and/or disruptions; and outcomes in litigation as well as
other risks discussed from time to time in our filings with the Securities and
Exchange Commission
, including, without limitation, our annual report on Form
10-K for the year ended December 31, 2020.



General Overview


We are a facilities-based provider of low-cost, high-speed Internet access,
private network services, and data center colocation space. Our network is
specifically designed and optimized to transmit packet switched data. We deliver
our services primarily to small and medium-sized businesses, communications
service providers and other bandwidth-intensive organizations in 48 countries
across North America, Europe, Asia, South America, Australia and Africa. We are
a Delaware corporation, and we are headquartered in Washington, DC.

We offer on-net Internet access services exclusively through our own facilities,
which run from our network to our customers’ premises. We offer our on-net
services to customers located in buildings that are physically connected to our
network. As a result, we are not dependent on local telephone companies or cable
TV companies to serve our customers for our on-net Internet access and private
network service. Our on-net service consists of high-speed Internet access and
private network services offered at speeds ranging from 100 megabits per second
(“Mbps”) to 100 gigabits per second (“Gbps”).

Our on-net revenues represented 75.1% of our revenues for the three months ended
June 30, 2021, 73.6% of our revenues for the three months ended June 30, 2020,
75.0% of our revenues for the six months ended June 30, 2021 and 73.5% of our
revenues for the six months ended June 30, 2020. We provide our on-net Internet
access and private network services to our corporate and net-centric customers.
Our corporate customers are located in multi-tenant office buildings and
typically include law firms, financial services firms, advertising and marketing
firms, as well as health care providers, educational institutions and other
professional services businesses. Our net-centric customers include
bandwidth-intensive users that leverage our network to either deliver content to
end users or to provide access to residential or commercial internet users.
Content delivery customers include over the top (“OTT”) media service providers,
content delivery networks, web hosting companies, and commercial content and
application software providers. Our net-centric customers include 7,530 access
networks comprised of other Internet service providers (“ISPs”), telephone
companies, mobile phone operators and cable television companies that
collectively provide internet access to a…



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