By Jason Anders
The Wall Street Journal
Copyright (c) 2000, Dow Jones & Company, Inc.

WASHINGTON -- Little-known Cogent Communications is out to shake up Internet access for businesses, aiming to provide a faster connection to the Web for less money. The start-up plans to offer Internet access at speeds 65 times faster than a T-1 line, the standard connection of choice for corporations today. What's more, Cogent says it will charge $1,000 a month, well below the $1,300 to $1,500 monthly fee a company might pay for T-1 access.

It is an ambitious goal, particularly considering that late last year Cogent had just three employees and little more than a business plan.

Cogent is now a 75-person operation and more important, it has some serious cash: Last week, it announced it raised $90 million, adding to the $26 million it raised in February. And thanks to a financing agreement negotiated with networking company Cisco Systems Inc., the company has been able to purchase $67 million of equipment without paying a penny down.

Cogent is the newest player in an increasingly crowded field of start-ups looking to provide businesses an alternative to the expensive and sometimes lethargic Internet connections offered by local phone companies.

The challenge for the newcomers, analysts say, is getting started in such a high-overhead business. Companies must establish a "point of presence" -- a networking hub that connects to the Internet backbone-and then run cable connecting that hub to an office. It is a slow and expensive process.

Indeed, Cogent says it has spent more than $30 million acquiring thousands of miles of fiber-optic cable for its network.

Cogent hopes to generate revenue quickly by focusing its efforts on large commercial buildings populated with many would-be corporate customers. The company has already leased equipment space in 50 buildings in four cities -- Chicago, New York, Philadelphia and Washington -- and is negotiating space in 50 more. All told, Cogent says, that will give it access to about 40,000 customers. By May of next year, the company hopes to be operating in 13 cities.

"This is a focused approach," says Chief Executive Dave Schaeffer. "We're not trying to be all things to all people. We are providing a solid high-speed Internet connection, and that's it."

And the connection will be fast: a blazing 100 megabits per second, much faster than a 1.5 megabit-per-second T-1 line. What's more, Cogent is installing enough hardware at each location to make sure as many as 50 customers each get a true 100 mbps connection, without having to worry about the office two floors up hogging the connection and slowing things down.

"They're going to have a lot of competition," says Lee Doyle, vice president of networking for International Data Corp., a Framingham, Mass., research firm.

Mr. Doyle says a number of firms are angling to provide similar services, even though it remains to be seen just how much demand there will be for the super-highspeed connections, especially since phone-company offerings such as DSL, which cost only a couple of hundred dollars a month, have yet to catch on in a big way.

"Demand for DSL in the business community has been slower than some have expected. We're still finding out how much people are hankering for 10 megabits, let alone 100 megabits," he says.

Still, he notes, $1,000 a month for that kind of access is "particularly impressive, if they can do it."