Cogent Communications (CCOI) 10-Q8 Nov 132013 Q3 Quarterly reportFinancial data

Company Profile

Document_and_Entity_Informatio

Document and Entity Information	9 Months Ended
Document and Entity Information	Sep. 30, 2013	Oct. 31, 2013
Document and Entity Information	'	'
Entity Registrant Name	'COGENT COMMUNICATIONS GROUP INC	'
Entity Central Index Key	'0001158324	'
Document Type	'10-Q	'
Document Period End Date	30-Sep-13	'
Amendment Flag	'false	'
Current Fiscal Year End Date	'--12-31	'
Entity Current Reporting Status	'Yes	'
Entity Filer Category	'Large Accelerated Filer	'
Entity Common Stock, Shares Outstanding	'	47,358,921
Document Fiscal Year Focus	'2013	'
Document Fiscal Period Focus	'Q3	'

CONDENSED_CONSOLIDATED_BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)	Sep. 30, 2013	Dec. 31, 2012
In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Current assets:	'	'
Cash and cash equivalents	$304,775	$247,285
Accounts receivable, net of allowance for doubtful accounts of $1,905 and $3,083, respectively	28,703	23,990
Prepaid expenses and other current assets	12,843	9,978
Total current assets	346,321	281,253
Property and equipment, net	331,763	311,175
Deposits and other assets - $445 and $442 restricted, respectively	14,169	14,103
Total assets	692,253	606,531
Current liabilities:	'	'
Accounts payable	12,176	14,734
Accrued liabilities	23,935	26,519
Convertible senior notes - current portion, net of discount of $4,750 (Note 3)	87,228	'
Current maturities, capital lease obligations	8,572	10,487
Total current liabilities	131,911	51,740
Senior secured notes, including premium of $5,710 and $0, respectively (Note 3)	245,710	175,000
Capital lease obligations, net of current maturities	148,822	127,461
Convertible senior notes, net of discount of $9,494 (Note 3)	'	82,484
Other long term liabilities	10,775	10,067
Total liabilities	537,218	446,752
Commitments and contingencies:	'	'
Stockholders' equity:	'	'
Common stock, $0.001 par value; 75,000,000 shares authorized; 47,343,921 and 47,116,644 shares issued and outstanding, respectively	47	47
Additional paid-in capital	505,787	497,349
Accumulated other comprehensive income - foreign currency translation	1,541	667
Accumulated deficit	-352,340	-338,284
Total stockholders' equity	155,035	159,779
Total liabilities and stockholders' equity	$692,253	$606,531

CONDENSED_CONSOLIDATED_BALANCE1

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Sep. 30, 2013	Dec. 31, 2012
In Thousands, except Share data, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
CONDENSED CONSOLIDATED BALANCE SHEETS	'	'
Accounts receivable, allowance for doubtful accounts (in dollars)	$1,905	$3,083
Deposits and other assets, restricted (in dollars)	445	442
Convertible senior notes, discount (in dollars)	4,750	9,494
Senior secured notes, premium (in dollars)	$5,710	$0
Common stock, par value (in dollars per share)	$0.00	$0.00
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	47,343,921	47,116,644
Common stock, shares outstanding	47,343,921	47,116,644

CONDENSED_CONSOLIDATED_STATEME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)	3 Months Ended		9 Months Ended
In Thousands, except Share data, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	'	'	'	'
Service revenue	$87,761	$79,656	$258,118	$234,360
Operating expenses:	'	'	'	'
Network operations (including $114 and $166 and $395 and $367 of equity-based compensation expense for three months and nine months ended September 30, 2013 and 2012 respectively, exclusive of depreciation and amortization shown separately below)	37,441	36,541	111,825	105,992
Selling, general, and administrative (including $1,947 and $2,364 and $6,317 and $5,425 of equity-based compensation expense for three months and nine months ended September 30, 2013 and 2012 respectively)	21,719	19,473	64,410	60,217
Depreciation and amortization	16,024	15,610	47,798	46,353
Total operating expenses	75,184	71,624	224,033	212,562
Operating income	12,577	8,032	34,085	21,798
Interest income and other, net	292	397	1,537	926
Interest expense	-10,568	-9,015	-30,653	-26,998
Income (loss) before income taxes	2,301	-586	4,969	-4,274
Income tax (provision) benefit	-179	492	-879	299
Net income (loss)	2,122	-94	4,090	-3,975
Comprehensive income (loss):	'	'	'	'
Net income (loss)	2,122	-94	4,090	-3,975
Foreign currency translation adjustment	2,341	1,501	874	56
Comprehensive income (loss)	$4,463	$1,407	$4,964	($3,919)
Basic and diluted net income (loss) per common share (in dollars per share)	$0.05	$0	$0.09	($0.09)
Dividends declared per common share (in dollars per share)	$0.14	$0.10	$0.39	$0.10
Weighted-average common shares - basic (in shares)	46,171,194	45,377,732	46,145,642	45,411,958
Weighted-average common shares - diluted (in shares)	46,823,167	45,377,732	46,905,154	45,411,958

CONDENSED_CONSOLIDATED_STATEME1

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	'	'	'	'
Network operations, equity-based compensation expense	$114	$166	$395	$367
Selling, general, and administrative, equity-based compensation expense	$1,947	$2,364	$6,317	$5,425

CONSOLIDATED_STATEMENTS_OF_CAS

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012
Cash flows from operating activities:	'	'
Net income (loss)	$4,090	($3,975)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:	'	'
Depreciation and amortization	47,798	46,353
Amortization of debt discount and premium	4,696	4,478
Equity-based compensation expense (net of amounts capitalized)	6,712	5,792
Gains - dispositions of assets and other, net	-24	-198
Changes in assets and liabilities:	'	'
Accounts receivable	-4,509	-2,963
Prepaid expenses and other current assets	-2,767	-73
Accounts payable, accrued liabilities and other long-term liabilities	-4,478	-2,233
Deferred income taxes	418	1,115
Deposits and other assets	627	-650
Net cash provided by operating activities	52,563	47,646
Cash flows from investing activities:	'	'
Purchases of property and equipment	-38,936	-34,051
Proceeds from dispositions of assets	42	120
Net cash used in investing activities	-38,894	-33,931
Cash flows from financing activities:	'	'
Dividends paid	-18,146	-4,537
Net proceeds from issuance of senior secured notes	69,882	'
Purchases of common stock	'	-1,265
Proceeds from exercises of stock options	974	330
Principal payments of capital lease obligations	-8,930	-14,433
Net cash provided by (used in) financing activities	43,780	-19,905
Effect of exchange rates changes on cash	41	47
Net increase (decrease) in cash and cash equivalents	57,490	-6,143
Cash and cash equivalents, beginning of period	247,285	238,207
Cash and cash equivalents, end of period	304,775	232,064
Supplemental disclosure of non-cash financing activities:	'	'
Capital lease obligations incurred	$27,649	$9,953

Description_of_the_business_an

Description of the business and recent developments:	9 Months Ended
	Sep. 30, 2013
Description of the business and recent developments:	'
Description of the business and recent developments:	'
	1. Description of the business and recent developments:

	Description of business

	Cogent Communications Group, Inc. (the “Company”) is a Delaware corporation and is headquartered in Washington, DC. The Company is a facilities-based provider of low-cost, high-speed Internet access and Internet Protocol (“IP”) communications services. The Company’s network is specifically designed and optimized to transmit data using IP. The Company delivers its services to small and medium-sized businesses, communications service providers and other bandwidth-intensive organizations in North America, Europe and Japan.

	The Company offers on-net Internet access services exclusively through its own facilities, which run from its network to its customers’ premises. The Company provides on-net Internet access services to net-centric and corporate customers. Because of its integrated network architecture, the Company is not dependent on local telephone companies to serve its on-net customers. The Company’s on-net service consists of high-speed Internet access and IP connectivity ranging from 100 Megabits per second to 10 Gigabits per second of bandwidth. The Company offers its on-net services to customers located in buildings that are physically connected to its network. The Company’s net-centric customers include bandwidth-intensive users such as universities, other Internet service providers, telephone companies, cable television companies, web hosting companies, content delivery networks and commercial content and application providers. These net-centric customers generally receive the Company’s services in colocation facilities and in the Company’s data centers. The Company operates data centers throughout North America and Europe that allow customers to collocate their equipment and access the Company’s network. The Company’s corporate customers are located in multi-tenant office buildings and typically include law firms, financial services firms, advertising and marketing firms and other professional services businesses.

	In addition to providing its on-net services, the Company provides Internet connectivity to customers that are not located in buildings directly connected to its network. The Company provides this off-net service primarily to corporate customers using other carriers’ facilities to provide the “last mile” portion of the link from its customers’ premises to the Company’s network. The Company also provides non-core services that resulted from acquisitions. The Company continues to support but does not actively sell these non-core services.

	Basis of presentation

	The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments that the Company considers necessary for the fair presentation of its results of operations and cash flows for the interim periods covered, and of the financial position of the Company at the date of the interim condensed consolidated balance sheet. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The operating results for interim periods are not necessarily indicative of the operating results for the entire year. While the Company believes that the disclosures are adequate to not make the information misleading, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in its 2012 annual report on Form 10-K.

	The accompanying unaudited consolidated financial statements include all wholly-owned subsidiaries. All inter-company accounts and activity have been eliminated.

	Use of estimates

	The preparation of consolidated financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates.

	Financial instruments

	At September 30, 2013 the carrying amount of cash and cash equivalents, accounts receivable, prepaid and other current assets, accounts payable and accrued expenses approximated fair value because of the short-term nature of these instruments. The Company measures its cash equivalents at amortized cost, which approximates fair value based upon quoted market prices (Level 1). Based upon recent trading prices (Level 2 — market approach) at September 30, 2013 the fair value of the Company’s $92.0 million convertible senior notes was $90.4 million. Based upon recent trading prices (Level 2 — market approach) at September 30, 2013 the fair value of the Company’s $240.0 million senior secured notes was $263.0 million.

	The Company was party to letters of credit totaling $0.4 million as of September 30, 2013. These letters of credit are secured by investments that are restricted and included in other assets.

	Basic and diluted earnings per common share

	Basic earnings per share (“EPS”) excludes dilution for common stock equivalents and is computed by dividing net income or (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is based on the weighted-average number of shares of common stock outstanding during each period, adjusted for the effect of common stock equivalents, if dilutive.

	Shares of restricted stock are included in the computation of basic EPS as they vest and are included in diluted EPS, to the extent they are dilutive, determined using the treasury stock method. As of September 30, 2013 and 2012, 1.2 million and 1.8 million unvested shares of restricted common stock, respectively, are not included in the computation of basic and diluted income (loss) per share, as the shares were not vested.

	Using the “if-converted” method, the shares issuable upon conversion of the Company’s 1.00% Convertible Senior Notes (the “Convertible Notes”) were anti-dilutive for the three and nine months ended September 30, 2013 and 2012. Accordingly, the impact has been excluded from the computation of diluted loss per share. The Convertible Notes are convertible into shares of the Company’s common stock at an initial conversion price of $49.18 per share, yielding 1.9 million shares at September 30, 2013 and 2012.

	The Company computes the dilutive effect of outstanding options using the treasury stock method. For the three and nine months ended September 30, 2012, options to purchase 0.2 million shares of common stock are not included in the computation of diluted loss per share as the effect would be anti-dilutive. For the three and nine months ended September 30, 2013, options to purchase 0.1 million shares of common stock are not included in the computation of diluted loss per share as the effect would be anti-dilutive. For the three and nine months ended September 30, 2013, and the three and nine months ended September 30, 2012, the Company’s employees exercised options for 15,839, 72,802, 15,002 and 33,504 common shares, respectively.

	The following details the determination of diluted weighted average shares for the three and nine months ended September 30, 2013:

		Three Months Ended	Nine Months Ended
		September 30, 2013	September 30, 2013
	Weighted average common shares - basic	46,171,194	46,145,642
	Dilutive effect of stock options	70,557	76,632
	Dilutive effect of restricted stock	581,416	682,880
	Weighted average common shares - diluted	46,823,167	46,905,154

Property_and_equipment

Property and equipment:	9 Months Ended
Property and equipment:	Sep. 30, 2013
Property and equipment:	'
Property and equipment:	'
	2. Property and equipment:

	Depreciation and amortization expense related to property and equipment and capital leases was $16.0 million, $47.8 million, $15.6 million and $46.2 million for the three and nine months ended September 30, 2013 and 2012, respectively. The Company capitalized salaries and related benefits of employees working directly on the construction and build-out of its network of $1.8 million, $5.6 million, $1.8 million and $5.2 million for the three and nine months ended September 30, 2013 and 2012, respectively.

Longterm_debt

Long-term debt:	9 Months Ended
	Sep. 30, 2013
Long-term debt:	'
Long-term debt:	'
	3. Long-term debt:

	Senior secured notes

	On January 26, 2011 and on August 19, 2013, the Company issued its 8.375% Senior Secured Notes (the “Senior Notes”) due February 15, 2018, for aggregate principal amounts of $175.0 million and $65.0 million, respectively, in private offerings for resale to qualified institutional buyers pursuant to SEC Rule 144A. The Senior Notes are secured and bear interest at 8.375% per annum. Interest is payable in cash semiannually in arrears on February 15 and August 15, of each year. On January 26, 2011, the Company received net proceeds of $170.5 million after deducting $4.5 million of issuance costs from issuing $175.0 million of Senior Notes. On August 19, 2013, the Company received net proceeds of approximately $69.9 million after deducting $1.0 million of issuance costs from issuing $65.0 million of Senior Notes. The Senior Notes sold in August 2013 were sold at 109.00% of par value. The $5.9 million premium is being amortized as a reduction to interest expense to the maturity date using the effective interest rate method. Issuance costs are included in deposits and other assets. The net proceeds from the Senior Notes are intended to be used for general corporate purposes, the buyback of the Company’s Convertible Notes if the holders exercise their put, and/or repurchases of its common stock or Convertible Notes or special or recurring dividends to the Company’s stockholders. In the three and nine months ended September 30, 2013 and September 30, 2012, the Company incurred approximately $4.3 million, $11.9 million, $3.8 million and $11.4 million, respectively, of interest expense related to its Senior Notes.

	Convertible senior notes

	In September 2007, the Company issued its Convertible Notes for an aggregate principal amount of $200.0 million in a private offering for resale to qualified institutional buyers pursuant to SEC Rule 144A. The Convertible Notes mature on September 15, 2027, are unsecured, and bear interest at 1.00% per annum. The Convertible Notes will rank equally with any future senior debt and senior to any future subordinated debt and will be effectively subordinated to all existing and future liabilities of the Company’s subsidiaries and to any secured debt the Company may issue, to the extent of the value of the collateral. Interest is payable in cash semiannually in arrears on September 15 and December 15, of each year. The Company received net proceeds from the issuance of the Convertible Notes of approximately $195.1 million, after deducting the original issue discount of 2.25% and issuance costs. The discount and other issuance costs are being amortized to interest expense using the effective interest method through June 15, 2014, which is the earliest put date. In 2008, the Company purchased an aggregate of $108.0 million of face value of the Convertible Notes for $48.6 million in cash in a series of transactions. As of September 30, 2013, the Convertible Notes are classified as a current liability since the earliest put date in June 2014 is within one year.

	The debt and equity components for the Convertible Notes were as follows (in thousands):

		September 30,			December 31,
		2013			2012

	Principal amount	$	91,978		$	91,978
	Unamortized discount	(4,750		)	(9,494		)
	Net carrying amount	87,228			82,484
	Additional paid-in capital	74,933			74,933


	At September 30, 2013, the unamortized discount had a remaining recognition period of nine months. The amount of interest expense recognized and effective interest rate were as follows (in thousands):

		Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
		September 30, 2013			September 30, 2012			September 30, 2013			September 30, 2012

	Contractual coupon interest	$	230		$	230		$	690		$	690
	Amortization of discount and costs on Notes	1,619			1,486			4,755			4,367
	Interest expense	$	1,849		$	1,716		$	5,445		$	5,057
	Effective interest rate	8.7		%	8.7		%	8.7		%	8.7		%

Commitments_and_contingencies

Commitments and contingencies:

9 Months Ended

Sep. 30, 2013

Commitments and contingencies:

4. Commitments and contingencies:

Current and potential litigation

In accordance with the accounting guidance for contingencies, the Company accrues its estimate of a contingent liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Where it is probable that a liability has been incurred and there is a range of expected loss for which no amount in the range is more likely than any other amount, the Company accrues at the low end of the range. The Company reviews its accruals at least quarterly and adjusts them to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular matter. The Company has taken certain positions related to its obligations for leased circuit and dark fiber costs which could result in a loss of up to $1.8 million in excess of the amount accrued at September 30, 2013.

Certain former sales employees of the Company filed a collective action against the Company in December 2011 in the United States District Court, Southern District of Texas, Houston Division alleging misclassification of the Company’s sales employees throughout the U.S. in violation of the Fair Labor Standards Act. The lawsuit seeks to recover pay for allegedly unpaid overtime and other damages, including attorney’s fees. In January 2013, a former sales employee filed in the Superior Court of Santa Clara County, California a lawsuit alleging misclassification of sales employees under California wage and hour laws. The lawsuit seeks certification as a class action and seeks to recover pay for allegedly unpaid overtime and other damages, including attorney’s fees. The Company denies both claims and believes that the claims for unpaid overtime in each case are without merit. The Company believes its classification of sales employees is in compliance with applicable law.

In the normal course of business the Company is involved in other legal activities and claims. Because such matters are subject to many uncertainties and the outcomes are not predictable with assurance, the liability related to these legal actions and claims cannot be determined with certainty. Management does not believe that such claims and actions will have a material impact on the Company’s financial condition or results of operations. Judgment is required in estimating the ultimate outcome of any dispute resolution process, as well as any other amounts that may be incurred to conclude the negotiations or settle any litigation. Actual results may differ from these estimates under different assumptions or conditions and such differences could be material.

Income taxes

In the normal course of business the Company takes positions on its tax returns that may be challenged by taxing authorities. The Company evaluates all uncertain tax positions to assess whether the position will more likely than not be sustained upon examination. If the Company determines that the tax position is more likely than not to be sustained, the Company records the amount of the benefit that is more likely than not to be realized when the tax position is settled. This liability, including accrued interest and penalties, is included in other long-term liabilities in the accompanying balance sheets and was $1.4 million as of September 30, 2013 and $1.7 million as of December 31, 2012. During the three and nine months ended September 30, 2013 and 2012 the Company recognized $8,000, $43,000, $39,000 and $192,000 in interest and penalties, respectively, related to its uncertain tax positions. The Company does not expect its liability for uncertain tax positions to decrease during the three months ended December 31, 2013. Actual changes in the liability for uncertain tax positions could be different than currently expected. If recognized, the total unrecognized tax benefits would lower the Company’s effective income tax rate.

At each balance sheet date, the Company assesses the likelihood that it will be able to realize its deferred tax assets. The Company considers all available positive and negative evidence in assessing the need for a valuation allowance. As of September 30, 2013 and December 31, 2012, the Company did not have a valuation allowance against its Canadian deferred tax assets, nor against the deferred tax assets of certain state and local jurisdictions. The Company continues to maintain a valuation allowance against its U.S. federal and certain state deferred tax assets as well as its European and other foreign deferred tax assets, the effect of which is to substantially reduce the Company’s effective tax rate as the tax expense or benefit recorded at the statutory tax rate is offset by a corresponding expense or benefit resulting from the change in the valuation allowance. The Company will analyze its position in subsequent reporting periods, considering all available positive and negative evidence, in determining the expected realization of its deferred tax assets. There is a reasonable possibility that the Company will no longer require a valuation allowance against its US federal and its remaining state jurisdiction deferred tax assets in future periods.

Common stock buyback program

The Company’s board of directors has approved $50.0 million for purchases of the Company’s common stock under a buyback program (the “Buyback Program”). There is approximately $45.8 million remaining for purchases under the Buyback Program. The Company purchased approximately 0.1 million shares for approximately $1.3 million during the nine months ended September 30, 2012. There were no purchases of common stock during 2013.

Dividends on common stock

Dividends are recorded in the Company’s accumulated deficit. Dividends on unvested restricted shares of common stock are paid as the awards vest. The Company’s initial dividend payment was made in the third quarter of 2012. On November 6, 2013, the Company’s board of directors approved the payment of a dividend of $0.15 per common share to holders of record on November 27, 2013. The estimated $7.0 million dividend payment is expected to be made on December 20, 2013. A summary of the Company’s quarterly dividends paid since the initial dividend payment is as follows (in thousands):

Dividend Period

Amount per Common

Record Date

Payment Date

Dividends Paid

Q3 2012

0.1

August 22, 2012

September 12, 2012

4,537

Q4 2012

0.11

November 21, 2012

December 12, 2102

5,012

Q1 2013

0.12

March 4, 2013

March 15, 2013

5,489

Q2 2013

0.13

May 31, 2013

June 18, 2013

6,145

Q3 2013

0.14

September 5, 2013

September 25, 2013

6,512

The Company’s board of directors has approved an additional return of capital program (the “Capital Program”) for the Company’s shareholders. The Company plans on returning an additional $10.0 million to its shareholders each quarter through either stock buybacks or a special dividend or a combination of stock buybacks and a special dividend. The aggregate payment under this program will total at least $10.0 million each quarter and this amount is in addition to the Company’s regular quarterly dividend payments, described above. The Company’s board of directors has approved the initial $10.0 million ($0.22 per share) quarterly dividend payment under the Capital Program to be paid to holders of record on November 27, 2013 and to be paid on December 20, 2013. The total dividend to be paid on December 20, 2013 will be $0.37 per share.

The payment of any future dividends and any other returns of capital will be at the discretion of the Company’s board of directors and may be reduced, eliminated or increased and will be dependent upon the Company’s financial position, results of operations, available cash, cash flow, capital requirements and other factors deemed relevant by the Company’s board of directors.

Related_party_transactions

Related party transactions:	9 Months Ended
Related party transactions:	Sep. 30, 2013
Related party transactions:	'
Related party transactions:	'
	5. Related party transactions:

	Office lease

	The Company’s headquarters is located in an office building owned by Niobium LLC. The two owners of Niobium LLC are the Company’s Chief Executive Officer, David Schaeffer, who has a 51% interest and his wife who has a 49% interest. The Company paid $0.2 million and $0.5 million in the three and nine months ended September 30, 2013 and paid $0.1 million and $0.4 million in the three and nine months ended September 30, 2012, for rent and related costs (including taxes and utilities) to this company, respectively. The lease ends on August 31, 2015.

Segment_information

Segment information:	9 Months Ended
	Sep. 30, 2013
Segment information:	'
Segment information:	'
	6. Segment information:

	The Company operates as one operating segment. The Company’s service revenue and long lived assets by geographic region are as follows (in thousands):

		Three Months		Three Months		Nine Months		Nine Months
		Ended		Ended		Ended		Ended
		September 30, 2013		September 30, 2012		September 30, 2013		September 30, 2012
	Revenues
	North America	$	69,327	$	63,608	$	203,923	$	187,745
	Europe	18,434		16,048		54,195		46,615
	Total	$	87,761	$	79,656	$	258,118	$	234,360

		September 30,		December 31,
		2013		2012
	Long lived assets, net
	North America	$	243,662	$	225,060
	Europe	88,141		86,162
	Total	$	331,803	$	311,222

	The majority of North American revenue consists of services delivered within the United States.

Description_of_the_business_an1

Description of the business and recent developments: (Policies)	9 Months Ended
	Sep. 30, 2013
Description of the business and recent developments:	'
Basis of presentation	'
	Basis of presentation

	The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments that the Company considers necessary for the fair presentation of its results of operations and cash flows for the interim periods covered, and of the financial position of the Company at the date of the interim condensed consolidated balance sheet. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The operating results for interim periods are not necessarily indicative of the operating results for the entire year. While the Company believes that the disclosures are adequate to not make the information misleading, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in its 2012 annual report on Form 10-K.

	The accompanying unaudited consolidated financial statements include all wholly-owned subsidiaries. All inter-company accounts and activity have been eliminated.
Use of estimates	'
	Use of estimates

	The preparation of consolidated financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates.
Financial instruments	'
	Financial instruments

	At September 30, 2013 the carrying amount of cash and cash equivalents, accounts receivable, prepaid and other current assets, accounts payable and accrued expenses approximated fair value because of the short-term nature of these instruments. The Company measures its cash equivalents at amortized cost, which approximates fair value based upon quoted market prices (Level 1). Based upon recent trading prices (Level 2 — market approach) at September 30, 2013 the fair value of the Company’s $92.0 million convertible senior notes was $90.4 million. Based upon recent trading prices (Level 2 — market approach) at September 30, 2013 the fair value of the Company’s $240.0 million senior secured notes was $263.0 million.

	The Company was party to letters of credit totaling $0.4 million as of September 30, 2013. These letters of credit are secured by investments that are restricted and included in other assets.
Basic and diluted earnings per common share	'
	Basic and diluted earnings per common share

	Basic earnings per share (“EPS”) excludes dilution for common stock equivalents and is computed by dividing net income or (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is based on the weighted-average number of shares of common stock outstanding during each period, adjusted for the effect of common stock equivalents, if dilutive.

	Shares of restricted stock are included in the computation of basic EPS as they vest and are included in diluted EPS, to the extent they are dilutive, determined using the treasury stock method. As of September 30, 2013 and 2012, 1.2 million and 1.8 million unvested shares of restricted common stock, respectively, are not included in the computation of basic and diluted income (loss) per share, as the shares were not vested.

	Using the “if-converted” method, the shares issuable upon conversion of the Company’s 1.00% Convertible Senior Notes (the “Convertible Notes”) were anti-dilutive for the three and nine months ended September 30, 2013 and 2012. Accordingly, the impact has been excluded from the computation of diluted loss per share. The Convertible Notes are convertible into shares of the Company’s common stock at an initial conversion price of $49.18 per share, yielding 1.9 million shares at September 30, 2013 and 2012.

	The Company computes the dilutive effect of outstanding options using the treasury stock method. For the three and nine months ended September 30, 2012, options to purchase 0.2 million shares of common stock are not included in the computation of diluted loss per share as the effect would be anti-dilutive. For the three and nine months ended September 30, 2013, options to purchase 0.1 million shares of common stock are not included in the computation of diluted loss per share as the effect would be anti-dilutive. For the three and nine months ended September 30, 2013, and the three and nine months ended September 30, 2012, the Company’s employees exercised options for 15,839, 72,802, 15,002 and 33,504 common shares, respectively.

	The following details the determination of diluted weighted average shares for the three and nine months ended September 30, 2013:

		Three Months Ended	Nine Months Ended
		September 30, 2013	September 30, 2013
	Weighted average common shares - basic	46,171,194	46,145,642
	Dilutive effect of stock options	70,557	76,632
	Dilutive effect of restricted stock	581,416	682,880
	Weighted average common shares - diluted	46,823,167	46,905,154

Description_of_the_business_an2

Description of the business and recent developments: (Tables)	9 Months Ended
	Sep. 30, 2013
Description of the business and recent developments:	'
Schedule of diluted weighted average shares	'
		Three Months Ended	Nine Months Ended
		September 30, 2013	September 30, 2013
	Weighted average common shares - basic	46,171,194	46,145,642
	Dilutive effect of stock options	70,557	76,632
	Dilutive effect of restricted stock	581,416	682,880
	Weighted average common shares - diluted	46,823,167	46,905,154

Longterm_debt_Tables

Long-term debt: (Tables)	9 Months Ended
Long-term debt: (Tables)	Sep. 30, 2013
Long-term debt:	'
Schedule of debt and equity components for the Convertible Notes	'
	The debt and equity components for the Convertible Notes were as follows (in thousands):

		September 30,			December 31,
		2013			2012

	Principal amount	$	91,978		$	91,978
	Unamortized discount	(4,750		)	(9,494		)
	Net carrying amount	87,228			82,484
	Additional paid-in capital	74,933			74,933


Schedule of interest expense recognized and the effective interest rate for the Convertible Notes	'
	The amount of interest expense recognized and effective interest rate were as follows (in thousands):

		Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
		September 30, 2013			September 30, 2012			September 30, 2013			September 30, 2012

	Contractual coupon interest	$	230		$	230		$	690		$	690
	Amortization of discount and costs on Notes	1,619			1,486			4,755			4,367
	Interest expense	$	1,849		$	1,716		$	5,445		$	5,057
	Effective interest rate	8.7		%	8.7		%	8.7		%	8.7		%

Commitments_and_contingencies_

Commitments and contingencies: (Tables)

9 Months Ended

Sep. 30, 2013

Commitments and contingencies:

Summary of the Company's quarterly dividends since the initial dividend payment

A summary of the Company’s quarterly dividends paid since the initial dividend payment is as follows (in thousands):

Dividend Period

Amount per Common

Record Date

Payment Date

Dividends Paid

Q3 2012

0.1

August 22, 2012

September 12, 2012

4,537

Q4 2012

0.11

November 21, 2012

December 12, 2102

5,012

Q1 2013

0.12

March 4, 2013

March 15, 2013

5,489

Q2 2013

0.13

May 31, 2013

June 18, 2013

6,145

Q3 2013

0.14

September 5, 2013

September 25, 2013

6,512

Segment_information_Tables

Segment information: (Tables)	9 Months Ended
	Sep. 30, 2013
Segment information:	'
Schedule of revenue and long lived assets by geographic region	'
	The Company’s service revenue and long lived assets by geographic region are as follows (in thousands):

		Three Months		Three Months		Nine Months		Nine Months
		Ended		Ended		Ended		Ended
		September 30, 2013		September 30, 2012		September 30, 2013		September 30, 2012
	Revenues
	North America	$	69,327	$	63,608	$	203,923	$	187,745
	Europe	18,434		16,048		54,195		46,615
	Total	$	87,761	$	79,656	$	258,118	$	234,360

		September 30,		December 31,
		2013		2012
	Long lived assets, net
	North America	$	243,662	$	225,060
	Europe	88,141		86,162
	Total	$	331,803	$	311,222

Description_of_the_business_an3

Description of the business and recent developments: (Details) (USD $)	9 Months Ended
In Millions, unless otherwise specified	Sep. 30, 2013
	MB
Financial instruments	'
Letters of credit, outstanding amount	0.4
Minimum	'
On-net service - high-speed Internet access and IP connectivity	'
Speed per second of bandwidth (in megabits)	100
Maximum	'
On-net service - high-speed Internet access and IP connectivity	'
Speed per second of bandwidth (in megabits)	10,240
Convertible senior notes	'
Financial instruments	'
Aggregate principal amount of debt issued	92
Convertible senior notes \| Level 2	'
Financial instruments	'
Debt instrument, amount	90.4
Senior notes	'
Financial instruments	'
Aggregate principal amount of debt issued	240
Senior notes \| Level 2	'
Financial instruments	'
Debt instrument, amount	263

Description_of_the_business_an4

Description of the business and recent developments: (Details 2) (USD $)

3 Months Ended

9 Months Ended

3 Months Ended

9 Months Ended

3 Months Ended

9 Months Ended

Sep. 30, 2013

Sep. 30, 2012

Sep. 30, 2013

Sep. 30, 2012

Sep. 30, 2013

Sep. 30, 2012

Sep. 30, 2007

Sep. 30, 2013

Sep. 30, 2012

Sep. 30, 2013

Sep. 30, 2012

Sep. 30, 2013

Sep. 30, 2012

Convertible senior notes

Options

Restricted stock

Basic and diluted net (loss) income per common share

Unvested restricted common stock not included in computation of basic (loss) income per share as shares were not vested (in shares)

1,200,000

1,800,000

Interest rate (as a percent)

1.00%

Initial conversion price of notes (in dollars per share)

$49.18

Number of shares yield after conversion

1,900,000

Shares not included in the computation of diluted loss per share as the effect would be anti-dilutive

100,000

200,000

100,000

200,000

Options exercised during the period (in shares)

15,839

15,002

72,802

33,504

Diluted weighted average shares

Weighted average common shares - basic

46,171,194

45,377,732

46,145,642

45,411,958

Dilutive effect of awards (in shares)

70,557

76,632

581,416

682,880

Weighted average common shares - diluted

46,823,167

45,377,732

46,905,154

45,411,958

Property_and_equipment_Details

Property and equipment: (Details) (USD $)	3 Months Ended		9 Months Ended
Property and equipment: (Details) (USD $)	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Property and equipment	'	'	'	'
Depreciation and amortization expense	$16,024,000	$15,610,000	$47,798,000	$46,353,000
Capitalized salaries and related benefits of employees	1,800,000	1,800,000	5,600,000	5,200,000
Property, equipment and capital leases	'	'	'	'
Property and equipment	'	'	'	'
Depreciation and amortization expense	$16,000,000	$15,600,000	$47,800,000	$46,200,000

Longterm_debt_Details

Long-term debt: (Details) (USD $)

Sep. 30, 2013

Dec. 31, 2012

Aug. 19, 2013

Jan. 26, 2011

Sep. 30, 2013

Sep. 30, 2012

Sep. 30, 2013

Sep. 30, 2012

Sep. 30, 2007

Sep. 30, 2013

Sep. 30, 2012

Sep. 30, 2013

Sep. 30, 2012

Dec. 31, 2008

Dec. 31, 2012

Senior Notes

Convertible senior notes

Long-term debt

Interest rate (as a percent)

8.38%

1.00%

Aggregate principal amount of debt issued

$65,000,000

$175,000,000

$200,000,000

Proceeds from issuance of long-term debt, net of issuance costs

69,900,000

170,500,000

195,100,000

Premium price of debt instrument (as a percent)

109.00%

Debt issuance costs

1,000,000

4,500,000

Senior secured notes, premium (in dollars)

5,710,000

5,900,000

Interest expense related to its senior notes

4,300,000

3,800,000

11,900,000

11,400,000

Percentage of original issuance discount

2.25%

Aggregate face value of debt purchased

108,000,000

Purchase of convertible notes in cash

48,600,000

Debt and equity components for the Convertible Notes

Principal amount

91,978,000

Unamortized discount

-4,750,000

-9,494,000

-4,750,000

-9,494,000

Net carrying amount

87,228,000

82,484,000

Additional paid-in capital

74,933,000

Amount of interest expense recognized and effective interest rate

Remaining recognition period of unamortized discount

'9 months

Contractual coupon interest

230,000

690,000

Amortization of discount and costs on Notes

1,619,000

1,486,000

4,755,000

4,367,000

Interest expense

$1,849,000

$1,716,000

$5,445,000

$5,057,000

Effective interest rate (as a percent)

8.70%

Commitments_and_contingencies_1

Commitments and contingencies: (Details) (Maximum, USD $)	Sep. 30, 2013
In Millions, unless otherwise specified	Sep. 30, 2013
Maximum	'
Commitments and contingencies	'
Estimate of possible loss in excess of the amount accrued	$1.80

Commitments_and_contingencies_2

Commitments and contingencies: (Details 2) (USD $)

0 Months Ended

3 Months Ended

9 Months Ended

0 Months Ended

Share data in Millions, except Per Share data, unless otherwise specified

Sep. 25, 2013

Jun. 18, 2013

Mar. 15, 2013

Dec. 12, 2012

Sep. 12, 2012

Sep. 30, 2013

Jun. 30, 2013

Mar. 31, 2013

Dec. 31, 2012

Sep. 30, 2012

Sep. 30, 2013

Sep. 30, 2012

Nov. 06, 2013

Subsequent Event

Minimum

Interest and penalties related to uncertain tax positions

Liability for uncertain tax positions, including accrued interest and penalties

$1,400,000

$1,700,000

$1,400,000

Interest and penalties related to uncertain tax positions

8,000

39,000

43,000

192,000

Common stock buyback program

Authorized amount of common stock repurchases under the Buyback Program

50,000,000

Remaining authorized amount of common stock repurchases under the Buyback Program

45,800,000

Repurchase under the common stock buyback program (in shares)

0.1

Repurchase under the common stock buyback program

1,300,000

Dividends on common stock

Amount per Common Share (in dollars per share)

$0.14

$0.13

$0.12

$0.11

$0.10

$0.39

$0.10

$0.15

Expected value of dividend to be paid on December 20, 2013

7,000,000

Dividends paid

6,512,000

6,145,000

5,489,000

5,012,000

4,537,000

Quarterly payment under return of capital program

10,000,000

Dividend payable under Capital Program

$10,000,000

Dividend per common share under Capital Program (in dollars per share)

$0.22

Gross amount per common share (in dollars per share)

$0.37

Related_party_transactions_Det

Related party transactions: (Details) (USD $)	3 Months Ended		9 Months Ended
In Millions, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Renewal of lease	'	'	'	'
Office lease	'	'	'	'
Payment for rent and related costs (in dollars)	$0.20	$0.10	$0.50	$0.40
Headquarters building	'	'	'	'
Office lease	'	'	'	'
Number of owners of the LLC	'	'	2	'
Chief Executive Officer, David Schaeffer	'	'	'	'
Office lease	'	'	'	'
Ownership interest of related parties held in the partnership (as a percent)	'	'	51.00%	'
Chief Executive Officer's wife	'	'	'	'
Office lease	'	'	'	'
Ownership interest of related parties held in the partnership (as a percent)	'	'	49.00%	'

Segment_information_Details

Segment information: (Details) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
	Sep. 30, 2013	Sep. 30, 2012	segment	Sep. 30, 2012	Dec. 31, 2012
Segment information:	'	'	'	'	'
Number of operating segments	'	'	1	'	'
Geographic information:	'	'	'	'	'
Revenues	$87,761	$79,656	$258,118	$234,360	'
Long lived assets, net	331,803	'	331,803	'	311,222
North America	'	'	'	'	'
Geographic information:	'	'	'	'	'
Revenues	69,327	63,608	203,923	187,745	'
Long lived assets, net	243,662	'	243,662	'	225,060
Europe	'	'	'	'	'
Geographic information:	'	'	'	'	'
Revenues	18,434	16,048	54,195	46,615	'
Long lived assets, net	$88,141	'	$88,141	'	$86,162