What’s driving the demand for low latency right now is high speed financial trading. Increased use of automated trading programs has created a competition for getting trades placed first. First may mean milliseconds or even microseconds ahead of other traders. Certainly this is beyond the capability of the fastest human traders manually entering data. But it’s also so fast that path between traders and exchanges influences performance. The time delay in that path is called latency.
What’s needed for low latency connections is minimizing the distance between source and destination and minimizing the processing time of the electronics in the network. When microseconds make a difference, the speed of light comes into play. The fastest a signal can go is about 186 miles per millisecond. That’s the speed of light in a vacuum. In a physical wire or fiber optic strand, that speed is even less.
In the United States, low latency network services have taken two forms. One is a fiber optic cable running in as straight a line as possible between trading centers, say Chicago and New York. The amount of equipment on that line is minimized and engineered to pass signals as fast as possible.
Another approach is colocation. Companies move into a colocation facility, such as the ones offered by Telx, to be as close to the electronic trading floors as possible. It’s possible to save tens of milliseconds by just being physically next door.
Level 3 Communications has now established low latency connections that span the Atlantic from Europe to North America. They’ve also established direct connectivity with BATS Europe, a European Multilateral Trading Facility.
Financial services are a leading application driving the construction of low latency networks worldwide. There are other applications that are latency sensitive as well. It’s well known that VoIP telephony works best if latency is minimized. Long delays in voice packets cause “clipping” of conversations and may even result in dropped calls. Two-way video conferencing is also affected by high latencies. In fact, any interactive application requires some limitations on latency to function properly. As companies commit more of their business processes to cloud computing, latency issues that were once non-existant will become painfully apparent.
Has your company or organization developed a need for low latency communications linking locations in North or South America, Europe, Asia, Australia or Africa? Find out what services are available to meet your requirements for international high bandwidth low latency network connections. With multiple providers, prices are competitive.