The significance of network latency is evident in AboveNet’s efforts to establish faster fiber optic connections, even within a metropolitan area like Chicago, set to launch by the middle of next year. This begs the question: will other cities follow suit?
Latency is the new frontier, surpassing even bandwidth in importance. It represents the critical factor when exceptional computing performance is non-negotiable. This need is especially acute in the financial sector, where companies engaged in stock and commodity trading demand minimal delays. It’s no surprise that AboveNet is focusing on Chicago, a major financial hub. Similarly, New York is experiencing a surge in demand for colocation services near financial exchanges. In our globally connected economy, low latency connections to Europe and Asia are also experiencing rapid growth.
Why is speed so crucial, and why can’t we simply solve this with more bandwidth? Latency and bandwidth are distinct concepts. Latency refers to the time it takes for data to travel between two points in the absence of congestion, while bandwidth represents the capacity of a network connection, determining how much data can be transmitted before bottlenecks occur.
For those with limited network capacity, latency and bandwidth might appear synonymous because a bandwidth-constrained system slows down transmission significantly more than latency alone. However, once bandwidth is sufficient to handle data flow, the network reaches its maximum speed. At this point, further increases in bandwidth won’t accelerate data transfer. The speed of light and electrical signal processing within the circuitry become the limiting factors.
The impact of latency becomes strikingly clear during televised interviews conducted over long distances. Signals are often relayed via satellites in geostationary orbit, introducing a noticeable delay. This delay, while sometimes amusing, highlights the challenges of real-time interaction over such distances.
Minimizing latency involves optimizing data transmission paths. While not much can be done about the fixed position of geostationary satellites, terrestrial networks offer more flexibility. Fiber optic cables are the preferred choice for high-bandwidth communication, but even these have limitations. Networks like the internet, designed for resilience and redundancy, often prioritize reliability over speed, resulting in less direct data routes.
In contrast, privately managed fiber optic networks, such as MPLS networks, generally provide better performance, although they are typically designed for standard business needs rather than minimal latency. For ultimate speed, specialized networks are necessary, featuring direct connections, minimal intermediary equipment, and close proximity to end-users.
While high-frequency trading has been a driving force behind the demand for low latency networks, other business operations, particularly those migrating to cloud-based solutions, will likely demand similar performance levels. Data mirroring and replication already benefit from faster connections, and cloud computing across geographically dispersed locations could have the same requirement.
Businesses should assess the latency sensitivity of their operations. For those requiring lightning-fast data transfer, newer low latency network services offered by AboveNet and its competitors are worth considering. Even microseconds or milliseconds of improvement can make a significant difference.
