Ultra Low Latency Fiber Connections Through Madrid
New ultra low latency fiber routes through Madrid, Spain support high speed financial trading.
By: John Shepler
If you’ve harbored any hope that the speed of business would slow down to a leisurely pace, consider one of the hottest new technology offerings. It’s the ultra low latency WAN network connection. If you are involved in the financial services industry, you need to keep a keen eye on what your competitors are implementing in the way of higher bandwidth/lower latency connections. If you are involved in any other business field, expect that latency will be important to your business sometime soon.
Level 3 Connections Through Madrid
Level 3 Communications is a leader in the field of low latency transport services. Once of their niche services is fiber optic lines optimized to reduce latency between financial centers. They’ve just added London to Madrid and Frankfort to Madrid routes with circuit speeds up to 10 Gbps. These join the existing routes of Chicago to Washington DC, Chicago to New York, New York to London, and London to Frankfurt. The newly added European connections will improve latency on the Madrid to New York and Madrid to Chicago routes also.
What's The Fuss About Low Latency?
Why is low latency such a hot topic as opposed to, say, bandwidth? Actually both latency and bandwidth are important characteristics of long haul fiber optic networks. What’s given latency the spotlight in recent years is the rise of high speed financial trading. This is a process where computers generate market trades far faster than humans are capable of. With thousands of trades executing in milliseconds, even very small moves in a market can result in huge profits or losses. If your trading platform is running even a fraction of a second behind your competitor’s, you could be on the losing end of those trades.
The Minimum Latency
Latency can be minimized, but not eliminated. That’s because latency is nothing more than the length of time that elapses between when a signal is sent and when it is received. The fastest that an optical or electrical signal can propagate is set by the speed of light at 186,000 miles per second or 300,000 kilometers per second. If two locations are separated by 186 miles, you’ll never get below 1 millisecond of latency. A 1,860 mile route can do no better than 10 milliseconds. However, it can be much, much worse.
Additional Latency Sources
What sort of characteristics can slow down a speeding laser pulse? The mere fact that the data modulated light beam is traveling through a glass fiber rather than the vacuum of space will slow it down. According to Level 3, the propagation delay in optical networks is approximately 4.9 microseconds per kilometer. In free space the delay would be about 3.3 microseconds. That 4.9 microseconds can be degraded further by electronics that can’t keep up with the speed of the traffic. In other words, any bandwidth limitation will manifest itself as an additional delay as packets queue up in a buffer chip. Even with the fastest electronics, fiber routes must be as straight as possible. Any meandering through the countryside or to pick up other cities adds fiber length and, thus, latency.
Bandwidth For Global Trading
Global trading has been increasing in volume at the rate of 30 to 50% annually. It is expected that automated trading will soon account for fully two-thirds of equity trades. Level 3 Communications has carved out a position as a key provider of high bandwidth ultra low latency connections to serve the financial industry. Unprotected Ethernet Private Line services are available at 100 Mbps. Unprotected Wavelength services are available at 1 GigE, 2.5 Gbps, 10 Gbps, 10 GigE and 40 Gbps. They can also provide customized global latency solutions for specific physical routing and diversity.
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