More Speed, at $80,000 a Millisecond

A panel at last week’s PTC ’11 conference in Honolulu provided a glimpse at the startling economics on the shifting frontier of low-latency trading. The difference in pricing between the fastest route and runners-up can be dramatic, according to Will Hughs, president and CEO of Telstra Americas.

“On the Chicago to New York route in the US, three milliseconds can mean the difference between US$2,000 a month and US$250,000 a month,” Hughs said. “The financial traders will pay a premium.”

That premium illustrates the value proposition for the network operators who can provide those extra milliseconds and microseconds. That’s why we’ve seen new fiber builds like Spread Networks’ recent trenching of a route connecting  key trading hubs in Carteret and Secaucus, which could also provide some customers in an Equinix data center in Secaucus with faster routes to exchanges in Chicago. Meanwhile, Hibernia Atlantic has announced plans to build a trans-Atlantic submarine fiber optic cable that will provide faster connections between New York and London than any available today. These illustrate how capacity isn’t the only metric driving fiber economics.

The downside: Hughs’ anecdote also illustrates how pricing can fall off should another route emerge that can promise even faster feeds and speeds.

RELATED POSTS:

• Spread Connects Carteret, Secaucus Trading Hubs
• Speed of Light Constrains High-Speed Traders
• Hibernia Plans High-Speed Trans-Atlantic Cable
• Lexent Metro Acquired by Lightower Fiber
• Equinix Plugs Into Even Lower Latency

About Rich Miller

Rich Miller is the founder and editor-in-chief of Data Center Knowledge, and has been reporting on the data center sector since 2000. He has tracked the growing impact of high-density computing on the power and cooling of data centers, and the resulting push for improved energy efficiency in these facilities.