- September 20, 2013
- Aviat Networks, Back Office, Business, Ian Marshall, Investing, latency, Latency (engineering), Low latency, microwave, technology
Over the course of the last 18 months, a new application has grown by leaps and bounds for microwave networks: low latency. Low-latency microwave networks find most of their applicability in financial transactions, such as for executing trading instructions between major stock exchanges and trading houses in other cities.
Typically, low-latency microwave is used to “replace” traditional-fiber based networks linking financial centers. The business driver for microwave-instead-of-fiber in low latency is the time it takes to transmit trading instructions. With microwave, latency is reduced by a few milliseconds as compared to fiber. Nevertheless, those few milliseconds can translate into a trading edge over rival investors, which means big bucks. Low latency investors will pay a premium for this edge resulting in increased revenue for low-latency microwave network operators.
However, as with most financial functions, low latency is subject to a set of stringent regulations. The scenario is doubly difficult when low-latency microwave networks transmit across international boundaries. This compares to linking financial centers within a single country, which is relatively straightforward from a regulatory perspective because there is only one set of rules. The fact is when connecting financial centers in different nations and the operator’s network has to traverse other countries’ borders, the process becomes orders of magnitude more complex. Download the complete article for a fuller examination of some of these issues and why there should be widespread support for greater international harmonization of microwave regulation.