$1.5 Billion: the Cost of Cutting London-Tokyo Latency By 60ms 158
Posted
by
Soulskill
from the aussies-still-jealous dept.
from the aussies-still-jealous dept.
MrSeb writes "Starting this summer, and thanks to the continuing withdrawal of Arctic sea ice, a convoy of ice breakers and specially-adapted polar ice-rated cable laying ships will begin to lay the first ever trans-Arctic Ocean submarine fiber optic cables. Two of these cables, called Artic Fibre and Arctic Link, will cross the Northwest Passage, which runs through the Canadian Arctic Archipelago. A third cable, the Russian Optical Trans-Arctic Submarine Cable System (ROTACS), will skirt the north coast of Scandinavia and Russia. All three cables will connect the United Kingdom to Japan, with a smattering of branches that will provide high-speed internet access to a handful of Arctic Circle communities. The completed cables are estimated to cost between $600 million and $1.5 billion each. As it stands, it takes roughly 230 milliseconds for a packet to go from London to Tokyo; the new cables will reduce this by 30% to 170ms. The latency drop will mainly benefit algorithmic stock market traders, but other areas like education, telemedicine, and POTS will also enjoy the speed-up. Perhaps more importantly, almost every cable that lands in Asia goes through a choke point in the Middle East or the Luzon Strait between the Philippine and South China seas. If a ship were to drag an anchor across the wrong patch of seabed, billions of people could wake up to find themselves either completely disconnected from the internet or surfing with dial-up-like speeds. The three new cables will all come down from the north of Japan, through the relatively-empty Bering Sea. In addition, the Arctic Ocean, where each of the cables will run for more than 5,000 miles, is one of the least-trafficked parts of the world. That said, the cables will still have to be laid hundreds of meters below the surface to avoid the tails of roving icebergs."
Millisecond trading (Score:5, Interesting)
Investing in shares for time spans of months is of general benefit to the economy, directing investment dollars to those best able to use them. Millisecond trading is of no benefit to anyone except millisecond traders, and any money they make is at the expense of people trying to do something productive. I propose that stock markets shift to a 'clock pulse' trading model: Trade bids for (e.g.) Apple are accumulated for (e.g.) 5 seconds and then all sales are resolved without regard for the order in which the bids arrived. This will cause no problems to real investors, but will rid us of the millisecond leaches.
However, I am not experienced with the share market, so constructive criticism is welcome.
Expanding bandwidth, ignoring latencies. (Score:4, Interesting)
Why not just leave the latencies alone? It's not like one gets cumulative latencies - the 230ms is constant in time.
I guess the Bering Sea will be the crosspoint b/w the Siberia-Alaska railline that the Russkies want to build, and this cable that runs from the Arctic to the South. Probably run it along the Kamchatka peninsula coastline, then across to Sakhalin, Japan, then on to Taiwan, Philippines and along the S China Sea to Singapore on one end, and on the other, from Philippines, run it along to Papua New Guinea and then Australia and New Zealand. From Singapore, they could run a line to India, and get enhanced bandwith in that country.
Re:Millisecond trading (Score:2, Interesting)
Cross-exchange arbitrage strategies are typically performed by servers located as close the the midpoint of the cabling between them as possible. Perhaps it's time to speculate on Alaskan rack space.
Neutrinos (Score:5, Interesting)
If you want to cut latency, communicate through the Earth with neutrinos [scientificamerican.com]. If we could just get the bit rate up some (from the current 0.1 bps), you could communicate to anywhere on Earth with a one way time of 40 milliseconds.
Parasitic trading (Score:5, Interesting)
Parasitic trading is tolerated not desired. It diverts profit from investors into traders, reducing the number of investors in a market by reducing the profits they can make and thus reducing the capital available to companies. Fewer companies go to the stock market to obtain capital as a result.
So yeh, you basically understood it correctly, however it has little to do with 'share' trading, rather derivatives.
The derivatives market far outweighs the shares market these days. These are pure bets stuff like: "derivative X pays out k(Z-W) for each cent asset Z rises above (K+U+Y)/3.... ladies and gentlemen place your bets I will spin the wheel". It's a bookies pure bet.
Unlike a proper bookies, Wallstreet pays out more money that it receives, so banks around the world place bets on these derivatives in order to make money. The banks and Wallstreet can afford to buy cables, it's pocket change since the underlying asset may only be a shopping mall worth $50 million, but the derivatives derived from that can be worth billions since it's a virtual asset with no real value beyond the fact it pays out a profit.
In a good year (when they take more money than they pay out) Wallstreet awards themselves big fat bonus's, in a bad year, the Fed extends them more credit against smaller assets. So overall, because they pay out more than they take in, their borrowing leverage increases. Today it's something like 30:1 or more.
The Fed says 'the loans were good we got all the money back', but that's a lie. They print money against 'Linden dollars', Wallstreet buys assets that pay out enough to cover the interest with that cash, Wallstreet borrows against those new assets, and pays back the money borrowed against the 'Linden dollars'. The Fed says 'hey look we got all our 'Linden loans' back', Wallstreet gets to own a real asset, everyone holding dollars has been silently robbed by inflation.
But hey - faster internet! /rant
Re:Neutrinos (Score:5, Interesting)
That's true as long as it doesn't take any time to detect and decode a signal sent with neutrinos. Neutrinos are not electrons and trying to extract a signal from them is challenging enough that, in the near term, the computational latency would likely dwarf the transit time.