STOCK MARKET WATCH -- Wednesday, 21 March 2012

[Demeter]

39. $1.5 billion: The cost of cutting London-Toyko latency by 60ms

http://www.extremetech.com/extreme/122989-1-5-billion-the-cost-of-cutting-london-toyko-latency-by-60ms

Starting this summer, 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.

All three cables are being laid for the same reasons: Redundancy and speed. 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. This speed-up will be gained by virtue of a much shorter run: Currently, packets from the UK to Japan either have to traverse Europe, the Middle East, and the Indian Ocean, or the Atlantic, US, and Pacific, both routes racking up around 15,000 miles in the process. It’s only 10,000 miles (16,000km) across the Arctic Ocean, and you don’t have to mess around with any land crossings, either.

The massive drop in latency is expected to supercharge algorithmic stock market trading, where a difference of a few milliseconds can gain (or lose) millions of dollars. It is for this reason that a new cable is currently being laid between the UK and US — it will cost $300 million and shave “just” six milliseconds off the fastest link currently available. The lower latency will also be a boon to other technologies that hinge heavily on the internet, such as telemedicine (and teleconferencing) and education. Telephone calls and live news coverage would also enjoy the significantly lower latency. Each of the fiber optic cables will have a capacity in the terabits-per-second range, which will probably come in handy too.

Beyond the stock markets, though, the main advantage of the three new cables is added redundancy. Currently, 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 — and 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. Each cable will be laid by a pair of ships: an ice breaker that leads the way, and a cable ship. Until now it has been impossible to lay cables in the Arctic Ocean, but the retreat of the Arctic sea ice means that the Northwest Passage is now generally ice-free from August to October; a big enough window that cable can be laid fairly safely. Existing cable ships (and there aren’t many of them) are all outfitted for balmier climes, so all three cables will require the use of a polar ice-rated ship that has been retrofitted to carry cable-laying gear.

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