HFTs continue to seek the providers that can get them from point A to point Z the fastest – even in 2013.

Last year, the buzz grew louder around microwave — the rising star that provides a more direct line between points A and Z  traveling at the speed of light through air (at 186,000 miles per second) 50 percent faster than light through optical fiber. A recent article in the Wall Street Journal stated that microwave’s “faster speeds would still potentially provide trading advantages as automated strategies often take cues from prices on markets situated in other cities.”

Microwave can be a great way to innovate and stay ahead, but there are cost, operational and technical considerations.  Five key technical considerations include:

1.      Roof Access
Each exchange handles roof access differently. To ensure you get the connection you need, consider a provider that combines roof access when possible and nearby tower/building roof when necessary. When an off-roof solution is necessary, some providers secure dark fiber or builds fiber laterals to the exchange.

 2.      Effects of Weather
Long haul routes are typically from 6 GHz to 18 GHz. At 6 GHz, weather has no effect. For 11 and 18 GHz, a combination of engineering and electronic solutions can be developed to limit the effect of weather. Routes can also be engineered placing towers closer together and equipment can be engineered to provide enough power to meet distance requirements.

For metro locations, because of the much shorter distance required, Microwave or millimeter wave technologies can be used. Millimeter wave operates in the 70-80 GHz frequency. This frequency range has very specific weather limitations, so the distance between towers is typically only 1 – 2 miles and there is additional equipment engineering.

 3.      Packet Size Limitations and Feed Impact
Packet size limitations are more pronounced on long haul routes than metro routes. On long haul routes, a good provider will provide a technical review between both locations. On metro routes, packet size does not affect latency performance.

 4.      Encryption and Security
Security is embedded in the radio platform using FIPS-compliant protocols for both the signal and the payload. Additional encryption should not be considered as it has a negative impact on latency.

 5.      Technical Support
Users need to understand the technology-based, operational issues associated with microwave routes – from external issues like lightning strikes on towers to environmental impacts such as rain, snow or wind. The key is going with a provider that will utilize industry standard processes to address these technology inherent issues. Furthermore, a good provider will offer SLAs to ensure both parties are satisfied with the network performance.

 Right now, the hottest pathways for microwave are New York and Chicago, but as microwave’s demand increases so will the competition for data center roof space.  If you are looking to microwave, the biggest questions you’ll need to answer involve technical, operational and cost considerations.

Stay tuned for our continued discussion on microwave when we examine the operational and cost implications.