High-Speed Route From Chicago to New York to Virginia Ramping Up
January 4, 2012
The first phase of an ambitious dark fiber network being built by Allied Fiber between Chicago, New York and Ashburn, Va. is near completion and the New York City-based carrier already signed some high-frequency traders and banks as customers, CEO Hunter Newby says.
“The network will connect New York and Chicago and all points in between,” Newby asserts. “We have 1,200 miles of duct completed and have only 100 miles left.''
Chicago is the nation's centerpoint for trading in commodity futures and options. New York is the center of trading in equities and equity options. Nasdaq OMX Group operates a backup facility for its stock markets in Ashburn, Va.
Allied’s approach centers on transmission speed and ultra-low latency, but it differs markedly from that of Spread Networks and other long-haul carriers.
Allied combines long-haul fibers with short-haul fibers – both of which its leases to customers. Intermediate access points connect cell towers, data centers, telecommunications carrier hotels and Allied’s own co-location huts.
Allied isn’t targeting high-performance traders, exclusively or even primarily, as customers.
“We can’t run ahead in developing an infrastructure solely for the trading market,” Newby says. “We consider them tenants, but we have numerous other tenants as well.”
Consequently, Allied isn’t putting as much emphasis on the speed game as Spread, which offers a 13.33-millisecond roundtrip between Chicago and New York, or some of the new private microwave networks that appear to be emerging.
“I have friends who have developed a 12 millisecond Chicago-New York network and are now working on a 10 millisecond network,” Newby asserts.
Allied does not give out its projected network speeds.
What does appeal to the high-frequency crowd, however, is the ability to tap into the network via short haul connections.
“This means they can intercept market data that comes out of Chicago and make a trading decision on that data before it reaches New York,” Newby says.
In technical terms, this is known as relativistic, statistical arbitrage. The speed that matters here is the ability to act on a price differential involving two correlated securities, from stocks to options to futures.
Long-haul systems can’t provide this capability, says Newby. “Legacy long-haul route designs lack splice points every 3,000 feet – no short haul cable -- so there is much less flexibility and this type of access isn’t possible.”
As for banks, short-haul cable provides access to dark fiber for data centers located along the long haul route that house financials data, Newby notes. “This gives the banks the ability to securely control the light packets from end to end.”
Ultimately, Allied intends to build a nationwide network capable of providing interconnectivity as far west as Seattle, as far south as Miami and as far north as Vancouver with numerous interconnections to multiple long-haul routes along the way.
It’s offering the networks as an alternative to private networks. “We are a far cheaper alternate than building s $100 million private network.”
