RCN May Be A Bit Late With Its Exclusive Exchange/Data Center Fiber Network
And the undisputed winner of the market bad timing awards is RCN. Just as the world is finally getting concerned and quite vocal over a two-tiered market in which certain exclusive market participants reap the gains of extensive infrastructure investments which may or may not allow them a distinct "informational asymmetry" advantage, and hot on the heels of a vote by the SEC seeking a Flash trading ban, RCN has announced that it set to launch a "low-latency co-location and exchange-only network connecting the major bourses and data centers in the New York and New Jersey financial hubs."
But at least the network, which may just see some pushback sooner or later, has a cool sounding name, as disclosed in SecuritiesIndustry.com:
Roadm, or “Reconfigurable optical add-drop multiplexer,” enables providers remote routing, monitoring and provisioning of network bandwidth from a workstation, as needed. It makes, proponents say, for easier management to avoid bottlenecks, thus leading to faster transmission speeds than fiber optic networks with traditional controls can offer.
In the meantime, the hunt for ever increasing technical advantages continues:
Because it’s RCN’s own network, the routing “allows us to cut several milliseconds of latency off a centralized model, which typically would have one or two data centers go back to a carrier POP,” Romagnoli added. “What we’ve done is cut that centralized mindset out of the design and connected everything to bypass that middleman, drastically reducing latency. As you can see, we’re connecting all the major data centers [and] as many exchanges as we can.”
“We’ll be the first to offer and support this to the financial services industry,” Romagnoli said. “Bandwidth will be deployed via software changes which will take days rather than weeks and months. It will be no less than a two terabit network from day one.”
Who would benefit the most from this upgrade:
A network map Romagnoli provided at the conference showed the system connecting Bats, Nasdaq, NYSE Euronext; and co-location data centers offered by Equinix, Sungard, Switch and Data, Savvis, the Secure Financial Transaction Infrastructure (SFTI) and Telx.
SFTI is a fiber network developed after the Sept. 11, 2001 terrorist attacks by SIAC – now NYSE Technologies – the technology provider to the New York Stock Exchange, with a ringed architecture, diverse fiber pathways and built-in redundancies, business continuity features now ubiquitous but previously lacking in financial networks.
And just who is RCN?
RCN in April 2006 acquired Con Edison Communications, the former telecommunications arm of Con Edison, which provides fiber pathways for SFTI through Con Edison’s electrical conduits, which are underground fiber routes distinct from those used by other carriers, which often run stands through Verizon’s Empire City Subway pathways.
Basically the company already controls all the mission critical infrastructure pathways in New York, specifically all those in New York's southern tip, where such relevant companies as the NYSE and DTCC (not to mention Goldman Sachs and Deustche Bank) need constant fat pipe link up. And now it is adding one more layer to its domination of financial inter-institution infrastructure.
As to whether RCN is concerned that with the major market reevaluation that the SEC is engaing in it may have spent a lot of money for nothing:
When asked whether low latency was still relevant given regulatory proposals to ban flash trading, Romagnoli said: “It’s still important, because almost every technology is based upon a low latency foundation. No one is ever going to say give me a slower network.”
He is so right. Especially among clients who are willing to dish out tens of millions so their algos can have proprietary access and extract a few extra milliseconds from order flow.