Low Latency Underpins Carrier's Ability to Compete & Succeed in Vertical Markets

Low Latency Underpins Carrier's Ability to Compete & Succeed in Vertical Markets

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[June 21, 2017] Recently, Ovum, a global consulting firm, released a survey report titled "Monetizing High Performance, Low Latency Networks" (hereinafter referred to as “the report”). The report points out that low latency networks have become the first choice of more and more enterprise customers. With digital transformation taking place across various global industries, new application requirements for low latency networks are being raised. The report lists multiple business cases for low latency requirements in the financial services sector, the resource sector, in on-line advertising, governments, enterprises, and research institutes. At the end, the report emphasizes that, to gain more competitive advantages in vertical markets, carriers should optimize network latency in their network architecture, for example, reducing network latency by simplifying network layers, combining the OTN and OXC technologies, and constructing full mesh topology networks.

Rise of digital economy is the most important engine for the future optical network market

The rise of the digital economy poses higher requirements for reducing the latency on optical networks. Next generation 4k video will add to the network load and increase demand for lower latency. Cloud services represent a once-in-a-generation shift in IT workloads to distributed data center environments and will come with heightened latency expectations. Internet of things will add billions of devices to the network with their own set of latency expectations.Wireless application and IoT will further add to the density of networks and add rigorous latency specifications. Revenues are now, and will continue to be, generated by these major service trends and business initiatives. Low latency networks will be imperative for the future, and will become the platform for all future service growth.

The industries that have strict requirements for low latency features include:

  • Financial services sector: The financial services sector is renowned for its demanding low latency requirements. In an environment where the worldwide economy is more and more integrated, the financial markets have to become more globalized as well. These markets and services will require the lowest latency possible in more complex and wider networks.
  • Resource sector: Oil and gas and other resource extraction industries have an increasing need for high performance, low latency communications. Video surveillance of key assets and operations is increasingly utilized. Data processing requirements have increased substantially in the resource extraction industry. With more and more sensors, more real time information is collected and analyzed and utilized for control. For the resource extraction industry, latency directly affects the profitability of their enterprises.
  • On-line advertising segment: On-line advertising is growing in its revenue generation. The advertising ecosystem is based on algorithms and low latency networks. Inferior latency performance would disadvantage bidders reducing their business prospects. This requires low latency networks that can guarantee the capability of processing concurrent sessions from a large number of customers.

The report points out that with the popularization of low latency network applications, carriers must take low latency into consideration for network construction. Generally, optimizing optical fiber lines or deploying shorter optical fibers can greatly reduce network latency. However, in many situations where the optical fibers cannot be modified, the network architecture needs to be optimized to achieve low latency.

Network latency can be reduced through the following methods:

  • Use the hierarchical optical network topology to establish direct point-to-point connections and reduce latency.
  • Extend optical networks to the network edge and simplify the network layers to reduce latency caused by intermediate aggregation, convergence, and forwarding.
  • Use physical hard pipes based on OTN transmission to realize physical isolation of the transmission, ensuring latency that can be predicted and guaranteed.
  • Use OTN and optical switching technologies to achieve both optical and electrical processing, improving network flexibility.

"Latency can have a direct impact on the user experience, perceptible latency has a strong effect on user satisfaction and loyalty." Comments Ian Redpath, principle analyst of Ovum and the author of this report, "Latency performance can be the difference between winning and losing the business. Latency has a direct impact on network monetization. Meeting latency requirements directly impacts latency sensitive high capacity wholesale services."

For more details, please download the White Paper at: