The importance of low latency

Connectivity, certainly not a new concept, but one that’s receiving a lot of attention these days as the world continues its steady march toward moving online with increased adoption of cloud-based services and content. In a post-COVID world, many of us are still working, learning, playing, and even socializing from home to some degree.

It comes as no surprise, then, that more people than ever are connected to the online world. This certainly rings true in the Asia-Pacific region, with internet penetration rates at the start of 2022 hitting new highs in emerging markets like Vietnam (73 percent), Thailand (78 percent), and Indonesia (74 percent), and remaining consistently strong in mature ones like Singapore (92 percent), Hong Kong (93 percent), Japan (94 percent), and Australia (91 percent), according to DataReportal.

But these days, it’s no longer enough to just be connected. To fully participate in the digital world, you need to be able to engage with more experiences, content, and applications in near real-time. That’s where reliable, high-bandwidth, high-speed, and low-latency connectivity comes in that together provides an overall acceptable quality of online experience.

Much has already been said about bandwidth and speed. But what exactly do we mean when we talk about latency, and how does it factor into today’s networks?

Compared to its more mainstream counterparts like bandwidth and speed, latency has taken a backseat in conversations about connectivity until recently, when the guarantee of having zero-to-no delays while online proved invaluable. Whether it’s an important video conferencing call or time-sensitive online gaming, buffering has no place in today’s fast-paced digital-heavy reality. That’s where latency comes into play, and the lower and more consistent, the better.

Latency refers to the time it takes for your device, the internet, and everything in between, to respond to an action you take (such as clicking on a link)—that is, the time it takes for data to travel from its origin to its destination and back. Closely linked to latency is jitter, which refers to the consistency—or lack thereof—of latency across the network. While high latency can be incredibly disruptive, unpredictable, and erratic, jitter can be equally as frustrating.

A low latency connection experiences minimal delays and delivers seamless connectivity. In everyday situations like online gaming and content streaming, lag is considered a nuisance. However, for a growing number of applications that demand near-instantaneous response times—from high-speed financial trading, role-playing games, through to emerging technologies such as driverless vehicles and remote surgery—even a slight connectivity hiccup of milliseconds can mean the difference between success and failure—or life and death, in both the virtual and physical worlds.

While minor hold-ups may not seem like major issues in the moment, they often snowball into huge complications down the line. For example, in the volatile high-frequency financial trading context, a slight hiccup could be the cause of a trader filling an order at a much higher share price than initially desired. The latency issue has even birthed a whole trading strategy—latency arbitrage—where investors on ultralow latency networks capitalize on the minor price differences in a stock that arises due to the time disparity between them and other participants in the market. This practice has significant market impact, with a 2021 Bank for International Settlements study estimating global profits as a result of latency arbitrage at about $5 billion annually.

For communications service providers (CSPs), there are economic benefits in reducing latency in their networks. Consider the economic potential promised by what is expected to be a major beneficiary of ultralow latency connectivity—the metaverse. Early estimates of the size of the metaverse opportunity range enormously from $750 million to $13 trillion by 2030, presenting a major new market for CSPs to tap on by leveraging technology like 5G fixed wireless access to deliver the ultralow latency experience that virtual and augmented reality necessitates.

In these times of rapid progress, latency has become the latest commodity on the market—and rightly so. Governments, businesses, and communities everywhere are looking to future-proof their networks. This means they’ll need to choose solutions that can keep pace with a swiftly evolving online world that has no patience for delays and lags.

The good news is that there are already solutions that CSPs are constantly developing, improving, and bringing to market. Building ultralow latency networks gives CSPs the prime opportunity to differentiate their offerings to end-users, ultimately introducing new revenue streams for the business while giving them the chance to exceed customers’ expectations and build loyalty along the way.