dark fiber versus lit fiber

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In putting together a low latency connectivity strategy to compliment a high frequency trading schedule, it is important to really understand the implications of dark versus lit fiber.

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Page 1: Dark Fiber versus Lit Fiber

FiberCharacteristicsthatAffectLatencyFiber‐opticcommunicationisamethodoftransmittinginformationfromoneplacetoanotherbysendingpulsesoflightthroughanopticalfiber.Thisisimportanttonotewhendiscussingthevariablesthataffectlatency.DistanceThedefinitionofzeronetworklatencywouldbenetworktransportatthespeedoflight.Thatsaid,thefurtherthelighthastotravelthehigherthelatency.ObtainingjustafiberconnectionfrompointAtopointZisnolongersufficienttoensureoptimaldatatransferspeeds.Fibernetworksdonotnormallyfollowadirectlinebetweenanygiven“A”and“Z”location.Itfollowsgeographicroutesandcontoursrelatedtoroads,railroadtracks,orothertypesofright‐of‐waywherethefiberwasplaced.Forthisreasonitisimportanttounderstandtheexactrouteyourcircuitfollows.Youwanttoeliminateanywasteddistance.Fordarkfiberaswellaslitcircuits,thatisnotanoptionforatypicalserviceprovider,astheyarequotingtheircircuitsonanexistingfiberpaththatinmostcasescannotbevaried.However,anetworkintegratorthatcanutilizeoptimalspansfrommultipleproviderswillbeabletopiecetogetherthemostdirectroute,incorporatingnewfiberconstructionwhererequired.ReachingtheendoftheFiberInthelonghaulenvironment,therearetwomainoptionsforextendingthetransmissionoflightthroughthefiber;opticalamplifiersandregenerators.AmplifiersandRegeneratorsareplacedalongthefiberopticroutetoensurethatthesignalisabletotravelthedistancewhilekeepingits’integrity.Themaindifferencebetweenthetwoisthatanamplifieraddslighttotheexistingwavelengthtoincreasethestrengthofthesignalwithverylittleaddedlatency,whereasaregeneratorwilladdasubstantialamountoflatency.Thisisrequiredforbothlitanddarkfibersolutionsandneedstobetakenintoconsiderationasitisahighlyvariablecomponentoftheend‐to‐endcircuitthataffectslatency.WhatisDarkFiber?Darkfiberisatermusedtodescribefiberopticstrandsthatarenotbeingused‐i.e.thereisnoequipmentontheendsofthefiber.Theamountofdarkfiber,particularlyintheUnitedStates,increaseddramaticallyoverthepastdecade.Darkfiberiscontrastedwithactivefiberopticcable,oftenreferredtoas“lit”fiber.

Page 2: Dark Fiber versus Lit Fiber

Inthepast,darkfiberwasvirtuallyneversold.Telecommunicationscompaniesconsideredittheircoreasset,andsellingitwouldbeakintosellingofftheirbusiness.Duetowhathasbeenreferredtobymanyasa“glut”offiberinthemarketplace,alongwithaneedtogeneraterevenue,sellingdarkfiberbecamemorecommonandisnowapracticeofafewtelecommunicationscompanies.Therealitythoughisthatmanyprovidersarestillreluctanttoselldarkfiberandwillonlyofferlitcircuits,somostofthetimeyourchoicesfordarkfiberareverylimited.Insomemarketswherethereisalargesupplyofdarkfiber,priceshavebeendrivendowntolevelsatwhichmanycompaniesthattraditionallyboughtlitcircuitsarefindingitpracticaltopurchasewholesaledarkfiberandlightitwiththeirownequipment.ManyEnterprise,Government,andEducationalInstitutionsthathavehigh‐bandwidthneedsarenowlookingtodarkfiberasameanstofindeconomiesofscalebyowning&operatingtheirownnetworkasopposedtopurchasingmultiplelitcircuits.Unfortunately,becausesofewtelecomcompaniesarewillingselldarkfiberinmostmarkets,theavailabledarkfiberroutemaybemuchlongerthananalternativelitcircuitpathfromanotherprovider.LatencyofDarkFiberandLitFiberWhenevaluatingthevalueofdarkfiberthemostimportantissueistheeconomics.DarkfiberrequiresalargeupfrontCapitalExpensefortransmissionequipmentplusthecostofthedarkfiber,butallowsyoutoaddadditionalbandwidthcapacityatnominalincrementalcostbeyondyourinitialinvestment.AlitcircuitwillbealeasedassetandwillfalltotheOperationalExpensesofthecompany,butasyourbandwidthneedsgrow,eachadditionalcircuitisa100%incrementalcost.Soifcostisnotyourprimaryconsideration,whichoptionwouldofferthelowestlatency?ItisapopularmisconceptionthatDarkFiberalwayshasthelowestlatencybetweentwopoints‐itcanbeinsomeinstances,buttherearemanytimeswhenalitcircuitisthebetterchoicewhenlowlatencyisanabsolutepriorityduetoashortercircuitpathand/orbetterequipmentconfiguration.CaseStudy:Whenworkingwithatoptradingfirmtheirmaingoalwastodrivethelowestlatencycircuittheycouldbetweentwolocations.TheycametoCFNServicesandrequestedpricingfordarkfiberstrands.Afterathoroughevaluationofbothdarkfiberandlitcircuitprovideroptionstoconnectvarious“A”and“Z”addresspairs,inmostcasestheshortestavailabledarkfiberpathwouldhavehigherlatencythanthelitcircuitpath:

Page 3: Dark Fiber versus Lit Fiber

ALocation ZLocationDarkFiber

RouteDistanceLitCircuit

RouteDistanceBuildingA BuildingB 40.3 31.9BuildingB BuildingC 41.7 27.6BuildingC BuildingD 36.6 36.4BuildingD BuildingE 29.2 27.3BuildingE BuildingF 52.2 50.0BuildingF BuildingG 43.7 29.1BuildingG BuildingH 105.2 60.1BuildingH BuildingI 38.6 40.2BuildingI BuildingJ 26.1 11.6BuildingJ BuildingK 9.3 16.5BuildingK BuildingL 25.2 12.9BuildingL BuildingM 8.9 4.7BuildingM BuildingN 26.2 17.9BuildingN BuildingO 29.5 17.9BuildingO BuildingP 38.8 16.8BuildingP BuildingQ 23.3 21.6BuildingQ BuildingR 10.6 14.5BuildingR BuildingS 7.0 5.7BuildingS BuildingT 10.6 4.7BuildingT BuildingU 3.9 3.7BuildingU BuildingV 34.6 34.6BuildingV BuildingW 3.1 1.8BuildingW BuildingX 38.6 41.2

Asyoucansee,thedarkfiberspanprovidedadistanceadvantageinonlyahandfulofthespansanalyzed.Itwasfoundthatthiswasprimarilyduetothefactthatformostspanstherewasonlyonedarkfiberprovider,whereastherewasoftenseverallitservicesprovidersthathadshorterroutesbuttheyarenotwillingtosellthedarkfiber.