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What Is Low Latency And Why Does It Matter To Your Business?

What Is Low Latency And Why Does It Matter To Your Business?

When trying to optimize network speed, you are very likely to run across the term “latency.” To understand the question posed in the title of this article, you must first understand this idea. “Latency” is just a technical term for internet lag of various kinds. When a page is slow to load, or a video stream is stalled, that is caused by latency. Thus, you can immediately see why low latency is desirable. Low latency equals a faster network and less delay all around. When it comes to online business, latency can obviously make a big difference as well.

Understanding The Causes Of Latency

There are quite a few things that can cause latency because internet data sometimes has to do a lot of traveling. Along its route to your computer, it might have to go through multiple servers, switches, routers, etc. If that path contains a bridge between a wireless connection and a wired one, that also tends to cause a slight delay.

Bear in mind that latency delays tend to be very small. Ideally, they should be measured in milliseconds or nanoseconds. However, a lot of tiny delays can add up to a significant amount. It may not be enough to stop you from using the internet, but it can definitely be enough to annoy you greatly. So, if you want to know the causes of latency, the answer is simple: Travel time.

The Real Costs Of High Latency

It doesn’t take an expert to figure out that latency can have a real impact on business performance. So much of today’s most important business is conducted online, so companies (especially smaller ones) need every advantage they can get. However, we want to dive a little deeper than that. We want to know exactly how costly internet lag can be.

First, we need to understand that these are indirect costs. Lag itself does not cost you money, but it does cost you time. Wasted time obviously equals wasted money in terms of operating costs, but it gets much worse than that. When you consider the high-speed and high-stakes world of stock trading, a millisecond can make a huge difference. In a serious bidding situation, those with faster internet connections have a definite advantage.

According to the source linked above, this kind of advantage makes a big difference, to the tune of about $5 million per year (which would be 416,666.667 per month). Here is another study that gives us a maximum figure of $4 million per millisecond of delay.

Finally, we have a third source which says:
“A 1 millisecond advantage can be worth $100 million to a major brokerage firm.” As you can see, we are getting a lot of different numbers here. That’s because there is more than one way to measure the cost of latency. However, we can also see a definite pattern as well. When business is being conducted at high speed, latency can translate to serious dollars.

When Does Latency Matter Most?

Obviously, latency might not be a big deal for some businesses. For instance, if all you are doing is selling products on a website, a little bit of lag isn’t likely to cost you serious money. Delay always involves a certain amount of loss (operating costs, etc.), but that loss will be negligible to some companies.

As we have already seen by looking at matters related to the stock market, some other businesses can be affected far more. Here is a short list of instances in which low latency is especially important:

  • 1. Online auctions or anything that involves bidding
  • 2. Businesses that have to deliver streaming content
  • 3. Businesses that make heavy use of the cloud
  • 4. Online meetings
  • 5. Security monitoring and response
  • 6. Online training and certification

Ways Of Reducing Network Latency

Now you understand why latency can make such a big difference in your business affairs. So, let’s talk about some of the ways in which network latency can be reduced. First of all, reducing the distance between your routers and devices is a simple step that can make a significant difference. For instance, if most of your organization’s work computers are in one area, the router should also be in that area (preferably right in the center). This approach is sometimes called “edge computing.”

Another simple step is to always keep your software and hardware up-to-date. Most of these systems can be configured for automatic updates, but these do not always work with 100% efficiency. It is best to manually check for updates from time to time. As for outdated hardware, it should be replaced as soon as possible. All the best software in the world won’t make a difference if you’re running it on substandard hardware.

There are also some very good options that your internet provider might have to offer. For instance, if you are using an ADSL broadband connection, you might want to ask about switching to a fiber broadband connection. This tends to reduce latency very nicely. You might also want to ask about a leased line, as this will give your organization a private physical line to the internet. This means that you will not have to share that line with anyone else, and less strain on the line will always equal lower latency.

Finally, here’s a little trick that online gamers have been using for a long time. A wired connection is generally less “laggy” than a WiFi connection, which is why most gamers prefer a wired one. The difference is small, but it can make a big difference in quick-reaction situations. Minimizing your use of WiFi could, therefore, be a good way to reduce overall network latency.


It is well worth your time and effort to try and create a low-latency network. Of course, your control will be limited to that network itself. For this reason, it is also essential to have a high-quality internet provider. The same is true for any online services that your company might use. For more information on this and other fascinating topics, call PCH Technologies at (856) 754-7500.