The time it took you from clinking on the link requesting to open this page and the actual page being displayed is latency.
Latency is the time gap between an action (input) and the outcome, or the time data takes to travel from point A to B. The longer the latency, the longer the time people have to wait for applications to load.
Therefore, latency is a constant of most modern technologies and systems, spanning from the data centre, networks, satellite communications, and audio to the internet and beyond.
Why does latency occur? This is simply down to the physical distance between two, or more, systems. Even though information usually travels at the speed of light, this is not enough to shorten the time it takes for data to travel, as the speed of light is a physical constant itself.
How do you solve latency? The closer to the source, the lower the latency will be. For example, this is one of the greatest premises being used in the data centre space to justify the need for edge data centres.
Data centres that serve financial hubs, like the City of London, are usually closer to the hub itself so latency times are shortened to a minimum.
In the digital world, latency is one of the biggest barriers that companies are trying to fight back. And the costs to those affected can be huge.
For example, Amazon has unveiled that 100ms of latency can cost them as much as 1% in sales. In a company that has $107bn in net sales, that is just over $1bn lost every year.
Search engine giants like Google are also not immune to latency issues. The company has said that a half a second delay in search page generation can lead to a 20% drop in traffic.
According to financial markets research and strategic advisory firm TABB, in the brokerage space, electronic trading platforms which are running with a 5ms delay compared to competitors can cost a broker $4m in revenues per millisecond. This is $4bn every second.
These values are so high that over the last few years billions of dollars have been invested in deploying infrastructure that helps reduce latency.
For example, in 2012, Tokyo and London entered a joint $1.5bn project to reduce latency between the two cities by 30%, or in time-talk, 60ms (from 230ms to 170ms).
Three fiber optic cables are set to be built, with the longest one planned to measure 15,000Km. The Artic Fibre and Arctic Link cables will cross the Northwest Passage which runs through the Canadian Arctic Archipelago.
The third cable, the Russian Optical Trans-Arctic Submarine Cable System (ROTACS), will go through the north coast of Scandinavia and Russia.