The Ultimate Guide to Low Latency: Why Do Businesses Need It?

Low latency is crucial for network performance and business operations. From real-time financial transactions to seamless video conferencing, the demand for efficient infrastructure is ever-increasing. But what exactly is low latency, and why is it important for businesses to prioritize it? 

This article explains the definition of low latency, the factors that influence it, and how businesses across various industries benefit from low-latency networks.

What is low latency?

Generally, latency is the time delay between sending a data packet and receiving it, measured in milliseconds. To put it simply, if server A sends a data packet at 03:33:00.000, and server B receives it at 03:33:00.133, the latency in this operation is 0.133 or 133 milliseconds. Latency is typically measured between a client’s device and a data center, providing developers with insight into how fast various services will load for users.

Low latency means less delay, leading to faster responses, while higher latency results in noticeable lags. Tools like ping tests or traceroute can measure this, giving a good sense of how quickly data is transmitted within a network.

What is a low-latency network? 

A low-latency network is designed to minimize delays during data transmission, ensuring that data reaches the destination as quickly as possible. These networks prioritize speed and efficiency, making them ideal for cases that require real-time interaction and quick response times. Online gaming, video conferencing, or financial services are perfect examples of such cases. 

What factors affect latency?

Several factors can influence the overall latency in a network, such as technical, geographic, and environmental, as well as protocol overhead, network infrastructure, application design, and monitoring practices. 

Technical factors

• Network congestion and bandwidth limitations. When too much data is being transmitted simultaneously, the network becomes congested, causing delays. Bandwidth limitations, or the network’s capacity to handle data, play a significant role in how much congestion occurs.
• Routing inefficiencies and packet loss. When transmitted across networks, data is often divided into packets. Inefficient routing paths or misconfigurations can result in packets taking longer to reach their destination or getting lost, increasing latency.
• Processing delays. Each device on a network, from routers to switches, contributes to the overall latency. Poorly optimized or overloaded devices can slow down data transmission.

Geographic location

• Distance between sender and receiver. If a user accesses a server on the other side of the globe, the delay is more expected compared to someone accessing a server in their city. Simply put, the longer the distance data travels, the more latency increases. 
• Server location and proximity to users. To minimize latency, businesses often rely on geographically dispersed data centers. By ensuring that servers are close to their users, companies can reduce the physical distance data needs to travel, resulting in faster responses. Hostline operates data centers worldwide, including servers in New York, London, Amsterdam, Hong Kong, and Vilnius.

Network infrastructure and configuration

• Quality of hardware components. Various details can affect latency, such as cable types (e.g., fiber optic versus copper), routers, and switches used within a network. Higher-quality, faster components lead to better performance.
• Network configuration settings. Features like Quality of Service (QoS) and efficient routing protocols can prioritize critical data traffic, ensuring it moves through the network faster.

Protocol overhead

• Communication protocols. Communication protocols like TCP/IP and UDP add overhead (extra data, such as headers to indicate the source and destination IP addresses), which can introduce additional delays. 

Environmental factors

• External interference. Wireless networks are sensitive to environmental interference, such as physical obstructions, weather conditions, or competing signals, which can increase latency.
• Environmental conditions. Humidity, temperature, and physical barriers can also affect the reliability of wireless signals, leading to increased latency.

Application design and optimization

• Efficient data handling. Efficient software design is key to reducing latency because poorly coded applications can introduce delays in processing and handling data, even when the network is optimized. 
• Optimization techniques. Developers use various techniques such as data caching, compression, and efficient query processing to optimize applications for faster performance.

Why low latency is important for businesses

Low latency is important for a company’s infrastructure because it has benefits across various operations, user experience, and overall competitiveness.

Better user experience

Low latency ensures that applications and services respond quickly, providing a seamless experience for users. This is particularly important for real-time communication platforms, video conferencing, and financial services, where delays can disrupt interactions and cause frustration.

Competitive advantage

Faster data transmission enables businesses to make better decisions and execute strategies faster than competitors. For example, in e-commerce, where seconds can determine customer satisfaction or abandonment, low latency can be the difference between gaining or losing a competitive edge.

Financial sector considerations

In some sectors, such as financial trading platforms, transactions need to be executed in real time. Even the slightest delay can result in significant financial losses. Low latency ensures that data is processed and transmitted with minimal delay, providing more accurate market insights and enabling quicker trades.

Customer retention and satisfaction

A smooth, responsive service helps reduce customer frustration. Businesses that invest in low-latency infrastructure can improve customer satisfaction, resulting in higher retention rates and long-term customer loyalty.

Operational efficiency

Low latency improves the efficiency of internal workflows, such as data processing or real-time analytics. Companies that rely on quick access to data can optimize their operations, leading to faster decision-making and more efficient processes.

Critical use cases that rely on low latency

Several industries rely heavily on low latency to ensure smooth operations and customer satisfaction, such as healthcare, financial services, gaming, and IoT. 

• Healthcare. Low latency is critical for real-time data transmission and monitoring in telemedicine and remote surgery. Delays in communication can have life-or-death consequences.
• Gaming. Online multiplayer games require low latency to ensure that gameplay is smooth and responsive. Any delay can ruin the user experience.
• IoT (Internet of Things). IoT devices rely on low latency to communicate and react to real-time data. In industrial automation or autonomous vehicles, low-latency networks are crucial for safe and effective operations.
• Financial services. Low latency ensures faster transaction processing, which is crucial in markets where milliseconds can make a significant difference.

Conclusion

Low latency plays a crucial role in enhancing operations performance, improving user experience, and maintaining a competitive edge. By investing in low-latency infrastructure, companies can ensure they operate efficiently, reducing delays and keeping up with the fast-paced demands. Hostline provides reliable data centers globally, ensuring ultra-low latency and extra support to give your business a competitive edge. 

Frequently asked questions

What is ultra-low latency?

Ultra-low latency refers to latency that is near-instantaneous, typically below 5 milliseconds. This is essential for highly time-sensitive applications such as high-frequency trading.

What does low latency do?

Low latency reduces the delay in data transmission, resulting in faster processing and responses, which is crucial for real-time applications.

What is auto-low latency mode?

Auto-low latency mode (ALLM) is a feature that automatically optimizes settings to ensure minimal lag, particularly in gaming or high-performance applications.