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The Low-Latency Services Market: Evaluating the Emerging Market Opportunity for Service Providers and Telecom Carriers
New Paradigm Resources Group, Inc. (NPRG), April 2011
In the past two years, a new, highly-profitable telecommunications service market centered on addressing the very specific and stringent demands of financial services firms has emerged. Major banks and securities exchanges, as well as small hedge funds and other investors, increasingly engage in rapid automated electronic securities exchange, requiring data connections to trading venues that are as fast as or faster than their competitors'. These institutions cannot tolerate network latency—delays in the delivery of transaction commands from the firm to the market—that impedes execution of their trading strategies. Additionally, these end-users are willing to pay telecommunications carriers and related service providers significant premiums to ensure that their transactional traffic enjoy far less latency than standard enterprise data services.
This report begins evaluating this market opportunity for telecommunications carriers. The objective of this report is to provide telecommunications carriers and technology vendors the foundational knowledge and information to begin assessing their own strategies for addressing the low latency services market opportunity. Therefore, this report begins by defining the services comprising the low latency market. It then moves onto examining the core aspects of this market including the critical factors driving the demand among financial institutions for low latency services, the current centers of low latency market activity, the low latency market “ecosystem,” the drivers and dynamics shaping and driving this nascent market and the future trends we expect to see emerge for low latency services. This report also identifies the key service providers already serving this market and examines how they are addressing the low latency service requirements of the relevant customers from the financial services vertical.
This report is written for decision-makers and strategists at telecommunications service providers looking for insights into and analysis on the emerging and rapidly developing Low Latency services market. While this initial report focuses on the low latency market opportunity for service providers, strategists with equipment vendors will also find the information contained in this report pertinent as they identify opportunities to work with their customers - the carriers and end users—to successfully enter, serve and thrive within this market. Finally, this report will be useful to those, such as venture capital firms, seeking and evaluating investment opportunities within the telecom space.
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