In Search of the Perfect Web Connection - TheStreet

If you're a serious trader, maybe it's time you thought about getting a serious connection to the Web. No, I'm not talking about cable modems or DSL. As anyone who's experienced either knows, when these connections work, we love them dearly. At present, though, they're just too unreliable.

Case in point: Last winter a friend of mine from Boston tried to buy shares of Web software provider

InfoSpace

(INSP) - Get Report

. It was near the close, and the stock was selling at around 238. Suddenly her cable connection bleeped out. "I guess I could have called up my broker," she says. "It's just so annoying when you can't check the price."

In any event, the order never got executed. And next day the stock gapped up to 246. (Gapping up is what happens when a stock opens trading at a higher point than the previous day's close.) InfoSpace eventually reached a day's high of about 268. The thousands of dollars in potential profits my friend lost, thanks to her failed cable connection, would have more than paid for an industrial-strength link to her broker.

Time for a T1?

So what are the alternatives to cable and DSL? Well, they include a T1 line or a satellite uplink. Neither is as difficult to set up or as expensive as you might think.

In a

previous column I spoke briefly about T1 lines. Let's take a closer look now. A T1 is simply a fatter phone line that enables you to transmit and receive more data than you could with a standard line using a 56k modem. And like DSL or cable, a T1 is always on. If you opt for T1 service, you'll be leasing the line from your local phone company. For that portion of the service, you'll be billed anywhere from $80 to $400 a month, depending on the line's speed. That speed could be as little as 56k, or 56,000 kilobytes of data per second, or as much as 2 megabytes, or 2 million bytes of data per second, in certain areas.

In addition to the line-lease fee, you'll be charged a monthly Internet access fee. And in this case you may have a choice. You can either link up with the phone company's own Internet service provider, or ISP, or port into a third-party ISP. Usually it's the small, local ISPs that accommodate T1 connections. Find these companies in the Yellow Pages. Or check with some of the online ISP directories like

ISP Finder and

ISPs.com.

Again, prices for the actual T1 Internet connection vary across the country. But, generally, you can expect to pay anywhere from $200 to $700 a month, depending on the speed you want. You'll also be charged $300 or more for installation, though some firms charge as much as $2,000. It pays to shop around.

Besides costs, your decision should be based on how quickly you believe either the phone company or the third-party provider will respond to a problem. So make sure you grill the sales reps thoroughly.

Also, don't let yourself be talked into a fatter pipeline than you need. Most people think of speed when they think of T1s. But to traders, the chief advantage is reliability. Why? Trading doesn't require all that much bandwidth. All you really need is enough bandwidth to handle streaming quote data. That's because professional-level trading software programs such as

RealTick.com,

TradeCast.com and

CyBerCorp.com reside on your own computer. And it's this software that transforms raw financial data into the color-coded charts and Level II-quote screens traders use. CyBerCorp.com, for example, recommends a modest 128k connection -- a little more than twice the speed of a standard PC modem -- for its high-end trading platform.

To be safe, call up your broker's tech representative to find out how much bandwidth you'll need. Do the same if you use a third-party quote provider.

You won't be able to download photos or shareware programs on a 128k connection with the same dispatch as you would using a cable modem or DSL line, both of which cruise at around 256k and up. So does that mean you should order a heftier T1? Not necessarily. A far cheaper -- and in my opinion better -- alternative would be to dedicate a computer with a modest T1 hookup strictly to trading. Then, link to the Net for chat and miscellaneous surfing via cable or DSL. The reason: Even with a fat T1 pipe, your computer can still crash if you load a Web page with a flaky Java app. So keep your surfing computer and your trading computer entirely separate. This also gives you a completely separate back-up system should your trading computer fail.

A Bird and a Wire

A satellite uplink may be your only choice if you live out in the country. The biggest player in this realm is

Hughes Network Systems'

DirecPC. Sign on and you can get download speeds of up to 400k. And the $40-a-month cost for unlimited access is cheaper than cable or DSL service in many areas.

Now for the negatives. Bad weather can crash the system, of course. Also, at any given time you are competing for bandwidth with the satellite's other users. So expect occasional delays. Another potential glitch: The satellite connection provides only incoming data. When you transmit data -- such as an order to sell stocks -- you must do it through a local phone line. And that means that in effect you have two Internet connections to worry about. All of us have experienced being summarily logged off our dial-up Internet connection. Now imagine that at the same time data downstreaming from the satellite slow to a crawl.

Here's one horror story that'll illustrate the point: A trader I know and his wife just built their dream house in a country setting near St. Louis. Because neither cable nor DSL service was available in the area, he opted for DirecPC. "It is a complete nightmare," he emailed me. "I'm logged off all the time, so I'm afraid to take down large positions."

Two days later I received another email: "I ripped the Direct PC satellite dish off my roof the other day. What a joke!"

Granted this is just one user's experience. To be fair, I should point out that

America Online

(AOL)

pumped $1.5 billion into DirecPC last year. The move came after

AT&T

(T) - Get Report

refused to allow AOL onto its own cable networks. DirecPC's future thus depends on its building a reliable nationwide broadband connection. So maybe that'll be impetus enough to get the kinks worked out.

Until then, here's one industrial-strength satellite alternative:

Tachyon.Net provides satellite uplink and downlink communications at speeds of 256k and 2 megabytes, respectively. Uplinks transmit direct from your rooftop to the satellite. So there's no phone-line connection to hassle over. Coverage areas include most of North America, including parts of Canada and all of Mexico. Another Tachyon.Net satellite blankets most of Europe. The service is geared toward commercial users, and the company pledges more than 98% uptime.

In the U.S., expect to pay just over $1,000 a month, plus installation charges of just over $5,000. Prices vary, since the company relies on independent dealers to install equipment. There's a list of dealers on the Web site.

Given the choice, I'd go with the T1 over the satellite uplink. That is, unless I decided to trade from a remote mountain lodge. Otherwise, the T1's cheaper and probably more reliable than the satellite in all types of weather. Think about it: How often does your phone line go down?

One final point: Whatever broadband connection you go with, check into whether the deal is for consumer or business service. True, you'll probably pay more for business-level service. But there's a reason: When my cable modem went down recently, I was told it would take a week before a technician could come to the house. When I informed the service person on the phone that I absolutely needed a broadband connection for my work, she told me that in the contract I'd signed I had agreed not to use the service for business.

Gotcha!

Mark Ingebretsen is editor-at-large with

Online Investor magazine. He has written for a wide variety of business and financial publications. Currently he holds no positions in the stocks of companies mentioned in this column. While Ingebretsen cannot provide investment advice or recommendations, he welcomes your feedback at

mingebretsen@thestreet.com.