[Here is Part III of Bob Van Valzah’s series “Shortwave trading”. No real comments from me on this one as I’m on vacation. I’ll cover the HF sites in Europe once Bob’s gardening leave ends. Happy reading, and thanks Bob for this new episode. Alexandre.]

I’ve heard that years ago, there was a stable business selling microwave data radios to local governments for networking their offices. Then the traders discovered microwave and everything changed for the radio vendors. Their new customers weren’t so much concerned about the cost—they just wanted the lowest-possible latency in the radios and repeaters.

I’m picking up signs that vendors in other industry segments are now seeing a surge in their business with the recent interest in shortwave trading. For example, TCI has had a good business making shortwave antennas for 50 years. Then they issued a press release in April 2018 saying they’re now working with “non-government customers to provide HF antenna communication systems that minimize timing-latency.”

Bloomberg has picked up the story of shortwave trading, digging through public records to disclose ownership of a site I described in a previous post. It seems like this is a hot topic!

In this post, I’ll show some recent site changes, document a fourth CME/Europe shortwave trading site I’ve discovered, detail discoveries from my trip up the east coast, discuss regulatory questions, cover two patents on shortwave trading, some miscellaneous things, and finally explain the connection between a sax-playing sheep farmer and shortwave trading. This is a long post and these are varied topics, so please just skip to the next section if you’re not engaged.

A Rapidly Changing Field

After stumbling on the original West Chicago Shortwave Trading site, I found other sites by looking in an FCC database of experimental licenses. More on these licenses below, but as you can guess from the name, holders of such licenses can be expected to be doing some experimenting. I’m sure there are many technical and business experiments happening that we can’t see, but antenna changes are hard to hide. Consider what’s happened at the West Chicago tower site in the four months since I discovered it.

I never set out to document the changes over time, so my camera angles above aren’t identical, but I’ve still tried to make a fair juxtaposition with cropping and zooming. The changes have replaced fairly broadband shortwave antennas with more narrow band antennas and strengthened the mounting system holding the antennas to the tower. The boom length on the new antennas is nearly double that of the previous antennas, giving them more gain. It looks to me like they’ve decided on a narrower band of frequencies and want more oomph, which can be turned into better reliability or more throughput. Shortwave trading appears to be a rapidly changing field.

I have a hunch that the trading companies are not entering the field without tapping the experience of others. While visiting the West Chicago site in April, I noticed a building permit posted on the perimeter fence.

The contractor doing the work is listed as “Long Wave,” which could be Long Wave Strategic Communications. They appear to be experienced in building shortwave sites for global governments. They had no comment when I asked if they knew anything about a tower in West Chicago.

A Fourth Chicago/Europe Antenna Site

The FCC experimental license database shows a new license granted on June 6 for a site in Maple Park, Illinois, less than 16 miles from CME’s data center in Aurora. Google Earth showed several buildings surrounded by corn fields on all sides. I could see fuzzy shapes that could be a shortwave antenna on a tower attached to an old farm silo, so I was intrigued.

I Googled the address and learned that this site was the home of TowerWorks, Inc. who are “Communication Tower Specialists.” Now looking back at the image above, I could understand the gray and black area above the silo. At first I though it was shadows on cylindrical bails of hay covered with tarps. But in the context of a tower company, I can guess those are monopole tower sections. Use a crane to stack two or three of those atop each other and you have a great place to put an antenna!

A bit more Googling turned up an interesting filing with the local zoning board from June 17, 2017. The handwritten application seeks special use of the land to store tower sections, add a tower for a customer, and “man toys.”

I visited the site and found the pattern I’ve come to expect. A couple of massive shortwave antennas pointed at Europe and a microwave dish pointed at CME. As with West Chicago, I think I see a narrowband, high-gain antenna, as well as a more broadband, lower-gain antenna.

There was a time in the past when all trading between Chicago and New York was done over fiber. But in modern times, competitive trading companies seem to use their own microwave networks or those of McKay Brothers. Seeing this transition has made me wonder what the future holds for shortwave trading. Will it be a crazy experiment by only the top-few trading firms, or will it become effectively “table stakes” for any serious participant in ocean-crossing trades? Having found a fourth CME/Europe site with ownership independent from the previous three, I’m thinking it’s the latter.

One significant difference with shortwave is that there’s not enough bandwidth to share at a single site. Since a single microwave link can offer hundreds of megabits of bandwidth, McKay can offer a “private bandwidth” service where fractions of the total link bandwidth are for sale. Even if that business model is unlikely to work for shortwave, the market data distribution model of Quincy Data (a McKay subsidiary) might work. More on this below.

East Coast Reconnaissance and Speaking Trip

A single FCC experimental license can cover transmitting from several locations. So my initial searches for shortwave licenses within 100 miles of CME’s Aurora data center also turned up transmit locations along the east coast and even in Alaska. I used Google Street View to look around the licensed area in Alaska, but didn’t find any antennas there.

Still, there were many antenna sites along the east coast and I had agreed to speak on shortwave trading at the STAC Summit in New York. I’ve always wanted to see the museums in Washington DC, so my gardening leave seemed like a natural time to rent a car and visit antenna sites on the east coast. I can’t imagine how many wrong turns I would’ve made in eight hours of driving through unfamiliar territory without GPS directions.

In the same way that Chicagoans and New Yorkers each have their preferred style of pizza, I’m beginning to think they also have their preferred style of shortwave trading. I didn’t really expect to find anything active at the Baltimore and Washington DC sites since their licenses had expired long ago. However, one of those expired licenses from 2011 covers a Chicago-area antenna that’s still flying so I thought it was worth looking for the other end of the link, but couldn’t find it.

One generality that emerged from the trip is “build out Chicago first.” Several of the licenses covering sites I found operating in Chicago also allowed for east coast transmit sites, but I didn’t find any one company operating in both Chicago and on the east coast, even when they had licenses to do so.

A signal arriving from across an ocean is several billion times weaker than one arriving from across town, so electrical noise is a big consideration in deciding where to place a receiving antenna. People like to surround themselves with electrically noisy machines (e.g. cars, computers, shavers, etc.), so I wasn’t too surprised to find no antennas near densely populated areas like Secaucus, New Jersey.

I had a lot more hope for an antenna site in more sparsely populated Wesley Hills, New York which is just across the state line from Mahwah, New Jersey. I didn’t find anything there except a well-camouflaged cell tower in the middle of the woods, but this site is on the same license as the West Chicago tower, so I felt I had to visit.

Alpine, New Jersey Antenna Site

All the sites visited so far have been on FCC experimental licenses, but I received a tip about an east coast shortwave broadcast license that could be related to trading. The heyday of shortwave broadcasting is sadly long past, but this new station was approved for construction in August 2017.

Unlike shortwave stations from the days of yore, this license uses a new form of digital transmission called Digital Radio Mondiale (roughly translated as worldwide digital radio). The format supports a variety of different voice/music digital encoding schemes, allowing for tradeoffs in the radio bandwidth used, the reproduction quality, and the reach of the signal. But most relevant to traders is the fact that data and voice can be sent at the same time (“data casting”). Think of how modern car radios seem to know the song and the artist for every song played.

The application for this license says the applicant’s principal business is “broadcast and data services,” which would be a good description for a shortwave version of the Quincy Data business model mentioned above.

A little looking through LinkedIn shows that the applicant shares an address on Lexington Ave. with a company involved with securities. A director of the company is listed as being an Independent ForEx Trader. The application says the antenna will have a heading of 52º and achieve good coverage of Europe.

The antenna site is in Alpine, New Jersey. There’s a nice aerial photo of the site in the application:

Even though the licensed antennas would be on the smaller “radar tower” highlighted in the application photo, it’s worth noting the much larger red and white tower to the left. It’s often called Armstrong Tower after the FM radio pioneer Edwin Armstrong who built it in 1938. His work gave us the FM broadcasting standards still in use worldwide today.

But back to the application for a shortwave antenna on the radar tower. I managed to get this photo of the radar tower before the Alpine Police chased me away:

After checking my rental car and out-of-state driver’s license, the officer accepted the story that I was looking for the Armstrong Museum. It was on the same site, but apparently closed years ago. The officer politely explained that they’re rather vigilant around the site because it was used as the backup transmission site for the NY/NJ metro area after the World Trade Center antennas and transmitters were lost in the 9/11 attacks. It’s across the Hudson and only 6 miles away from the northern end of Manhattan.

But getting back to shortwave trading, the key point here is that no shortwave antennas had been built as planned when I visited in early June, 2018, even though the FCC had allowed construction to start 10 months prior.

Riverhead, New York Antenna Site

There’s an experimental shortwave license for a site way out on Long Island at Riverhead, NY that looked very promising. Before heading to an antenna site with my own cameras, I always see what I can from aerial imagery first.

The above image covers an area about 1/2-mile on each side. The largest antenna sites I’ve previously surveyed have covered a few acres. The drone pilot I hired to survey the site measured it at 26 acres. It’s huge. Here’s the drone’s-eye view.

Most of the antennas used here are made with comparatively thin wire strung between steel towers, rather than with rigid aluminum tubing that’s easier to see from the sky. So it mostly looks like somebody cut a huge hole in the woods so they could stand up about 20 red and white towers until you take a closer look.

Above is one of the smaller wire antennas at Riverhead and the zoom lens makes the size hard to judge. The two closest towers are about 90 feet apart, while the one behind the trees with the red “T” bar at the top is 125 feet back from them. The diagonal lines in the foreground are guy wires for towers outside the frame.

In previous surveys, I’d never come across a pyramid antenna like this before.

It has a central tower and four sides, each of which is logarithmically flared toward the base. This site is practically an antenna zoo. It seems to have one of everything.

Research into the history and ownership of the site suggests that it wasn’t recently built for shortwave trading like the other sites I’ve documented. Historical imagery shows most of the towers have been there since at least 1994.

The site was built by ARINC many decades ago. You have to use the Internet Archive’s Wayback Machine to even find their history. Briefly, they were appointed by the FCC to provide communication to aircraft while they’re flying outside the range of their usual VHF radios. This is called “over-the-horizon” communication because it’s required beyond the line-of-sight limits of VHF. If you’ve ever flown back from Europe and wondered how the pilot knew the weather at JFK, now you know. Actually, today’s transoceanic pilots also have access to satellite communication, but I’ve read that their bosses still like them to use shortwave because it costs less.

In 2013, ARINC was bought by Rockwell Collins, who have a line of business making shortwave radios for airplane cockpits. They in turn agreed to be acquired by United Technologies. The FCC experimental license database shows that Rockwell Collins also has a license at this site, which I presume is for testing products like their shortwave modem.

If you dig back into the history of the area, you find that radio figures prominently. During the 1920’s, RCA built Radio Central, the largest radio transmitter in the world, just 17 miles away at Rocky Point, NY. Riverhead was the complimentary receiving site. The leader of this radio work was David Sarnoff who oversaw RCA and NBC. He also worked with Edwin Armstrong mentioned above in the history of the Alpine, NJ tower. In 1978, RCA sold 2,000 acres of land at Riverhead and 5,000 acres at Rocky Point to the state for $1. The Riverhead land is now the David A. Sarnoff Pine Barrens Preserve, coming right up to the fence around the antenna site I surveyed.

Getting back to modern-day Riverhead, I used the drone imagery to work out the outlines of the shortwave antennas there.

Unsurprisingly, the red antenna outlines point along the common flight paths over oceans. Google Earth has a sort of Wayback Machine for aerial images so you can see changes over time. Not much changes from 1994 until May 2016, when the antennas I highlighted with bluish outlines first show up. One of the bluish squares is the pyramidal log-periodic antenna shown above. The smaller bluish shape is a very interesting rigid log-periodic antenna similar to those seen at other shortwave trading sites.

We know these new antennas are transmitting because their license gives the station call sign as WI2XER and their signal was received by a shortwave listener. Experimental stations often request an exemption from the usual requirement that stations identify themselves with their callsign regularly. WI2XER did not request the exemption, so they regularly pause their high-tech data transmission experiments and identify with old-fashioned Morse Code.

Careful observers will note the microwave dish on the tower. I couldn’t find FCC records for it, but by eye, I can tell you that it’s pointing in the direction of Secaucus. To be fair, that’s also the direction of LaGuardia Airport and Central Park, so I have no certainty in the microwave destination.

So there’s a century-long history of shortwave radio around Riverhead. Antennas there have communicated with aircraft in recent decades. Only the last two years show any signs of new activity that seems to match the pattern seen in use by shortwave traders elsewhere. But if traders are now working there, it’s not the first time. A book on radio published in 1922 describes a small cottage in the woods at Riverhead where one “would never suspect that one fifth of the trade of the United States with Europe is practically conducted.” Nearly a century ago, prices sent by Morse code from Europe were received at Riverhead and then sent over land lines to 64 Broad St. in Manhattan, driving international trade.

Regulatory Questions

Many have asked how shortwave trading stations would be regulated by the FCC. I’m no expert in this area, so I sought the perspective of Bennett Z. Kobb before I left Washington DC. He’s a veteran watcher of the wireless industry and curator of @experimradio, an excellent Twitter feed highlighting interesting FCC experimental licenses. I’ve boiled my understanding of our conversation down to a few paragraphs for others who want some regulatory insight into shortwave trading.

If your business wants to set up a microwave link between two offices, the FCC has a category of licenses just for you. If you want to be an AM, FM, or TV broadcaster, there’s obviously a category of licenses for that. There are even licenses for shortwave broadcasting to the general public. But what if your business wants to set up a private shortwave link between international offices? Sorry, there’s no permanent license category for that. Nobody ever wanted such a license until recently.

FCC experimental licenses seem to be the category of choice today. These allow experimental operation for a few years and may be renewed. Historically, experimental licenses shared some constraints of amateur licenses, specifically the old rules contained prohibition of commercial use and encryption. However, the rationale behind new rules issued in 2013 says they were “modernized,” specifically to “keep pace with the speed of modern technological change.”

The rationale for rule change also mentions that it’s often proprietary business interests that drive technological change. Hence an applicant can ask the FCC not to publicly disclose proprietary parts of their application. (Example redacted application.) The proprietary information could describe novel technologies, questions to be answered by the experiment, and future business plans. But even if the FCC agrees not to disclose proprietary information from the application, the granted license will still reveal the transmitter location, frequencies used, other basic technical data, and contact information.

It’s clear to any FCC observer that rules do change over time. My best guess is that shortwave traders running unsuccessful experiments will just let their licenses expire. But those achieving success will renew, while petitioning the FCC for a rule change that would create a new license category allowing permanent operation. But note that the ocean-crossing properties of shortwave also make it subject to regulation by more than just the FCC. Clearly, there are mechanisms for this, but the international wrinkle will probably delay such permanent rule changes compared to domestic-only changes.

From my own perspective, I’ve now observed at least four different companies placing large bets on the future success of shortwave trading. They’re not skirting regulations and hoping that the regulators don’t notice. They’ve requested, and received, FCC licenses for their operation. Even though they’re limited-term licenses today, I can infer from the size of the bets that the traders see a path to continued legal operation.

Shortwave Trading Patents

Interesting things started to happen after I began talking about shortwave trading in public. I’ve received tips that often begin “Hey Bob, have you seen this?”

One tipster mentioned a US patent for trading over long distances with low latency using shortwave. It contains key ideas like using Software Defined Radio (SDR) to give computers control over radio parameters. It was published in June 2016, with a priority date of December 12, 2014.

Another tip I received pointed to a US patent covering shortwave trading with multiple paths. It was granted in September 2015, with a priority date of December 11, 2014. That’s literally the day before the priority date on the above-mentioned patent. The patent links to three prior posts on this blog [the now famous “HFT in my backyard” series – Alexandre] as non-patent citations. [Seems the people behind this patent is/are a Twitter follower of SniperInMahwah – Alexandre.]

I’m no IP attorney, but I read the patent as describing a communication system with multiple paths that may differ in bandwidth and latency. It describes “command data” such as an order to buy or sell and also “triggering data” that causes the command to run, perhaps with simple parameters that can be delivered with the trigger.

It gives the example of a trading system using both fiber and shortwave communication. The code and the orders can be sent over the fiber, with shortwave carrying only the trigger of when to sell, perhaps with small parameters.

Shortwave Radiogram

Shortwave broadcasting has been common since the 1920’s, but modern alternatives like the Internet have caused some to call it a legacy technology who’s glory days are behind it. Name calling doesn’t stop innovators like Dr. Kim Andrew Elliott from inventing things like Shortwave Radiogram. It’s a radio program of digital text and images sent by powerful shortwave stations on weekends when they’re not busy with their usual voice transmissions. Reception reports come in from all over the world.

This is relevant to shortwave trading because it’s an existence proof for sending data via shortwave. Take a quick look at YouTube reception reports from Israel, Germany, or Ontario to get a feel for the speeds and sounds of data and images going over shortwave.

The program for June 22-25 carried the text of a story on shortwave trading written by the ARRL, the national association for amateur radio. Watching the text scroll by as it’s received in the reception report videos linked above will give you a feel for shortwave data rates. Digital transmitters can probably achieve better data rates than shown, but this is probably the right order of magnitude for your thinking.

Farmer Kevin Mystery

I know I shouldn’t be impressed by how deeply connected the world is these days, but who could expect the connection between tweets from a sax-playing sheep farmer and shortwave trading? Let me explain.

Farmer Kevin Harrison plays tenor sax and tends his sheep in fields in Bath, England. He tweets as @FarmerKev100 and on June 17, 2018, he posted a picture of a mysterious device that showed up in one of his fields, asking what it was.

It was chained to a tree in his field so he went to get a hacksaw to cut the chain. By the time he got back, “two dudes were taking it away.”

Reddit has a subreddit called “WhatIsThisThing” with 600,000 subscribers where people post photos and videos of unknown things, asking for help in identifying them. Farmer Kevin now has about 600 twitter followers. Somehow Reddit user Pontifff saw Kevin’s photo and asked the subreddit for help with identification the same day Kevin posted the picture. Farmer Kevin was astonished four days later that his tweet was seen over 71,000 times.

The mysterious device was covered in camouflage tape and had a solar panel. Many on Reddit liked the suggestion that it looked like a “solar-powered beer fridge for hunters.” There were also some pretty hilarious comments on the Twitter thread linked above.

The only reason I know about these events is because I happened to be looking at the sources of traffic to my previous blog posts about shortwave trading when I saw 3,000 clicks coming in from the subreddit. I found that Reddit users linotype and spiregrain had commented on the mysterious device and suggested that it might be connected to shortwave trading, linking to my previous posts.

Their suspicions were raised because the device had wires going up into the trees that appeared to be ad hoc antennas.

Now imagine that you’re an aspiring shortwave trader. Some antenna sites are better than others, so how do you decide among them? Your goal is to receive a faint signal coming from across an ocean, so you want to choose a receiving location away from noise sources. You might build a portable broadband shortwave receiver device that logged noise readings to an SD Card for later analysis. Adding a solar panel would remove the need to change batteries. You might take your device to each proposed receiving site, chain it down, hope nobody notices, and collect a few weeks of data on the local noise levels so that you had data for comparing the receive sites.

Now throw in the fact that this site in Bath is on the side of a hill gently sloping toward the US and I like the explanation that somebody was assessing the site for use as a shortwave trading receive station. Reddit and Twitter came to the most reasonable conclusion in my book within a day and had great fun along the way.

Next Up

I hope to complete one more post here before my gardening leave ends and I go back to work on July 17th. I know there are still many discoveries to be made and insights to be gained, but my forthcoming employment agreement won’t allow me to talk about them publicly.

I plan to list some of the tools and techniques I’ve used in my investigations. I’ll also give pointers to some potentially interesting sites and hope that others can continue the investigation.