Human market makers at those exchanges are entering their quotes(by hand even). And Brad Katsuyama uses new electronic technology to crush them. Taking their entire inventories and moving the markets against them.
The human market makers fight back and make their computers do the market making for them and Brad is hurt because his technology is no longer the best way to trade.
This new exchange uses the long coil of fiber to enable all traders from around the world to benefit from that protection. I'm wondering if they really had to go to that extent to get the speed bump. But hey since shame has yet to force formally verified software on anyone's radar, the long coil will certainly do.
Edit: Oops. Maybe they can bypass the coil for certain orders. Well that doesn't make sense...
Canadian banker Brad Katsuyama notices prices for stocks he is buying change price almost the instant he places his order to purchase them.
Turns out that this happens when he places a larger order than can be filled at a single exchange. After some investigation he determines that HFT traders "see" his trade on the local NJ exchange and buy up stock at other (further away) exchanges before said banker can fill his order at the original (lower) price.
His solution: Send orders to multiple exchanges but delay the orders to the closest ones so orders arrive at exchanges more or less simultaneously thus defeating that particular HFT strategy. The coil of fiber is the method used to achieve that delay.