[mruts]

I don't think you understand what many HFT firms do. They arbitrage between exchanges. For example the option or futures price of a security in Chicago and price of the underlying in New York. Also arbitraging between equities listed on multiple exchanges.

Co-location isn't a solution to these problems, and low latency lines between exchanges in different parts of the country and world is a huge huge factor to successfully implementing many/most HFT strategies.