This is a nice plot for a movie, but not how HFT is really done. It's so much easier to colocate on the same datacenter of the exchange and run algorithms from there; while those algorithms need humans to guide their strategy, the human thought process takes a couple of seconds anyways. So the real HFTs keep using the defined strategy while the human controller doesn't tell it otherwise.
For faster access to one exchange, yes, absolutely, colocate at the exchange. But there's more then one exchange.
Yes, but to do real HFT you will need to colocate at each exchange. Otherwise your competitors have a head start on you.
As one example, many index futures trade in Chicago. The stocks that make up those indices mostly trade in New York. There's money to be made on the arbitrage, if your Chicago algorithms get faster information from New York (and vice versa) than everyone else's algorithms.
Most traded index futures are longer than just that day closing, usually months to a year in advance. They are influenced mostly by traders perception on economic futures, and the current stocks valuation is a poor proxy for it. There is more chance in reading the news feeds and speculating its impact on perception than stocks. Rubens