http://nitrosphere.com/tuning-sql-servers-network-performance/

Where do performance problems happen?

When data hits the network, there are a number of problems that can cause poor performance, including:

Packet loss – caused by either congestion or an unreliable connection.

Spurious retransmission – slow links can appear to lose packets, causing duplicate packet transmission.

Underutilization – surprisingly, failing to fill a high bandwidth connection that also has high latency, like many WAN connections, is a very real issue.

Poorly Implemented Applications – inefficient use of TCP/IP (or TDS when talking specifically about SQL Server).

With the exception of poorly implemented applications, the transport layer is designed to deal with all these performance issues.