I don't know how it'd be possible to implement on a practical level, but technically it would not be hard to have an exchange compensate purchases for network travel times. This would eliminate the advantage these particular parties get from their location. The biggest flaw is that you'd need an impartial 3rd party administering the machine that handled these calculations (however, this problem is no worse than the one that currently exists).
In a broader sense I'm not sure that HFT benefits anyone except banker parasites, so perhaps it'd be worthwhile to try and limit trading in an even stronger way.
In a broader sense I'm not sure that HFT benefits anyone except banker parasites, so perhaps it'd be worthwhile to try and limit trading in an even stronger way.