Consider disabling the Nagle algorithm. 120-bytes is quite small and its possible that data is being buffered before being sent. Another reason I think it is the Nagle Algorithm is that about 33 sends should happen in 1 second.
That corresponds with 33*120 = 3960 bytes / sec very similar to the 3500 you are seeing.
Change your dataread function as follows such that WSAGetLastError is only called when there is an error.
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