Archive for June, 2008

The Internet’s Routing and Addressing Crisis

Monday, June 30th, 2008

Even the most advanced IT systems cannot grow and expand forever.

In the years to 2010, the Internet enters its fourth decade and is reaching two important limits which are inherent in the current architecture. Firstly, the exhaustion of previously unused IPv4 address space, and secondly a set of inter-related scaling problems in the BGP (Border Gateway Protocol) routing system which drive up the cost of the core routers used by every ISP and large end-user network – such as those of corporations and universities.

These problems contribute to the cost of Internet access for all users – at home and in business. The Internet’s Routing Scaling Problem threatens the stability of the global routing system. Together with the closely related IPv4 address exhaustion problem, the two form the Internet’s unfolding Routing and Addressing Crisis.

This crisis leads to increasingly high barriers to the entry of new ISPs and prevents millions of end-user networks from obtaining the Provider Independent address space they need to multihome their networks and avoid “provider lock-in” – by being able to choose a new ISP without having to change the IP addresses of all the computers and other devices on their networks.

At a time when many users and investors expect Internet costs to continue their historical downwards trajectory while capacity and user numbers continue to grow, we examine the problems facing the Internet, the likely solutions and the likely costs and limitations of these solutions.

A new BuddeComm biennial report in Handbook format – 2008 Technology – Internet – Volume 5 – Routing and Addressing Crisis – introduces managers and technical specialists to and important and controversial set of technical and policy challenges. The BuddeComm Handbooks provide an overview and functional understanding of important technologies which are otherwise hard to grasp without one-on-one training or lengthy study of voluminous engineering-oriented material.

The routing scaling problem and the closely related IPv4 address depletion problem directly affect every ISP’s costs, the capacity of the Internet to accommodate new networks, and the ability of end-user computers to have their own unique address. These problems are rarely discussed outside the IETF and IRTF (Internet Engineering and Research Task Forces). Until these problems are resolved, competition policy, reliability and cost problems will escalate, especially with the accelerating adoption of Internet communications in developing countries.

It is widely recognised that fresh IPv4 address space will become difficult or impossible to obtain around 2010, and that it is impractical for most users to adopt IPv6 – the second version of the TCP/IP protocols and addressing system with its essentially boundless 128 bit address space.

We review the needs of end-users and discuss in detail the scaling problems of individual routers and the BGP routing system as a whole. We then consider the role the current architecture plays in the relatively low rates of utilisation of IPV4 address space. While IPv4’s 3.7 billion addresses are a fundamental constraint, we consider how a new routing and addressing architecture could enable efficient use of these addresses than is possible with today’s techniques.

We discuss the major proposals for improving the BGP protocol and the current routing system. However, these are marginal improvements and are not a solution to the major challenge of providing an ever-growing number of end-user organisations with portable address space, multihoming – using two or more ISPs to create a robust, reliable Internet connection – and Traffic Engineering, the ability to manage incoming packet flows over multiple links. A new architecture is required so these goals can be achieved, for potentially millions of businesses and other organisations, without further burdening the BGP routing system.

Since the Internet’s inception, these have been achieved by directly using the BGP routing system so that each of the Internet’s 200k+ Default-Free Zone routers has to make a separate “best path” decision for each network’s division of the address space. There are currently 250k divisions and this number is doubling approximately every four years.

We discuss the constraints on a new architectural solution, including complete backwards compatibility for computers in networks which have not adopted the new architecture, and the requirement that there be no changes to the operating systems or application programs of user’s desktop PCs, servers and mobile devices.

We explain and compare the four current proposals for achieving these goals: LISP-NERD, LISP-CONS, APT and Ivip. These are all overlay systems, operating at the IP packet level. These involve upgrades to some routers but are intended to relieve the burden on the BGP system. These proposals are ‘Locator / Identifier Separation’ protocols, involving Ingress and Egress Tunnel Routers, with some broad similarities and important differences.

Finally, we consider some pervasive difficulties which are likely to result from any one of these new architectural approaches, including the longer headers of tunneled packets, the resulting inefficiencies for short packets (such as VoIP packets) and problems with maximum packet length and fragmentation for longer ones.

This report is intended for technical specialists and managers who require insight into the future of Internet communications in the three to fifteen year timeframe. This is the only report extant on this important topic and is intended to support readers by providing fundamental understanding of the most important principles, in order to enable them to better plan their own product and service development, investment and regulatory activities.

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Virgin mobile buys helio

Monday, June 30th, 2008

Virgin Mobile USA has agreed to acquire Helio (a joint venture between SK Telecom and EarthLink).with the acquisition costing Virgin Mobile $39 million, paid in limited partnership units equivalent to 13 million of its shares, currently valued at $2.99. In addition, the company will take on $50 million of investments from British parent Virgin Group and SK Telecom at a price of $8.50 per share. It is thought the deal will assist Virgin by:

  • Acquiring higher-paying subscribers (170,000 customers with an ARPU of $80);
  • Expanding its range of products and services;
  • improve its handset portfolio;
  • improve its debt levels;
  • place it in a stronger position for negotiating better with network operator Sprint Nextel.

For further information see separate report: Global – Mobile – MVNOs.

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Mobile TV and Mobile Broadband

Monday, June 30th, 2008

A growing number of countries are eagerly pursuing the mobile TV market, with ten licences provided in France alone. However, so far no one has been able to come up with a good business model. In Australia these plans have been abandoned for a similar reason. It will be interesting to see if France can make mobile TV viable, but BuddeComm is very doubtful about it a possible success.

By contrast, there is an explosion of mobile broadband taking place in 2008. This is driven by competition, which of course is much better embedded in the mobile market than in the fixed market. Telenor, the key second-tier player in the mobile market in Sweden, is a good example of this development. Competition has driven the price of unlimited data caps down from SEK560 ($93) to SEK199 ($33). This saw the market for mobile broadband grow from 50,000 in 2007 to 350,000 subscribers in 2008.

Currently, high-end mobile data services represent complementary revenue for the mobile operators. However, it is expected that over time this will balance out when the mass market starts to kick in, by which time this revenue will change from being complimentary to being a substitute.

Please join me on the 24th of July at the BuddeComm Roundtable in Sydney. Theme: The Rapidly Emerging Mobile Media Market

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Digicel officially launches it mobile network in Vanuatu

Friday, June 27th, 2008

Digicel officially launches it mobile network in Vanuatu

In June 2008 Digicel Pacific launched its fourth market in the Pacific region in Vanuatu, following launches in Samoa, Papua New Guinea and Tonga. Digicel has made an initial investment of US$35 million building a network provides coverage to all Ni -Vanuatu communities for the first time. Digicel Pacific was awarded the licence to operate the GSM network in Vanuatu in March 2008, after being awarded a licence in Fiji two weeks prior.

Digicel Vanuatu has opened two flagship stores and has over 1,300 top up locations throughout the country. It is headed by John Delves from Ireland. The mobile operator now employs about 70 Ni-Vanuatu staff and it is estimated that an additional 2,500 jobs have been created through its local dealerships and partners.

Digicel Vanuatu’s offerings include per second billing, rollover minutes, international postpaid roaming and free voicemail. Prices for handsets for both prepaid and postpaid customers, start at $18.

Vanuatu has a population of approximately 210,000 people with mobile penetration estimated at just over 16%.

See also: Vanuatu – Telecoms Market Overview & Statistics.

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TNZ signs transformation contract to assist Telecom Retail

Friday, June 27th, 2008

As part of Telecom New Zealand’s transformation program, the company has signed a contract worth $NZ20 to $30 million with Indian company Tech Mahindra, to assist Telecom Retail with four key areas. These involve the bundling of products sourced not only from Telecom wholesale but also from Chorus and companies outside of the group. This will build on Telecom Retail’s capability to bring out new products.

Another key area Tech Mahindra will assist with is improving Telecom Retail’s cost position with improved self-service functions, including more focus on online automation processes. The move is part of Telecom’s strategy to counter high CAPEX with call centre reduction and online sales and service.

The Indian company will also assist with the delivery of retail separation undertakings. Tech Mahindra has been working with Telecom group for about 13 months, with small projects involving Gen-i.

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