India’s Ambani brothers ‘battle’ over Reliance strategy

June 24th, 2008

A major battle is looming involving the Reliance conglomerate in India that could have far-reaching implications for the telecom sector in parts of Asia, Africa and the Middle East.

India’s billionaire Ambani brothers have been in dispute over a huge deal being negotiated by the younger brother Anil Ambani to create an emerging-market telecoms giant.

The ongoing feud between the brothers flared up earlier this month when older brother Mukesh Ambani, head of Reliance Industries, India’s largest private company, told the South African telecom player MTN that he had first right of refusal to buy a controlling stake in Anil’s Reliance Communications, according to media reports.

Reliance Communications had entered exclusive discussions in May to combine with MTN to build a telecoms operation that would reach from Asia to Africa to the Middle East with a market capitalization of up to US$70 billion. MTN, Africa’s largest mobile operator, said it intended to proceed with the talks.

But legal experts were reported to believe that the dispute, which hangs on the original settlement involving the break-up of the Reliance empire after the 2002 death of the father Dhirubhai Ambani, could seriously complicate proceedings.

Previously, Anil had threatened legal action against his brother if he tried to block the deal, a Reliance Communications source said.

Reliance Industries insisted a 2006 agreement stipulated that a decision on a majority stake sale in any of the companies belonging to the original group could only be made after consultations with the parties involved in the settlement.

The brothers appeared to work well together when their father was alive but relations started souring after they inherited the huge business empire from Dhirubhai in 2002.

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Peter Evans - Senior Research Analyst - BuddeComm

IPv6: How It Works - and Will It Ever Be Widely Adopted?

June 23rd, 2008

In development since the mid-1990s, IPv6 (Internet Protocol version 6) has not yet been widely adopted, due in large part to compatibility difficulties with IPv4, which is the basis of virtually all Internet communications today.

IPv6’s importance rests on the fact that it is the only alternative to IPv4, at a time when IPv4 address space is becoming harder to obtain, and when major new deployments of IP technology, in developing countries and in handheld mobile devices, are being planned.

A new BuddeComm biennial report in Handbook format - 2008 Technology - Internet - Volume 4 - IPv6 - introduces managers and technical specialists to the technologies and controversies of IPv6. 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.

While it is widely assumed that IPv6 will one day be so widely adopted as to overtake and replace the current IPv4-based Internet, we argue that such ubiquitous adoption is not assured in the foreseeable future. At a time when many organisations are tempted to adopt IPv6, or are being pressured to do so by governments, this Handbook provides an alternative perspective to much of what has been written about IPv6 by its proponents.

The Handbook provides a comprehensive introduction to IPv6’s addressing system and to its commonality and differences with IPv4. We offer critical perspectives on some of IPv6’s purported benefits, such as its long 128 bit address system and the yet-to-be completed SHIM6 approach to multihoming. Multihoming is the ability to reliably connect to the Internet via two or more ISPs. SHIM6 is intended to enable this without the use of BPG-managed PI (Provider Independent) address space. Current BGP-based multihoming practice drives up costs of core routers for every ISP and is the primary cause of the Internet’s routing and addressing crisis.

IPv6 addressing is more complex and flexible than that of IPv4. We discuss the auto-configuration processes by which an IPv6 host computer develops its own IP addresses, with separate addresses for local and global use. We discuss Unique Local Scope addresses which enable a site to retain a fixed set of addresses, which are not globally routable, no matter which ISP they connect to the Net with.

IPv6 provides extensive support for automated assignment of IP addresses to hosts and routers, which is intended to make it more practical to renumber an entire network from one range of PA (Provider Aggregatable) address space to another, when changing ISPs. However, there are many challenges to achieving this securely and robustly, and many other aspects of networks beyond the reach of this system would require manual reconfiguration if a new address range was adopted.

Other aspects of IPv6’s address system enable a more standardised approach to addressing than is possible with IPv4, such as the use of a /48 prefix for most end-users, from large companies to residential users, with the capability of running 65,336 LANs, each with an essentially unlimited number of computers.

The Handbook describes the IPv6 extensions to the Domain Name System and the IPv6 packet header, with its system of extension headers for various applications such as Mobile IP and authentication.

We provide a detailed description of Mobile IPv6 and some enhancements to it, including NEMO (mobility for entire networks), Fast Handovers and Hierarchical MIPv6 Management (HMIPv6). We also discuss the difficulties of integrating mobile IPv6 and multicasting with cellular mobile systems and how this would compare with alternative arrangements, such as MediaFlo and DVB-H.

The Handbook includes a detailed discussion of SHIM6 - the IPv6-specific multihoming protocol which operates at the level of each host computer, rather than for an entire network via a router. There are several challenges to its successful operation, and questions about its usefulness when an entire network is to be multihomed.

The problems IPv4 is experiencing with unconstrained growth in the global BGP DFZ (Default-Free Zone) routing table - the Internet’s routing and addressing crisis - are likely to be repeated with IPv6 if and when IPv6 becomes widely adopted. We discuss attempts to avoid this through the use of address assignment policy and the filtering of BGP advertisements. Now that three RIRs assign Provider Independent /48 prefixes to end-users, we review the difficulty in constraining DFZ routing table growth unless a new routing and addressing architecture is developed. We also critique calls for the RIR’s control over IPv6 address assignment to be opened up to include multiple for-profit registration companies.

We review the transition mechanisms for running dual-stack host operating systems with IPv6 connectivity via tunnels over the IPv4 network. An IP “stack” is multiple layers of software which enable the computer to communicate via each Internet Protocol. A computer with both IPv4 and IPv6 protocol stacks needs both IPv4 and IPv6 addresses. Since IPv4 computers cannot communicate directly with IPv6-only computers, dual-stack is the only feasible method by which end-users could adopt IPv6 while still being able to communicate with all the computers in today’s IPv4 Internet. There are several approaches to this, including 6to4 and Microsoft’s Teredo. Yet only when almost all computers have IPv6 could most end-users do without IPv4 connectivity. This ubiquitous adoption of IPv6 will not occur in the foreseeable future, since IPv6 is yet to provide sufficient benefits for it to be adopted by significant numbers of ordinary end-users.

Finally, the Handbook considers the countries and application areas where IPv6 is most likely to be adopted, including mobile and IMS (IP Multimedia Subsystem) applications and in China.

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Italian WiMAX auction proving wider sector interest

June 23rd, 2008

As has become common across Europe in recent years, the Italian government sees WiMAX as a key technology for expanding the availability of broadband, particularly in underserved rural areas. WiMAX in the 3.4GHz - 3.6GHz band was slow to gain traction in Italy because the Ministry of Defence controlled the spectrum in most parts of the country. Starting in February 2005 the Ministry gradually transferred these frequencies to the regulator region by region. Nevertheless, WiMAX remained a poor proposition in Italy because of the perceived high cost of freeing up the spectrum (transfer costs to Defence) and rolling out a network. In October 2006 the Ministry of Communications was forced to reassure players that a national WiMAX network could be built for around €200 million, less than half the sum proposed by one of the main WiMAX providers, Alvarion.

The 3.4GHz spectrum release enabled the regulator in October 2007 to pursue plans to auction 35 WiMAX licenses in this band. By the time of the auction some of the main broadband players, including FASTWEB, Mediaset and Wind, had pulled out.

In March 2008 the government awarded WiMAX licenses to 11 companies, raising €136 million. This was the highest price yet realised in the EU, and a full 176% more than the base price set for the auction. The 15-year licenses must be used within 30 months (the ‘use or lose’ condition). Frequencies can be sold to third parties with the agreement of the Ministry for Economic Development, which took over the responsibilities of the Communications Ministry in May 2008.

AriaDSL and AFT secured the two licences at the national level, while Telecom Italia has chosen to concentrate mostly on central and southern Italy and Sardinia, with a view to fulfilling its universal access targets without having to invest in fixed-line infrastructure in sparsely populated regions: about 4.2 million citizens, or 7.5% of the population, still have no access to broadband. Retelit gained coverage in several regions in northern Italy, while Tourist Ferry Boat took a single license to offer Internet access on ships travelling between the mainland and Sicily, as well as services on the island itself.

The cost of the spectrum reflected the high demand and value attached to it (particularly when compared to 3.5GHz auctions in France and Germany - €126 million and €56 million respectively), even though the band is not best suited to mobile broadband and Internet services. Most of the licensees plan to deploy WiMAX to provide broadband to underserved rural regions. The greater demand for 3.4GHz-3.6GHz frequencies was driven by the increasing willingness of regulators across Europe to allow mobile applications in what was traditionally a fixed-only band. In addition, Italy’s auction was the first undertaken with a standards-based technology (WiMAX) for the band.

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 Henry Lancaster - Senior Research Analyst - BuddeComm