Europe’s Regional Internet Registry Mulls a ‘No Need’ IPv4 Address Allocation Policy

WTPF draft opinion 4, in support of IPv6 adoption and transition from IPv4 (http://xrl.us/bo3k6e), said a “growing market has developed in the transfer of IPv4 addresses between entities with a significant proportion of transferred addresses from legacy allocation which are not subject to the relevant policies of the RIRs.” The “reality of an IP number market can no longer be denied” after Microsoft bought Nortel’s number assets in a bankruptcy, wrote Internet Governance Project members Milton Mueller and Brenden Kuerbis of Syracuse University School of Information Studies and Hadi Asghari of the Technology University of Delft, School of Technology, Policy and Management, in a Sept. 1 paper. But “few wish to openly acknowledge the market’s existence,” bringing to mind the phrase “’the elephant in the room,'” they wrote in Dimensioning the Elephant: An Empirical Analysis of the IPv4 Number Market (http://xrl.us/bo3k67).

IPv4 numbers are depleted, but the fact that IPv6 addresses are now available doesn’t solve the problem, Mueller and the others wrote. Because the two protocols aren’t compatible, implementing IPv6 means either abandoning communication with everyone else running IPv4 or running both at the same time (dual stacking). Migration to IPv6 doesn’t actually reduce the need for IPv4 numbers; it requires parallel growth of both Internets until the tipping point is reached when almost everyone is using IPv6, they said.

To close the gap, some RIRs have adopted policies to allow transfer of IPv4 addresses between organizations, the paper said. “There is a thriving and growing market for IPv4 number blocks.” The market for such addresses consists of several areas, Kuerbis told us. There are transfers occurring within RIR processes and recorded by RIRs, but there’s also a “gray” or parallel market taking place outside the RIRs which is perfectly legal, but “unofficial” according to the regional registries, he said. Gray-market transactions either involve parties which can’t meet RIR transfer policies (in particular, the needs-based assessment) subleasing addresses from entities previously given addresses by an RIR, or transfers between legacy address space holders and others who need addresses, he said.

There is growing evidence that IPv4 number blocks are being leased as well as sold, Kuerbis wrote in an April 28 Internet Governance Project blog (http://xrl.us/bo3mia). According to the transcript of an April 22-24 meeting in Barbados (http://bit.ly/142layK), ARIN Registration Services Department Director Leslie Nobile said: “There’s no policy for this, but we're hearing lots of reports and rumors that organizations are leasing IPv4 address space to other [organizations]. Obviously with depletion, people do get creative.” However, she said this might not be a matter for ARIN to deal with.

The issue of leasing, or, rather, subleasing, since ARIN already leases the addresses to its members, “is yet another symptom of the growing scarcity of IPv4 addresses,” Kuerbis wrote. It could transform the address transfer market by creating completely new ways of allocating addresses and provisioning post-allocation services, he said. It could lead to innovative products such as providing means to mitigate the technological obsolescence of IPv4, he said. “We just don’t know."

Entities are willing to consider buying or leasing IPv4 addresses rather than moving to IPv6 “because their businesses depend on being connected to the Internet,” Kuerbis said. Companies can’t realistically switch to only IPv6 until a critical mass adopts it, so they must continue dual-stacking, he said. As IPv4 addresses become scarce, organizations are trying to figure out how long the “great tipping point” might take to arrive and planning and acquiring IPv4 addresses accordingly, he said. In North America, “the interesting thing is that some businesses continue to think buying or leasing addresses is preferable to simply getting some allocated from ARIN -- which suggests businesses see value in those activities, probably for a variety of reasons,” he said.

'No Need’ Allocation Policy

Under current RIR policies, all Internet Protocol numbers “continue to be allocated for use on a needs basis and should be returned to the numbering pool when no longer needed,” the draft WTPF opinion said. Transfers of IPv4 addresses not coordinated through the RIRs “could have undesirable consequences” which could be lessened if the switch to IPv6 were accelerated, it said. An idea being considered by RIPE NCC could shake up the situation. On Wednesday, its Address Policy Working Group debated a proposal from Tore Anderson, of Redpill Linpro, a Nordic provider of open source services and products.

The proposal throws out the need-based requirement for IPv4 delegations in the RIPE NCC region. Current policy requires IPv4 addresses to be “conserved” and distributed to end-users’ operating networks according to need, and not stockpiled, Anderson said at the working group meeting. But Europe ran out of IPv4 space last September, so the goal of conservation is obsolete, he said.

The proposal, “No Need -- Post-Depletion Reality Adjustment and Cleanup” (http://bit.ly/10pvK2m), will make transfers easier, although the second-hand market for IPv4 addresses is “over-hyped or exaggerated,” Anderson said. Other benefits include: (1) Organizations will be able to plan their use of IPv4 addresses for as long as they deem sensible, without having to justify their need every one or two years. (2) The policy will be easier to read and understand, because it does away with large portions of the current text. (3) Ending the requirements to document need for IPv4 addresses will cut red tape.

The new policy would also eliminate the incentive to “game the system,” Anderson said. If there’s no need to convince RIPE NCC that more IPv4 address space is needed, there’s no longer any point in lying about that need, he said. Another benefit is that IPv4 policy would be more closely aligned with IPv6, which almost never requires allocation to be need-based, he said.

The proposal also sets out opposing arguments. One key argument is that it conflicts with the address space conservation goal, which Anderson believes is no longer applicable. Another potential issue is that a no-need policy would run counter to ARIN’s inter-RIR transfer policy, he said. But ARIN only accepts transfers from the Asia-Pacific RIR region, so transactions between RIPE NCC and ARIN service areas are “impossible to begin with,” a state that would remain unchanged. Another counterargument to the proposal is that removing the need-based requirement would break open the entire IPv4 market, allowing big corporations to grab all the available addresses and sell them for the highest price, Anderson said. This argument applies equally to any freely traded commodity, especially those in limited supply, he said. But those markets function well and competitively, and there’s no reason why trade in IPv4 addresses would be different, his proposal said. Even if that turns out to be untrue, most jurisdictions in the RIPE NCC service area have laws against monopolies, cartels, price-fixing and so forth, he wrote.

The working group is waiting for an impact analysis of the proposal, due shortly, Anderson said. The concept has sparked “hot discussion” but mostly support, he said. One meeting participant called the proposal a “dramatic change” whose time had come. Another, Michele Neylon of Irish domain name registrar Blacknight Solutions, called Anderson “incredibly naive” for thinking that eliminating the need assessment won’t lead to wholesale gaming of the system. Plenty of people will abuse it, and small companies will get hurt, he said. Anderson disagreed, saying no amount of policy can stop someone willing to game the allocation system.

The two draft opinions being considered by WTPF delegates on IPv4/IPv6 issues -- the second concerns capacity-building for deployment of IPv6 -- call for needs-based allocation to continue. “What’s remarkable to me is the similarity between the RIRs and ITU positions,” Kuerbis told us. The RIRs “have obviously spent a lot of time influencing the process,” said Anderson.

Any policy ideally should encourage the movement of IPv4 addresses to where they're needed, Kuerbis said. The ITU and U.S. government seem to think they're showing their knowledge of address allocation policy by giving unqualified endorsement to needs-based allocation, he said. “But the real world of IPv4 has already bypassed that old-time religion. More and more people in the RIRs are viewing needs assessments for IPv4 as an unnecessary bureaucratic obstacle to the smooth functioning of an IPv4 market.”