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The Invisible Hand vs. the Public Interest in IPv4 Address Distribution

In the efforts to promote the public interest over that of monied interests in Internet Governance few issues are clear cut. One issue that has recently been discussed is that of requiring a “needs assessment” when transferring IP addresss blocks from one organisation to another (in the same or different RIR regions) or indeed when requesting IP resources from your friendly RIR.

IP address space is a finite public resource. Traditionally, folk who need IP addresses fill in a simple form documenting how current addresses are used and explaining how the requested IPs will be used. It’s a simple process that takes a few minutes to complete, and even less time to process. Having been a Hostmaster at one of the RIRs, I have some experience in this area. Back in the very early days of the IANA, requirements were even more simple and many organisations got lots more IPs than they could actually use due to the classfull nature of addressing at the time. These early Allocations are often called “legacy space”, as they were made prior to the formation of the RIR system as we know it.

There seems to be a vocal minority clamoring for the removal of this needs requirement in some of the RIR regions, some of whom are undoubtedly hoping to profit from the sale of IP addresses, while others seem to be guided by free-market philosophies. Unfortunately, neither motivation seems to advance the public interest in IP address distribution, despite their rhetoric to the contrary.

If organisations were allowed to obtain IP blocks from the RIRs (or from other companies) without first demonstrating that they needed them, the Internet would have run out of IPv4 long ago. This would obviously not have been in the public interest, as Internet growth would have stagnated.

Recently, we have seen the Internetgovernanceproject blogging about this issue and they talk about the needs requirement as a “barrier to trade”. While this may be the case, a much bigger and more damaging barrier to would be erected if folk were allowed to flog their IP resources (legacy or not) to the highest bidder without any regard for Internet resource stewardship. In the theoretical case that IGP raises, where Asian companies looking for more addresses than they think they can get from their RIR are eyeing legacy IP blocks. IGP seems to think that such organisation should be able to buy legacy blocks without demonstrating that they actually need these resources. In other words, the companies who have the most cash “wins”, which is not a philosophy normally associated with public interest outcomes. Many in the RIR policy communities are concerned that this will lead to hoarding and speculation, driving up the cost of doing business for all while enriching the few.

The current RIR system works incredibly well. It is the most respected part of the ICANN system in terms of openness, transparency and true bottom uppity-ness. Normally, IGP decries the heavy influence in ICANN processes by monied interests, but in this case, they seem to be cheerleading for the monied interests due to some deep seated Ayn Rand-ian laissez faire-ness. Inexplicable really, but I digress.

Now that we are faced with the impending run out of IPv4, several RIR policy communities are placing greater restrictions on allocation and assignments as a natural reaction the coming shortage. For example, in the AfriNIC region, consensus was reached at the last AfriNIC meeting on a “Soft Landing” policy, which is now in Last Call. Amongst other things, this policy specifically states that resources allocated to the AfriNIC region are meant to be used in the region, thus precluding inter-region transfers.

Currently the APNIC community is in the process of restoring the justification of need for transfers, which was relaxed just last year.

Asking folk why they need a certain number of addresses has worked to prevent hoarding and speculation of Internet resources for many years. It is even more important now that we are running low on the supply side of IPv4. RIR policies are set by groups of people working together to reach consensus positions. Asking that we allow the “Invisible Hand” to determine policies going forward is not responsible stewardship, it’s just crass commercialism.

By McTim, Internet policy and governance consultant

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there is already a rather thriving market in abandoned netblocks Suresh Ramasubramanian  –  Sep 12, 2011 3:27 PM

which get acquired by creating shell companies in the name and domain of a defunct organization and simply resubmitting registration papers.

It will be very difficult to stop horse trading CIDRs but the worst abuses can certainly be warded off with the current needs based approach

@Suresh: if you're aware of such abuses, Frank Bulk  –  Sep 13, 2011 3:39 AM

@Suresh: if you're aware of such abuses, please submit them to ARIN at https://www.arin.net/public/fraud/index.xhtml.

I had older cases in mind Suresh Ramasubramanian  –  Sep 13, 2011 3:41 AM

eg: http://voices.washingtonpost.com/securityfix/2008/04/a_case_of_network_identity_the_1.html

Some more recent cases Carl Byington  –  Sep 13, 2011 6:06 PM

http://www.five-ten-sg.com/mapper/spam-history#rout has some more recent ones, but at least some of those have been resolved. Others are still a problem - for example see http://www.spamhaus.org/SBL/sbl.lasso?query=SBL51908

Yet another "market" in an abstract "commodity" that ought to be managed, not sold. Brett Glass  –  Sep 14, 2011 5:55 PM

If IPv4 addresses are allowed to be bought and sold, we’ll see exactly the same problems we see with domain names and spectrum. In the case of domain names, we see “squatters” and speculators seeking to cash in on others’ genuine needs, and in the case of spectrum, we see the hoarding of licenses for the purpose of locking out competition. Neither is appropriate. IANA and all of the regional authorities should lay down the law: no selling of addresses. Period.

stolen, not sold Carl Byington  –  Sep 15, 2011 7:48 PM

Most of the cases I pointed to above are where the address space was simply stolen, not sold.  There are large blocks of address space where the former user cannot be located. Spammers at one point were re-registering the original domain names and creating similar named shell companies, then simply pretending to be the old company, and taking over that old ip address space. That is not really a sale.

However, “authorities should lay down the law: no selling of addresses” is folly. Prohibition has not worked for alcohol or drugs, and it won’t work for ip address space either.  If there is a supply and willing buyers, there will be sales.

We're not talking about "Prohibition." We're talking about appropriate use. Brett Glass  –  Sep 20, 2011 3:29 PM

The analogy to Prohibition does not hold water. IP addresses are (obviously) not contraband. And they are allocated rather than sold. Just as regional numbering authorities should revoke allocations when they go unused, they should also revoke them if they're being traded or sold. We pay them thousands of dollars per IP block to do this; there's no excuse for them not to engage in proper oversight.

What does "revoke" mean? Leo Vegoda  –  Sep 20, 2011 8:03 PM

Brett, You say that "they should also revoke them" but what does that actually mean? The RIR cannot stop them being used; it can only remove its database entry and the reverse DNS delegation. If the original registrant or its customer continues to use the addresses the RIR could only allocate them to another registrant in the full knowledge that the new registrant would experience significant problems. I think that revocation is only meaningful if the RIRs have a role in controlling routing, which they currently do not.

With revocation the operators who peer or Frank Bulk  –  Sep 20, 2011 11:54 PM

With revocation the operators who peer or route the netblock would need to be informed. Otherwise it revocations would have no (short-term) effect.

Yes, it is prohibition Carl Byington  –  Sep 21, 2011 5:29 PM

Of course it is prohibition - you want to prohibit the sale of ip addresses, just as many governments want to prohibit the sale of some drugs. As soon as you (generic you meaning a government) prohibit the sale of anything, that thing then becomes contraband. How will anyone be able to tell the difference between: A: user X has excess ip addresses, and allows user Y to use some of those addresses, perhaps by pretending that user Y is a "customer" making periodic payments for such use. B: user X has excess ip addresses, and sells some of them to user Y for a fixed one time price. It seems you wish to prohibit B but allow A. And, as others have pointed out, the entire "revoke the allocation" has operational problems. One could of course make it illegal to advertise (or to accept BGP advertisements) for that "revoked" space, but I think that is a dangerous path for many reasons.

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