Dimensioning the elephant: an empirical analysis of the IPv4 number market

Abstract

The elephant in the roomOne of the most important but least-studied aspects of Internet policy is the emergence of a trading market for previously allocated Internet number blocks. Without unique Internet protocol numbers for the networks and devices attached, the Internet simply doesn't work. The original Internet Protocol standard, known as IPv4, specified a 32-bit numbering space, which provided slightly less than 4 billion unique numbers that could be used as addresses (Postel, 1981). A large part of that number space has already been handed out to organizations. The available supply is dwindling, and the Asia-Pacific region is already reduced to rationing its last /8 in tiny, 1024-address chunks, one to an organization, while the European region is only a few months from that status.Recent market developments and policy changes by Internet number registries now allow organizations with more numbers than they want to sell them to another organization. In other words, a market for IPv4 numbers is now possible. This is a major change in the political economy of Internet governance. It is likely that the commercial forces unleashed will have far-reaching consequences for Internet businesses, users and governance institutions. In a related area, domain name registration, the emergence of a commercial market led to the growth of a domain name industry and major changes in policies and institutions, such as the formation of ICANN, the separation of registries and registrars and the new gTLD program.After a highly publicized deal in which Microsoft bought Nortel's number assets in a bankruptcy proceeding, the reality of an IP number market can no longer be denied. But many in the Internet technical community still feel uncomfortable about it. One reporter with attitudes typical of the technical community, has predicted that "a functioning market won't form at all, or will break down very quickly after it forms" (van Beijnum, 2011). This is partly due to an ideological resistance to the commodification of a critical Internet resource, and partly due to their fears that an IPv4 market might delay or even prevent a migration to a new Internet protocol (IPv6). Either way, few wish to openly acknowledge the market's existence. Thus the topic of number markets brings to mind the phrase "the elephant in the room."Moreover, the information we have about this elephant is fragmented and unsystematic. IP number allocation is controlled on a contractual basis by five separate regional Internet registries (RIRs). Each has different policies toward transfers, different registry databases, and different disclosure practices. It is difficult, therefore, to obtain a comprehensive picture of the emerging market for IPv4 number blocks. This recalls the old fable about the five blind men and the elephant, with each one having access to a small part of the body and none of them quite grasping the nature of the beast as a whole.Based on this double-elephant metaphor, this paper tries to make a less than elephantine but much-needed empir...

The hidden standards war: economic factors affecting IPv6 deployment

“…A market price for IPv4 number resources encourages conservation and incentivizes the transfer of unused or underused IPv4 numbers to network operators who need them more. Ever since the development and legitimization of secondary markets for IPv4 numbers, market incentives have led to the creation of an increasingly efficient process for locating unused or underused number blocks and for linking buyers and sellers in ways that move numbers from less valued to higher valued uses (Mueller et al, 2013). In addition, network operators can economize on IPv4 addresses by deploying NAT.…”

Passive and Active Measurement

“…Early academic studies [17,28] discussed the possible implications of market-based mechanisms for reallocating IPv4 addresses. Mueller et al [32,33] used the list of published transfers to analyze the emerging IPv4 transfer market by quantifying the amount of legacy allocations exchanged on the markets and the impact of the need-based policies on the utilization of the transferred blocks. Livadariu et al [23] provided a comprehensive study on the IPv4 transfer market evolution, the exchanged IPv4 blocks, and the impact on the routing table and IPv6 adoption.…”

A Primer on IPv4 Scarcity

“…Even though ARIN states that legacy holders are subject to ARIN policies, recent transfers, such as the wellknown sale of more than 660K IP addresses from the Nortel bankruptcy to Microsoft, have raised concerns whether they complied with proper ARIN transfer policy. Mueller et al [59] state that while ARIN was formally involved in the transfer, likely no needs-based evaluation was performed on the receiving side, and that ARIN's intervention boiled down to a "face-saving exercise". As the relationship of legacy holders towards the RIRs is not entirely clear, one IP address trader has suggested that legacy address holders in the ARIN region could de-register their address space there and re-register it with a different RIR, such as RIPE [50].…”