Are we certain that an IP address is not property? We can state that it is not
the case but such statements do not necessarily have the intended effect.
The only way to be sure would be to do something silly and see what the result
of the lawsuit is. For example we could decide to cancel the allocation for net
18. Jeff Schiller would have the injunction delivered a few hours later and
after eight to twelve years of littigation we would have an answer. In the
meantime net 18 could be considered property for all practical purposes since
regardless of the outcome we do not anticipate that an IPv4 address will have a
significant scarcity premium in 2015.
I do not think that the conditions are met for an efficient market in IPv4
address space. There is not sufficient liquidity for a start and the
constraints on supply are distinctly odd. All it takes to assign IPv4 address
assignments is for someone to publish the BGP adverts and for others to accept
them.
Returning to the previous thought experiment, if the assignment body that
originally allocated net 18 attempts to withdraw it then its time for lawyers
at 20 paces. If on the other hand the net community decides to recognize
another source of authority and direct net 18 traffic elsewhere I don't see
where the cause of action lands.
There are certainly cases where this type of issue could occur. If the
assignment bodies decided to price gouge for address block allocations to buy
themselves a personal yatch for example.
What we have to avoid losing sight of here is that the objective is to deploy
IPv6, an environment where technical scarcity of addresses is simply not an
issue. The only scarcity that can exist is if we are negligent in the
allocation procedures.
As I said at the plenary, don't worry too much about the state we leave the
IPv4 world. The IPv4 world will go away when people stop exchanging IPv4
routes. I don't expect that to happen until 2025-2030, but that is the
objective here. I don't expect people to ever stop routing IPv4 packets on
private nets. There are still people who route UUCP.
We need to think in terms of how we establish strategic interests that
1) Encourage transition to the prefered end state (pure IPv6)
2) Minimize inconvenience to and maximize functionality for all parties during
transition
3) Minimize the cost to all parties
4) Align costs of transition with benefits
During the later stages of transition we will be in a state where there are
vastly more Internet hosts than IPv4 addresses. At least a hundred billion
hosts, quite likely a trillion or more.
Many of those hosts will not require IPv4 connectivity. Light switches for
example. But most hosts will need a limited IPv4 connection capability. That is
where hyper-NAT will come in. What the devices require is some quantity of IPv4
ports, not an IPv4 address.
By 2015 the IPv4 address space is going to be heavily NAT-ed. The only way that
5 billion people can use 4 billion addresses is if a substantial number of
people share. There will thus be the following classes of broadband internet
user:
A) Has at least one full IPv4 address plus an IPv6 /64.
B) Has a share in a NAT-ed IPv4 addesss plus an IPv6 /64.
C) Has at least one full IPv4 address
D) Has a share in a NAT-ed IPv4 address
Note that the total number of users in class A and C combined cannot ever be
more than four billion and in practice is highly unlikely to exceed two
billion. We have got as far as we have to date because dial-up users are in
effect time-sharing their IPv4 address allocation. The 'always on' property of
broadband means that this form of sharing will inevitably decline.
My big concern here is that the rejectionism I see with respect to NAT in the
IPv6 community is driving the market from state C into state D, the worst
possible state. We have to engineer a situation where the market forces
encourage a transition to state B. It is not possible for every Internet user
to end up in state A unless the growth of Internet use suddenly stops.
I expect the market in IPv4 addresses to trace the following pattern
Phase 1: Anticipation
As the exhaustion in IPv4 address space nears there will be increasing
speculative acquisition of IPv4 address allocations. Within a few years a point
will be reached where the anticipated resale value of an IPv4 address exceeds
the cost of holding it as inventory. At this point the entire remaining stock
of IPv4 will be purchased by IP address squatters.
Phase 2: Confusion
The immeditate reaction to exhaustion of the address space will be
recriminations countered by 'I told you so'. Parties with excess IPv4 capacity
will investigate options for sale.
Phase 3: Speculation
Despite the large number of IPv4 addresses the technical difficulty of
transfer creates liquidity issues. As with certain commodity markets (e.g.
Palladium during the cold fusion bubble) the price rises to a point where the
industrial users are effectively excluded. Once the realitiy checks are taken
out of the equation the stage is set for serious price acceleration.
Phase 4: Asset Stripping
Large ISPs begin to exceed their existing IPv4 stock. They discover
that it is cheaper to buy a smaller ISP for its stock of excess IPv4 address
space than to buy from an IPv4 speculator. Others buy ISPs with large IPv4
allocations, stick the existing customer behind a hyper-NAT and a /24 and sell
the /16 to the address speculators.
Phase 5: Bubble bursts
The speculators discover that ultimately the price of IPv4 addresses is
going to be set by the cost of putting a network segment behind a hyper-NAT.
The bubble bursts and a huge inventory of IPv4 space is thrown onto the market.
At this point all ISP support infrastructure supports hyper-NAT by default.
It is in the strategic interests of ISPs to deploy not just any hyper-NAT but a
hyperNAT that drives to deployment of IPv6 and minimize the length of the
crisis phase. If they acted soon enough it might even be possible to avoid the
buble phase entirely.
-----Original Message-----
From: michael(_dot_)dillon(_at_)bt(_dot_)com
[mailto:michael(_dot_)dillon(_at_)bt(_dot_)com]
Sent: Wednesday, August 01, 2007 6:55 PM
To: ietf(_at_)ietf(_dot_)org
Subject: RE: Charging I-Ds
IETF unique way could be to charge a fee for an address
allocation to
RIRs. On their side RIRs would charge for assignments as
they do now
and return a fair share back to IANA/IETF.
A IP address use fee might help solve two problems. When
based upon
relative scarcities, IPv4 space should demand a higher premium.
The Board of Trustees of ARIN, one of the 5 RIRs, has just
released an official statement here:
http://www.arin.net/announcements/20070701.html
There are, however, those who propose that the democratically
established governance principles now be abandoned, to create
a market in IP addresses. A market that abandons these
existing, consensus-driven core values would encourage
speculators to take advantage of the upcoming time of
relative scarcity of IPv4 addresses to profit from less
foresightful users' remaining need.
The purpose of this memorandum is to assure the community
that the democratic principles of Internet governance will be
adhered to by ARIN,
That adds to the other two big hurdles. First, IP addresses
are not property. And second, given the fact that there is a
rapidly shrinking pool of free addresses to be sold, there is
not sufficient liquidity for a stable market to form.
--Michael Dillon
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