Re: OMB: IPv6 by June 2008

[Daniel Golding <dgolding () burtongroup com>]

Rubbish. Many of the organizations that hold legacy /8s are Universities. If
a .edu can pick up even a few million dollars from selling off a class A,
they will. After all, they could simply sell chunks.

$1 per IP address is the going rate, as I understand - not so much for "grey
market" transactions, but as a valuation used in merger/divestiture
situations.

If we simultaneously start making address space fungible (#nanog vocabulary
word of the day!) and keep giving it away from the RIRs folks will have a
choice. Choice is good.

As some point, as address space becomes scarce, it will become more
valuable. As it becomes more valuable, people will be willing to spend more
money to get addresses. This is basic economics. We have an artificially
scarce (but finite) resource - the market can fix our problems.

At some point, the cost of buying enough address space for a given service
provider or enterprise will become more than the cost of implementing IPv6.
The market will then drive v6 implementation.

Our system of allocating IP addresses is a cross between soviet-style
central planning and FCC spectrum allocation. That doesn't need to occur. We
can morph the RIRs into commodity exchanges and solve the following issues:

- irritation with RIR procedures for getting address space
- justification for address space ("cash is my justification")
- worries about running out of address space as folks sell their hoarded
space and the market loosens
- motivation for shifting to v6 - there will be a real cost to using v4
addresses, but v6 addresses will be free.

We can try to regulate the heck out of this, or let the market handle it. To
quote Gorden Gecko, "greed is good" - at least for driving IPv6 adoption.

- Dan

On 7/8/05 5:27 AM, "Iljitsch van Beijnum" <iljitsch () muada com> wrote:

> On 8-jul-2005, at 9:42, David Conrad wrote:
>
>
> > > There are some 45 - 50 /8s assigned to single organizations. Let's
> > > assume for simplicity that those can all be reclaimed. That's 4
> > > years at a /8 a month. So far so good. Then there are 40 - 45 /8s
> > > in class B space. That means 256 times as much effort to reclaim
> > > the address space, or reclaiming about 10 class Bs a day...
>
>
> > There is, of course, a slightly different model:
>
>
> > As IPv4 address space becomes less freely available, there will be
> > an increase in black and gray market transactions for that address
> > space.  Since these transactions involve actual money instead of
> > the more difficult to account for human activity dealing with the
> > RIRs or ISPs, there will be financial incentive both to reduce
> > consumption as well as offer allocated but unused space via the
> > black and gray markets.
>
> I'm not saying you're wrong (although the RIRs may do their best to
> stop the sale of address space, with unknown success), but I'm not
> sure this will make a huge difference.
>
> There are currently both holders of big chunks of address space, and
> holders of small chunks of address space, as well as organizations
> that burn up massive amounts of address space and those that use up
> very little. I can easily see how it makes sense for the users of
> relatively small amounts of address space to purchase or lease it
> from holders of (largely) unused /8s. At $1 per address, buying a /24
> rather than jump through RIR hoops is probably a good deal for most
> people, while at $1 per address selling off your /8 is certainly
> worth the trouble.
>
> However, I don't think the likes of Comcast (which received 3 /10s or
> 3/4 of a /8 this year, or more than $12 million worth at our
> speculated $1/addr) are going to want to spend this kind of money as
> long as there is ANY chance they can get addresses from the RIRs.
>
> And then, think about it: how much money per address would you have
> to offer to someone with a spare /24 to part from those addresses?
> $1? $5? $10? I doubt the big ISPs that burn millions of addresses per
> year will be interested in that. Suddenly the transition to IPv6 (or
> recursive NAT...) is going to look very attractive.
>
> So basically the tradeoffs between market forces and regular
> reclaming are similar: easy for /8s, hard for /16s and close to
> impossible for /24s.
>
> And the real fun starts when people holding big blocks of address
> space start holding on to it because they expect to make more money
> that way in the future...

-- 
Daniel Golding
Network and Telecommunications Strategies
Burton Group