[ppml] Proposed Policy: Adding an HD ratio choice for new IPv4 allocations

[Member Services]

ARIN received the following proposed policy.  In accordance with the ARIN
Internet Resource Policy Evaluation Process, the proposal is being posted
to the ARIN Public Policy Mailing List and being placed on ARIN's website.

The ARIN Advisory Council will review the proposal and within ten working
days may decide to:
1)  support the proposal as is,
2)  work with the author to clarify, divide or combine one or more policy
proposals, or
3)  not support the policy proposal.

If the AC supports the proposal or reaches an agreement to work with the
author, then the proposal will be posted as a formal policy proposal to
the Public Policy Mailing List and it will be presented at the Public
Policy Meeting.  If the AC does not support the proposal, then the author
may elect to use the petition process to advance the proposal. If the
author elects not to petition or the petition fails, then the proposed
policy will be considered closed.

The ARIN Internet Resource Policy Evaluation Process can be found at:
http://www.arin.net/policy/ipep.html

Mailing list subscription information can be found at:
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Regards,
Member Services Department
American Registry for Internet Numbers

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Policy Proposal Name: Adding an HD ratio choice for new IPv4 allocations

Author: Michael Dillon

Policy term: permanent

Policy statement:
That section 4.2.4.1 of the NPRM (Number Policy Resource Manual) be
replaced with the following text:

4.2.4.1. Utilization Efficiency

ISPs must have efficiently utilized all previous allocations in order to
receive additional space. This includes all space reassigned to their
customers. The reassignment information section of the ARIN ISP Network
Request Template should be completed for all address blocks that have been
allocated to your organization. In the template, line 1b. Assigned:
information will be verified via SWIP/RWHOIS and 1c. Reserved: should be
used to indicate internal network information. Please note that until your
prior utilization is verified to meet the requirements of section 4.2.4.1
and its subsections, ARIN can neither process nor approve a request for
additional addresses.

4.2.4.1.1. Capping the Utilization Percentage - In no case will an
organization be required to show greater than 80% utilization of their
most recent allocation.

4.2.4.1.2.  Electing the use of HD Ratio - Any organization whose total
IPv4 allocation is equivalent to a /20 or more may choose to have
additional requests for IPv4 addresses evaluated using an HD (Host
Density) Ratio calculation to determine sufficient utilization instead of
a fixed percentage threshold.

4.2.4.1.3. Simplified HD Ratio table - When electing to use the HD ratio
calculation, the applicant may elect to use these simplified tables rather
than calculating the actual ratios:

Total Alloc.    Total Perc.
<  /20               80%
>= /20 and < /18     75%
>= /18 and < /16     70%
>= /16 and < /14     66%
>= /14 and < /12     62%
>= /12 and < /10     59%
>= /10               55%

Recent Alloc.   Recent Perc.
<  /19               56%
>= /19 and < /18     51%
>= /18 and < /17     49%
>= /17 and < /16     46%
>= /16 and < /15     44%
>= /15 and < /14     42%
>= /14               40%

In these tables the percentage columns refer to the percentage utilization
of the address block represented by the first column.

4.2.4.1.3. HD ratio threshold for all previous allocations - All requests
for additional IPv4 address space subject to the HD Ratio shall require
the efficient utilization of the sum total of all existing IPv4
allocations. The HD Ratio on the sum total of all existing IPv4
allocations must be greater than or equal to .966.

4.2.4.1.4. HD ratio threshold for the most recent allocation - In
addition, the HD ratio of the most recent IPv4 allocation must be greater
than or equal to .930.

4.2.4.1.5. HD ratio calculation defined - The HD ratio is calculated as
log(utilized IPv4 addresses) divided by log(total addresses in all
previous IPv4 allocations). In this formula, log refers to the natural
logarithm.

Rationale:

The existing fixed 80% threshold does not recognize that address
management efficiency decreases for large address blocks and imposes an
unreasonable management overhead on larger organizations. The HD ratio
floating threshold makes allowance for hierarchical management. As
hierarchy increases in a network, the need for maintaining spare addresses
in a larger number of address blocks requires an ISP to have a lower
overall utilization rate for addresses. This effect is caused by both
increasing depth in addressing hierarchy and the increased breadth enabled
by the deeper hierarchy, e.g. larger number of PoPs. We cannot measure
depth and breadth of hierarchy directly so we approximate this by
measuring the total quantity of IP addresses allocated to the ISP.

The existing fixed threshold imposes a limited growth rate on larger ISPs
which is inconsistent with restraint of trade legislation in USA, Canada
and other countries. This growth rate limit has been masked in previous
years by two factors. One is that many, many new ISPs were starting up and
therefore the growth of the Internet was not limited by the growth rate of
a single company. The second factor is that in the recent past, many
companies experienced shrinkage and churn. When the growth of new business
required new IP addresses, they could either apply to ARIN or mine the
required addresses from these churned customers. Today we have a situation
where many companies have cleaned up their internal inefficiencies and the
Internet is growing once again, but the number of independent network
operators is much reduced. There is a real danger that the fixed threshold
imposed by ARIN will, in fact, limit the ability of one or more network
operators to grow their Internet services.

This limiting effect kicks in when an organization's rate of growth
exceeds their 6 month predictions and the time required to run internal
network change management processes is longer than the time required to
use up the last 20% of their most recent allocation. The Internet has
become a critical infrastructure in the world economy and prudent network
management practices require that any change to a network should be
checked, tested and carefully rolled out during narrow change windows
which may be as little as 20 hours per week. Many smaller networks who do
not provide mission critical network services can accommodate the fixed
threshold with little problems. However, ARIN's policies apply to all
organizations in the region regardless of business model, it is important
for these policies to allow a variety of business models to compete on a
level playing field.

Because this requires ISP to make fundamental changes in their addressing
process it is made entirely optional. There are three possibilities. An
ISP can do everything in the same way as they always have and 4.2.4.1.1
ensures that they continue to adhere to ARIN's policies. An ISP can elect
to apply the HD ratio to their address management systems by using the
percentage tables from 4.2.4.1.3. At any point in time an ISP needs to be
concerned with only two table entries, and this should be easy to
incorporate into percentage-based management systems. Or, an ISP can elect
to implement the HD ratio formula into their management systems and use
the same framework for both IPv6 and IPv4 allocations.

RIPE will be discussing a similar proposal from Alain Bidron of France
Telecom at their meeting in Stockholm May 2 - 6, 2005. In Europe, the
largest ISPs are telecom companies and are members of the ETNO (European
Telecom Network Operators Association). The ETNO has recently published an
expert opinion document in which they strongly support applying the HD
ratio to IPv4 addresses. This document is available in PDF format at this
URL
<http://www.etno.be/pp/EC064%20-%20NANI%20EC%20on%20IPv4%20AD%20ratio.pdf>.

The HD ratio was proposed as a way to determine allocation usage
thresholds for IPv6 address allocations. For more details on this, please
refer to RFC 3194 <http://www.faqs.org/rfcs/rfc3194.html>. There is some
detailed background discussion about applying the HD ratio to IPv4
allocations in a proposal by Paul Wilson posted to the APNIC mailing list
on Aug 7, 2003
http://www.apnic.net/mailing-lists/sig-policy/archive/2003/08/msg00000.html
and he made a presentation of this to last year's RIPE 48 meeting in
Amsterdam. PDF slides of his presentation are here
<http://www.ripe.net/ripe/meetings/ripe-48/presentations/ripe48-ap-hd-ratio.pdf>.
Paul and some others use the term 'AD ratio' to refer to the HD ratio when
it is applied to IPv4 addresses. I have kept the original term used in
ARIN's IPv6 policy for the sake of simplicity.

Timetable for implementation: 30 days after ratification by the board