ARIN-PPML Message

[arin-ppml] Revised -- Policy Proposal 2009-4: IPv4 Recovery Fund

Policy Proposal 2009-4: IPv4 Recovery Fund has been revised. This 
proposal is open for discussion on this mailing list and
will be on the agenda at the upcoming ARIN Public Policy Meeting.

The current policy proposal text is provided below and is also available
at: http://www.arin.net/policy/proposals/2009_4.html


Regards,

Member Services
American Registry for Internet Numbers (ARIN)


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2009 -4: IPv4 Recovery Fund

Date: 9 April 2009

Proposal type: New

Policy term:  Permanent

Policy statement:

(Create new section in section 4, represented by "4.X".)

4.X IPv4 Recovery Fund

4.X.1 Implementation Timing

      ARIN shall begin offering financial incentives for the return
      of IPv4 number resources as specified in section 4.X when
      IANA announces that the last full /8's in the IANA free pool
      have been allocated to RIR(s).

  4.X.2 Recovery of IPv4 Resources

      Organizations should voluntarily return unused and/or unneeded
      number resources to ARIN based on ARIN's current utilization
      guidelines.  ARIN will provide instructions on how to
      voluntarily return number resources on the ARIN web site.

      After the conditions in section 4.x.1 are met, ARIN will
      offer financial incentives for the return of IPv4 number
      resources to ARIN and relinquishment of any future claims
      to those resources.  ARIN will use the bids from section
      4.X.3 to determine the value of returned resources.

4.X.3 Allocation of Recovered IPv4 Resources

      After a requester has been approved for IPv4 number resources
      via any policy in section 4 or section 11 of the NRPM, ARIN
      will ask the requester to specify a binding bid of how much
      they are willing to pay for reclamation of number resources
      to satisfy their request.  The requester may make a higher
      bid at any time, which is treated as a brand new bid replacing
      their old bid.

       Requesters may choose to bid $0, in which case they would
      only be eligible for number resources that were voluntarily
      returned to ARIN.

       IPv4 number resources recovered by ARIN under section 4.X.2
      will be offered to those who have been waiting the longest
      with bids high enough to cover ARIN's cost to recover the
      resource.  If ARIN offers IPv4 number resources at or below
      the requesters bid the requester will be required to take
      the space at the offered price.

4.X.4 Management of Recovered IPv4 Resources

      ARIN may not fill a request with multiple smaller blocks.
      ARIN must offer recovered number resources in the largest
      possible contiguous blocks.  Recovered IPv4 number resources
      should be broken into smaller blocks only if there are no
      bidders for the larger sized blocks, and ARIN believes there
      are unlikely to be bidders for the larger sized block in the
      next 30 days.  When sub-diving the block ARIN shall divide it
      into as few pieces as possible to satisfy existing bids.

      ARIN should take all practical steps to aggregate returned
      address blocks.

4.X.5 Transparency

       ARIN must post statistics updated as frequently as practical
      but not less than monthly on the ARIN web site regarding all
      activity taking place under section 4.X.  ARIN must report
      the following items at a minimum, and is encouraged to report
      as much additional data as is practical and useful:

        - The amount of number resources recovered under 4.X.3.
        - The amount of number resources allocated under 4.X.4.
        - The min, max, median, and average prices for number resources
          recovered under 4.x.3.
        - The min, max, median, and average prices for number resources
          allocated under 4.x.4.
        - The min, max, median, and average prices for all bids received
          under 4.x.4, as well as the number of outstanding bids not
          yet satisfied.
        - How many address blocks were de-aggregated, and the resulting 
number
          of blocks.
        - How many address blocks were aggregated, and the resulting number
          of blocks.

4.X.6 Cost Recovery

      ARIN shall use the payments made in 4.X.4 to pay for any
      work done under section 4.X as well as for any payments made
      in section 4.X.3.  ARIN must base payment offers made under
      4.X.3 on the binding bids made in section 4.X.4.

       The Board may set aside a portion of ARIN's general funds
      to provide financial liquidity to the activities taking place
      under section 4.X, provided there is a clear mechanism and
      time frame to return those funds to the general fund.

Rationale:

Many have recognized that in order for unused or poorly used IPv4 
resources to be returned to the free pool that financial compensation 
will be required.  This is particularly the case in poorly used assets 
where the current holder may have to expend time and money to renumber 
in order to free the blocks.

This proposal sets up a fund administered by ARIN to encourage the 
return of space.  Effectively ARIN will offer financial incentives to 
return unused or poorly used IPv4 number resources and place them back 
into the IPv4 free pool.

The intention is for this activity to be revenue neutral to ARIN.  To 
achieve that goal those requesting IPv4 number resources will be 
requested to bid on a one-time payment to the recovery fund to cover the 
cost of the resources they have received.

The proposal is intentionally vague on the exact implementation details 
to staff because:

 - Transactions with those returning space and obtaining space may
   occur in any order.
 - The bidding process may need to evolve over time, and may not
   be as simple as highest bidder wins.  It may include aspects such
   as a dutch auction style format (all winners pay the lowest winning
   price), or may include other factors such as which size blocks
   ARIN has free in an effort to limit de-aggregation.
 - ARIN will have to develop contracts and procedures around this
   activity that are better suited for staff and legal than the policy 
process.

Compared to other "transfer proposals", this proposal has the following 
benefits:

 - Maintains that IP addresses are not property.
 - Maintains the concept that unused addresses should be returned to
   the free pool.
 - Maintains need based addressing.
 - Removes the need for those with excess resources to find those
   without resources.  There is no need for any sort of listing
   service, eBay, etc.
 - All transactions are two party transactions with ARIN as one of
   the parties.  The potential for multi-party legal disputes is
   reduced.
 - ARIN can absorb spikes in supply or demand, creating more level
   prices over time.
 - ARIN can provide transparency across all transactions in this
   system.
 - Reduces confusion to new entrants over where they should go to
   receive address space.

Change Log:

  - Changed "monetary" to "financial" to allow for the possibility
   of ARIN offering things other than direct payment (like fee
   credits).  Credit: Robert Bonomi.

 - Updated numbering so there were not two 4.10.2's.  Also changed
   to using a place holder for section.  Credit: Robert Bonomi

 - Changed the cost recovery language to be more clear and provide
   some additional flexibility.

 - Clarified 4.10.2 about future claims.  Credit: Ted Mittelstaedt

 - Split 10.X.3 into 10.X.3 and 10.X.3 with better titles.

 - Left the exact algorithm to staff.  Removed examples as a result.

Timetable for implementation: Staff should begin developing procedures 
and updated templates immediately. Policy would not go into effect until 
the criteria listed occurs.