PPML Archive

Research on transfer markets, was: RFC 1744 and its discontents

michael.dillon at bt.com — 2008-04-23T08:44:12Z

> > the problem of the new company that comes to ARIN the day after
> > depletion looking for addresses for their new network.

> The only downside is that getting it from an existng network
> means if at some point in the future you decide to cancel
> service from that network, you will have to give it up and renumber.

Actually, no you will not have to give it up and renumber in this
scenario. Instead, you will have to go live on IPv6. Getting an
IPv4 allocation at that late date is only a stopgap measure to
give you time to get IPv6 functional in your network.

Here's where the idea comes in of requiring *ALL* applicants
for IPv4 space over the next two years or so, to provide answers
to a survey of IPv6 deployment which includes signed statements
of intent from the CFO level. This shouldn't cause anyone great
difficulty to get the information, but will have the effect of
raising the profile of IPv4 exhaustion within the MBA-bearing
community.

--Michael Dillon

Research on transfer markets, was: RFC 1744 and its discontents

Ted Mittelstaedt — 2008-04-22T23:37:54Z

> -----Original Message-----
> From: ppml-bounces at arin.net [mailto:ppml-bounces at arin.net] On
> Behalf Of Randy Bush
> Sent: Tuesday, April 22, 2008 3:46 PM
> To: Matthew Pounsett
> Cc: arin ppml
> Subject: Re: [ppml] Research on transfer markets,was: RFC
> 1744 and its discontents
>
>
> [ i do not disagree (strongly) with much of your message, but
> i really can not let the following go ]
>
> > Considering that "fair and equitable distribution" is what
> we think we
> > have now
>
> some may think that. the screwees we barred from entry at
> the lower end sure do not, and have not for a decade. have
> we not read their pain on nanog and this list?
>
> what we have is a highly jury rigged distribution based on
> how market incumbents thought the game should be played. if
> we don't think it is jury rigged, why is policy so long and
> complex and why do we keep making up more?
>

The ARIN policy is really not any more complex than the Parker Brothers
Monopoly game rules. See:

http://richard_wilding.tripod.com/monorules.htm

> let me repeat
>
> > look how long a community of vested incumbents has kept barriers to
> > entry at the low end. cathy screamed at me in public when
> i suggested
> > small allocations in the first arin denver meeting; when we had an
> > actual victim there whose business was being severely
> hampered by our
> > bottom up policies. now, when the end is in sight, we are finally
> > talking about sharing the last orts here in the restaurant
> at the end
> > of the universe. how magnanimous of us.
> >
> > to be clear, the bald-faced trade we made was protecting the
> > incumbents' router capital costs by making it hard for folk
> at the low
> > end.
>
> and, at the other end, 75% of the address space has gone to
> ten entities in the last couple of years. and take another
> look at the internal statistics,
> .
>
> perhaps we should understand that some people might not
> consider this "fair and equitable distribution?"
>

There is a reason for that which has nothing to do with IP space
assignment, and has a lot to do with how the US FCC punted on
the issue of requiring networks to be open.

Tell me, how many ISPs are choices on ANY given cable TV network
in the US?

ONE!!!!!!!

Thank the FCC for that.

Tell me, how many ISP's are choices on the Verizon fiber deployment?
(ie: FIOS)

ONE!!!!!!

Thank the FCC for that one as well.

And the DSL providers are not far behind.

> and i do not blame arin hostmasters, management, ... they do
> a great and often thankless job. we, the community did it
> [ab]using arin's philosophy of thinking with our bottoms up.
>

The idea that policy in IPv4 assignment has significantly affected the
trend of consolidation is pure fiction.

Consolidation is in MANY markets. It is the NORMAL AND NATURAL
progression of corporations in any capitalistic market.

THAT IS WHY WE HAVE ANTI-TRUST LAWS

Left to themselves, just about ALL markets would collapse into
monopolies.

And the idea of protecting incumbents router costs?

Baw ha ha ha ha!!!!!

Geeze Randy, ex-runner of gated software, please, please lecture
us on how ALL ISPs MUST USE HARDWARE ROUTERS that have super expensive
fixed cards in them.

We ran gated and later Zebra quite well for years on FreeBSD,
and would be still doing so to this day if Ebay hadn't made
used Cisco gear available for LESS than the cost of a fast
Pentium.

>From a TECHNICAL perspective, an ISP can be EASILY built from
purely commodity, cheap PC hardware that will serve quite enough
customers to qualify the ISP for a /22 (IPv4)

And if your too incompetent to build one (an amazing thing if
your planning on running that large of an ISP) you can go to
Imagestream and buy a PC off the shelf with it preconfigured
as a router and have at it.

The problem of building an ISP with that many customers is a
SALES AND MARKETING one. NOT a technical one.

When you are competing against a cable provider that has the
city covered with a sole monopoly ISP, and has the bankroll to
LOSE MONEY for YEARS at a time to build up a customer base, it
is no wonder that small ISP's can't get started these days.

Ted

Research on transfer markets, was: RFC 1744 and its discontents

Randy Bush — 2008-04-22T22:46:18Z

[ i do not disagree (strongly) with much of your message, but i really
can not let the following go ]

> Considering that "fair and equitable distribution" is what we think we
> have now

some may think that. the screwees we barred from entry at the lower end
sure do not, and have not for a decade. have we not read their pain on
nanog and this list?

what we have is a highly jury rigged distribution based on how market
incumbents thought the game should be played. if we don't think it is
jury rigged, why is policy so long and complex and why do we keep making
up more?

let me repeat

> look how long a community of vested incumbents has kept barriers to
> entry at the low end. cathy screamed at me in public when i suggested
> small allocations in the first arin denver meeting; when we had an
> actual victim there whose business was being severely hampered by our
> bottom up policies. now, when the end is in sight, we are finally
> talking about sharing the last orts here in the restaurant at the end of
> the universe. how magnanimous of us.
>
> to be clear, the bald-faced trade we made was protecting the incumbents'
> router capital costs by making it hard for folk at the low end.

and, at the other end, 75% of the address space has gone to ten entities
in the last couple of years. and take another look at the internal
statistics, .

perhaps we should understand that some people might not consider this
"fair and equitable distribution?"

and i do not blame arin hostmasters, management, ... they do a great
and often thankless job. we, the community did it [ab]using arin's
philosophy of thinking with our bottoms up.

and i share the blame for this.

randy

Research on transfer markets, was: RFC 1744 and its discontents

Ted Mittelstaedt — 2008-04-22T21:51:27Z

> -----Original Message-----
> From: ppml-bounces at arin.net [mailto:ppml-bounces at arin.net] On
> Behalf Of Matthew Pounsett
> Sent: Tuesday, April 22, 2008 2:18 PM
> To: arin ppml
> Subject: Re: [ppml] Research on transfer markets,was: RFC
> 1744 and its discontents
>
>
>
> Personally, the problem with depletion that I think needs fixing is
> the problem of the new company that comes to ARIN the day after
> depletion looking for addresses for their new network. Yes,
> they are
> in an excellent position to fire up v6 and never have to
> worry about a
> transition, but most of their customers will not be able to
> reach them
> on v6, and so they will need some way to acquire at least a small
> number of v4 addresses to make their web site, mail servers, and
> various other public-facing services work.
>

So if they are multihomed they go to one of their feeds and request
a /24, then advertise it via BGP in the normal fashion. Companies have
been doing this for years, so what?

Are you unaware that you can obtain an AS number and advertise
IP addressing that was allocated to you by your feed? As long as
your feed SWIPS it, and as long as it is a minimum of a /24,
your fine.

I think there's some confusion by use of the term "depletion"

We are talking "RIR-depletion" we are NOT talking "IPv4-depletion"
like the entire Internet will come to a grinding halt. There will
still be plenty of IPv4 around post RIR-depletion. It is just not
going to be available from the RIR's. But it will certainly be
available from many networks for many years afterwards.

The only downside is that getting it from an existng network means
if at some point in the future you decide to cancel service from
that network, you will have to give it up and renumber.

Anyone needing more IPv4 is going to only need it if they are
connected to the Internet. Thus, the end of RIR-IPv4 availability
simply means that people now will have to get IPv4 from whomever
they are connected to.

if that ISP has no more IPv4 then they merely find another ISP.
It's not like there's any shortage of them.

> v4 will be around in some form or another for a long time. I don't
> think it's going to "go away" in any significant way until it's
> cheaper to run single-stack v6 (both in terms of straight-up
> operational costs and the ability to do whatever business
> people need
> to do on v6 only). As long as v4 is around, any new player on the
> 'net will require some v4 addresses... not necessarily a lot,
> but some.
>
> In order to allow new players to get the addresses they require post-
> RIR-depletion, we need some sort of incentive for those already
> migrating to v6 to actually free up v4 addresses where possible.

We already have this - those existing players will have incentive to
renumber to free up IPv4 so they can sell IPv4 Internet connectivity
to these "new players"

> There will be places where networks don't need to run dual
> stack, but
> it will cost money to remove the need for the v4 stacks, and to
> renumber into smaller blocks of a company's current v4 addresses.
>
> I'm not entirely convinced that a paid transfer policy is the best
> incentive; it seems to carry a lot of negative baggage with it, and
> require a lot of complex restrictions in order to maintain the fair
> balance that (I hope) we all want. However, so far it's the only
> remotely viable suggestion I've seen.
>
> > How is any new entrant ever going to be able to bypass the need to
> > reach the universe of IPv4-addressed resources?
>
> The context of your question suggests you think this is a reason not
> to have this sort of transfer policy. Let me ask you the same thing
> though; in the absence of a policy along these lines, how will a new
> entrant ever do business with other
> companies/individuals/whomever in
> the universe of IPv4-addressed resources?
>
> I would very much like to see alternative ideas explored that would
> address this issue.
>

http://tools.ietf.org/wg/softwire/
http://www.join.uni-muenster.de/Dokumente/Howtos/Howto_TRT.php?lang=en

http://www.cs.washington.edu/research/networking/napt/
http://www.cs.princeton.edu/~mef/research/napt/reports/usenix98/

http://www.datatekcorp.com/literature/pdf/IEEE_IPV6_IPV4.pdf
http://www.fujitsu.com/downloads/MAG/vol40-1/paper21.pdf

Ted

Research on transfer markets, was: RFC 1744 and its discontents

Owen DeLong — 2008-04-22T21:28:23Z

On Apr 22, 2008, at 2:17 PM, Matthew Pounsett wrote:

>
> On 20-Apr-2008, at 17:33 , Tom Vest wrote:
>
>>> I don't think there has been a land grab: hence my use of "if". I
>>> think that IP addresses have, for the most part, been assigned
>>> fairly and equitably based on the conditions and understanding at
>>> the time they were given out.
>>
>> I agree entirely. However, I also believe that resource transfer
>> proposals as currently defined would represent a fundamental and
>> irreversible break from this policy/practice/outcome.
>
> Considering that "fair and equitable distribution" is what we think
> we have now with justification requirements, and considering that
> these requirements for justification are maintained in 2008-2, I'm
> not sure I understand how it is a fundamental break from fair and
> equitable distribution. Could you expand on that?
>
Well, at least to one extent, instead of being the combination of
justification
and first-come first-serve, it now becomes highest-bidding justified
user,
which, could place organizations with fewer financial resources at a
clear
disadvantage vs. organizations with greater financial resources.

>> Whose demands for redistribution rise to the level of "requirements"
>> -- aspiring sellers or would-be buyers? Incumbent buyers or new
>> entrant buyers -- i.e., the current and future "customers" that don't
>> participate in ARIN deliberations (yet)?
>
> Personally, the problem with depletion that I think needs fixing is
> the problem of the new company that comes to ARIN the day after
> depletion looking for addresses for their new network. Yes, they
> are in an excellent position to fire up v6 and never have to worry
> about a transition, but most of their customers will not be able to
> reach them on v6, and so they will need some way to acquire at least
> a small number of v4 addresses to make their web site, mail servers,
> and various other public-facing services work.
>
This could argue for the possibility of reserving the last /8 or two
for "transitional
addressing" allocations/assignments rather than handing them out as
business
as usual. (A /8 makes quite a few /28 or /29 assignments for this
purpose vs.
a few months of business as usual).

> v4 will be around in some form or another for a long time. I don't
> think it's going to "go away" in any significant way until it's
> cheaper to run single-stack v6 (both in terms of straight-up
> operational costs and the ability to do whatever business people
> need to do on v6 only). As long as v4 is around, any new player on
> the 'net will require some v4 addresses... not necessarily a lot,
> but some.
>
The solutions for reaching the v4 internet from v6 only clients are
starting
to mature fairly rapidly. The bigger issue, certainly, is how to make
it possible
to build a v6-only site that is reachable from v4-only clients. I
think there is
room for community effort and out reach as I think that eyeball
providers are
going to need to address this with something akin to NAT-PT Proxies with
DNS voodoo. If the majority of ISPs with v4 clients can provide this
service
transparently to their users, I think that goes a long way towards
solving this.

> In order to allow new players to get the addresses they require post-
> RIR-depletion, we need some sort of incentive for those already
> migrating to v6 to actually free up v4 addresses where possible.
> There will be places where networks don't need to run dual stack,
> but it will cost money to remove the need for the v4 stacks, and to
> renumber into smaller blocks of a company's current v4 addresses.
>
This assumes that the migration will begin sooner and/or move faster
than I think
the facts at hand suggest is likely. As such, I think we might need a
solution
other than incentives and some form of reservation for this purpose
might be
necessary.

Owen

Research on transfer markets, was: RFC 1744 and its discontents

Matthew Pounsett — 2008-04-22T21:17:39Z

On 20-Apr-2008, at 17:33 , Tom Vest wrote:

>> I don't think there has been a land grab: hence my use of "if". I
>> think that IP addresses have, for the most part, been assigned
>> fairly and equitably based on the conditions and understanding at
>> the time they were given out.
>
> I agree entirely. However, I also believe that resource transfer
> proposals as currently defined would represent a fundamental and
> irreversible break from this policy/practice/outcome.

Considering that "fair and equitable distribution" is what we think we
have now with justification requirements, and considering that these
requirements for justification are maintained in 2008-2, I'm not sure
I understand how it is a fundamental break from fair and equitable
distribution. Could you expand on that?

> Whose demands for redistribution rise to the level of "requirements"
> -- aspiring sellers or would-be buyers? Incumbent buyers or new
> entrant buyers -- i.e., the current and future "customers" that don't
> participate in ARIN deliberations (yet)?

Personally, the problem with depletion that I think needs fixing is
the problem of the new company that comes to ARIN the day after
depletion looking for addresses for their new network. Yes, they are
in an excellent position to fire up v6 and never have to worry about a
transition, but most of their customers will not be able to reach them
on v6, and so they will need some way to acquire at least a small
number of v4 addresses to make their web site, mail servers, and
various other public-facing services work.

v4 will be around in some form or another for a long time. I don't
think it's going to "go away" in any significant way until it's
cheaper to run single-stack v6 (both in terms of straight-up
operational costs and the ability to do whatever business people need
to do on v6 only). As long as v4 is around, any new player on the
'net will require some v4 addresses... not necessarily a lot, but some.

In order to allow new players to get the addresses they require post-
RIR-depletion, we need some sort of incentive for those already
migrating to v6 to actually free up v4 addresses where possible.
There will be places where networks don't need to run dual stack, but
it will cost money to remove the need for the v4 stacks, and to
renumber into smaller blocks of a company's current v4 addresses.

I'm not entirely convinced that a paid transfer policy is the best
incentive; it seems to carry a lot of negative baggage with it, and
require a lot of complex restrictions in order to maintain the fair
balance that (I hope) we all want. However, so far it's the only
remotely viable suggestion I've seen.

> How is any new entrant ever going to be able to bypass the need to
> reach the universe of IPv4-addressed resources?

The context of your question suggests you think this is a reason not
to have this sort of transfer policy. Let me ask you the same thing
though; in the absence of a policy along these lines, how will a new
entrant ever do business with other companies/individuals/whomever in
the universe of IPv4-addressed resources?

I would very much like to see alternative ideas explored that would
address this issue.

> And if incentives for
> incumbent IPv4 resource holders are realigned so that the worse they
> ever face is big bucks for small IPv4 sales, plus the collective
> ability to manage/limit future competition, what incentive will they
> ever face to migrate to IPv6 themselves?

I believe that, in order to ever receive bucks of any amount for v4
resources, companies will need to begin the migration to v6 and free
up those v4 resources. Presumably these organizations will be growing
themselves, even as they transfer away v4 resources (the old truism
that any company that isn't growing is shrinking) and so they must be
acquiring new resources from somewhere. v6 would be the only option.

> Perhaps future new ISPs will
> take comfort from the old "donut hole" peering theories -- i.e., they
> won't really be totally marginalized forever -- but the fact is those
> theories only hold water in situations when/where (a) the supply
> critical resource (in this case, "private line" bandwidth inputs) is
> so vast and/or growing so fast that price discipline cannot hold, and/
> or (b) incumbent resource holders are subject to gov-mandated resale
> requirements and price cap restrictions.

Do you believe that in the 'do nothing' scenario (i.e. stick with
roughly our current distribution mechanism) that new players will be
any less marginalized? If that's not what you're advocating, and I've
misread you, can you be clearer about what alternative action you'd
like to see the community take?

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FW: No transfer policies are needed

Ted Mittelstaedt — 2008-04-22T20:46:41Z

> -----Original Message-----
> From: ppml-bounces at arin.net [mailto:ppml-bounces at arin.net] On
> Behalf Of Edward Lewis
> Sent: Tuesday, April 22, 2008 12:19 PM
> To: ppml at arin.net
> Cc: ed.lewis at neustar.biz
> Subject: Re: [ppml] FW: No transfer policies are needed
>
>
> I have not worked for an ISP/LIR and haven't managed address
> assignments. So I want to ask some questions related to the
> "reality" of this scenario.
>
> At 11:40 -0700 4/22/08, Ted Mittelstaedt wrote:
>
> >In other words, suppose you have a small ISP "SmallCo Inc."
> that owns
> >an IPv4 block it doesen't need.
>
> In that case, isn't ARIN justified in recalling the block?

As long as SmallCo keeps paying the yearly fee and does not
request additional space that would require justification, how
is ARIN going to know there is a block to be recalled?

> Or is
> this a block that is "legacy?"
>
> The context of my question is that I have long assumed that the issue
> with the markets is the large amount of legacy (=RIR unencumbered
> space) and not the space covered by registration service agreements.
>

No. The legacy space isn't significant even though people think it
is, this has come up multiple times on this list and several people
have bothered to do the research and run the math, and the amount of
IPv4 that could be freed from legacy holders isn't going to significantly
extend the IPv4 runout date.

The issue is that post IPv4
runout your going to have an Internet with mixed IPv4/IPv6 on it. Orgs
that are moving to IPv6 will eventually have proxies or translators or
gateways or whatnot so that IPv6 customers can talk to an IPv4 Internet,
and IPv4 customers can talk to an IPv6 Internet.

Ultimately your going to enter a period of time where some orgs will
have all IPv6 customers, and will be able to use proxies or gateways
or translators for those customers to access the remaining IPv4 on
the Internet. At that time they will have unused IPv4. What to do
with it? If it's returned to the RIR then it will be available for
reassignment to orgs who have not yet converted to IPv6. That's what
the community should want, of course. However, if the org sells it,
the org may get a windfall if they are an early IPv6 adopter. So you
can see that a time will come when the early adopters may want to
have ARIN bless such transactions. And some people think that if ARIN
blesses these transactions it will encourage orgs to abandon IPv4 all
the earlier - which will ultimately add pressure to the rest of the
Internet to switch to IPv6. The downside of course is by making IPv4
available to slow-starters, it can also act to delay IPv6 introduction.
The other downside is that as the RSA that the org signed disallows
consideration of IPv4 as "property" there is no legal mechanism for
the seller to "sell" the numbers - thus ARIN would have to be involved
in such a transfer, (perhaps allowing an org to sell "reservations")
but even setting up such a scheme greatly weakens that section of
the RSA.

I could see a court case where someone claims that ARIN setting up
an "IPv4 Market" invalidates section 9. of the RSA as ARIN themselves
are now treating IP addressing as property. And if that section is
invalidated then the entire idea of an ARIN-controlled market falls apart.
Which means now you will have spammers buying IPv4 blocks on the
black market that ARIN -cannot- revoke under Section 4 c ii, and iii.
and all kinds of nasty things.

> >
> >You have an ISP named "MCI Corp" that needs more IPv4 and
> does not meet
> >the utilization criteria to get it from ARIN
> >
> >SmallCo secretly sells it's block to MCI Corp.
>
> How is this different than reassigning or reallocating addresses from
> SmallCo to MCI?

Because SmallCo still is responsible on a reallocation. If ARIN goes
to SmallCo and says "you haven't paid your bill we are yanking your
allocation" then MCI can't do a damn thing about it. (except sue SmallCo)

> Instead of selling the addresses as capital, why
> don't they just record a charge (= to an amortization "cost" -
> remember, I'm not an economist), a "rental" of the addresses?
>

That is what a SWIP does.

> >SmallCo sends a name-change in to ARIN claiming it's
> spinning off it's
> >ISP operations to a separate company named "NewCo Inc" ARIN changes
> >the record on the block.
> >
> >MCI Corp then registers the company name "NewCo Inc" as a
> subsidiary of
> >MCI Corp. in whatever state it's incorporated in.
>
> This seems like a lot of trouble to accomplish what an
> upstream/downstream relationship already is. If I understand that
> right.
>
> >Another "black market" scenario would be for a large org
> that did not
> >meet utilization criteria to create an independent company, use that
> >company to obtain a block from ARIN, then "buy" that independent
> >company. Of course, that only works before IPv4 runout.
>
> My problem is that I find it hard to imagine that a large
> organization could not meet the utilization criteria (in a way
> cheaper than having to incorporate and buy a new company).

There's been stories in the bad old days of large orgs with many
internal WAN circuits, each of which were numbered with a /24. I
have gone through renumbering of a large network myself and it
takes a -lot- of work. I can easily imagine a scenario where a
large org has thousands of hosts with STATIC IP addresses in
application configuration files and they would regard renumbering
as more expensive than buying IP's from a black marketer.

Personally I think such logic is stupid because your passing up
an opportunity to correct a lot of old crappy configurations,
but I tend to think long term - most CEO's do not.

> I could
> understand these scenarios after the free pool runs out and that is
> the reason that the large organization failed to get space.
>
> >I am not familiar enough with the existing language of the various
> >RSA's that the RIR's use to know if such behaviour is explicitly
> >prohibited but I think it is, certainly it violates the intent.
>
> My read of the scenarios is that these seem like a lot of work to
> circumvent the rules when there's gotta be something else that was
> missed. Maybe these scenarios are close to what's happening, or
> could happen, but I don't see that the scenarios are realistic.
>
> >In any case, I would assume that ARIN would have the guts to revoke
> >assignments on any blocks that were transferred in this
> manner, if it
> >discovered them. Thus, I think the risks of block revocation would
> >likely make an "IPv4 black market" a non-starter.
>
> I can imagine that the one wanting the space might not get what they
> want, but if someone has space available, that's space ARIN could
> revoke, no?
>

That is a good question. Here is the RSA for ARIN:

http://www.arin.net/registration/agreements/rsa.pdf

Read it and decide for yourself. Here is my $0.02:

Yes.

Here's the operative section of the RSA:

4. CONDITIONS OF SERVICE
(c) Cooperation.

During the term of this Agreement, Applicant shall provide ARIN complete,
up-to-date and accurate information, assistance, and cooperation that ARIN
requests in ARIN's provision of the Services to Applicant, including,
without limitation, during its review of Applicant's utilization of
allocated number resources.

In other words, ARIN can any time during the term of the agreement, request
a review,
(see section 8)
and the registrant must comply - including providing ARIN with information
showing that
it is no longer using the IPv4 it was assigned (due to replacing it with
IPv6 let's assume).

> >The typical MO of the EPA when it discovers a polluter, is
> to tell the
> >polluter that if they spend the money to install pollution
> control that
> >they will only get a token fine and nobody will go to jail.
>
> The limitation of this analogy is that there's no widespread cost to
> clean up when a block of addresses has been "hoarded." Unless you
> stretch this to include router slots or something. Addresses held
> back represent growth that isn't happening but once they are
> reclaimed, the damage is instantly undone.
>

That wasn't the point of the analogy, actually. I was illustrating that
when penalties are light enough more people will do the wrong thing,
nothing more. Thus, the claim that an "IPv4 black market" will form
by itself post-IPv4 runout is untrue. An "IPv4 black market" will
only form if the penalties for violating the RSA are light, and
there's little effort on ARIN's part to root out the participants in
such a black market.

Ted

FW: No transfer policies are needed

Edward Lewis — 2008-04-22T19:19:08Z

I have not worked for an ISP/LIR and haven't managed address
assignments. So I want to ask some questions related to the
"reality" of this scenario.

At 11:40 -0700 4/22/08, Ted Mittelstaedt wrote:

>In other words, suppose you have a small ISP "SmallCo Inc." that
>owns an IPv4 block it doesen't need.

In that case, isn't ARIN justified in recalling the block? Or is
this a block that is "legacy?"

The context of my question is that I have long assumed that the issue
with the markets is the large amount of legacy (=RIR unencumbered
space) and not the space covered by registration service agreements.

>
>You have an ISP named "MCI Corp" that needs more IPv4 and does
>not meet the utilization criteria to get it from ARIN
>
>SmallCo secretly sells it's block to MCI Corp.

How is this different than reassigning or reallocating addresses from
SmallCo to MCI? Instead of selling the addresses as capital, why
don't they just record a charge (= to an amortization "cost" -
remember, I'm not an economist), a "rental" of the addresses?

>SmallCo sends a name-change in to ARIN claiming it's spinning off it's
>ISP operations to a separate company named "NewCo Inc" ARIN changes the
>record on the block.
>
>MCI Corp then registers the company name "NewCo Inc" as a subsidiary
>of MCI Corp. in whatever state it's incorporated in.

This seems like a lot of trouble to accomplish what an
upstream/downstream relationship already is. If I understand that
right.

>Another "black market" scenario would be for a large org that did not
>meet utilization criteria to create an independent company, use that
>company to obtain a block from ARIN, then "buy" that independent company.
>Of course, that only works before IPv4 runout.

My problem is that I find it hard to imagine that a large
organization could not meet the utilization criteria (in a way
cheaper than having to incorporate and buy a new company). I could
understand these scenarios after the free pool runs out and that is
the reason that the large organization failed to get space.

>I am not familiar enough with the existing language of the various RSA's
>that the RIR's use to know if such behaviour is explicitly prohibited but
>I think it is, certainly it violates the intent.

My read of the scenarios is that these seem like a lot of work to
circumvent the rules when there's gotta be something else that was
missed. Maybe these scenarios are close to what's happening, or
could happen, but I don't see that the scenarios are realistic.

>In any case, I would assume that ARIN would have the guts to revoke
>assignments on any blocks that were transferred in this manner, if it
>discovered them. Thus, I think the risks of block revocation would likely
>make an "IPv4 black market" a non-starter.

I can imagine that the one wanting the space might not get what they
want, but if someone has space available, that's space ARIN could
revoke, no?

>The typical MO of the EPA when it discovers a polluter, is to tell the
>polluter that if they spend the money to install pollution control that
>they will only get a token fine and nobody will go to jail.

The limitation of this analogy is that there's no widespread cost to
clean up when a block of addresses has been "hoarded." Unless you
stretch this to include router slots or something. Addresses held
back represent growth that isn't happening but once they are
reclaimed, the damage is instantly undone.

I don't mean to argue. I'm just not following...
--
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Edward Lewis +1-571-434-5468
NeuStar

Never confuse activity with progress. Activity pays more.

FW: No transfer policies are needed

Ted Mittelstaedt — 2008-04-22T18:40:13Z

> -----Original Message-----
> From: ppml-bounces at arin.net [mailto:ppml-bounces at arin.net] On
> Behalf Of Kevin Kargel
> Sent: Tuesday, April 22, 2008 7:24 AM
> To: ppml at arin.net
> Subject: Re: [ppml] FW: No transfer policies are needed
>
>
> Being as at this point IP addresses are not transferrable
> property then doesn't that make every transaction where an
> ISP grants leased use of IP addresses to it's customers for
> off site termination without SWIP or other registration a de
> facto black market (or at least grey market)
> transaction? That would say we have a pretty widespread and common
> place black market in existance today.
>

No it doesen't because the ISP that is granting the lease is
STILL responsible for it.

If someone takes the IP number that this ISP leases out and
goes and uploads a bunch of child porn from it, Interpol is
going to come knocking on that ISP's door, and they are going
to suddenly find that all of these academic arguments about
how they are not responsible just because they forgot to SWIP
it, will be thrown out the window. They ARE responsible and
a court will not let them off the hook about it until they cough
up the names of the perpretrators.

What I think the people throwing around the term "IPv4 black market"
are meaning, is a situation where an ISP holding an IPv4 block
"sells" it to another independent organization, then the "selling"
ISP essentially lies to the RIR (ie: violates it's RSA) to get the
receiving organization to become the holder of record of the block.

In other words, suppose you have a small ISP "SmallCo Inc." that
owns an IPv4 block it doesen't need.

You have an ISP named "MCI Corp" that needs more IPv4 and does
not meet the utilization criteria to get it from ARIN

SmallCo secretly sells it's block to MCI Corp.

SmallCo sends a name-change in to ARIN claiming it's spinning off it's
ISP operations to a separate company named "NewCo Inc" ARIN changes the
record on the block.

MCI Corp then registers the company name "NewCo Inc" as a subsidiary
of MCI Corp. in whatever state it's incorporated in.

Another "black market" scenario would be for a large org that did not
meet utilization criteria to create an independent company, use that
company to obtain a block from ARIN, then "buy" that independent company.
Of course, that only works before IPv4 runout.

I am not familiar enough with the existing language of the various RSA's
that the RIR's use to know if such behaviour is explicitly prohibited but
I think it is, certainly it violates the intent.

In any case, I would assume that ARIN would have the guts to revoke
assignments
on any blocks that were transferred in this manner, if it discovered them.
Thus, I think the risks of block revocation would likely make an "IPv4 black
market"
a non-starter.

But, there is an old saying in criminal behaviour that the liklihood of a
crime happening is inversely proportional to the penalty, and the risk
of being caught.

If ARIN spends very little effort checking up the validity of address
requests, and in cases where it does find fraud (because someone rats it
out for example) it does little more than a hand-slapping and does NOT
revoke the holding, then it would definitely encourage an IPv4 black
market to form post-runout.

We see this all the time in government regulation of polluters, for example.

The typical MO of the EPA when it discovers a polluter, is to tell the
polluter that if they spend the money to install pollution control that
they will only get a token fine and nobody will go to jail.

As a result, this encourages industry to pollute because the polluters know
that if they are caught, the penalties are merely what they would have to
do to comply with the law in the first place - and the money they saved
during the years of operating without the expensive pollution controls
will far and away exceed what they lose on the token fine.

Ted

FW: No transfer policies are needed

Randy Bush — 2008-04-22T14:46:37Z

rant warning. hit delete now. but you asked!

> Randy - could you please identify the pros?

not well, because i too am a geek and not a policy expert. what
differentiates me is that i seem to be one of the few that admit it.

but it looks like a mix of government and civil society folk, heavy on
the former. heck, in a/p, most of the big nirs are already tied to the
governments, and they have the big lir bases.

> Would this be a different governance model that the current bottom
> up, community regulated model?

yep. and just because we're thinking with our bottoms up does not mean
we are particularly wise or fair. others might look at it as amazing
self-protection by established players.

look how long a community of vested incumbents has kept barriers to
entry at the low end. cathy screamed at me in public when i suggested
small allocations in the first arin denver meeting; when we had an
actual victim there whose business was being severely hampered by our
bottom up policies. now, when the end is in sight, we are finally
talking about sharing the last orts here in the restaurant at the end of
the universe. how magnanimous of us.

to be clear, the bald-faced trade we made was protecting the incumbents'
router capital costs by making it hard for folk at the low end.

we are well past the limits of our talents. read the last year of
gibberish on this list. how many address policies can dance on the head
of a pin? it's embarrassing.

> If so, what governance structure do you propose?

darned if i know. heck, i helped make this mess. at least i admit it.
and i am embarrassed.

i just think it's time to stop trying to micro-manage all those dancing
angels, to try to see that the last 'free' chunks of v4 go as fairly as
we can, to let an open market try to get the best use out of the v4
space as we can, to go about making a new fun mess of ipv6 or nats, and
try to figure out how we survive.

e.g. tell me. what are we gonna do in a couple of years when there is
no more 'free' v4 space to sell, we're giving ipv6 away for free to
'promote' it, and folk are starting to wonder just how much it is really
worth paying for a whois service and dns delegation? what's the
business plan here?

i wonder if the instinctive fear this future generates is a large part
of why we are turning even more control freakish.

randy

FW: No transfer policies are needed

Kevin Kargel — 2008-04-22T14:23:44Z

Being as at this point IP addresses are not transferrable property then
doesn't that make every transaction where an ISP grants leased use of IP
addresses to it's customers for off site termination without SWIP or
other registration a de facto black market (or at least grey market)
transaction? That would say we have a pretty widespread and common
place black market in existance today.

-----Original Message-----
From: ppml-bounces at arin.net [mailto:ppml-bounces at arin.net] On Behalf Of
Ted Mittelstaedt
Sent: Monday, April 21, 2008 7:37 PM
To: 'Paul Vixie'; 'Randy Bush'
Cc: ppml at arin.net
Subject: Re: [ppml] FW: No transfer policies are needed

> -----Original Message-----
> From: ppml-bounces at arin.net [mailto:ppml-bounces at arin.net] On Behalf
> Of Paul Vixie
> Sent: Monday, April 21, 2008 5:31 PM
> To: Randy Bush
> Cc: ppml at arin.net
> Subject: Re: [ppml] FW: No transfer policies are needed
>
>
> > >> There's an IPv4 black market now.
> >
> > > can you describe it? how many transactions, what dollar volume,
> > > what average price, is it all sales or also leasing, how do they
> > > manage whois, is it done by M&A of shell companies, when did it
> > > first begin operations, is volume growing or shrinking, how many
> > > participants? things like that.
> >
> > paul, what is it about the term "black market" is there
> that you seem
> > not to understand?
>
> probably nothing. as to what i know i don't understand, it's how arin

> could make meaningful or useful policy that takes into account
> unprovable assertions about unmeasureable forces.

Until some examples of successful black market behavior in IPv4 are
cited in this forum, claims that a black market exists are nothing more
than political horse pucky

It's as bad as the Republicans wanting to pass the flag-burning laws
when there's no evidence that flag burning has occurred in 99.9% of the
times that they claim it has.

Ted

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FW: No transfer policies are needed

Ray Plzak — 2008-04-22T13:42:10Z

>
> i don't either. but it has a well established track record of doing
> so.
> but amateur regulation only goes so far. the pros are coming.
>
> maybe it's time to let go?
>
> randy

Randy - could you please identify the pros? Would this be a different governance model that the current bottom up, community regulated model? If so, what governance structure do you propose?

Ray

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FW: No transfer policies are needed

Howard, W. Lee — 2008-04-22T13:36:36Z

> paul, what is it about the term "black market" is there that
> you seem not to understand?

I'll bite. Can anyone provide a useful definition?

Wikipedia suggests that at least three actors are required for
a "market," so that one can evaluate competing offers. A
"black" market is one in which applicable regulations are
being evaded.

Are these conditions met in whatever circumstances people are
using the phrase?

Lee

> randy

FW: No transfer policies are needed

Howard, W. Lee — 2008-04-22T13:29:54Z

> it's how arin
> > could make meaningful or useful policy that takes into account
> > unprovable assertions about unmeasureable forces.
>
> i don't either. but it has a well established track record
> of doing so.
> but amateur regulation only goes so far. the pros are coming.
>
> maybe it's time to let go?

Are you asking a stimulating question, or advocating a different
governance model? If the latter, would you describe the model
you would like to see, and a transition plan?

Lee

>
> randy

FW: No transfer policies are needed

michael.dillon at bt.com — 2008-04-22T09:40:08Z

> For instance, my company has a legacy Class B network that is
> "in use".
> However, it's entirely possible that the finance folks would
> decide that, for a sufficient amount of money, we'd renumber
> to 10/8 and sell the Class B, or perhaps renumber into a /24
> subnet (for our public servers) and sell the rest. I'm not
> aware of anyone having offered us money, so I have no idea
> what our CFO's reaction would be.

My worry is that people will only consider letting go of unused
blocks, not renumbering. And most of that space is probably in
orgs who have a class B which raises the specter of ISPs who
can't get a /17 from ARIN so they get 8 /20s from class B holders.
This means 8 new routes announced rather than 1.

> > the transfer policy HARMS the organizations who succeed in buying
> > addresses because they lose large sums of money which reduces their
> > ability to move to IPv6.
>
> It is not up to you to tell other organizations how to best
> allocate their funds.

No, but I can call things as I see them. There is a cost-benefit
issue here for companies. Do I spend money on IPv6 which has delayed
benefits, or do I spend it on IPv4 and risk not being in a position
to invest additional money in two years when I need to shift to IPv6.
The people promoting IPv4 address trading are pushing up the costs
for companies who do not invest in IPv6. And money spent on IPv4
address blocks is not an investment, unlike money spent on upgrading
routers to v6-compatible devices or upgrading monitoring/management
systems to support v6.

> If some folks decide that paying for
> IPv4 space is better _for them_ than migrating to IPv6 (if
> that's even possible), so be it. I'll also point out that
> for every party "harmed" in your view this way, there is
> another organization _receiving_ money to help fund their migration.

Yes. My position is that these are the true beneficiaries of a
transfer policy. I also think that there will be a smaller number of
buyers than sellers. These buyers will be shooting themselves in the
foot, or maybe just desperately scrambling to get by until their IPv6
capability comes on line. There will be many sellers, mostly smaller
orgs who have already gotten their IPv6 capability well underway, and
who like the idea of getting their competitors to finance the smaller
orgs headstart. Of course I could be wrong. Maybe MIT and HP will be
the true beneficiaries...

> Disclosures are only required when someone has a conflict of
> interest; lack of disclosures does not imply people are
> hiding things. Unless you're accusing AC/BoT members of
> ethics violations, one should assume that those who haven't
> made a disclosure have nothing to disclose.

IP address blocks have no monetary value. Why should anyone bother
to disclose a holding or make any distinction between legacy or not?
If there were no talk of transfer policies, I don't see the point in
making any kind of formal disclosure. Let people search the ARIN db
if they are curious.

But all of a sudden, things change when we are seriously considering
proposals which monetize IP address blocks. Now is the time for this
sea change to be publicly recognized and for formal disclosures to
be made.

> Furthermore, neither the AC nor BoT actually makes a decision
> on policy -- the community does. The BoT rubber-stamps the
> AC's decisions unless there is evidence that the IRPEP was
> not followed (which is rare). The AC gauges community
> consensus, regardless of the members' individual views. As
> others have pointed out, members of both bodies have recused
> themselves (as shown in the minutes of their meetings) to
> avoid even the appearance of impropriety.

I haven't trawled through the minutes of such meetings. And as you
say, the decisions are made by the community so what is wrong with
announcing address holdings to the community?

--Michael Dillon