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<div class=Section1>
<h2>Comments of the Internet Governance Project (IGP) on the proposed Transfer
Listing Service<o:p></o:p></h2>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>ARIN is to be commended for making this first attempt to
implement a Transfer Listing Service (TLS). In effect, ARIN is setting up a
market intermediary or exchange. In our view, ARIN should strive to make this
market as liquid, open, efficient and responsive to supply and demand as possible.<o:p></o:p></p>
<h3>General comments<o:p></o:p></h3>
<p class=MsoNormal>To design it correctly, ARIN must have a clear understanding
of two things: the purpose of the Transfer Listing Service (TLS) and its own
role in the transfer process. <o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>Regarding the TLS’s purpose, in our view the design
should be based on the following premises: <o:p></o:p></p>
<p class=MsoListParagraph style='margin-bottom:0in;margin-bottom:.0001pt;
text-indent:-.25in;line-height:normal;mso-list:l0 level1 lfo1'><![if !supportLists]><span
style='font-family:Symbol'><span style='mso-list:Ignore'>·<span
style='font:7.0pt "Times New Roman"'>
</span></span></span><![endif]>There will be legitimate needs for IPv4
addresses well beyond the exhaustion of the free pool<o:p></o:p></p>
<p class=MsoListParagraph style='margin-bottom:0in;margin-bottom:.0001pt;
text-indent:-.25in;line-height:normal;mso-list:l0 level1 lfo1'><![if !supportLists]><span
style='font-family:Symbol'><span style='mso-list:Ignore'>·<span
style='font:7.0pt "Times New Roman"'>
</span></span></span><![endif]>Prolonged scarcity of ipv4 addresses means that
there must be a mechanism to move ipv4 resources from lower-value to
higher-value uses;<o:p></o:p></p>
<p class=MsoListParagraph style='margin-bottom:0in;margin-bottom:.0001pt;
text-indent:-.25in;line-height:normal;mso-list:l0 level1 lfo1'><![if !supportLists]><span
style='font-family:Symbol'><span style='mso-list:Ignore'>·<span
style='font:7.0pt "Times New Roman"'>
</span></span></span><![endif]>It is vital to retain ARIN’s function as a
comprehensive and accurate address registry, and transfers that take place
without its knowledge or recordkeeping risk undermining this function;<o:p></o:p></p>
<p class=MsoListParagraph style='margin-bottom:0in;margin-bottom:.0001pt;
text-indent:-.25in;line-height:normal;mso-list:l0 level1 lfo1'><![if !supportLists]><span
style='font-family:Symbol'><span style='mso-list:Ignore'>·<span
style='font:7.0pt "Times New Roman"'>
</span></span></span><![endif]>It is more important to get parties who hold
address blocks they don’t really need to release them for others to use
than it is to ascertain whether these parties actually needed the block they
currently hold, or whether they are signatories to ARIN contracts. Those receiving
resources can be brought into the contractual regime; it is less important
whether those releasing resources meet rigid guidelines. (Obviously, sales of
hijacked or illegitimately claimed resources must be screened out.)<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>Regarding ARIN’s role, what ARIN calls a
“Transfer listing service” implies four conceptually distinct
functions: <o:p></o:p></p>
<pre style='margin-left:.5in;text-indent:-.25in;mso-list:l1 level1 lfo2'><![if !supportLists]><span
style='font-size:11.0pt;font-family:"Calibri","sans-serif"'><span
style='mso-list:Ignore'>1.<span style='font:7.0pt "Times New Roman"'> </span></span></span><![endif]><span
style='font-size:11.0pt;font-family:"Calibri","sans-serif"'>Verification of who is a legitimate offerer of ipv4 address assets and verification, through “needs assessment,” of who is a qualified seeker or bidder. <o:p></o:p></span></pre><pre
style='margin-left:.5in;text-indent:-.25in;mso-list:l1 level1 lfo2'><![if !supportLists]><span
style='font-size:11.0pt;font-family:"Calibri","sans-serif"'><span
style='mso-list:Ignore'>2.<span style='font:7.0pt "Times New Roman"'> </span></span></span><![endif]><span
style='font-size:11.0pt;font-family:"Calibri","sans-serif"'>A listing process which publicly identifies seekers (bidders) and offerers (askers) of ipv4 address assets; <o:p></o:p></span></pre><pre
style='margin-left:.5in;text-indent:-.25in;mso-list:l1 level1 lfo2'><![if !supportLists]><span
style='font-size:11.0pt;font-family:"Calibri","sans-serif"'><span
style='mso-list:Ignore'>3.<span style='font:7.0pt "Times New Roman"'> </span></span></span><![endif]><span
style='font-size:11.0pt;font-family:"Calibri","sans-serif"'>A process for matching of bid/ask prices; <o:p></o:p></span></pre><pre
style='margin-left:.5in;text-indent:-.25in;mso-list:l1 level1 lfo2'><![if !supportLists]><span
style='font-size:11.0pt;font-family:"Calibri","sans-serif"'><span
style='mso-list:Ignore'>4.<span style='font:7.0pt "Times New Roman"'> </span></span></span><![endif]><span
style='font-size:11.0pt;font-family:"Calibri","sans-serif"'>A clearing house which formally registers the transaction once verifying that appropriate payments are made (including any transaction or listing fees imposed by ARIN), and officially alters the title to the resources.<o:p></o:p></span></pre>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>In our view, ARIN only needs to do #1 and #4. Our
understanding of the proposed TLS is that ARIN has devoted most of its
attention to the first and second functions, has completely ignored the third
function, and has not fully thought through its approach to the fourth
function. <o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>Ideally, ARIN policy should foster an efficient and
decentralized market in which its role is restricted to authenticating
legitimate sellers and transferring titles to legitimate buyers once
transactions are concluded. In this view, the second and third functions could
emerge in the market based on authoritative information supplied by ARIN.
However, setting in place the infrastructure for a more robust and competitive
exchange system could be more complicated than a more closed and monopolistic
system. Due to the need for immediate action, it is important to get the TLS up
and running in a simpler form and consider ways to improve it in the second and
third iterations.<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>ARIN needs to specify whether the listing service will list
asking price (we think it should) and whether seekers can also specify their
initial bid price (we think they should be able to). The market will be more
efficient and prices for seekers will be lower if this information is public.
Askers and bidders should be able to modify their listed ask/bid price easily
and quickly. ARIN should publish the clearing price of address resources, both
to facilitate research and assessment of the transfer policy and to aid
industry planning and operations. (Organizations that may not yet need
addresses but think they might in the future have a legitimate interest in
access to information about the volume, price and specific blocks traded.)<o:p></o:p></p>
<h3>Questions posed by the Consultation: <o:p></o:p></h3>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoListParagraph style='text-indent:-.25in'>1.<span style='font-size:
7.0pt;line-height:115%;font-family:"Times New Roman","serif"'>
</span>How long should ARIN offer a Transfer Listing Service and what, if any,
conditions should be tied to its availability?<o:p></o:p></p>
<p class=MsoNormal>ARIN should maintain the TLS indefinitely. The listing
service should be offered as long as ipv4 addresses are in use and for the
duration of a full transition to ipv6. Because no one knows when ipv6 will
completely supplant ipv4 it is unwise to set an arbitrary time limit on the
TLS. <o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>ARIN should, however, periodically reconsider the design of
the TLS. ARIN might commit itself to a review of the service design every 18
months or so. <o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal style='margin-left:.25in'>2. As proposed, there is a usage
agreement for participation. Is this a fair and reasonable requirement?<o:p></o:p></p>
<p class=MsoNormal style='margin-left:.25in'><o:p> </o:p></p>
<p class=MsoNormal>As (vaguely) described in the consultation, the usage
agreement specifies that parties can only participate in the TLS “for the
purposes of meeting the requirements of the Transfer Listing Service
participants.” We don’t know for sure what this means. If it is
simply an anti-spam agreement, we have no objections, although misbehavior of
that sort might already be covered by existing laws. If it is an attempt to
strongly restrict who can look at listings of seekers and offerers, for example
by limiting access to parties who actually hold address resources or who have
contracts or “demonstrated need,” we think it is a bad idea. <o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>Listing information should be public if it is to serve its
primary function of facilitating transfers among parties. Transparency and
liquidity go hand in hand. Brokers and intermediaries who could facilitate the
effective functioning of the transfer market would have a legitimate interest
in access to the information, as well as academic and industry
researchers. Once the information is public, ARIN is not in a very strong
position to control subsequent “uses” of the information, which
could be compiled, stored, exchanged and analyzed by anyone who possessed
it. Thus, we question the need for such an agreement.<o:p></o:p></p>
<p class=MsoNormal> <o:p></o:p></p>
<p class=MsoNormal style='margin-left:.25in'>3. Under what conditions should
ARIN disallow or remove either an organization listing or seeking IPv4 address
space from the service? For example, if an organization has a Registration
Services Agreement (“RSA”) with ARIN and is not current on payments
with ARIN, should they be allowed to participate?<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>ARIN must clearly define its priorities with respect to the
proposed listing service. In our view, the most vital purpose is to facilitate
the movement of resources from parties with unneeded or larger-than-needed
assignments to those with too few address resources. An equally vital
function is to preempt the development of underground trading of address
resources. Those two purposes should take priority over all others. <o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>ARIN can and should insist that those receiving resources
under the policy (successful bidders) be under an RSA and able to demonstrate
technical requirements or “need” for them. But ARIN should be much
more liberal about regulating legitimate address block holders who are willing
to release resources through the listing service. The movement of resources
from legacy, non-contracting parties to contracting, fee-paying parties
benefits both ARIN and, presumably, the public by bringing them under a
consistent policy regime. ARIN should do everything it can to encourage
participation by legacy holders and remove all obstacles to their
participation. While obviously ARIN should not allow hijacked or illegitimately
identified resources to be transferred, the listing service should not be
confused with some kind of tool for retroactive punishment of past overconsumption,
or as a way to coerce organizations into signing RSAs. Such an approach would
simply discourage participation and undermine the net benefits that could be
gained from efficiency-enhancing transfers. Attempting to leverage the listing
service to achieve unrelated objectives produces no corresponding benefits, as
parties could simply avoid it. <o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>With respect to unpaid ARIN fees, it makes no sense to bar
an organization from participation in the transfer market on that basis –
but it would be justifiable to make the final settlement and re-registration of
the address resources contingent upon the back payments. Buyer payments to the
seller could be tapped for this purpose during the settlement stage. <o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal style='margin-left:.5in'>4. Should there be a fee associated
with the Transfer Listing Service? If so, on what factors should the fee be
based?<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>ARIN’s primary purpose is to facilitate liquidity and
the matching of supply and demand for v4 addresses. Fee mechanisms and fee
levels that discourage participation in the listing service should be avoided. <o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal>But we have no objection to flat, simple listing fees that
cover the costs of providing the service. Bear in mind that issues related to
the size of fees become less difficult if and when competition enters into the picture.
As noted before, TLS designs that allow competing third parties to operate
exchanges should be explored going forward. <o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoNormal style='margin-left:.25in'>5. Are there any other factors
that ARIN should consider in providing this service?<o:p></o:p></p>
<p class=MsoNormal><o:p> </o:p></p>
<p class=MsoListParagraph style='text-indent:-.25in;mso-list:l2 level1 lfo3'><![if !supportLists]><span
style='font-family:Symbol'><span style='mso-list:Ignore'>·<span
style='font:7.0pt "Times New Roman"'>
</span></span></span><![endif]>How will the success or failure of a particular
TLS design be assessed?<span style='font-family:"Courier New"'><o:p></o:p></span></p>
<p class=MsoListParagraph style='text-indent:-.25in;mso-list:l2 level1 lfo3'><![if !supportLists]><span
style='font-family:Symbol'><span style='mso-list:Ignore'>·<span
style='font:7.0pt "Times New Roman"'>
</span></span></span><![endif]>Will it be possible for third
parties/consultants or other intermediaries to provide gateways into the ARIN
listing service? <o:p></o:p></p>
<p class=MsoNormal>Milton Mueller<o:p></o:p></p>
<p class=MsoNormal>Brenden Kuerbis<o:p></o:p></p>
<p class=MsoNormal>Lee McKnight<o:p></o:p></p>
<p class=MsoNormal>Michel van Eeten<o:p></o:p></p>
<p class=MsoNormal><span style='font-family:"Courier New"'>(IGP)<o:p></o:p></span></p>
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