[arin-discuss] SPAM-WARN:Re: [ppml] Counsel statement on Legacyassignments?(fwd)

[Owen DeLong]

On Oct 5, 2007, at 8:35 AM, Michael Thomas - Mathbox wrote:

>> We are, with respect to IPv6.  So let's not put too much effort into
>> solving the pricing problem of legacy assignments in legacy address
>> space.
>
> Actually everyone _is not_ treated the same for either. The pricing
> structure for both IPV4 and IPV6 indicates that there are first class
> citizens, second class citizens, third class, etc. Otherwise,  
> everone would
> pay exactly the same price per IP address.

Not true.  The pricing structure indicates that IP addresses are a  
mixture
of fixed and incremental costs.  This is also common in transactions of
wholesale goods.  Companies that buy a container of a product get a
much better price than companies that purchase a pallet of the product
at a time.  Companies that buy a pallet receive a better price than
companies that buy a case at a time.

While ARIN is not selling IP addresses, the reality is that to evaluate
an allocation request requires a certain amount of effort  regardless
of the size of the request.  Beyond that, a certain amount of effort
tends to be roughly proportionate to the size of the request.  Thus,
as the size of the address space allocated to a given organization
increases, the price per IP appears to decrease, but, that is because
the fixed cost portion of the price is not growing as the size of the
allocations grows.

Example (absurd numbers used to keep math easy):

Fixed costs to maintain an organization in the system: $1000

Per IP cost to maintain customers allocation records: $1

Customer with a /22:	$1000 + $1024 = $2024	$2024/1024 = 1.9765625

Customer with a /19:	$1000 + $8192 = $9192	$9192/8192 = 1.1220703

Customer with a /16:	$1000 + $65536 = $66536	$66536/65536 = 1.0152588

As you can see, the "apparent price" per IP drops somewhat  
substantially,
but, the reality is that the pricing is quite linear.

I have not evaluated the ARIN fee structure to see what this constant
is, and, there are some rounding and smoothing errors introduced
into ARIN pricing to simplify the fee structure vs. a unique price for
every customer.  However, it does roughly approximate such a
pricing structure, and, this is a very common practice for both sales
and service pricing.

Owen