[ppml] Policy Proposal: Decreasing Exponential Rationing of IPv4 IP Addresses

[Alexander, Daniel]

Dean,

There are several proposals that try to delay the depletion of IPv4 by
restricting or rationing demand. One conern I have is the assumption
that demand is primarily based on waste, hoarding and inefficiencies.

Rationing of IP space currently exists with the RIR's in the form of the
slow start method of allocation. While it may not be 100% efficient, one
advantage is it rations IP allocations without restricting demand.

Rationing, by restricting demand, ensures that IP are available for
those who may need them in the future, by denying those who may need
them in the present. Don't you trade one problem for another at that
point. 

My opinion is that policy should never inhibit the genuine growth of the
Internet. If the concern is hoarding, then the focus should be on
reclaiming unused allocations, rather than prohibiting natural growth. 

I'll use the company I work for as an example. Not too long ago, we
started offering VoIP services. We planned on a nationwide deployment,
and marketing had ambitious goals for the number of devices deployed the
first year. (as they often do). To deploy the service across our entire
footprint, it was determined we would need X number of IP. (scopes of a
certain size to be deployed on the CMTS and provisioned to the customer
through DHCP) 

When ARIN provided the allocation to deploy the service, they used the
slow start mechanisms. Their response was, we know you are asking for X,
but you have no historical data to back that up. Therefore, we were
given a percentage of X. Once that is used according to the utilization
policies, we could then ask for more. In the end, that allocation only
lasted us a month, given the rate the service took off. We had to juggle
allocations, and renumber IP space to where it was needed most, to allow
the time needed for a history of proven growth to develop, before ARIN
would allocate larger blocks of IP space.

If a strict approach to rationing is taken, what happens when a company
needs IP for new customers, but is not provided them by the RIR. That
scenario, is no different than if the IANA pool was allowed to deplete.
It won't matter if the possibility exists they could get more the next
time their turn came up. The customer has already gone elsewhere.

Isn't IPv4 better served by ensuring those who need it get it, and those
that aren't using it give it back, rather than restricting natural
growth?

Thanks,
-Dan Alexander


-----Original Message-----
From: ppml-bounces at arin.net [mailto:ppml-bounces at arin.net] On Behalf Of
Dean Anderson
Sent: Tuesday, August 21, 2007 1:11 AM
To: Scott Leibrand
Cc: ppml at arin.net
Subject: Re: [ppml] Policy Proposal: Decreasing Exponential Rationing of
IPv4 IP Addresses

On Mon, 20 Aug 2007, Scott Leibrand wrote:

> Dean,
> 
> Thank you for starting this discussion with a policy proposal.
> 
> IMO we'll need to add some additional guidance to a policy proposal 
> like this in order to ensure it's implemented in a way that meets the 
> proposal's goals.  For example, here are a few questions we might want

> to address:
> 
>     * How should rationing be achieved?   Should all applicants
receive
>       smaller blocks than their justified usage would otherwise
permit? 
>       Should all applications be placed on a waiting list and filled
in
>       a first-come-first-served basis as soon as the rationing
function
>       allows?

My perception of the actual inner working of ARIN right now is that
requests are handled roughly first come, first served, with the
exception that people that get all their documents in order first, get
served first.  I can't say that this is really the case.  But to the
extent it is the case, then we already have a system that will work for
rationing.  Rationing based on a hard limit isn't always fair, but it is
often necessary.

For example, I recently saw on the news of water rationing after a flood
in the UK. The people who get in line first, get their [ration] bottle
of water first. This continues until the water buffalo [water tank on
wheels] runs out.  That's unfair to the people at the back of the line.

But there is nothing better, sometimes. Likewise, I don't think we can
determine who is 'most worthy' other than those who get in line earliest
and get their paperwork in order first.  One ISP is just as worthy as
the next to get IP Addresses, assuming their documentation is the same.

But there are a number of natural side effects that are quite
beneficial. To give example of such side effects I'd like to relate an
article I read just today about captive insurance strategies in Fortune
Small Business Magazine. Captive insurance is where a group of small
businesses get together and raise capital for their own insurance upto
say $500k, and then purchase reinsurance for larger amounts.  This also
puts them in control of costs of small claims, because they select the
claims to pay and the claims to fight, and they also get the profits
when premiums paid in exceeds costs. Employees of these companies also
naturally get the message that accidents are paid by the company, not by
some nebulous far-off wealthy insurance company.  Safety improves and
claims decline. The company benefits, the employees benefit.  These are
beneficial side effects of captive group insurance.

Imposing any hard-limit rationing regime will also have side effects on
the way ARIN staff perform their duties even without further policy
changes.  Inclination to toward giving out somewhat smaller blocks and
looking more closely at existing allocation and usage are natural ways
to serve more people with less resources, and can be done within
existing policy. I expect that this will be a natural consequence of a
hard limit in any case.  Once the ARIN staff realize they have a hard
limit, they'll naturally look harder at documentation.  This doesn't
have to be specified.

And if tightening doesn't 'just happen' as a side effect, the hard limit
will stop delegations for a little while, and ARIN staff will simply
have more time to look at the current requests and documentation.

And if that still doesn't work, we can adjust the policy. However, we
won't be running out of space for 10 years, so we have some little more
time to work this out.

I would expect that people who put in requests do not lose the place in
line just because the hard limit for a timeframe is hit.

I also thought some more about Mr. Herrin's assertion of ambiguity this
afternoon.  Although I suspect Mr. Herrin may merely be uncomfortable
with calculating with exponentials, there are actually several different
ways to calculate e^(-x).  One could use their scientific calculator;
use Maxima, Matlab, Mathematica, etc; use a series expansion; or use a
table found a book.  Rounding might make some small differnce.  
However, none of these make any difference to the 'big picture' of
preventing IP Address Exhaustion for at least 10 years.

In the first example I posted of a decreasing exponential, I described
rationing a hundred widgets over 10 years. In the first year, you divide
100 by 10, and so give out 10 in the first year. 90 remain.  In the
second year, divide 90 by 10, and so give out 9. And so on. This
approximation is fine, too.  So, I think the method by which they
calculate and scale e^(-x) makes no difference to the big picture of
keeping address space available for at least 10 years.  I think that
staff will find some convenient means for doing this. And unless there
is some "approximation" that isn't really e^(-x) and causes ARIN to
allocate more IP addresses so that we will run out in less than 10
years, I don't think it necessary to impose much on the method or scale
factor for calculating e^(-x).

But if there is still ambiguity, I suggest the following should be
completely clear:

AIP is the available IP pool at year 0 (the start)

Year 0 is (AIP) * (1/10) * e^(-0/10) = AIP/10 * 1 Year 1 is (AIP) *
(1/10) * e^(-1/10) = AIP/10 * 0.9 Year 2 is (AIP) * (1/10) * e^(-2/10) =
AIP/10 * 0.8
....   

If you want to go by 3 month periods: (40 3 month periods in 10 years)

quarter 0 is (AIP) * (1/40) * e^(-0/40) = AIP/40 * 1 quarter 1 is (AIP)
* (1/40) * e^(-1/40) = AIP/40 * 0.97 quarter 2 is (AIP) * (1/40) *
e^(-2/40) = AIP/40 * 0.95
....   

When space is returned, the AIP is calculated, the process starts over
at year 0, quarter 0, etc.  I think ARIN staff will have a better view
as to what timeframe to use conveniently.  If they can't decide on a
timeframe, then additional guidance will be necessary.  Obviously, a
very long timeframe is bad, for about the same reasons that extending
the timeframe on delegation use is bad.  Too short a time frame would be
inconvenient, too.



>     * What mechanisms would be allowed to meet the needs of networks
>       denied or delayed space under rationing?  Would a market be
>       created/allowed such that networks that really need IP space
right
>       away can purchase it from other networks that can more easily
free
>       up addresses through improved efficiency?  Would networks
needing
>       space immediately be encouraged to get ("rent") PA space from a
>       provider?

I don't know about the whole market idea, yet.  A market allocates some
resources quite effectively (e.g. Oil, Capital, Dry goods), and
allocates some things quite badly (e.g. Healthcare, Law Enforcement,
Fire Protection, National Security). I haven't quite decided for myself
whether IP Addresses are like Oil or are like Healthcare.

But I can't deny that a market of a sort exists now, and will probably
exist whether or not you try to impose rules on prohibiting that.  
Quite obviously, people with money who need IP Addresses can buy the
ISPs that have already IP Addresses. Like the movie Wall Street, the
raider can then turn the just-bought resources to their own more
profitable purposes.  There is almost no way to stop that; because so
far as ARIN is concerned, nothing has changed. The business pages just
report ISP X bought ISP Y.  Allowing the sale of IP Address blocks on
ebay would seem to make little difference.

Recently, a person on a mailing list that I read, offered the use of his
legacy /24 in exchange for hosting their server.  I can't see anything
wrong with that.

On the other hand, IP Address delegations are basically leases from the
government, and the landlords (the government) can specify that the
leases either are or aren't transferrable.  Usually, one wants some
sensible cause for restrictions---e.g. you can't sell the nuclear
weapons plant or whatever to just anyone---and so far in the "market"
discussion, I haven't seen anyone really show the social harm in
allowing blatant IP Address transferral for money.  I've only seen
hypocritical discussion of what is fair and what limits should be
imposed retroactively (and hypocritically) on others.  People speak of
the probable USG interests; I think the USG will treat the issue of IP
Addresses much like it treated frequency spectrum: Up for bid to the
highest bidder, possibly subject to FCC regulation where necessary.

But I do worry that a market for IP Addresses will eventually result in
an Enron-like debacle with traders trying to cause power outages to
generate higher prices and more profits.  Indeed, the Iraq war seems to
have done somewhat the same thing in the Oil industry, but we don't have
any tapes (yet) of Dick Cheney or anyone saying the equivalent of 'drop
that plant off-line for maintenance during the heat wave' to spike
prices like we do for Enron.  I've seen a lot (and have also
occasionally been victim to)  operators and even senior people in the
Internet whose morals are about the same or less than those of Enron
traders.  But of course, the Enron, Worldcom, Adelphia, etc people were
eventually found out and went to jail or were fired.

If we create a market of IP Addresses, I think an Enron-like debacle is
all but certain. So, the question for me is this: Is the benefit of a
market worth the trouble?  Almost certainly there will be trouble.
Almost certainly some people will go to jail on fraud, criminal
conspiracy, etc like with Enron etc.  But outside the bad events, I
think resources might be allocated quite well by a market.  But I don't
know how damaging the bad events might be.  I'd guess they would be
somehat similar to, but probably not as bad as, IP Address exhaustion.

>     * What do you mean by contested IP space?  Are you referring to
>       pre-ARIN allocations and assignments, or something else?

No. Just as I explained to Mr. Herrin, "contested" is a broad term to
apply to ordinary disputes opened via the ticket system, and also to
other disputes that may need to be negotiated or litigated.  This is
motivated by the Kremen case.  It is so that ARIN staff can't ignore
court orders, or otherwise pretend that they aren't subject to the
jurisdiction of a court or otherwise ignore disputes.  I think this
issue has to be written into policies in some way. The provision I wrote
doesn't change anything else, but just prevents ARIN from considering
contested space in its space available. That affects the hard limit
function. The provision consequently ensures that should ARIN "lose" the
ensuing negotiation or court case, there will be space available.

> I'm not sure if a rationing policy would be better than the Soft
> Landing proposal, but IMO rationing is an idea worth fleshing out and
> considering as an alternative.

Thanks.

		--Dean

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