[ppml] NANOG IPv4 Exhaustion BoF
Kevin Kargel
kkargel at polartel.com
Thu Mar 6 15:08:08 EST 2008
But if it is known that the real estate in Manhatten is going to be
abandoned because a new island with much better real estate popped up
out of the ocean and nobody is going to live in Manhatten anymore and we
aren't going to talk to anyone there anymore do we really care if anyone
hoards the Manhatten real estate? Wouldn't it even be more ecologically
feasible if some hanger on continued to upkeep the old real estate?
Would we even care or notice if it went in to disrepair?
> -----Original Message-----
> From: ppml-bounces at arin.net [mailto:ppml-bounces at arin.net] On
> Behalf Of Tom Vest
> Sent: Thursday, March 06, 2008 1:34 PM
> To: Scott Leibrand
> Cc: Randy Bush; Public Policy Mailing List
> Subject: Re: [ppml] NANOG IPv4 Exhaustion BoF
>
> Hi Scott,
>
> I agree that you got the substitutability comparison right --
> the same could be said about real estate in any one place
> that you really cared about -- but it's a trivial comparison.
> Manhattan real estate is not really essential to anything
> important. Even a diehard New Yorker couldn't credibly claim
> that living/working in NYC is equivalent in importance to
> preserving/growing the Internet through a difficult transition.
>
> However, if everyone strongly disagrees I imagine we could
> get Donald Trump to help refine the transfer proposal ;-)
>
> TV
>
> On Mar 6, 2008, at 12:11 PM, Scott Leibrand wrote:
>
> > In the past I've used the analogy of Manhattan real estate: it's
> > definitely unique, and has only imperfect substitutes elsewhere, as
> > IPv4 is unique, with its own unique demand, and IPv6 is an
> imperfect
> > substitute.
> >
> > -Scott
> >
> > Tom Vest wrote:
> >> On Mar 6, 2008, at 7:54 AM, Jim Weyand wrote:
> >>> Tom-
> >>>
> >>> This is an interesting example, but instead of using a
> market of a
> >>> produced commodity like grain or steel do the same thought
> >>> experiment with a market for something fixed like
> farmland in Iowa.
> >>> It isn't a perfect analogy but it eliminates the producer
> incentive.
> >>>
> >>> Tony-
> >> Hi Jim,
> >> Thanks for the response.
> >> Neither Iowa farmland, nor farmland nor land more
> generally are good
> >> analogies, at least not in the present age.
> >> Unless you postulate a situation in which potential buyers and
> >> sellers are (almost) completely immobile -- e.g., in the
> pre- modern
> >> era -- all of the above are "substitutable" -- i.e., you
> can still be
> >> an agro producer without it, you can still be an agro consumer
> >> without it. And unless you postulate a time in which land
> had some
> >> unique, extra-economic significance -- e.g., in the
> pre-modern era
> >> -- then possession of it doesn't confer any special
> significance that
> >> is not substitutable with some other economic asset/activity.
> >> In the end, if landowners in Iowa have to compete for investment
> >> dollars with landholders (and other asset owners)
> elsewhere, then
> >> that puts an upper bound on the demand, and hence the price, and
> >> hence the appeal of hoarding rather than immediately
> selling, for
> >> Iowa land. On the other hand, if Iowa land was the last land on
> >> Earth, and not completely substitutable for any aspiring agro
> >> producer or consumer on Earth, then you'd probably rarely
> see it on
> >> the market, and never see it at all at a price or in tracts big
> >> enough to permit new farmers to enter the market. Making
> this even
> >> worse, if you happened to know that agro production would
> be getting
> >> much more efficient in the near future, so that smaller
> and smaller
> >> parcels might be economically viable (and hence
> marketable), you'd be
> >> even less likely to sell at any price now.
> >> (we actually covered this in the course of the NANOG thread --
> >> apologies again for duplication)
> >> TV
> >>> I agree 100%, as counter-intuitive as it sounds, we need
> >>> speculators in
> >>> this market. Hopefully we can attract a reasonable number of
> >>> speculators that will compete with one another and
> actually deliver
> >>> lower prices. In an active, vibrant market the price for
> a block of
> >>> addresses will be quickly and fairly determined.
> >>>
> >>> It is my belief that open market with minimal constraints will
> >>> result in
> >>> the best balance and fairness between sellers and buyers
> of address
> >>> space.
> >>>
> >>> That said I continue to support Scott's proposal, Policy Proposal
> >>> 2008-2: IPv4 Transfer Policy Proposal with its constraints and the
> >>> resulting additional costs because that may prove to be more
> >>> politically
> >>> acceptable. Even a constrained market is far better than
> no market
> >>> at all.
> >>>
> >>> -Jim Weyand
> >>>
> >>>> -----Original Message-----
> >>>> From: ppml-bounces at arin.net [mailto:ppml-bounces at arin.net] On
> >>>> Behalf
> >>> Of
> >>>> Tom Vest
> >>>> Sent: Thursday, March 06, 2008 9:22 AM
> >>>> To: tony.li at tony.li
> >>>> Cc: 'Randy Bush'; 'Public Policy Mailing List'
> >>>> Subject: Re: [ppml] NANOG IPv4 Exhaustion BoF
> >>>>
> >>>>
> >>>> On Mar 6, 2008, at 12:47 AM, Tony Li wrote:
> >>>>
> >>>>> |i would be interested in hearing if speculative
> purchasing would
> >>>>> have a
> >>>>> |signature we could detect and use to ameliorate speculation in
> >>>>> some
> >>>>> |fashion.
> >>>>>
> >>>>> If I remember my econ classes (from oh so long ago ;-),
> >>>>> speculative trading is actually beneficial to the
> market in that
> >>>>> it helps provide a buffer for supply. Hoarding is the behavior
> >>>>> that we would want to really detect and avoid. Someone
> trying to
> >>>>> corner the market in v4 space would be
> >>> bad.
> >>>>> Tony
> >>>> Hoarding in the behavior you should expect. This will be true
> >>>> unless/ until IPv6 is actually fully substitutable for IPv4, for
> >>>> both existing and aspiring number resources users.
> Until then any
> >>>> "rational" IPv4 seller will know that they'll be able to
> sell the
> >>>> same, if not a shorter prefix at a higher price
> tomorrow, and also
> >>>> that they will have to pay even more if they find they they need
> >>>> the
> >>>> IPv4 back again after that. So the only people who might
> contribute
> >>>> to IPv4 liquidity (i.e., after the first/last sale of
> truly idled
> >>>> address space) are going to network operators that know they'll
> >>>> never need more IPv4 ever again.
> >>>>
> >>>> For them however, the prospect of empowering new/existing
> >>>> competitors by making essential inputs available is going to
> >>>> provide an additional gating factor influencing number
> and length
> >>>> of prefixes offered, as well as asking price (c.f., the
> market for
> >>>> dark fiber).
> >>>>
> >>>> Reposting below from NANOG, with apologies to those who will be
> >>>> seeing this for the second time.
> >>>>
> >>>> TV
> >>>>
> >>>> Begin forwarded message:
> >>>>> From: Tom Vest <tvest at pch.net>
> >>>>> Date: February 18, 2008 9:26:03 PM PST
> >>>>> To: nanog at merit.edu
> >>>>> Cc: Rod Beck <Rod.Beck at hiberniaatlantic.com>, Iljitsch
> van Beijnum
> >>>>> <iljitsch at muada.com>, David Conrad
> <drc at virtualized.org>, Brandon
> >>>>> Galbraith <brandon.galbraith at gmail.com>
> >>>>> Subject: Re: IPV4 as a Commodity for Profit
> >>>>>
> >>>>> It's good that this discussion is happening now.
> >>>>> To make the discussion as productive as possible, it's
> probably a
> >>>>> good idea to clarify assumptions and terms.
> >>>>> We all know what "market" means -- but in all
> likelihood many of
> >>>>> the things we all "know" do not overlap, and some are probably
> >>>>> mutually contradictory.
> >>>>>
> >>>>> If thinking about IPv4 addresses as a "commodity" has any
> >>>>> validity, it comes from the assumption that making them
> subject to
> >>>>> "market pricing" will increase supply, i.e., incentive current
> >>>>> surplus holders to make that surplus available to
> would-be buyers.
> >>>>>
> >>>>> In other "commodity" markets, the connection between market
> >>>>> pricing and increased supply is *production* -- i.e., when the
> >>>>> revealed price of a commodity goes up, those who are capable of
> >>>>> making it are motivated to make more, or to jump into
> the market
> >>>>> for the first time. In other commodity markets, that
> motivation is
> >>>>> bounded by the threat of alternative suppliers, by the
> >>>>> impracticality of hoarding, and by the inability of the
> potential
> >>>>> seller to use more of the commodity directly. In other
> words, the
> >>>>> existence or potential emergence of alternative
> >>>>> producers/suppliers tends to discourage hoarding to maximize
> >>>>> prices (because there's no guarantee that prices will
> stay high,
> >>>>> much less go even higher), and the lack of direct "use value"
> >>>>> reduces any countervailing incentive that the
> prospective seller
> >>>>> to just hold the assets in perpetuity, until they can be used
> >>>>> in-house.
> >>>>>
> >>>>> In the case of IPv4 addressing, none of these bounding
> conditions
> >>>>> apply. No more IPv4 addresses can be produced, and
> they're almost
> >>>>> certain to have unique (if not irreplaceable) use
> value, at least
> >>>>> for some classes of ISPs that exist today, for at least
> a decade
> >>>>> or more (or as long as those kinds of ISPs exist, whichever is
> >>>>> shortest). That means the potential price is always going to be
> >>>>> higher tomorrow than it is today, right up to the day
> before the
> >>>>> last day that IPv4 becomes useless. Which means
> hoarding is going
> >>>>> to continue to be the most sensible behavior for all surplus
> >>>>> holders -- even those that no longer have any
> Internet-related ops
> >>>>> or business interests.
> >>>>>
> >>>>> This countervailing incentive is much stronger for
> surplus holders
> >>>>> that *do* still have such interests. Knowing that IPv4
> addresses
> >>>>> that they might need in the future will certainly cost
> more (maybe
> >>>>> lots more) than whatever price they could command for
> surplus IPv4
> >>>>> today, growing ISPs are not likely to contribute much to the
> >>>>> salable, "liquid" address pool. Worse still, so long as IPv4
> >>>>> continues to be a non-substitutable, must-have input
> for certain
> >>>>> kinds of ISPs, ISPs like that will know that the threat of
> >>>>> competition from existing or hypothetical future
> competitors will
> >>>>> be absolutely limited by the availability of IPv4 address space.
> >>>>> For them, making IPv4 address space unavailable to
> competitors is
> >>>>> a perfectly sensible "use", and one with quite a lot of value.
> >>>>>
> >>>>> An unmediated market is not going to "work", for almost any
> >>>>> meaning of that term. Get over it.
> >>>> _______________________________________________
> >>>> PPML
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> >> _______________________________________________
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