[ppml] Markets, pricing, transparency, 2008-2 / 8.3.9

[Tom Vest]

On Mar 17, 2008, at 10:20 PM, Cliff Bedore wrote:

> Regarding a "market" for IPv4 addresses, I still have not heard any
> disadvantage to ARIN staying completely out of the market part and  
> just have a
> policy that allows one more method of acquiring addresses.
>
> As I understand current policy, there are basically two ways to get  
> addresses
>
> 1)  Ask ARIN with appropriate justification
>
> 2)  Buy/merge with a company and get the addresses as a part of that
> transaction (again with some justification to ARIN
>
> It seems to me that all that 2008-2 needs to do is add a third  
> method once the
> IANA free pool is gone.
>
> 3) Party 1 offers to transfer to Party 2 some block of addresses.   
> Party 1
> has the right to offer and Party 2 justifies the right to receive the
> addresses.  No market, no ARIN involvement with SEC, just ARIN  
> approving use
> of a block of addresses.
>
> Why is this not a simple way to handle the end of life address  
> management of
> v4 addresses?  ARIN gets their fees just like now so they remain  
> viable but
> have no interaction with the "market" and its associated problems.
>
> Cliff

Basically this is the simple way, but it will not work -- technically  
it cannot work. This is because the arrangement you describe requires  
the same incentives to operate in multiple, simultaneous, but  
mutually contradictory ways -- more or less like this:

1. First, eliminate the single source mechanism for address  
delegation. Henceforth anyone may potentially be a buyer or seller of  
address resources, as they see fit.

2. Next, allow market forces to govern the address delegation  
function -- i.e., engage everyone's well-honed instincts to spend  
less and profit more, and allow the overall distribution of address  
resource be determined and legitimated by that market process.

3. Having empowered everyone this way, and fired up those competitive  
juices, also make sure that under certain defined circumstances,  
everyone always ignores both their new sovereign prerogatives and  
their newly engaged, otherwise-unrestricted market instincts, and  
voluntarily accept extra costs, restrictions on when and under what  
circumstances they may act, etc.

4. Make sure that they follow these rules and pay these extra costs  
in 100% of the required circumstances.  Also assure that everyone  
takes the extra effort to inform some now distant, formerly critical  
institution of the results of their actions -- for whatever reason.

5. This is a decentralized, market-driven system, but unlike every  
other market in human history all rules are purely voluntary, and no  
other enforcement mechanisms will ever exist. Make it work anyway.

If that illustration doesn't work, maybe this one will:

Basically the arrangement you describe would be like vehicle  
insurance in the US. We all know that, if we can afford it, auto  
insurance tends to protect us from somewhat from extreme risks. We  
also probably have a vague sense that the insurance we pay for also  
helps to protect other drivers too -- although that's hardly a  
motivating factor for us to buy in.  But some people simply can't  
afford it, and some are forgetful and let their coverage lapse, and  
some people just like to live dangerously, damn the consequences for  
themselves and everyone else.

The Insurance Research Council estimates that 15-16% of all vehicles  
on US roads at any given time (c. 2007) were uninsured. Lucky for US  
drivers, there is no Department of Homeland Insurance that might be  
called in to rectify the situation in case uninsured, anonymous  
motorists start crashing into important things, or if that compliance  
rate drops too low. We do not enjoy the same luxury.

I can't make the case any more clearly. I would also like the simple  
way to work, but wishing it will not make it so.

TV