[arin-ppml] Revised -- Policy Proposal 2009-4: IPv4 Recovery Fund

[Matthew Petach]

On 4/11/09, Leo Bicknell <bicknell at ufp.org> wrote:
> In a message written on Sat, Apr 11, 2009 at 01:30:55PM -0700, Matthew Petach wrote:
>  > In that case, can we consider calling this an 'escrow' function
>  > rather than a 'recovery fund'?
>  >
>  > I don't like the idea of sending a check for $250,000 to ARIN for
>  > them to put in their "recovery fund'" in the hopes they find a
>  > seller.
>
> That's not quite how it works.

(very good clarification of how Leo expects it to work deleted for brevity)

> Escrow, to me, requires a 1:1 match.  You need a /16, ARIN finds
>  someone with a /16, the two of you are matched.  ARIN becomes the
>  neutral party in the middle.  While that is possible, it precludes
>  all sorts of more interesting transactions, and also means the two
>  parties end up sharing fate, something the proposal was seeking to
>  avoid.
>
>  For instance, if ARIN convinces someone to give back a /8, but no
>  one is willing to pay the extremely high price required to get the
>  whole thing then it may need to be broken up into say, 16 /12's.
>  Having to get 17 folks into a classic escrow all at the same time
>  seems difficult.

On the flip side, if someone has a /8 to return, but will only return it
for the (stated by someone else in the thread) going rate of $4/32;
that is, they'll return it, but only for the sum of $67,108,884. would
you propose that ARIN front the $67M, obtain the space, in the hopes
that sufficient buyers are willing to meet the demand?  (Would ARIN
even have enough money to do that?)  Or, on the flip side, should
ARIN collect enough bids until the full asking price is met before
proceeding, which could take months or years?

It would seem like we'd want ARIN out of the funds-collecting-and-issuing
process as much as possible, to minimize liability, and prevent ARIN
from being the bottleneck in the proceedings.  I can see your point
about the flexibility that having it be a "fund" entails over pure escrow,
but I can also see the very big downsides, in that as the price goes
up, ARIN may have to start "borrowing" more and more to obtain the
blocks before recouping the outlay from the various bidders--and that
presupposes that the recovered blocks fold neatly into the reallocated
blocks.  If I have 64 non-contiguous /24's to return, and am asking
$1,000 each for them, but all ARIN has in the bid pipeline is 8 bids
for /22's at $4,000 each, should ARIN
a) spend $64,000, purchase the /24's and hold them in case future
    /24 requests come in, but reject the bids due to lack of /22s
    (leaves ARIN $64,000 poorer)
b) spend no money; reject the offer of space, and reject the bids
    due to lack of /22s
    (no net loss or gain in the fund)
c) accept the bids as an open-ended offer, and keep them on the
    books, potentially for months, until /22 blocks become available,
    adding them either 1) sequentially into the wait queue for /22's, or
    2) adding them by bid amount into the wait queue for /22s

I *suspect you'd recommend case c-1, but both c-1 and c-2 come with
some challenges; if you go strictly in request order, if the first request
in the queue is stupidly low, you'll end up with head-of-line blocking;
a person bidding $1 for a /22 will hold up a queue of people bidding
$4000 per /22.  If you go with option c-2, then you need a way to
provide feedback to bidders, and provide a dynamic portal for them
to adjust their bids appropriately, so that as the asking price goes
up, they can raise their bids to match, re-ordering the hold queue
each time based on the newly submitted bids.  This is actually a
non-trivial situation to handle, as eBay, Yahoo, Google, and others
will be happy to point out.  It also puts us right back into the "big
guys with money get all the space" scenario that people are so
fond of whining about here.  (disclaimer--I work for a big company
with money.)

> I think the AC would be quite open to editing the proposal if it
>  was a way to gain community support.  I did select the initial
>  title, which has stuck with the proposal, but after the first
>  comments back I realized it was a poor choice.  "Recovery Fund"
>  does not convey the correct sentiment of how this works.
>
>  At several meetings folks kept saying the same thing, "I wish there
>  was some alternative to a transfer policy" (referring primarily to
>  2008-2 the time).  I wanted to be sure we had an alternative concept to
>  consider, and thus I authored the original version of this proposal.
>  That said, we're running out of time.  IPv4 exhaustion will be here
>  soon, and whatever proposal we do ARIN must prepare.  The AC and the
>  Board need to know what the community wants.  If it's not exactly what
>  has been described in any of the proposals then please, describe it to
>  us.  We can turn it into policy.

I think I'm stuck in the same boat as you; I don't like the name "recovery
fund", but as you've clearly pointed out, a pure escrow model doesn't
quite fit either, because there's non-1:1 pairings that are possible that
don't really map to the real estate model ("yes, I'd like to buy half that
house, please...").

With that said, if we can work out the challenges with scenario "c" I
outlined above, and come up with a better name for the proposal rather
than a "recovery fund", I think I'd be able to support this.  Very good work,
Leo--thanks!

Matt