[arin-ppml] Draft Policy 2009-4: IPv4 Recovery Fund
Ted Mittelstaedt
tedm at ipinc.net
Tue Mar 24 15:13:37 EDT 2009
I do not agree with implementing such a policy at the
current time. Once the IPv4 free pool is exhausted that
would be an appropriate time to do a study to see if
something like this would increase the rate of IPv4
return. But if this is implemented now it will encourage
hoarding and speculation.
I also strongly oppose a policy like this that does not
contain a sunset clause. Once a tipping point is reached
in IPv6 penetration, IPv4 will be in surplus and I don't
want to see ARIN paying for addresses that 6 months later
will be worthless.
Ted
> -----Original Message-----
> From: arin-ppml-bounces at arin.net
> [mailto:arin-ppml-bounces at arin.net] On Behalf Of Member Services
> Sent: Monday, March 23, 2009 12:06 PM
> To: arin-ppml at arin.net
> Subject: [arin-ppml] Draft Policy 2009-4: IPv4 Recovery Fund
>
> Draft Policy 2009-4
> IPv4 Recovery Fund
>
> The following draft policy text is being posted for feedback
> and discussion on the Public Policy Mailing List (PPML).
>
> This draft policy was developed by the ARIN Advisory Council
> (AC) from Policy Proposal 80: IPv4 Recovery Fund. The AC has
> taken the proposal and developed it into a draft policy. The
> AC was required to submit text to ARIN for staff and legal
> assessment prior to selecting it as a draft policy. The
> assessment, along with the text that was assessed, is located
> below the draft policy.
>
> On 20 March 2009 the ARIN Advisory Council (AC) selected Draft Policy
> 2009-4: IPv4 Recovery Fund for adoption discussion on the
> PPML and at the upcoming Public Policy Meeting.
>
> Draft Policy 2009-4 is below and can be found at:
> https://www.arin.net/policy/proposals/2009_4.html
>
> We encourage you to discuss Draft Policy 2009-4 on the PPML
> prior to the ARIN XXIII Public Policy Meeting. Both the
> discussion on the PPML and at the Public Policy Meeting will
> be used by the AC to determine the community consensus
> regarding adopting this as policy.
>
> The ARIN Policy Development Process can be found at:
> https://www.arin.net/policy/pdp.html
>
> All of the Draft Policies under discussion can be found at:
> https://www.arin.net/policy/proposals/index.html
>
> Regards,
>
> Member Services
> American Registry for Internet Numbers (ARIN)
>
>
> ## * ##
>
>
> Draft Policy 2009-4
> IPv4 Recovery Fund
>
> Date: 23 March 2009
>
> Policy statement:
>
> (Create new section in section 4, represented by "4.X".)
>
> 4.X IPv4 Recovery Fund
>
> 4.X.1 Implementation Timing
>
> Upon receiving a valid request for a block larger than ARIN
> can satisfy from its existing free pool, or, by obtaining
> additional space from IANA, ARIN shall begin offering
> financial incentives for returned IP blocks according to this policy.
>
> 4.X.2 Recovery of IPv4 Space
>
> ARIN believes that organizations should voluntarily return
> unused and/or unneeded IP resources to the community.
> However, upon implementation of this policy, ARIN will offer
> financial incentives for the return of IPv4 resources to ARIN
> relinquishment of any future claims to those resources. ARIN
> will continue to accept voluntary returns.
>
> 4.X.3 Allocation of Recovered Space
>
> Once approved for IPv4 space ARIN will ask the requester to
> specify a bid of how much they are willing to pay for
> reclamation of address space. ARIN will use this bid in
> determining what incentives to offer for return of space.
> The requester may make a higher bid at any time, which is
> treated as a brand new bid replacing their old bid.
>
> If ARIN recovers space and offers it to requester at or below
> the specified bid within 60 days of the time the bid was made
> then the bid shall be binding on requester at the price ARIN
> offers the space.
>
> 4.X.4 Address Block Management
>
> ARIN may not offer a partial fill, that is provide a block
> smaller than the one for which the requester was approved.
>
> ARIN may split recovered blocks into multiple smaller blocks
> at the staff's discretion using the following principals:
> - It is unlikely a request will be made for the address block
> size involved in the next 60 days.
> - The block is divided into as few parts as practical.
> - There are enough bids to allow the entire block to be allocated.
>
> 4.X.5 Transparency
>
> ARIN staff shall make public the current and historical
> prices of asks, bids, and executed transactions in a manor
> that facilitates the bidding process. ARIN staff must
> regularly report on the amount of address space obtained and
> distributed via this mechanism, number of blocks subdivided,
> as well as aggregate financial numbers.
>
> 4.X.6 Cost Recovery
>
> ARIN shall manage the address space recovery program with a
> goal of cost recovery.
>
> ARIN may:
> - Use ARIN funds to reclaim blocks when there is no specific
> demand; if such reclamation is deemed in the best interest of
> the community and there is a significant likelyhood of future demand.
> - Use a portion of the funds collected under this program to
> pay for the implementation of this program.
>
> Rationale:
>
> Many have recognized that in order for unused or poorly used
> IPv4 resources to be returned to the free pool that financial
> compensation will be required. This is particularly the case
> in poorly used assets where the current holder may have to
> expend time and money to renumber in order to free the blocks.
>
> This proposal sets up a fund administered by ARIN to
> encourage the return of space. Effectively ARIN will offer
> financial incentives to return unused or poorly used IPv4
> resources and place them back into the
> IPv4 free pool.
>
> The intention is for this activity to be revenue neutral to
> ARIN. To achieve that goal those requesting IPv4 resources
> will be requested to bid on a one-time payment to the
> recovery fund to cover the cost of the resources they have received.
>
> The proposal is intentionally vague on the exact
> implementation details to staff because:
>
> - Transactions with those returning space and obtaining space
> may occur in any order.
> - The bidding process may need to evolve over time, and may
> not be as simple as highest bidder wins. It may include
> aspects such as a dutch auction style format (all winners pay
> the lowest winning price), or may include other factors such
> as which size blocks ARIN has free in an effort to limit
> deaggregation.
> - ARIN will have to develop contracts and procedures around
> this activity that are better suited for staff and legal than
> the policy process.
>
> Compared to other "transfer proposals", this proposal has the
> following
> benefits:
>
> - Maintains that IP addresses are not property.
> - Maintains the concept that unused addresses should be
> returned to the free pool.
> - Maintains need based addressing.
> - Removes the need for those with excess resources to find
> those without resources. There is no need for any sort of
> listing service, eBay, etc.
> - All transactions are two party transactions with ARIN as
> one of the parties. The potential for multi-party legal
> disputes is reduced.
> - ARIN can absorb spikes in supply or demand, creating more
> level prices over time.
> - ARIN can provide transparency across all transactions in
> this system.
> - Reduces confusion to new entrants over where they should go
> to receive address space.
>
> Change Log:
>
> - Changed "monetary" to "financial" to allow for the
> possibility of ARIN offering things other than direct payment
> (like fee credits). Credit: Robert Bonomi.
> - Updated numbering so there were not two 4.10.2's. Also
> changed to using a place holder for section. Credit: Robert Bonomi
> - Changed the cost recovery language to be more clear and
> provide some additional flexibility.
> - Clarified 4.10.2 about future claims. Credit: Ted Mittelstaedt
> - Split 10.X.3 into 10.X.3 and 10.X.3 with better titles.
> - Left the exact algorithm to staff. Removed examples as a result.
>
> Timetable for implementation:
>
> Staff should begin developing procedures and updated
> templates immediately. Policy would not go into effect until
> the criteria listed occurs.
>
>
>
> #####
>
>
> ARIN Staff Assessment
>
> * Title: IPv4 Recovery Fund*
>
> *Proposal Submitted: 08 Jan 2009 *
>
> *Date of Assessment: 10 March 2009*
>
> I. Understanding of the Policy:
>
> *Staff Understanding of the Proposal:*
>
> ARIN understands this policy allows approved requestors of
> IPv4 address space to place binding "bids" for the addresses
> they have been approved.
>
> In turn, ARIN can use the monies from those bids to offer
> financial incentives to registrants of address space to
> return unused or unneeded addresses to the free pool for
> reissue to the approved requestors.
>
> II. Comments
>
> A. ARIN Staff Comments:
>
> * It is unclear to staff exactly when this policy would be
> triggered. For example, if someone is approved for a
> /9, and ARIN
> has only bits of fragmented space left (/10, /12, /13,
> etc.) which
> together could fill a /9 request, would this trigger
> this policy?
> In other words, can ARIN use dis-contiguous smaller blocks or
> would the requester be denied and asked to bid on a /9
> that may be
> returned in the future?
> * The policy appears to say that once a request cannot be
> filled, a
> requester must make a bid. There does not seem to be an
> option of
> waiting for a block that is voluntarily returned. It would be
> helpful if the policy specified that once the policy is
> triggered,
> there is no opting out, if this is indeed the case.
> * Once the policy is triggered, it is difficult to tell whether
> every request must then be filled via the bid process or if
> requesters can choose not to use it. Again, it would be
> helpful if
> this were specifically spelled out in the policy text.
> * Under section 4.X.3 what would happen if a requester doesn't pay
> the bid amount they committed to? If ARIN is paying the money up
> front for that address space but is unable to collect
> that amount
> back, it could put ARIN at some financial risk.
> * The bidding process as laid out in section 4.X.3 is somewhat
> confusing. There is no mention made of a situation
> where there are
> two bidders competing for the same address space. Would ARIN
> automatically award the space to the highest bidder? If
> so, could
> that be viewed as an unfair process that rewards those with the
> most monetary resources?
> * If someone return's space without monetary compensation in the
> midst of this, it is not clear whether ARIN would then
> offer that
> address space under the current fee structure or under this bid
> structure.
> * The term "cost recovery" in section 4x6 should be
> clearly defined.
> Specifically, this states that we can use "a portion"
> of the funds
> collected to recover space even when there is no demand.
> * Is there anything to prohibit out of region bidders? ARIN's
> current practice is to issue address space only to organizations
> that will be using that space within ARIN's region. If
> anyone can
> bid on this space from any region, it will represent a
> fundamental
> change in the way we operate today.
> * This policy would change ARIN's current financial and business
> models and would significantly impact the way we do
> business today.
> * This policy could be a disincentive for people to voluntarily
> return IP address space, which is something that people do on a
> somewhat regular basis today.
>
> B. ARIN General Counsel Comments:
>
> Nothing in ARIN's Articles of Incorporation or Bylaws
> prevents ARIN from implementing this policy. However, this
> policy would represent a major shift in ARIN's activities by
> requiring ARIN to build business capabilities and undertake
> legal risks quite different from ARIN's existing business and
> expertise.
>
> In particular, this proposal would require that ARIN staff
> exercise skills as traders -- e.g. buying IPv4 resource when
> they think they should buy, selling when they think they
> should sell. The required skills are not unlike those
> involved in running a hedge fund or, perhaps, the US
> government role in buying Strategic Petroleum Reserve assets.
> The required skills are quite different from ARIN's core competency.
>
> This proposal would also introduce potentially capital
> requirements -- causing ARIN to invest its funds in purchases
> of v4 resource in anticipation of future sales. As a
> nonprofit with a limited financial reserve, ARIN faces an
> important financial risk from such transactions, in that ARIN
> could lose significant funds if IPv4 prices do not evolve as
> ARIN staff anticipate.
>
> The proposal is relatively silent on the specifics of ARIN's
> decision-making process for allocating the IPv4 resources
> ARIN obtains through this process. While it may be
> appropriate to delegate those decisions to staff, it is
> difficult to legally assess the proposal without a vision of
> the decision rules ARIN would use in allocating scarce space
> among multiple prospective recipients. Moreover, because
> many potential recipients will urgently want additional v4
> space, such decisions are likely to be closely scrutinized,
> and ARIN would need a clear and compelling reason to choose
> to grant space purchased to one recipient rather than another.
>
> This proposal also exposes ARIN to significant and
> unameliorated legal risk. For example, in each potential
> transfer, ARIN participates at least twice on "good"
> transactions that go well -- one to receive space from an
> original provider, then a second time to transfer that space
> to an ultimate recipient. But each transaction performed
> presents legal risk. For example, if a putative provider
> promises to transfer, but reneges, ARIN might find itself
> having to sue to compel such sale.
>
> Conversely, if a putative provider wants to sell ARIN
> addresses at a given price, but ARIN is unwilling to pay that
> price, the provider might sue ARIN, alleging that ARIN's
> decision to reject that price was wrongful. (The provider
> might ground its case in a purchase it sees as similar, in
> which some other provider received that price.) As to
> recipients, ARIN might face liability from those who wanted
> v4 resource but did not receive it (at the prices they sought
> to offer), and ARIN might feel compelled to enter litigation
> if a recipient ultimately refuses to pay for resources it
> received. In short, ARIN would face important legal risks
> both due to the multiple sequential transactions and due to
> disputes potentially resulting from ARIN's significant
> decision-making discretion as to the purchase and allocation
> of v4 resource.
>
> These risks may be worth accepting in order to get the
> benefits of address transfers. However, ARIN faces
> significantly less legal risk from a other proposed
> decentralized markets where ARIN's role is not central (e.g.
> , see the market portion of an abandoned policy, 2008-6) in
> which address providers and recipients were left to their own
> resources to reach agreements directly between one another,
> without ARIN serving to receive and transfer all resources
> and all associated funds.
>
>
> III. Resource Impact
>
> The resource impact of implementing this policy is viewed as
> significant. It is estimated that this policy could require
> up to 18 person months of effort to implement following
> ratification by the ARIN Board of Trustees. Because this
> implementation is not planned, it may preempt ARIN's current
> project deployment schedule. It may require the
> following:
>
> * The development of a tracking system to monitor the transaction,
> both the purchase and the sale, as well as the inventory.
> * The development of a reporting system.
> * Modifications to ARIN's existing business model would be needed,
> particularly if ARIN gets into the business of buying
> back address
> space which then becomes designated as an asset and inventory.
> * Increased fees due to potential litigation, legal costs, and
> collection costs
> * Modifications to existing registration procedures
> * Staff training
> * Guidelines updates
>
> Text assessed:
>
> Policy Proposal Name: IPv4 Recovery Fund
>
> *Policy statement:*
>
> * (Create new section in section 4, represented by "4.X".)*
>
> *4.X IPv4 Recovery Fund*
>
> 4.X.1 Implementation Timing
>
> Upon receiving a valid request for a block larger than ARIN
>
> can satisfy from its existing free pool, or, by obtaining
>
> additional space from IANA, ARIN shall begin offering financial
>
> incentives for returned IP blocks according to this policy.
>
> 4.X.2 Recovery of IPv4 Space
>
> ARIN believes that organizations should voluntarily return
>
> unused and/or unneeded IP resources to the community. However,
>
> upon implementation of this policy, ARIN will offer financial
>
> incentives for the return of IPv4 resources to ARIN
>
> relinquishment of any future claims to those resources. ARIN
>
> will continue to accept voluntary returns.
>
> 4.X.3 Allocation of Recovered Space
>
> Once approved for IPv4 space ARIN will ask the requester to
>
> specify a bid of how much they are willing to pay for
>
> reclamation of address space. ARIN will use this bid in
>
> determining what incentives to offer for return of space.
>
> The requester may make a higher bid at any time, which is
>
> treated as a brand new bid replacing their old bid.
>
> If ARIN recovers space and offers it to requester at or below
>
> the specified bid within 60 days of the time the bid was
>
> made then the bid shall be binding on requester at the price
>
> ARIN offers the space.
>
> 4.X.4 Address Block Management
>
> ARIN may not offer a partial fill, that is provide a block
>
> smaller than the one for which the requester was approved.
>
> ARIN may split recovered blocks into multiple smaller blocks
>
> at the staff's discretion using the following principals:
>
> - It is unlikely a request will be made for the address
>
> block size involved in the next 60 days.
>
> - The block is divided into as few parts as practical.
>
> - There are enough bids to allow the entire block to be
>
> allocated.
>
> 4.X.5 Transparency
>
> ARIN staff shall make public the current and historical
>
> prices of asks, bids, and executed transactions in a manor
>
> that facilitates the bidding process. ARIN staff must
>
> regularly report on the amount of address space obtained and
>
> distributed via this mechanism, number of blocks subdivided,
>
> as well as aggregate financial numbers.
>
> 4.X.6 Cost Recovery
>
> ARIN shall manage the address space recovery program with a
>
> goal of cost recovery.
>
> ARIN may:
>
> - Use ARIN funds to reclaim blocks when there is no specific
>
> demand; if such reclamation is deemed in the best interest
>
> of the community and there is a significant likelyhood of
>
> future demand.
>
> - Use a portion of the funds collected under this program
>
> to pay for the implementation of this program.
>
>
>
>
>
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