[arin-ppml] DRAFT POLICY ARIN-2011-1: GLOBALLY COORDINATEDTRANSFER POLICY (Legecy space)

[Owen DeLong]

Sent from my iPad

On Apr 12, 2011, at 3:26 PM, Benson Schliesser <bensons at queuefull.net> wrote:

> Hi, Eliot and Larry.
> 
> On Apr 12, 2011, at 1:01 PM, Eliot Lear wrote:
> 
>> Coming back to the issue at hand, seems to me the value of RFC 2050 has
>> to do with preventing hoarding, and that it is as relevant today as it
>> was when it was written.  I agree with Benson and Milton that a
>> financial incentive to get address space to those who would buy it is
>> important.  But who would buy an asset if they couldn't show need?  Only
>> those who intend to sell it for more later.  I would be concerned about
>> how that appeared to new entrants.
> 
> 
> I'm not an economist, but: (a) I understand that speculation brings liquidity, and liquidity is good for markets.  Address markets will make addresses available to those with need, even after RIR exhaustion.  Thus, a pure "needs-based" system may not be desirable.  (b) On the other hand, as you point out, we want to ensure that people get addresses when needed.  It is possible that speculators might accumulate large holdings, making addresses less-available (untenably more expensive) to those with need.  This would be undesirable.
> 
In a market where higher prices lead to greater production, speculation brings liquidity. In a market where increased production is not possible, speculation leads to higher prices and increases the probability of market manipulation.

It has never been and is not now a pure "needs-based" system. It is a combination of first-come-first-served and need now. After free pool exhaustion, it becomes a combination of needs-basis (qualified buyer), price, and market availability (supplier).

I don't think anyone has ever advocated a pure "needs-based" system. However,  I think
that removing needs-basis from the system would discard a critical component that has
served us well in the past and is serving us well now. So far, you have not made anything approaching a compelling case that removing it would be somehow beneficial in the future. In fact, much of what you have said in favor of removing needs-basis from the system has convinced me that it is more vital than ever.

> If we can agree on the above, then RFC2050 is not necessarily the correct conclusion.
> 
If we could agree on the above, then, RFC-2050 would probably have been written differently at the time.

> On Apr 12, 2011, at 1:02 PM, Larry Ash wrote:
> 
>> Careful, I am a free market capitalist but even I would caution that the classical
>> supply/demand curve has some build it assumptions. One of those is that as price
>> goes up they will build more. In a market where the overall supply is strictly fixed
>> no matter how high the price goes,  higher prices can attract speculators and attempts
>> to corner the market which pushes demand. Under speculative pressure, demand can
>> greatly outpace the increased supply. One only has to look at the current oil markets
>> to see the effect of run away speculation.
> 
> On the other hand, we have CGN and IPv6 as relief to very expensive IPv4 addresses.  These aren't perfect alternatives, but may form a ceiling on IPv4 prices.  In other words, very high IPv4 costs will result in faster IPv6 transition, in-turn resulting in lower IPv4 address values.
> 
In an ideal world, this would be true. If I thought that would be the true outcome, I'd be the first to jump on your bandwagon. However, due to the true nature of the situation, I think it is not quite as simple as you state above. IPv6 is only relief for expensive IPv4 addresses if you can convince the party(s) at the other end of your client/server situation to also adopt IPv6. Until they do, IPv6 is a non-workable alternative. CGN works if you are a carrier with public addresses available to be placed on the outside of the CGN, but, if you are attempting to run a server or service, it's not a workable alternative.

>> "Need" has always made me nervous because it's so subjective, but "no need"
>> is just not acceptable.
> 
> I agree with your underlying sentiment, that hoarding would be bad.  But I'm not convinced that "need" is the only way to prevent this.  And if it harms the availability of addresses and/or ARIN's role in an address market, then "need" should perhaps be replaced with another mechanism.
> 
I do not believe you have established that it harms the availability of addresses or of ARIN's role in an address market. I will also note that you haven't made any suggestions as to what alternative mechanism(s) should be put in place of need.

> As Geoff Huston recommended in the ARIN meeting yesterday, we might be well-served by working with real economists (such as OECD and/or others) to figure this out.
> 
ARIN and the AC did work with real economists in developing the current policy regime.

Owen