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

[Owen DeLong]

On Apr 14, 2011, at 2:56 PM, Milton L Mueller wrote:

> Owen, 
> it's nice to have a more detailed discussion of v4-v6 migration economics, because while I see lots of IPv6 evangelism I don't see much serious discussion of how it is really going to happen. Responses below
> 
>> -----Original Message-----
>> 
>> Let me attempt to explain it a  bit more accurately:
>> 
>> The Mueller theory:
>> --------------------------
>> At T1, upgrading network to IPv6 costs $1000, more ipv4 addresses cost
>> $1000. However, more IPv4 addresses will allow T1's users to reach the 
>> still-only-on-IPv4 parts of the internet while upgrading to IPv6 without 
>> IPv4 addresses will leave T1's users without such access, or, with severely 
>> degraded access to those parts of the internet that are still IPv4-only. 
>> Rational actor picks buying more v4.
> 
> OK, that makes sense and is not much different from what I said.
> 
Correct. This was your example that didn't run off the rails so I kept it as rational.

>> At T2, upgrading network to IPv6 costs $1000, more ipv4 addresses cost
>> $2000. Same constraints on the usefulness of the IPv4 addresses apply. 
>> "Rational" actor ignores this disparity of usefulness and chooses the cheap
>> connectivity. T2 loses his customers as a result and goes bankrupt.
>> The price of IPv4 addresses drops as T2s IP addresses are now available 
>> cheap in a bankruptcy fire sale.
> 
> Three observations. 
> First, we have some current experience with a bankruptcy sale of IPv4 addresses and it wasn't that cheap. I doubt that it will reduce prices in the short term. But that's a tangential point.

First, that sale is particularly odd for a number of reasons, but, on the advice
of counsel, I am limited in what I can say publicly about it at this time. Suffice
it to say I think it was rather anomalous in a number of ways and should not
be used as an example of rational behavior.

> Second, you seem to be saying that anyone who opts for IPv6 in the current environment without also adding to their IPv4 stock will go bankrupt because of the incompatibility.
> That's also in agreement with what I've been saying about the dual stack migration strategy, and it's why I believe the transition will take longer than most people think and why we need to pay a lot of attention to v4 transfer/trading policies. 

No, I'm saying that anyone who is out of IPv4 and assumes that IPv6 is a
drop-in replacement at this time is mistaken in the substitutability of the
two resources. It's like trying to serve grapefruit juice to all your customers
that order grape juice. At the moment, they're not going to be very happy
with the grapefruit juice.

Over time, IPv6 will be come more useful and more widely deployed.
Today, you really need to provide both protocols to all your customers
with IPv4 being the one they will notice first if it is missing.

If you fail to provide IPv4 connectivity, you will lose customers.
If you fail to provide IPv6 connectivity, you will lose the ability to grow
your business and be forced to provide less and less useful IPv4
connectivity to your customers at a higher and higher cost as well.

> Third, the actual rational strategy here would be to try to spend money on upgrading to IPv6 while also acquiring more v4 addresses, but to deploy methods, such as CGN or DS-Lite, that reduce the number of new IPv4's one needs. 
> 
Sure, but, higher IPv4 prices reduce the ability to do that. The point was exactly that as you
should have seen in my T2 example below. Lower IPv4 prices make it easier for
organizations that need to work on both in parallel to afford their necessary investment
in IPv6. 

>> The DeLong theory:
>> --------------------------
>> At T1, upgrading network to IPv6 costs $1000, more ipv4 addresses cost
>> $1000. However, more IPv4 addresses will allow T1's users to reach the 
>> still-only-on-IPv4 parts of the internet while upgrading to IPv6 without IPv4 
>> addresses will leave T1's users without such access, or, with severely degraded
>> access to those parts of the internet that are still IPv4-only. Rational actor 
>> picks buying more v4. Further, since T1 sees the writing on the walls, he also 
>> spends $1,000 to upgrade his network to IPv4/IPv6 dual-stack so that his
>> customers can reach both the IPv4 and the IPv6 capable parts of the internet.
> 
> Yes. No difference between us here, really. In essence, all you are telling us is that a rational actor will have to spend to do both: upgrade to IPv6 for the long term and get more IPv4 in the short term. However, it does not undercut the fact that a rising price for v4s will increase the likelihood of stragglers taking the need for a v6 migraiton more seriously.
> 
To the first part, yes. To the second part, not so much. For the time being the
fact that customers will be more immediately more negatively impacted by the
lack of IPv4 than the lack of IPv6 means that if the cost of IPv4 limits the
available funding to the point that a decision must be made for one or the other,
it is not unlikely IPv6 will be the choice eliminated.

>> At T2, upgrading network to IPv6 costs $1000, more ipv4 addresses cost
>> $2000. Same constraints on the usefulness of the IPv4 addresses apply. 
>> "Rational" actor recognizes that keeping his customer has a value in excess of
>> the price disparity and purchases the more expensive IPv4 addresses. 
>> Unfortunately, this unexpected additional cost of IPv4 addresses means that 
>> the $1000 he was planning on spending to get to IPv6 has now been
>> diverted into the additional cost of IPv4 and there is no money to
>> upgrade to IPv6. The provider is now trapped	in a very difficult position 
>> where it will become ever-increasingly expensive to grow his network with IPv4,
>> but he desperately needs capital to deploy IPv6.
>> 
>> Does this make sense to anyone?
> 
> Sure, it makes sense, although as I said before the most likely outcome of the scenario you present is that people will deploy NAT or things like Dual Stack Lite so that their consumption of new IPv4 addresses will be reduced as they (v4 addresses) become more expensive. 
> 
Yes, these degradations to the IPv4 network will also occur. Not necessarily because of the price of IPv4, so much as the lack of availability of IPv4 at any price.

> The gist of your scenario is that the migration to IPv6 will be expensive; that IPv6 is a net ADDITION to cost, and that no ISP can afford to abandon IPv4 any time soon. Thanks for joining me in promoting this message. 
> 
No. The gist of my message is that IPv6 has some costs. That IPv4 will be necessary for some time. That the cost savings of IPv6 will not be realized for some time and that if IPv4 is made artificially expensive by allowing speculators into the environment will produce an additional cost burden that is contrary to progress.

> What I don't understand is why we are (seemingly) having an argument about policy.  My policy take-home is that ARIN and the RIRs need to do everything they can to make the transfer of IPv4s from less valuable, less efficient uses to more valuable uses as quick and easy as possible. My take home is that people like you need to stop whinging about the monetization of addresses and recognize it as a fact and figure out how to deal with it. All of the scenarios presented above, whether the Mueller or DeLong version, lead to that conclusion. 
> 
I am not convinced that monetarily valuable is equivalent to efficient or otherwise valuable use. Further, I do not think that allowing IPv4 addresses into the hands of speculators who serve no purpose other than to artificially raise the price is not useful or helpful to the situation.

I think ARIN has done a good job of making sure that the market is as liquid as possible without abandoning the fundamental principles of stewardship over the address space. As  such, I think our fundamental disagreement is about whether speculators add or extract value from the market. For reasons passing my understanding, you seem to think that they somehow add value. I think from history and from the present situation it is clear that they have the opposite effect.

> Or maybe there is something I am missing. Is there some way that a policy of resisting and discouraging IPv4 markets will: 
> a) eliminate the need for growing ISPs to acquire IPv4 blocks? 

No. And there is no such policy. However, current policy does resist unnecessary increases in IPv4 pricing in order
to fund speculators without adding meaningful value to the market.

> b) reduce the cost of making the investments required to upgrade to IPv6; 

If we were to facilitate speculation, yes, it would increase the costs of investing in IPv6 by removing money from
the available funding pool for the transition and reallocating it to the profits of the speculators.

> c) prevent the supply of IPv4 blocks from decreasing? 

Probably not, but, it can prevent the supply of IPv4 blocks from going to parties that have no need of them and
merely want to engage in profiteering.
> 
> If your answer to all those questions is NO, and I think it is, you need to step back and ask yourself why what we are allegedly disagreeing about. 
> 
Yeah, once again, you missed the mark.

1.	We are disagreeing about the effect of current policy. IMHO, current policy does not resist or discourage an IPv4 market.
	It seems clear that you are of the opinion that a policy which precludes speculators does so.

2.	We are disagreeing about the net effect of speculators on the market. You seem to be of the opinion that they in some
	way add value. I am of the opinion that they are parasitic.

Owen