[arin-ppml] ARIN-prop-151 Limiting Needs Requirements for IPv4 Transfers

Mike Burns mike at nationwideinc.com
Tue May 24 12:55:08 EDT 2011

> Hi Mike, Owen, ARIN,
> Still not ready to declare for or against, but leaning... OK, not for it 
> exactly as written, but I do think this needs to be discussed from now to 
> and through Philadelphia.
> At base, the policy change under discussion is to remove needs assessment 
> from the process of transfering IPV4 addresses. There is another clause 
> dealing with the section 12 review that I am going to skip in this post. 
> The major idea SEEMS to be that the author feels that the invisible hand 
> of the free market will do a better (fairer?) job of fitting available 
> addresses to their best destination in the context of a marketplace.
> A marketplace.
> So far, the traffic in IP addresses has taken place in an orderly manner, 
> not unlike a harvest does. An RIR gets a crop of addresses in, in a 
> quasi-seasonal manner and they enter into a regulated, distribution 
> situation. Take a number, no pushing, no shoving, parcel 'em all out, 
> rinse repeat. Not a modern NAFTA, WTO market, granted, but predictable.
> But the harvest has failed in IPV4 numbers and we seem to be faced with 
> famine, first in APNIC and then in the rest of the RIRs. Oh sure, we can't 
> eat IP numbers and they are endlessly recyclable and we have a new food 
> supply ready and waiting, blah, blah, blah. But it will resemble a famine, 
> nontheless. And there are a number of features about famines, with which 
> mankind has wide experience. There will be a black market, there will be 
> hoarding. There will be haves trying to help havenots. There will be 
> bandits, both individual and collective. There will be bad behavior and 
> good behavior. There will be starvation and gluttony and all the 
> inefficiencies that man can devise.
> But in every famine with which I am familiar, I've never heard of the body 
> that had control of the grain throwing open the doors of the granaries and 
> declaring, "Everything goes to the highest bidder! First come, first 
> served! Get it today before it's gone!" Someone said something earlier 
> about an invisible fist. That's what this sounds like.
> But wait!, I can hear someone saying. We're not talking about the central 
> granary here. We just want some well capitalized benefactors to be able to 
> come in and buy up all the unused grain from folks who don't need it 
> anyway, hang onto it and sell it at a modest profit later when the price 
> really goes up. What's wrong with that? They're taking all the risk, 
> right? RIGHT? Pay no attention to those guys with the pick handles by the 
> gates. They're just keeping order.
> And Mom and Pop and their little windfall and all the rest.
> Now, I recognize that the author is not proposing throwing open the doors 
> precisely. And the horrors of IPV4 starvation don't have the same punch as 
> say, Biafra. But in this orderly marketplace, the needs basis is the door, 
> and we should think long and hard before taking it out of the jamb and 
> setting it aside. And, quelle surprise, that seems to be exactly what we 
> are doing.
> Looking toward Philadelphia, I think I might be in favor of dealing (so to 
> speak) with the question of needs and the market as its own solo subject, 
> without the section 12 stuff. This would allow for the appropriate
> recapitulation of the development of modern economics since the ancien 
> regime, in this context. :)
> My thanks to the participants in this important discussion.
> John Springer

Thanks for your input, John,

Please understand that although I do think addresses will be more 
efficiently used in the future when they have monetary value than currently, 
or in the past, when they didn't, I am not making this the crux of my 

What I am saying is that needs testing was a requirement for free pool 
allocations, and that is why we imposed needs tests on applicants for 
address space. Actually some kind of constraint was required, as it always 
is, for the distribution of unpriced but valuable resources.

So the stewards chose needs-testing of applicants, with the idea that we 
want allocated addresses put into actual and efficient use, and this method 
of constraint would serve those goals.

Now, however, we do not need needs-testing to drive addresses towards 
efficient use, because we are allowing them to be priced, and that is a 
fundamental difference.

Maybe I haven't made clear why we didn't just give addresses out 
first-come-first-served, from the free pool.
I have referred to the Tragedy of the Commons, and if you  are unfamiliar 
with this concept, you can google it.
Basically, the British used to refuse villagers from allowing their sheep to 
graze on the commons, a publicly held land usually at the center of the 
Then it was decided to open the Commons to the villagers for this purpose. 
Since the villagers would have had to pay any other landholder to allow 
their sheeps to graze on their land, all the villagers herded their sheep on 
to the freely available Commons.

Whereupon the sheep ate all the grass and destroyed the Commons.

Whether this actually happened is immaterial, it instructs us as to what 
happens when a valuable commodity is not contrained by price. The commodity 
is almost immediately consumed.

So the stewards were wise in choosing to constrain allocation by some 
mechanism. They could have chosen price, as the government does when it 
auctions spectrum, for example.
I think there would have been many problems with that choice.
But instead they chose a needs-test, which to me was an excellent choice.

Now, however, whether with or without my policy, the stewards at ARIN chose 
to allow individuals to buy and sell addresses, and thus for addresses to 
have a price.

The price is the constraint on wasteful use that the needs test used to be.

So maintaining the needs test is not a requirement for stewardship, as other 
forces outside of our control will work towards the same ends of efficient 
usage that the needs test was designed to incentivize.

I think some stewards have gotten it into their heads that their role is to 
decide the best, or at least better, use of addresses, but I argue that was 
never a goal of stewardship.

Now on to your analogy.

There is simply no granary in control of the addresses. The food has already 
been allocated from the granary into the hands of a bunch of individuals.
In our case, tens of thousands of individual ARIN allocants. (I just made up 
tens of thousands maybe it's just thousands.)

But in your famine scenario, they would be selling, buying, stealing, and 
donating to each other.

Unless and until some third party came in to say they could not engage in 
certain of  these transactions.

Which would make that third party a lightning rod for conflict, and a very 
potential source of corruption.

I know that you are presupposing that some speculator or hoarder will come 
and buy up everybody's available grain.
So your objection comes down to fear of speculators and hoarders, once 

What about the /12 limit in my proposal, specifically designed to prevent 
speculation and hoarding?
In your analogy, I guess you could say that everybody had a limit to the 
size of their storage silo, which would prevent them from hoarding.

Thanks for your thoughtful consideration of the matter, though, and your 
belief that this is a proper topic for the AC to discuss.


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