[arin-ppml] ARIN-prop-151 Limiting needs requirements for IPv4transfers

[Owen DeLong]

On Nov 23, 2011, at 7:07 AM, Mike Burns wrote:

> Hi Owen,
> 
> First, thanks to Daniel for suggesting changes to Prop-151.
> 
> Clearly there is a consensus for allowing out of region transfers, that much is clear.
> 
> But the devil is in the details, and I think that post-Philadelphia discussion on this list served to point out potential pitfalls of 2011-1, one of which was the danger of a raid on the free pool driven by pecuniary interests.
> 
> Because once Inter-RIR transfers are allowed, a real demand for transferred addresses will exist for the first time, MS/Nortel notwithstanding.
> 

I think the final language of 2011-1 contains reasonable safeguards against it becoming a raid on the ARIN free pool.

> Prop-151 seeks to recognize the bald facts of human greed and deal with them proactively to protect the free pool in two ways.
> 

Protecting the free pool at the expense of abandoning rational policy and protection from speculative pricing in the transfer world is not, IMHO, in the best interests of the community at large.

> First, it prevents the selling of addresses from anybody who has received an allocation from the free pool in the prior 12 months. This would serve as a check against those who would seek to receive allocations of free addresses with the intent of selling them in the transfer market.
> 

This would be one of the few provisions of 151 that I do not object to.

> Second, it caps needs-free transfers at the size of a /12, which Owen helpfully points out is just 1/4096th of unicast space. With a cap like this in place, cornering the market is not feasible and total potential profits are limited, making this kind of speculation unsound because the high risk of speculating in this market can not be outweighed by oversized returns.

Capping needs-free transfers at a /12 is absurd. That's virtually equivalent to no cap whatsoever. If you want me to consider the needs-free cap meaningful, then, move it to some more rational place like a /22. At /22, I'd still think this was a bad idea, but significantly less damaging than the current proposal would be.

> 
> And Prop-151 seeks to recognize what Owen and others fear, that people will see monetary value in IPv4 addresses, and will act accordingly.  That means in addition to greed, IPv4 address value will naturally cause people to use this valuable resource efficiently, to an extent that ARIN justification policies simply can not match.  My own opinion, based on the size of allocated but unrouted address space (less the smidgen used only internally) is that there is a great deal of efficiency still to be wrung out of the pool of prior ARIN allocations, not to mention the pool of legacy space. Whether or not you agree, it is axiomatic that valuable assets are used more efficiently than free ones.

Do not attribute your ill-conceived conclusions to me. Nowhere have I stated that value of IP addresses would, in fact, cause them to be used efficiently. In fact, I have argued quite the opposite that value without policy will lead to speculation and artificial pricing not dissimilar from the Tulip Mania of the 1600s. You continue to use this fallacy of "allocated but unrouted" as if route announcements visible to your perspective are somehow an accurate measure of utilization. They are not. There are many addresses in perfectly legitimate use that are not advertised in routing tables visible to you. I won't disagree that more efficiency could be obtained from the pool of prior ARIN allocations, but, I'm not convinced that it is as big a gain as you seem to think. As to your claim that it is axiomatic that valuable assets are used more efficiently than free ones, I am unconvinced. Unless you define efficiency solely in terms of the assets landing in the hands of the highest bidder and not based on them serving the highest societal purpose, your axiom can be shown to break down many times throughout history.

> 
> And speaking of legacy space, this proposal would recognize what ARIN lawyers are trying to tell us, namely that ARIN's legal position insofar as restricting legacy space transfers is weak. ARIN can certainly refuse to book these transfers, but it is by no means certain, legally, that ARIN has any right to block them.  I believe ARIN counsel recognizes the difficulty and expense involved in trying to either prevent transfers of legacy space or revoking/reclaiming it.
> 

I don't see how this proposal improves that situation at all. I think that the current policy deals with the issues just as well as this one would, with the difference that it at least preserves some potential for preserving the community's ability to set rational policy for IPv4.

> By allowing all transfers to be needs-free, we remove an artificial and un-needed market restraint whose existence will only serve to drive transfers off the books, with Whois accuracy diminished.
> 

That market restraint is, IMHO, neither artificial nor unnecessary, but, rather very real and vital to preventing speculative hoarding of addresses placing the interests of greed over the efficient utilization of address resources. That is why I believe the entire premise of 151 is so completely flawed.

> We take the first steps towards supporting a viable, open, transparent, and global market for IPv4 addresses which is the best method of ensuring Whois accuracy, aligning ARIN policy with the legal realities of property law, equalizing regional exhaust dates, and discharging our conservationist duties as stewards of the free pool.
> 

Those first steps were taken with 2009-1. This isn't first steps. It's not even a continuation of that journey on a rational path. It's a nearly complete abandonment of reason in favor of sanctioned greed to the great detriment of the community.

> I simply remind you of where this proposal started. It was seeking to answer the question "What would have happened in the MS/Nortel deal had not MS justified the transfer to ARIN?"

The transfer would not have been recognized in the ARIN database absent a court order to the contrary. No such court order has ever been granted and I have no reason to believe that one necessarily would have been granted in this case.

> Please consider the situation we will be in when this inevitably occurs.  My fear is that legally, the deal would be done.  Whois would be ignored or replaced by a private registry. Addresses revoked and reissued would subject ARIN to lawsuits. A breakdown in Whois could lead to ITU becoming more invasive.  If we stand in defiance of a free, open, and transparent market we will be creating a black market.

Yeah, we've all heard this doom and gloom scenario before. Frankly, I think it's not very likely and depends on a number of events being decided very poorly all in a row. I have more faith in ARIN's legal counsel and in our judiciary than you apparently do. Frankly, what you are seeking to do is enact most of the negative aspects of that scenario pre-emptively, so, I don't see how this proposal is better. Throwing open the gates and inviting the invading army to dinner really isn't an improvement over waiting to at least see whether or not there is actually a siege to defend.


The views expressed here are my own and may not be shared by any other member of the AC or my employer.

Owen