[arin-ppml] ARIN-PPML Digest, Vol 80, Issue 51

[Sean Copeland]

Sent from my iPad

On 2012-02-25, at 11:39, arin-ppml-request at arin.net wrote:

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> Today's Topics:
> 
>   1. ARIN Fact Check: /8 For Sale (Jim Fleming)
>   2. Re: Fwd: ARIN-prop-165 Eliminate Needs-Based    Justification
>      (Tom Vest)
> 
> 
> ----------------------------------------------------------------------
> 
> Message: 1
> Date: Sat, 25 Feb 2012 12:07:15 -0600
> From: Jim Fleming <arinfactcheck at gmail.com>
> To: arin-ppml at arin.net
> Subject: [arin-ppml] ARIN Fact Check: /8 For Sale
> Message-ID:
>    <CAOSk4yc5mdLD6K4Crz+TTohD16H+F1DjZk9amBQys7N=t=b1ZQ at mail.gmail.com>
> Content-Type: text/plain; charset=windows-1252
> 
> ARIN Fact Check: /8 For Sale
> 
> Regarding:
> http://blog.internetgovernance.org/
> A whole /8 for sale
> by Milton Mueller on Tue 14 Feb 2012 06:15 PM EST
> 
> ARIN POLICY QUESTION:
> 
> Is the following exchange verified to originate from the ARIN CEO John Curran ?
> 
> Governance of Internet number resources...
> by John Curran on Tue 14 Feb 2012 08:37 PM EST |  Profile |  Permanent Link
> Milton -
> 
> I was surprised that your article did not mention the more interesting
> Internet governance aspects of the situation.
> 
> As you are aware, the Regional Internet Registries (RIRs) manage
> Internet number resources based on policies developed in each region.
> These policies are developed by the community in each region using
> open and transparent processes. The participants in the policy
> development efforts are predominantly service providers, but
> individual end-users, governments, educational, and civil society
> organizations are also common participants.
> 
> In short, the Regional Internet number registry system works well, and
> is recognized by ICANN as a successful mechanism for the overall
> technical coordination of Internet number resources.
> 
> The policies of the Internet number registry system change to reflect
> the requirements of the community, and this includes adoption in many
> regions of policies which support limited market-based mechanisms for
> encouraging more efficient address utilization. These policies balance
> a number of additional considerations, including both communities need
> to reduce routing table impact from address deaggregation as well as
> encouragement of IPv6 as the long-term solution to IPv4 runout.
> 
> Your article implies that ARIN's policies "obsolete", but I will note
> these policies have been frequently updated by the community to
> provide for reasonable address availability while still managing the
> technical aspects of keeping the Internet running.
> 
> ARIN operates the registry according to the community developed
> policy, and this includes all IP address blocks in the region
> including "legacy blocks." We follow these policies when approving
> transfers of address space because it respects the bottom-up policy
> development that has occurred and that is the hallmark of good
> Internet governance.
> 
> Are you suggesting the ARIN disregard the policies set by the
> community when processing requests for transfers? How does that
> reconcile with fair and open Internet governance? As ARIN was formed
> "to give the users of IP numbers (mostly Internet service providers,
> corporations and other large institutions) a voice in the policies by
> which they are managed and allocated within the North American
> region", I am uncertain how we can now ignore those policies, and am
> curious why you are now advocating that doing so makes for good
> Internet governance.
> 
> In http://blog.internetgovernance.org/blog/_archives/2010/4/20/4509826.html,
> you wrote: "To sum up, we've had pretty open, focused and (with the
> one exception noted) fair discussions here. For those with the
> technical background to understand the Internet governance
> implications of RIR decisions and policies, I'd encourage
> participation and membership in ARIN. "
> 
> For those who heeded your call and have been participating, do you now
> believe that their input (and the rest of the community's) should
> simply be set aside to allow transfers outside of the system for
> maximum financial gain?
> 
> Clarification on this point would be helpful.
> 
> Thank you,
> /John
> 
> John Curran
> President and CEO
> ARIN
> 
> 
> 
> 
> 
> Reply
> Re: Governance of Internet number resources...
> by Milton Mueller on Wed 15 Feb 2012 08:50 PM EST |  Profile |  Permanent Link
> Hello, John
> You ask, "Are you suggesting the ARIN disregard the policies set by
> the community when processing requests for transfers?" My answer: No.
> I am, however, noting (as an objective fact) that ARIN policies do not
> apply to entities that have not signed contracts with ARIN. ARIN
> staff, and many of the people active within it, seem to have trouble
> accepting that fact.
> I would also note that ARIN has been warned repeatedly by people like
> me that it should abandon or drastically liberalize needs assessments
> for transfers because the nature of "need" for addresses (as any
> economist will tell you) depends on the buyers' time horizons, future
> prospects and other factors that cannot be "demonstrated" in a needs
> assessment. What matters is how much the bidder values addresses, not
> some arbitrary technical assessment. ARIN policies which set a 3 month
> time horizon for proving need are simply going to drive anyone who can
> legally avoid it outside of ARIN's transfer system. ARIN is
> beleaguered by a small number of anti-market ideologues who never
> wanted to allow transfers to begin with and, failing in their quest to
> prevent them completely, have chosen to hobble 8.3 transfers as much
> as possible. Therefore, transfers "outside the system" will in fact
> take place because they are in the interests of both parties and there
> is nothing to legally prevent them.
> Reply
> Re: Re: Governance of Internet number resources...
> by John Curran on Thu 16 Feb 2012 09:29 AM EST |  Profile |  Permanent Link
> Milton -
> 
> You should work on sharing your views on what makes for appropriate
> transfer policies within the policy development process; all are
> welcome to participate.
> 
> Regarding transfers "outside the system", I will note that ARIN
> operates the registry for the community according to the policies that
> they set. There is no obligation for ARIN to update the registry
> contrary to these policies and doing so would be contrary to our very
> reason for existence.
> 
> The rights that various parties have to address block registrations is
> governed by policy set by the community, and we update those
> registrations accordingly. If someone attempts to transfer the address
> block in the registry, that requires putting in a request that meets
> those policies.
> 
> ARIN has never had to make any change to the registry contrary to the
> community's wishes. These policies fully govern updates to the
> registry, and transfers of these registrations does not otherwise
> occur. I imagine that there are many things that folks could claim to
> sell in this world, but they do not relate to the rights that parties
> have to address blocks in the registry unless they comply with the
> community policy for the registry.
> 
> Best wishes,
> /John
> 
> John Curran
> President and CEO
> ARIN
> 
> 
> Reply
> Re: A whole /8 for sale
> by Charles Lee on Fri 17 Feb 2012 04:34 PM EST |  Profile |  Permanent Link
> Dear Professor Mueller:
> 
> An open marketplace for the legitimate and legal sale of distributed
> but unused ?Legacy? IPv4 number blocks is good for access service
> providers, content platforms and users, and it as well solves the
> acute problems of a ?hard? landing while the Internet transitions to
> IPv6. This marketplace should be welcomed by everyone, including
> ARIN?s Board of Trustees, members of its advisory council and members.
> This marketplace can, and does, provide an essential service to enable
> the continued growth of the Internet.
> 
> To that end, we can again confirm that one of Addrex Inc.?s clients is
> offering for sale a ?Class A? or ?/8? number block.
> 
> Your article refers to ?ARIN?s obsolete ?needs assessment? policies,?
> which is a characterization that Mr. Curran, CEO of ARIN, objects to
> on the basis of his belief that his members, who have voted for these
> needs-basis ?policies?, are reacting to the overall direction that the
> ?community? deems appropriate. In reality, it is not the ?overall?
> community but the controlling members of ARIN who are dictating
> policy. This setting of rules for a marketplace, under the guise of
> ?governance?, is simply the buyers colluding to maintain access to low
> price assets while the sellers, whom we represent, are not members and
> have zero contractual relationship with ARIN, are financially harmed
> due to this anti-competitive behavior.
> 
> Addrex?s position is that the marketplace should determine who has the
> greatest need, instead of ARIN, or any other third party, picking the
> winners and losers. We refer to your July and November, 2008 articles
> found in the ?newsroom? on our website . Such a marketplace offers a
> pragmatic solution, global in scale, with legitimate participants,
> unhampered by the bureaucratic disputes and ever-changing policies of
> the current five RIRs. (?Policies?, we might add, voted upon by a
> minority of interested ?members? in this completely voluntary
> association run by and for these members to the exclusion of
> non-members. The concept of ?need? becomes ?relative need? rather than
> some engineering-based calculation of absolute need, to use the
> Professor?s own words.)
> 
> You, again, unfortunately are correct when you reference ARIN?s veiled
> threats. One such threat is that ARIN might retaliate, against any of
> their members who participate in the marketplace, by ?reclaiming?
> other number blocks which were distributed under a separate contract
> to that member organization by ARIN. This threat effectively seeks to
> deny the ARIN membership organizations the opportunity to compete in a
> fair market. The consequence of such a threat is that it manipulates
> the marketplace, to the detriment of sellers, by chilling potential
> buyers, and therefore limiting competition, and artificially lowers
> the price a seller might receive. Another threat is that ARIN might
> discriminate against marketplace participants by refusing to update
> the registry to reflect the newly-acquired number block(s). Mr.
> Curran?s latest retort states that ?There is no obligation for ARIN to
> update the registry??. This, too, limits competition and artificially
> lowers the price a seller might receive. Both of these threats are
> purportedly based on ARIN?s policy positions and/or contract
> provisions. The entire concept that ARIN and its controlling members
> can openly conspire in such a manner is rather surprising.
> 
> Your article, we respectfully suggest, however, is incorrect when you
> state that ??such a trade would erode ARIN?s control over the IPv4
> address space?.? In point of fact, neither ARIN nor any of the other
> regional Internet IP number registries (RIRs) has any jurisdiction or
> control over Legacy IPv4 numbers given out by the federal government
> or its contractors (of which ARIN is not and has never been one)
> unless, of course, that Legacy number block holder has been convinced
> to sign a contract with ARIN which then gives ARIN contractual
> authority over that specific number block. ARIN is a Virginia,
> non-stock (i.e., no stockholders) corporation, which later obtained
> exemption from federal taxation, just like any other chamber of
> commerce or business league. The concept of ?jurisdiction? no more
> applies to ARIN than your local chamber of commerce?s ?authority? over
> you. ARIN has no contract, written or otherwise, with the federal
> government, the federal government?s contractor (ICANN), or, for that
> matter, with the seller of the Legacy IPv4 number blocks. ?Apparent
> authority,? based on repeated self-declarations of authority is not
> real authority, no matter how many times ARIN says it. In fact, recall
> that the IANA, a function under ICANN?s contract with the federal
> government (U.S. Department of Commerce), is the registry of record
> for the Class A Legacy blocks. We would encourage your readers to
> review the recent article published in the AIPLA by Ernesto Rubi, Esq.
> which also is found in our newsroom, for more information on this
> topic.
> 
> Mr. Curran, truly a master at not answering a direct question, has
> continued to avoid a concrete answer to the question posed by the
> Professor: Does ARIN have authority over Legacy IPv4 numbers and their
> owners? Mr. Curran simply hides behind ?buttoms-up policies?
> (mentioned 15 times in his response to the Professor) and a
> bewildering statement that ?ARIN operates the registry according to
> the community developed policy and this includes all IP address blocks
> in the region including ?legacy blocks?.? We have no idea what that
> means and, perhaps, neither does anyone else, but it certainly doesn?t
> answer the direct question. ARIN?s actual position, when it is sued,
> is just the opposite. In sworn affidavits in federal district court by
> Mr. Ray Plzak, then President and CEO of ARIN, he clearly states that:
> ?Like other ?legacy? address holder?s issued resources before ARIN
> began, ARIN has never had an agreement with {the Legacy IPv4 owner}
> that would give it authority over those specific resources.? ARIN
> describes these ?resources? (i.e. Legacy IPv4 number blocks) as ?IP
> Resources Not Issued Or Controlled By ARIN.? We will not speculate as
> to why there is apparent reluctance to publically acknowledge and
> reiterate what has already been sworn to in a federal court of law.
> 
> We believe and, through your published articles well before the
> founding of Addrex in 2009, it would appear that you too believe that
> this marketplace is good for the Internet. It will, in an efficient
> and effective manner, enable the redistribution of needed IPv4 number
> blocks. By unleashing the economic driving forces of supply and demand
> from the artificial constraints of a third-party ?needs assessment?,
> the marketplace will enable underutilized number blocks to be
> redistributed to entities which will put those number blocks into
> actual use. Professor Mueller, you are far more persuasive and
> articulate in the articles cited above and found on our website. We
> encourage your readers to take the time to refresh their memories by
> rereading those articles, especially in light of the clairvoyant
> nature of your predictions. ?Right On? comes to mind. This marketplace
> will help the Internet ?community? grow and prosper. Many in the
> ?community? mistakenly thought that the commercialization of Internet
> transport services, and the monetization of domain name registrations,
> would end the Internet. Instead, it created billions of dollars in
> value, technology employment and a world connected, even in
> revolutions, by a suite of Internet protocols, and ushered in an era
> of broader Internet adoption and utility. The marketplace in Legacy
> IPv4 number blocks will, despite the fears of a vocal few, help to
> bridge the technology gap in timing, global distribution, and the
> incompatibility with IPv6, while IPv6 gains favor and broader
> adoption.
> 
> Finally, allow me to observe that this marketplace operates in
> parallel with ARIN?s distribution of its contract-based IPv4 number
> blocks. It is a marketplace which complements ARIN?s role and its
> sworn objectives of competition and portability found within its
> Articles of Incorporation. The marketplace is not, and does not seek
> to be, a replacement for ARIN. It is a means to help achieve our
> shared goals of continued Internet growth, stability and security.
> 
> Respectfully,
> 
> Charles Lee
> President
> Addrex, Inc.
> Reply
> Re: Re: A whole /8 for sale
> by John Curran on Tue 21 Feb 2012 07:12 PM EST |  Profile |  Permanent Link
> Several of Mr. Lee's remarks are well considered, particularly because
> of the overlap in his positions and that of the ARIN community.
> 
> For example, it is recognized that a marketplace for IP address blocks
> will enable underutilized number blocks to be redistributed to
> entities which will put those number blocks into actual use, and the
> ARIN community has developed transfer policies for this very purpose.
> Another area of agreement is the purported goals stated by Mr. Lee of
> Internet growth, stability and security - these are definitely
> important goals held the ARIN community.
> 
> However, there are differences in perspective that are too large to be
> done justice in a brief response, but I will outline some points for
> reader's consideration:
> 
> - ARIN was specifically formed to take over these registration
> services and (per NSF) "give the users of IP numbers (mostly Internet
> service providers, corporations and other large institutions) a voice
> in the policies by which they are managed and allocated within the
> North American region." This was a conscious decision to change from
> USG directed operations to multi-stakeholder community-led
> self-governance (just as was done the ICANN formation which followed
> several years later)
> 
> - How IP address blocks are maintained are of critical importance to
> the entire Internet community, and has implications for global
> routing, law enforcement, privacy, etc. ARIN provides a successful
> forum for discussion and resolution of these issues in an open and
> transparent manner. It is uncertain how these issues would be
> addressed if registry were not operated according to community policy.
> 
> - There are ongoing public discussions regarding what transfer
> policies are most appropriate for the marketplace. Most recently, this
> has resulted in changes to policy including revising the
> needs-assessment test and simplifying how address blocks may be
> subdivided. These policies do have implications to the service
> provider community, and we encourage discussion of any other changes
> that will improve the marketplace.
> 
> ARIN operates as part of the Internet number registry system as
> coordinated by ICANN, and while some of Mr. Lee's goals may be
> achievable within that system, some clearly lie outside the present
> structure. It remains an open Internet governance question as to what
> process should be used in considering large scale structural changes
> to the system itself.
> 
> Best,
> /John
> 
> John Curran
> President and CEO
> ARIN
> Reply
> Does ARIN have authority over Legacy IPv4 numbers and their owners...
> by _McTim on Fri 24 Feb 2012 04:56 AM EST |  Profile |  Permanent Link
> Is perhaps the wrong question.
> 
> The more central question (to me) is, "Under what conditions was the
> /8 allocated" In other words, was the block delegated by IANA to your
> customer with any provisos about it's usage and what should happen if
> the block was no longer needed?
> 
> Do you have a (redacted of course) copy of the document that granted
> the use of the /8 to your customer that you can post online?
> 
> I know it is asking a lot in terms of transparency, but Milton is
> correct when he talks about "the "exceptional" status of IP address
> governance" in that IP address distribution is the most open,
> transparent and bottom-up of all Internet governance processes. I
> think the "marketplace" should uphold the same ideals.
> 
> 
> 
> Reply
> Re: A whole /8 for sale
> by E.W. on Sun 19 Feb 2012 11:58 AM EST |  Profile |  Permanent Link
> Mr. Curran,
> 
> You?re saying that the Arin community is setup to create public
> policies regarding the transfer of IP address space, and I see that.
> In fact, that community welcomes all to participate and share their
> thoughts and have a voice in the policy, and I see that too.
> 
> Now, Dr. Mueller seems to be saying that some of that IP address space
> was given out before the Arin community even existed and the owners of
> that IP space aren?t beholden to the well wishes of the community
> regarding what they can do with their IP space, and I see that too.
> 
> Sometimes an analogy using not so technical comparisons can bring a
> point to light and may help technical people like yourselves better
> understand what each is trying to say so I?ll offer one here. Suppose
> you?re a farmer with a hundred acres of good land that?s been in your
> family for years, and that you?ve taken pride in cultivating crops on
> that land, bringing them to market, and ensuring a livelihood for your
> family while helping the people around you who buy your produce.
> 
> Now suppose, over the years, people start moving in around you and
> what used to be open and free country becomes more crowded. The people
> form a community. The community incorporates into a town. The town
> forms a government ? a well-meaning, democratic government where
> everyone in it can come to town meetings, voice their opinions, and
> vote on the issues of the day.
> 
> Because free land is starting to become scarce, the democratic
> community passes a law that no one can just squat on free land and
> grow their crops. The remaining free land is put under the stewardship
> of the town, and if someone wants farmland, they have to apply for it
> at Town Hall, and a Board of Commissioners will decide who needs the
> land the most and how much each applicant can get. The applicant has
> to sign a Community Land Agreement that says if they later want to
> sell off some of their land, they have to get the Board?s permission
> and the Board has to approve the Buyer to make sure the Buyer really
> needs it.
> 
> Now, one day the farmer decides he?d like to sell his land and retire.
> Or maybe he decides he just wants to give it away to his son who?s
> learned the ways of farming under his father. Someone on the Board
> gets wind of it and says, ?No. You can?t do that. Only the Board
> decides how much land anyone can get in a land transfer according to
> our public policies.?
> 
> The farmer replies, ?This is my land. I own it. I can do with it as I please.?
> 
> The Board member answers, ?We appreciate all the work you?ve put into
> the land, which helped make this area so prosperous. In fact, you?re a
> part of our community too. Why don?t you come to the next town meeting
> and have your voice heard by others in the community? Maybe you can
> convince them to change public policy so you can sell your land to
> whomever you like.?
> 
> Now the farmer isn?t a lawyer or a politician, but he has pretty good
> horse sense about these kinds of things. So his answer to the Board
> member is pretty clear. ?You?ve invited me to participate in your
> meeting, and maybe I?ll do that one day if I have something to say
> about how the town is dividing up the land that it owns. But I own my
> land and what I do with it is up to me. It?s not up to a politician or
> a community, even if I?m part of the community.?
> 
> ?Fine?, says the Board member. ?It?s true it?s your land and isn?t
> subject to the Community Land Agreement that others have signed and
> you can do with your land whatever you please. But if you sell it or
> give it to your son, we?re not going to recognize the sale in the
> County Register. And you know a lot of people look at that Register to
> recognize land ownership.?
> 
> It?s about then, I think, that the farmer decides he?s had enough of
> community organizers and gets himself a good property attorney.
> 
> And that?s where we seem to be now, if you get my analogy.
> 
> - E.W.
> Reply
> Created and issued for a purpose...
> by John Curran on Tue 21 Feb 2012 05:24 PM EST |  Profile |  Permanent Link
> E.W -
> 
> An interesting analogy, but as with many analogies, somewhat of an
> imperfect fit to the reality of the situation.
> 
> The point omitted is that the original "land" (to keep with your
> analogy) was created by the Internet community for a particular
> purpose, and was issued to parties by various predecessor registries
> so that the parties could participate in the Internet and/or use of
> Internet technologies. There were always rules and policies for how
> such address space should be used, and these policies which were
> refined by community discussion over the years.
> 
> Your farmer was brought to the new land by ship with the plan of
> building a community, and it was agreed upon arrival that they should
> each settle on some land to start that process.
> 
> The fact is that your farmer has forgotten how he got the land in the
> first place doesn't relieve him of the obligations.
> 
> Best wishes,
> /John
> 
> John Curran
> President and CEO
> ARIN
> Reply
> Re: Created and issued for a purpose...
> by Ernesto Rubi on Wed 22 Feb 2012 10:37 AM EST |  Profile |  Permanent Link
> What continues to trouble me is this concept of "community" - akin to
> the incantations of the "proletariat" that many in the past have used
> to quash free will, free markets and progress.
> 
> The first issue - which is an obvious one - is that the entire
> proposition/argument rests on the assumption that "the community can
> do no wrong."
> 
> The second is that ARIN's argument that "our authority comes from the
> community" is devoid of any basis in reality. ARIN's election process
> is open only to ARIN members - not to members of the Internet
> community (broadly defined as all those folks who use the Internet,
> have an interest in the Internet functions, or are affected by the
> Internet). In fact, it's not clear how many ARIN members actually vote
> in the ARIN election process. If participation is less than 5% then
> how can ARIN claim to represent the "community", much less its own
> members? And who counts the votes? ARIN? That's process is obviously
> transparent right? =)
> 
> I think using your logic you would agree that Raul Castro and Hugo
> Chavez are elected by their 'community' every 5 years...so...they're
> not despots, thugs or ruthless dictators but rather - they are duly
> 'elected' in an 'open' process, in and they represent their
> wonderful-yet-starved community - the "ploretariat."
> 
> Reply
> open and transparent policy development
> by John Curran on Wed 22 Feb 2012 01:31 PM EST |  Profile |  Permanent Link
> Ernesto -
> 
> The community is anyone who has an interest in Internet number
> resource policies. Anyone may participate, regardless of whether you
> have a number number resources, are a service provider, or are a
> member of ARIN.
> Feel free to get involved - see
> https://www.arin.net/participate/how_to_participate.html for details.
> 
> Regarding whether the community can do wrong, what we have established
> a process by which everyone is equally able to participate by
> expressing a position and its basis.
> Policy proposals are considered in an open and transparent manner, and
> go through several stages of refinement before being adopted as new
> policy. We do utilize an elected advisory council to assist in policy
> development, but provide a low-threshold online petition as a check
> and balance on their actions.
> 
> This process results in policy which has been discussed extensively
> before adoption, has had any concerns raised and considered, and still
> enjoys support of the community.
> 
> To the extent that you have any suggestions for improvement of the
> policy development process, I would welcome any input.
> 
> Thanks!
> /John
> 
> John Curran
> President and CEO
> ARIN
> 
> 
> ------------------------------
> 
> Message: 2
> Date: Sat, 25 Feb 2012 14:39:44 -0500
> From: Tom Vest <tvest at eyeconomics.com>
> To: ARIN PPML <ppml at arin.net>
> Subject: Re: [arin-ppml] Fwd: ARIN-prop-165 Eliminate Needs-Based
>    Justification
> Message-ID: <2A1E9EA1-7D44-4A3E-87AB-A86EAB2FFAA6 at eyeconomics.com>
> Content-Type: text/plain; charset=utf-8
> 
> Point of clarification below:
> 
> On Feb 24, 2012, at 3:50 PM, Tom Vest wrote:
> 
>> 
>> On Feb 24, 2012, at 1:56 PM, Astrodog wrote:
>> 
>>> On Fri, Feb 24, 2012 at 12:45 PM, Tom Vest <tvest at eyeconomics.com> wrote:
>>>> 
>>>> On Feb 24, 2012, at 4:00 AM, Astrodog wrote:
>>>> 
>>>>> On Thu, Feb 23, 2012 at 3:59 PM, John Curran <jcurran at arin.net> wrote:
>>>>>> Milton -
>>>>>> 
>>>>>>  Is there an fairly straightforward economic explanation that addresses
>>>>>>  the questions that John Sweeting raised?  If so, could you outline it?
>>>>>> 
>>>>>> Thanks!
>>>>>> /John
>>>>> 
>>>>> Sorry for hijacking a bit, but I do have an answer.
>>>>> 
>>>>>> From: "Sweeting, John" <john.sweeting at twcable.com>
>>>>>> Subject: Re: [arin-ppml] ARIN-prop-165 Eliminate Needs-Based Justification
>>>>>> Date: February 17, 2012 12:55:52 PM EST
>>>>>> To: Milton L Mueller <mueller at syr.edu>, 'Paul Vixie' <paul at redbarn.org>,
>>>>>> "jeffmehlenbacher at ipv4marketgroup.com"
>>>>>> <jeffmehlenbacher at ipv4marketgroup.com>
>>>>>> Cc: "arin-ppml at arin.net" <arin-ppml at arin.net>
>>>>>> 
>>>>>> Hi Milton,
>>>>>> 
>>>>>> A few questions since I am not an expert in markets.  Do you think there is
>>>>>> a scenario where the largest and wealthiest of the world's ISP's would buy
>>>>>> up as much address space as they could just to keep it out of the hands of
>>>>>> their competitors? Or new start ups in their markets?  There are some very
>>>>>> wealthy companies out there that would not blink an eye at spending the
>>>>>> money needed to run their competitors out of the market but maybe that is
>>>>>> not possible in this particular market. Is there a way that a small but well
>>>>>> of portion of the market could insure prices are so high that the number of
>>>>>> competitors would be capped or even reduced? As I said I am not an expert on
>>>>>> markets so would very much welcome your views on this.
>>>>>> 
>>>>>> Thanks,
>>>>>> John
>>>>>> ...
>>>>> 
>>>>> It's very unlikely that large ISPs would make this sort of move for a
>>>>> number of reasons:
>>>>> 
>>>>> First, it should be noted that even the largest ISPs are not
>>>>> particularly well positioned financially for this sort of endeavor.
>>>>> AT&T as an example, has ~$3.2 billion in cash, and after paying
>>>>> dividends, has lost money somewhat the past few years. When compared
>>>>> to some of the end users of address space, they simply wouldn't be
>>>>> competitive bidders, limiting how much of the "for sale" capacity they
>>>>> could acquire. Aside from this, the largest ISPs cannot cooperate on
>>>>> their purchases and would be at a significant disadvantage compared to
>>>>> their large competitors who did not attempt to drive up the price.
>>>>> 
>>>>> It is also notable that large ISPs are not precluded from doing this
>>>>> under current policy. Simply through changing their address scheme for
>>>>> CPE, most large ISPs could nearly double their current allocation.
>>>>> Considering that in 8.3 transfers, they only need to show 24 month
>>>>> need, most could go significantly past this (for example, planning to
>>>>> offer customers public IPs for all of their various bits of network
>>>>> enabled equipment... note that under current policy, they do not have
>>>>> to actually do this. Merely intend to.) As a result of how rare
>>>>> auditing is, its unlikely that they would see revocations, either.
>>>>> Under current policy, a small ISP attempting to become a large one
>>>>> would face a much greater regulatory hurdle.
>>>>> 
>>>>> I think there is consensus around the fact that long term, IPv4
>>>>> allocations are likely to have little to no value. As a result, they
>>>>> are particularly unattractive as speculative investments. Someone
>>>>> holding a large number of addresses without utilizing them as an
>>>>> investment is taking a very large risk and would be very unlikely to
>>>>> hold those addresses for long, due to their value trending to zero.
>>>>> The same reasons why many of you have expressed... acceptance with
>>>>> removing needs requirements in a few years would make speculation on
>>>>> IP addresses today minimal.
>>>>> 
>>>>> Finally, a major way to keep a handle on speculation would be for ARIN
>>>>> to hold some allocations back, post-exhaustion, with authorization to
>>>>> release some of those addresses if it appears that an entity is
>>>>> attempting to "corner the market" at a given point in time. Another
>>>>> option would be verbiage specifically prohibiting speculation, through
>>>>> post-purchase auditing. These do not need to occur frequently to
>>>>> eliminate speculative behavior.
>>>>> 
>>>>> --- Harrison
>>>> 
>>>> Hi Harrison,
>>>> 
>>>> That's a fine set of arguments, and I do hope that you are right, but it might be worth considering the following:
>>>> 
>>>> 1. Your examples don't capture the most compelling incentive(s) that might hypothetically motivate an operator's attempt to strategically leverage IPv4 scarcity for commercial/competitive purposes. The Internet has a strong tendency to "route around" congestion, censorship, scarcity, and other bad things, not only (or primarily) because the technology just works that way, but because clever operators are constantly, actively looking for opportunities to optimize their network cost/performance characteristics -- i.e., by topologically "bypassing" such problems. Of course, network input suppliers (the majority of which are now also "operators" themselves) are fully aware of this fact, and as a class they naturally tend to be reluctant to compete on price ( -> commodification) *if* there is any other alternative. Consequently, smart input suppliers are constantly trying to identify and "capture" profitable market niches that are very likely to remain profitable because opera
> tors cannot easily bypass them -- i.e., because they constitute a "bottleneck" to profitably providing network service to some place/population. Sometimes (increasingly uncommon IMO) such bottlenecks are be embodied in some unique technology or non-fixed asset. Today, in this industry, such bottlenecks are far more likely to be explicitly or implicitly spatial/geographic in nature, e.g., a particularly attractive room in a building (e.g., an IXP/IDC), building in a particular neighborhood, neighborhood right-of-way in a city, city in a country, etc., or indirect access to the same via interconnection/traffic exchange with another operator that has better or perhaps exclusive topological access to to the desired "turf."
>>>> 
>>>> 2. At various times/places, IPv4 can and has embodied an absolute bottleneck of the former (non-fixed) kind, at least for some network operators and/or would-be operators. The possibility (or rather "eventuality") that IPv4 would become a bottleneck was one of the factors that drove the creation of the RIR (needs-based) allocation system, and the limited accessibility of IPv4 on non-adversarial terms to aspiring network operators outside the US was one of the demand drivers that led to the spread of that address distribution model to every continent. Today, thanks to NAT, RFC1918, and IPv6, IPv4's status as a "quantitative bottleneck" to delivering many kinds of services has diminished substantially -- i.e., life might be vastly easier if one had more IPv4, but -- assuming that you have any at all --  an independent network operator can generally remain in business as such, and even continue growing, by strategically reassigning/multiplexing and/or supplementing their lim
> ited IPv4 holdings with private addressing and/or IPv6. However, for the overwhelming majority of places and aspiring (future) service providers, IPv4 still remains an absolute/qualitative bottleneck to entering (appx. any/all) Internet services market, at least with the same sort of "independent" status that all of one's incumbent competitors would enjoy.
>>>> 
>>>> One day that might not be true, but when (or whether) that day might come is anyone's guess. You may be right that there is "consensus around the fact that long term, IPv4 allocations are likely to have little to no value," but if so that consensus is overwhelmingly among individuals that work for institutions that (a) have to-date put little if anything at risk to hasten that outcome, and (b) simply by virtue of their possession of IPv4 could have quite a lot to gain if the consensus prediction turns out to be wrong. Obviously there are some exceptions, e.g., networks that have literally bet the farm on IPv6, but they represent a tiny minority among those holding the "consensus" view.
>>>> 
>>>> Note that I'm not suggesting that people are misrepresenting their actual beliefs, but it's a lot easier to have strong opinions about future unknowns when being wrong is a (privately) cost-free option. Like I said, I do hope that the consensus is right, but caveat emptor is always good advice.
>>>> 
>>>> 3. Given the fact that, by itself, a strategy of "IPv4 hoarding" seems unlikely pay off in the near future, and might never become an effective means of *establishing* market power (i.e., except under relatively improbable circumstances/scenarios, for the perennially modest market segment of aspiring new entrants), but arguably has already/repeatedly proven to be quite effective as a strategy for *enhancing* market power under certain conditions (e.g., during the preRIR/early RIR era, in regions/bargaining situations where BYO addressing is unacceptable, etc.), one should assume that any shift toward strategic "IPv4 hoarding" would probably start -- and if left unchecked, end -- with the kind of entities that already control some other critical bottleneck(s) to Internet service delivery, as described in [1] above.
>>> 
>>> Thanks for the explanation.
>>> 
>>> Those are definitely significant concerns, but I'm not sure how needs
>>> testing addresses them.
>> 
>> On this point I am inclined to (reluctantly) agree.
>> Assuming very very generously that I got everything right in the predictive model described above, continued needs testing ala current practice might slow the inexorable, but probably not all that much (esp. in relative terms, since the ultimate result would be a market in which IPv4 conferred the same sort of status that land conferred upon its owners during the century or two after land first became "alienable" but land ownership still remained an appx. universal bottleneck input to the accumulation of personal wealth and/or the achievement of social/political non-nonperson status). 
> 
> Addendum: Even if one agrees with me that at strategy of "IPv4 hoarding" would be unlikely to pay off for a "pure speculator" (i.e., an entity that could not satisfy any form of needs-based justification requirement) in the near term -- or rather, that it would be *relatively less likely* to pay off for them, as opposed to an entity that might be able to satisfy some kinds of needs nests -- that does NOT imply ANY of the following:
> 
> -- that all "pure speculators" are by definition motivated solely by short-term payoffs; with "safe" economy interest rates parked at +/- 0.00% indefinitely, demand for everything else flat, and octillions of idled $?? just waiting patiently for the next attractor to appear, any such assumption would be foolish;
> 
> -- that "pure speculators" would be necessarily be interested in or obliged to participate in the actual "IPv4 hoarding" themselves;
> 
> -- that "pure speculators" should be incentivized to put any of this to the test, e.g., by dropping the justification requirement altogether. 
> 
> Short version: when/if these messages are tallied for informational purposes, please add this one to the "opposed" column.
> 
> TV
> 
>>> Large ISPs already have the ability to horde
>>> address space, in that they can make relatively minor changes that
>>> would suddenly make them "need" (or, at least, qualify for) quite a
>>> bit more address space than they already have. These entities are also
>>> the ones most likely to be well versed in how to meet the letter of
>>> ARIN's requirements. It seems like the needs testing simply adds one
>>> more advantage they would have over their smaller counterparts and
>>> end-users.
>>> 
>>> Perhaps the solution to this problem is a reserved block for small
>>> allocations, where the "reservation" survives 8.3 transfer?
>> 
>> In the final analysis, there are only two possible outcomes that matter: either IPv6 (or some other, as-yet unimagined technology that provides the same or better functionality on terms that are least as open/accessible to as broad a segment of aspiring Internet contributors as would be served by, e.g., an inexhaustible supply of IPv4) "promptly" achieves perfectly substitutability with IPv4 -- which mean that what happens to IPv4 doesn't really matter -- or else it doesn't, and possession of IPv4 continues to provide a variety of technical and commercial opportunities that are unattainable (or attainable only on commercially unsustainable terms) to anyone who does not possess IPv4, in perpetuity -- or at least until someone actually comes up with that "as-yet unimagined technology." 
>> 
>> Personally, it's not clear to me how or why the suggested changes would be likely to materially alter the current trajectory, but that may just reflect a failure of imagination (or understanding) on my part.   
>> 
>>> At least in a more open market, such entities may also decide that
>>> they can make more money using their space more effectively, and
>>> selling the extra on, post-exhaustion, though I'll admit this seems
>>> like a fairly unlikely outcome.
>>> 
>>> --- Harrison
>> 
>> Absent some kind of intervention (divine, infernal, or bootstrap-directed), the economic logic that I attempted to map out permits only one high probability outcome.
>> 
>> Of course, anything is possible, for some definitions of "possible."
>> 
>> And caveat emptor is still always good advice ;-)
>> 
>> Cheers, 
>> 
>> TV
>> 
>> 
> 
> 
> 
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