[arin-ppml] Hoarding and speculation (was: Re: Draft Policy ARIN-2014-20: Transfer Policy Slow Start and Simplified Needs Verification)

[John Curran]

On Sep 23, 2014, at 10:45 PM, David Huberman <David.Huberman at microsoft.com> wrote:

> What is the virtue of a limit?  
> 
> It's not the prevention of speculation and hoarding.  Those will always 
> happen outside the view of ARIN policy.
> ...
> Before anyone answers this, please ensure you're knowledgeable about
> the IPv4 market today. I am.
> ...
> There's no speculation that I can  find, short of a one-off speculator
> who is a well-known fraudster. 
> ...
> ARIN's job should simply be to verify the seller is the bona fide registrant,
> and that the seller agrees to the transfer, and that the buyer signs an
> RSA and pays whatever fees are necessary to cover the costs of the 
> transaction processing.

David - 
 
  You describe an interesting "present state", and presuming it is 
  well-informed, it is probably extracting and making explicit some
  points in your worldview before continuing the discussion.  
 
  You indicate - 

  1) Hoarding and speculation can happen outside of ARIN's view

     This is almost certainly the case, as parties always free
     to contract for future behavior, including a party ceding 
     its ability to transfer address rights to any other party.

  2) A limit on the size of transfers cannot meaningfully deter 
     hoarding, due to point #1 above.

  3) A limit on the size of transfers cannot meaningfully deter 
     speculation, due to point #1 above.

  4) Hoarding does occur, but there is no meaningful speculation 
     that you can find.

     By "hoarding", I believe that you mean parties obtaining 
     right to number resources in anticipation of future need
     to make use of them, as opposed to "speculation" whereby 
     one obtains rights in anticipation of financial gain.

  If you are correct above, it does raise the question of "why 
  isn't there abundant & apparent speculation going on today?"  
  
  It can't be for lack of interest; investment firms will speculate 
  on nearly anything that has good potential to beat the market. 
  I've had investment firms ask about the 'rules and regulations' 
  that apply to transfers of IP address rights for this very reason.

  The various policy merits of allowing hoarding or speculation are
  not mine to argue; that is for the community to ponder through the 
  policy development process.  However, you propose that we simplify 
  ARIN processes and make ARIN policy fit reality; effectively that 
  ARIN's job should simply be to verify the seller is the bona fide
  registrant and that parties agree to the transfer.

  If community does as you suggest, both hoarding and speculation 
  become readily available, and this represents a significant change
  from the present state as described by your worldview. A change
  which simply formalized the present state that you describe would
  not enable speculation, since you do not view that as abundant in 
  the present system. The difference between the two outcomes comes 
  down to whether or not the buyer is obtaining the resources in 
  anticipation of future need or simply financial gain, i.e. is the 
  buyer of the rights to the addresses a bona fide network operator.

  I'll assert that the present system is actually rather unfavorable 
  to speculation; parties that seek to obtain the rights to address 
  blocks without the real potential for future use are run a very risk 
  of ending up in violation of policy and with impaired investments 
  as a result.  More specifically, your postulate [#3] above to the 
  effect that a limit on the size of transfers cannot meaningfully 
  deter speculation is likely not valid - the limit does indeed deter
  speculation today, as having to qualify eventually against needs-
  based limit requires the party to actually operate a network (or
  risk total loss of the investment, likely beyond the risk profile 
  of the vast majority of potential investors.) 

  Unless you are advocating for a policy shift to enable speculation,
  simplification of ARIN policy towards your "present reality" needs 
  to be more than simply verifying that the seller is the bona fide 
  registrant and that parties agree to the transfer; in particular,
  verification that the recipient is a bona fide network operator 
  would also be required. That is an aspect presently implied in the 
  needs-based limit on the size of an address rights transfer, but 
  that element could be made explicit and retained, if limit itself 
  is otherwise undesirable in your view.

Interesting discussion - Thank you!
/John

John Curran
President and CEO
ARIN