[arin-ppml] Draft Policy ARIN-2015-9: Eliminating needs-based evaluation for Section 8.2, 8.3, and 8.4 transfers of IPv4 netblocks

[Brett Frankenberger]

On Thu, Sep 24, 2015 at 10:51:29PM +0300, Elvis Daniel Velea wrote:
> +1
> 
> Keeping needs basis in the NRPM will only drive the transfers underground.
> Some are already using all kind of financial tricks (futures contracts,
> lease contracts, etc) and are waiting for the needs basis criteria to be
> removed from NRPM in order to register the transfers in the ARIN Registry.

Requiring that the transfer be handled completely underground adds risk
and cost to a transaction that would be less risky and less expensive
if it could be handled completely above board and recorded in ARIN's
records.

That additional cost and risk will cause some people who can't justify
their need (as defined in ARIN policies) to forgo an underground
transfer.  And that will have the effect of reducing the volume of
non-needs-based transfers.

So it's not true that the *only* effect of the needs basis is to drive
transfers underground.  It does that with some transfers; it also
prevents some transfers.

Some people might rationally believe that that's a benefit, and enough
of a benefit to offset the costs of having IP addresses in defacto use
by parties other than those listed in the ARIN database.  (I'm not
agreeing with that position; just commenting on it's existence.)

What's more interesting is that the speculative transfers are possibly
the ones least impacted by forcing them underground.  If I want to
acquire IP addresses today to use on my operational network tomorrow
(but in a manner that won't meet ARIN's criteria for justified need),
there's risk to me doing an underground transaction, because it
increases the difficultly associated with getting the IP address space
that I acquire routed on the public Internet, and with resolving issues
should someone else announce the space.

On the other hand, if I want to acquire IP addresses today, for the
purpose of reselling them for a higher price at some point in the
future, there's much less reason for me to be concerned about an
underground transfer.  I contract for the right to direct the current
owner to transfer them as I see fit (and to direct the current owner to
not route them on the public Internet -- to make sure he doesn't
reputationally damage them), and then I wait until the price goes up to
the point where I want to sell.  At that point, I find a buyer who can
satisfy ARIN's needs-based jutification, and I direct that the
addresses be transferred to him.  He has no trouble routing them on the
public Internet because it's an ARIN-recognized transfer.  I got to
engage in my intended speculation (and the IP addresses remained idle,
because the original (and ARIN-recognized) holder of the space couldn't
use them or transfer them, because he was contractually prohibited from
doing so).

Obviously, the inability to register the initial transaction with ARIN
creates some risk.  For example, the original holder could "sell" his
addresses multiple times, and the buyers only resources would be to sue
him when the duplicity was discovered; by then, he might have made
himself judgement proof.  Certainly the multiple-sale case is also
possible with an underground transfer to a recipient who uses the
addresses on the public Internet immediately, but it's harder to sell
addresses a second time when the first buyer is currently routing them
on the public Internet.  

Still, the point stands that the burden imposed by needs-based policies
is at least arguably higher on buyers that want to use the addresses
now is higher than the burden imposed on speculators.

> The Registry/Whois will win most from the removal of needs basis from the
> NRPM and process streamlining.

     -- Brett