[arin-ppml] LAST CALL for Recommended Draft Policy ARIN-2015-3: Remove 30 day utilization requirement in end-user IPv4 policy

Mike Burns mike at iptrading.com
Thu May 19 12:17:32 EDT 2016

For what it’s worth to this discussion, we have as much access to pricing information as anybody, and we do not see prices rising more rapidly in RIPE.


Pricing in this market is opaque. The only ones with access to this information are brokers.

Anybody but brokers only can see information on a small number of transfers. We have pricing information on hundreds of transfers.


ARIN pricing is still lowest, but not by much, and not due to the retention of the archaic needs test. It’s due to supply.  The ARIN region has 5 addresses per capita. Other regions of the world are orders of magnitude smaller. The fact that abundant supply changes prices is evident in the unusual truth that per-address prices are lowest at the /16 level.  Larger blocks cost more due to lack of supply. Smaller blocks cost more due to economies of scale. But because the old classful allocation regime handed out /16s to anybody with 257 devices or more, we find many old colleges, defunct corporations, long-closed ISPs with available /16s. 


So supply impacts price in a detectable way, but the needs test is irrelevant. Anybody who wants to buy, but who has problems with justifying their need, can simply use RIPE as their registry of choice and use their addresses wherever they want.  


The ARIN needs test is perversely driving transfers out of ARIN. Why suffer through an ARIN 30-day utilization ordeal or an ARIN 24 month needs test when the same ARIN-originated purchased addresses can be transferred to RIPE, where a 5 year test is applied?  For the difference in cost between a RIPE membership and an ARIN one, any buyer can neatly sidestep the issue.


Fortunately for ARIN, nearly every buyer is able to justify their need, because speculators don’t really exist. But the 80% requirement is onerous and RIPE is the escape hatch.


Geoff Huston did some stats showing that dusty old blocks make up a large chunk of transferred space. Some of his data was presented at the recent LACNIC meeting. This is evidence that the transfer market is actually more efficient at conserving address space than the needs-test regime ever was.  Because needs-tests and utilization requirements and revocation threats did not bring these addresses into productive use, but the market did.


Policy in ARIN has been held hostage for years to the boogeyman of speculators capable of harmfully manipulating the market.  Never has evidence supporting the existence of these people been offered. And certain unavoidable facts are avoided:

1.       Any such speculation will drive IPv6 and could render IPv4 worthless

2.       Supply has been fragmented through a quarter century of worldwide RIR allocations

3.       Every policy-compliant transfer is publicly recorded

4.       Prices have not changed dramatically in five years of trading


These conditions make it all but impossible for any market manipulation to occur, because due to fragmentation, the acquisition of enough blocks to manipulate the market would take years, in my educated opinion, and would have to involve a very rich speculator who was willing to engage in a series of transfers under assumed names, with the speculated asset marching towards a zero value.  It’s ludicrous to believe that any such speculator exists, willing to risk not only the loss of his investments, but worldwide opprobrium.








From: arin-ppml-bounces at arin.net [mailto:arin-ppml-bounces at arin.net] On Behalf Of Mueller, Milton L
Sent: Thursday, May 19, 2016 10:42 AM
To: Owen DeLong <owen at delong.com>
Cc: arin-ppml at arin.net
Subject: Re: [arin-ppml] LAST CALL for Recommended Draft Policy ARIN-2015-3: Remove 30 day utilization requirement in end-user IPv4 policy




From: Owen DeLong [mailto:owen at delong.com] 


Transfers are not rationed by price…


MM: False. This is like saying white is black. Transfers involve a payment by the receiving party. They are, therefore, rationed by price. Not much room for debate here. You’re just wrong. 


Price does not ensure that the purchaser has actual need for the resources, it merely insures that they have monetary resources that they are willing to trade for number resources.


MM: It means that they value the resources and thus have some kind of need for them. There are 1,000 other things they could spend that money on but the buyer has determined that the value they will get out of the numbers is at least equal to the value of the money they spend. 


You’ve presented no evidence whatsoever to support your conclusion that stringent needs assessment raises the price 


In fact, in the RIPE region where there are virtually no needs-based controls, according to the brokers I have discussed things with, prices are rising more rapidly than in the ARIN region, which would in fact appear to suggest that our needs-assessment regime is, in fact, holding prices down.


MM: Facts? Citations to specific transactions? I am always open to evidence. 

If we eliminate needs assessment, what mechanism assures that the transferee is actually a network operator? Further, how does it in any way assure that the transfer is from a place of less need to a place of greater need rather than a place of limited need to a place of greater monetary resources?


MM: This is not the place to rectify your general lack of familiarity with economics. But you seem to think that people with “greater monetary resources” simply throw them at anything that moves. In fact, in the real world, everyone tries to maximize the value they get from whatever resources they have. So if someone pays for addresses, it is a very reliable indicator that they need them for something. Most if not all of the organizations that can derive value from numbers are network operators.  The threat of massive speculation is a bogeyman you have invented – there is no evidence that it exists. The only “speculation and hoarding” that currently exists is the holding of number resources by current assignees who don’t need them. And stringent needs assessment freezes that problem into place. Sorry to say it, but you, Owen, are one of the greatest defenders of hoarding.  


You start with an assumption that you are correct in your conjecture and then act as if it is everyone else’s duty to provide evidence that your speculation is not correct. The reality is that these are judgment calls based on limited experience and while we do know that needs assessment does, in fact, work to some extent, there is very limited experience without it. Unfortunately, once it is eliminated, it will be virtually impossible to put the genie back in the bottle, so people are understandably cautious about opening the bottle all at once.





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