[arin-ppml] Draft Policy ARIN-2021-6: Remove Circuit Requirement

Wed Sep 22 11:15:57 EDT 2021

Hi Isaiah,

How would ARIN determine compliance with reporting requirements and revoke addresses?

This is an unrealistic approach and certainly does not provide the same incentives.

ARIN has always utilized the needs test for future allocations as the method of enforcement of assignments in prior allocations.

I repeat myself, but we have tried these old free-pool methods and they failed to answer the community’s needs.

But when financial incentives were recognized in transfer policy, things started changing, and addresses are used more efficiently today as measured by the large legacy swathes that came into the market, and even the de-aggregation of the DFZ is evidence that financial incentives are effective as blocks become smaller and presumably more efficiently used.

The carrot works, the stick (twig) not so much. This policy provides a carrot for some IPv4 owners to accurately register assignments that does not exist in the absence of this policy.

Regards,

Mike

From: Isaiah Olson <isaiah at olson-network.com> 
Sent: Wednesday, September 22, 2021 10:56 AM
To: Mike Burns <mike at iptrading.com>
Cc: 'ARIN-PPML List' <arin-ppml at arin.net>
Subject: Re: Draft Policy ARIN-2021-6: Remove Circuit Requirement

I understand your argument here now, I still don't see any meaningful reason to financially reward networks who are currently non-compliant with existing policy. I don't agree with your characterization that there is no financial incentive existing either. Networks who are non-compliant with their reporting requirements could, in the worst case scenario, be subject to having their space reclaimed by ARIN. I would argue this means that, in practice, the stick is already available in policy, ARIN is just not using it on a widespread basis at this time.

- Isaiah

On 9/22/2021 9:43 AM, Mike Burns wrote:

Because currently there is no "justification benefit" for accurate registration, but this policy would create one.

I don't understand what you are asserting here. There is currently a requirement to accurately report re-allocations. The only benefit I see is to networks that are currently non-compliant with that policy. If networks are failing to meet those obligations, I would argue a better policy proposal would be one to strengthen the penalties related to non-compliance with that policy, rather than rewarding non-complaint networks.

- Isaiah

Good morning Isaiah,

This policy will create a financial benefit for accurate registration of leased addresses that currently does not exist. I lease addresses out, but there is no financial incentive for me to register those leases in any way at ARIN. However if I wanted to purchase more addresses to meet the needs of more lessees, then I would have a financial incentive for accurate registration. I am not arguing that this should be required, I think we all should strive for accurate registration. But I see financial incentives as meaningful, they are driving the IPv4 distribution system today.  

It’s the carrot approach, but you can try the stick to see if that would encourage more accurate assignments.

Regards,
Mike

From: Isaiah Olson  <mailto:Isaiah at olson-network.com> <Isaiah at olson-network.com> 
Sent: Tuesday, September 21, 2021 8:00 PM
To: Mike Burns  <mailto:mike at iptrading.com> <mike at iptrading.com>
Cc: 'ARIN-PPML List'  <mailto:arin-ppml at arin.net> <arin-ppml at arin.net>
Subject: Re: Draft Policy ARIN-2021-6: Remove Circuit Requirement

Nonetheless your objection was that this proposal somehow would not distribute resources in accordance with policy, I think your objection was addressed completely.

You are certainly correct that my initial objection was unclear. Specifically, I do not believe that this policy is compatible with section 4.2 of the PDP process, nor 4.3 as of this moment. Compliance with the NRPM would seem to be irrelevant since the policy proposal would change the NRPM.

You are drifting. I never made the argument you are saying I made regarding any benefit of leasing to RIPE.

I said in response to Noah, and you now agree, that allowing leasing will not in fact lead to the demise of an RIR.

I take it you agree that Noah's objection in this regard has been addressed.

You are the one who opened the door to the RIPE situation, although I would have certainly cited the research from my first email regardless. Although you may have addressed the extreme example brought up by Noah, you have failed to address any of the concerns I have raised about the results of the RIPE policy. If I've put words in your mouth, I apologize. However, I am asking you directly to address whether you consider the policy implementation in RIPE to have been beneficial to the Internet community, both in the region and as a whole, because I would argue the data says otherwise.

OK the waiting list is rock solid, but my wisp needs a /21, what now? My point remains, the waiting list is not appropriate for all those in need, and if there were alternatives then there would be no market for leases to begin with. I can spend all day giving examples of legitimate lessees. I think you should concede that there are legitimate business cases where leases make more sense for the recipient.

The waiting list may not be appropriate for all needs, but it certainly fills in many of the gaps you are arguing necessitate leasing. The edge cases you note may make for a compelling argument for expanding wait list eligibility, but I don't find them compelling enough to justify a RIR-wide policy change to allow leased addresses to be considered as justification, a policy which has the potential for considerable negative side effects to the community. The existence of a market for leasing does not equate to a necessity for the ARIN community to enable and subsidize the practice by changing policy in this way. I would certainly concede that legitimate business cases for leasing IPv4 do exist. Unfortunately, there is a dearth of reputable research into the leasing market, so I will refrain from making any assertions about the proportion of legitimate to non-legitimate use cases. Regardless, the existence of legitimate use cases doesn't strike me as a compelling reason to support this policy.

I believe you have conceded that my assertion is correct.

With regards to your assertions about the composition of the pool of lessors, I would agree that you are correct. I do not concede or agree in any way that your assertion supports implementation of this particular policy. I do not support the concept of LIRs acquiring new space solely to lease off-network, and I would prefer that the pool available for leasing off-network dwindles over time until as much space as possible can be brought under terms that explicitly disallow the practice. For networks smaller than /20, the waiting list provides an acceptable alternative and it appears that the current rate of revocations is approximately matched to the demand on the waiting list, for networks larger than /20, I assert that what you propose would only exacerbate the difficulty of obtaining a block at a reasonable price.

That is the current policy, to disallow justification without a circuit, so  your objection to this proposal means you prefer no leasing policy.

You are correct here, I certainly prefer a no leasing policy, specifically one that is stronger than the current policy, but I still prefer the current policy to what you propose. I do not believe it is legally or economically feasible for ARIN to retroactively reclaim resources that are currently being leased off-network, but I don't consider anything you've presented here as a compelling argument to officially sanction the practice regardless of the historical inequalities.

I consider this also a concession that what I said is true about "providing an incentive" which is as far as I went.

You're going to need to go further if you want to garner any significant community support for this proposal.

I agree with your first contention, that this policy could in fact lead to price increases on the transfer market.

But the basic math you refer to is the linkage between the transfer market and the lease market.

Transfer prices have doubled this year, lease rates have not doubled, they haven't risen anywhere nearly as quickly.

I think the lack of ability to purchase blocks to feed the lease market in ARIN serves to loosen that coupling between the lease and transfer market.

Thanks for phrasing it as "if networks choose to lease", as that is a clear understanding of the way things work currently.

Lessors and lessees are choosing to engage in leasing because they both see an advantage.

So let me admit my assertion that lease rates would drop with this policy is just an assumption and not an assertion.

I would agree with your assertion that the linkage between the transfer market and the leasing market is loose. I expect that there will be a corresponding increase in lease prices over time. If you have any historical data to contradict that expectation, I'd certainly be open to hearing it. If networks choose to lease when there are alternatives available, I am unconcerned if they must pay more, even significantly more in the far flung future when the leasing pool has dwindled, because that is the price they are choosing to pay for the flexibility associated with a lease.

Thanks, I think we understand that you do not support the policy but I don't think that you overcame my assertion this time.
Because currently there is no "justification benefit" for accurate registration, but this policy would create one.

I don't understand what you are asserting here. There is currently a requirement to accurately report re-allocations. The only benefit I see is to networks that are currently non-compliant with that policy. If networks are failing to meet those obligations, I would argue a better policy proposal would be one to strengthen the penalties related to non-compliance with that policy, rather than rewarding non-complaint networks.

- Isaiah

On 9/21/2021 6:17 PM, Mike Burns wrote:

Hi Isaiah,

Thanks, replies inline.

---- On Tue, 21 Sep 2021 18:56:05 -0400 Isaiah Olson  <mailto:Isaiah at olson-network.com> <Isaiah at olson-network.com> wrote ----

Hi Mike, 

Thanks for your reply. I would be happy to address each of your assertions. 

> That RIPE situation is an unfortunate artifact of their reserve pool 
> for new entrants. 
> 
> Can you share the percent of those /24s that begin with 185? 
Roughly 17% of the RIPE IP space that I have on my list comes from that 
block. I would hardly agree that the statistically significant disparity 
in transfer market abuse activity across all RIPE IP ranges is solely an 
artifact of this single block. 

> First you wrote “The onus is not on ARIN to sanctify practices that 
> some are already engaging in, but rather to distribute number 
> resources in accordance with community developed policy.” 
> 
> My answer is that this policy proposal continues to distribute number 
> resources in accordance with community developed policy. 
It will be community policy if and when it is adopted through this PDP, 
which seems unlikely at this point since you are the only person arguing 
in favor and I don't find your arguments particularly convincing since 
they are not backed up by any hard data. Whether the policy comports 
with the goals of the PDP itself is a different question.

Mike-Nonetheless your objection was that this proposal somehow would not distribute resources in accordance with policy, I think your objection was addressed completely.

> I would agree with you, but that doesn’t mean we should ignore 
> relevant data from our sister registry, and I brought up RIPE to deal 
> with Noah’s objection about what will happen should this policy pass 
What relevant data have you provided from RIPE which justifies your 
initial assertion? Certainly you may have rejected Noah's concern that 
the RIR would collapse, given the fact that RIPE still exists, but I 
haven't seen any compelling data cited here that shows any benefit to 
the RIPE community due to their policy and I have provided data which 
shows quite the opposite. A lack of immediate negative effects is hardly 
sufficient data to declare that RIPE policy hasn't caused negative long 
term effects, of which we may not have yet seen the full impact.

Mike-You are drifting. I never made the argument you are saying I made regarding any benefit of leasing to RIPE.

I said in response to Noah, and you now agree, that allowing leasing will not in fact lead to the demise of an RIR.

I take it you agree that Noah's objection in this regard has been addressed.

> Then you won’t have to worry about leasing, because you claim there is 
> no market for it. The waiting list is not a guaranty, and has an 
> unpredictable schedule for address delivery. I gave an example of a 
> WISP seeking to try out a new area, and why leasing addresses might be 
> quite attractive to that WISP for entirely legitimate reasons. 
I would not consider the current waiting list distributions 
unpredictable, in fact I would argue it's quite the opposite in 
practice. Speaking from personal experience on the waiting list before 
ARIN moved to quarterly distributions, I waited only four months to 
receive a block. Under the last several quarterly distributions, nearly 
every request on the list has been fulfilled in each distribution, 
resulting in a consistent distribution schedule of 3-6 months for the 
last several distributions. The oldest request currently on the list is 
from 07/01/2021. I would ask ARIN to please provide some hard data about 
this process for the community to consider when evaluating this policy, 
because I do not believe the current reality of the waiting list agrees 
with your assertions. If and when that changes, I would possibly be open 
to re-considering my position on the matter. 

With regards to leasing, I did not assert that there is no market for 
leasing, but rather that alternatives to leasing do exist and you are 
casting them in an a light that I do not believe reflects the reality of 
the situation. Under current policy, your WISP example is free to apply 
to the waiting list for the block it needs to try out the new area, and 
either return or re-purpose it if services in that new area don't work 
out. I don't find a compelling argument here for the necessity of 
leasing addresses. 

Mike- OK the waiting list is rock solid, but my wisp needs a /21, what now? My point remains, the waiting list is not appropriate for all those in need, and if there were alternatives then there would be no market for leases to begin with. I can spend all day giving examples of legitimate lessees. I think you should concede that there are legitimate business cases where leases make more sense for the recipient.

> Opposing this policy means the only lessors are the lucky incumbents. 
If the lucky incumbents choose to retain their IPv4 space and lease it, 
that is certainly their choice to make. However, under the current 
policy you propose to change, they may not consider leased addresses as 
justification for additional space. I feel the current policy strikes a 
perfectly appropriate balance. If a network has leased space available 
to reclaim when leases expire, it is inappropriate for them to seek 
additional allocations from the RIR. If they have over-leased their 
space such that they cannot operate their network until someone's lease 
expires, then they should not expect the ARIN community to subsidize 
their lack of foresight with additional addresses. Transfers in such a 
situation are a different matter and I would certainly consider this 
policy in a different light if leasing space were to be exempted as 
justification for waiting list request. 

Mike- I believe you have conceded that my assertion is correct.

> Opposing this policy means a lack of policy is preferred, despite the 
> open practice of leasing. 
As I originally stated in my first e-mail, I do not prefer the lack of 
policy or the insufficiency of the current policy. I would instead 
prefer to see the policy explicitly strengthened to disallow off-network 
leasing as justification for additional requests, despite the fact that 
ARIN has made it clear that they consider the current policy to prohibit 
using such addresses as justification.

Mike - That is the current policy, to disallow justification without a circuit, so  your objection to this proposal means you prefer no leasing policy.

> Opposing this policy provides incentive for registry-shopping and 
> address outflow. 
I agree that RIR-shopping is a concern and there is a real chance that 
strict policy against leasing in the ARIN region may encourage the 
practice. However, I don't believe this should be the concern of the 
ARIN community in deciding how to allocate resources in our corner of 
the world. If other RIR communities want to make other decisions, they 
are endowed with that freedom under the current system. I don't think 
"everyone is jumping off the bridge so we should too" makes for a good 
argument. What would convince me is hard data that shows how the RIPE 
community has benefited from the elimination of the needs-test in the 
transfer process, or data that demonstrates what tangible issue your 
policy proposal would solve in the ARIN region. "Current ARIN policy 
prevents the use of leased-out addresses as evidence of utilization" 
doesn't strike me as a complete problem statement.

Mike-I consider this also a concession that what I said is true about "providing an incentive" which is as far as I went.

> Opposing this policy reduces the lessor pool and drives up lease rates. 
This argument cuts both ways. I would argue that supporting the policy 
drives up transfer market prices by increasing speculation by entities 
that have no stake in the shared Internet resource aside from the rights 
to use IPv4 addresses. Basic math tells us that higher prices in the 
transfer markets will result in higher prices in the leasing market, as 
well as resulting in fewer blocks available to networks who wish to 
obtain space directly from the RIR via transfers. I do not see this as a 
benefit to the community. As I have stated before, I am unmotivated by 
the impacts on lessees/lessors of keeping the current policy or 
strengthening the requirement to provision actual services on an 
operational network. If networks choose to lease, they may pay more, 
which is a similar situation for any capital-intensive resource that is 
subject to leasing. Developing policy to keep lease rates low is not the 
concern of the ARIN community or this PDP, but rather developing policy 
that supports efficient and technically competent administration of the 
region's resources. 

Mike- I agree with your first contention, that this policy could in fact lead to price increases on the transfer market.