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

[Owen DeLong]

> On Sep 23, 2021, at 15:49 , William Herrin <bill at herrin.us> wrote:
> 
> On Thu, Sep 23, 2021 at 2:41 PM David Farmer via ARIN-PPML
> <arin-ppml at arin.net> wrote:
>> I have a question for those that oppose the leasing or loaning of IPv4 addresses to other entities absent connectivity; Is it the rent-paying or that lack of connectivity provided with the addresses that offend you? Or, both?
> 
> Hi David,
> 
> The defined Economics term is "rent seeking." Just renting something
> to someone is not "rent seeking." The term has a specific meaning.
> Briefly, it means exploiting a rule-making process (such as law,
> regulation or other public policy) often by changing it to let you
> make money without adding value.
> 
> Address transfers are at least notionally not rent seeking - the
> recipient isn't paying for the addresses, he's paying the former
> registrant's one-time cost to reconfigure to stop using them while the
> addresses themselves convey to the new registrant for exactly the same
> cost as the original registrant. Yes I know that's ridiculous. Call it
> a "legal fiction."

That’s a nice story some of us may wish to tell ourselves, but in reality,
virtually every address provider I’ve talked to on a transfer transaction
perceives their IPv4 addresses (or in the most enlightened cases,
the registration they hold of said IPv4 addresses) as a thing of value
that they are willing, even want to monetize.

I haven’t seen a single one who has tried to compute their price for
transferring some or all of their address space based on their costs
of freeing up the space, so instead of calling it a “legal fiction”, I’ll
just call it as I see it… FICTION.

> Address leasing, on the other hand, is unapologetically rent seeking.
> I have them only because the regulatory agency allowed it. I add no
> value by letting you pay me to use them but you have no choice because
> the regulatory agency has no more to offer. I and my contemporaries
> took them all.

In reality, we can say that about the ones providing addresses for transfer
just as much.

Further, the claim that there is no value add ignores several market realities…

The purchase of addresses is capital intensive. Leasing allows address
utilization to be maximized while preserving flexibility and a lower up front
cost.

Indeed, leasing of addresses is really no different in terms of value add than
leasing of equipment. Most of the addresses that are being leased today
would be unlikely to be transferred. Either they’d be held for future use or
deployed in some fashion on the existing registrant’s infrastructure.

Bottom line, if there is no value add, why would anyone be leasing
addresses today?

> What's wrong with a little rent seeking? Rent seeking is
> anticompetitive behavior. Quoting from
> https://www.investopedia.com/terms/r/rentseeking.asp :
> 
> "Rent seeking can disrupt market efficiencies and create pricing
> disadvantages for market participants. It has been known to cause
> limited competition and high barriers to entry.

I think IPv4 has other factors that have already created these conditions.

Given that we already have proof that the market without connectionless
leasing already has (by and large) significantly higher prices than
connectionless leasing, I think it’s pretty hard to make a believable
case about “rent-seeking” here.

> Those that benefit from successful rent seeking obtain added economic
> rents without any added obligations. This can potentially create
> unfair advantages, specifically providing wealth to certain businesses
> that leads to greater market share at the detriment of competitors."

That may well be, but I don’t think you’ve made your case that connectionless
address services are inherently rent seeking. Connectionless lessors
face market risks and do provide a service that some find useful and
apparently see value. Otherwise, the current market for it wouldn’t exist
and we wouldn’t be having this discussion.

FWIW, I would support a policy that came closer to David’s idea. I remain neutral
on Mr. Burns’ proposal.

Owen