[arin-ppml] Revised and Retitled - Draft Policy ARIN-2021-6: Permit IPv4 Leased Addresses for Purposes of Determining Utilization for Future Allocations

Fri Mar 18 17:50:37 EDT 2022

> On Mar 11, 2022, at 11:37, Fernando Frediani <fhfrediani at gmail.com> wrote:
> 
> Scott, the point is that we should not be spending much time and should dismiss such proposal because although it may not look like it is willing to change a fundamental thing about IP address usage based on justification, something that doesn't require to much debate such obvious it is. Fundamentally we are not dealing with an irrevocable asset that someone purchased and may dispose or sell it at he/she wishes, but about a right to use which may be revoked if used against the rules.
> Therefore it should not need too much debate to find out that anyone using this scarce resources, that doesn't belong to anyone individually MUST always justify for that need.
> 
Fortunately for the community, you are not the arbiter of what we do or do not consider in terms of policy proposals and you don’t get to decide what we do or don’t spend time on. Fortunately, you aren’t granted the authority to dismiss a proposal based on your faulty tautological reasoning.

This is a legitimate proposal. It is being considered by the community, and it is unlikely that the AC will abandon it out of hand simply because you have decreed that it should be so.

Like it or not, there is value in current IPv4 registrations issued by RIRs today. This value fluctuates as a function of demand for IPv4 addresses and availability of addresses from various sources. Currently, those sources are limited to:
	RIR free pools (when such exist, mostly not these days)
	Transfers (essentially party A purchasing all or part of party B’s registration and effecting the
		transfer of that registration through complex interaction with the applicable RIR(s)).
	Leasing from a party that has addresses and/or engages in wholesale leasing of addresses from
		fourth parties.

The first is allowed universally and fits your model of the world. Unfortunately, it is not effective or timely for most businesses these days.

The second is allowed everywhere except AFRINIC and even in AFRINIC with some bizarre limitations.

The third is allowed in the RIPE region and common in the APNIC region even though technically prohibited by policy. In the ARIN region, it’s tacitly allowed, but a lessor cannot use their lease customers as justification for acquiring additional space by transfer or from the free pool. The proposal we are discussing would change this.
> There is already a neutral and well established entity tasked to evaluate those justifications, the RIR, and we all assume they do this in the most impartial way. And better they do this directlly with those who are really using the resources, not via a 3rd party who have financial interest in it.
> 
Well, yes and no… Mostly, RIRs don’t evaluate most of those justifications. That task is delegated to LIRs for the most part. LIRs are traditionally providers of connectivity and addresses. Traditionally, connectivity cost and addresses were included for free, much the way gas stations with car washes used to include a free car wash when you filled up your tank (though they usually charged slightly more per gallon than gas stations without car washes).

Now that the gas stations (LIRs) are starting to charge for the car wash (addresses) separately from the gas (connectivity), people want the option of driving down the street to get a cheaper car wash (lessors).
> For those that for a moment believe a lessor may be able to justify to the RIR that "their clients are really using it" (just look how absurd this is!), it is a lot simple and removes any points of doubt to just have any unjustified space to be returned to the RIR and they, according to the current agreed rules will re-distribute those addresses to those who are really building operational networks in a most neutral and fair way, not to those who are able to pay more for it.
> 
So you’re saying that LIRs can’t tell if their customers are really using the addresses they issue to them? A lessor is just an LIR that isn’t providing network services to the same client. It’s not an entirely new model for distribution of addresses, it’s just an unbundling of previously bundled services.

Your pretense that this is somehow novel or absurd rings hollow.
> If for some reason a resource holder realizes doesn't need any addresses anymore there are always the Transfer policies in place. As long the receiver can justify the need and building networks ARIN will proceed with the transfer.
> 
You’re ignoring the existence of an entire class of resource holder who are getting their addresses from LIRs. These resource holders actually hold the majority of the resources issued by RIRs. When they no longer need, the resources revert to the LIR in question, not to an RIR. This is how it currently works with LIRs that also sell network services. This is also how it would work with LIRs that do not (lessors).
> We do not need 3rd parties making it even more complex something that can remain simple in the hands of the RIR - and avoids pretending leasing is a normal and legitimate thing. At the end that only beneficiaries are the companies who intermediate these type of business and have financial interest in it, not the organizations who need IP addresses.
> 
We already have 3rd parties doing exactly this… Yes, they have the customers locked into an additional service, but that’s a contractual matter that really isn’t relevant to the RIR. I know it’s convenient for your argument if you pretend that LIRs don’t already exist, but that’s not reality. RIRs do not issue the majority of their space to end users. The majority of the space reaches end users via LIRs.

LIRs that also provide connectivity were a perfectly reasonable model _WHEN_ addresses were essentially free and didn’t show up as a separate billable line item. Now that they do, it makes sense to allow price competition in that line item. You can get your car wash from your gas station for $25+fillup or you can go down the street and get it for $20 without the fillup. 
> I don't care that leasing "makes it cheaper" in short time for those without IP addresses to get some, but only that those who really justify for those resources do that directly with the RIR which is the fairer thing to all involved - all the community - which is the most important. We if let these 3rd parties turn something unnecessary in something normal we all know where it is going to end basically because their interest is not a better and fair distribution of IP addresses to those who really need or who are building networks, but simple to those who are willing to pay more.
> 
You may not care, but the people who have to pay for the addresses and need them care a great deal. If they didn’t care, then you wouldn’t need to worry about what happens if this policy is implemented because lessors wouldn’t have a useful business model and would disappear. Your idea that all addresses are justified directly to the RIR is absurd in the extreme and ignores that LIRs already exist.

Owen

> Regards
> Fernando
> 
> Em 11/03/2022 15:43, Scott Leibrand escreveu:
>> It seems that lots of people oppose this policy based on their assumptions about what it will do to the economics of the IP address transfer market, but no one is making those assumptions explicit or describing what exactly they think would happen if it were passed.
>> 
>> Right now https://auctions.ipv4.global/prior-sales <https://auctions.ipv4.global/prior-sales> is showing recent prices of about $55 per IP (to buy them on the transfer market), up from about $30/IP a year ago.
>> 
>> Right now https://www.heficed.com/lease-ipv4/ <https://www.heficed.com/lease-ipv4/> is quoting $0.50/mo per IP ($546 for 1024 addresses). The data at https://www.ipxo.com/blog/leasing-vs-buying-ip-addresses/ <https://www.ipxo.com/blog/leasing-vs-buying-ip-addresses/> is a bit older, but indicates that in late 2020, prices were in a similar range of $0.34 - $0.67 per IP.
>> 
>> If someone buys addresses at $55 each and leases them out at $0.50/mo, it would take 110 months (9 years) to cover the cost. That would be a lousy business, so clearly, entities leasing space are expecting IPv4 purchase prices to continue rising more quickly than their cost of financing, and expect to be able to sell any addresses they buy at a profit.
>> 
>> Leasing is clearly already happening. Right now it has to be done using RIPE space or by an entity that has (at least nominal) network connectivity.
>> 
>> If you oppose or support this policy on grounds that it will affect the supply and demand of addresses, can you be more specific as to what effects you expect relaxing the justification requirements for those offering IP leasing who want to buy more space to lease out would have? How would this policy affect the demand and price of IPv4 addresses bought and sold on the transfer market? How would that affect the supply, demand, and price of IPv4 addresses available for lease? How would that affect network operators? Would more of them switch from purchasing addresses to leasing them? With leasing (currently) being cheaper than purchasing (because a purchase is also an investment in a currently-appreciating asset), would it help or hurt network operators for leasing to be considered a more legitimate option?
>> 
>> -Scott
>> 
>> On Fri, Mar 11, 2022 at 10:02 AM Fernando Frediani <fhfrediani at gmail.com <mailto:fhfrediani at gmail.com>> wrote:
>> On 11/03/2022 14:56, Tom Fantacone wrote:
>>> Bill,
>>> 
>>> We can quibble about semantics, but let's go with your verbiage:
>>> 
>>> If I run a network and qualify for an /18 right now, can I go to ARIN and lease one?   I must either pay someone to release their addresses to ARIN to lease to me or lease one from a (non-ARIN) 3rd party.
>> And that should always be the expected, release them to ARIN which should be the only actor taking care of it.
>> I really fail to understand how can one consider legit that a 3rd party could be doing this job otherwise.
>> If everybody sticks that what is expected, things work better, is much better to trust ARIN to do this plus in the end doing in such way doesn't least space for speculation, price rises and community have the assurance that the one who is intermediating it is someone really neutral and with no other interests to the business other than make sure the policies are being followed.
>> 
>> Fernando
>> 
>>> 
>>> And the amount I must pay (commonly referred to as the Purchase Price in most IPv4 transfer contracts, whether I'm technically "buying" it or not), is significantly more than either typical lease rates or ARIN's annual fees.  My point is that 3rd party lessors do provide a service that ARIN does not.
>>> 
>>> Regards,
>>> 
>>> Tom Fantacone
>>> 
>>> 
>>> 
>>> ---- On Fri, 11 Mar 2022 12:42:52 -0500 William Herrin <bill at herrin.us> <mailto:bill at herrin.us>wrote ----
>>> 
>>> On Fri, Mar 11, 2022 at 9:40 AM Tom Fantacone <tom at iptrading.com <mailto:tom at iptrading.com>> wrote: 
>>> > If I run a network and qualify for an /18 right now, can I got to ARIN and lease one? I must either buy one on the transfer market 
>>> 
>>> Tom, 
>>> 
>>> I think you misunderstand the transfer market. You don't buy addresses 
>>> on the transfer market. You lease addresses from ARIN and then pay 
>>> someone on the transfer market to release their addresses to ARIN for 
>>> lease to you. 
>>> 
>>> Regards, 
>>> Bill Herrin 
>>> 
>>> 
>>> -- 
>>> William Herrin 
>>> bill at herrin.us <mailto:bill at herrin.us> 
>>> https://bill.herrin.us/ <https://bill.herrin.us/> 
>>> 
>>> 
>>> 
>>> 
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