Invisible Hands, was Re: Multihoming sites and ARIN

[Jim Fleming]

On Saturday, February 22, 1997 4:22 PM, Scott Huddle[SMTP:huddle at MCI.NET] wrote:
@ David,
@ 
@ Thanks for your comments, they were very thoughtful.
@ 
@ At 02:22 PM 2/21/97 -0800, davidk at ISI.EDU wrote:
@ >Note that IPv4 space in itself is limited and that alone can distort
@ >market forces. In many situations where supplies are limited, prices get
@ >set artificially high and there is no guarantee that this could not
@ >happen with IPv4 address space.
@ 
@ IPv4 space is bounded (though very large), note that technologies
@ such as NAT, V6, and clever use of private space expand the supply,
@ though.  Almost everything is limited ("buy land, God ain't makin'
@ any more dirt"). In general, markets are the most efficient mechanism
@ for the allocation of scarce resources. Prices aren't "set" in a market, 
@ they are determined by supply and demand.  
@ 

ISPs have been allocated a very small portion of the IPv4 address
space. Those ISPs who have developed a gravy train of address
allocations defend the system. Of course they do, they pay nothing
and get all the benefits.

The IPv4 address space is actually quite large. This nonsense
about it being exhausted is bogus and promoted largely by people
who are sitting on huge allocations.


@ >Ooh, and what does Jon do with the money? Or do you want to give away the
@ >address space for free and then some lucky people can make huge profits
@ >or you divide it very democratically among the current Internet users
@ >which will be even a better recipe for disaster.
@ 
@ Use the inital money to fund root name servers, or the IETF, or the
@ fine work at ISI :)  What happens with the money from the auction of
@ radio frequencies?  
@ 

I have suggested that the NSF take the $12.6 million they have
already collected from the domain name taxes and help launch
49 InterNIC clones across the U.S.

ARIN could be one such clone and could manage ONE /8 space.

@ >> Note that the current allocation schemes can destroy the routing
@ >> system and there are no methods to fix it.
@ >> 
@ >Note that a free market system can do the same. And there are no methods
@ >to fix it ...
@ 
@ I disagree.  Market demand is shaped by aggregate utility functions
@ for the members in the market, obviously the utility of broken 
@ routing is zero, and the price for a routing slot in a broken system
@ is zero.  From the supply side, why would an ISP sell a route slot 
@ that breaks their systems? The price for that would be infinite.
@ 

Yes...

@ >The current registry system is not perfect but there is no evidence that
@ >current allocation policies are destroying the routing system. In fact,
@ >the policies are defined by consultation with the users of the address
@ >space to avoid just that.
@ 
@ Yes, I agreee, but there are examples of market failure (e.g. little
@ sites wanting to multihome) that aren't met by the current procedural
@ scheme.  Also, note that not all of the users of address space are
@ consulted -- only certain users get space from the registries.  Indeed
@ most of the "heat" on the list has been generated by those that
@ feel have a stake but don't have a voice.  In a market model, they
@ all vote.
@ 

You have a voice....GO TO YOUR ELECTED OFFICIALS...!!!!


@ >> Clearly, a market based scheme insists on making things work
@ >> (else why buy the slot or pay for the space) 
@ >
@ >And what happens if a free market registry sells one address block too
@ >much?
@ 
@ I'm not sure I follow.  The routing slot market is controlled 
@ by individual ISPs, IP space by a global market.  Can you clarify your 
@ point?  
@ 
@ >> I assert that a free market would determine the demand and supply
@ >> curves and an equilibrium point for a default free routing table.
@ >
@ >And what if demand is bigger then supply ?
@ 
@ Prices go up.  What happens in a procedural based allocation?  Do
@ you tighten the allocation and make it harder to get space?  This
@ is effictively raising the price as well.
@ 
@ >And what if the equilibrium point for the number of route entries is much
@ >higher ?
@ 
@ You have an effective damper on route explosion, you have a market to
@ encourage renumbering, and you have a market to encourage deployment 
@ of additional technology such as NAT.  Sounds like A Good Thing to me.
@ 

Yes, when routing slots are "marketed", the price of advertising
a /24 could become very high. At some point, the cost of renumbering
is not so bad.

At the moment, the people who are forced to renumber are the
people who would normally be helping to clean up the market.
They are put behind the eight-ball in the beginning and never
become part of the solution.

Instead, they get locked into "upstream providers" who then raise
their rates and help reduce their profits and their ability to compete.
The upstream providers do not have this problem because they
have already figured out how to line up for the gravy train of IP addresses.

@ How does the current procedural allocation have *any* direct control on 
@ route entries?  The current processes are indirect at best.
@ 
@ >The free market will certainly solve these problems but it could turn out
@ >to be more expensive then our current system.
@ 
@ Why?  A free market typically drives costs *down*.  I'm interested
@ in your examples here.  OPEC controls the supply of oil, how do
@ Evil Greedy Bastards control the supply of new IP space?  
@ 
@ As a counter example, witness the Bass brothers debacle in trying to 
@ control the silver market.
@ 
@ >Don't get me wrong, I am not a supporter of bureacratic solutions over a
@ >free market economy and would prefer any free market solution. However,
@ >there is no proof whatsoever, that a free market will indeed work better
@ >then the current system, and even worse then that, if this turn out to be
@ >the case, we cannot go back anymore. Therefore, it might be the time for
@ >an experiment with a limited amount of address space to test (part of)
@ >the free market theories because a free market solution indeed has a lot
@ >of potential and could indeed turn out to work better, as you claim it
@ >will, then the current approach. But then, this is not the topic of the
@ >ARIN list but <piara at apnic.net>, so please reply on that list only,
@ 
@ Thanks for these comments.  
@ 
@ best regards,
@ -scott
@ 
@ 

Again, ARIN could be an experiment with ONE /8 and
that /8 could come from space already allocated to
a company. I know of one company that might be
a likely candidate to donate the space. In fact, they
are helping to back ARIN and therefore NSI.

--
Jim Fleming
Unir Corporation

e-mail:
JimFleming at unety.net
JimFleming at unety.s0.g0 (EDNS/IPv8)