US CODE: Title 15, Chapter 1, Section 2.

[Michael Dillon]

On Fri, 31 Jan 1997, Tim Bass wrote:

> In my opinion, the Justice department will not find
> any tangible differences if:
> 
> (1) you give IP address space away for free and then
>     charge money, in this case $2500.00 to register
>     a Class C prefix; or
> 
> (2) charge $2500.00 for the address space.

However, the proposal for the creation of ARIN specifies neither of the
two options you mentioned. ARIN is charging a sliding scale membership fee
based on the amount of IP address space allocated to an organization.
However, no-one has to join ARIN and therefore no-one has to pay this fee.
If you recieve your /24 (formerly called Class C) address block from your
upstream ISP it is not likely to cost more than a nominal fee, if any,
since ISP's will all have a /19 or larger. Since a /19 contains 32 of the
/24 address blocks and since an ISP with a /19 pays $5000 membership fee
to ARIN it is unlikely that they would charge more than $156 if anything. 
In fact, most ISP's are likely to charge no more than a simple
administrative fee that covers their direct costs to register your use of
the /24 and do any router configuration necessary. The membership fees
that they pay to ARIN are overhead costs just like phone bills and office
rental.

> the proposals, a user of IP address space will pay
> to use it and they must pay a single registry in the
> US (or part of some pyramid scheme of registries).

You have failed to establish that ISP's will be treating IP address blocks
as a service which is bought at wholesale and sold at retail. Even then,
it is a stretch to call this a pyramid scheme. The amount of money
involved is so trivial that most ISP's are likely to consider ARIN fees to
be an overhead expense.

> They prohibit a variety of practices that restrain trade, such as
> price-fixing conspiracies, corporate mergers likely to reduce the
> competitive vigor of particular markets, and predatory acts designed to
> achieve or maintain monopoly power. 

Allocation of IP addresses cannot be considered "trade" any more than
allocation of telephone numbers and area codes and therefore are beyond
the jurisdiction of the US government. 

> The Division is also committed to ensuring that its essential efforts to
> preserve competition for the benefit of businesses and consumers do not
> impose unnecessary costs on American businesses and consumers. 

Two different groups have worked up some rough budget figures for ARIN's
operation and independently arrived at numbers between $2 million and $3
million. ARIN's fees are intended to cover those costs and are intended to
be roughly related to the degree of benefit an organization receives from
ARIN. Such small amounts of money can hardly be considered to impose
unnecessary costs on business or consumers. The only area in which IP
addressing can impose a significant cost on business is the requirement to
renumber all of an organizations computers if they change ISP's. However,
there is abundant information available on the web and elsewhere warning
people about this and recommending measures that businesses can take to
minimize this renumbering cost. In any case, this renumbering cost is not
something imposed either directly or indirectly by ARIN but is a result of
the pratices of the Internet backbone providers. And those practices were
developped to cope with a hard technological limitation in the routers
which run the Internet backbone. It does not appear that ARIN's activities
fall under the "essential effort" of the US Department of Justice.

> In my opinion, provider based addressing schemes whereas address space
> must be purchased, rented, lease, or registered in a non-competitively
> manner might be consider anti-competitive by USDOJ.

Not if they understand that IP addresses are not any more interchangeable
than street addresses are. If you want to change your street address then 
it will cost you some money to move, but that's life.

> In addition, creating a routing paradigm, for whatever goal, which
> is causal to to creating an anti-competitive downstream dependency
> between ISPs might be of interest to USDOJ.  

It might be but it does not concern ARIN. The routing paradigm was created
by network service providers working within the IETF standards
organization. It can also be changed within that organization should a
better idea come along that can be proved to work with two interoperable
implementations. ARIN, RIPE and APNIC do not create the IP allocation
policies of the world, they merely administer them.

> This type of
> anti-competitive scheme is antipodic to the direction of
> US Telecom laws, from my limited knowledge of these laws.

My knowledge of those laws is limited too but I find more antipodic
behavior in the conspiracy of the RBOC's to oppose the implementation of
those laws. 

> Finally, in my opinion, it does not really matter what practices
> are accepted in foreign countries.  Firms operating in the
> US are subject, I believe, to US Laws, so it is really
> off topic to discuss what is happening abroad.  Businesses
> practices abroad do not supersede US Federal Law.

ARIN is not a US firm. In fact, ARIN is only a proposal for a non-profit
non-governmental organization to administer an international resource. If
the USA is not an appropriate country for such an international body to
operate in then it can easily be incorporated in another country in North
America. It would be convenient to operate ARIN in the USA because of its
central location, however if the potential members of ARIN feel that it
would be better to operate it out of Bermuda or the Cayman Islands, I'm
sure that the proposed Board of Trustees would consider that.

> I have faxed the Antitrust division of DoJ a copy of my paper
> on the subject of problem with exterior routing protocols
> and provider based addressing (as currently implemented).

I'm sure the DoJ regularly recieves reports about black helicopters and
illegal mind control broadcasts. And I'm sure they know exactly where to
file such reports. In case the DoJ people reading this would like some
background material in addition to the Reading List at http://www.arin.net
there is some information on Internet Standards at
http://info.isoc.org:80/standards/index.html especially the link to the
Internet Engineering Task Force. Also, two papers on Internet standards at
http://info.isoc.org:80/papers/standards/crocker-on-standards.html and
http://info.isoc.org:80/papers/standards/amr-on-standards.html

> I hope they will take interest, seek comment, create an
> open forum for discussion, and issue a formal advisory.

I wouldn't mind hearing a formal comment from the DoJ on the ARIN
issue ifthat is something they are able to do.

> Again, it is only my opinion, and it has been for quite
> a few years, the Internet is moving toward anti-competitive
> practices and this is primarily due to the provider based
> paradigm as implemented today.

How can anyone who lived through the deployment of the WWW in 1994 and the
Internet boom of 1995 say something like this? *sigh*


Michael Dillon                   -               Internet & ISP Consulting
Memra Software Inc.              -                  Fax: +1-250-546-3049
http://www.memra.com             -               E-mail: michael at memra.com