(No.76) What is the best response to IPv4 scarcity? Exploring a global transfer market for IPv4 addresses

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Workshop Theme: 
Managing Critical Internet Resources
Theme Question: 

Question 5 under Managing Critical Internet Resources

Concise Description of Workshop: 

The economics of IP addresses provides one of the most important linkages between Internet governance and development. Unique IP addresses are “critical Internet resources” because they are required inputs for participation in the Internet economy. Now that the global (IANA) free pool of Internet addresses (IPv4) is exhausted, the scarcity of IPv4 address blocks has become an important factor in the development of Internet industries, especially in fast-growing, developing regions. Although the new Internet Protocol (IPv6) provides a much larger, more abundant address space that would eliminate scarcity for some time, IPv6 is not compatible with IPv4. Thus, during the transition period, network operators and equipment manufacturers must support both protocols (the “dual stack” method) if they are to maintain compatibility with the global Internet. No one knows how long the transition will take. Estimates run from a minimum of 5 years to at least 20 years, while some actually think we may never complete the transition. This means that IPv4 scarcity will continue to be a factor in global Internet governance for some time to come. This workshop will bring together network operators, technical experts, academic researchers, members of regional address registries, address brokers, competition policy experts and Internet users to discuss policy responses to the depletion of IPv4 addresses. The session is intended to be a real workshop, where the parties involved explore proposals to harmonize address transfer policies across the 5 regional Internet registries. The workshop will explore the feasibility and desirability of a globalized transfer policy, taking into account issues such as promoting the most efficient use of the remaining IPv4 address space, aggregation limits, open entry into Internet markets, and preserving the global interoperability of the Internet. It will also explore the economic and technical implications of IPv4 scarcity policies for the migration to IPv6. The workshop will attempt to develop a commitment among participants to continue awareness-raising and education on the importance of policies to handle IPv4 allocation properly in their regions, and to carry mutually acceptable proposals into the regional internet registries’ policy development processes so that a global policy can be implemented.

Organiser(s) Name: 

Milton L. Mueller, Professor, Syracuse University School of Information Studies. affiliated with Civil Society and Academic and Technical stakeholder groups

Previous Workshop(s): 

2010 Vilnius workshop on RPKI http://www.internetgovernance.org/2010/09/15/best-igf-workshop-ever/ workshop on CIR and development agenda http://www.intgovforum.org/cms/component/chronocontact/?chronoformname=W... 2009 workshop on security http://www.intgovforum.org/cms/index.php/component/chronocontact/?chrono... this is not a complete list, I have organized several other workshops

Submitted Workshop Panelists: 

Please note: This is not a panel with speakers. It is a workshop. Any attendee will be in a position to participate and speak. The following list of names are people who have been invited and/or agreed to attend: Dr. Milton Mueller, Internet governance project Dr. Geoff Huston, research scientist, APNIC Ms. Theresa Swinehart, Verizon Mr. Peter Thimmesch, Addrex Mr. Benson Schliesser and/or Eliot Lear, Cisco Systems, Mr. Adiel Akplogan, AFRINIC; A representative of the Korean Internet Governance Alliance, Korean Communications Commission, government of Korea Mr. Hartmut Glaser, LACNIC Ms. Caroline Greer, European Telecommunication and Network Operators Association (ETNO); Mr. David Conrad, former director of IANA (remote participation), European Commission. 

Name of Remote Moderator(s): 
Brenden Kuerbis, Louis Sterchi
Assigned Panellists: 
Gender Report Card
Please estimate the overall number of women participants present at the session: 
There were very few women participants
To what extent did the session discuss gender equality and/or women's empowerment?: 
It was not seen as related to the session theme and was not raised
Please include any comments or recommendations you have on how to improve the inclusion of issues related to gender equality and: 

Your options provide no middle ground between "Half the participants were women" and "There were very few women participants." This gives an inaccurate picture: probably a third of the attendees were women.

Reported by: 
Milton Mueller
A brief substantive summary and the main issues that were raised: 

Note: The complete, official report is attached as a pdf document.
The emergence of a trading market for IP address blocks as a response to the exhaustion of available pools of IPv4 addresses in the registry system is an important development that affects the Internet service provider industry, users, and the transition to IPv6. By raising the economic stakes of IP addressing issues, an emerging market for IP addresses leads to greater policy contention and could pose further challenges to the policies and structures of existing Internet governance institutions involved in IP number allocation.
This workshop experimented with a new method of deliberation in the IGF. Instead of a few selected panelists giving talks to an audience and then answering questions, it featured an open discussion guided by a framework. The framework, which is included in this report, set out 5 policy issues related to market trading of IPv4 number blocks. The five issues were:

  1. The role of RIR needs assessments in transfers
  2. The status of (uncontracted) legacy block holders
  3. The accuracy of post-transaction records
  4. Aggregation
  5. Market power

For each issue, several policy alternatives were defined, and were intended to be used as the basis for discussion. The policy options could be – and were – modified during the session. At the end of the discussion a straw poll was held to see how many participants agreed with one of the articulated alternatives, and whether anyone had changed their mind. 
The discussion was moderated by two experts on Internet addressing policy issues: Dr. Milton Mueller, Syracuse University School of Information Studies, and Geoff Huston, Chief Scientist at the Asia Pacific Network Information Center (a regional internet registry). Both moderators gave a brief introduction to the issue. Approximately 30 people attended the workshop in Baku, and another 12 or so participated via remote participation.
The workshop discussion succeeded in clarifying some of the policy options proposed in the workshop, but this discussion did not result in consensus. Instead, the discussion, and the straw polls demonstrated how divided participants were over some of the policy options. Two participants objected to even having any kind of straw poll. The discussion and debate did, however, lead to modification of the original framework’s definition of the policy options. In issue A (needs assessment), several new policy options were added, including the idea that if needs assessments were meant to prevent monopolistic forms of hoarding or unproductive speculation, that it might be possible for other entities, such as national regulators, to undertake that function rather than using registry as a mechanism to enforce market behaviours. “None of the above” was added for those who felt that there might be policy options not represented, and “abstain” for those who did not want to express an opinion. In Issue C (accuracy of post-transaction records)

Conclusions and further comments: 

Most of the issues were too complex to be fully aired in the short time of a workshop, but there was a robust discussion of the needs assessment issue in particular.  The results of the straw poll for needs assessment are displayed in Table 2. It shows that 9 participants would like to end needs assessments altogether for IPv4 transfers; 6 supported retaining them in their current form; 6 would like to search for another party to enforce the policy objectives and remove that function from IP address registries. Four (4) participants abstained or went for none of the above. Thus, a clear majority of the straw poll (9 for A1, 6 for A3, and 2 for None of the above for a total of 17, or 68%) supports some kind of change in our approach to needs assessments, but there is no consensus on what that change should be.  Given that this is was a short session that included a very small set of IGF participants it is not possible to draw any further conclusions from this exercise.
Issues B and C were collapsed into the same discussion, as it was agreed that the policy options for both issues were essentially the same. The issue is whether holders of legacy address blocks that are not under contract to an RIR need the approval of an RIR to sell their number block to another organization. There were some assertions that this was exclusively a North American problem, but it was noted that legacy blocks currently held by North American companies could be and almost certainly would be transferred to other regions.
Consideration of Issue C led to intensive discussion of the role of the address registry. The discussion could be said to have produced a strong consensus on the importance of a common, comprehensive registry that maintains the uniqueness of all IP number allocations and assignments. The differences arose over whether the registries should be allowed to use that essential function as leverage for imposing other policies on legacy holders, or enforcing certain market behaviors in the context of a aftermarket for addresses. Several participants noted that the IP numbers had no utility without a uniqueness-maintaining registry, and that all entities described in the registry had a common interest in the maintainence of the registry function. This led to the modification of policy option C1 to include a proviso that those parties who held addresses that were described in the registry should be required to pay their “fair share of related registry costs.”
The straw poll for Issue C revealed even sharper division than on Issue A. Unfortunately, the number of votes was diminished by the fact that the operators of the remote participation process failed to submit the poll to the remote participants. At any rate, only 3 of the 11 participants in the poll supported alternative C3, that “RIRs should not update records unless receiving party signs a contract and conforms to RIR policies.” Five (5) supported C2; that “RIRs should update legacy transactions based on legal proof of transfer, but legacy holders should pay a fair share of related registry costs.” No one (0) supported the view that legacy transfers should be updated regardless of whether the parties pay a fair share of registry costs. There were 3 abstentions.
While recognizing that these are complex issues that bring a wide panoply of perspectives and motivations to bear, the workshop was able to illustrate to a broader group  some perspectives on the underlying issues and options in this matter, and that it probably sharpened the participants’ sense of what the policy options are and why one would or would not support a specific option.

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