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So in what way exactly does the Internet as a whole benefit from allowing IPv4 addresses to be traded in a free market? This is a honest question. I would like

by tjgq 11y ago

So in what way exactly does the Internet as a whole benefit from allowing IPv4 addresses to be traded in a free market? This is a honest question. I would like to know how we avoid ending up in a world where a few large companies control all the available IPv4 addresses (which they don't really need) so they can rent them to the rest of us at exhorbitant prices. IPv6 won't render the problem moot - it's likely that IPv4 addresses will remain a necessity for globally reachable services for years to come, regardless of IPv6 adoption.

EthanHeilman 11y ago
I wrote a blog entry about some of these issues. http://ethanheilman.tumblr.com/post/104839763080/are-ip-address-allocations-property http://ethanheilman.tumblr.com/post/104839763080/are-ip-addr... IANA specifically states that a free-market of IP addresses would be harmful, instead they argue that IP allocation should be based on need and not treated as property. >ISPs are required to utilize address space in an efficient manner. To this end, ISPs should have documented justification available for each assignment. The regional registry may, at any time, ask for this information. If the information is not available, future allocations may be impacted. In extreme cases, existing loans may be impacted. RFC 2050 Big companies have fought them on this and won. >The court held that Nortel had an exclusive right to use the legacy numbers. The court also explicitly sanctioned Nortel’s exclusive right to transfer its exclusive right to use the numbers. In recognizing Nortel’s exclusive right to use legacy IPv4 numbers, the court implicitly found that Nortel had the exclusive right to possess the numbers themselves. Consequently, Nortel could exclude others from possession and use of the same legacy IPv4 numbers. In other words, the court found Nortel possessed the customary “bundle of rights” commonly associated with the ownership of tangible or intangible property. - Property Rights in IPv4 Numbers: Recognizing a New Form of Intellectual Property
wmf 11y ago
So in what way exactly does the Internet as a whole benefit from allowing IPv4 addresses to be traded in a free market? Compared to a world where you can't get IPs at any price? Seems pretty obvious: you can get IPs. I would like to know how we avoid ending up in a world where a few large companies control all the available IPv4 addresses (which they don't really need) so they can rent them to the rest of us at exorbitant prices. It seems like the cloud is already going there with only a few large providers. All I can suggest is to buy your IPs now before Amazon does.
- tjgq 11y ago
  > Compared to a world where you can't get IPs at any price? Seems pretty obvious: you can get IPs. You seem to be presenting a false dichotomy; there are plenty of intermediate solutions between the current state of affairs and a laissez-faire market. At the very least, if we're going to set a price on IPv4 addresses, I think it should be set by the RIRs - not by the companies to whom they were allocated. (Remember that RIRs have the right to reclaim addresses that are not being used.) In other words: my concern is not that IPv4 addresses end up having a price tag on them; that seems inevitable at this point. My concern is that big players might be able to dictate the prices and effectively buy the small ones out of the Internet.
gardarh 11y ago
I always viewed the cause for slow IPv6 adoption as a lack of incentive - while IPv4 addresses are effectively free then where is the ROI in building an IPv6 infrastructure? I guess that when IPv4 addresses are traded in a free market it is easier to realise the cost of not adopting IPv6, eventually leading to a faster adoption (which is a good thing for everyone, NAT is essentially making the internet a lot less cooler place than it could be). Also, what would the alternative be? Just not handing out IPv4 blocks to new players and telling them "tough luck"? Or a lottery? I really don't know a better alternative to a free market.
- tjgq 11y ago
  Totally agree with you in that IPv6 and the end of NATs are great for the Internet. My honest (though possibly unpopular) opinion is that the incentive should have been given years ago through government intervention, by legally compelling ISPs to provide IPv6 connectivity to their customers. If most of the Internet had been switched to IPv6 by now, no bidding war over IPv4 addresses would need to take place. Naturally, it's moot to point out what could have been done and wasn't. But I think this illustrates a limitation of market-based incentives: they seem to work well on the short term, but have a tendency to fail on the long one. Slow IPv6 adoption is, in my view, a market failure that should have been corrected through government intervention.
  - wampus 11y ago
    I have IPv6 through my ISP, Comcast. It's completely broken and unusable due to a bug in the router they upgraded me to last year and force me to use because I have a business account. It took me half a day to figure out the cause of the problem. I'll probably wait another six months to look at it again. This is just one of many sad details plaguing the rollout of IPv6. Maybe the solution will come by skipping it entirely and using something backwards-compatible with IPv4, only with a larger address space (baby steps).
    - simoncion 11y ago
      That's strange. My buddy across the street also has a Comcast Business account. While he does have to use a particular modem, it's handing out a DHCP lease to his personal Airport Extreme. He also has fully functioning IPv6 service. Do you like, have several IPv4 addresses assigned to you or something?
bradleyjg 11y ago
The Coase theorem basically says that you can have any initial allocation of resources and so long as they are tradable, transaction costs are low, and a few other conditions are met, you will end up with an economically efficient outcome (i.e. those who will put the resources to the most remunerative use will end up with them). Which isn't to say that any initial allocation will satisfy us as fair or that the outcome will satisfy us as fair, but a top down system may well end up being neither fair nor efficient.
- cbd1984 11y ago
  How do we know the Coase theorem applies in this case?
  - thaumasiotes 11y ago
    It basically never applies; transaction costs are always sky-high. But it can still function as a sort of guide to thought, like Raymond Chen's "what if two programs had that feature". It's more useful if you think of it as saying "reality can't diverge from this goal state by more that a function of the local transaction costs, legal system, etc".
Arnt 11y ago
The internet as a whole doesn't need to benefit; the buyer and seller do. The internet as a whole benefits from the liberty that lets us act without permission from central authorities. Also, we're currently in a world where no large company owns even 1% of the addresses, and heading towards one where IPv6 is the majority of traffic. Have a look at http://www.google.com/intl/en/ipv6/statistics.html http://www.google.com/intl/en/ipv6/statistics.html and pretend to be an IPv4 address investor. The year-end figures are about 0.4, 1.0, 2.5 and 5.7%, so a little over 100% yearly growth for each of the past three years. If that goes on, we'll pass 50% IPv6 in 2017, and if that happens I rather doubt that IPv4 addresses will be worth much. Of course that projection doesn't have to be right. Perhaps IPv6 growth slows down. But if you were an investor, would you invest heavily in v4 addresses on the assumption that IPv6 growth slows down? If so, why do you assume it'll slow down? Oh, and I do think IPv6 will render IPv4 moot. Assuming that trading goes on, IPv4 will increasingly use tunnels and long-prefix routes, and then it'll have the kind of reliability problems v6 had around 2005.

by tjgq 11y ago

EthanHeilman 11y ago

I wrote a blog entry about some of these issues. http://ethanheilman.tumblr.com/post/104839763080/are-ip-address-allocations-property http://ethanheilman.tumblr.com/post/104839763080/are-ip-addr... IANA specifically states that a free-market of IP addresses would be harmful, instead they argue that IP allocation should be based on need and not treated as property. >ISPs are required to utilize address space in an efficient manner. To this end, ISPs should have documented justification available for each assignment. The regional registry may, at any time, ask for this information. If the information is not available, future allocations may be impacted. In extreme cases, existing loans may be impacted. RFC 2050 Big companies have fought them on this and won. >The court held that Nortel had an exclusive right to use the legacy numbers. The court also explicitly sanctioned Nortel’s exclusive right to transfer its exclusive right to use the numbers. In recognizing Nortel’s exclusive right to use legacy IPv4 numbers, the court implicitly found that Nortel had the exclusive right to possess the numbers themselves. Consequently, Nortel could exclude others from possession and use of the same legacy IPv4 numbers. In other words, the court found Nortel possessed the customary “bundle of rights” commonly associated with the ownership of tangible or intangible property. - Property Rights in IPv4 Numbers: Recognizing a New Form of Intellectual Property

wmf 11y ago

So in what way exactly does the Internet as a whole benefit from allowing IPv4 addresses to be traded in a free market? Compared to a world where you can't get IPs at any price? Seems pretty obvious: you can get IPs. I would like to know how we avoid ending up in a world where a few large companies control all the available IPv4 addresses (which they don't really need) so they can rent them to the rest of us at exorbitant prices. It seems like the cloud is already going there with only a few large providers. All I can suggest is to buy your IPs now before Amazon does.

tjgq 11y ago
> Compared to a world where you can't get IPs at any price? Seems pretty obvious: you can get IPs. You seem to be presenting a false dichotomy; there are plenty of intermediate solutions between the current state of affairs and a laissez-faire market. At the very least, if we're going to set a price on IPv4 addresses, I think it should be set by the RIRs - not by the companies to whom they were allocated. (Remember that RIRs have the right to reclaim addresses that are not being used.) In other words: my concern is not that IPv4 addresses end up having a price tag on them; that seems inevitable at this point. My concern is that big players might be able to dictate the prices and effectively buy the small ones out of the Internet.

gardarh 11y ago

I always viewed the cause for slow IPv6 adoption as a lack of incentive - while IPv4 addresses are effectively free then where is the ROI in building an IPv6 infrastructure? I guess that when IPv4 addresses are traded in a free market it is easier to realise the cost of not adopting IPv6, eventually leading to a faster adoption (which is a good thing for everyone, NAT is essentially making the internet a lot less cooler place than it could be). Also, what would the alternative be? Just not handing out IPv4 blocks to new players and telling them "tough luck"? Or a lottery? I really don't know a better alternative to a free market.

tjgq 11y ago
Totally agree with you in that IPv6 and the end of NATs are great for the Internet. My honest (though possibly unpopular) opinion is that the incentive should have been given years ago through government intervention, by legally compelling ISPs to provide IPv6 connectivity to their customers. If most of the Internet had been switched to IPv6 by now, no bidding war over IPv4 addresses would need to take place. Naturally, it's moot to point out what could have been done and wasn't. But I think this illustrates a limitation of market-based incentives: they seem to work well on the short term, but have a tendency to fail on the long one. Slow IPv6 adoption is, in my view, a market failure that should have been corrected through government intervention.
- wampus 11y ago
  I have IPv6 through my ISP, Comcast. It's completely broken and unusable due to a bug in the router they upgraded me to last year and force me to use because I have a business account. It took me half a day to figure out the cause of the problem. I'll probably wait another six months to look at it again. This is just one of many sad details plaguing the rollout of IPv6. Maybe the solution will come by skipping it entirely and using something backwards-compatible with IPv4, only with a larger address space (baby steps).
  - simoncion 11y ago
    That's strange. My buddy across the street also has a Comcast Business account. While he does have to use a particular modem, it's handing out a DHCP lease to his personal Airport Extreme. He also has fully functioning IPv6 service. Do you like, have several IPv4 addresses assigned to you or something?

bradleyjg 11y ago

The Coase theorem basically says that you can have any initial allocation of resources and so long as they are tradable, transaction costs are low, and a few other conditions are met, you will end up with an economically efficient outcome (i.e. those who will put the resources to the most remunerative use will end up with them). Which isn't to say that any initial allocation will satisfy us as fair or that the outcome will satisfy us as fair, but a top down system may well end up being neither fair nor efficient.

cbd1984 11y ago
How do we know the Coase theorem applies in this case?
- thaumasiotes 11y ago
  It basically never applies; transaction costs are always sky-high. But it can still function as a sort of guide to thought, like Raymond Chen's "what if two programs had that feature". It's more useful if you think of it as saying "reality can't diverge from this goal state by more that a function of the local transaction costs, legal system, etc".

Arnt 11y ago

The internet as a whole doesn't need to benefit; the buyer and seller do. The internet as a whole benefits from the liberty that lets us act without permission from central authorities. Also, we're currently in a world where no large company owns even 1% of the addresses, and heading towards one where IPv6 is the majority of traffic. Have a look at http://www.google.com/intl/en/ipv6/statistics.html http://www.google.com/intl/en/ipv6/statistics.html and pretend to be an IPv4 address investor. The year-end figures are about 0.4, 1.0, 2.5 and 5.7%, so a little over 100% yearly growth for each of the past three years. If that goes on, we'll pass 50% IPv6 in 2017, and if that happens I rather doubt that IPv4 addresses will be worth much. Of course that projection doesn't have to be right. Perhaps IPv6 growth slows down. But if you were an investor, would you invest heavily in v4 addresses on the assumption that IPv6 growth slows down? If so, why do you assume it'll slow down? Oh, and I do think IPv6 will render IPv4 moot. Assuming that trading goes on, IPv4 will increasingly use tunnels and long-prefix routes, and then it'll have the kind of reliability problems v6 had around 2005.