IPv4 endgame; following the money

As part of its campaign to be able to buy and sell IPv4 addresses in the profitable end game of numbering availability, Depository Inc., a US company led by David H. Holtzman (formerly of NSI) has written to ICANN complaining about the US regional Internet registry, ARIN. Depository wants bulk access to ARIN’s IP Whois in order to ensure accuracy of its own records, and says it doesn’t intend to use the database for direct marketing. ARIN rather unconvincingly argues that Depository’s stated use would contravene the community-developed acceptable use policy. Without bulk Whois, it’s hard to see how Depository can reliably sell routable address space to its own putative registrants. But how could a private firm with no obligation to the multi-stakeholder process or global Internet community get its hands on addresses and legitimately sell them on?

Many of the initial Internet address allocations were enormous; giving rise to the oft-stated complaint a few years ago that MIT had far more IP addresses than China. Initially, Internet address blocks were doled out to techies ‘in the know’ and in countries that got their Internet acts together quickly. In the early 2000’s, the UN’s International Telecommunication Union (ITU) – which had initially ignored the Internet or railed against it – started clamouring to be the numbering authority. ITU’s argument that a closed shop of rich country engineers could not be allowed to divvy up the global public pool of address space resounded strongly with its largely developing country membership. But those interested in developing the Internet itself, and not simply using IP addresses as a communications ministry cash cow, agreed that the while the ITU proposal might arguably be fair, it was far from efficient. Something had to be done.

With political pressure and enormous effort from the technical community, a global network of five regional Internet registries (RIRs) was created. (Some, such as ARIN, pre-dated this effort. AfriNIC was created in 2005 with much jubilation and optimism for the Internet in Africa.) Until last month, the Internet Assigned Numbers Authority (IANA), which is effectively part of ICANN, gave address blocks to the RIRs who then distribute them in their own regions to, for example, telcos and Internet service providers. The RIRs are run fairly transparently and answerable to local technical communities that set the allocation policies and oversee the management. The RIRs are a set of regional and, I believe, natural monopolies of a non-divisible public good. That public good is a publicly available, equitable and authoritative global addressing system.

Now that IANA has given out its last blocks of numbers, the end game of IP number allocation has finally begun. The Asia Pacific registry, APNIC is expected to run out first, in a couple of months’ time. As the final blocks of IP numbers filter their way down through the allocation system, demand for them increases. IPv6 deployment may not be happening quickly enough to forestall a scramble for the remaining pool of IPv4 addresses. Meanwhile, scads of IP numbers allocated in the early days of the Internet are lying dormant. The organisations who got them sometimes no longer exist or have no interest in returning them to the public pool.

ARIN, the north American regional Internet registry, was created by the technical community long after the original addressing allocations were made, and doesn’t have a legal relationship with many of what are called the ‘legacy holders’ of address blocks. To keep information about large parts of the unused address space from going dark, ARIN continues to point its tables to these blocks. Not everyone likes the ‘implied authority‘ over the addresses this creates, but it seems like a pretty straight forward public service to me.

Depository Inc. sees these legacy holders as its way in. If it can create a market for this scarce and diminishing resource, Depository will attract many of the address blocks back into circulation.To do this, it needs to be able to run its own authoritative registry of numbers, mirroring that of ARIN. ARIN doesn’t want to give that access and is prepared to fight hard.

Depository’s letter to ICANN contains a fair amount of self-serving rhetoric about the inherent value of competitive markets. Coming from a former senior employee of the murky Network Solutions Inc, it complains that the people who broke up NSI’s unseemly monopoly on the entire domain name system have no place standing against another private US firm’s desire to profit from the scarcity of a global technical resource. The people involved in Depository include domainers, the unloved speculators who, depending on your view, hog useful names and clog up search results and create no discernible value, or generate prices and therefore efficient and competitive markets in valuable virtual goods. The Depository arguments are couched in purely US terms, with no consideration of the implications elsewhere. The implicit threat of invoking a US antitrust investigation is made by copying the letter to James J. Tierney, Chief Networks and Technology Enforcement Section Anti-Trust Division of the United States Department of Justice.

As IP numbers run out, their possible value in a free market would sky-rocket and make lots of money for Depository. But how would IP profiteering play out in the rest of the world? How fair is it for developing countries, who missed out on the enormous initial allocations to mostly US institutions, to once again be priced out of available numbers? RIRs have publicly available and community-developed policies for how to deal with re-allocated blocks. The whole model of community-based stewardship of a diminishing global public good is under threat by the desire of a small number of people determined to profit from scarcity.

ICANN appears to have largely left this matter to ARIN to sort out. This is tactically sound, since ARIN just needs a couple of years of delay tactics to see off this challenge, before scarcity-induced IPv6 deployment is decisive. But ICANN / IANA and the global technical community would do well to re-assert the principle that the open allocation model for IP numbers – while imperfect – has been cultivated for sound technical and political reasons. We expect domainers and profiteers to freely exploit legal loop holes to make themselves money. But these predators are still just a small part of a big and complex ecosystem, and their narrow interests do not override the public interest.

Hat tip to the Goldstein Report for publishing the correspondence link.