Could IP address plan mean another IPv6 delay?

Internet policymakers are considering sweeping changes to the way they distribute IP addresses that could allow network operators to make money by transferring unused blocks of IPv4 address space to others in need. One result could be lessened incentive to move to IPv6 any time soon.

The American Registry for Internet Numbers (ARIN) is expected to post proposed changes to its IPv4 address space transfer policy on its Web site this week. ARIN is a nonprofit group in Chantilly, Va., that doles out IPv4 and IPv6 address space to ISPs operating in the United States, Canada and the Caribbean.

Under the proposal, ARIN would allow ISPs to transfer IPv4 address registrations, and ARIN would provide a list of IPv4 address blocks that are available for transfer.

Until now, IPv4 addresses have not been tradeable goods. When an organization was done using IPv4 address space, it was supposed to return it to one of five regional registries such as ARIN in North America. The only time ISPs can transfer IPv4 address space is when they are acquired.

Click to see: How IP addresses are assigned

ARIN's proposed changes are designed to help network operators cope when the Internet runs out of IPv4 address space, which is expected to occur in 2012. 

"Industry demand for IPv4 addresses will not stop, but the current supply channel, namely the unallocated IPv4 address pool will have run out," says Geoff Huston, an expert on IPv4 address depletion and chief scientist at the Asia Pacific Network Information Centre, the Australian counterpart to ARIN. "So, as with any other commodity out there, trading and pricing gets included into the distribution function."

IPv4 is the Internet's main communications protocol. IPv4 uses 32-bit addresses and can support around 4 billion IP addresses. IPv6 is a long-anticipated upgrade to IPv4. IPv6 uses a 128-bit addressing scheme and can support so many billions of IP addresses that the number is too big for most non-techies to understand. (IPv6 supports 2 to the 128th power of IP addresses.)

The IETF designed IPv6 in the mid-1990s to expand the available IP address space. However, few ISPs or enterprises have upgraded to IPv6. 

The issue of IPv4 address depletion has received a great deal of attention in the last few months. Experts say more than 80% of IPv4 addresses have been distributed.

Huston says it is too late for the Internet to avoid creating a way for ISPs to transfer their titles for IPv4 address space because the Internet will run out of the available pool of IPv4 addresses before everyone transitions to IPv6.

"We now need to talk openly in our policy development process about transfers, trading and mechanisms that will allow the Internet to continue to function as smoothly and as reliably as possible in the coming few years," Huston says.

APNIC and the European registry RIPE are considering similar changes to their IPv4 address transfer policies as ARIN's proposal. These changes are controversial and may not be approved.

Many unanswered questions surround IPv4 address trading:

• Will it create a financial market for IPv4 address space? (Read what the Internet Assigned Numbers Authority has to say about the potential for an IP address black market.)

• Will it delay the transition to IPv6 because more IPv4 addresses will come available?

• Will IPv4 address transfers swamp the Internet's core routers with too many routing table announcements from ISPs?

"We don't know whether some of the side effects of such a policy makes sense for the Internet," admits John Curran, chairman of the ARIN Board of Trustees. Curran is chief technology and operating officer at ServerVault, a Dulles, Va., managed security services provider.

If IPv4 address trading is permitted, the likely beneficiaries are the U.S. federal agencies, universities and companies that received massive blocks of IPv4 address space at the dawn of the Internet. Back then, no one realized that IPv4 addresses would become a precious commodity. So they didn't assign IPv4 addresses efficiently across their wiring closets, buildings and campuses.

Until now, these organizations have lacked a financial incentive to renumber their networks to free up IPv4 addresses. It is rare for an organization to return extra IPv4 addresses. Notably, Stanford returned more than 16 million IPv4 addresses in 2000.

With an IPv4 address shortage looming, policymakers are stepping up their efforts to recover unused IPv4 address space. This week, the Internet Corporation for Assigned Names and Numbers (ICANN) announced that it had recovered 16 million IPv4 addresses from Net-14, which was originally used to connect older packet data networks.

ARIN's proposed IPv4 transfer policy would provide an economic incentive for organizations to free up IPv4 addresses.

"Hypothetically, a large company with excess IPv4 address space could get compensated for the work of freeing up that space," Curran says.

ARIN's proposal wouldn't allow speculation on IP addresses as has occurred with domain names because it requires IPv4 address space that gets transferred to be used.

No one knows if sizeable profits could be made from transferring excess IPv4 address space.

"Now we're telling people that [returning unused IPv4 address space] is the right thing to do without compensation," Curran says. "When you set up a process where an organization can be compensated so it can free up address space that others might not have, it's very hard to say how that system will actually behave."

The U.S. Defense Department, for example, is sitting on a mother lode of IPv4 addresses. Could this become a sale-able asset for the Department of Defense, akin to a wireless spectrum auction? Experts say that scenario is unlikely.

"It's fairly difficult to imagine circumstances where the receipts for such a transfer policy would be so large as to incent someone who was using the address space to actually stop using it," Curran says.

Experts agree that allowing the transfer of IPv4 addresses would likely delay the transition to IPv6 by several more years.

"One of the forecasts that's most common says that if the un-advertised IPv4 address space were somehow put back into use that could push out the date of IPv4 address depletion by another five or six years," Curran says. "Yes, I think allowing IPv4 address transfers could move back the date for IPv6, but I don't know to what extent. It could be months, or it could be a handful of years."