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Sales of unused IPv4 addresses gathering steam

ISPs hedge bets on IPv6; snap up unused IPv4 address space from bankrupt tech firms

By , Network World
May 24, 2012 07:26 AM ET

Network World - A growing number of U.S. carriers and enterprises are hedging their bets on IPv6 by purchasing blocks of unused IPv4 addresses through official channels or behind-the-scenes dealmaking.

Why the Internet needs IPv6

The U.S. government, Internet policymakers and leading content providers such as Google, Facebook and Yahoo are encouraging network operators to adopt IPv6. In particular, proponents of the new version of the Internet Protocol are promoting World IPv6 Launch Day, an event scheduled for June 6 that requires participants to permanently enable IPv6.

But even as many companies plan their migrations to IPv6 - so far, 1,550 Web sites, 45 ISPs and two home router vendors have committed to World IPv6 Launch Day - they are also purchasing hundreds, thousands, even millions of IPv4 addresses to ensure smooth Internet operations during what's expected to be a decade-long transition from IPv4 to IPv6.

BACKGROUND: Need IPv4 addresses? Get `em here

IPv4, the Internet's main communications protocol, has limited address space that is being rapidly depleted worldwide. The replacement protocol, IPv6, has a vastly expanded address space but is not backwards compatible with IPv4. Most network operators plan to run IPv4 and IPv6 side-by-side for years to come in what's called dual-stack mode, and for this set-up they need both IPv4 and IPv6 addresses.

Designed 40 years ago, IPv4 has 4.3 billion addresses that hosts can use to connect directly to the Internet. Initially, IPv4 addresses were given out in gigantic chunks as large as 16.7 million addresses each to the U.S. federal agencies, universities and corporations involved in the original network research that resulted in the Internet. Most of these organizations use only a tiny fraction of their so-called /8 IPv4 address space, and it's now possible for them to resell unused portions for a huge profit.

The IPv4 address secondary market has emerged since last spring, when Microsoft made a splash by purchasing 666,624 IPv4 addresses from Nortel during its bankruptcy proceedings. Microsoft spent $7.5 million on Nortel's IPv4 addresses, giving the market an evaluation of $11.24 per IPv4 address. Microsoft made this IPv4 address purchase even though its Bing search engine is one of the founding participants of World IPv6 Launch Day.

Since then, several large bankruptcy-related IPv4 address sales have been approved. In December, for example, Borders sold 65,536 IPv4 addresses - what's called a /16 -- to software provider Cerner for $12 each.

Some IPv4 address sales - or transfers as Internet policymakers prefer to call them - are being recorded through official channels such as the American Registry for Internet Numbers (ARIN), which allocates IPv4 and IPv6 address space to North American ISPs and other network operators.

MORE: Does ARIN have the right to approve all IPv4 address sales?

As of March 31, ARIN had recorded 88 IPv4 address blocks transferred that total more than 4 million IPv4 addresses. Two of these transfers involved what are called /12 blocks of addresses, with more than 1 million IPv4 addresses each. (These IPv4 address sales - which are known as 8.3 transfers in ARIN parlance - are different than transfers of IPv4 addresses that occur as the result of a merger or acquisition, which ARIN calls 8.2 transfers.)

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