Microsoft pays Nortel $7.5 million for IPv4 addresses

Bankrupt Nortel finds a buyer for 666K of its legacy IPv4 addresses, raising questions if the IPv4 black/grey market has arrived.

Microsoft this week offered to pay Nortel $7.5 million for 666,624 legacy IPv4 addresses. The sale is pending approval by U.S. Bankruptcy Court for the District of Delaware as part of Nortel's Chapter 11 bankruptcy.

It doesn't sound exactly like the black market for IPv4 address that industry experts have been warning us about for years. But then again, it could be the start of one. This sale is reportedly the first publicly disclosed large-scale sale of IPv4 addresses since ICANN announced they had run out of address blocks, says Kevin Murphy from Domain Incite. And if the court approves the sale on April 26, these 666K-plus addresses will selling for a decent chunk of change, too. (Those who oppose the sale, have until April 4 to file their objections). [Court documents: PDF].

Microsoft will pay $11.25 per address. That's more than the going rate for to register a .com domain name, which these days can be had for as little as $7.50.

Nortel filed for Chapter 11 on On January 14, 2009. In November, it realized its block of legacy IPv4 addresses might be worth something to its debtors and it hired Addrex, a stealthy broker of IPv4 addresses, to find a buyer. Addrex began shopping around and, in early December, asked eighty potential purchasers if they were interested. Of these, 14 expressed interest and seven actually submitted bids for all or some of the addresses, according to the court documents. Obviously, Microsoft walked with the prize for being the highest bidder.

Interestingly, those in the IP-address-assigning business seem to be busy launching brokering sites so that deals like this one can grow commonplace. The so-called "aftermarket" for IPv4 addresses is expected to heat up in about six months, as large network providers feel the pressure of their dwindling IPv4 address supply, John Curran, president and CEO of the American Registry for Internet Numbers told Government Computer News.

ARIN and perhaps some Regional Internet Registries (RIRs) could be among the ones doing the brokering, Curran said. ARIN has always had a policy allowing companies to return unused address, but the Microsoft sale proves that those owning large blocks of unused addresses can expect to sell them, and that price-per-address could be expected to rise until IPv6 becomes more widely used.

I searched around for some kind of indication as to how much legacy "reserved for future use" IPv4 address space existed but couldn't find a ready statistic. There was a time when 2 million addresses were assigned at a chunk. Surely many companies that obtained multiple blocks of 256 are no longer around.

Murphy notes that not everyone agrees that an IP address is actually the property of the one to which is was assigned. He writes:

"The Regional Internet Registries, which allocate IP addresses, do not typically view IP as an asset that can be bought and sold. There are processes being developed for assignees to return unused IPv4 to the free pool, for the good of the internet community."

That would make sales such as this one, and any other aftermarket brokerages automatically the "black" market wouldn't it? Or at the very least a gray market. I noticed that the web site was particularly bare. No marketing info, no contact info ... reminded me of a speakeasy ... you could only gain access if you know the password.

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