Expert: IPv4 addresses could soon be valued at $200 apiece

Canada's Bill St. Arnaud says that universities and R&E networks are sitting on a gold mine in IPv4 addresses once purse holders grasp the real value of them.

Bill St. Arnaud

The following is a guest blog written by one of Canada's most prominent technology visionaries Bill St. Arnaud.There has been a lot of buzz in the press about the recent news of Nortel selling some of its address space to Microsoft for $7.5m which works out to $11.25 per IP address. This is not an actual sale yet, but only approval by a bankruptcy court to proceed with a sale, ultimately subject, of course, to ARIN’s compliance process. However it does underscore the fact that there is now a market value for IPv4 addresses.

THE BUZZ: Microsoft pays Nortel $7.5 million for IPv4 addresses

Accountants and lawyers will now be scrambling to include address space as a new asset class in an organization’s balance sheet and debating how fungible IPv4 addresses actually are. Universities, research institutions and R&E networks, particularly in North America and Western Europe, who have a large number of unallocated address blocks will discover that their net worth has increased significantly overnight.

However, I would argue that this does not represent the total value of an IPv4 address. It is much closer to $200 or more per IP address. In reality IPv4 address represent energy consumption and can be expressed in energy equivalence of Kwh. In general a fixed IP address is used for servers such as web hosting, databases, computing etc.

While dynamic IP addresses are assigned to client computers such as PCs. A reasonable assumption is that each fixed and dynamic IP address is a proxy for 100W consumption. Servers will consume more power per IP address, but one must take into account that there are multiple addresses per server such as loopback addresses, etc. At 100 watts consumption, assuming 10 cents per KwH over a 3 year life span of a server represents a cost in excess of $200.

As I have blogged before I think there is a real opportunity for R&E networks to partner with their members to reduce their energy consumption and CO2 footprint by moving IP addresses off the campus and aggregating campus services at central location where greater efficiencies of scale can be obtained (and maybe even use zero carbon facilities). Clearly high speed optical network connections to the campus will be essential. Using IP address as a proxy for energy consumption and CO2 emissions has a number of advantages in that it will prevent back sliding or end runs by those who want to deploy closet servers. One of the challenges we faced when developing an ISO 14062 CO2 abatement standard for computing as part of the Greenstar project was the fluidity of computing and the difficulty of establishing boundary conditions.

Surrendering IP addresses may be a possible solution. As well, over time an institution or network can aggregate these address blocks and perhaps sell them in the nascent IPv4 markets.

R&E networks can play a critical role by working with their institutional and business partners to develop outsourcing solutions that reduces both their energy and support costs. One possible model is to have a number of institutions pools their network and IT costs and “bell curve” the annual network fee to these institutions with those who achieve the greatest percentage change energy savings or reduced CO2 emissions paying the least and those who are the least successful paying the most. Partnering with ESCOs and the facilities department to monetize the energy savings is another opportunity as I have discussed in previous blogs.

Many presidents of universities in the USA and Canada have signed onto the Presidents Climate Commitment or Climate Change Action respectively. These strategies that I have described here may help to put some real substance behind these commitments. IT represents 20-40% of an institutions electrical energy consumption and significant portion of CO2 emissions.

IT has the greatest flexibility in terms of CO2 reduction as opposed to moving wet labs and/or classrooms.

Bill St. Arnaud is a Green IT consultant who works with clients on a variety of subjects such as the next generation Internet and practical solutions to reduce GHG emissions such as free broadband and electrical highways. As the former Chief Research Officer for CANARIE (Canada's Advanced Research and Innovation Network), he is known as one of Canada's most prominent leaders in technology. This article was originally published via the Green Star Network newsletter (subscribe here). Reprinted by permission.

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