[sig-policy] prop-050: IPv4 address transfers

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  • Subject: [sig-policy] prop-050: IPv4 address transfers
  • From: Randy Bush <randy at psg dot com>
  • Date: Fri, 24 Jul 2009 14:28:36 +0200
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      The proposal, 'IPv4 address transfers', has been sent to the Policy SIG
      for review.  It will be presented at the Policy SIG at APNIC 28 in
      Beijing, China, 25-28 August 2009.  The proposal's history can be found
      We invite you to review and comment on the proposal on the mailing list
      before the meeting.
      The comment period on the mailing list before an APNIC meeting is an
      important part of the policy development process.  We encourage you to
      express your views on the proposal:
               - Do you support or oppose this proposal?
               - Does this proposal solve a problem you are experiencing? If
                 so, tell the community about your situation.
               - Do you see any disadvantages in this proposal?
               - Is there anything in the proposal that is not clear?
               - What changes could be made to this proposal to make it more
      Randy, Jian, and Ching-Heng
      prop-050-v005: IPv4 address transfers
      Authors:   Geoff Huston
                  gih at apnic dot net
                  Philip Smith
                  pfs at cisco dot com
      Version:   5
      Date:      24 July 2009
      This proposal contains the transfer proposal features that reflect the
      points of general agreement demonstrated on the APNIC Policy SIG
      mailing list in the period May - July 2009.
      1.  Introduction
      This is a proposal to amend APNIC policy restrictions on the transfer
      of registration of IPv4 address allocations and IPv4 portable address
      assignments between current APNIC account holders.
      This proposal does not propose to refine the existing APNIC historical
      resource transfer policy, as it is intended to apply to IPv4 resources
      held by current APNIC account holders.
      2.  Summary of current problem
      Current APNIC policies relating to the registration of transfer of
      address holdings limit the eligibility of registration of transfers to
      those relating to mergers and acquisitions of entities that are
      administering an operational network.
      It is currently anticipated that the IPv4 unallocated address pool
      will be exhausted in a timeframe of between 2011 and 2012. There is a
      very considerable level of investment in IPv4-based services in the
      Asia Pacific region, and a transition to IPv6-based service delivery
      is likely to take longer than the remaining period of unallocated
      address availability. Accordingly, it is likely that demand for IPv4
      addresses will continue beyond the time of unallocated address pool
      exhaustion, leading to a period of movement of IPv4 address blocks
      between address holders to meet such continuing demand for IPv4
      address blocks.
      The underlying proposition behind this policy proposal is that the
      registry of IPv4 addresses operated by APNIC is of general utility and
      value only while it accurately describes the current state of address
      distribution. If a class of address movement transactions are excluded
      from being entered in the registry, then the registry will have
      decreasing value to the broader community, and the integrity of the
      network itself is thereby compromised.  This proposal's central aim is
      to ensure the continuing utility and value of the APNIC address
      registry by allowing the registry to record transactions where IPv4
      addresses are transfered between APNIC account holders.
      It proposes that APNIC will recognise and register a transfer of
      addresses where the parties to the transfer are 'known' to APNIC and
      that the address block being transferred is part of APNIC's current
      (non-historical) address set
      The proposal does not prescribe how such transfers may occur, nor
      impose any further constraints on the transfer or on the parties
      involved other than those described in this proposal.
      3.   Situation in other RIRs
      RIPE has implemented a transfer policy in its region. See section 5.5,
      "Transfers of Allocations", of:
           IPv4 Address Allocation and Assignment Policies for the RIPE NCC
           Service Region
      On 1 June 2009, ARIN implemented:
           2009-1: Transfer Policy
      LACNIC is currently discussing a transfer proposal:
           LAC-2009-04 Transfer of IPv4 Blocks within the LACNIC Region
      AfriNIC currently has no similar policy or proposal under discussion.
      4.   Details of the proposal
      APNIC will process and record IPv4 address transfer requests between
      current APNIC account holders following the adoption of this proposed
      policy, subject to the following conditions.  APNIC will maintain a
      public log of all transfers made under this policy.
      Conditions on the IPv4 address block:
          - The minimum transfer size is a /24
          - The address block must be in the range of addresses administered
            by APNIC.
          - The address block must be allocated or assigned to a current
            APNIC account holder.
          - The address block will be subject to all current APNIC policies
            from the time of transfer.
      Conditions on source of the transfer:
          - The source entity must be a current APNIC account holder.
          - The source entity must be the currently registered holder of the
            IPv4 address resources, and not be involved in any dispute as to
            the status of those resources.
          - The source entity will be ineligible to receive any further IPv4
            address allocations or assignments from APNIC for a period of 12
            months after the transfer, or until the exhaustion of APNIC's
            IPv4 space (i.e. until the commencement of the use of the "final
            /8" resources), whichever occurs first.
          - Under exceptional circumstances a member may submit an
            application for further assignments or allocations earlier than
            the expiration of this period. The APNIC Secretariat will monitor
            these exceptional requests carefully and publish comprehensive
            statistics on a regular basis. Without identifying any member
            organization, these statistics will record the numbers of
            requests and the outcome, the economy that the requests  come
            from and clearly identify if any member has made more than one
            request under this provision.
      Conditions on recipient of the transfer:
          - The recipient entity must be a current APNIC account holder.
          - The recipient entity of the transferred resources will be subject
            to current APNIC policies. In particular, in any subsequent APNIC
            IPv4 address allocation request, the recipient will be required
            to account for the efficient utilization of all IPv4 address
            space held, including all transferred resources.
          - Prior to the exhaustion of APNIC's IPv4 space (i.e. prior to the
            use of the "final /8" allocation measures) recipients of
            transfers will be required to justify their need for address
            space. After this time there is no requirement for any form of
            evaluation of requirements for eligibility.
      Applicability to NIRs:
          - NIRs have the choice as to when to adopt this policy for their
            members (i.e. members of NIRs)
          - This proposal is to take effect as soon as the APNIC Secretariat
            implement the mechanisms of the policy following the completion
            of all steps of the Policy Development Process.
      5.   Advantages and disadvantages of the proposal
      5.1 Advantages
      This proposal:
          - Ensures that the APNIC registry continues to reflect the current
            actual status of IPv4 resource holdings by APNIC account holders.
          - Mitigates the risks to the integrity of the network, and its
            routing and addressing infrastructure in particular, associated
            with the unregistered transfers of IPv4 addresses.
          - Provides a stronger incentive for unused IPv4 address space to
            return to active use, helping to satisfy residual demand for IPv4
            address space across the IPv6 transition.
      5.2 Disadvantages (and responses)
      5.2.1 Altering the traditional concepts of IP addresses
             This proposal has the potential to alter a number of traditional
             preconceptions relating to addresses and their value, including
             challenging the concept that addresses are not in and of
             themselves assets and addresses do no in and of themselves have
             monetary value outside of the narrow constraints of use in
             networks for routing and end point identification. Changing these
             common percpetions about addresses and their use opens up the
             potential for a number of responses, including:
             - The loss of strong aggregation capability in the address space,
               with the consequent load being imposed on the routing system.
             - The significant shift away from a universal need-based address
               allocation model in the underlying policy framework.
             - The treatment of addresses as property with the associated legal
               ramifications in terms of corporate and contract law.
             - The imposition of taxes on addresses and their movement.
             - The potential for unfairness and inequities to be realized in
               terms of access to addresses for use by network service
                 A number of factors mitigate the risks above:
                 - As the transition to IPv6 gathers pace, any residual value
                   of IPv4 addresses would fall in line with the decreasing
                   value proposition of IPv4-based services in an increasing
                   IPv6 network.
                 - If this policy were to be adopted while IPv4 addresses are
                   still available from APNIC, APNIC's established IPv4 address
                   allocation process would continue to provide an alternative
                   source of supply of IPv4 addresses to the industry.
      5.2.2 Proposal diverts attention from address reclamation and reuse
             It has been argued that the proposal diverts attention from policy
             development that encourages IP address reclamation and reuse.
                 To date the level of return and reclamation of addresses has
                 been minimal. Aside from price-based mechanisms it is unclear
                 that further policy refinement would alter this situation.
                 Even if policy development encouraged address reclamation and
                 reuse, there is the distinct possibility that the amount
                 reclaimed addresses would be smaller than the amount needed
                 for APNIC to continue to allocate addresses on a needs-basis
                 after the unallocated address pool has been exhausted.
                 An open and significant issue is how APNIC could fairly ration
                 limited addresses when faced with a much larger set of
                 demands. In other words, concentrating on reclamation and
                 reuse policies rather than transfer policies also contains
                 significant issues that may prove challenging to resolve as a
                 policy matter.
      5.2.3 Potential for APNIC to be cast as a regulator
             If APNIC adopted this policy, APNIC may be cast as a regulator
             of a secondary market in addresses. Concerns have been expressed
             that APNIC has no experience, expertise nor the authority to
             enforce regulatory actions. Such a role may also expose APNIC to
             additional litigation.
                 This proposal does not advocate such a role for APNIC. The
                 scope of this policy is explicitly limited to the conditions
                 that would allow APNIC to recognise and record a transfer of
                 addresses in its registry.
                 There is a general belief that adoption of this policy would
                 act as an incentive for a market in addresses. However, that
                 does not imply that markets would act outside existing
                 regulatory structures.  Nor does it mean that market
                 participants would be immune from existing regulatory measures
                 within their respective regimes.
                 The potential for additional liabilities associated with this
                 policy should be the subject of legal review by an
                 appropriately qualified party.
      5.3 Summary of comments on transfer proposals
      There are a number of views of this that have been noted in the
      various policy discussions on this topic in the various RIR policy
      forums. The APNIC policy proposal is broadly similar to a policy
      proposal under consideration in RIPE, which is referred to here as a
      "minimal' policy for address transfers. The address transfer proposal
      currently under consideration in ARIN has a larger set of constraints
      to be applied to determine if a transfer would be recognised by the
      registry. A summary of the discussion of the differences in these
      policy proposals follows.
      5.3.1 In favor of a 'minimal' policy
             - The policy places APNIC in the role of a 'title office' for
               addresses, and ensures that APNIC, as a registry operator, is
               neutral in terms of the means used by APNIC members to determine
               that they wish to proceed with a transfer of addresses.  As long
               as the criteria for a valid transfer are met, by whatever means
               agreed to by the parties involved, then the registry should
               allow the transaction to be duly recorded.
             - APNIC has no practical operational experience in the area of
               enforcing various constraints on parties as to how and why
               addresses may be transferred, and does not currently have any
               recognized authority to do so.  Making policy in the absence of
               a well understood and commonly accepted authority model calls
               into question the legitimacy and authority of outcome.
             - Regulation is a well understood and familiar concept in many, if
               not all, regimes. If there is a general desire to place
               constraint and regulate the actions of parties who wish to
               undertake a transfer of addresses, then it may be preferred to
               do so in the context of a broader framework that involves other
               bodies and authorities that have a greater level of experience
               and authority in this area of activity, and leverage from
               existing regulatory structures and enforcement mechanisms. In
               this manner the policy proposal does not attempt to create a
               novel, and potentially superfluous additional regulatory
             - APNIC has no experience in determining what actions by potential
               parties to a transfer may need to be constrained in some
               fashion. Attempting to create policy in anticipation of the need
               for such constraints is going to be a guessing game that has
               accompanying flaws, Irrespective of what constraints are
               initially specified in policy, it will be the case that as the
               levels of experience in this form of activity increases some
               iterations over the policy of constraints will be necessary in
               any case. This approach argues to start from a position that is
               relatively open and unrestricted, and recommend that APNIC
               impose additional constraints only when all other forms of
               constraint are inapplicable and there is a clear need and common
               desire for such constraints to be enforced by APNIC as distinct
               from using another party for such a role.
      5.3.2 In favour of applying a greater level on constraint in the policy
             - APNIC has no practical operational experience in address
               transfers, so we should take incremental steps form the current
               position rather than a complete relaxation of the entire set of
               constraints associated with the existing allocation
               framework. Recipients of a transfer should be qualified by the
               registry on the basis of demonstrated need in the same fashion
               as recipient of address allocations today. Address blocks should
               not be arbitrarily fragmented. Timing constraints should be
               applied to stop transfers of addresses occurring that are
               primarily motivated by reasons other than immediate need for use
               in deployed networks.
             - Constraints that are generally considered to be onerous and
               unnecessary can always be removed at a later date, while
               applying and enforcing additional constraints at a later date
               will prove to be a far harder task.
             - There are a number of technical risks associated with address
               trading. Unconstrained deaggregation will lead to a fracture of
               the routing system due to unconstrained and large scale
               expansion of the inter-domain routing table. This is an
               irreversible state.
      5.3.3  Discussions of the emergence of a market
              The various comments made on this and the related address
              transfer policy proposals provides grounds for the observation
              that there is a general perception that the recognition of
              address transfers leads to a de facto recognition of the
              emergence of a market or markets for IPv4 addresses. A related
              topic of discussion about the merits or otherwise of these
              proposals has been the consideration of the relative merits and
              risks of market behaviours when applied to this situation.
              The comments opposed to the emergence of markets include the
              - Markets in addresses are an inevitable consequence of a
                transfer policy, and unconstrained markets are prone to a
                number of risks of distortion. These risks include deceptive
                trading, margin trading, trading in market derivatives and
                futures, hoarding, and speculation. The utility of an address
                as a token for addressing a packet is devalued in a market
              - Operation of a market will lock out all but the largest of
                players in the network from access to further addresses, as the
                value of the address will be set by the bidder with the highest
                price and the ability to exploit the address to its maximal
              - The operation of a market in IPv4 addresses will lead to the
                erosion of the effectiveness of self-imposed policies in IPv6,
                and may lead to the emergence of a market in IPv6 addresses.
              - Markets are unfair in terms of the implicit bias of a market in
                favour of those parties who are in a position to set the market
                price, and inherently discriminating against those parties who
                do not have the capacity to pay. In an international context
                this is counter to the general objective of a generally
                available, neutral and non-discriminatory communications
              Comments in favour of the emergence of a market in IPv4 addresses
              - Address exhaustion poses an insoluble problem to the address
                registries in that for as long as there is a continuing demand
                for addresses the registries have no means to meet that demand.
                Markets create a means for addresses to be recycled, and create
                a means for the various levels of demand and supply of
                addresses in IPv4 to reach a balance through a market-based
                pricing mechanism.
              - At every stage there is always an alternative to bidding for
                IPv4 addresses in the context of a market transaction: namely
                the use of IPv6 within the network, and the use of an upstream
                protocol translation service to provide legacy access to other
                IPv4 networks. Given that substitutes exist, the potential
                price of IPv4 addresses in a market is capped by the cost of
                deployment of IPv6 and IPv4 transitional mechanisms.
              - This is a temporary measure during the dual stack phase of
                IPv6 transition. The higher the market price for IPv4
                addresses the greater the cost pressure placed on the
                industry to undertake the IPv6 transition, which in turn
                limits the lifetime of the market and the speculative
                potential of any such market. Players will have an incentive
                to act quickly in terms of releasing address resources into
                such a market given that withholding for too long will result
                in no return as the market will naturally terminate once IPv6
                transition has reached a critical deployment mass.
              This address transfer policy proposal is mute on the topic of a
              market for address transfers, and neither advocates nor
              specifically opposes the emergence of any such market or
              markets. The policy constrains itself to enumeration of the set
              of constraints that would apply for APNIC to recognize and
              register a transfer of addresses between APNIC members. How
              those parties arrived at the decision to undertake the
              transfer, and the related issues concerning property, financial
              and legal frameworks and the emergence of markets, the need to
              regulate such markets and identification of the market
              regulator are specifically not encompassed by this policy
              proposal, nor does this proposal advocate that such a role be
              undertaken by APNIC.
      6.   Effect on APNIC members
      APNIC members will have the ability to register the transfer of IPv4
      address resources between APNIC members.
      7.   Effect on NIRs
      As APNIC account holders, NIRs will have the ability to register
      transfers of addresses with other APNIC account holders upon adoption
      of this proposal.
      The proposal allows for NIRs to have the choice as to when to adopt
      this policy for their members.  Members of NIRs will have the ability
      to register transfers of addresses when individual NIRs implement this
      transfer policy.