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Re: [sig-policy] [Sig-policy][Draft announcement]prop-050: IPv4 addresstransfers
Hi,
Thank you for forwarding these comments and observations from the
JPNIC community.
Hi all,
A few last minutes comment before the meeting...
### WARNING: it's long ###
WARNING : its even longer now! :-)
We undertand this proposal restricts APNIC's role to updating DB
registrations. However, we believe implications and issues outside DB
update must be also considered before implementing this policy.
There is a view these days that where we are heading with IPv4 is not
a pretty place for many reasons, and thats a view that I personally
share. But to avoid that situation where the network's continued
expansion is dominated by considerations related to unallocated
address pool exhaustion, perhaps this industry should've made its
moves to adopt Ipv6 quite some years ago, rather than leaving things
to well after the last second to figure out how to avoid some of these
issues. But thats now a lost opportunity and we are facing some pretty
tough issues as an industry.
And central to those issues are the management of addresses and, given
that the allocation function is coming to an end, the ongoing
management of the registry function. For me the most relevant aspect
of IPv4 policies these days is all about what actions are appropriate
to preserve the integrity, accuracy and common utility of the address
registry for the Internet as a whole. Without such an authoritative
registry which is _accurate_ and _complete_ then you might as well
give up and return to using smoke signals, because its possible that
the Internet won't be useful any more! :-) If IP addresses are no
longer assuredly unique and the association of an IP address with a
certain end point is no longer universally acknowledged as a unique
association then the network heads in a direction that leads to a
collapse into address chaos.
So how do you preserve the integrity and accuracy of the IPv4 registry
when the current mechanisms for address supply vaporizes and yet
demand for additional IPv4 addresses is still strong? That's the
primary motivation for me behind proposing the address transfer policy.
Our understanding of this proposal is that it implies to allow trading
of IP address between LIRs which is likely to involve monetary
exchange.
The policy explicitly does not cast APNIC into any role regarding the
operation of monetary exchange, nor any role regarding the pricing
addresses, nor the mechanisms relating to the way in which the
exchange may have been arranged. Some would argue that a registry, or
title office, has no role in facilitating a marketplace, and should
remain strictly neutral. The transfer policy advocates placing APNIC
in such a "title office" role in so far as the proposal does not
place APNIC as a facilitator nor even an advocate of markets, nor does
it place APNIC in a position of having to deny the existence of
markets for addresses, if or when they emerge. The policy simply
proposes to allow APNIC to recognise and register a transfer of
addresses if the parties involved meet a number of nominated criteria.
How the parties arrived at the position of requesting a transfer is
explicitly not cast as being APNIC's business in the scope of this
policy proposal.
We've listed possible issues below:
1. Change in the nature of IP address/IP address distribution
- IP adress may be considered an "asset" or "property" rather than
a resource
I'll respond to this comment here, but with the caveat that this
response is not really relevant to the policy proposal per se, and the
comments are, as per the disclaimer below, strictly comments that are
my opinions, and not necessarily positions that relate to any other
party or any organization, including my employer.
If you strip off all the layers and look at this in economic terms,
what allowed addresses to be considered as valueless commodities was
their abundance. If you had a need, the need was met from the
allocation pools at effectively nominal cost. If you did not have a
need then your valuation of the price of addresses was effectively
zero, and if you did have a need then the allocation registries could
meet that need at a minimal transaction cost. So the formation of any
market
in addresses was stymied simply because there were no buyers willing
to pay because all such needs could be met from the existing
distribution
system. This lead to an observation that *within the context of that
particular distribution framework* addresses had no intrinsic value
and consequently could be considered as something other than an
"asset" or "property" simply because they had no explicit monetary
value within this form of distribution system.
But such an observation says nothing about the intrinsic nature of
addresses and says more about the properties of a distribution system
that exploited abundance to suppress any organized formation of
secondary markets.
So when that distribution framework grinds to a halt due to supply
exhaustion do the properties of a lack of a monetary value for an
address still hold? In a conventional view of trade, economics and
markets this would not be the case. Where a good is in demand and the
demand exceeds supply then the relative scarcity is expressed as a
pricing function. Now one view would be that this pricing function
generates a consequent interpretation of the good as an asset simply
because there is this value that is placed on the good because of the
shift in the demand and supply situation. In other words the nature of
a good, including addresses, is dependent on the context and the
demand / supply position, the distribution framework and the utility
value and the content of the utility function.
Which is a long way of saying that what will change the nature of IPv4
addresses in terms of their view as an asset or property is the
situation of premature exhaustion where demand will outlive supply,
and this is not intrinsically an outcome of this transfer policy per
se. i.e. this shift in the generally viewed nature of an IPv4 address
will shift irrespective of this policy proposal.
And if this shift in the value of IPv4 addresses presents an
intractible problem, then perhaps the time when this situation
could've been avoided has already come and gone and what we are left
with is to accommodate what needs to be done as effectively as we can.
- This proposal implies that there are no longer needs to
demonstrate the needs in receiving address space. This
leads to inconsistency that those who receive the space via
APNIC
must demonstrate the needs and those who receive it via transfer
don't need to do so. It may result in those who do not
necessarily need address space are eligible to receive it for
financial reasons
(We understand too strict a criteria would lead to black market,
but perhaps there should be checks in some form to prevent
hoarding)
Most of this proposal is aimed at the post 2010 situation when the
current distribution framework for Ipv4 addresses is no longer viable
because the existing framework would've come to a halt. This comment
therefore refers to the period between when this policy is
implemented and the point when the address pool is exhausted for APNIC.
Now its my personal guess that this period will be short. Maybe I'm
taking a pessimistic view of the speed of the policy development
process these days, but proposals such as this one do take time, and
it may well be that the above situation will not eventuate simply
because exhaustion would've occurred
prior to this policy being adopted.
2. Social implications as a result of allowing transfer
- IP address holdings may be subject to taxation for LIRs
as well
as APNIC. Impact of such change is not properly analyzed
See the above comments - once addresses are scarce and when demand
outstrips supply then a pricing function will emerge. Whether this
emerges in the context of the RIRs or in the context of alternative
registry systems is yet to be seen, but the basic dynamics of the
situation is unaltered. Irrespective of the RIRs' position this
pricing function will have implications for address holders,
In other words this comment appears to have traction *irrespective of
the fate of this transfer policy* It is a matter of some concern
given the potential range of price outcomes, but for any enterprise
to suddenly have an incredibly valuable asset appear on their
financial books is a source of some concern for a number of reasons,
including, but not limited to taxation.
So I would argue that address pools will have a significant asset
value post IPv4 address exhaustion and irrespective of whether such
addresses move between parties or not in the context of markets may
attract taxes and changes, depending on the local rules and
regulations concerning the holding of assets.
- APNIC may get caught in legal disputes over adress holdings and
transfers and restricting APNIC's role to DB update in the
policy
may not be effective enough as a protection
Again, once the current IPv4 distribution framework grinds to a halt
in the coming months, folk will search around for "unused" space and
attempt to use it, and disputes will increase and recourse to legal
remedy will always be available. Again, this policy is entirely
neutral about this - the likliehood of escalation in the number of
such disputes is independent of the adoption or otherwise of this
transfer policy, in my view.
We also had some discusssion in JP-OPM and major comments received
were
as follows:
- Those who trade in black markets always chose the easiest way -
therefore, even if this policy is implemented, they will likely
to
move address space between themselves without going through the
official procedure
I am not so pessimistic as this, and note that this (the formation of
black markets) would be a terrible outcome for the Internet. The
association of a holder with an address is not useful if it is kept as
a private secret - for the network to work in any meaningful and
useful way this association MUST be public and MUST
be universally acknowledged. Black markets, if one defines such
markets as occluded or hidden transactions where the parties and the
outcomes are not visible to all others are useless - useless to the
participants and useless to the Internet!
The more likely scenario is that needs will be expressed in other
ways. If parties wish to effect movement of addresses in order to meet
continuing demands for addresses then if the RIRs are not able to
record the outcome of such transactions then its more likely that
other public registries will appear. Given that such registries would
be holding current rather than historical information about the
disposition of addresses one possible (probable) scenario is that
everyone else would use those sources of information as the
authoritative source of information about addresses. At that point the
RIRs would revert to the status of an historical institution with no
further relevance in the IPv4 world. In other words, denial of a shift
in requirements for the registry function may well be a move which
simply ensures that the registry function moves elsewhere where
requirements are accommodated.
But such an orderly transition is unlikely in this situation. A more
likely scenario is a number of such alternate registries appearing
each with differing information and differing modes of operation - at
this point the ability to determine that any address is unique and the
identity of the current holder of the address vaporises and the
Internet itself then suffers potentially irreparable damage. The
remedies to such a scenario are typically political and typically work
"consensus" in the direction of "equal distaste expressed by every
party". Again its not a pleasant scenario when compared with what
we've been able to achieve in terms of cost, efficiency and efficacy
in the RIR system.
- Some form of demonstration of needs should be required to prevent
address hoarding
Its not clear to me that a title office should also act as a market
regulator. Its not clear to me that APNIC should undertake such a
role. That's not toi say that there should or should not be some form
of restraint on the actions of individual actors that provides
appropirate disincentive for hoarding, but it is saying that its
probably asking a bit much for a title office to also undertake the
role of a market regulator. To the extent that hoarding is a natural
expression of the expectation of price escalation then surely the
issue here is that at some point the alternative, that of more visible
and rapid moves to quit IPv4 and use IPv6, becomes economically so
much more attractive that the hoarder is left with a valueless pile of
integers. So its unclear to me that address hoarding would be an
attractive proposition financially given that there is
substitutability, and this substitutability becomes more attractive
the higher the price moves in IPv4.
- simply register them as assignments rather than treat it as
transfer of allocations. this will allow to achieve the goal
without fundamental changes in the policy
(issues on this methods were also discussed)
This appears to be a continuation of the previous comment, that APNIC
should act as a market regulator and constrain who can be a market
actor and the nature of each and every transaction. Its an interesting
proposition, but it certainty has some substantive issues, including
issues of authority, credibility, competence, effectiveness,
acceptability, and substitutability to name a few.
regards,
Geoff
Disclaimer:
Most of you have figured it out by now, but for those who haven't
the above is entirely a product of my own delusions and definitely
noone else's.
