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[sig-policy] updated: prop-050-v004: IPv4 address transfers
Dear colleagues
Below is an updated version of the proposal that includes the elements
of the transfer proposal that reached consensus in the APNIC 27 Policy
SIG as well as a couple of administrative updates.
The following changes have been made:
- Section 4, "Details of the proposal", has been replaced with the
elements that reached consensus during the APNIC 27 Policy SIG.
- Section 3, "Situation in other RIRs", has been updated to show
the most recent status of transfer proposals in other RIRs.
- Section 7, "Effect on NIRs", has been updated to reflect the
inclusion of NIRs in transfers if and when NIRs choose to
implement the transfer policy.
The proposal's history can be found at:
http://www.apnic.net/policy/proposals/prop-050-v004.html
A formal eight-week final call for comments announcement will be sent to
this list shortly.
Regards
Randy, Jian and Ching-Heng
________________________________________________________________________
prop-050-v004: IPv4 address transfers
________________________________________________________________________
Author: Geoff Huston
gih@apnic.net
Version: 4
Date: 6 March 2009
This proposal contains the transfer proposal features that reached
consensus following community discussion at the APNIC 27 Policy SIG
on Thursday 26 February 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 is a
refinement of the historical resource transfer policy and applies 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 2009 and 2011. 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.
It is the objective of the APNIC IPv4 address registry to accurately
record current address distribution information.
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.
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
http://www.ripe.net/ripe/docs/ripe-449.html#55
ARIN's Advisory Council has recommended that the ARIN Board of Directors
adopt:
2008-6: Emergency Transfer Policy for IPv4 Addresses
http://www.arin.net/policy/proposals/2008_6.html
LACNIC is currently discussing a transfer proposal:
LAC-2009-04 Transfer of IPv4 Blocks within the LACNIC Region
http://www.lacnic.net/documentos/politicas/LAC-2009-04-propuesta-en.pdf
4. Details of the proposal
----------------------------
APNIC will process IPv4 address transfer requests involving current
account holders following the adoption of this proposed policy, subject
to the following conditions:
4.1 The minimum transfer size accepted will be a /24.
4.2 APNIC is to maintain a public log of all transfers.
4.3 Address transfers should be permitted between APNIC account holders
and NIR members, if and when individual NIRs implement the transfer
policy.
4.4 Address transfers are permitted between APNIC account holders and
other RIR account holders, following the policies of all the
respective RIRs.
4.5 This proposal to take effect as soon as the APNIC Secretariat can
implement the mechanisms of the policy.
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
providers.
Response:
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 resuse
It has been argued that the proposal diverts attention from policy
development that encourages IP address reclamation and reuse.
Response:
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 relamation 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.
Response:
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
framework.
- 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
following:
- 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
situation.
- 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
extent.
- 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
infrastructure.
Comments in favour of the emergence of a market in IPv4
addresses include:
- 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.
It should be noted that 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
recognise 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 stated in section 4.3 of this proposal, NIRs will have the ability to
register transfers of addresses with APNIC account holders if and when
individual NIRs implement the transfer policy.
