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[sig-policy] prop-050: IPv4 address transfers
Dear SIG members,
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
at:
http://www.apnic.net/policy/proposals/prop-050
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
effective?
Randy, Jian, and Ching-Heng
________________________________________________________________________
prop-050-v005: IPv4 address transfers
________________________________________________________________________
Authors: Geoff Huston
gih@apnic.net
Philip Smith
pfs@cisco.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
http://www.ripe.net/ripe/docs/ripe-449.html#55
On 1 June 2009, ARIN implemented:
2009-1: Transfer Policy
https://www.arin.net/policy/proposals/2009_1.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
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)
Implementation:
- 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
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 reuse
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 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.
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.
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.
