[sig-policy] updated: prop-050-v004: IPv4 address transfers

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  • Subject: [sig-policy] updated: prop-050-v004: IPv4 address transfers
  • From: Randy Bush <randy at psg dot com>
  • Date: Fri, 06 Mar 2009 11:59:18 +0900
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      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:
      A formal eight-week final call for comments announcement will be sent to
      this list shortly.
      Randy, Jian and Ching-Heng
      prop-050-v004: IPv4 address transfers
      Author:    Geoff Huston
                 gih at apnic dot 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
      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
      ARIN's Advisory Council has recommended that the ARIN Board of Directors
           2008-6: Emergency Transfer Policy for IPv4 Addresses
      LACNIC is currently discussing a transfer proposal:
           LAC-2009-04 Transfer of IPv4 Blocks within the LACNIC Region
      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
      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
                 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
      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.
                 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.
                 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 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.