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Avoid IPv6, Buy an IPv4 Address

Many IT executives have considered what will happen when they need to migrate their organizations to IPv6. Not that many have budgeted for the IPv6 transition. Moving to IPv6 is hard to justify on a ROI basis, a situation that some think could be eased, even postponed, with the creation of the IPv4 address marketplace.

Some of the issues related to IPv6 migration include:

Being able to postpone a migration for three to five years makes an IPv6 deployment more manageable for many organizations. What if you could buy IPv4 addresses as part of a sensible IPv6 deployment plan? An IPv4 address market could make this possible.

How Did We Get to this Point?
Prior to the creation of the Regional Internet Registry (RIR) system in the mid to late 1990s, entities obtained IP addresses for free on behalf the U.S. government. Directly assigned and allocated addresses most often fell into one of three classes:

The allocation did not follow any formal written policies or agreements. With the establishment of the RIRs, address allocations were governed by RIR formal agreements and policies.

Players in Address Allocation
The Internet Corporation for Assigned Names and Numbers (ICANN) handles the coordination of technical and administrative functioning of Internet resources. ICANN operates through the Internet Assigned Numbers Authority (IANA), which is responsible for the global coordination of the DNS Root, IP addressing, and other Internet protocol resources. IANA supplies the RIRs with free addresses drawn from the blocks that have not been previously allocated and the pool of previously allocated IP addresses that are returned by or reclaimed from registrants.

Each RIR, under its self-determined policies, then allocates and assigns the IP addresses it receives from IANA to network operators for (essentially) free. The five RIRs allocate addresses mostly based on scarce resource stewardship policy underpinnings. These are the five RIRs allocating addresses:

The State of IPv4 Addresses
There are 3.7 billion usable IPv4 numbers, 99.8% of which already have been allocated (see the "IPv4 Address Report" created by Geoff Huston, chief scientist at APNIC). Prior to exhaustion in APNIC and RIPE NIC, the global RIR allocation rate had been about 176 million IPv4 addresses per year, according to Huston's report.

Transacting in the IPv4 Address Market
Selling and buying IPv4 addresses is a relatively recent phenomenon stimulated by a few business realities.

IPv4 addresses are part of the assets available for purchase during tech company acquisitions, or as tech companies file for bankruptcy, for example. When two financial services firms merge, the resulting company will end up owning more IPv4 addresses than it needs.

In addition, early user recipients of large IP address space may now rely on their ISP or carrier to provide routable IP addresses, reducing the utilization of their independently owned IPv4 inventory.

I spoke to Marc Lindsey, president and co-founder of Avenue4LLC, a top broker, about the process of and negotiations for transacting IPv4 address trades. Marc identified the following approaches considered by buyers and sellers participating in today's market.


Successful IPv4 Address Transfer
Since Avenue4 is in the business of providing IPv4 market advisory services, I asked Marc what steps he follows to complete a successful address transfer. As the first step, he said the advisors must perform due diligence to ensure that the addresses are rightfully owned by the seller and that the applicable RIR will likely recognize a registration transfer. Advisory service also should:

The ability to acquire IPv4 addresses doesn't solve the address problem permanently, but it does help postpone the IPv6 migration. The postponement can help with the constantly growing IT budgets and allow other projects to take precedence.