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An insider's guide to the private IPv4 market

Marc Lindsey, Janine Goodman | May 28, 2015
We've been hearing about the impending depletion of IPv4 addresses for years, but that day is finally upon us -- the free supply of IPv4 numbers in North America will be completely gone within a month or two.

The private market

IPv4 number trading between private parties has developed in North America, Europe and the Asia Pacific region as a market-driven solution to free-pool depletion. Many previously allocated IPv4 numbers are unused or inefficiently utilized. The IPv4 market creates financial incentives for those entities to invest in efficiently renumbering their IPv4 blocks to free up excess inventory to sell to others who need more IPv4 numbers.

The most widely publicized sale of IPv4 numbers occurred in 2011, soon after IANA exhausted its supplies. Microsoft purchased Nortel's IPv4 inventory of 666,624 legacy numbers for $7.5 million. Since that time, the sale, lease or other conveyance of IP numbers has accelerated.

The IPv4 market is very active in European and Asia Pacific regions. In North America, the market is in its early stages largely because ARIN still has free numbers to give out; nonetheless, trading activity has steadily increased. During 2014, ARIN recorded over 4.5 million numbers transferred between private parties. In the first quarter of 2015 alone, the volume of ARIN's registration transfers jumped to approximately 11 million.  

The IPv4 marketplace is not well understood. There are no established standards of conduct, little transparency and even less accountability. Many participants in the market struggle to define, from a legal perspective, what is being bought and sold.

For example, buyers typically want to obtain the exclusive rights, title and interest in and to the numbers they purchase. But informed sellers resist committing to convey "title" because classification of IPv4 numbers as property is not well settled under the law. ARIN vigorously advocates the position that IPv4 numbers are not property. While ARIN's policy position on the matter has no direct legal effect, it does add to the uncertainty of what a buyer gets when it purchases an IPv4 block.

Classification of IPv4 numbers as property would eliminate much of this uncertainty. It would also allow the market to evolve around the mature norms of other property-based asset sales and markets, including effective means for parties to qualify and enforce their exclusive rights to IPv4 numbers.    

The RIR registries present another set of challenges. For previously allocated IPv4 numbers, the primary purpose of the RIR registry is to record accurately the rightful holders of the number resources within the RIR's region. Buyers are, understandably, hesitant to pay substantial sums of money for an asset to which another entity may lay claim. (Also read: Sales of unused IPv4 addresses gathering steam.)

ARIN's transfer policies discourage some buyers (and potential registration transfer recipients), from presenting their transactions to ARIN for registration approval, which introduces inaccuracies into the registry. When the RIR registries are inaccurate, there can be considerable adverse economic consequences for both potential sellers and buyers of the affected blocks, since potential buyers rely heavily on the RIR registry records as part of their necessary due diligence to determine whether a particular seller has the authority to sell or transfer a designated IPv4 block.


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