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Beware the black market for IPv4 addresses

Businesses have no time to lose in moving to IPv6

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Organisations slow to adopt IPv6 take heed: Surging requests for IPv4 addresses are quickly drying up the available store, raising the spectre of an IPv4 black market that could dramatically increase the cost of obtaining a presence on today's Internet.

Previous predictions pegged late 2011 as the anticipated date of IPv4 address exhaustion. But a sudden turnaround in the rate of allocation for IPv4 addresses this year has consumed an alarming number of "/8" IPv4 address blocks - /8 being the unit of allocation to Regional Internet Registries (RIRs).

"There were just eight /8 allocations in all of 2009, but there have been six /8s issued just in the first 100 days of 2010," notes American Registry for Internet Numbers (ARIN) CIO Richard Jimmerson.

As of this writing, only 20 IPv4 /8s remain in the Internet Assigned Numbers Authority (IANA) pool of 256 /8s. At the current rate, the IANA pool may well be exhausted by the end of this year (see graphic below). And though the transition from IPv4 to IPv6 has been long anticipated, many organisations are ill-prepared for the fallout of IPv4 exhaustion. In addition to being required to maintain web presence in both address spaces until the Internet's transition is complete, new services, such as Microsoft's DirectAccess, are increasingly becoming available only on IPv6, as tech vendors and service providers increasingly find IPv4 too expensive to support.

IPv4 black market: A matter of supply and demand

The coming IPv4 shortage has been foreseen for years, but organisations needing an Internet presence - businesses, educational institutions, government agencies, and the like - have largely been in denial about the inevitability of IPv4 exhaustion.

At last October's dual celebration of ARPAnet (the Advanced Research Projects Agency Network that preceded the Internet) and the 125th anniversary of event sponsor IEEE, Internet pioneer Vincent Cerf urged immediate IPv6 adoption because Internet growth is not slowing: "We are going to see billions and billions of devices on the Net. The Internet, for its part, has invited many people to contribute content."

In a more recent interview, ARIN's Jimmerson says, "Yes, there was a dip [of IPv4 assignments] in 2009, but 2010 is accelerating. Lots of new applications - next-gen Wi-Fi, cloud services, and smart grid - are taking off, and regions such as Asia and South America are coming online rapidly."

IPv4, which uses 32-bit addresses, is capable of supporting 4.3 billion total addresses, but severe fragmentation makes utilisation of the full range of IP addresses inefficient. Worse, many consider reclaiming unused IP space a far too complex and expensive undertaking. As such, when the last IPv4 /8 is allocated, new Internet players could find high prices and a black market the only practical means of getting IPv4 addresses.

Well-known Internet engineer and notable Internet "pseudo-economist" R. Kevin Oberman points out that this black market already exists, albeit on a small scale.

"The probability of black market growth depends on how run-out of IPv4 addresses is handled by the regional registries," Oberman says. "A black market is uncontrolled by definition. If you have a commodity that has value and is required for commerce, the price will rise to whatever willing buyers will pay."

Currently, Oberman notes, IPv4 addresses are still relatively easy to get, because significant anti-fraud measures haven't yet been put in place by registries such as ARIN.

"Most of the current black market is a matter of convenience, because ARIN's IPv4 costs, and those of other registries, are low for large organisations. But if you're a small company, the expense can be fairly high," Oberman says. "If the survival of your business depends on getting IPv4 addresses, you'll be willing to pay for them, even if you have to skirt the rules."

Oberman believes that regional registries such as ARIN should head off a potentially deleterious black market by creating a "white market" with established rules for trading IPv4 addresses at market-established costs.


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