Liberalization comes to IP address market in RIPE region

Despite a title tweak to assuage a few stakeholders’ sensitivities, policy proposal 2013-03 “Post Depletion Adjustment of Procedures to Match Policy Objectives, and Clean-up of Obsolete Policy Text” has been accepted by the RIPE community and is now policy.  The gist of the proposal removes the requirement for organizations engaged in the trading market for IP numbers, or assigning IP number blocks to customers, to prove their need for a specific quantity of numbers.

Originally, the policy proposal was more boldly and accurately entitled “No Need: Post-Depletion Reality Adjustment and Cleanup.” The proposal was based on the idea that the depletion of the free pool was a major inflection point that required fundamental change in the RIRs’ approach to IP number stewardship. The reality adjustment was needed and, in fact, overdue. When there was a free pool of unassigned IP numbers that were not priced according to market value, needs-based allocations and assignments were justified by the existence of a potential tragedy of the commons. Network operators had no independent incentive to conserve addresses; they could simply apply for more address space from the RIPE NCC to get them before anyone else did. “This created an externality (premature depletion of the free address pool) that had to be addressed through policy,” the authors of the policy noted. “After depletion of the free address pool this is no longer the case, and so the original justification for a costly ex ante assessment of need in the transfer market no longer applies.”

The central planning regime for IP addresses, its critics noted, created more bureaucracy, made it difficult for businesses to plan for the future, created a need for costly audits, incentivized applicants to lie about their needs and increased staff workload unnecessarily.

Despite the unassailable logic, there were still many people in the Internet Registry technical community who treated needs assessment as a religious dogma and could not bear to eliminate it. It took a full year, much contention and many verbal modifications, for the policy to pass.  In the words of the policy’s co-author, Tore Anderson:

With the new policy, the LIRs are trusted to make sensible assignments to their end users. The community can safely do so, because if an LIR does go on to make excessive assignments, the LIR will only have hurt itself by depleting its own pool of IPv4 addresses. So if an LIR now wants to make an assignment to one of its end users, it can simply do so, without having to fill out any forms or paperwork required by the RIPE community. However, the assignment must still be registered in the RIPE database with the end user’s contact details, as before.

As market pricing in the transfer market replaces needs assessment, people waiting for the sky to fall will be disappointed. Two years down the road, we will all be shaking our heads in wonder at why this was considered so controversial.


4 comments

  1. Louis Sterchi

    Brenden,

    Great post per usual. As Tore has said, this policy is almost entirely about removing unnecessary administrative burdens. To your last point, this policy’s affect on the transfer market will be muted: i. enterprises are not going to pay for that which they do not need, and ii. there is relatively a small amount of space available to change hands in the region.

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