Today IGP releases its study of the market for IPv4 number blocks. It is the first independent academic analysis of an emerging market in number resources. The commoditization of IP addresses is likely to have a major impact on the governance of the Internet.

Although the Regional Internet Registries (RIRs) are running out of IPv4 numbers and hope to encourage migration to IPv6, a new Internet protocol with a much larger address space, there are actually millions of unused IPv4 numbers held by organizations who received them in the early, informal era of Internet governance before the RIRs were formed. The costs and difficulties associated with implementing IPv6, coupled with the impending exhaustion of the so-called IPv4 “free pool” allocated by the RIRs, has prompted some of the RIRs to encourage a trading market in IPv4 numbers. These IPv4 transfer markets allow organizations with a surplus to sell number blocks to organizations that need more.

Drawing on the records of the Regional Internet Registries, Whois data, and bankruptcy court records, our paper compiles factual information about the number of address blocks that have been traded and their size as a percentage of the overall address space.

Our data show that the quantity of IPv4 numbers traded exploded from only about 10,000 in 2010 to about 5 million in the first six months of 2012. The overall value of the IPv4 market, now estimated to be about $60 million in 2011 and 2012 based on an assumption of $10 per address, could increase to half a billion or even a billion US dollars if current rates of growth are extrapolated into the future. Surprisingly, the market is strongest in the ARIN region, which still has ‘free pool’ addresses to give out. Market-traded IPv4 numbers, according to our data, accounted for 26.3% of the numbers allocated by ARIN in the traditional manner in the first half of 2012.

The paper examines some of the very limited information that exists about the pricing of these resources, and whether the traded addresses are being routed or not. The paper then shows how this factual information highlights certain policy issues, in particularly the role of needs assessment and property rights in IPv4 number blocks.

Download the paper here: IPv4marketTPRC2012

7 thoughts on “The first study of the emerging market for IPv4 numbers

  1. Milton – 
    Thank you for conducting this study into the emergent IPv4 transfer market…  Such academic efforts are important in helping everyone better understand this important topic.   The principle conclusion of the paper (that being “there is a thriving and growing market for IPv4 number blocks”) is definitely true and needs repeating for those who might not have heard by now.
    I will note that popularity of buyers in the ARIN region is actually very simply explained by the fact that service providers, like all businesses, want certainty in their operations, and continuing to predicate growth on receiving 3-month-at-a-time allocations from the IPv4 free pool in the face of imminent depletion doesn’t provide that business certainty.  While there has been enormous progress getting content to IPv6 (and now the migration of the mobile providers based on that content being available), each service provider must develop their own transition plans, and the ability to receive 2 years worth of IPv4 space via transfer provides reassurance to providers while they work on this transition.
    It is interesting that after all of your study of the transfers that have occurred, you provide conclusory statements that providers are performing transfers to “avoid the needs assessment process” and/or  “strengthen recipients’ property rights’.   As is very clear from the court documents of the transfers subsequent to MSFT/Nortel, the recipients are all bound by Internet number resource policy in the ARIN region, and the transfers were predicated upon having the need verified by ARIN before the transfer could be completed.  For example, from the Borders/Cerner bankruptcy document referenced in your paper, we find the following language:
    “14. Notwithstanding anything herein to the contrary, including, without limitation, paragraphs J, 3-8, 11 and 16, hereof, (i) the IA Sale, as stated in the Agreements, is conditioned upon ARIN’s consent including any terms and/or conditions established by ARIN’s transfer policies or any other policies, guidelines, or regulations developed by ARIN and published on its website, as may be amended and supplemented from time to time (collectively, “ARIN’s Policies”), (ii) the transfer of the Debtors’ interests in the Internet Addresses to the Purchaser is subject to ARIN’s Policies, (iii) the Debtors and the Purchaser are required to comply with ARIN’s Policies before any transfer of the Debtors’ rights in the Internet Addresses may be effectuated.; (iv) ARIN is not required to take any action in violation of ARIN’s Policies in connection with or as a consequence of this Order, the IA Sale, or the Agreements, nor shall ARIN be required to apply a different standard to the transfer of the Internet Addresses than it does to the transfer of non-legacy Internet Protocol numbers. Nothing in this Order is intended, nor shall be construed, as exempting the Debtors and Purchaser from complying with the ARIN Policies. Subject to the conditions set forth in this paragraph, ARIN has approved of the transfer as contemplated herein and shall take reasonable steps to provide assistance for the transfer as contemplated in this Order.”
    It is a shame that you did not actually assess the bankruptcy transfers that occurred post-Nortel, as you would have found very similar language to this effect in each of them.  I imagine that would have made for a less stirring set of conclusions, but such is the burden of an academic study.
    John Curran
    President and CEO

  2. Milton,

    Thanks for a great report. I would like to comment on two aspects. First, I believe there is market activity that is transfer-like that is not reflected in your transfer statistics. Secondly, I see no evidence that ARIN creates a level playing field for all market participants and hence this IPv4 market can be more risky than need be. If you want to play by the rules you risk getting burned. Not playing by the rules is encouraged by the body that purports to be the judge and jury. I also propose a solution on our website at

    The missing market statistics are from two sources. The first is the numerous leases that temporarily transfer the use of IP’s from one user to another. It is somewhat ironic that when a recipient of my marketing email recently asked the ARIN PPML if leases are legal, no one could say that they are not. And yet a 100 year lease, which effectively transfers use of the IP’s from one company to another, is the same as a sale, except that the ARIN registration record is not updated. I suggested to that ARIN AC once before that their primary duty should be to create policies that preserve the accuracy of the registry and Owen DeLong, in his wisdom, pointed out that it was the duty of the staff to update the registry. So, the registry accuracy suffers. But I digress.

    A second type of transaction, and this is at least as common as leases, is the selling of companies for only the IP’s. So the IP’s stay in the old company name, the registry is out of date, and the IP’s are used. And the wise ARIN AC sits on the sidelines pleased that it is able to prevent IP speculation. So, the registry accuracy suffers. But I digress again.

    This brings me to my second point. The playing field is not level. As Milton et al prove in their report, these bankruptcy cases of Nortel/Microsoft, and Borders/Cerner show no evidence that needs justification was done. As an insider at Nortel, I can tell you that I do not believe Microsoft proved need. And in the Borders/Cerner case, Cerner was posted as desiring to acquire a /16 on the specified transfer listing service, as if they were approved for a /16, several days AFTER the bankruptcy purchase announcement.

    ARIN has never shown audit documentation to prove that need was illustrated.

    ARIN, show us the redacted submitted ARIN application form. Show us the lovely back and forth memos from Leslie Nobile’s staff where she says first 1) you are not at 80% utilization so you are denied 2) you don’t have a /20 so you are denied 3) you don’t need a /16 or /18 or whatever so you are denied 4) show me your data center addresses or you are denied 5) show me your customer lists or you are denied 6) show me your equipment lists or you are denied.

    In EVERY submission that IPv4 Market Group has taken to ARIN we are denied four or five times on every request, and then we go back and satisfy the request and then are denied for a new reason. We have multiple iterations where the above requests are made by ARIN staff.

    ARIN should produce the above redacted documentation for Microsoft and Cerner to prove to us once and for all that it is a level playing field. Otherwise it is unfair business practice.

    I submit to you that I do not believe it is a level playing field. John Curran, produce an audit trail for those two bankruptcy transactions to prove it is a level playing field, or otherwise, you are creating unfair business practices for the companies I represent.

    The ARIN Policies are so BAD that they cannot even be followed. So change them. Change them like IPv4 Market Group has submitted to you – to the point: remove needs justification for transfers. I agree that Borders/Cerner and Microsoft/Nortel should not have had to do needs assessment. These IP’s will continue to sit unused unless these companies have some sort of incentive to do the work to free them up.
    Wake up ARIN:

    1) Unless you can prove to me otherwise, you are currently following unfair business practices because your policies are so bad.
    2) Fix your bad policies and remove needs justification for IPv4 address transfers.

    Sandra Brown

    1. Wow. Thanks, Sandra for an eye-opening set of insights into a less visible side of the IP numbers market. We did intimate in the report, though we do not have the direct experience you do, that the resistance of some within ARIN to the emergence of this market creates incentives to apply different standards to bigger, more politically powerful companies involved in legacy transactions than to smaller, more vulnerable ones. Still, I have great trouble understanding why ARIN would penalize brokerages such as yours, which seem to be attempting in good faith to use the 8.3 specified transfer policy. It seems incredibly self-destructive. It is evident to all that “needs assessment” is crumbling as a criterion for IP number allocation, so eventually ARIN will have no choice but to eliminate it, or see it eliminated de facto. The problem is that in the transition period, there is not a clear, level playing field.

      1. Milton,

        I should have also made clear that ARIN should show us a few redacted transfer requests that were not in bankruptcy situations. For instance TW Telecom, my very own service provider at home (what am I thinking?), has three members on the ARIN AC, and had a /13 transferred from Merit last week. I wonder how many times Leslie Nobile’s team gave them “Rejected, show me your customer list” – type messages. ARIN needs to show us that audit too.

        A guy contacted me last week because he wanted a /22 from the ARIN pool. He was rejected because ARIN told him to go to his service provider for a block this small. So, he goes to his service provider. His service provider tells him they don’t have any IP’s for him and sends him to us. I tell him I don’t have any blocks this small and he should go back to ARIN. Can you picture ARIN providing customer service to him? Maybe the AC should spend some time on customer service policy rather than wasting time on needs assessments on blocks over which they rightfully have no jurisdiction.

        To your point, how is a small company to survive when the non-profit making the rules, seems to have no idea how they affect real people trying to run real businesses, has an AC with people who are living with a free Internet mentality that existed 25 years ago, and makes decisions arbitrarily such that constituents it is supposed to serve are not treated equally?

        Sandra Brown
        President, IPv4 Market Group

    2. Hi Sandra,
      MIlton (and Sandra),

      What Sandra’s experience proves is that she is unable to fill in a form correctly, or provide documentation that proves that the resources will be used on a network (and not reserved for re-sale).

      It doesn’t prove that there is not a level playing filed, nor does it prove that ARIN is penalizing anybody. It DOES prove however that both of you are willing to cast unfounded aspersions on competent professionals in order to pursue your own agendas.

      BTW, Need is easy to prove…that is IF you actually have a genuine need for the resources under current policy.

  3. Sandra –

    It is surprising that you’ve been having so much difficulty accomplishing transfers, given the very real success of the transfer policy that others have had, and as Milton has documented in his study (For those interested, the ARIN list of transferred IP blocks used in the study may be found here:

    ARIN cannot disclose information from others (even in redacted form) that has been provided to us under NDA during transfer requests, but if you need help understanding how transfers work and why your transfer requests do not meet policy, you always have the option sending details your request to the community (e.g. on PPML) and I’m confident that you’ll receive ample feedback documenting the same issues identified by ARIN’s Registration Services Helpdesk. We haven’t had others expressing your level of difficulty with making correct requests, but I will continue to monitor and perhaps we can provide a tutorial session with appropriate introductory material at a future ARIN meeting.


    John Curran
    President and CEO

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