[address-policy-wg] RE: The price of address space

Michael,

On Jul 22, 2009, at 2:50 PM, <michael.dillon at bt.com> <michael.dillon at bt.com 
 > wrote:
> Equilibrium? When I learned basic economics, scarcity caused
> prices to rise. After IPv4 runout, every block sold just makes
> IPv4 addresses scarcer which means that there will be no equilibrium,

> just increases until nobody can afford to pay the price.

Which is an equilibrium.  Not that this would occur, of course.  You  
seem to believe there is no constraint on the price of IPv4  
addresses.  This is silly.

If you are an enterprise, how many public IPv4 addresses do you really  
need?  How many of your machines could be renumbered at some cost into  
RFC 1918 space and put behind a NAT?  If you are an ISP, how many  
addresses do you give your customers by default?  How many do they  
really need?  How much internal infrastructure is numbered in public  
IPv4 that could be renumbered into RFC 1918 space (or better yet,  
renumbered into IPv6) if you could somehow find someone to pay for it?

As the cost of IPv4 goes up, there will be increasing incentives to  
make more efficient use of the address space.  People will consolidate  
their address holdings, putting their allocated-but-unused IPv4  
address onto the market.  Since this is increasing the supply of  
usable IPv4 addresses, this will tend to drive the price down.

> Then the whole thing comes crashing down when IPv6 gathers enough
> momentum and people start releasing large amounts of IPv4 addresses.

And you don't believe the anticipation of IPv6 deployment would have a  
depressive effect on an IPv4 market?

> We could prohibit 3rd part transfers

How? Given a choice between turning customers away or paying (say)  
$100,000 for a legacy /16, what do you think most ISPs would choose?

> We have a cartel today and the price is zero.

No it isn't. RIR membership is not free and the real costs are hidden  
in bureaucracy.  The whole reason a black market exists is because  
some people believe those costs are too high.

> It's been like
> that for many years now and nobody is complaining or investigating
> the RIRs.

People do complain, but that's not really relevant.  We're dealing  
with a fundamental shift in the environment.  The RIRs were created  
during a period of resource abundance.  It should be obvious by now  
that the policies created in that environment aren't particular  
applicable to an environment of resource scarcity.  As for  
investigations, they may come later, depending on what the RIRs do in  
the future.  Hint: some folks don't look highly on cartels that block  
free competitive markets (for good or ill).

Regards,
-drc