Who Will Buy My IP Addresses? Two Blocks for a $Million.

Louie Lee / 李景雲

Network operators on the NANOG mailing list saw a message over the past weekend from a company offering to sell its IP addresses.

Fast-forward to a not-so-distant future….

Well, now you’ve done it.

No, you didn’t do anything bad. As the matter of fact, you’ve just come up with a new, innovative, interactive, online technology, and everyone is going to want to play with it. EVERYONE.

Sure, you can try using a cloud service. Who wouldn’t want to when it seems so easy? “Reliable”, “scalable”, and “inexpensive” are how cloud services are being sold. Indeed, a cloud service can be a wonderfully powerful thing. It can bring new services to the world at a speed not previously possible – but not your brainchild.

You require far more than just computing power. To bring your idea to the world, you will have to put equipment on the Internet – a lot of equipment: about half a million pieces. No problem, right? There aren’t any unassigned IPv4 addresses left, but since you’ve been given $15M to make this happen, you spend half of it on the nearly 700,000 IP addresses that just came up for sale. Awesome.

Back to today’s reality….

How far fetched is this scenario? Do you have $7.5M to spend? Microsoft did just that when the software giant gave that much money to Nortel for 666,624 IPv4 addresses back in March 2011. That works out to just over $11 per address. Not bad.

How Much are IP Addresses Worth?

One IPv4 address exchange firm lists offers by address holders for as low as $4 (for very large blocks) up to $30 per IP address for a block of 256 addresses.

Prices on IPv4 Offers (Source: TradeIPv4.com, Aug 10, 2011)

It’s interesting to see bids right now considering that low-cost addresses are still available today from most of the Regional Internet Registries (RIRs).

Hurricane Electric offers a number of widgets describing how many addresses remain in each region and the estimated exhaustion time.

There is very little argument that IPv4 addresses have value, and that certain ones are more valuable to some people than others. For instance, the address blocks that were assigned without contracts in the early days are seen as ones that are not restricted (or less restricted, from some viewpoints) by policies that were later put in place to govern ownership and transfers.

Other address blocks are considered to be “favored” because they had a specific use on the public Internet. Such is the case with the auction of Goodmail Systems assets after CEO Daniel Dreymann announced the closing of his business in an email to his customers. In that email, he alluded to the effort involved in making IP address changes:

“We are working with our ISP partners to accommodate a transition period for your IP addresses so as to decrease the effort required for warm up.”

Goodmail’s IP addresses were already qualified by many e-mail services as being clear of unsolicited messages, aka mail spam. If another company in which a large part of the business relies on sending emails to their customers whose email accounts reside everywhere, these IP addresses would be of special value because there wouldn’t be much of a “warm up” period to qualify the servers on those IPs.

The handlers for the asset liquidation certainly thought that there was plenty of value. In a package offer where the assets bundled with the IP addresses were of questionable value, the minimum bid for the package was $75,000. For this /21 IP block where there are 2,048 IPs, that’s over $36 per IP. (Refer to the letter below.)

It should be noted that seller acknowledged that the IP transfer would be subject to ARIN’s approval. To this day, however, there is little evidence demonstrating that the transaction ever occurred.

Speaking of approval by ARIN, John Curran, President and CEO of ARIN responded to that offer to sell IP addresses we saw over the weekend. In it, he refers to the policies that the ARIN community developed to govern IP transfers, and noted that the transfer “must be to another party that can demonstrate corresponding need.”

Are IPv4 Addresses Valuable to You?

It seems ludicrous to develop a business plan that would serve only a small percentage of a potential market, but that’s what you would be doing if you offer an online service today that is not available on IPv4.

The cost of obtaining that IPv4 address space will surely rise even as IPv6 adoption expands. But one day, it will become more valuable to be on the IPv6 Internet than the legacy IPv4 Internet.

When that scale tips, the IP brokers will have to find a new business. But for the rest of us, if we can just include IPv6 in our network and systems deployment plans, we can sail right over that hump. And in doing so, we can even bring that tipping point closer as the cost of obtaining IPv4 soars right up until that point.