[address-policy-wg] 2007-08 New Policy Proposal (Enabling Methods for Reallocation of IPv4 Resources)

Michael, all,

> > The address space in question is already allocated, hence
> > unavailable.  The question is how to incent folks to put
> > their "allocated but unused" address space back into play.
> > Stamping your foot and declaring "markets are bad"
> > isn't likely to be too helpful.

> And thinking that you can influence address-holders decision making
> without pricing an IPv4 at several hundred thousand dollars, is also not
> likely to be too helpful.

I don't think that anyone knows how the pricing is going to work yet,
so I'm going
to leave aside discussion of your specific figure. Similarly, "an
IPv4" (an IPv4 what?)
probably needs clarification, but it's not the substantive issue.

Notwithstanding the detail of the numbers, which is obviously a
crucial detail, I have to take
issue with your assertion is that we cannot influence address-holder
decision making
without setting a price, and setting it high.

The fact is, after IPv4 exhaustion we will still need IPv4 addresses.
Address holders
who have more IPv4 addresses than they will ever use will have a
strong incentive to
exchange those addresses for money, and IPv4-dependent organisations will have
a strong incentive to purchase them. That's going to happen, make no
mistake, because
as an industry, we are *nowhere near* where we need to be in order to
have an IPv6
world by 2010.

So, there's already no question of address holders being uninfluenced.
They certainly
will be by 2010, if they're not already, and such pricing as emerges
in a back-door market
does not have to be high in order to provoke the release of addresses
in an ad-hoc fashion.
It's entirely plausible that a steady drip-feed of low-priced prefixes
would suit many
organisations better than holding on for higher prices (think
cashflow, for example).
For these and other reasons, there'll be no question of, for example,
the RIR system being
frustrated in its attempt to influence address-holders because of too
low a price. The danger
is not the RIR system and is not the market; the danger is the
unregulated market, and the
chaos of the current post-exhaustion scenario.

> Any organization who contemplates selling a block of IPv4 addresses has
> to conside the reality that it would be an extremely constrained market
> where the supply is going down and they are not making any new IPv4
> addresses.

Indeed - that's exactly right, and that's one of the reasons why it's
such a powerful
incentive to move to IPv6, which is, IIUYC, where we both want to be.
But you must
also consider that such a market as we proposed is not intended to be
*the* solution:
it is explicitly not for continually recycling existing prefixes. It
is to provide liquidity
to the participants for an undefined period until IPv6 is a workable day-to-day
alternative to IPv4. So the fact that the market is constrained
*doesn't matter* in the
long term - we're inventing our way out of scarcity elsewhere.

> This means that if you do sell, and then discover that you
> needed those addresses after all, the price to buy them back could be
> substantially higher than your sale price. In the face of continually
> rising prices, it is risky to sell any addresses at all, unless you are
> absolutely certain, at the CEO/board level, that the addresses are not
> needed, or if the price that you would receive is at least several
> hundred thousand dollars.

(Again, I'm not going to talk about the figures here,  but that's not a central
point in your argument.)
If I parse what you're saying correctly, you posit that the danger of
accidentally
selling addresses that it turns out that you'll need will motivate
people to stay
away from the market, and therefore cause rising prices and liquidity problems.
Well, my argument would be that from an economic point of view, organisations
are incentivized to only sell what they explicitly don't need. We all
know of organisations
that have much more spare than they could possibly use, so it's unclear where
the original 'dump everything' motivation could come from. Furthermore, the
meta-assertion that "a market might have problems" reinforces the fact
that the community *must keep transfers where it can see them*. If they are
happening out of sight, we have no direction observation or control of the
same set of problems.

> This is a recipe for a gold-rush style market followed by liquidity
> collapse which will have additional knock-on effects in the real
> markets, i.e. share prices.

If you watch our talk webcast (when RIPE gets around to putting them up) you'll
see more details of our argument here, but in brief the dangers of *not* having
a realistic plan in place will cause as much damage to stock prices etc as much
as leaving things alone will.

I'm in sympathy with you on the topic of avoiding gold-rush markets
and liquidity
collapses, but I think with a bit of careful planning, we'll be able
to avoid both. (If only
we'd had that careful planning years ago, then we could have saved ourselves a
lot of trouble. But now we're in the position of having no wholly good choices,
it's only a question of choosing which set of bad effects we want.)

Niall