[address-policy-wg] 2014-02 New Policy Proposal (Allow IPv4 PI transfer)

Hi!

Thank you for your extensive and thoughtful reply; I've expanded on several of
these points already in my reply to Elvis, who also contributed a few thoughtful
comments, but here are a few additional notes:

On 04/18/2014 12:24 PM, Erik Bais wrote:
> Hi Dave, 
> 
> First of all thanks for your lengthy response and let me reply on it.  
> 
>> With such a policy in place, IP address broker needs to offers potential
> IP space buyers only a marginally lower price than the cost of being a LIR
> for the expected duration of use of 
>> the IPv4 PI space in question (and requesting this IP space from the last
> /8 or realizing an inter-LIR PA transfer) in order to create a perverse
> incentive for IPv4 address buyers to line 
>> the pockets of IP address brokers instead of stepping up and becoming
> members of the RIPE NCC.
> 
> Brokers don't own IP address. Same as that your house if you sell it, will
> never transfer ownership into the hands of the house broker, IP addresses
> are transferred between offering and receiving parties. The broker doesn't
> set the price, the offering party decides what the price is and has the
> final say if they want to agree on a bid that the receiving party is making.
> 

By changing the status of PI to transferable, an incentive is created for
brokers to identify existing PI holders willing to sell assignments, and match
them with the highest bidder independently of the RIPE NCC and the RIPE NCC
listing service - as that service presently only deals with PA transfers between
LIRs.

Additionally, since neither the seller not the buyer are required, under this
policy, to be LIRs, a "friendly LIR" (once again, presumably, the broker) is
required to facilitate the transfer vis-a-vis the RIPE NCC, while the RIPE NCC
sees nothing but added administrative burden, the cost of which is spread
between paying LIRs which were no part of this transaction nor benefited from it
in any way.

I'm all in favor of allowing existing PI holders to become LIRs themselves and
transfer the space from PI to PA status, at which point it will fall under
existing rules, fees, listing structure, etc; I see no reason to create an extra
"asset class" with custodial fees of 50 EUR/year (instead of 2,000 EUR/year for
a LIR) and encourage PI space to be bought as a speculative investment with the
RIPE NCC provided a very accurate registrant information of the buyer, and a
completely fabricated infrastructure which justifies a non-existent "need".

> 
>> This policy appears to fail the most basic economic incentive test, and
> will in practice create a secondary and desirable 'asset class' from which
> IP transfer brokers benefit considerably
>>  more than the community as a whole.
> 
> This policy isn't about economic incentives. I don't hold PI space, although
> I have a lot of customers that do. The policy goal is to provide a way to
> officially register PI transfer (which are already being done) to be
> correctly reflected into the registry in order to keep the registry
> accurate. 
> 

There is no reason for a way to officially register a PI transfer to exist
because a PI transfer is a non-existent construct. PI space, by policy, has been
designed to be specifically assigned to a single end user and a specific
infrastructure, and returned once this ceases to be the case.

>> To deconstruct the arguments which purportedly support this proposal:
> 
>> a) "Currently the policy for PA and PI space isn't the same and people
> don't understand the difference between the various types of IP Space."
> 
>> Ignoring that this is a superfluous argument which goes in the face of
> nearly two decades of policy, this appears to argue that letting PI space be
> sold would somehow eliminate this distinction.
> 
>> This, of course, is disingenuous. If this is indeed the goal, a policy
> should be introduced to allow PI space to be converted into PA space and
> assigned to a LIR
>> - this will enable its "transferability" and eliminate many of the
> concerns raised above by ensuring that all holders of "transferred" IPv4
> space are first rate LIRs who contribute financially toward the operation of
> the RIPE NCC and fall under all obligations > imposed on such.
> 
> Not all are created equal ... not everyone who has PI space or want PI space
> (and not PA space due to the requirement of becoming a member to that scary
> group of internet hippies that talk about bits and bytes or other legal
> reasons.. and have secret meeting with people attending like Randy Bush,
> yourself or Job Snijders ... ). Some entities can't, due to legal
> restrictions, can't become a part of a membership association ... So their
> only option is to either obtain PI space or ERX space. 
> And PI space is the only of those 2 that is non-transferrable currently.
> Asking my customers to hand over their PI space into our LIR, would make us
> the owner .. Asking them to become an LIR themselves, import the PI space
> and convert the space to PA, is just a detour, without any added value to
> the parties involved .. The offering party, the receiving party, RIPE ... We
> are trying to make things easier .. and accurate ... 
> 

Becoming a LIR to receive any additional IPv4 assignments, in any form, is a
fair and balanced requirement which puts everyone seeking IPv4 address space on
equal footing.

The shortage of IPv4 space does not disproportionately affect end users, why
would they enjoy a different set of rules and different price card?

In fact, it would be easier to argue that ISPs (which sell services to end
users) have a much stronger incentive to achieve optimal utilization of address
space as it directly contributes to their revenue, whereas an end user that
acquired an assignment and paid it in full has no further incentive in regards
to efficient use as the end user's business outcome may have no direct relation
to efficient IPv4 address space utilization.

There already are exemptions carved out for organizations for which this is not
an option for legal/independence reasons, and simply adding RIPE NCC direct
assignees as PA transfer recipient candidates solves this problem instantly.

>> b) "There is already some trade in PI space, however it is not documented
> or registered, which doesn't help to keep the registry updated."
> 
>> This is also disingenuous, as every IPv4 PI space holder has a contract
> with the sponsoring LIR (and indirectly, with the RIPE NCC). This LIR can,
> and should, regularly verify and update these details in cooperation with
> the registrant.
> 
> There are a few exceptions, but can you name me 10 LIR's out of the 10.000
> which have more than 10 PI objects .. all documents approved and which do
> regular (once every 2 years ?) checks with their customers if their PI
> contracts are up to date ? 
> I think that you might need to take of your pink glasses to this world ...
> We both go a long way back and I have you in high regards, but your view to
> this is too optimistic imho. 
> 

Seeing how we've managed to get tens of thousands of independent resource
holders to sign an end user agreement, none of this seems like "mission
impossible", it just requires will and focus - both of which are not currently
targeted at curtailing this behavior.

When 2007-01 came around, I was equally sure that the situation is hopeless, and
the level of involvement it requires from both LIRs and PI holders is
impossible. Yet here we are.

> I've seen documents been signed between 2 companies as side letters because
> they wanted to transfer the PI space and policy didn't let them ... I've
> been asked by interested parties who were ready to sign on the dotted line
> to purchase IP space and asked me for a second pair of eyes before they
> did.. And people have no idea, no clue.  ( No offence .. it is my personal
> observation ) We spend a LOT of time explaining to customers the differences
> between the various types of IP space if they ask us what the status is if
> they want to purchase of transfer IP space.  
> 

That's perfectly fine. The answer is "no", current policy does not allow PI
transfers, you do not own these resources, and you should let them be reclaimed
by the RIPE NCC if they are no longer in use. As a LIR, you should know this and
be able to communicate it with conviction. You may charge consulting fees in the
process ;-)

>> c) "A lot of current PI space holders are more than happy to have their
> assignments re-assigned to other parties, but due to the current policy it
> is not possible. The same goes for the documentation provided to the RIPE
> NCC during mergers or 
>> acquisitions of infrastructure with PI space. Due to the current policy,
> some changes in company names are marked as mergers or acquisitions when
> they are actually a transfer of IP space with added documentation to make it
> look like an merger 
>> or acquisition of infrastructure."
> 
>> If a legitimate transfer has occurred as part of legitimate organizational
> restructuring, there is no disincentive to document it. The disincentive
> only exists if the registrant fears the transfer's legitimacy may be
> questioned, which is exactly the intention 
>> for non-transferable, end-user assigned PI space.
>> Such transferred allocations could, and should, per current policy, be
> simply reclaimed.
> 
> Simply reclaimed ... that doesn't happen .. as it would simply go to the
> pool, while there are people that are currently offering money for the space
> ..Either in currently non-approved sales or long term leases etc. 
> 
> None of them are correctly documented in the registry ... Which is the
> end-goal .. to have a proper registry of who the current holder and user
> is.. 
> 

As I mentioned in my mail to Elvis, this can be mostly rectified by creating an
effective deterrent.

> If people are not properly registered in the RIPE Registry with the space
> they have, they will never be able to certify their resources under RPKI for
> instance .. as the maintainers don't match, the legitimate holder isn't
> correct etc etc. 
> The long-term goal is to have the registry correctly updated, (fair)
> distribution isn't a role or goal of RIPE anymore. The market will deal with
> that themselves. 
> 
>> d) "We want to have an open and honest communication to the RIPE NCC from
> the community and we need to make sure that the registry is up to date,
> without having to fluff up the procedures, bend the rules and truth in
> communication to the 
>> RIPE NCC to be able to transfer the IP space."
> 
>> Alternatively, elements which "bend the rules and truth" could be
> identified, and, within reason, have their resources reclaimed. Certainly,
> such enforcement can never be perfect - but speed traps also do not catch
> 100% of speeding cars.
>> With a few documented instances, this would create tremendous uncertainty
> and disincentive to engage in such practices from the buy side, as it will
> mean that any resources acquired in this manner may very suddenly get
> written off.
> 
> The RIPE NCC and her staff isn't the internet police .. and the policies
> should reflect the current status ... Which is to be able to maintain a
> proper Internet Resource Registry. 
> There is currently no requirement anymore to document need or documentation
> requirement anymore .. The idea that fair distribution is still in place is
> obsolete. There is currently a reservation for new LIR's that they can
> obtain a single /22 via the NCC, but they can't get more space.  There are
> still some checks which the NCC will do even with this policy in place, to
> see if the original (legal) documentation to which the PI was provided was
> correct at the moment of assignment. 
> But for the rest, the process should be fairly similar as with the current
> PA Transfers. 
> 
>> e) "The goal of this policy change is to get PI space on-par with PA space
> in respect to the ability to transfer it."
>> See (a). It seems very disingenuous to make PI and PA "equal for purposes
> of transferability" but maintain the distinction in all other aspects.
> 
> If we would work around this via the loop-hole you suggested, import the PI
> space into an LIR and transfer it to PA and then transfer the space.. how
> would that make it different to what we are proposing ? 
> The proposed proposal to allow PI space to be transferred will make it a lot
> easier. 
> 

A PI->PA conversion (and subsequent transition to another LIR) will assure that
anyone who receives IPv4 resources in any form from the moment the last /8
policy kicked in is a LIR, and would have received them under the same set of
rules, with the same cost basis, and the same conditions and obligations.

All those addresses will be eligible for listing under the same listing service,
and the recipient of such a transfer would be subject to constant outreach by
the RIPE NCC, as would any LIR, continuously encouraging the recipient to have
an effective IPv6 transition and eventual phase-out strategy for IPv4. It will
also make all space transferred in such a way sub-assignable (as it is now PA,
not PI) - thus removing any remaining deterrent to inefficient use due to
sub-assignment restrictions.

In the process, the community benefits as the cost of operating the RIPE NCC is
spread across an increased base of LIRs, and the ties between the RIPE NCC and
the resources become much stronger, since for a variety of reasons its
considerably more difficult to be an absentee LIR than it is to be an absentee
end user.

>> To summarize, I strongly object to this policy in its current form.
> 
>> I concur that the mobility of IPv4 PI space toward those who value it most
> is desirable - on the condition that this mobility occurs as part of a wider
> reform to eliminate the distinction between PA and PI status of IPv4
> resources.
> 
>> This should result in equitable burden for all resource holders toward the
> RIPE NCC instead of lining the pockets of IP address brokers by helping
> address space speculators which presently hoard IPv4 PI assignments against
> policy realize profits 
>> at the expense of the community.
> 
> Your missing the point Dave. People who hoarded are not brokers, brokers
> make a fee on a transaction ... Your so called hoarders are offering
> parties, but I doubt that you can show in numbers, a substantial number of
> hoarders as you call them, that would make a substantial amount of money
> which would justify not doing the policy and not allow a proper registration
> in the registry for those that have legitimate reasons.  
> 

I don't believe there is a legitimate reason for end users to unilaterally
decide to violate policy, capitalize on an assignment made to them with specific
restrictions, and walk away - in the process, not contributing more than 50
EUR/year to the RIPE NCC while realizing an arbitrary amount of profit.

Nor do I believe that we should encourage this behavior by suddenly accepting it
in the interest of database accuracy. The database accuracy need was already
addressed by 2007-01, and the lack of teeth in terms of revocation of resources
which are found no longer to be compliant with the terms of the assignment is an
operational matter that can be resolved by re-focusing the RIPE NCC to deal with it.

For anyone who is currently a LIR, pays LIR fees, engages in policy development,
and expects the community to abide by the policy this work group creates, the
argument "lets change it because some elements decided to violate it anyway in
the name of profit" should be outright insulting.

... and none of this deals with the fact that this policy goes completely in the
face of the actual wording of every single end user contract, which as per
2007-01 must include wording that explicitly prohibits the behavior this
proposal aims to enable, yet makes no mention of this fact, or any legal review
of the consequences (see mail on this subject to Elvis for more detail).

> Regards,
> Erik Bais 
> 
> 
> 

--
Respectfully yours,

David Monosov