📄 rfc1744.txt
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Network Working Group G. HustonRequest for Comments: 1744 AARNetCategory: Informational December 1994 Observations on the Management of the Internet Address SpaceStatus of this Memo This memo provides information for the Internet community. This memo does not specify an Internet standard of any kind. Distribution of this memo is unlimited.Abstract This memo examines some of the issues associated with the current management practices of the Internet IPv4 address space, and examines the potential outcomes of these practices as the unallocated address pool shrinks in size. Possible modifications to the management practices are examined, and potential outcomes considered. Some general conclusions are drawn, and the relevance of these conclusions to the matter of formulation of address management policies for IPv6 are noted.1. Introduction The area explicitly examined here is the allocatable globally unique IPv4 address space. Explicitly this includes those address groups uniquely assigned from a single comprehensive address pool to specific entities which are then at liberty to assign individual address values within the address group to individual hosts. The address group is handled by the technology as a single network entity. At present these addresses are allocated to entities on a freely available, first-come, first-served allocation basis, within the scope of a number of administrative grounds which attempt to direct the allocation process to result in rational use of the space, and attempt to achieve a result of a level of equity of availability that is expressed in a sense of multi-national "regions" [1]. In examining the current management policies in further detail it is useful to note that the IPv4 address space presents a number of attributes in common with other public space resources, and there are parallels in an economic analysis of this resource which include:Huston [Page 1]RFC 1744 Management of Internet Address Space December 1994 - the finite nature of the resource This attribute is a consequence of the underlying technology which has defined addressed entities in terms of a 32 bit address value. The total pool is composed of 2**32 distinct values (not all of which are assignable to end systems). - the address space has considerable market value This valuation is a consequence of the availability and extensive deployment of the underlying Internet technology that allows uniquely addressed entities the capability to conduct direct end- to-end transactions with peer entities via the Internet. The parameters of this valuation are also influenced by considerations of efficiency of use of the allocated space, availability of end system based internet technologies, the availability of Internet- based service providers and the resultant Internet market size. - address space management is a necessary activity Management processes are requires to ensure unique allocation and fair access to the resource, as well as the activity of continuing maintenance of allocation record databases. Increasing rates of Internet address allocation in recent years imply that the IPv4 address space is now a visibly finite resource, and current projections, assuming a continuation of existing demand for addresses predict unallocated address space exhaustion in the next 6 - 12 years (rephrasing current interim projections from the IETF Address Lifetime Expectancy Working Group). There are two derivative questions that arise from this prediction. Firstly what is the likely outcome of unallocated address space exhaustion if it does occur, and secondly, are there corrective processes that may be applied to the current address management mechanisms that could allow both more equitable allocation and potentially extend the lifetime of the unallocated address space pool. These two issues are considered in the following sections.2. Outcomes of Unallocated Address Space Exhaustion - No change in current Address Management Policies As the pool of available addresses for allocation depletes, the initial anticipated outcome will be the inability of the available address pool to service large block address allocation requests. Such requests have already been phrased from various utility operators, and the demand for very large address blocks is likely to be a continuing feature of address pool management. It is noted that the overall majority of the allocated address space is veryHuston [Page 2]RFC 1744 Management of Internet Address Space December 1994 inefficiently utilised at present (figures of efficiency of use of less than 1% are noted in RFC 1466, and higher efficiency utilisation is readily achievable using more recent routing technologies, such as Variable Length Subnet Masks (VLSM) and disjoint subnet routing). Given the continuing depletion of the unallocated address pool, and the consequent inability to service all address allocation requests, it is a likely outcome of interaction between those entities with allocated address space and those seeking address allocation that such allocation requests could be satisfied through a private transaction. In this situation an entity already in possession of a sufficiently large but inefficiently utilised allocated address block could resell the block to a third party, and then seek allocation of a smaller address block from the remaining unallocated address space. The implication is that both address blocks would be more efficiently utilised, although it is the entity which has large blocks of allocated address space which would be the primary beneficiary of such transactions, effectively capitalising on the opportunity cost of higher efficiency of address block use. Such reselling / trading opportunities which involve the use of the unallocated address pool would in all likelihood be a short term scenario, as the high returns from this type of trading would increase the allocation pressure from the pool and act to increase depletion rates as more pressure is placed to claim large address blocks for later resale once such blocks are no longer available from the unallocated pool. Following exhaustion of the unallocated address pool a free trading environment in address blocks is a probable outcome, where address blocks would be bought and sold between trading entities. The consequent market, if unregulated, would act to price address space at a level commensurate with the common expectation of the market value of addresses, trading at a price level reflecting both the level of demand, the opportunity cost of more efficient address use, and the opportunity cost of deployment of additional or alternate internetworking technologies to IPv4. It is interesting to note that within such an environment the registry (or whatever takes the place of a registry in such an environment) becomes analogous to a title office, acting to record the various transactions to ensure the continued accuracy of "ownership" and hence acts as a source of information to the purchaser to check on the validity of the sale by checking on the validity of the "title" of the vendor. This impacts on the characteristic features of Internet address registries, which effectively become analogous to "titles offices", which typically are structured as service entities with "lodgement fees" used to fund the action of recording title changes. Whether existing registries adapt to undertake this new function, or whether other entities provide this function is a moot point - either way the function is aHuston [Page 3]RFC 1744 Management of Internet Address Space December 1994 necessary adjunct to such a trading environment. It is also anticipated that in an unregulated environment the trade in address blocks would very quickly concentrate to a position of address trading between major Internet providers, where a small number of entities would control the majority of the traded volume (market efficiency considerations would imply that traders with large inventories would be more efficient within this trading domain). It is also reasonable to expect that the Internet service providers would dominate this trading area, as they have the greatest level of vested interest in this market resource. This would allow the Internet service provider to operate with a considerably greater degree of confidence in service lifetime expectation, as the service provider would be in the position of price setting of the basic address resource and be able to generate an address pool as a hedge against local address depletion for the provider's client base. There is of course the consequent risk of the natural tendency of these entities forming a trading cartel, establishing a trading monopoly position in this space, setting up a formidable barrier against the entry of new service providers in this area of the market. Such a scenario readily admits the position of monopoly- based service price setting. Compounding this is the risk that the providers set up their own "title office", so that in effect the major trading block actually controls the only means of establishing legitimacy of "ownership", which in terms of risk of anti-competitive trading practices is a very seriously damaged outcome. Assuming a relatively low cost of achieving significantly higher efficiency address utilisation than at present, then the resultant market is bounded only by the costs of agility of renumbering. Here renumbering would be anticipated to occur in response to acquisition of a different address block in response to changing local address requirements, and the frequency of renumbering may occur in cycles of duration between weeks and years. Markets would also be constrained by deployment costs, where local address trading within a provider domain would have little cost impact on deployment services (as the aggregated routing scenario would be unchanged for the provider and the provider's peers) whereas trading in small sized blocks across provider domains would result in increased operational service cost due to increased routing costs (where efforts to create aggregated routing entries are frustrated by the effects of address leakage into other routing domains). In examining this consequent environment the major technical outcome is strong pressure for dynamic host address assignment services, where the connection and disconnection of hosts into the Internet environment will cause a local state change in allocated addresses (which may in turn trigger consequent extended dynamic renumberingHuston [Page 4]
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