ARIN IPv4 Address Exhaustion… Keep Calm and Internet On

“No, the sky is most certainly NOT falling,” is my typical response to any question regarding the exhaustion of our IP version 4 (IPv4) public address pool. With ARIN (the Regional Internet Registry responsible for managing IP address allocations in North America) likely to issue its remaining IPv4 address space in the next few days, we can only expect this event will come with plenty of fan fair and news reporters pandering FUD (fear, uncertainty, and doubt) to the masses in order to drive up hysteria prior to the sky falling. In fact, ARIN has already failed to fulfill at least one request for address space due to insufficient available space… but as another reminder, the sky is still not falling.

The immediate impact…

The reality is even with ARIN exhausting the remainder of its IPv4 address space pool, there will be zero immediate impact on almost everyone using the Internet. The average consumer will have no issues accessing their favorite web sites and businesses will continue doing online transactions just as they did the previous day. The groups most likely to feel an impact are those who interact with the Internet backbone by advertising IP address space which has been directly allocated to them by ARIN, mostly including ISPs, cloud/managed service providers, and large enterprises. If ARIN cannot immediately fulfill a request for new address space businesses can have issues onboarding new customers, suffer an inability to grow their networks, and have trouble creating transition networks for migration efforts. Once ARIN has completely exhausted its IPv4 address pool, organizations who find themselves in this predicament will have a few options:

Option 1 – The Waiting List

  • Fulfillment occurs when sufficient address space to satisfy a request is returned to ARIN
  • Unlikely solution because organizations will be clinging to their existing space for fear of not being able to ever get it back

Option 2 – Inter-organizational Address Space Transfer

  • Organizations with existing IPv4 address space allocations can transfer it to another organization
  • Much more likely solution as organizations with allocated but unused space (of which there is a lot) realize the new found value of this asset (a further reason why Option 1 is unlikely)

Option 3 – Re-address Existing Networks

  • Organizations will change how current IPv4 address allocations are employed on their network to more efficiently utilize the address space and free up addresses for other purposes
  • Where technically feasible, this will likely come at the cost of requiring much reconfiguration and associated maintenance windows

Scenario 1 is very unlikely so we won’t discuss that in detail, but scenario 2 presents a very intriguing situation as it has already started happening in some cases. Four years ago Microsoft reportedly paid $7.5m to Nortel for 666,624 IPv4 addresses (roughly $11.25/address) as a part Nortel’s Chapter 11 bankruptcy asset liquidation. With four years of time and exhaustion of the ARIN IPv4 address pool passing, it can only be assumed this valuation has increased and it will be very interesting to see how the open market for IPv4 address space evolves. Some very unlikely organizations such as public university with very large IPv4 address space legacy allocations (e.g. prior to ARIN requiring justification) might suddenly find they are sitting on a very valuable asset. Their IPv4 address space assets could now be easily valued into the multiple millions of dollars. This option also presents the very interesting possible formation of an IPv4 address space commodities market. A quick online search shows a small amount of chatter about this topic and warrants ongoing observation.

Scenario 3 seems like a move to be made out of desperation or desire for revenue generation, risking network stability in lieu of reclaiming IPv4 address space. It is highly probable organizations will re-address their networks for the purposes of freeing up IPv4 address space to be sold on the open market as a source of revenue. Many ISPs “re-organizing” their IPv4 address space for the purposes of selling it creates a very real concern that they will implement kludgy solutions such as Carrier-grade Network Address Translations (CGN). If these start running rampant across the Internet (which has already occurred at some ISPs) it can cause a lot of very real issues with how the Internet functions.

The final result of the coming scarcity of public IPv4 addresses is yet to be seen and I don’t think it will be a “doomsday” event by any means. We will likely see a combination of the 3 scenarios come to fruition and I think that scenarios 2 and 3 will be the most prevalent.  However, there will be concerns with how things are regulated with new marketplaces and how existing regulations will apply or need to change to adapt.

I’ll be posting some follow up information around this topic in the coming days as events unfold so please check back for more details around the impacts, what you can do as a business to prepare, and some good news about how this event horizon will help us evolve into new standards (IPv6!)

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