Recent signals point to escalating jitters for IPv4 market

The transition to IPv6 will take years, or even more than a decade, and IPv4 will be necessary until then.

Publications discussing the transition to the IPv6 addressing system have revealed mounting anxiety regarding the economics and service impact of the global shortage of IPv4 addresses. Common concerns have implications for the top and bottom lines of ISPs, clouds, hosting services and other service providers for interconnected pathways. Taken together, the following perceptions suggest a growing appetite for transfers of increasingly scarce IPv4 addresses:

1. The transition to IPv6 will take years, or even more than a decade, and IPv4 will be necessary until then.

2. As more global regions run out of their "free" pools, the allocation of increased IPv4 costs between businesses and customers will increase prices throughout the distribution chain.

3. Although some service providers have been charging consumers for provisioning IPv4 addresses for quite some time, this is expected to increase.

4. There is no adequate replacement for highly functional but increasingly scarce IPv4 addresses until IPv6 is more widely - if not nearly universally -- adopted.

5. Pairing of dual-stacked IPv4 + IPv6 addresses is viewed as the best among a few strategies to ensure optimal functionality.

6. Imperfect solutions include NATS and Carrier Grade NATS, which allow multiple users to access through a single IPv4 address but in turn seriously degrades functionality (such as making it far more difficult for law enforcement to effectively police the Internet terrain.)

7. Buyers of IPv4 addresses are beginning to distinguish between the value of "legacy" and non-legacy addresses.

8. Public policy issues, principally impacted by the governance of the Internet through interconnected RIRs, will both encourage and dictate process for transfer of unused IPv4 addresses to enterprises who can use them.

9. As a result, while one can expect creative deal-making to be an aspect of IPv4 transfer transactions, this creativity will be limited by public policy and regulatory requirements, principally relating to the need and utilization plan that the proposed transferee/buyer can demonstrate to the RIRs.

As these concerns have been given voice, some of the more active pundits on Internet Protocol transition have begun to speculate about how certain buyers will decide on whether and how to use NATS, CGNATS, or whether and how to acquire IPv4 addresses to ensure optimal functionality until the transition is complete.

[QUIZ: Are you ready for IPv6?]

One such commentator, Lee Howard (Time Warner Cable) has recently suggested that in the short term, a cost of $40 per year for each CGN user is likely. In Internet Access Pricing in a Post-IPv4 Runout World, Howard flatly suggests that "until (IPv4) addresses reach $40 per IPV4 address, there is no reason to deploy CGN." He appears to envision prices of IPv4 addresses reaching at least $70 per address.

Another commentator, Geoff Huston (APNIC), made a stark comment along with Mark Kosters (ARIN) regarding the limits of CGN, noting a projected failure rate, depending on application, as high as 35% due to network complexity and fragility, coupled with glacial IPv6 deployment, as "unworkable", and warns that over the next five years of Internet growth: "Really simple transactions in a restricted application environment will still function, but not much else can be assumed to work."

In 2013, the video capabilities of mobile devices including smartphones, tablets and digital media players are expected to make a significant jump in capabilities and performance of video features. With this anticipated dramatic shift in usage the limitations of Carrier Grade NATs, and NATs in general, will become highlighted in the market. As users begin to employ their mobile devices for video and audio streaming, computer game play, and financial and business transactions, the inherent limitations and weaknesses of NATs will become more evident to highly interactive consumers. Eventually, consumers will begin to seek ISPs that offer dedicated IPv4 addresses without NATs to ensure or limit encountering such performance issues.

All this points to the need for increased planning for IPv6 transition, and for ISPs and others reliant on IPv4 addresses to provision themselves with an adequate, supply of these addresses.

Berkeley Research Group is the preeminent global resource and strategic consultant in helping companies confidentially secure long-term supplies of IPv4 addresses worldwide. Focused on the premise that failure to plan for the impending IPv4 shortage will be a costly mistake for many telecom, mobile and cloud sector enterprises, BRG and its partner companies offer a road map to IPv4 valuation, procurement, and utilization. A financial adviser for large blocks of legacy IPv4 addresses, BRG offers entities IPv6 migration clarity and assurance in an increasingly strained market. Contact the author at Gnachtwey@brg-expert.com.

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Greg Nachtwey

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