The art of finding, buying and selling unused IPv4 addresses

IPv4
"Pssst! Hey buddy, wanna buy an IPv4 block? Hardly used, great condition ..." Credit: Photon photo / Shutterstock.com

Believe it or not, there’s still a lot of unused IPv4 addresses out there – and there’s an active market of buyers and sellers. But it’s anything but straightforward. At the APNIC-hosted Apricot2017 event last week, registrars, brokers and buyers of IPv4 numbers shared their experiences on navigating the tricky IPv4 number market in (and beyond) the APNIC region.

Addrex chairman Peter Thimmesch spoke of a hidden, untapped source of IPv4 address space that was allocated in the late eighties and early nineties at the dawn of the Internet project.

The primary source of IPv4 numbers in the Asia-Pacific region is, of course, APNIC, which was given 45 /8 numbers by IANA. That’s about 780 million numbers. The secondary source is legacy. Early registration between 1983 to 1987 saw a lot of space given out – about 1.4 billion numbers. Looking at the Class A space, many organizations got as much space as APNIC did. Of course, there are caveats like the US Department of Defense getting 13 /8’s, but there are still well over a billion numbers – and the shocking part is that the vast majority is not being used.

Thimmesch said that there is no direct way to find out how much unused space there is, but his company has talked to several hundred holders of Class Bs. The Class A space has been picked clean and there is not a lot of unused space – but there is an immense amount of unused space in Class Bs.

“We believe that there are 8,000 /16’s that are currently not used, but that isn’t with one company,” Thimmesch said. “There are about 6,140 entities that hold that address space.”

According to Thimmesch, in the early 1990s, the goal at the time was to give out as much address space as they could to make the Internet a success. So companies who wanted to get onto the Internet would get a frame-relay E1/T1 or ISDN connection and simply fill out a form to get address space. If they had more than 240 hosts, they would be moved up to a Class B /16.

The guy who filled out that form in 1989 is probably retired now, and nobody in the C-suite knows about those IPv4 numbers – in part because they were free of charge, so there was nothing to record in the accounting ledger. That’s assuming the company even still exists: many have either out of business or have been acquired.

The upshot: these blocks are unused. Nobody knows they even exist. They are clean and do not have reverse DNS, and sender is neutral. This is a huge secondary source of IPv4 address space but nobody knows that they have them, Thimmesch said.

IPv4 shopping tips

David Huberman, principle program manager at Oracle’s cloud division, shared his experiences as a corporate buyer of IPv4 addresses for over 20 years.

Before going to market, the IPv4 buyer needs a sense of the purchase price, transaction fees, bank fees for escrow and brokerage fees.

Most importantly, Huberman noted, it is critical to get quality legal counsel. Buying IPv4 address space is not like buying a used printer – it’s more like a company merger and acquisition deal, and the number of legal documents can be daunting to engineers. Legal counsel is not cheap and there is much more to it than just the purchase price in the terms and conditions.

“Those of us in APNIC do not need to just buy from the APNIC region,” he said. “It is possible to even buy from LACNIC [Latin America] and AFRINIC [Africa] even though the two have policies that do not allow address space to be transferred out of the region.”

In other words, the buyer can still buy from LACNIC or AFRINIC but cannot transfer the numbers to APNIC. That said, RIPE (Europe, Middle East, Central Asia) and ARIN (North America) can move numbers to an account at APNIC.

The IPv4 market is a very difficult, very opaque market, Huberman said. Nobody knows who is selling and nobody knows who is buying. Brokers exist that work very hard to put buyers and sellers together. Pro tips from Huberman include:

  • Email is not a great tool for negotiations. There is very high value in doing negotiations face to face.
  • Timing is also a major issue. For example, a buyer may want to take three /18’s now and wait for another /18 later. This happens a lot in the market.
  • Block qualities to consider: Is it being routed? What is its routing history? Is it on any block lists? Has the seller has been only using the space internally? (This is important – if they are routing it internally it might not be able to connected to the buyer’s services.)
  • If you’re going to use escrow, use only well-known, trusted banks.
  • Beware of fraud. Huberman estimates that 30% of sellers out there are fraudulent, selling non-registered or hijacked spaced.

IPv4 futures

Amy Potter, head of IP address brokerage at Hilco Streambank, said that the cost of IP addresses has been dramatically increasing over time. Consequently, one common approach these days is to draw up a futures contract where the buyer purchases as much as possible and transfers it in tranches. Futures contracts are also beneficial for the sellers, as many want to sell but need time to do renumbering.

IPv4 purchases from a bankruptcy estate is an interesting example where due diligence is needed, Potter said: “Are the IPv4 addresses in the assets, and does the trustee have the rights to sell it?”

APNIC services director George Kuo provided a checklist of what is needed for a transfer. The current market transfer policy was amended in late 2011 requiring recipients to provide justification for buying addresses. APNIC allows for pre-approval of justification, after which it will help post the pre-approval so that sellers of IPv4 addresses can approach the buyer either directly or through APNIC.

Conditions:

  • Minimum size: /24
  • The recipient must be a valid, currently registered account with APNIC
  • Addresses must not be under any dispute.

Transfer fees are 20% of the annual fee – and because the recipient is adding more address space, the following year’s membership renewal will be affected.

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