North American Network Operators Group

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Re: Market-based address allocation

  • From: Daniel Golding
  • Date: Thu May 01 13:40:04 2003

So, your theory is that providers will corner the market for IP space,
then price fix? And people will go along with this why? Because they are

If providers start buying up space, the space becomes more expensive, and
it gets harder for the providers to buy. Considering the liquidity
situation of most carriers, the nightmare scenerio of trying to make a
business case to engage in monopolistic practices and price fixing is
bizaare. No management team would agree to it, because of the legal
exposure, large cash outlay required, and uncertain return on investment.
"Ok, Mr. CEO, give me $100M to corner the market on something that no one
has ever made money on before. Oh yeah, we'll be sitting on that cash for
a while, as we engage in activities likely to result in your future
incarceration. Sign here, please"

Currently, IP space is artificially limited because people are sitting on
large amounts of it. Why? Why shouldn't they?

However, if a current /8 holder finds that they have $5M worth of IP
addresses, they would be incented to exchange some of those for cash.
Renumbering out of legacy space becomes something that you can make a
business case for. Addresses go on the market more, and the price drops.

We currently have a very bad situation - hoarding, artificial scarcity,
and a central control authority. Historically, these have proven to be bad
ways to manage a resource. See the economics (or history) book of your
choice for the background - other than Das Kapital.

A (gasp) capitalistic approach, with current safeguards against
monopolistic behavior and price fixing, would result in cheaper, more
available IP space. We all win. yay.

- Daniel Golding

On Wed, 30 Apr 2003, Jack Bates wrote:

> Bill Nickless wrote:
> >
> > I'm confused--are IPv4 netblocks so valuable that we can't expect the
> > market to set a reasonable price, or are IPv4 netblocks (sets of
> > integers) so worthless that they're not worth the trouble of trading at
> > all?
> >
> The issue is that it's just plain smart for large providers to buy all
> the space up if they can. Businesses are into making money. When they
> can, they will monopolize a market.
> Most commodities cannot be saturated. You don't buy all the oranges in
> the world and then maintain ownership until the end of the world. The
> next year, everyone will produce more oranges. Even money is
> replenished, and how much is in circulation is governed by the
> corresponding government.
> IPv4 address space, while adequate to currently meet our needs, is
> limited. The reason it is adequate is because we do require
> justification. Take away justification and put on a $ value, and the big
> money makers will buy it all, lease it out to people at variable rates,
> and watch the money roll in. Never underestimate greed. It's the
> foundation of business.
> -Jack