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April 6, 2015 Comments (18) Views: 52348 Economics, Middle East, Politics

IPv4 Address Market Takes Off

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As the available supply of IPv4 addresses dwindles, the market for these virtual commodities is heating up.  In recent months, the pace of the address transfers has greatly accelerated as evidenced by RIPE’s table of IPv4 transfers, as well as the increasing number of IPv4 brokers facilitating the exchange of IPv4 address space.  However, the transfer of IPv4 address space isn’t always problem-free and, in this blog, we’ll review this new trend and some of the issues that can arise.

Buying and selling IPv4

In 2011, when Microsoft paid $7.5 million for 666,624 IPv4 addresses as part of the Nortel bankruptcy, observers wondered whether this development would usher in the era of the commercial sale of IPv4 address space.  As statistics from European registrar RIPE show, the market may have had a slow start, but we’re in that new era now.

RIPE’s table of transfers of provider aggregatable (PA) IPv4 address clearly shows a rapidly increasing rate of transfers of IPv4 address blocks and unique IPv4 addresses.  The following two graphs illustrate the uptick in recent months of address space movement.  February 2015 saw the most organizational transfers (373), while November 2014 saw the most unique address transfers (nearly 2 million).

count.dat2-3 PA_transfers.dat3-3

As noted on IPv4 address broker V4Escrow’s blog post from February, the number of transfers in the RIPE region far outpaces any other region.  Elvis Velea of V4Escrow gave a talk last year at MENOG about the IPv4 transfer market in which he described to process and prices observed.  Prices ranges from $9-$11/address.  Microsoft paid $11.25/address in the 2011 Nortel bankruptcy.

Thanks to the data compiled by RIPE, we can analyze who is selling and who is buying and where these parties reside.  For the 1,848 address ranges (blocks) transferred between 1 January 2014 and 30 March 2015, 1,069 (58%) came from Romanian organizations.  In fact, 947 (51%) of all of the blocks transferred in the RIPE region were from a single organization, namely, Jump.ro. Jump is willing to sell large blocks of IPv4 address space (around $10/address) or lease smaller blocks for $0.50/address/year.  We wonder what kind of repo men they use for nonpayment.

Kidding aside, Romanian address space is pretty popular.  Of the 4,656 routed prefixes that currently make up the Saudi Arabian part of the Internet, 1,498 or almost a third of them were Romanian just a few months ago.  The Syrian state telecom got 5.155.0.0/16 from Romania’s Nav Telecom last August and Iranian telecoms bought over 1 million unique IP addresses in 85 transfers over the past year (80% from Jump.ro).  Saudi Telecom received 17 IPv4 transfers since September last year representing over 1.5 million IP address:  14 were from Romanian sources and the other 3 were from Ukraine.  At $10/address, those addresses would have cost Saudi Telecom $15 million – a non-trivial amount of money.

In fact, Romania is bucking the trend of monotonically increasing routing footprints exhibited by nearly every other country on earth.  When we look at the amount of Romanian address space routed over the past year (pictured below), the day-to-day count declines by over 3 million starting last summer as their IP sell-off begins.  Perhaps they are just getting out ahead of the transition to IPv6 and selling off address space to the 97% of Internet users still using the old IPv4 Internet?


RO.dat-2
Routing issues

In January, I wrote a post about MITM BGP hijacks that turned out to be caused by a seller of address space accidentally re-announcing transferred addresses and thereby creating a MITM BGP hijack.  While most IPv4 transfers appear to be free from routing incidents, the A2B Internet incident isn’t an isolated event.

One of the more interesting cases of ongoing contention of transferred IPv4 address space is between US telecom giant Level 3 and the Mobile Communication Company (MCI) of Iran.  On 27 October 2014, MCI received 46.51.0.0/17 from Netserv in Romania and began routing it immediately.  However, there was a problem.  Level 3 already announced 8 more-specifics of this address space (46.51.16.0/21, 46.51.24.0/21, 46.51.32.0/21, 46.51.40.0/21, 46.51.80.0/21, 46.51.88.0/21, 46.51.112.0/21, 46.51.120.0/21).  Lest anyone think there is any funny business going on here — Level 3 has been announcing those routes continuously since early 2012 – likely covering routes for their customer Romanian incumbent Romtelecom.

The Iranians evidently noticed they were having trouble receiving inbound traffic to those IP address ranges because in early December they started announcing more-specifics of each of the Level 3’s more-specifics.  By doing so, MCI nullified Level 3’s routes and regained use of the address space.  MCI also had to announce two more-specifics (46.51.108.0/23 and 46.51.110.0/23) to wrest control from AS51656 — a Romanian ISP still routing a range within the /17 the Iranians bought in October.  For the /24’s, there is nothing the Iranians can do but announce equivalent /24’s and go head-to-head with the other origin.  The graph below illustrates the recent origins of a /24 in the /17 purchased by MCI. Half the Internet believes that Romtelecom is the origin while other half chooses the Iranian origin.


46.51.105.0_24_1428170010_1428299610
While the overall trend of RIPE’s IPv4 transfer movement is from Romania to the Middle East (Iran, Saudi Arabia, UAE), there are also movements in the opposite direction.  Take, for example, the case of this British IT Firm Essensys (no relation to Renesys) that received a /22 from an Iranian source last February.  The Iranian organization began announcing the address space in September of last year and then for 22 days (pictured below) it was announced from both Iran and England before finally settling on just the British origin.

185.57.92.0/22 185.57.92.0/22 Azadnetrasaneh Private Joint Stock Company essensys Ltd 02/09/2014


185.57.92.0_22_582_15_0_583_27_0
Besides the possibility for routing snafus, address transfers can complicate the difficult process of IP geolocation, introducing another potential source of errors that commercial geolocation providers like Maxmind have to contend with.

RO_IR_geo
Conclusions

So what are the implications of all this?

Now that the Romanians have demonstrated that there is lucrative business to be had in selling off IPv4 address space, will we see ISPs in developing countries rush to sell off their address space for some quick cash?  If such sales result in the IPv4 space getting sliced more and more thinly, we can surely expect the global routing table to increase in size, perhaps dramatically, as a result.  Will this cause more router meltdowns?  Also, what does this phenomenon say about IPv6 adoption?  IPv6 address space is effectively free and infinite, yet more and more organizations are apparently now paying large sums to continue to acquire IPv4 addresses.  Are the impediments to IPv6 adoption simply too great?  Or are these transfers merely a convenient expedient during a time of transition?

The analysis in this blog post formed the basis for today’s story in the Washington Post by Craig Timberg:

Other press coverage of this story includes the following:

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18 Responses to IPv4 Address Market Takes Off

  1. […] companies over the past 15 months have bought more than 1 million IP addresses, said Dyn, a New Hampshire-based Internet performance analysis company. At roughly $10 per address, this […]

  2. […] companies over a past 15 months have bought some-more than 1 million IP addresses, according to Dyn, a New Hampshire-based Internet opening investigate company. At roughly $10 per address, a […]

  3. […] IPv4 Address Market Takes Off In recent months, the pace of the address transfers has greatly accelerated as evidenced by RIPE's table of IPv4 transfers, as well as the increasing number of IPv4 brokers facilitating the exchange of IPv4 address space. However, the transfer of IPv4 … Read more on Dyn Research […]

  4. […] to Dyn Research‘s Director of Internet Analysis, Doug Madory, the IPv4 address market has taken off since the first such firm, Addrex, opened its virtual doors. Today, there are more than two dozen […]

  5. […] of IPv4 address space. However, the transfer of IPv4 address space isn't always problem-free and, in this blog, he reviews this new trend and some of the issues that can […]

  6. […] de l’occasion pour les adresses IPv4. La revente de celles-ci est même florissante. Selon une étude de Dyn Research, les brokers d’adresses IPv4 se développent. Et ces derniers organisent ainsi de nombreux […]

  7. […] market for reassigned IPv4 addresses is growing in Europe and the Middle East, according to Dyn Research, which monitors the state of the Internet. […]

  8. […] IPv4 Address Market Takes Off […]

  9. […] address space. However, the transfer of IPv4 address space isn’t always problem-free and, in this blog, he reviews this new trend and some of the issues that can […]

  10. […] a surge in business, backed up by independent research, V4Escrow is using ARIN 35 to meet with potential employee candidates. Recent policy changes within […]

  11. Sandra Brown says:

    I applied for an OFAC license to trade IPv4 addresses to Iran two years ago and it was rejected by the US Treasury Dept so I don’t see US to Iran trading in the near future unless the sanctions story changes. I share some of my ideas on IPv4 markets at http://ipv4marketgroup.com/the-ipv4-address-resale-market/.
    Sandra

  12. Tim mathews says:

    I guess that’s why people keep asking us for ipv6 release date :-)
    I know where it’s coming from now.

  13. […] export has always seemed a bit of an oddity since it was noted in earlier blog post from Dyn earlier in […]

  14. […] address brokers.” These sales are private. Prices vary and are not always made public, but some sources mention prices of 9 USD – 10 USD per address. One commentator has elaborated on the (indirect) effects of […]

  15. […] address brokers.” These sales are private. Prices vary and are not always made public, but some sources mention prices of 9 USD – 10 USD per address. One commentator has elaborated on the (indirect) effects of […]

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