Beware the black market rising for IP addresses

IPv4 depletion is happening faster than expected; a black market could jump the price of an Internet presence

Organizations slow to adopt IPv6 take heed: Surging requests for IPv4 addresses are quickly drying up the available store, raising the specter of an IPv4 black market that could dramatically increase the cost of obtaining a presence on today's Internet.

Previous predictions pegged late 2011 as the anticipated date of IPv4 address exhaustion. But a sudden turnaround in the rate of allocation for IPv4 addresses this year has consumed an alarming number of "/8" IPv4 address blocks -- /8 being the unit of allocation to Regional Internet Registries (RIRs).

"There were just eight /8 allocations in all of 2009, but there have been six /8s issued just in the first 100 days of 2010," notes American Registry for Internet Numbers (ARIN) CIO Richard Jimmerson.

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As of this writing, only 20 IPv4 /8s remain in the Internet Assigned Numbers Authority (IANA) pool of 256 /8s. At the current rate, the IANA pool may well be exhausted by the end of this year (see graphic below). And though the transition from IPv4 to IPv6 has been long anticipated, many organizations are ill-prepared for the fallout of IPv4 exhaustion. In addition to being required to maintain Web presence in both address spaces until the Internet's transition is complete, new services, such as Microsoft's DirectAccess, are increasingly becoming available only on IPv6, as tech vendors and service providers increasingly find IPv4 too expensive to support.

IPv4 black market: A matter of supply and demand
The coming IPv4 shortage has been foreseen for years, but organizations needing an Internet presence -- businesses, educational institutions, government agencies, and the like -- have largely been in denial about the inevitability of IPv4 exhaustion.

At last October's dual celebration of ARPAnet (the Advanced Research Projects Agency Network that preceded the Internet) and the 125th anniversary of event sponsor IEEE, Internet pioneer Vincent Cerf urged immediate IPv6 adoption because Internet growth is not slowing: "We are going to see billions and billions of devices on the Net. The Internet, for its part, has invited many people to contribute content."

In a more recent interview, ARIN's Jimmerson says, "Yes, there was a dip [of IPv4 assignments] in 2009, but 2010 is accelerating. Lots of new applications -- next-gen Wi-Fi, cloud services, and smart grid -- are taking off, and regions such as Asia and South America are coming online rapidly."

IPv4, which uses 32-bit addresses, is capable of supporting 4.3 billion total addresses, but severe fragmentation makes utilization of the full range of IP addresses inefficient. Worse, many consider reclaiming unused IP space a far too complex and expensive undertaking. As such, when the last IPv4 /8 is allocated, new Internet players could find high prices and a black market the only practical means of getting IPv4 addresses.

Well-known Internet engineer and notable Internet "pseudo-economist" R. Kevin Oberman points out that this black market already exists, albeit on a small scale.