Allocation of IP Addresses

nelson at nelson at
Thu Mar 14 04:17:49 UTC 1996

David R. Conrad writes:

 > Your proposal is?  If you say charging for address space, please
 > explain what would stop deep pocket companies from buying up all the
 > address space?

David, I know that you know what you're doing technically, but you
have no clue about how a free market works (and, by implication, I do
-- not very humble I guess.  Oh well.  Deal.)

Assume with me, that a market for IP addresses has been created (just
like the Internic did when they said that they would cooperate with
the transfer of domain names from one party to another, and that any
trademark was sufficient to hold a domain name).  Doesn't matter who
owns them first -- the market will decide on a price.

Further assume that AT&T (hey, I'm a stockholder so I get to pick on
them) wants all the IP addresses in the world.  Problem is that they
have to buy them from the current owners.  The owners need somewhere
between a few and all of them.  But not zero.  The cost of giving up
all of their addresses is ALL OF THEIR BUSINESS.  If they're tired of
being an ISP, they might be willing to go out of business.  But let's
say that they're not.  So they sell their address block to AT&T.

The problem for AT&T is that some people WON'T want to go out of
business at any price (e.g. Sprint or MCI).  AT&T would have to
purchase up all of their business, that is, merge with them.  That
would take a lot of money.  No, that would take a LOT OF MONEY,
because as soon as the stockholders realized that AT&T was trying to
get a monopoly on IP addresses, they would want their fair share of
the monopoly.  So the price of Sprint and/or MCI stock would go up.
Way up.  All out of proportion to the income from Sprint's or MCI's
ISP business.

AT&T couldn't get away with monopoly profits without sharing them with
the current IP address holders.

And it gets worse -- network address translation software exists, so
the ISP who sold his business to AT&T could start up another business,
buying only one address, compete with AT&T, and (because AT&T is
seeking monopoly profits) sell this business to AT&T again.  One Texas
oilman sold three successive refineries to Standard Oil.

And it gets worse -- just WHAT is the meaning of "owning" an IP
address.  Hell, I could claim to own all the class A addresses (in
fact, I actually do -- I've just never asserted my claim [ yet --
you'll be hearing from my lawyer]).  An IP address is just an entry in
a database, without the cooperation of all the backbone providers.  So
AT&T buys all the addresses; everyone laughs at them, and starts up
another Internet in parallel with AT&T's, and puts a network address
translator between the new Internet, and AT&T's old Internet.


-russ <nelson at>
Crynwr Software   | Crynwr Software sells packet driver support | PGP ok
11 Grant St.      | +1 315 268 1925 voice | If you would seek peace, 
Potsdam, NY 13676 | +1 315 268 9201 FAX   | first seek freedom

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