Market-based address allocation

bmanning at bmanning at
Thu May 1 17:48:57 UTC 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
> idiots?

	the market theory presumes a lock on space.
	it also presumes that someone (ICANN, IANA, RIR, DoC)
	is able to claim exclusive use on these things.

	the only way to enforce this is to treat the numbers
	as property.  and enforcing property across international
	boundaries is complex at best.

	how much more of your money would you like to give your
	legal staff, defending your use of IP addresses?

> 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
> >
> >

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