Market-based address allocation

Bill Nickless nickless at
Thu May 1 21:26:20 UTC 2003

These two things have to happen at the same time:

  1.  ISPs start charging for the service of advertising each
      prefix upstream and/or to peers.

  2.  Customers can purchase netblocks on an open market.

With both #1 and #2, customers can decide (based on financial incentives) 
whether to

   (a) pay for the service of advertising lots of small netblocks,

   (b) buy "big-enough" netblocks and renumber into them to save
       on per-advertisement service fees, or

   (c) use provider-based addressing and bear the risk/costs of
       renumbering when changing providers.

Without #1 above, there's no financial incentive for customers to renumber 
into better aggregated netblocks.  As I understand Randy's argument, this 
is a flaw in the Internet economic model, because the costs are borne by 
the service providers but the benefits accrue to other networks' customers.

Without #2 above, it's much harder to put a dollar value on the cost of 
(b): the price is difficult to determine in advance due to the utilization 
review uncertainties.

Using my institution (AS 683) as an example, we advertise about seven /16s 
and a pre-CIDR block of swamp /24s.  As much as I would like to aggregate 
everything into a larger netblock, there are some obstacles that I can't 
overcome by "community pressure" or "doing the right thing."

I wish I could put dollar figures on the asset valuation of the various 
netblocks, the capital cost of larger netblocks, and the recurring cost to 
my institution of making 14 advertisements.  Today I can't do that.

At 01:25 PM 5/1/2003 -0700, David Conrad wrote:
>So, lets say we go ahead a float IP address space and anyone can buy 
>whatever prefix they think need and have the cash for.
>What happens to the routing tables?
>The reason the BOF back in '96 was entitled "Pricing of Internet Addresses 
>and Routing Announcements' was that the folks who seriously considered the 
>idea realized that in the IPv4 CIDR world we live in, selling address 
>space without somehow tying those sales into some sort of market for 
>routing prefixes was a recipe for "fun", or at least lots of prefix length 
>filters and subsequently more unhappiness.
>If someone can figure out how to get the ISPs of the world to participate 
>in a routing prefix market, then it might be worth revisiting this 
>idea.  Note that there is nothing stopping establishing a routing prefix 
>market now, so it could be done prior to changing address allocation policies.

Bill Nickless      +1 630 252 7390
PGP:0E 0F 16 80 C5 B1 69 52 E1 44 1A A5 0E 1B 74 F7     nickless at

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