IPv4 smaller than /24 leasing?

Fri Jan 5 16:22:03 UTC 2018

Agreed having been in the ISP business since there were ISPs, the most common way to get started is to get an allocation from your upstream provider.  A bigger Tier 1 ish provider is more likely to give you a larger allocation since they hold a lot of resources they are not costing them much to retain.  

While you are at it, get an IP V6 allocation and AS to start going that way as much as possible.  I wouldn't go with an IX initially (they become a more attractive option once you get to the size where peering would be an option).  Most startups I have worked with get going with two upstream providers and a block provided by one of them.  Make sure you check with both carriers on their policy regarding advertisement of the block from both upstreams.  In order to get the two upstreams even close to balanced you will probably have to have the upstream that owns the block break the supernet for you (if one carrier is advertising the /24 you will get more traffic that way since it is a more specific route).  I would also recommend getting upstream carriers that are similar in tier because if you have a very well connected upstream and a much smaller one, you will be less likely to use both connections effectively.  Make sure your upstream will support V4 and V6 on the same transport circuit (most will now).  Be sure you like the carrier that gives you the initial allocation since you are going to be a voluntary hostage for a while.

Trust me, you want two upstreams even if you have to sell your dog to do it.  You do not want your fragile new business to get wiped out by a single upstream outage (remember to them you are just a single customer, to you it is your whole ball game).

You are in for some engineering work trying to squeeze the most out of the very limited V4 resources and are going to have to push back hard on allocations to customers to avoid ripping through them quickly.  You are going to have to do the heavy lifting of NAT to get the customers the connectivity to the V4 world (until you can get them to V6).   The most important factor will be whether the majority of your customers are business vs residential.    Another big start up question is how much CPE do you want to manage.  If you own the CPE you can get fancier with it and not have to worry about customers having to deal with V6 configuration.  If they own the CPE you have to make it as easy as possible for them.  Having worked in both environments I have to say that customer owned CPE costs the small ISP a lot of time and effort in support (way more than home CPE costs).    Do NOT charge a customer less for using their own CPE, discourage that as much as possible.  It is more pain for you when they provide the CPE for sure.

Business = usually less churn but more likely to want a V4 static address
Residential = more churn and the majority don't care whether they are running V4 or V6 as long as it all works automagically.  

The most successful ISPs I have worked with have a mix of business and residential which gives you better traffic patterns throughout the day.  Business oriented ISPs tend to be underutilized after hours and residential ISPs tend to get hammered in prime hours.  Business customers give you great stability in regular cash flow and residential tends to up the customer count to smooth out the churn percentage.   Churn is your biggest enemy.  Figure out how long you need to retain a customer to achieve positive cash flow after provisioning costs are factored in.  Most times this number comes as a shock to a new ISP.  If cash is so tight that a $5k expense is an issue you need to carefully examine whether you can survive the original provisioning of the network to get to positive cash flow.  I have been out of the finance side for quite some time now but I don't think it would be unusual to find that you have to keep a customer for 18 months or so before you are making a dime on them. 

Steven Naslund
Chicago IL

>-----Original Message-----
>From: NANOG [mailto:nanog-bounces at nanog.org] On Behalf Of Baldur Norddahl
>Sent: Friday, January 05, 2018 9:36 AM
>To: nanog at nanog.org
>Subject: Re: IPv4 smaller than /24 leasing?
>
>Joining an IX is in most cases much more expensive than buying a /24. You can get a /26 from your upstream. Having multiple upstreams is in most cases much more expensive than buying a /24.
>
>I do not see a real problem here. Aside from the irritation of having to pay for resources others got for free and then horded.
>
>Regards
>
>Baldur