ARIN-prop-326: Replace Specified Transfers with Monthly Single-Price Auction

Date: 13 February 2024

Proposal Originator: Kevin Wallace

Problem Statement:

IPv4 addresses are getting too expensive for small organizations. Large cloud providers are amassing huge IPv4 allocations, letting the value of their hoard disincentivize them from offering first-class IPv6. Bad actors are fraudulently obtaining IP addresses and flipping them for profit, interfering with price discovery and wasting resources on investigation and litigation efforts. IP leasing has become a haven for spam and other forms of abuse. The current transfer market approach embodied by NRPM 8.3 incentivizes speculation, hoarding, and fragmentation, rather than efficient allocation. Replacing it with a monthly single-price auction would reduce or eliminate the financial incentives underpinning these issues.

Policy Statement:

The NRPM is amended to implement the following policy:

Orgs may no longer transfer IPv4 addresses to specified recipients. They may voluntarily return unneeded addresses to ARIN.

Every month, returned IPv4 addresses are allocated back to eligible orgs based on the results of a single-price auction conducted by ARIN.

Returning organizations receive a non-refundable account credit equal to the winning bid multiplied by the number of addresses returned.

Auction participation is open to any org who needs addresses for justified operational use.

Reciprocity with other RIRs is maintained: non-ARIN orgs may bid and transfer acquired addresses into their RIR, and ARIN orgs may still obtain addresses out of region and move them into ARIN.

Specifically, the following changes are made.

(1) 4.1.8 is modified:

“a /22.” is replaced with “set forth in section 8.5.”

“Organizations which hold more than a /20 equivalent of IPv4 space in aggregate (exclusive of special use space received under section 4.4 or 4.10) are not eligible to apply.” is removed

“Qualified requesters will also be advised of the availability of the transfer mechanism in section 8.3 as an alternative mechanism to obtain IPv4 addresses.” is removed

(2) is replaced with:

ARIN will fulfill requests on a monthly basis, excluding months in which there are no addresses to distribute. When the quantity of requested addresses exceeds the number of available addresses, distribution will be prioritized based on the results of an auction conducted by ARIN and open to waitlist requestors as well as organizations belonging to other RIRs who need addresses for operational use outside of the ARIN service region. Participants may submit a positive per-IP bid; after auction close, bids are chosen in order of highest value, followed by non-bidding requests, breaking ties by earliest waitlist sequence, until every address has been matched to a request/bid. The final successful requestor may receive a partial allocation and remain on the waitlist for the remaining addresses; all other successful requestors will receive full allocations and be removed from the waitlist. The bid of every successful requestor is adjusted to the bid of the final successful requestor. All organizations returning address space distributed under this section receive a non-refundable account credit equal to the adjusted bid multiplied by the number of addresses they returned. Requests and bids are for a quantity of addresses, rather than for a specific prefix, and ARIN may match them to addresses in a way that aims to minimize overall fragmentation.

(3) is modified:

“IP allocations issued through are non-transferable via section 8.3 and section 8.4 for a period of 36 months.” is removed

(4) 8.3 is modified:

“IPv4 addresses {and,or} ASNs” is replaced with “ASNs”

“Address resources from a reserved pool (including those designated in Section 4.4 and 4.10) are not eligible for transfer.” is removed

“The source entity will not be allowed to apply for IPv4 address space under Section 4.1.8. ARIN Waitlist for a period of 36 months following the transfer of IPv4 address resources to another party.” is removed

(5) 8.4 is modified:

“Conditions on source of transfer” is amended to include “For transfers of IPv4 addresses, the source entity must be outside of the ARIN region, or the transfer must be the result of a section auction.”

(6) 8.5 is renamed:

“Specified Transfer” is replaced with “Specified Transfer and Waitlist Auction”

(7) is modified:

“transfer the entire larger block” is replaced with “return or transfer the entire larger block”

(8) 8.6 is retired.

Timetable for Implementation: 1 year after adoption, to give ARIN time to ready auction procedures, and to provide a “last call” period for organizations to initiate final specified transfers under the old policy.

Comments: Follow-up to ACSP Suggestion 2023.14.

Changes from revision 3 (2024-01-26):

  • Changed references from “LIR” to “org” - end users are eligible too.

Changes from revision 2 (2023-12-04):

  • Removed the words “price” and “$0” from

Changes from revision 1 (2023-10-26):

  • Removed references to percentage-based split per ARIN AC feedback
  • Removed the word “revenue” entirely per ARIN AC feedback
  • Clarified problem statement to identify the link between policy incentives and transfer market dynamics, to address ARIN AC concerns that the state of the market might not be seen as related to policy.