IPv4 address exhaustion comes to ARIN

By on 2 Jul 2015

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An Internet milestone was reached overnight when ARIN, the Regional Internet address Registry for the USA, Canada and several Caribbean Islands, reached IPv4 address exhaustion.

ARIN announced its IPv4 waiting list had been activated following a request for addresses which could not be fulfilled from its limited stock.

ARIN joins APNIC, RIPE NCC (Europe and Middle East) and LACNIC (Latin America and Caribbean) in reaching “IPv4 exhaustion”, however, in ARIN’s case the situation is different. While ARIN has reserved a small block of addresses to specifically support IPv6 deployments, unlike the other regions it did not have a policy for rationing its available IPv4 addresses as the unallocated pool reached low levels: hence ARIN can now no longer meet all of its approved requests for IPv4 addresses.

While this milestone has been inevitable, it is still a significant moment for the ever-growing, address-hungry Internet. IPv4 address scarcity is now a very real issue worldwide, and psychologically, the fact that America has now effectively run out of IPv4 addresses will make this issue very real throughout the community.

As a result, we can expect some significant changes over the next 12 months: increasing deployment of IPv6 services, and more activity in the IPv4 transfer market.

IPv6 Growth to Continue

IPv6 usage has been increasing steadily in recent years: last year IPv6 traffic doubled from 2.5% to 5% as measured by Google, and is currently 7% and rising. Big telecommunication companies, Internet Service Providers and content providers in the US have been moving to IPv6 – Comcast, AT&T, Time Warner Cable, Verizon, Facebook, and Google among them. The Asia Pacific region and the rest of the world has also been adopting IPv6, albeit unevenly.

As IPv4 addresses continue to become more scarce, we can expect IPv6 adoption to keep following its current growth trajectory, and hopefully accelerate.

Along with many other Internet organizations, APNIC urges companies to turn their Internet investments toward the transition to IPv6. If your company depends on the Internet, then it will depend on IPv6 as a critical part of its future. Now is the time to be asking those who provide you with Internet services and expertise – whether they are ISPs, technology vendors, data centres, developers, staff, or consultants – how they will support IPv6 in future?

The good news is the costs associated with moving to IPv6 can be minimized by planning ahead – for instance, by ensuring IPv6 capabilities are gained within the normal hardware and software upgrade cycles.

The IPv4 transfer market

The complete transition to IPv6 will take many years, and in the meantime, IPv4 address space is still critically important to many service providers and operators. Among other RIRs, APNIC has policies to provide small rations of IPv4 address space to those who need them; however those who need more public address space can only rely on transfers from other organizations.

A global “market” for IPv4 transfers already exists and will become more active following today’s news. There are some organizations who have more IPv4 addresses than they need, and some are willing to transfer addresses to other organizations who have a need (often with a private financial arrangement).

We are already seeing evidence of market transfer activity ramping up. In the Asia Pacific, the number of market transfers in the APNIC region in 2014 increased by 68% (98 in 2013, 165 in 2014). In the US, Amazon acquired 4 million IPv4 addresses from DuPont in January. In the UK, the government’s Department of Work and Pensions recently transferred 150,000 IPv4 addresses to Norwegian ISP, Altibox, for a reported £600,000.

The transfer market is an important mechanism for organizations which need to get IPv4 addresses but can’t get them from their RIR (due to exhaustion). However, APNIC strongly cautions against the notion that the transfer market is the cure to IPv4 scarcity. Even optimistically, the total amount of unused or under-used IPv4 address space that could be made available only represents a “stop gap” measure in the life of the IPv4 Internet.

The demand for Internet addresses will only continue to grow. An estimated 40% of the world’s population currently has Internet access, and this is predicted to rise to 50% by 2017. At the same time, the number of devices connected to the Internet will grow massively, as mobile broadband and the Internet of Things become a reality. Around 50 billion devices will be connected to the Internet by 2020. That’s about 25 billion more than are connected right now, relative to the total IPv4 size of four billion addresses. Even if another billion addresses could be made available on the market, it’s abundantly clear that the only way to support Internet growth in the next five years is through IPv6 adoption.

As IPv6 is deployed in more and more networks, as products and expertise become more available and cheaper, the cost of IPv4 addresses should be carefully assessed. IPv4 address transfer brokers report addresses changing hands for around $7 – $13 USD per address, and as scarcity bites, prices may change. Constantly going back to the transfer market may become a very costly exercise, particularly as a stop gap measure which only defers the inevitable need for IPv6.

The path to IPv6 will be different for every organization, according to their current stock or supply of addresses, their growth path, and their need for addresses in future. But to those organizations who are hoping that the transfer market and CGN technology will be enough: we at APNIC would say ‘think again’.

IPv6 is the only viable option for the Internet’s future and today’s announcement is yet another strong signal that the future is almost here.

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The views expressed by the authors of this blog are their own and do not necessarily reflect the views of APNIC. Please note a Code of Conduct applies to this blog.

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