Seven steps to successful IPv4 transfers

By on 13 Apr 2017

Category: Tech matters

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David presented during the panel discussion "Navigating the IPv4 Transfer Market" at APRICOT 2017.

In the northern hemisphere, spring is arriving; the trees are blooming, the grass is greening, and the sun is shining. In the southern hemisphere, autumn is approaching and the long lazy summer is coming to an end. But in the IPv4 transfer market space, it is hot, steamy, and full of action!

The transfer market is booming. Hundreds of millions of IPv4 addresses are being transferred between buyers and sellers. The market is a fast-moving place, and so it is important to square away a few key items before you start making enquiries.

Below are my seven key steps for transferring via IPv4 markets.

Step 1: Work out how much you need

The first step is to understand how much IPv4 address space you think you want to add to your inventory.

You also want to measure how long that space will last based on current sales projections.

Together, that is your “runway”—to use as a bootstrap phase—to get to better IPv6 integration in your network and with your customers.

Step 2: Budget for how much you can afford

You then need to calculate how much capital expenditure you’ll need. Apart from the cost of addresses, you’ll also need to consider the cost of any fees owed to brokers or exchange operators and any RIR or NIR fees associated with adding more space to your accounts.

One of the key data points is cost. In an opaque market such as IPv4 addresses, finding out market prices is not easy. You will need to research recent transactions on the Web and it may be worth meeting with an IPv4 address broker. Another option is to sign up for an exchange market where you can name the price you are willing to pay and see the prices sellers are wanting to sell at.

Step 3: Hire legal counsel

Buying IPv4 addresses is not like buying a used printer. It is much more like buying a company.

A very important step for a buyer is to hire quality legal counsel who is an expert in mergers and acquisition (M&A) deals. The contracts that come out of IPv4 sales look like M&A contracts, so you want attorneys who are experienced in M&A legal structures in the countries you are operating in.

This step is critical because while purchase price seems like the most important part of any transaction, experience teaches us that the terms and conditions in the purchase contract are actually more important. They need to clearly dictate who is responsible for what and properly protect both the buyer and the seller during unusual or unexpected circumstances.

Step 4: Learn about RIR policy

It is important to be educated about your and other Regional Internet Registries’ various policies.

You may be fortunate enough to find a seller in the APNIC region for your APNIC account. But it is very possible (especially for larger networks) that you will buy space that is registered in a different region.

In such a case, you should know that ARIN and RIPE NCC allow space registered in their regions to move to APNIC, but LACNIC and AFRINIC do not.

Step 5: Organize face-to-face meetings

Once you are in the market and talking to brokers and sellers, how you are perceived becomes paramount to successfully negotiating deals.

Many of us who operate networks in APNIC and in other regions are, by training, network engineers. Buying IPv4 addresses in a market, however, is not an engineering activity. It is more akin to negotiating transit and peering.

Deal-making is mostly about people. Sellers are more likely to want to work with you if they like you. That means there is likely a premium on face-to-face meetings in lieu of email. Every culture has its norms, but generally speaking, seeing someone eye to eye, or sharing a meal together, goes a very long way to the success of a deal.

Step 6: Check address history

When you have a seller identified that you want to work with, ensure you do some technical due diligence on the space they are selling.

You can use tools like RIPE NCC’s Routing Information Service to discover the routing and registration history of an address block. There’s also multiple public tools to discern if the space is on any block lists (commonly due to email spam activities).

One of the questions you want to ask the seller is whether they are routing the space internally, and how that may affect their connectivity to your network.

Step 7: Deal with known sellers

My final piece of advice: because this is an active market where people are making money, there are a few bad actors out there.

To protect your company and your network, you should probably only do deals with companies you already know, or can easily learn about. If you have not heard of an entity that is trying to sell you IP addresses, and you cannot find a lot of information about them on the Web, there is a greater risk of being defrauded.

Work diligently with your legal counsel to investigate the seller to ensure everything is proper, and that the seller is acting in good faith.

Good luck, and keep in mind, buying IPv4 addresses is only a bootstrapping activity to get to fuller IPv6 adoption!

David Huberman runs the IP addressing shop for Oracle’s Bare Metal Cloud product.

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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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