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IPv4 Depletion – The Well is Dry

Softwares   Write Comment 8th July, 2015

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All the speculation is over as ARIN announced that IPv4s numbers are depleted and it is effectively out of inventory, activating its waiting list last week. Groups needing the asset will need to source them from a free market.

An IP is an address that directs an Internet data stream where to go; that number is at the innermost core of how the network functions. Internet engineers speculate its replacement standard, IPv6, will not be in fully implemented for at least five, and possibly eight years. This announcement is not a surprise but will shake the Internet world. I am going to sort out this quagmire.

When the Internet was developed the engineers and scientists that put it together had no idea these 4.3 billon IP addresses would be used. My readers, data centers, web hosting professionals, content providers, innovators, and entrepreneurs that made a bet on the industry, they know only too well the necessity of the IPv4. Now we are past dipping into the seemingly bottomless well of IP numbers to a point where they will need to help each other.

ARIN may be out of IP numbers, but they are not out of the way. It will continue to be involved in registering, doling out what few IPs that may be returned, assisting in merger and acquisitions and transfers to specified recipients which is primarily the open market segment.

My concern is that over the last year ARIN has been doling out 1.1 million IPv4s a month to keep up with demand. Over the term, before the IPv6 network is complete, there will be a need for an additional 50 to 75 million IPv4s. The question is where they will come from.

There is one light at the end of the tunnel. The 50 million IPs I need only represent 1.2 percent of the IPv4 universe. The problem is how to brush them out of the corners; it is an unknown world under the rug. There has been some speculation that a few larger blocks of several million way come to the surface provided enough incentive come to bare. But a few million is only a few months. And by incentive I am referring to the value placed on an IP number.

We have crossed the line from an essentially free product, to a free market system that sets the price of a vanishing yet an essential product. I find this an unprecedented set of circumstances. After all the IPv4 is essential to make the whole system work was free, and now it will be bought and sold at market price while at the same time no new product is produced for that growing marketplace. That is a quagmire.

On top of this is a murky timing factor. IP valuation will also be tied to the buildout of the IPv6 network. While the IPv4 value should diminish the closer we get to full IPv6 implementation, even that is questionable as even with a short timespan and very thin inventory certain high-end services could push prices very high even for a relatively short amount of time.

So where are prices today of and in the mid-term? Recent transactions have been in the $8 to $9 and IP range. That was yesterday, and yes there is a difference between yesterday and today. Today you pull up at a gas pump, and it is dry. Today you drive up and wonder where to go to next.

My clients have already talked about $10 or what I term the Microsoft floor, the $11.25 IP price that it paid for Nortel’s 666,000 IPv4s in 2011.

At HostingCon last last year a group of attendees guessed what the price would be in five years, the average was $26.22. It is all determined by how bad you need them. I can see $15 to $18 by years end. Between now and the end of the year the market is going to have to find 6.6 million IPs to make up for ARIN. My little half million really will not go to far, and I don’t know how many could be available, no one does.

It is not the end of the world. It does set in place many hurdles. The depletion of ARIN’s IPv4’s sets in place another set of problems for the industry to solve.

Source:http://www.thewhir.com