This is a response to The Changing Foundation of the Internet: Address Transfers and Markets by Geoff Huston
The majority of this piece was written on 27 October 2008, closely following the posting of The Changing Foundation of the Internet but due to time constraints in my schedule, I have just now gotten around to editing and publishing my response. Because of the lengthy delay, I am posting it here to my blog rather than to the mailing lists on which it was originally discussed.
If you have not, please read Geoff’s entire article before reading my response so that my quotations of his work are not perceived out of context with his full and original meaning. I have added a ‘[…]’ to indicate where I have omitted portions of his text for brevity in this response.
RIR’s perform three roles:
* they are allocation entities who distribute address blocks,
* they are regulators, or at least de facto regulators, in that the allocation of address blocks is accompanied by the imposition of certain constraints and regulations applied to recipients, and
* they act as registry operators, maintaining a public registry describing the disposition of allocated addresses.
I disagree with Geoff’s basic premise that the RIR’s role as an allocation entity is fundamentally different than its role as a registry. The way I see it, there is no vault full of IPv4 that is guarded by IANA and doled out to the registries in armored cars. In fact, all the RIRs provide when they allocate IPv4 to a LIR/EU is a spot in the registry. The de facto monopoly that the RIRs as a whole enjoy now, is nothing more than industry cooperation. Geoff recognizes this when opining about the future but fails to point out that it is already the case. In other words, at any point in the last 9 years, someone could have cloned the IANA registry and set up a new one. The thing that changes at free-pool exhaustion is not the possibility of this but merely the pressure.
The de facto regulatory role is of interest here. The RIR’s have embraced a broad agenda that has associated their allocation role with goals that span not only effective stewardship of the address space, but also to encourage industry conservatism in the use of these resources. They have also embraced an agenda of attempting to limit extravagant growth in the routing table through adoption of the principles of provider-based addressing, minimum address allocation sizes, and allocation practices that attempt to preserve aggregatability of addresses.
I further disagree that the encouragement of industry conservatism and attempts to limit extravagant growth in the routing table are exclusive from effective stewardship of the address space.
Efficiency of address use and comprehensive accuracy of maintained registration data are directly linked to the ability of an entity to obtain further addresses as the need arises. Compliance of these particular policies has been generally observed. However, fragmentation of the routing space has not been directly linked to the further allocation function, and the results of this decoupling of policy with a risk of any negative outcome is clearly evident in the continuing fragmentation observed in the routing space. The observation is therefore that policies that are effective in this environment are limited to those policies which are clearly linked to the allocation function, since the primary motivation of the entities serviced by the RIR system is access to addresses, and the RIR’s form a de facto monopoly in terms of this allocation function.
I agree with the observation but not the conclusion. By drawing a line between allocation and registration Geoff makes the point that without “new” IP space to allocate, there is no chance for effective policy. If you do not draw this hard distinction and look at allocation as simply one form of registration, the point becomes that policy needs to remain tied to registration in order to remain effective.
This consideration has led to an [at times] reluctant acceptance of a registry transfer policy as being a necessary, and hopefully temporary, measure, and a related concession that such a transfer policy and the registry itself underpins the operation of any associated market, or markets, in addresses by proving clear title to the goods being traded in such a market, namely addresses. But if that is the case why have transfer policies at all? Why not simply allow the registry to record all outcomes of any transfers between consenting parties without further qualification or constraint?
This really seems to be a leap of logic IMHO. If we reluctantly accept transfers, then we should just let go of the reins completely?
Much of the motivation for transfer policies for registries lies in the observation that most, if not all, efficient, fair and open markets are regulated in some manner. Markets are intended to establish a dynamic equilibrium between supply and demand using a pricing function as the mechanism of mediation, but markets are seldom “perfect”. Markets are subject to various manipulative and distortive pressures, including efforts directed at price manipulation, speculative acquisition, fraudulent transactions, misrepresentation, withholding of information, and deliberate leaks of false information.
In the context of a market in addresses all such risks apparently apply, but the means to eliminate [or “address” if you will pardon the painful pun] these risks are not so clearly obvious. It is also the case that such market distortions would impair or compromise the cherished principles of address administration-efficient use, fair and equitable access, an avoidance of profiteering and extortion. In much the same manner if all you have is a hammer then everything else starts to look like a nail, if all you can regulate is an address registry and if the problem is risks of distortions in an address market, then the temptation to apply your only available mechanism to the problem is often overwhelming.
This is another line of reasoning that I disagree with. The statement as I read is that most markets are not perfect and that all market risks apply to IP addresses perhaps multiplied because of their effects on current practices (cherished principles). The conclusion presented appears to be to eliminate all regulation by the current regulatory bodies. My response to this then is; who steps in to conduct the necessary regulation in that case? I would guess that local governments would be the only entities ready to take this on immediately and then what? What happens if they all decide to approach the problem differently, perhaps in incompatible ways? What do we do when a country decides that the best way to clean up the potential (perhaps likely) IPv4 market mess is to start over and hand out all IPv4 space within their borders in a new, nationalized registry? That is obviously a fairly dramatic example but not outside the realm of possibility, imho. I see government intervention as likely being much more intrusive and disruptive to the industries involved than maintainning current and necessary RIR regulation to avoid such intervention.
My conclusion to the regulatory problem posed is quite different: If regulation of an address market is truly impossible under the current framework, avoid using the “hammer” that is a market answer to IPv4 scarcity and seek other tools (or alter the framework).
An alternative outcome to the effort to impose such constraints on the operation of one set of registries is that alternate registries appear that do not impose such constraints on the registrants. The reason behind this lies in the observation lies that the selection of a registry, and the derivation of authority of the registry operator, is more based on common convention than by external imposition.
This is (already) the case today. If a majority of organizations decided that needs based allocations with minimum sizes (etc, etc) are overly burdensome, they could create a less constraintful registry – and could have at any point. The “free pool” is just another entry in the current registry.
There is no comparable de facto monopoly in the registry role.
The registry is public, so it is not possible to occlude the contents of the registry from public view. This implies that cloning the registry in some form or fashion is potentially possible at any time. If the recording of otherwise legitimate transactions is excluded from the original registry, the possibility exists that alternate registries may appear to meet that demand. The original registry is left with an information set that is historical rather than current and, in the face of the emergence of variants, is then incomplete and inaccurate. Anyone wishing to understand the actual current disposition of addresses would have to consult these alternate registries in order to understand if the address has subsequently moved to another holder.
In and of itself this could be seen as just another expression of a competitive market for the supply of goods and services in action within a deregulated industry. If one registry operator no longer meets the demand of users of the registry’s services than these users are at liberty to use an alternate provider of registry services that is able to meet their needs.
But is such an outcome desirable? Or even tenable for the Internet. Alternate points of authority relating to the disposition of addresses is an attack at the one essential property of addresses that we simply must preserve, namely the uniqueness of address holdings. When multiple registries all have different entries relating to the current holder of the same address, then how actually is the current holder of that address? Where should routing point to? Why? In this case diversity of choice in address registries with deliberate overlap would be a catastrophe for the Internet.
Which is why it has not happened yet, and is relatively unlikely to occur in the future. As long as the registry remains open to community input and policy continues to be written and approved by community consensus, I see no great risk of mutiny. If a registries staff or board took any sort of unilateral action, then I can see this being a much more likely outcome. In the mean time, most community members will find it in their own best interest to stick with a single registry (even if it is begrudgingly) to avoid the potential catastrophe and certain chaos that would follow in the wake of a mutinous registry.
An alternate perspective has motivated the APNIC policy proposal, namely that the registry function is incapable of sustaining a substantive regulatory agenda. The proposal being put to the APNIC policy forum offers a minimal set of constraints that are intended to be as neutral as possible and to ensure the continued acceptance of this particular registry as the region’s authoritative address registry. This approach does not necessarily condone poor market behaviours but deliberately avoids attempting to use the registry operation in novel and untested ways to regulate market behaviour.
I do not see maintaining current restrictions as novel or untested. If a transfer policy is shown to be absolutely necessary, maintaining current allocation standards should be a part of it. Tying policy to an organizations ability to acquire addresses has proven to be effective. Allowing a market free for all would allow large incumbents to purchase unneeded resources simply to keep them out of the hands of their competitors. This would effectively close the currently open system, stopping new entrants from being able to obtain the necessary resources by allowing those in positions of wealth or power to hoard them. This is not only a shame, it could lead very quickly to anti-trust suits or other legal action and then potentially government intervention.
Registries are, in effect, title offices, and their function is simple: they record who holds what resource. Title offices need to be respected by all parties, and accessible for all parties in order to ensure that the registry itself reflects the true disposition of the resource. Not only a registries essential to sustain the integrity of operation of any market, but in the case of address registries and the Internet, address registries are essential to sustain the coherent operation of the Internet. Registries are not an eternally imposed monopolistic constraint, and registries derive their authority through common acceptance by all parties and by conventional use and accessibility. This is generally best achieved if, like a title office, a registry is neutral in its operation. Attempting to overload the access to a registry with what is in effect a regulatory agenda is a course of action with a high risk of failure.
That does not imply that markets are perfect nor that market distortions should be tolerated simply because the registry is incapable of acting as a regulator of market behaviours. Neither is the case. But the observation should be made that markets in all manner of good and services have a rich history in human societies, and the role of the regulator is similarly one with a rich history. Market regulators exist in many guises and in many regimes, and can exert influence through various direct and indirect means. There is no need to believe that this issue of transfers and address markets requires a comprehensive solution based solely on the resources, capability, authority and enforcement authority of the RIR’s. Once the RIR’s are no longer address allocation entities much of their ability to enforce certain behaviours goes with that role, and the residual role, that of operation of an address registry, necessarily has to take a more neutral stance if it is to be a role that is discharged effectively.
So who will regulate this new market, if not the RIRs?
After all, when all you have is a hammer, then you really need to appreciate that some problems will get far worse if you try and hit them on the head, and that a fully stocked hardware store is never too far away!
I see the RIRs as the entity weilding the tools, not as the tools themselves. Therefor I agree that they should take that trip to the hardeware store or even invent some new tools.