Exhausted IPv4 address architectures

May 3rd, 2011 by kc

In light of available data on global IPv6 deployment, ISPs, and those who build equipment for them, have already accepted that multi-level network address translation (NAT, between IPv4 and IPv6 networks) is here for the foreseeable future, with all its limits on end-to-end reachability and application functionality, and its required unscalable per-protocol hacks. Whether “carrier-grade” NAT (CGN) technology supports a transition to IPv6 or becomes the endgame itself is irrelevant to the planning horizon of public companies, who must now develop sustainable business models that accommodate, if not support, IPv4 scarcity. I’ve heard a few notable predicted outcomes from engineers in the field.

  1. ISPs already offer multiple service classes to support those who want to pay more to get (more) globally unique IP addresses; typical home users will accept to be NATed in the ISP cloud in exchange for keeping their current “low” monthly fees. It is certainly bad for innovation, but the average end user does not care about innovation, they care about web and web-video, which will keep working fine with NAT in most forms.
  2. Multiple layers of NAT will hit P2P technology hard, since P2P is an inherently less attractive prospect when 90% of the peers are not contactable. But if the history of piracy/porn-driven technology is any indicator, we can safely assume that BitTorrent will hack its way through the problem eventually, perhaps unscalably. (Imagine a temporary use of a public IP to knit two NATed TCP sessions together. Shuddering optional.)
  3. Skype, however, which requires a higher level of performance and reachability, must prepare for the worst case (“Pandora”) scenario, because their network needs enough publicly routable Skype users to convert into supernodes. They will at least take a profit hit when they need to run a bunch of non-revenue supernodes themselves “in the cloud”. Or more likely do profit-sharing with ISPs to get the ISP to run supernodes for them next to their giant NAT boxes in the core, similar to today’s online streaming videogame providers that put hardware close to gamers, in the ISP datacenters, and to do so they must share revenue with the ISPs. Future attempts to commercialize any P2P technology would face similar obstacles. Since the Internet architecture was designed to be a P2P architecture, admission control by gatekeepers is indeed a manipulation (violation or evolution, depending on your point of view) of the Internet architecture.

Once there are proven business models built on IPv4 scarcity, incumbent ISPs (i.e., those with IPv4 addresses) will be even more incented to invest in the failure of IPv6 than in its success. Equipment vendors already have mixed incentives, as sustaining NAT technology will only grow more complex and challenging, and complex solutions can be sold for a higher profit margin than simplicity. The RIRs are also counter-incented to make IPv6 happen, since it threatens (at best) their business model. Bureaucracies rarely advocate themselves out of existence, or even into dramatic transitions. Especially a bureaucracy composed of members of the industry it’s intended to regulate.

Many have acknowledged the lasting harms expected as a result of IPv4 address exhaustion: to users and aspiring new ISP entrants, technical coordination and fault management mechanisms, and most vitally to the unique cooperative governance models. But the leading proposed transition mechanism — IPv4 address markets — has never been well-justified as the most obvious or effective — or even workable — mechanism for coordinating the distribution of IP addresses during the transition to widespread IPv6 adoption (as Tom Vest noted). On the contrary, it seems obvious that institutionalizing a valuable market in IPv4 addresses is a reliable recipe for removing any incentive for IPv4-holders to invest in upgrading to IPv6. Believing that address markets can help us steward a transition to IPv6 is as grounded in reality as (the same authors’) belief that two parallel Internets are a sustainable endgame (“an IPv6 Internet, or at least enough of one to keep off address scarcity for a workable subset of the industry.”)

I’m a known skeptic regarding self-directed architectural transitions of trillion-dollar networked infrastructures with radically distributed ownership, especially accompanied by investment climates that disincent long-term investments in the common good. I also had a front row seat for the last decade, when all the now-IPv6-zealots were admitting how much of IPv6 its designers got wrong. [“They even got the main point wrong! We should have moved to variable length addresses like OSI had in the first place, precisely for the reason of extensibility!”] While running out of addresses is undoubtedly an architectural failure, I suspect we will discover a bigger failure — of the Internet’s current political economy to accommodate a network-layer “innovation” to IPv6, or to anything else. The magic of markets notwithstanding.

3 Responses to “Exhausted IPv4 address architectures”

  1. Simon Leinen Says:

    Agree with almost all of this, especially the last section.
    In the one before, you claim it’s obvious that “it seems obvious that institutionalizing a valuable market in IPv4 addresses is a reliable recipe for removing any incentive for IPv4-holders to invest in upgrading to IPv6”. I’m not so sure – at least it exposes one aspect of the costs of staying for IPv4 in a unit that “normal people” can understand ($$).
    Maybe that means that I still believe that “the market will sort it out” eventually, but the overhead seems huge in any case. A system of directed competition (like in China) might handle this kind of case better, although that’s just my speculation – and not a general endorsement.

  2. Tom Vest Says:

    Hi Simon,

    You might want to reconsider your assumptions about (or at least your exemplar of) the virtues of directed competition.




  3. TV Says:


    Imagine you’re the owner of a modest-sized apartment building in Manhattan. While your monthly rental income may never be sufficient to enable you to buy a second apartment building, even so life is pretty good. Manhattan housing demand always exceeds supply, and your your income has risen consistently year after year. Moreover, your risk of business failure is effectively zero.

    Now imagine that someone invents a miraculous technology that is capable of opening up a virtually infinite dimension of “ground-level” space in Manhattan. Once the new technology is deployed, an infinite number of new building lots will become available, enabling any Manhattan resident (including your tenants) to build their own homes, or even new apartment buildings that would compete with yours. As an owner of a scarce but reliable revenue-generating resource, how would you feel about this new technology? Your feelings matter a lot because, as it turns out, this particular technology can only work as designed if a large subset of current Manhattan Apartment Building Owners (MABOs) individually volunteer to commit 1% of their net rental income for one year to the deployment effort.

    What factors would you prioritize in your decision? The modest, one-time deployment cost, or the collateral threat to your current risk-free business model and guaranteed future income? What if you also had the option to undertake a more modest deployment of that new technology yourself, e.g., to add additional floors on top of your current building — but without triggering the open ground-level expansion? Other MABOs face the same set of choices, several are exploring this private deployment option, and some are even considering private high-tech skyways between their new building additions, for the convenience of their mushrooming tenant populations. Of course, non-residents would not be permitted to “free ride” on your private elevators and skyways to reach your new tenants. A tiered fee arrangement could support users, including your tenants, in various degrees of urgency or business relationships with you.

    What do you do?

    Absent other developments, the market will definitely work it out, as long as you’re completely indifferent to what value “work it out” ultimately takes.


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