Many people today are aware that the folks in charge of the Internet are starting to run low on addresses. Most of them are not aware that this is not the first time we’ve face this, or just how low that pool of addresses is today. The majority of Internet users are either completely oblivious to what is going on and think that the Internet will go on like it has, forever. If they have heard any rumors about an address shortage have a blind faith that the folks running things on the Internet can simply work some magic and the problem will go away.

The best study on this done to date (in my opinion) is in the OECD report presented at the OCED Ministerial Meeting on the Future of the Internet Economy, in Seoul Korea, 17-18 June, 2008. I was a speaker at the concurrent Korean IPv6 Summit. The full name of OECD is Organisation for Economic Co-Operation and Development. It was established in 1961, and currently has 30 member nations, including most members of the EU, plus Australia, Canada, Japan, Korea, Mexico, New Zealand, Turkey, the UK and the US. It had a 2009 budget of EUR 320 million. Their goals are to:

> Support sustainable economic growth
> Boost employment
> Raise living standards
> Maintain financial stability
> Assist other countries’ economic development
> Contribute to growth in world trade

Unlike the IETF or ISO, it is not traditionally concerned with technology. However, they have determined that the imminent exhaustion of the IPv4 address space will have a major impact on most of their goal areas, hence they did a major study, the results of which are presented in Ministerial Background Report DSTI/ICCP(2007)20/FINAL, "Internet Address Space: Economic Considerations in the Management of IPv4 and in the Deployment of IPv6". The report is available free by download over the Internet. You should actually read the entire report, but I will summarize the most important aspects of it in this chapter.

Let me quote one paragraph from the Main Points section:

"There is now an expectation among some experts that the currently used version of the Internet Protocol, IPv4, will run out of previously unallocated address space in 2010 or 2011, as only 16% of the total IPv4 address space remains unallocated in early 2008. The situation is critical for the future of the Internet economy because all new users connecting to the Internet, and all businesses that require IP addresses for their growth, will be affected by the change from the current status of ready availability of unallocated IPv4 addresses."

As of this writing, in early 2010, only 8% of the addresses remain unallocated. The current best estimates are that the IANA address pool will be exhausted by September 2011, and all RIRs will exhaust their supply by March, 2012 (some potentially even earlier).

Another key passage from this section follows:

"As the pool of unallocated IPv4 addresses dwindles and transition to IPv6 gathers momentum, all stakeholders should anticipate the impacts of the transition period and plan accordingly. With regard to the depletion of the unallocated IPv4 address space, the most important message may be that there is no complete solution and that no option will meet all expectations. While the Internet technical community discusses optional mechanisms to manage IPv4 address space exhaustion and IPv6 deployment and to manage routing table growth pre- and post- exhaustion, governments should encourage all stakeholders to support a smooth transition to IPv6."

"IPv6 adoption is a multi-year, complex integration process that impacts all sectors of the economy. In addition, a long period of co-existence between IPv4 and IPv6 is projected during which maintaining operations and interoperability at the application level will be critical. The fact that each player is capable of addressing only part of the issue associated with the Internet-wide transition to IPv6 underscores the need for awareness raising and co-operation".

Basically, there is no solution for those wanting to remain with IPv4. It is going to take multiple years to make the transition. There are only two years left, so March 2010 is really the last possible date to begin a smooth and affordable introduction of IPv6. Any later start will involve unnecessary expense and crisis management, towards the end of the IPv4 lifetime. Such transitions are usually not done well when rushed. And once the addresses are gone, that's it.

The report acknowledges that in the early phases of a major technology transition such as this, there may be little or no incentive to shift to the new technology. However, once a critical mass of users adopting the new technology, there is often a tipping point after which adoption grows rapidly until it is widespread. In theory this tipping point is reached when the marginal cost, for an ISP or an organization, of implementing the next device with IPv4 becomes higher than the cost of deploying the next device with IPv4. For an ISP, there are costs associated with deploying IPv4 nodes such as the cost of obtaining the addresses themselves, the costs of designing and deploying network infrastructure that uses fewer and fewer public (globally routable) addresses (by using NAT). When these become higher than the cost of deploying IPv6, they will begin migration in earnest. Reaching this tipping point depends on a number of factors, including customer demand, opportunity costs, emerging markets, the introduction of new services, government incentives, and regulation.

One of the key requirements for migrating to IPv6 is technical expertise in the subject. This is necessary to provide economies and companies with competitive advantage in the area of technology products and services, and the benefit from ICT-enabled innovation. Countries who are early adopters, and provide training and incentives for their companies to embrace it, or even help fund the necessary infrastructure (as in China) will have significant competitive advantages in years to come over countries that are laggards in this transition.

Increasing scarcity of IPv4 addresses can raise competitive concerns in terms of barriers to new entry and strengthening incumbent positions. There has been much discussion over how to manage previously allocated IPv4 addresses once the free pool has been exhausted. Will a black (or even a legitimate) market evolve for IPv4 addresses? Will companies that have more than they need be selling them on eBay? It’s possible that some companies might even be acquired in order to obtain a large number of addresses (as happened when Compaq bought Digital Equipment Corporation, and then again when HP bought Compaq). Today, you only borrow (lease?) addresses from an ISP for so long as you have service with that ISP. If you terminate that service, the addresses are reclaimed by the ISP for allocation to other customers. You don’t really own those addresses, so you can't sell them. Even the ISP doesn’t own them, if an ISP goes out of business their address pool probably returns to the RIR they got them from. Some of these situations are not currently well defined, but they will be as the IPv4 address space nears exhaustion. Notably, the situation on the early Class A block allocations is not quite so well defined. Those blocks may be owned by those early adopter companies.

There is also discussion of how existing and increasing use of NAT requires developers of network aware products and applications to build increasingly complex central gateways or NAT traversal mechanisms to allow clients who are in most cases, both behind NAT gateways. This is creating barriers to innovation, the development of new services, and the overall performance and stability of the Internet.

There is a risk of some parts of the world deploying IPv6, while others continue running IPv4 with multiple layers of NAT. Such decisions would impact the economic opportunities offered by the Internet with severe repercussions in terms of stifled creativity and deployment of generally accessible new services. Also, there could be serious issues of interoperation between people in the IPv6 world and those left behind in the IPv4 world. This could lead to a fragmentation of the Internet.

The five sections of the report cover the following topics:

> Overview of the major initiatives that have taken place in Internet addressing to-date, and the parallel development of institutions that manage Internet addressing
> Summary of proposals under consideration for management of remaining IPv4 addresses
> Overview of the drivers and challenges for transitioning to IPv6 through a dual stack (IPv4 + IPv6) environment. It reviews factors that influence IPv6 adoption, drawing on available information.
> Economic and public policy considerations and recommendations to governments
> Lessons learned from several IPv6 deployments

SOURCE: The Second Internet, book authored by InfoWeapons Chairman and CTO Lawrence E. Hughes.