Alternative headline: Jun Murai remembers he has a /8 under the fridge
Special report Internet “samurai” and IPv6 advocate Jun Murai announced today he will sell more than 14 million IPv4 addresses and put the proceeds – expected to top US$300m – into a new trust co-owned by Asia-Pacific regional internet registry (RIR) APNIC.
Writing on the website for the organization that Murai founded in 1985 and which owns the addresses, the WIDE Project in Japan, Murai explained: “I have taken a decision to release this address block, for the purpose toward healthy development of today’s internet services and toward supporting internet development in the AP [Asia-Pacific] region.”
For the curious, the IPv4 addresses in question are vast majority of 43/8, or the addresses 43.*.*.*. Some are already allocated, and Murai owns 87.5 per cent of it, which he is now offloading.
Despite his revered status among internet engineers – Murai is the Japanese equivalent of “father of the internet” Vint Cerf and has been instrumental in internet development in Japan and across the Asia-Pacific region – the decision may prove controversial.
Under rules agreed by all five RIRs, any spare IPv4 addresses are supposed to be returned, for free, to the RIR and be redistributed as needed. But Murai received his address blocks in the early internet days before the rules were put in place, and so is pretty much free to do what he likes with them.
The enormous scarcity in such 32-bit network addresses has given them significant market value: currently each IPv4 address is worth between $20 and $30 apiece, meaning that Murai’s seven-eights of a /8 address block, representing 14.7 million addresses, is worth anywhere between $294m and $441m.
It is almost unheard of for such a large block of essentially unused addresses to be sold, and competition is likely to be fierce among giant internet companies, such as Google, Facebook, as well as cable giants and multinational mobile operators who are struggling to deal with demand for IPv4 addresses from customers.
The other controversial aspect is the fact that APNIC has agreed to set up a new trust to handle the proceeds. As a regional internet registry, APNIC is supposed to ensure that the internet’s foundational layer is treated with equanimity. The internet infrastructure industry has struggled for years over how to approach the commercial market for IPv4 addresses, especially when it has always been their job to hand out the addresses for free, according to need.
APNIC has long taken a neutral stance on address sales and their brokers, recognizing their role in freeing up address space but stopping short of endorsing the activity. This decision to directly benefit from what will likely be one of the largest-ever sales of an IPv4 address block is a shift from that neutral position.
Both Murai and APNIC recognize the move may not go down well with some. “While I have not been an active supporter of the commercialization of IP addresses, the fact is that a market for IPv4 addresses exists and the APNIC community has remained neutral by developing a proper policy framework for market transfers,” Murai wrote in his announcement.
Instead, he makes a pragmatic argument that the address space he owns “has a current value, but a value that will reduce and disappear over the next 10 years or so,” and that it makes sense to realize that value now and put it to good use. The trust will therefore be tasked with spending its millions wisely on improving internet services and connectivity in Asia-Pacific.
“This is an opportunity to produce a capital asset, with a significant impact on internet development, if used well and carefully,” he argued. “It is an opportunity that exists today and might not be repeated at any point in the Internet’s future.”
The Register spoke to the head of APNIC, Director General Paul Wilson, about the sale, and pushed him on the issue of profiting from the sale of IPv4 addresses. Wilson told us that discussions with Murai had started back in March 2019 at an ICANN meeting in Japan, and that he had been clear Murai should return the addresses to APNIC for no consideration.
Diving into the deep end
“Ideally, he should have given them to the free pool,” Wilson said. “And I offered that. In fact, I felt obliged to push that, and that’s what we would have done if he had been prepared to do so.”
But, Wilson says, Murai made it clear that he had decided he wanted to sell them and use the money to advance projects close to his heart, including the expansion of IPv4’s replacement, IPv6.
Murai asked APNIC to help, Wilson says, and Murai has long been connected with the RIR. As well as being in the past a board member at ICANN and the Internet Society, he also helped move the RIR from Japan to Australia, and sits on the board of APNIC’s own foundation, which has been running for four years and distributes approximately AU$1m (US$590,000) a year to internet development projects. Wilson says the largest-ever grant issued by APNIC’s Foundations was AU$500,000 (US$300,000) for tech training in Papua New Guinea.
The two men discussed what to do with the realized funds from a sale of WIDE’s 43/8 IPv4 block, and ended up agreeing to a new organization that will be called the Asia Pacific Internet Development Trust, with ownership split 50-50 between the WIDE Project and APNIC. The idea was signed off by APNIC’s Executive Council in September.
There are no solid plans for how the money will be spent and on what, although the trust’s deed stated [PDF] its funds are to be used for three purposes: expanding the use of the internet in the Asia-Pacific region; reducing the digital divide; and carrying out research and education in the region.
Wilson acknowledges that is a wide remit, though argues that the trust will follow the same path and “established track record” as APNIC’s Foundation. He refused to rule out funding broader issues, such as internet governance and open internet standards, though noted that it would “not be useful to spend money to buy support” – something that other internet organizations, like ICANN and the Internet Society, have long been guilty of.
The initial plan is to use proceeds from the IPV4 auction as a capital sum and invest it, using interest and returns, which should amount to several million dollars a year, to fund the trust’s activities. Wilson did not rule out reducing the capital sum over time if that’s what the trustees, which include him and Murai, decide is the best way forward, however.
As for the actual sale itself, the details have not been decided: KPMG has been hired to look at the best way to sell the asset. That will almost certainly be an open auction of the addresses given the high demand and likely global interest.
The deal has certainly come at a good time for APNIC. With the depletion of IPv4 addresses and the enormous space created by the IPv6 address space, all RIRs face an existential crisis: they will receive far less income, and while the allocation of addresses will need to continue, the task doesn’t require the current resources, staff, or budget of the existing organizations. With this massive influx of capital, APNIC will be in a position to expand its internet development remit and remain largely unchanged.
Freed from the office, home workers roam sunlit uplands of IPv6… 2 metres apart
Wilson argued that the internet industry has proven to be wrong when it concluded a decade ago that the market would eventually sort out the digital divide: it hasn’t happened, leaving some communities and even countries at a significant disadvantage.
That divide is even more stark with the current global impact of the coronavirus pandemic; while some have been able to transition relatively quickly to online activity, those with limited or slow internet access have struggled.
Wilson is also quick to defend the sale amid recent controversial moves by internet organizations, including ICANN’s decision to milk $20m out of Verisign to approve an increase in the price of dot-com domains; the Internet Society’s decision to sell the .org registry to an unknown private equity firm for $1.1bn; and .uk operator Nominet’s decision to shut down its charitable arm, raise prices, and spend the proceeds on pushing into for-profit markets.
“This is a completely different issue,” he argued. “This is an unoccupied piece of address space whose value will be realized and then set aside for internet development, which was its original intent.” The .org registry, by contrast, is “heavily tenanted by millions of people” who are concerned about what the impact of the sale will be, he noted.
Whether the sale of IPv4 addresses to benefit the agenda of an internet pioneer and a steward of the internet comes to be seen as a practical, even sensible, decision, or the ultimate act of betrayal, will come down to what is done with the money.
If the proceeds from one of the last-ever chunks of IPv4 address space can contribute to the take-up of its replacement, IPv6, drive down the digital divide, and bolster the internet’s overall security, it will be undoubtedly be seen as a success.
If, however, it is used to fund the growth of wages, bonuses, stipends, remunerations, and so on, that cash-flush internet organizations have come up to enrich themselves, or it is used to buy political access or push ego-driven public platforms – something on which internet organizations waste millions of dollars a year – then it will be a desperately sad note on which to close the final chapter of the addressing system that brought us the internet as we now know it.
Jun Murai and Paul Wilson have just put themselves in the spotlight. ®