IPv4 Exhaustion is REAL

Written by: Steve Puluka, Sr IP Engineer, DQE Communications // June 2016

When TCP/IP version 4 was published in 1981 (RFC 791-3) the four byte 4.2 billion addresses seemed like a limitless resource in our nascent networked world. The standard had only three sizes of addresses allocated to members: class A (16 million), B (65k) and C (254). But the member club was limited and the enormous space allocations were not an issue.

By the end of the decade, engineers recognized the limitations on growth this method of allocation was having on the system. RFC 1519 published in 1993 created the CIDR (Classless Inter Domain Routing) block system that allows a more flexible allocation of addresses in blocks starting with 1 and doubling in size as they march up the chain. This system is still in use today to allocate address space for connectivity.

Even with the CIDR method of address conservation, engineers realized that further economies could be realized. A large number of network connected devices did not need to have a direct presence on the internet. RFC 1918 (published in 1996) allocated three address blocks for private network use. These private address blocks provided addressable space that would not need to be routed on the public internet.

These two innovations, CIDR and Private Addressing, subsequently enable the internet to connect over 20 billion network devices using the 4.2 billion scope of IPv4 address space. A remarkable and enduring accomplishment for a network technology defined in 1980, with only two major revisions in scope. But there remains a limited resource in those 4.2 billion addresses due to a continuing upward trajectory of connected devices.

ARIN Countdown to IPv4 Exhaustion

Despite the efficiencies gained by CIDR & Private Addressing, there is still an actual limit on the number of available addresses for use in each region of the world. The North American registry, ARIN announced their 4 phase IPv4 address exhaustion countdown plan in February of 2011. In a matter of four years all 4 phases were complete. The 4 phases of the countdown plan became exhausted, when in September 2015 the last available IPv4 block in ARIN inventory was allocated leaving nothing remaining.

ARIN still accepts requests for additional IPv4 blocks and maintains a waiting list of such requests. The waiting list currently has over 300 requests for previously allocated address space which is being returned to ARIN. ARIN continues to review these requests and grant approvals for address blocks that companies can justify the need for the IP space.

Managing Limited Resources

Now that IPv4 space from ARIN is exhausted, ISPs (Internet Service Providers), like DQE Communications, have to both individually manage the allocations, as well as identify new ways to replenish their allocations from alternative sources. As such, recovery of unused space within existing allocations and finding new sources for unused address blocks are currently important actions for ISPs.

When initially assigning address blocks, ISPs work with customers to identify the anticipated public address space needs on the services. Due to ARIN specifications ISPs must perform audits of address utilization to ensure space is being utilized appropriately. If a customer’s IP space needs decrease or do not meet ARIN specs, their IP allocations can be adjusted and unused space recovered. As IP space becomes more limited, the recovery of unused space becomes more important.

As the limitations on IP space have become more apparent, a private marketplace for IPv4 address space transfers has developed. Organizations that were given large allocations by ARIN are collecting a fee (per IP address) to transfer the unused space to an organization that qualifies for additional space.

To enable this type of transfer, the receiving organization must apply for the new block size and be approved by ARIN. ARIN currently puts a two year usage period on these requests for transfer. Thus transferred space must be utilized within two years. For the foreseeable future, this private market of fee-based IPv4 block transfers will be the only method to acquire new address space in the ARIN region.

It is likely that there remain many unused IPv4 blocks that were previously allocated to large organizations many years ago. These address blocks will likely fill the growing needs of ISPs in the ARIN region for some time to come. As the market tightens, ARIN and other regional authorities may step in to more directly manage these limited resources. As with any market, we can expect costs for IPv4 address blocks to rise as the availability of transfers diminish.

Until IPv6 deployment has gained a foothold, ISPs will need to get new approved requests by ARIN for IPv4 address blocks and budget for the fees necessary to actually acquire the address space that will be needed.