Why buy IPv4 addresses ?

Quite often we are approached by a company’s network administrator and asked to create a proposal to purchase IPv4 space. When we later relay the proposal to the network administrator’s senior management we are met with skepticism in many cases. The senior managers want to know why they should invest in what can easily be seen as ether – something you can’t touch, feel, or even see. After all, their internet and website are working fine today, so what will be different about tomorrow?

Explaining the risks a company faces when their allocated pool of IPv4 addresses is depleted can be quite difficult. Many people, especially those without a technical background, are unaware of how their current IPs are utilized, how many are remaining, and what their future needs are. Adding even more confusion to the situation is the uncertainty surrounding the real timetable for full IPv6 deployment. For those with, rightfully, a more pessimistic view in can be extremely hard to project one’s networking needs five or more years in to the future. Will the company acquire another company? Will the company expand? Will the company have several new projects requiring new network infrastructure and consequently, more IPv4 addresses? These are tough questions for a network administrator to tackle.

When Accuro’s consultants initially engage with a client they spend the majority of their time analyzing precisely how the company is using its current IPs and what the company’s utilization prospects look like in the future before making a recommendation as to whether the client should buy IPv4 addresses. Determining exactly what a client needs before beginning the IPv4 purchase process is indeed the most important service an Accuro consultant provides – the stakes can sometimes be very high.

A recent experience with a client perfectly illustrates this point. About 18 months ago Accuro was retained by a network administrator to analyze his IPv4 utilization. The network administrator maintained a network for a medium-sized gas station franchise operator with about 250 stations across a half dozen states in the US. Over time, the company had been given three small allocations – a /20 and a /21 from ARIN directly and a /23 from an Internet service provider. Their network infrastructure was quite extensive. They maintained a frame relay network for their point-of-sale system with public internet connectivity, a VOD network to retrieve in-store video and audio advertisements via the internet, an internal VOIP phone network, and a public network delivering internet access to each store. Additionally, the network administrator was responsible for maintaining a data center at their headquarters that hosted their inventory and ordering system, website, and corporate intranet.

We were approached by the network administrator after his numerous requests for new IP space were turned down by ARIN. Unsurprisingly, the network administrator found himself lost in a forest of contradictory policy requirements with each request. Our team began a deep analysis of his current utilization and found his available pool of IPv4 address space was 97% utilized. We were able to recommend some changes that freed up a small part of his space, leaving him with a whopping 7% of his space unused.
We helped make one more request to ARIN, which was turned down as well. At this point, the network administrator’s superior, the company’s CFO, asked for an alternative proposal that didn’t involve the network administrator spending hundreds of hours negotiating with ARIN. The obvious solution at this point was to buy more IPv4 addresses and we worked with the network administrator to craft a proposal to do just that.

When we make our proposal to the CFO, however, we were met with resistance. As the CFO saw it, there was no reason to invest money when the company wasn’t actually out of IPv4 space. After all, why buy IPv4 space and just invest money in something invisible that you don’t need right now? The CFO’s final answer was clear: No and thanks for your help.

This was the last we heard from the network administrator until about 6 weeks ago when we received a panicked phone call. The reason for the phone call was twofold. First, the company had fast-tracked the purchase of a competitor in bankruptcy and that acquisition had increased the number of stores the company owned. Second, the company had signed a proposal to move their Point-of-Sale and credit card processing system to a new vendor. Since this vendor had proposed a new fee arrangement that would save the company about $300,000 a year the company was quite enthusiastic to make the switch.
So what is the catch? As it turned out, the new vendor required each store to connect directly to their credit card processing gateway using a unique SSL certificate over a VPN. SSL certificates and VPN connections require unique IP addresses, something the company did not have and had not taken in to account. Since the company had let the contract with their old vendor lapse and could not use the new vendor because they lacked IPv4 addresses, they were paying a penalty fee for every day they continued to use their old credit card processing system. That penalty was per store and amounted to almost $10,000 for each and every day. Adding to that they were also paying duplicate network costs because without IPv4 space they could not consolidate their newly purchased stores on their existing network and datacenter infrastructure.

The process involved in buying IPv4 space takes time. Fortunately Accuro is the largest IPv4 broker with the most extensive inventory of IPv4 space available. Nonetheless, it still took some time to put together a suitable transaction and then took more time for the network administrator to integrate the new space in to his network. In the end, the $300,000 in annual savings from the new vendor was more than wiped out by costs incurred solely because the company allowed itself to run out of IPv4 space.
There’s a lesson here, every company is impacted by the depletion of the IPv4 address pool and while not every company needs to buy IPv4 space they do need to assess their exposure and take action if needed. Don’t wait until you find yourself “under the gun”; deal with your IPv4 planning today.

Your feedback, questions, and topic ideas are always welcome. Please email us at

sales [at] accuroconsulting /dot/ com

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