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Microsoft offers $7.5M for 666,624 IPv4 addresses

Deal to buy the addresses from Nortel a sign of the increasing value of IPv4 as they run out, some say

March 24, 2011 09:12 PM ET

Computerworld - Microsoft has agreed to pay $7.5 million to purchase a block of 666,624 IPv4 addresses from bankrupt Canadian telecom equipment maker Nortel in a move that some see as a signal of the increasing value of IPv4 addresses.

Last week, Nortel filed a motion seeking approval for the sale from the Bankruptcy Court for the District of Delaware. If the deal is approved, Microsoft would assume control of the IPv4 addresses, currently owned by Nortel, for about $11.25 a piece.

About 470,000 of the addresses will be available for immediate use by Microsoft, while the remaining will be released to the company at the end of the bankruptcy proceedings, according to court documents filed in connection with the proposed sale.

News of the proposed deal comes just weeks after the Internet Corporation for Assigned Names and Numbers (ICANN) announced that it had handed out its last block of IPv4 addresses, and that any supplies remaining with regional registries would soon run out.

Some have speculated that a black market for IPv4 addresses will form as their supply begins to wind down and more organizations are faced with the costs and risks involved in a migration to the IPv6 protocol.

ICANN and regional registrars have noted that the remaining IPv4 addresses will go to entities that demonstrate an immediate need for them.

The American Registry for Internet Numbers (ARIN) has put in place new rules that allow companies to forecast their address needs for only three months at a time instead of the previous one year period.

Microsoft's plans to purchase Nortel's entire block of IPv4 address in this environment has prompted some discussion among members of the North American Network Operators' Group NANOG).

Some posters on the group's mailing list speculated that Microsoft was buying the addresses in order to resell them at a later date. "They can only get them for free from ARIN if they can document an immediate demand," one poster on NANOG noted.

"Perhaps they don't have an immediate demand, and are simply stockpiling addresses for later use post ARIN depletion? Or perhaps they hope to make a profit then by selling them to someone else," the poster noted.

Others wondered how Microsoft could purchase the address block when ARIN polices required that the blocks be returned by Nortel to a common pool where others could use it. One poster noted that the "recipient organization has to show justified need," in order to get the blocks.

In one post on NANOG, John Curran, the CEO of ARIN, appeared to suggest that the organization would be willing to go to court to explain IPv4 allocation policy.

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