INFORMATIONAL

Dealing with IPv4 exhaustion as a hosting company

December 18, 2020

On November 25th 2019 RIPE NCC allocated its final /22 IPv4 subnet from its available pool, meaning no further IPs could be claimed by making new RIPE accounts. This meant that 99% of all RIPE subnets were now allocated to LIR's throughout Europe.

The below graph details IPv4 run-down over the last 8 years for all internet registries. Its very apparent the pool of /8's sharply decreasing over the period into almost nothing.


Over the last few years HydraCom has seen a sharp increase in demand for IPv4 subnets across all brands (Zare.com/Nitrous Networks and Bandwidth.co.uk). This is mostly due to increased virtualization of services, proxies, VPN's and general increase in business. The challenge has not been one of getting hold of new IPv4 ranges, but how you go about it. Below will detail in today's market how services providers like ourselves acquire IPv4 addresses.

Where is the demand coming from?
At Zare we have seen huge demand for IPv4, almost daily we receive multiple external requests to rent /24's, /23/'s and /22's for a plethora of different uses, some being ones we reject very quickly (spam) and others we allow, however our demand far outstrips the supply. Below is a list of the most common uses for IPv4 space:

  1. Virtualization
  2. VPN's
  3. Sneaker bots
  4. Proxies
  5. Telegram endpoints
  6. Game servers

Buying IPv4 from the open market
At current the only way to acquire IPv4 addresses is to buy them off the open market from service providers or institutions who no longer need them or have kept them to cash in on their increasing value. To date HydraCom has purchased 43,520 IPv4 addresses at a total cost of roughly £600,000 and these figures are increasing on a monthly basis..

Whilst a lot of companies opt to register new companies and signup with ripe multiple times to claim /22's (these are now depleted and RIPE no longer offers this). HydraCom has opted to buy them from the open market for several reasons.

  1. All subnets can be controlled by a central LIR rather than multiple ones
  2. This method requires you to register multiple companies within your country, this can be expensive and may require accountants to file for the business yearly
  3. By claiming free /22's with each RIPE account you open, you are depriving new businesses or startups from being able to use IPv4 addresses as many other companies have been able to. Today a new company must spend 2000EUR one time and 1400EUR per year (RIPE fees) and roughly 18,000EUR for the /22 IPv4, whereas before it would simply be the RIPE fees only and you would be given a free /22. This point will be expanded on later in this post.

On 02/08/2017 ago we did a blog post similar to this one about the costs to buy IPv4, below are the prices we quoted:


The pricing now as of 18/12/2020 is below (based on prices we pay):


The pricing now as of 01/05/2021 is below (based on prices we pay):

As you can see from the above, the cost to buy IPv4 has double in the space of 3 years and there is no sign its going to stop increasing any time soon, even with the introduction of IPv6.

Registering new LIR's for free IPs
Many hosting companies have decided to register themselves new LIR's each time they require more IPs instead of buying them off the open market. As mentioned further up in this blog post, we decided against that for many reasons. Firstly, most would consider registering multiple companies and LIR's abusing the RIPE system as unethical, however its apparent RIPE either do not care or cannot be bothered to investigate each signup to ensure its not the same person/company creating multiple accounts in order to simply get IPv4 allocations to either use or rent/sell at a later date.

The primary issue is that each party in the transaction gain considerably. When this process was possible, RIPE would get 2000 EUR one-time and 1400EUR per year for 3 years for each LIR signup and the LIR owner would get a free /22 worth 18,000EUR at today's price. RIPE is of course a non-profit and is technically owned by its members and they will vote for policy changes, if RIPE makes more money from more LIR signups then these savings as passed onto its members in the form of reduced annual membership fees. While this is good for everyone in the short term, its resulted in rapid exhaustion of the remaining IPv4 pool and now the inability for any new companies to signup and gain IPv4 resources they may require. Overall RIPE made a mistake with the way they issued IPv4 addresses and companies who created multiple LIR's took advantage of a corrupt system for nothing other than financial gain (can you blame them?).

Finally, as mentioned before, RIPE members vote for policy change and could in essence have closed this loophole very quickly. However when you already have thousands of new LIR's purely created for the free /22 and which have voting rights, no policy change would have ever have passed due to the amount of people wanting to exploit this and would have shot down any policy that would have stopped it.

HydraCom's IPV4 purchases 
Below is a table of HydraComs IPv4 purchases from 19/02/2016 until 19/05/2021. This is publicly available information provided by RIPE NCC on the below link:
https://www.ripe.net/manage-ips-and-asns/resource-transfers-and-mergers/transfer-statistics/within-ripe-ncc-service-region/ipv4-transfer-statistics

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