As IPv4 addresses have become scarce and prices have risen over the past decade, it’s become more financially attractive for organizations needing IP space to consider leasing rather than purchasing ranges.
Likewise, IP address holders that don’t wish to sell their ranges may find that leasing is a way to monetize their address space while maintaining ownership of it.
Is leasing a viable alternative to transferring IPv4 ranges? The answer is yes, but there are many caveats associated with leasing of which both lessors and lessees must be aware.
Do the Regional Registries (RIRs) Allow Leasing?
This is a good question and one which both parties to a lease should be cognizant of so they feel comfortable that the lease does not violate the terms of service of the RIR where the IP space is registered. We will address this question by looking at various RIR policies, but first, let’s make some general observations.
RIRs have always allocated IPv4 blocks both directly to end users, organizations that need to use the IPs in their own networks, and to ISPs who re-allocate them to their own end users. As IPv4 space became scarce, these allocations continued to end users and ISPs through the IPv4 transfer market. ISPs usually include IPv4 allocations in bundled packages to their customers who need them routed to their own networks. The ISP may include the cost of the IPv4 address space with an Internet circuit or web-hosting package, or they may charge for the IPv4 rental as a separate line item. So, essentially, IPv4 leasing has gone on for a long time, and even predates the IPv4 transfer market.
The difference between this traditional leasing and the IPv4 leasing we are currently discussing is that traditional leasing only occurred when the customer also had some sort of Internet connectivity provided by the ISP. With IPv4 scarcity, ISPs often do not have enough IPv4 space to lease them to their connected customers, so the customer must either purchase space on the transfer market or lease it from another party.
In ARIN, the North American region, there is no prohibition on IPv4 leasing. In fact, leasing is not even defined in ARIN’s policy manual. It should be noted that when addresses are allocated from ARIN either directly or through the transfer market, the recipient must demonstrate to ARIN their “justifiable need” of the addresses to be used on their own network. So IPv4 leasing (obtaining IPv4 to provide to customers not directly connected to the recipient’s network) is not a valid justification to receive the space. However, ARIN recognizes that networks change and evolve, and as long as the recipient was honest in their original request for IPv4 space, if they no longer need the space for their own network they are certainly free to lease it out to someone who does.
RIPE, the European registry, is even more accommodating to those who wish to lease out IPv4 space. RIPE has no “needs analysis” when recipients obtain space directly or through transfers, so it’s perfectly fine to purchase IPv4 space with the intent to immediately lease it out to organizations in need. In this sense, RIPE is the most advanced registry since it recognizes that in the age of IPv4 run-out, the free market is the best mechanism for advancing the build-out of the Internet.
In APNIC and LACNIC, the Asia-Pacific and Latin American regions, the policies are similar to those in the ARIN region. Leasing is not a justifiable reason to purchase or obtain IPv4 space, but it is not prohibited in practice.
Leasing occurs in AFRINIC, the African region, as well. It should be noted that there are several prominent lawsuits pending between AFRINIC and one of its larger IPv4 recipients that does large-scale leasing. Questions still abound as to whether leasing AFRINIC addresses outside of the AFRINIC region is allowed, or if leasing violates the registry’s terms since the IPs are no longer used for their originally intended purpose.
Even in the ARIN region, there is a contingent of vociferous socialists who continually support policies that would restrict leasing and even the transfer of IPv4 space in the open market. As anybody in the ARIN region can join ARIN’s PPML (Public Policy Mailing List), the community group which guides the formation of regional policy, don’t hesitate to join yourself and make your voice heard.
What Should an IPv4 Lessor be Aware of?
Leasing out IP space is more complex than selling it, since as a lessor you retain ownership of the IPs and must monitor how the lessee uses them. Think of it as the difference between selling your home, where your concern ends once you are paid, and renting it, where you have an ongoing relationship with the tenant. Here are some of the caveats to consider:
- Lessees can damage the reputation of your IP addresses. This can occur if they send spam email or in less noticeable ways such as using the IPs in an ill-behaved proxy environment.
- Contracts, especially international ones, are hard to enforce, if the lessee doesn’t behave.
- Lessees can cancel and stop paying before the lease expires. Collections are often an issue.
- Lessees may require the lessor to perform various pre-lease technical actions to make the block usable to them, and may require technical changes during the lease term.
- Lessees may want to rotate blocks, change geolocation, require rDNS delegation, change the ASN authorized to advertise the block, and otherwise burden the lessor with maintenance tasks.
- Some lessees are engaged in constant battles with streaming services, sneaker sites, and those who seek to block IP addresses.
- It’s not always simple to revoke a Letter of Agency or get a lessee to stop routing addresses.
What should an IPv4 Lessee be Aware of?
As a lessee, you are also entering into a long-term relationship with the IP holder and have your own caveats to consider:
- Lessors may decide to cancel the lease to either sell their block or use it for their own purposes. Your legal recourses may be limited and time-consuming while your business suffers from the termination of your IP use.
- Lessors can over-react to abuse claims.
- Lessors want secure, long-term income but also want the freedom to sell quickly.
- Third-party databases play a large part in lease-ability and pricing, including geolocation, spam, and internal blacklists at shopping and streaming sites. The lessor may not have the time or ability to address these issues and you might be stuck in a lease with IPs that do not work for your purposes.
Let the Experts Help
The complexity of IPv4 transfers makes using a qualified IPv4 broker important, and the far more complex IPv4 leasing market makes using a broker even more critical.
IPTrading has years of experience dealing all the technical, contractual and financial issues that is involved in IP leasing. Contact us to help guide you through the experience and ensure it is a smooth one.