Nortel Sells Microsoft IPv4 Addresses For $7.5m

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Sale confirms addressable space as a commodity fuelling a growing grey market

Defunct telecommunications firm Nortel has sold Microsoft a block of internet protocol version 4 (IPv4) addresses for $7.5 million (£4.7m).

The sale emerged when the Canadian firm filed a motion seeking approval for the sale with the Bankruptcy Court for the District of Delaware.

The documentation filed in support of Nortel’s motion revealed Microsoft is purchasing a block of 666,624 IPv4 addresses, at roughly $11.25 (£7.02) each.

It also said Nortel would make 470,000 available for Microsoft’s immediate use, pending approval of the deal by the Bankruptcy Court. The remainder will be released to the software giant once the bankruptcy proceedings have been concluded.

The sale forms part of ongoing attempts to recover the maximum value from Nortel’s assets for its creditors that began when it first filed for bankruptcy in January 2009.

News of the sale has led to speculation that a grey market in diminishing IPv4 addresses is growing; especially when Nortel’s motion also revealed it received inquiries from no less than 80 potential buyers. And world stocks of IPv4 addresses officially ran out last month.

A growing commodity

It then signed non-disclosure agreements with 14 of them in the preliminary stages of finalising a deal, before deciding on Microsoft as a suitable buyer.

“It all seems a little strange,” Clive Longbottom, business process facilitation service director at analyst firm Quocirca, told eWEEK Europe UK.

“Any big block of [IPv4] addresses like this should really be returned to the Regional Internet Registry (RIR). They shouldn’t really be traded in this way. I don’t think it should be allowed. But if someone had said we’d run out of IPv4 addresses when they were first introduced I wouldn’t have believed them.”

Longbottom did suggest however, that Microsoft’s need for older IP addresses might stem from the fact that its old operating systems, up to and including XP, do not support the latest IPv6.

“They’re not looking for new customers for XP,” he said. “And the best way to manage the need for IPv4 addresses is to use NAT [network address translation] processes. I reckon Microsoft will end up wondering what to do with them in the end.”

Paul Rendek, head of external relations and communications for RIPE NCC – the RIR for Europe, the Middle East and parts of Central Asia – said there are no rules governing the sale or return to the RIR of IPv4 blocks.

“As far as the RIRs are concerned, we’re not in the business of transferring addresses. But it is important to note that any entity buying old addresses has to justify the need to the internet community,” Rendek told eWEEK Europe UK.

Policing registration, not transfer

He said companies could either transfer old IPv4 addresses privately or return them to their regional RIR. “But we don’t see them [IP addresses] as a commodity,” he added. “Our job is to make sure their registration is done well.

“There may be a market out there for IPv4 blocks, but I can’t comment on that,” he added. |How each organisation manages its networks is unique to them and it’s almost impossible to call out their different strategies for IPv6 migration.”

Rendek did however confirm that American Registry for Internet Numbers (ARIN) would likely be asking Microsoft to justify its IPv4 purchase from Nortel.

Domain Incite, a blog concerned with domain name space issues, noted that Microsoft had paid over the odds for the block.

Microsoft had yet to respond to requests for comment at the time of writing.

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