NZ's public sector could be sitting on internet address treasure trove

IPv4 addresses form one of the basic building blocks for the Internet. Photo / 123RF

The public sector in New Zealand may be sitting on a windfall worth tens of millions of dollars but it's a treasure trove that won't last forever.

We're talking about Internet addresses. At the recent APNIC 54 technical conference, Dr Ulrich Speidel at the University of Auckland's School of Computer Science was floored when he heard how much addresses sell for.

Speidel learnt that the going rate is US$45 to US$60 per address, or between NZ$80 to $108 at current exchange rates. Bigger contiguous address blocks are worth more per address than smaller ones.

Estimates by Speidel show that the NZ public sector has IPv4 allocations with 1 to 1.2 million addresses. At the low end of the scale, they are worth $85.5 million to $97m approximately.

Why do IPv4 addresses cost so much?

They form one of the basic building blocks for the Internet, allowing computers and devices to communicate with each other. In simplified technical terms, the public Internet routes data between networked hosts that have "quad dotted" numbered addresses, like 1.1.1.1 or 104.18.2.137.

The original Internet Protocol version 4 (IPv4) used for this was first deployed in 1982, and it's still in use.

Although the theoretical 4.3 billion addresses available within the original protocol originally seemed vast, the large number of devices and networks connected to the Internet meant the world ran out of IPv4 addresses several years ago.

If you want IPv4 addresses that work on the Internet, you have to buy them from someone with existing allocations. It'll cost a pretty penny and there are specialised address space brokers operating in that market.

This isn't how it used to be. When the Internet started, IPv4 addresses were obtained easily, and several organisations at the time applied for large blocks of them.

For example, lookups by Speidel suggest that the universities of Auckland, Wellington, Canterbury and Massey and AUT together have more than 348,000 IPv4 addresses.

Others such as the Ministry of Health has a large block of addresses, ditto the IRD and LINZ, and several other public sector entities.

This begs the question if public sector entities are aware of the pots of gold they're sitting on.

Speidel contacted the MoH which seemed unaware it had a big block of addresses worth around $6 million just sitting there.

A spokesperson for the University of Canterbury confirmed that its IPv4 allocations are on their assets register, and that the value is known.

Plant And Food Research has also entered its approximately 66,000 addresses into its assets register, but a spokesperson said the research institute does not know what they're worth.

In the case of Te Whatu Ora - Health NZ, the organisation appears to have a large block of IPv4 addresses that aren't even being used on the Internet, lookups by Speidel suggest.

The APNIC above refers to the regional internet registry in charge of managing IP addresses for us, the member-based, not-for-profit Asia Pacific Network Information Centre or APNIC.

APNIC allocates IP address space on a demonstrated need for use, with fees payable. Nobody can claim direct ownership of addresses, but the APNIC's director-general Paul Wilson confirmed that they can be on-sold.

This, Wilson said, was to prevent a black market for IPv4 addresses emerging.

In other parts of the world, the soaring value of IPv4 addresses has led to dodgy dealings. At AFRINIC a legal battle has been underway for years, with allegations of stolen address blocks and bogus registrations flying around.

Being unaware of IPv4 allocations and their worth carries risk, Speidel pointed out. Rogue IT staff could allocate addresses to themselves to sell, which could be difficult to unwind by legal means.

Time is also running out for IPv4. The newer IPv6 protocol is being deployed, and it supports a mind-bogglingly large number of addresses, counted in undecillions.

Rolling out IPv6 has been a long, painful process as it's not compatible with the older IPv4. Essentially, this means creating a new IPv6 Internet which cannot talk directly to the IPv4 Internet.

Even so, the IPv6 Internet is growing rapidly, which the IPv4 equivalent cannot as it can't be expanded further.

That means public sector organisations need to strike while the iron's hot if they wish to realise the value of their address holdings.

"Multiple large organisations in NZ have already made the switch [to IPv6]. At that point, IPv4 addresses are likely to sunset and demand for them will drop." Speidel said.

"These IPv4 assets will eventually depreciate in value to zero," he added.