Leasing vs. Buying IP Addresses
IPXO is becoming the world’s first IP address marketplace that provides companies experiencing IPv4 shortage with a solution.
More than a decade ago, the cost per IP address was around $5, but when IANA allocated the last block of IP addresses in 2011, that soon changed. With the world experiencing a shortage of IPv4 addresses, many companies are now looking for ways to get their hands on IP addresses to continue expanding their businesses.
With less than 4% of the world’s supply of IPv4 addresses available for allocation, the depleting pool of available addresses has caused IP address prices to skyrocket.
IPv4 addresses are becoming a scarce resource, and with IPv6 not yet ready to fully replace it, experts predict that IPv4 prices will likely increase by as much as 100% within the next 5 years. Therefore, it’s worth examining IPv4 transfer and lease prices to determine whether buying IP addresses is still the way to go.
IPv4 provided 4.3 billion IP addresses, but the Internet community didn’t think about the limited capacity of IPv4 for decades. It seemed that 4.3 billion IPv4 addresses would be sufficient for a long time.
However, large blocks of IP addresses are still in the hands of large corporations, such as Hewlett-Packard or Xerox. Now, such companies often appear as sellers as they’ve been allocated far more IP addresses than they needed in the early days of the Internet when the classful network allocation method meant inefficient IP address block distribution.
Today there are more than 820 million unused IPv4 addresses owned by large corporations that, for the most part, aren’t doing anything with them. Yet many new and expanding companies that need IP addresses are struggling to acquire them.
IPv4 Transfer Price Analysis
Even with the shortage of IPv4, the transition to IPv6 is moving at a snail’s pace. This situation has created a widening gap between the supply and demand of IPv4 addresses, making IPv4 addresses an expensive commodity.
The shortage of available IP addresses gave rise to the IP brokerage market. In 2011, the first arrangement occurred when Sandra Brown brokered the sale of Nortel IP addresses to Microsoft. IP brokerages use their network and contacts to match buyers to owners.
In the last five years, approximately 350 million IPv4 addresses were transferred. During this time, IP address prices were between $18 to $25, and the prices generally increased by 25-30% depending on the subnet size. Throughout 2019 the cost per single IP address increased by 35%, reaching up to $25-$35 per IP.
In the last five years, the most significant IP address buyers were hyperscalers, internet service providers (ISPs), and IP transit providers. Such companies hold 93% of the IPv4 transfer market share. They transferred around 35 million IPv4 addresses during 2019 alone.
At the same time, the majority of industries that purchased 10K to 100K IPv4 segments were data center operators, internet service providers, and VoIP providers, which accounted for 5% of the IP address transfer market.
In the 1K to 10K IPv4 segment, most buyers were data center operators, hosting service providers, and various small and medium businesses, which share 1.76% of the market.
Finally, the same can be said about the 1K segment, in which the majority of IPv4 buyers were data center operators, hosting service providers, and various small and medium businesses. This segment only has 0.24% of the market share.
Our analysis suggests that the most significant stakeholders in the Ipv4 transfer market are large corporations, highly dependent on IP addresses to sustain their businesses’ growth.
Meanwhile, small and medium-sized businesses generally don’t have enough financial resources to purchase large quantities of IPv4 addresses.
What Makes Leasing Attractive
Buying IPv4 addresses is an expensive proposition, but leasing offers a cost-efficient solution for companies looking to grow their global presence. On top of that, leasing does not require a long-term commitment. You can lease IP addresses for 12 months, for example. However, If the IP holder agrees, you can renew the contract once the original contract has expired.
Many businesses encounter a problem because there aren’t enough IP addresses for sale, so many of them are unable to buy them, even if they have the means to do so.
The IPv4 shortage led to the creation of not only the IP transfer market but also the IPv4 lease market. The IPv4 lease market has become the go-to place for small and medium businesses to acquire IP addresses at a reasonable price.
Due to the current scarcity of IPv4, when purchasing IPs, RIRs require buyers to justify their IPv4 requirements. And, it’s a lengthy process as well. Transfering IPv4 ownership between RIRs is a time-consuming process.
Leasing doesn’t require changing the ownership. So leasing is a faster and more efficient way to acquire IP addresses. Furthermore, you can determine the lease period, which can be from a month to several years, which makes leasing a cost-effective solution. Let’s go over some numbers.
Today, /24, /23, /22, and /19 blocks are the most popular in the IPv4 lease market. In September 2020, the cost per IP of a /19 block was $0.39 per IP. The price per IP of a /22 block $0.39 to $0.44.
The price per IP of a /23 block was $0.34 (in RIPENCC), $0.61 (in ARIN), and $0.67 (in APNIC). Meanwhile, the price per IP of a /24 block was $0.35 (in APNIC and RIPENCC) and $0.59 (in ARIN).
Without a doubt, the IPv4 transfer price has a direct impact on the IPv4 lease price. Today you can lease IPv4 addresses for $0.25 per IP. But, as in the IP address transfer market, the more you lease, the less you pay.
Furthermore, an extended lease contract also reflects favorably on the price. If you commit to leasing IP addresses for an extended period, there’s a chance that you will be offered a lower price.
By leasing IP addresses instead of buying them, businesses can conserve large amounts of financial resources. When you lease IP addresses, you enter into a fixed-term contract, which is ideal if you don’t want to commit to leasing IPs for an extended period. The costs of owning IPv4 addresses make leasing a more attractive option to meet your IP resource requirements at a low price.
Furthermore, another benefit of leasing IPv4 addresses is the minimized risk of getting blocklisted IPs due to abuse or spam. Another advantage of leasing IP addresses is that you can acquire them quickly instead of waiting for months or years for a RIR to allocate IP addresses for you after you join a waiting list.
As we are approaching 2021, there are not enough available free IP addresses to go around. It’s no secret that the scarcity-driven IPv4 market poses a challenge for companies trying to acquire IPv4 resources to scale their operations.
However, the good news is that the IP address lease market is now in a position to provide companies in need of IPv4 resources with a solution.
IPXO is the world’s first IP address marketplace that provides a unique IPv4 lease platform with a diverse selection of subnets. The IPXO Marketplace is an easily accessible and cost-effective solution, allowing companies to lease IPv4 subnets at reasonable prices, affording them to grow their businesses.
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