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IPv4 Market Group’s view is that IPv4 auctions do not work in regulated markets

Published on March 27th, 2014

Today, the ARIN and APNIC marketplaces are highly regulated, so how can IPv4 auctions work? Even in RIPE region, there are legal issues that make auctions dangerous for participants.

The problems that could be encountered are:

  • The winner of an auction may not get approval from the RIR to purchase the IPs. Then the seller is left in limbo with no sale made. Does the sale fall to the second highest bidder? What if that bidder has already moved on and purchased another block elsewhere?
  • Not everyone is a legitimate bidder in every auction situation. For example, RIPE bidders cannot bid in ARIN or APNIC region. Who screens the bidders to determine their eligibility? What if an ineligible bidder is driving bid prices up? It is known that at car auctions, the house plants bidders to drive car bid prices up. Does this happen in IPv4 auctions? You, as a bidder, have no control that the others you are bidding against are legitimate bidders, even though you are supposedly purchasing a highly regulated asset.
  • What representations and warranties are implicit in an auction situation? A seller may enter an auction thinking one set of warranties will apply, and the winning bidder may think another set of warranties will apply. If they do not come to terms after the auction, the auction is meaningless. This is particularly meaningful for larger blocks such as /18 and up. What if the IPs are subject to a security interest? If this is not disclosed within the auction details, the representations and warranties must be negotiated for the bid price to be meaningful. Buyer beware.
  • Does the auction allow the IPs to be examined for blacklisting, blocking, or misuse prior to bidding? If not, the bidder does not know what he or she is bidding on. Usually when you buy a car or a painting at auction, you can see the item before you buy it. This must be true for IPs as well via testing or full disclosure.
  • Contract terms are generally not part of the bidding process, only price is. If you have special requirements, such as neutral governing law, payment via a specific method, and so on, then auctions are not likely to meet your needs.

While IPv4 auctions could be an interesting option for very small blocks in the /22 to /24 range, whenever a larger amount of money is being spent, or specific requirements are needed, it would seem that IPv4 auctions introduce unnecessary risk to the IPv4 purchase process.

Learn more about IPv4 Broker Services and how IPv4 Market Group can assist in the legal and transactional processes of buying IPv4 addresses and selling IPv4 addresses.