If ARIN grants approval, the acquiring entity must sign ARIN’s Registration Service Agreement (RSA) before ARIN will update the registry records. The RSA is a non-negotiable contract that favors ARIN. Because the RSA contractually deprives the registrant of rights that it otherwise may have under applicable law (e.g., registrants must waive all property interests in their IP numbers) and grants ARIN rights to revoke the registered numbers, entering into the RSA is particularly problematic for holders of “legacy” numbers (i.e., those numbers acquired prior to the formation of ARIN in 1997) who are not subject to an existing contract with ARIN.
For entities deciding whether to record their M&A activities in the registry, the risks of doing so outweigh the benefits. ARIN would substantially shift this calculus and promote greater registry accuracy by modifying its merger and acquisition policy to (a) eliminate any needs assessment, and (b) replace the RSA requirement with a clear expectation that the rights and remedies that applied to the original registrant will continue to apply to the successor entity.
* Discouraging Grey Market Transactions. ARIN’s registration transfer policies helped to enable the IPv4 market, but also created unintended adverse consequences as the market has expanded. When ARIN adopted its registration transfer policy in 2009, it adapted the same needs-based requirement ARIN applied to free pool allocations. Prior to IPv4 exhaustion, when it was possible to game the free pool and acquire additional address space in the market, there were good reasons to link the transfer policies to the principles governing free-pool allocations. Now that the free pool is depleted and the market is the only way to re-distribute IPv4 numbers, ARIN transfer policies should focus on the needs of the marketplace.
ARIN’s current transfer policies require the buyer to prove it will use the purchased address space within 24 months and that it is using all of its pre-existing IP address space efficiently. When a buyer fails to meet either of these two conditions, ARIN will either reject the transfer request or only register a portion of the IP address space actually purchased. Unless the agreement between the buyer and seller contemplated this outcome, a buyer can be left in limbo – without the ability to recoup the money it paid the seller or an effective means to secure its purchase and update the registry to show it now controls the entire purchased block.
To avoid this outcome, some market participants prefer to purchase IP numbers completely (or partially) outside of ARIN’s justified need scrutiny. Several workarounds are gathering steam, including leases or perpetual use rights assignments, and options that grant buyers the exclusive right or obligation to then register tranches of IP address space over time. In each case, the original registrant continues to appear listed in the registry for some or all of the conveyed address space even though the buyer is really in control.
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