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Our Predictions of The Top 5 IP Addressing Trends of 2023

NFWARE BLOG

29/12/2022

2022 was a year of significant change on many fronts, including service provider IP addressing. Facing IPv4 address shortages and rapidly increasing costs, carriers needed to make some big decisions. The NFWare team surveyed their conversations with ISPs throughout the year and compiled this list of the top five IP addressing trends for 2023:

1. Incredibly high price for IP addresses. So, it's either
CGNAT or go broke.

The long process of exhausting the supply of IPv4 addresses has hit the point where the lack of supply and still constant demand for addresses has driven up the cost of an IP address significantly. As we wrote in the NFWare blog in June, IPv4 prices doubled in 2021, entering the $30 to $60 range, after having previously taken seven years to double between 2012 and 2019.

We predict that these prices will continue to increase in 2023 as brokers get as much money as possible from a shrinking pool of addresses. If you don't want to pay for that and can't migrate to IPv6, CGNAT is the best solution for managing this expensive asset. Virtual CGNAT from NFWare enables 128 users to share one public IP address which is hugely cost effective without any impact on applications or performance.

2. Hardware supply problems continue, so operators are opting for software on x86 servers.

The pandemic caused a chip shortage that many industry observers predict could continue until 2024. A spike in demand for technology products, combined with a lack of raw materials means shortages of many components – and the servers that are based on them.

Appliance manufacturers that use ASICs were hit, but so were virtualized solution providers that depend on Intel architecture CPUs. Our prediction is that this situation will encourage operators to adopt virtualized solutions in 2023. The market weight of Intel means it will bounce back more quickly. But even with a backlog on new servers, operators can test virtualized solutions and redeploy these workloads across their installed base.

3. More and more virtualization projects, operators are less likely to deploy hardware solutions

The telco preference for legacy appliance-based systems has been changing for several years and took a profound change in 2022 as they saw the success of a few pioneering greenfield operators (Rakuten Mobile for example) or felt pressure from competitors who adopted the technology. Mobile operators also acknowledged that to move to standalone 5G would require virtualization to a large degree. Virtualization technology also got dramatically better and faster in 2022. We at NFWare were able to use our performance and cost effectiveness to win many new accounts that were using hardware based CGNAT. In 2023, we predict this momentum will continue.

4. Many operators are actively migrating to IPv6. Regions where IPv6 migration has historically been delayed are starting to launch IPv6 projects, so we see demand for NAT64

2022 saw the tenth anniversary of World IP Launch Day, a worldwide event sponsored by the Internet Society (ISOC) to commemorate the global wide-scale IPv6 adoption. Since that launch, about 40% of sites worldwide have adopted IPv6 according to Google's IPv6 adoption tracker. The adoption is not equally spread, with France coming in at 73%; the U.S. at 46%, Brazil at 44%, but many other areas coming in below the average.

Does this record high in IPv6 adoption signify a "tipping point" for adoption? That's hard to predict, but we do believe the outlook for IPv6 growth in 2023 is good. Part of this due to the high cost of IPv4 addresses and part of it is that ISPs have new technology that is IPv6-compatible in place which reduces some of the cost of switching over.

One implication from this trend that we predict is an increase in demand for NAT64 services in 2023. The most popular NAT function is NAT44, which maps up to 128 private addresses to one public IPv4 address. NAT64 flips that translation, translating private IPv6 addresses to public IPv4 addresses. This provides IPv6 users with access to content and resources from IPv4 servers. IPv64 opens the entire Internet to IPv6 users and softens the transition from IPv4 to IPv6.

5. The economy is rocky, but traffic continues to grow, so operators will adopt a more cautious pay as you grow the model to better manage capital budgets

Many economists are pointing to signs of economic slowdown or recession for 2023 which has network operators rethinking their capital budgets. However, data consumption is not predicted to slow down which means operators must invest in key parts of their network such as CGNAT to remain competitive.

The way software is licensed is for a set user capacity that they then "grow into" as they sign up those users. This results in a large upfront cash outlay and only after a few months of growth does the per-user costs become reasonable. NFWare has embraced the pay-as-you-go approach that starts with a lower upfront investment and adds additional costs only bandwidth is increased. We think this trend will continue in 2023.

There are our five predictions for 2023 trends. 2023 maybe a year where big things happen in the world of IP addressing. Will IPv6 take off in the year? Will IPv4 addresses spike in price again? Only time will tell. If we can be of any help with your IP addressing needs in 2023, please connect with us at contact@nfware.com

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