The Price of IPv4 Addresses is Skyrocketing – What Does This Mean for Your IP Address Strategy?

Today, internet access is everything to all sectors of life and business – the world runs on ever-expanding connectivity. This connectivity has an imminent infrastructure problem, though: IPv4 addresses are increasingly scarce and prices are skyrocketing - approaching $60 per address. This price increase is making carriers rethink their IP addressing strategy.

In 1980, Internet Protocol version 4 (IPv4) was launched, and with it almost 4.3 billion unique 32-bit IP addresses. Technologists in 1980, however, could not have predicted the expanded use of the personal computer, much less the development of smartphones and Internet of Things (IoT) devices. As a result, these addresses, key to a functioning Internet, are almost completely depleted. According to the Asia Pacific Network Information Centre, that region's Internet address registry, only four million IPv4 were available to be allocated worldwide in 2021. Contrast this with the 1.43 billion cell phones shipped in 2021 – each needing an IP address – and you get a sense of the issue.

This scarcity and the increasing number of connected devices, along with speculation, is driving up the cost of remaining IPv4 addresses. Prices doubled in 2021, entering the $30 to $60 range, after having previously taken seven years to double between 2012 and 2019.

This leaves carriers with two choices: accelerate their transition to IPv6 or expand their carrier-grade network address translation (CGNAT) implementations. In some cases, the answer might be to do both.

Expanding IPv6 Implementation

The 128-bit IPv6 has address space that will eliminate the address scarcity of IPv4 for many years. The solution allows for network auto-configuration, better multicast routing, and simpler, more efficient formatting and routing. IPv6 handles packets more efficiently than IPv4, improves performance and security, and can reduce the size of routing tables for providers. IPv6 devices are also more energy efficient than those using IPv4 and minimize the cyberattack tracking issues of IPv4 address sharing. Authentication and privacy controls are built in, and, with flexible options and extensions, administration is easier with IPv6.

Despite these benefits, the adoption of IPv6, first made available in 2010, has been slow, with only 34% global adoption and 46% US adoption as of March 2022. Most of this gradual acceptance can be attributed to IPv6's increased complexity and immediate cost, the time needed to make the transition, and a lack of incentive felt by service providers to make the move. The new protocol was notably not engineered to be backwards compatible. Enterprises in particular are trailing in terms of adoption, reflecting their need to outsource this transition. Work-from-home conditions have actually decreased IPv6 adoption in 2021, with offices more likely to still operate on IPv4.

However, given time, IPv6 is the future long-term solution, however it may take more than high address prices to drive the transition.

CGNAT Is a Solution for Today

The immediate impact option is to add or expand a CGNAT implementation. CGNAT provides an intermediate network operated by broadband providers to save public addresses. These solutions can offer a variety of features and price points and help to resolve IPv4 exhaustion. CGNAT also offers application-level gateway (ALG), endpoint independent mapping (EIM), endpoint independent filtering (EIF) and hairpinning capabilities as valuable features and advantages over standard NAT.

At NFWare we're seeing increased interest in our Virtual CGNAT because of the rise in address prices, but also because as a virtualized solution it's easier and more cost effective to deploy. NFWare vCGNAT is a high-performance option that can render the transition between IPv4 and IPv6 connectivity seamless.

The software-based solution offers transparent address and protocol translation to extend existing networks. The cost-effective service can support hundreds of subscribers on one IPv4 address without service interruption, with NFWare advising that 128 subscribers per address be the guideline for fixed networks with the potential of many more for mobile networks. NFWare Virtual CGNAT works as a Virtual Machine on top of standard servers and hypervisors, offering capabilities at scale. The solution follows a smart resource utilization approach with a smaller hardware footprint that can be scalable in a matter of hours.
NAT44. Translating public IPv4 addresses to private to allow hundreds of subscribers using one IPv4 address.

Source: NFWare

CGNAT can Help an IPv6 Network

Even those operators moving to IPv6 can use CGNAT to help provide access to legacy IPv4 devices using the NAT64 mode, which allows an organization with all IPv6 addresses to access IPv4 servers and other resources. There's more detail on that strategy in this NFWare blog post.

With IP address costs rising, operators need to revisit their addressing strategy and the tools to better manage an expanding Internet are available, and have been carefully planned to last, even if they are not yet fully implemented. Solutions like CGNAT can help your enterprise bridge the gap to IPv6 adoption and avoid IPv4's scarcity issues.
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