IPv4 address rentals to mint millions of dollars for AWS

You were warned

AWS could rake in between $400 million and $1 billion a year from charging customers for public IPv4 addresses while migration to IPv6 remains slow.

The cloud computing kingpin signaled last year that it would start charging customers for public IPv4 addresses from February 1, as covered by The Register at the time.

AWS cited increasing scarcity and claimed the cost to acquire a single public IPv4 address for customer use had risen more than 300 percent over the past few years.

Fortunately, the charge is hardly ruinous – $0.005 (half a cent) per IP address per hour, which equates to a total cost of $43.80 per year for each public IPv4 address you have – excluding any IP addresses that you might own and opt to bring to AWS using Amazon's BYOIP (Bring Your Own IP) service.

However a technologist has done the calculations and estimated that across all users, this will add up to a sum of between $400 million and $1 billion a year for AWS. Not bad for something that was being offered completely free just a few days ago (and is still offered for 750 hours a month at no cost in the AWS free tier).

The source of the billion-dollar claim is Andree Toonk, founder and CEO of network services biz Border0, who is presumably trying to generate business for his own company.

Toonk used Amazon's own IP address range data to estimate that the cloud colossus has at least 131,932,752 IPv4 addresses. Based on the average price for an IPv4 address being about $35 at the time of writing, this means that AWS is sitting on about $4.6 billion, should it wish to divest itself of them.

He also used a script to ping all of the IPv4 addresses in order to gauge how many were "alive" within the AWS network and came up with an answer of about 6 million. But many instances on AWS will have a security policy to not respond to a ping packet, so the actual number of active IPv4 addresses could be double that.

Even with just those six million addresses, that's $262.8 million AWS will earn from charging for IPv4 in a year.

He forecast the headline $400 million to $1 billion figure by projecting a "conservative" estimate that between 10 percent and 30 percent of the IPv4 addresses (approximately 7.9 million) published in the AWS JSON are used for a year.

We asked AWS if it recognized any of these figures, and what the company itself estimated it would earn from charging customers for public IPv4 addresses, but it declined to answer, instead referring us to its original blog post disclosing the charges.

The general feeling among industry experts is that this is fair game, and customers should make plans to migrate to IPv6 if they don't like it – assuming their applications allow this, of course.

"While this is a new and additive charge which reduces to a degree the value that a customer receives from AWS services, this is a realistic charge given the expensive and limited nature of an IPv4 address and the fact it is being provided to a customer as a service, similar to the infrastructure hardware," said IDC Senior Research Director Andrew Buss.

"The annual cost is not huge, but is still significant enough to cause companies to make sure they are using their allocation and returning those they don't need, or to consider different approaches," he added, including migrating to IPv6.

"It's likely other providers could follow suit if they feel the IPv4 address crunch," he told The Reg.

Omdia chief analyst Roy Illsley said the motivation is to move people to IPv6 as IPv4 addresses are scarce and the cost to acquire them has increased.

"My view is that AWS has been smart in buying up IPv4 addresses, and this is a way for it to cash in until IPv6 adoption makes IPv4 redundant. It's just that organizations are not rushing to move to IPv6," he said.

This is despite the world officially running out of IPv4 ranges to allocate five years ago. Anyone desiring a new public IPv4 address since then has had to rely on address ranges being recovered from organizations shutting down or surrendering them as they migrate to IPv6.

Corey Quinn, Chief Cloud Economist at The Duckbill Group had initially welcomed the move by AWS as a way of ensuring that other customers were not impacted by the behaviour of the IPv6 laggards.

Duckbill Group is a consultancy that specializes in helping companies to manage their AWS cloud costs.

However, in response to this latest news, he added that Amazon’s glacial pace on adopting IPv6 for its own services made the charges appear somewhat like a cash grab.

“I don't think that's actually true, but when your AWS bill spikes 10 percent due to this change it's really hard to have a charitable interpretation,” he said.

“Customers with huge spend driven by this can't easily bring their own IP addresses; moving everything is a nightmare and requires a lot of work with customers/clients. It likely won't happen and folks will largely have to take it on the chin,” he warned. ®

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