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An increase in requests for IPv4 addresses means the supply might be exhausted by the end of this year rather than late 2011 as previously predicted.

In 2009, only eight allocations of /8 IPv4 address blocks were made, but in the first four months of 2010 six /8 allocations were issued. There are only 20 IPv4 /8s remaining in the Internet Assigned Numbers Authority (IANA) pool of 256 /8s.

IPv4, which uses 32-bit addresses, is capable of supporting 4.3 billion total addresses, but severe fragmentation makes utilization of the full range of IP addresses inefficient. The transition to IPv6, which uses 128-bit addresses, can support an essentially unlimited address space: 2 to the 128th power, or 3.4 with 38 zeros after it, has been long anticipated.

The current transition strategy, called 'dual stack,' requires businesses to remain connected to both IPv4 and IPv6 networks until most of the Internet gets to 'the other side.' The process is expected to take at least five years, and the cost ramifications of IPv4 exhaustion will be widespread.

Reclaiming unused IP space is considered by many to be too complex and an expensive undertaking. As such, when the last IPv4 /8 is allocated, new Internet players could find high prices and a black market the only practical means of getting IPv4 addresses.

American Registry for Internet Numbers (News - Alert)' CIO  Richard Jimmerson believes that an accelerating black market for IPv4 addresses is possible. Yet ARIN's membership has been proactive about providing at least limited address transfer opportunities to mitigate that problem, he said.

ARIN has proposed transfer guidelines and usage justification forms as way to move the transfer of numbers out into the open and help mitigate the use of a black market.

Such a move could mean price increases as depletion nears. Under today's rules, a small organization would pay a minimum of $1,250 annually for a /24 assignment, which represents 256 addresses, the smallest block that can be portably routed on the Internet. Smaller allocations than this must be obtained from an ISP, at the cost of a few dollars per month per IP address. Larger organizations could pay between $4,500 and $18,000 per year, but in all cases address holders must provide justification to their registry to continue using IPv4 allocations.

But the transfer policy might not completely solve the problem and forced reclamation of unused, or fraudulently used, IP space might be needed.  ARIN and its sister registries have the authority to reclaim space if necessary, because users are only loaned use of IP numbers.

While IPv4 will be needed for the foreseeable future, the sooner the Internet community abandons this legacy protocol, the less impact any potential black market could have on Internet commerce.