Key points:
- Universities could have an unexpected income stream right before their very eyes–their stores of IPv4 addresses
- Businesses have created ongoing demand for IPv4 addresses from their growing networks
- See related article: 5 essential edtech strategies for 2023-2024
In recent years, universities have faced a perfect storm of factors that have contributed to an educational financial crisis. The cost of delivering high-quality higher education has skyrocketed, while public funding has declined. At the same time, the global pandemic, the rise of online learning, the cost of tuition, and declining enrollment have reduced other income streams. However, many universities are sitting on a hidden fortune–their valuable troves of IPv4 addresses–that could bring a much-needed boost to their coffers.
Why do many higher educational institutions have a surplus of IPv4 addresses?
In the early days of the internet, IP addresses were considered a research and educational tool. Consequently, universities and research institutions were allocated huge numbers of them, often as many as 16 million in each location. At the time, nobody anticipated the future insatiable need for IP addresses–driven by the exponential expansion of connected devices–so the original vast supply of 4.3 billion addresses was considered more than enough.
But those addresses have run out with ARIN, the North American registry responsible for their allocation, announcing their depletion as long ago as 2015. Of course, by that time, IPv6, a replacement standard, had been introduced. IPv6 offers an unthinkably large number of available addresses, but it is not backwards compatible with IPv4. Businesses with urgent internal priorities have largely ignored it, creating ongoing demand for IPv4 addresses from growing networks. Scarcity has driven current high demand for unused IPv4 addresses, and their limited availability means that their value continues to rise dramatically.
Three potential pathways to monetize these hidden assets
Even the largest universities are sometimes unable to fully utilize every IPv4 address in their stockpile. Those with a surplus can monetize these intangible assets to finance both immediate needs and long-term projects.
They have three potential pathways for unlocking cash from these hidden assets:
1. Sell: The first and most straightforward option is to sell the unused IPv4 addresses outright, transferring ownership to the new buyer and unlocking a large lump sum payment immediately. This bonus revenue can be deployed immediately to fund scholarships, salaries, or new technology initiatives.
The huge blocks allocated to universities and even small colleges are in great demand and can attract premium prices. For example, while a modest /17 block with around 32,000 IPv4 addresses can attract around $38 per address, a /16 block with approximately twice as many addresses typically sells for $53 per address. This could mean a potential $1.2-3.5 million of found revenue for the university per block. Selling remains a good option even for those institutions unsure of their future needs – as the current price premiums will more than cover any future need to purchase small blocks.
2. Lease: Universities can also lease IPv4 blocks to enjoy an ongoing, passive income stream from these otherwise unused assets. Leasing offers flexibility as the lease period can span any length of time from six months to five years, though demand has kept rents low.
This is an attractive route for institutions whose long-term needs are uncertain–for example, educational institutions that are growing rapidly, planning to absorb another institution, or are undertaking measures to massively expand their student numbers, perhaps through extensive new online programs.
While there’s little risk involved (the institutions retain ownership of their addresses and control the length of the lease), this approach can be more complex to manage as leases are paid monthly, and could be used to violate other businesses’ terms of service. Consequently, educational institutions pursuing a leased option generally rely on a trusted broker to handle ongoing transactions and monitor usage reports.
3. Use collateral for loans or investments: Considering the potential value of unused IPv4 addresses, universities may use these assets as collateral to back a loan or investment. This option also allows them to retain ownership of the addresses. Pursuing this approach does require finding a lender familiar with intangible assets who is able to provide an appropriate valuation. In most cases, the IPv4 addresses form part of a portfolio of assets, including bonds or annuities. And, as with any collateral, the addresses could be seized in the case of a default.
How to prepare IP blocks for monetization
One challenge faced by most educational institutions with large, unused IPv4 address blocks is that portions of the addresses are likely to have acquired reputation issues. Being unused, they are attractive targets for being hijacked and used for spam, or are simply susceptible to malicious actors infecting students’ computers—if it isn’t the students themselves causing mischief. If this is the case, they can still be sold, however, colleges should work with a qualified facilitator to first rehabilitate/clean the blocks.
Another reason to find a competent broker for the sale, lease, or transfer of IPv4 addresses is the fact that educational institutions are partially using their IPv4 blocks. The easiest solution is to acquire a smaller block and renumber any network devices using addresses from the large block. This can be a significant undertaking, but a good broker will be able to help.
Work with a trusted expert to unlock the value of hidden assets
In the face of financial pressure, educational institutions are looking for new ways to secure funding to support growth initiatives. Thanks to being over-served with IPv4 addresses decades ago, many are sitting on valuable unused assets that can be monetized in different ways, depending on their future plans and appetite for risk. By working with the right facilitator, they can optimize their holdings for sale, identify the best approach, and of course, secure the best possible price.
Related: IT leaders are critical for a positive student experience
Lee Howard is a senior vice president at IPv4.Global. A thought leader in Internet Protocols, Lee Howard has 30 years of experience in networking. He has served on the Internet Architecture Board (IAB), the Board of Trustees of the American Registry of Internet Numbers (ARIN), and as a working-group co-chair of IPv6 Renumbering and IPv6 Operations working groups at the Internet Engineering Task Force (IETF).
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