Proposal

1. Summary of the problem being addressed by this proposal

1. AFRINIC is lagging behind in the IPv4 market and this is negative to the region which is leading the region to a situation of discrimination and scarcity of addresses, not only in the RIR itself but in the region's market.
2. New businesses can’t be established in the region, due to the lack of addresses.
3. Additionally, it is important to highlight that the deployment of IPv6, in some cases, may require
   small blocks of IPv4 addresses for transition mechanisms, or significantly increase the costs thereof, and many AFRINIC entities could, therefore, be at a serious disadvantage if they do not have access to a global market, as it is currently the case.
4. Legacy holders in AFRINIC region can’t transfer their resources out of the region and remain dormant.
5. Under the table agreements for transfers lead to the loss of the history of the registration.
6. Even if a member qualifies for the transfer of its resources, if the transfer fails due to the recipient not meeting stipulated policy conditions, the member can be penalized for stockpiling and the unused
   resources will be subjected to return to or recovery by AFRINIC.

This proposal allows establishing the mechanism to allow transfers of IPv4 resources to/from other regions and to align AFRINIC with a market that already exists and in which we are lagging behind, which is negative for the region.

At the same time, the proposal ensures that resources being transferred from an AFRINIC resource member have been used according to the documented justified needs as per the RSA/CPM conditions, and not stock-piled. There is also a grace period for justification of the usage of the resources, in case of a failed transfer due to the recipient's failure. Not including that, will actually disallow transfers, as it is obvious that a member willing to transfer is no longer justifying the resources and will be subjected to returning them or a recovery.

2. Summary of how this proposal addresses the problem

1. The proposal aims at maintaining the current intra-RIR transfers.
2. Enables bidirectional, compatible, and reciprocal transfers with all the other RIRs.
3. Facilitate a dynamic in the market and by increasing the offer and making it transparent, reduces
   prices.
4. Enables both legacy holders and resource members in the AFRINIC region to transfer resources.
5. At the same time, ensures that resources being transferred from an AFRINIC resource member
   have been used according to the documented justified needs as per the RSA/CPM conditions, and not stock-piled. There is also a grace period for justification of the usage of the resources, in case of a failed transfer due to the recipient's failure. Not including that will actually disallow transfers, as it is obvious that a member willing to transfer is no longer justifying the resources and will be subjected to returning them or a recovery

Exclusion/Out of scope:

• The proposal does not cover Mergers and Acquisitions in the AFRINIC service region as it is at this time covered by internal operational procedures.
• The proposal does not cover Merger and Acquisition between entities domiciled in different RIR service regions.

Notes:

It is suggested that, as an editorial CPM update, if this policy is adopted, section 5.7 is moved to a new section (possibly 13), which accommodates in the future, all the transfers-related policies in a single place. This editorial modification can be done by the staff, renumbering/reordering any relevant sections, even adjusting titles/subtitles for the new section to better match the adopted text.

3. Proposal

3.1 Amending article 5.7 of the CPM, as follows: 

 4. References            

There are Inter-RIR policies in APNIC, ARIN, LACNIC, and RIPE, which have widely demonstrated their effectiveness and have not presented problems to the respective communities, quite the contrary.

According to the existing evidence, the ARIN region appears as the origin of the transfer of the largest number of addresses to the other regions that have resource transfer policies.

• https://www.nro.net/wp-content/uploads/NRO-Statistics-2018-Q4.pdf
• http://www.lacnic.net/innovaportal/file/3277/1/2-john-sweeting-arin.pdf

Revision History

Revision History

AFRINIC Policy Impact Assessment

AFRINIC Staff Assessment

Date of Assessment: 27 October 2021

1.0) Staff Interpretation & Understanding of the proposal

This policy proposal, if adopted, allows staff to bring editorial modifications to the CPM and create a new section that shall contain all transfer related policies. Such editorial rights for staff shall be limited to only this policy. The contents of this policy proposal (which amends Section 5.7 of the CPM) shall then be updated in the new section of the CPM.

Currently, Section 5.7 of the CPM allows for Intra-RIR transfers of IPv4 resources only. Transfers due to Mergers and acquisitions are guided by the mergers and acquisitions guideline document, outside the Consolidated Policy Manual. In addition to intra-RIR transfers, This proposal would allow bidirectional transfers of IPv4 of both legacy and non-legacy status with all the other RIRs and amends Section 5.7 of the Consolidated Policy Manual.

For the purpose of clarity, two types of transfers are recognised:

1. Intra-RIR. Both parties are within the AFRINIC service region.
2. Inter-RIR. One of the parties is within the AFRINIC service region, while the other is in another RIR service region.

The recipient of the transfer, if in the AFRINIC service region, must justify its needs for the resources being transferred to it.

An organisation(recipient) that has received IPv4 resources from AFRINIC within the preceding 16 months will not be approved as a transfer source
Section 5.4.6.1 of the CPM ("In order to receive IPv4 allocations or assignments during the Exhaustion Phase, the LIR or End User must have used at least 90% of all previous allocations or assignments") shall remain effective on recipients based on Section 5.7.3.1 of the proposal that states "Recipient organizations within the AFRINIC service region must be approved with the same policies and procedures as if the request were being satisfied from the AFRINIC pool.".

IPv4 legacy resources transferred in the case of Intra-RIR transfers or incoming inter-RIR will lose their legacy status.

The following conditions apply for the source organisation in the transfer:-

• A source within AFRINIC must be in good standing, be the rightful registrant of the resources to be transferred and there must be no disputes as to the status of said resources.
• There is no limitation on the size and frequency a source can transfer out its resources.
• Source entities will not be eligible to receive any further IPv4 address allocations or assignments from AFRINIC.
• Source entities may, if they can show justified need, receive resources via transfer after a period of not less than 16 months (twice the window defined by 5.4.5) has elapsed from their last outbound transfer.
• An organization that has received IPv4 resources from AFRINIC within the preceding 16 months will not be approved as a transfer source.
• Both legacy and non-legacy resources can be transferred. The status of legacy resources in the recipient RIR registry shall be determined by the policies prevalent in the recipient RIR.

Each time a transfer is completed, AFRINIC will publish all related information permitted by the source or recipient, including at least: Date of the transfer, transferred resources, Source RIR and organization and Recipient RIR and organization. This doesn’t exclude the publication of the same or other information as a result of the operating agreement among the RIRs.

AFRINIC will run a pre-check to verify if the resources being transferred were allocated/assigned and used according to the RSA/CPM. It can happen that a transfer fails due to the recipient failing to be compliant; This proposal allows the successful transfer pre-check to be valid for up to 12 months after the failed transfer; i.e AFRINIC will not initiate a recovery/reclamation process in this period.

2.0) AFRINIC Staff Comments on clarity of policy

1. This policy states that after a successful transfer pre-check AFRINIC can’t perform any reviews and audits on this member for a period of 12 months; this can be dangerous as members can decide to violate RSA/CPM within this time without consequences.
2. In case of pre-check failure, can the author clarify if AFRINIC can take the resources back as the member is not compliant

3.0) Staff Comments On Areas of Impact

3.1) Impact on Systems

1. The transfer tool on MyAFRINIC and NMRP will require further adjustments to accommodate inter-RIR transfers
2. Introduce an automated tool to monitor the direction of the resources in order to easily manage 5.7.6
3. RPKI ROAs
4. Reverse DNS (majority /8s)
5. Internal Ticketing system
6. Change transfer business rules to add the possibility of inter-RIR transfers.
7. Add cross-RIR verifications.
8. Update the status of Legacy Resources after a transfer in WHOIS and MyAFRINIC.
9. Keep an audit trail including pre-check results.

3.2) Impact on Processes and procedure

Complete process and procedural reviews will be undertaken including the handling of the inter-rir transfer of IPv4 resources

3.3) Impact on MS Operations

Resource Transfer evaluations are resource-intensive and MS department would require additional staffing needs to facilitate officiate and timely evaluations.

Member services note that the policy doesn't enforce any hold-down time period for the transferred resources and it may lead to abuse of the registry where a resource may undergo multiple transfers within a short period of time without being put to the needs justification demonstrated at earlier transfer

3.4) Contractual agreements

Revision of transfer Agreement & Registration Services Agreement may be required

3.5) Impact on Registry Functions

1. Implementation on the requested dashboard
   1. Changes in preconditions and checks
   2. New workflow for Inter RIR transfer
2. Coordination with other RIRs to enable incoming and outgoing transfers
   1. How the request shall be received and treated.
   2. How AFRINIC shall send the request to other RIRs for proper processing
3. Handling Legacy and resulting statuses

3.6) Legal Assessment

1. It is noted that the ToR of the Appeal Committee has been revoked and substituted by a new version such that henceforth, the mandate of the Appeal Committee is now limited to a review of the acts and doings of the PDWG only; and has no authority to reverse a declaration for consensus/lack of consensus made by the PDP Co-Chairs based on discussions held in connection thereof on the mailing list. This major change has an impact on the assessment made herein.
2. Coming back to the present proposed policy, the author aims at establishing the mechanism to allow transfers of IPv4 resources to/from other regions and to align AFRINIC with a market that purportedly already exists and in which, according to the author, AFRINIC is lagging.
3. The decision of allowing, or not, inter-RIR transfers of IPv4 resources from and to the AFRINIC region is not strictly a legal one. In fact, it is purely and simply a business decision to be taken judiciously and prudently both by the PDWG and the Board of Directors having regard to the directors’ duties provided in the Companies Act, i.e. to act in the best interests of the company. Acting in the best interests of the company in this context means considering the real financial impact of such policy for AFRINIC so that the sustainability and business continuity of AFRINIC, both as a company and RIR, is not compromised.
4. Further, it is observed that the scope of the proposed policy is not limited to non-legacy IPv4 resources, but also extends to legacy resources. Therefore, it is important to highlight that, as a matter of law, legacy resource holders existing within the AFRINIC’s service region are not contractually bound by AFRINIC’s adopted policies such that these policies have no direct effect on legacy resource holders, and it is up to those legacy-holders to adhere to AFRINIC’s policies. Thus, the author must bear in mind that obligations impacting legacy resource holders may not necessarily achieve the intended results if the legacy resource holders refuse to opt for voluntary registration with AFRINIC.
5. The other question arising relates to outbound transfers of resources. It is understood that the intended transfers will be channelled through AFRINIC. Therefore, other than simply setting out the conditions for transfers, AFRINIC’s role in the whole process must also be adequately defined. In this respect, it is unclear as to whether AFRINIC’s role in the process would be limited to facilitating the administrative aspect of the intended transfers only with or without such legal responsibilities attached thereto, more so that AFRINIC will be relying on representation made to it when attending to similar requests. To address this issue, it is proposed that the burden of conducting such adequate due diligence be placed on both the source holder and the intended recipient, and that AFRINIC’s role should be limited to acting as a facilitator only without bearing any legal responsibility whatsoever in that process.
6. Moreover, while it is observed that legacy resources will lose their status upon being registered with AFRINIC (viz inbound transfers), it is not clear as to whether the receiving party will be required to sign an RSA with AFRINIC. Although one may presume that this is the intent of the author, yet it is imperative that same be clarified as well as whether AFRINIC will still be able to execute its RSA with the obvious risk of the concerned IP number resources being reclaimed by AFRINIC in case of a subsequent breach of the RSA, despite that the recipient organisation would have most probably paid good consideration (financial value) for such transfers.

3.7) Financial Assessment

The financial impact is forecasted to be high and negative as:-

1. Resources from the AFRINIC Pool can be transferred in outgoing transfers to other RIRs. AFRINIC will lose members to other RIRs in outgoing transfers.
2. AFRINIC will gain revenue in incoming transfers from the other RIRs(including those with legacy status as the latter lose legacy status after being transferred)

4.0) Implementation

The earliest we can implement the same will be in Q4 2022 based on the updated plan.

5.0) Reciprocity with the other RIRs

To be confirmed