Google made global headlines last week when it announced plans to open its very first product development center on African soil in Nairobi. The decision comes just months after the company pledged to invest $1 billion in the continent over a five-year period, with other major tech players following suit. Given the growing youth population and rapid urbanization throughout the continent, it’s hardly surprising that big firms are jostling for position in the African market.
However, the upsurge in demand requires the creation of new infrastructure that can increase internet capacity and speed, as well as lead to a drop-off in data prices. The developing situation in Africa, however, could be stunted by a wider issue in the world’s internet infrastructure: the exhaustion of existing IPv4 addresses and the sluggishness of the uptake of its Internet Protocol successor, IPv6. Although the latter ultimately represents the only long-term solution to the problem, better management of the existing IPv4 market is necessary to ease the transition.
Although Africa has made substantial progress with regard to its online capabilities in recent years – with average download speeds doubling between 2015 and 2019, while data costs have nearly halved – it still lags behind the global average (64%) in terms of its own (43%) internet penetration rates. The World Bank estimates it will take around $100 billion of investment to bring universal internet access to the continent by 2030.
But although those costs are high, so are the potential rewards. By the end of the decade, it’s expected that Africa will be home to around 800 million internet users. A 10% increase in penetration rates could bring a 2.5% increase in GDP, with a $180 billion benefit to the economy touted by 2025. If the population continues to grow at projected rates and reaches 2.5 billion by 2050 (up from 1.3 billion today), that injection of capital could exceed $712 billion.
The scramble for IPv4 space
But while the projections are encouraging, there are structural challenges to continued growth, not least posed by the lack of availability of IP addresses. Every device, whether it be laptop, smartphone, tablet or other contraption, requires an IP address to connect to the internet. The IPv4 system upon which the majority of the world currently depends for its connectivity was designed 40 years ago and its supply of 4.3 billion unique addresses – once thought to be virtually inexhaustible – having now been exhausted for several years.
The IPv6 system dreamt up to replace it was conceived in the late 1990s and an “IPv6 Launch Day” was announced in June 2012. Yet, a decade on, uptake remains underwhelmingly low. This is largely due to the fact that IPv6 systems are not able to communicate directly with their predecessor, meaning that the transition is cumbersome, expensive and complex. Most experts believe it will not be complete for many years, if not decades.
As such, it’s clear that IPv4 still has a role to play, but the dwindling availability of addresses is a huge cause for concern in Africa and elsewhere. On the continent, there are 0.07 addresses per African resident and their lack of availability is an issue that’s only likely to become more pressing as time wears on and demand increases.
Allowing affordable access
The situation has been complicated by the fact that major players in the tech industry anticipated the problem of IPv4 address scarcity many years in advance and used their considerable wealth to buy up remaining stores. Obviously, this has massive repercussions for fledgling entrepreneurs, start-ups and small-to-medium enterprises (SMEs), who cannot afford the cost of acquiring their own address. Since an online presence is absolutely crucial to continue developing businesses online, the issue of securing IPv4 addresses is extremely important. Thankfully, there are several stopgap solutions at hand, one of the most effective of which is the secondary market.
As highlighted in a recent White Paper by Larus, one of the most popular solutions has been to lease unused addresses for prices as low as $2.50 per year. Meanwhile, the loaner has access to the internet upon which their very survival depends, at a price which won’t threaten it in the process. Best of all, IPv4 infrastructure is being optimized as much as possible. Everybody wins.
But while this course of action would seem the most sensible solution until IPv6 can fully get off the ground, there are those with power in the existing status quo who are highly resistant to it. One of the main blockages comes in the shape of the five Regional Internet Registries (RIRs), which were initially set up to distribute and catalogue IP addresses among their member nations. Since then, the exhaustion of IPv4 addresses their role as distributor all but obsolete. But because many RIRs are refusing to accept this reality and develop a more dynamic IPv4 market, it is even more difficult to get the dwindling IPv4 addresses in the hands the smallest and less powerful businesses.
Instead of allowing non-profit organizations such as RIRs to wield authority and undue influence over the market, governments and policymakers should encourage a more liberal approach which allows everyone to access the services they need at the prices they can afford during this difficult transition period. Doing so would stop the cracks in the system from splintering further and hold together the fragile, fragmented IPv4 system until IPv6 can swoop in to shoulder its burden over the long haul. This is especially crucial to enable markets where internet use is likely to grow, such as in Africa, to have quick access to IPv4 addresses they need to continue developing.
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