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Microsoft pays a premium for Nortel IPv4 addresses

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Earlier this year, the International Corporation for Assigned Names and Numbers (ICANN) distributed the last unallocated blocks of IPv4 addresses, meaning, in some senses, the existing Internet had “run out of space.” Exhausting the pool of IPv4 addresses doesn’t mean the end of the world, but it should serve as impetus for network operators and organizations to shift to the much-larger (and more complex) IPv6 technology. However, it also means that when significant blocks of old-school IPv4 addresses go up for sale, they might command a premium…and tech giant Microsoft has just proven that by paying some $7.5 million to acquire a sizable block of IPv4 addresses from bankrupt Nortel Networks.

Details of the acquisition came to light in papers filed with the Delaware bankruptcy court handing Nortel Networks’ divestitures. Microsoft will be paying the $7.5 million to acquire some 666,624 IPv4 addresses that were being sold off as part of the company’s assets. Doing the math, that means Microsoft is paying about $11.25 per address—that’s more than it costs to register a domain name, even in pricier TLDs like .com. More than 80 companies bid on parts of Nortel’s assets, although only four placed bids for the IPv4 address space. If the sale is approved, Microsoft will take control of just over 470,000 of the addresses immediately, with the remaining addresses being released to Microsoft as Nortel’s former customers migrate to other spaces.

Nortel was once the largest maker of telecommunications equipment in North America, but the once-mighty telecommunications company was one of the first to fall during the recent worldwide economic downturn, filing for bankruptcy in early 2009.