On Thursday, Amazon Web Services (AWS) introduced a new charge for customers with public IPv4 addresses. It had warned that a new pricing plan would be put into place six months ago, and we had a rough idea of the scale of charges that many customers would face. However, the Border0 blog has spotlighted some very interesting financial implications of the change, estimating that Amazon will make as much as an extra $1 billion from its stable of IPv4 addresses over the coming year.
Last summer, we reported on the impending AWS IPv4 pricing change. Amazon said that starting February 1, 2024, it would start charging customers $0.005 per IP per hour for all public IPv4 addresses, whether attached to a service or not. It reasoned that IPv4 addresses are increasingly scarce and difficult to manage and explained that “the cost to acquire a single public IPv4 address has risen more than 300% over the past five years.” At the same time, it encouraged users to accelerate the adoption of IPv6.
So, $0.005 per IPv4 per hour sounds like a tiny amount, right? Previously, we worked out that it would mean a new fee of $43.80 per year per IPv4 address on an AWS service bill. Border0 has dived deeper into the figures and what the service pricing change could mean to AWS's income. It picked through data in the “AWS IP JSON and the various whois (ARIN, RIPE, etc.) data entries” to determine that Amazon has nearly 132 Million IPv4 addresses. Remember, we are told these addresses are in high demand / scarce, so it is reasonable to assume many are used by customers.
Combining the 132 million IPv4 addresses managed by AWS with ipv4.global data showing that the average price for an IPv4 address is currently ~35 dollars, Border0 calculated the total value of AWS IPv4 stock to be worth $4.6 billion.
The firm also considered the potential yearly income from these IPv4 addresses. Using a conservative estimate that 30% of AWS IPv4 stock (79 million IPv4 addresses) is in use by paying customers, Amazon would be able to rake in over a billion dollars a year from this internet real estate (23.7 million x $43.80 = $1.04 billion). The best guess of Border0 was that AWS would be making between $400 million and $1 billion a year from the IPv4 charging change implemented yesterday.
Go IPv6 if you can?
Why would Amazon want users to change to IPv6? IPv4 is a 32-bit addressing scheme and thus limited to 4.3 billion unique devices - not enough for the modern internet, IoT, and so on. IPv6 was created in 1998 and implements 128-bit addressing to provide approximately 340 undecillion addresses. That ought to be enough for anybody (sorry for recycling that joke from last time, but it was irresistible). As mentioned above, the scarcity of IPv4 addresses in 2024 means that there is a lot more effort needed to acquire, recycle, and manage them - so we have the new AWS IP address charging plan. However, AWS is not leveraging hourly charges on IPv6 addresses, and it provides tools for users to audit their IPv4 addresses, check where IPv6 addresses might be useful (several references), and release unused IPs.
Border0 also offers IP management solutions, including a free tier, which can potentially help you lower your AWS bill. If this charge structure change might affect you or your organization, you can read more about Border0’s services via their blog link in the intro.
