In a move that’s shaking up the cloud computing landscape, AWS joined the other cloud providers and has thrown a curveball by starting charging for IPv4 addresses. But what does this mean for businesses relying on their services?

Starting today – Feb 1st, 2024 AWS now charges $3.65 per public IPv4 address (aka. Elastic IP) per month – or $0.005 per hour. And that applies to both new and all existing, previously assigned Elastic IPs too.

For those relying on high numbers of IP addresses from AWS to operate their workloads, it may seem like the end of the world – they now need to pay more for running their applications and servers using AWS.
Imagine your annual AWS bill skyrocketing by $11,169 just to maintain 256 public IPv4 addresses (the equivalent of a /24 block) – a hefty price tag for staying connected.

But is it really the end of the world? Let’s look at it from a wider perspective.

Were you aware that over 35 years ago, experts foresaw the impending scarcity of IPv4 addresses? In the late 1980s, they envisioned a future where the world would deplete the availability of the most essential identifiers across the Internet. Fast forward to the present day, and their forecasts have materialized.
However, the twist is this – despite the development of IPv6 as a long-term solution in 1993, its uptake remained sluggish for decades. It didn’t help that roughly around the same time the NAT standard for a “short-term solution” was launched in 1994. And all this happened way before many countries were yet to gain access to the Internet.

Despite the awareness of the issue, however, it didn’t prevent IPv4 from widespread adoption by networks all around the world. The snowball effect started rolling – more and more networks started connecting to the Internet and relying solely on IPv4 without any consideration of long-term sustainability.

The official date for the depletion of IPv4 addresses is marked as 31 January 2011 when the last unallocated /8 address blocks were assigned by IANA to a RIR.
From that moment on, the scrutiny of RIRs in the assignment of IP allocation to ISPs became significantly increased and the assigned network became smaller and smaller. But that didn’t prevent RIRs from running out of the IPs:
On 24 September 2015 ARIN – the North American RIR – allocated the last block of IPs to a network.
On 17 April 2018 RIPE – the European RIR – allocated the last /22 range to a network (ISP or Content Provider).
Some RIRs are still assigning very small allocations (the maximum you can get is /23) – for example, APNIC from APAC – however with a very thorough review of any application and with very strict criteria making large Cloud Computing vendors uneligible.

However, even though the IPv6 standard became readily available in the ’90s, the vast majority of ISPs, content providers and network equipment vendors didn’t bother to start working on the implementation of IPv6 until the late 2000s.

And realistically, why would they? The NAT solution became available at roughly the same time as IPv6 and allowed networks to continue expanding without replacing existing equipment and changing the IPs within their network and for most cases, it works pretty well.

At the same time, the server folks – ie. Cloud Computing providers – were able to accumulate a sizeable amount of IPv4 blocks to sustain their growth… until this became a noticeable expense in the company books.

The pricing of IPv4 addresses started growing rapidly in the late ’10s and early ’20s. With the quickly growing demand for Cloud Computing solutions, the difficulty and cost of acquiring large enough blocks of IPv4 addresses became increasingly challenging.

This challenge, further boosted by the fact that the cost of money – the interest rates – went up rapidly meant that the largest players had to start acting before it was too late. This, combined with the growing demand for digital solutions during the pandemic, further boosted the problem pushing the prices of IP addresses 2x within 2021.

That said, the new list pricing of the public IPv4 addresses from AWS is significantly above the market rate – which is $32 one-off per IP address at the time of the publication – and I believe AWS is doing this on purpose.
And AWS isn’t the only Cloud Computing provider doing so – other providers such as Google and OVH also recently started charging for IPv4 addresses for the same reason.

I believe AWS and the other providers are not necessarily seeking to use this as a new stream of revenue but to simply push their customers and the wider industry toward IPv6-based networking (and offset their costs should someone still need them).

AWS isn’t also particularly keen on having customers heavily relying on NAT as a replacement either – the pricing for their NAT solution “VPC NAT Gateway” – is very expensive:

  • NAT Gateway Hourly Charge: NAT Gateway is charged on an hourly basis. For this region, the rate is $0.045 per hour.
    [This equals to $394.2 per year]
  • NAT Gateway Data Processing Charge: 1 GB data went through the NAT gateway. The Data Processing charge will result in a charge of $0.045.
    [This means using a NAT gateway to download and upload 1 TB of data in total for both directions will cost you $45 on top of hourly fees]

Pricing for the main AWS US regions. In Europe replace $0.045 in both places with $0.052, in Australia with $0.059 and in Brazil with $0.093.

AWS VPC Pricing


The fact that AWS charges both per hour and per gigabyte (which varies by AWS region!) combined with the fact that these prices didn’t go down on the back of the announcement about charging for the IPv4s indicates a strong move from AWS as the market leader to push their customers and the wider industry to not even operate a dual-stack solution but just go straight into native IPv6 and leave IPv4 behind as quickly as possible. (Although it is possible to implement dual-stack on AWS and with other cloud providers)

In the cost introduction announcement, AWS officially admitted that they want their customers to go on and fully move to IPv6 networking:

This change reflects our own costs and is also intended to encourage you to be a bit more frugal with your use of public IPv4 addresses and to think about accelerating your adoption of IPv6 as a modernization and conservation measure.

And I actually agree with AWS on this approach. AWS also started heavily investing in the IPv6 capabilities of their existing products allowing their customers to make the change.
I also wouldn’t be too surprised to see that AWS will continue to ramp up the pricing for the Elastic IPs.

Although controversial, this is ultimately good news for all customers of Cloud Computing providers. How?

Despite the fact many heavy users of IPv4 will have to go through a painful migration to reduce the growing cost, this activity will provide the return in the form of assurance of the long-term availability of capacity of Cloud Computing and the underlying networking, ensuring quick & on-demand scalability to accommodate growing needs of the customers of cloud providers.
Basically, you invest now so you can continue to grow at the same pace (or faster!) as you did in the past years.

Additionally, some servers and apps when moved to or built on AWS which rely on a significant number of public IPs may use this as an opportunity to review the security requirements or potentially explore replacing it with something more modern.

There are interesting times ahead. It may soon be that some end-users who still don’t have access to IPv6 might be missing out on some content/applications available only through IPv6-enabled networks and devices.
Or potentially even worse – may need to pay for a premium subscription to able to access it when using IPv4 networking at their end.

After all, it’s becoming clear that content providers will be seeking to reduce the financial burden of running their infrastructure with the continued price increases of various services. The migration to IPv6 or even just running the old infrastructure behind expensive NAT solutions is only going to exacerbate the problem further.

But that’s a price for neglecting IPv6 for years that we now all have to pay. Fun!