Today, we’re diving into a recent development that’s sure to impact many businesses using Amazon Web Services (AWS): the new pricing model for Bring Your Own IP (BYOIP).
The world of the Internet Protocol (IP) has been a dynamic one, and the latest news from Amazon serves as a reminder of this. As of February 2024, Amazon plans to reshape their IPv4 monetization strategy, which translates to higher prices for BYOIP on AWS EC2 instances.
As we highlighted on our Twitter feed, only in 2023 Amazon had aggressively expanded its IP pool with over 70 subnet transfers from the US Postal Service alone, resulting in the acquisition of over 5 million USPS IPs. Other major contributions came from companies like HP, AT&T, Xerox, Honeywell, and Merck.
With this new pricing model, Amazon has put a price tag on its Simple Email Service (SES) product. Under this scheme, customer-owned IPv4 addresses now carry a hefty monthly charge of $6,387.20 for AWS BYOIP. To break this down further, it equates to $24.95 per IP address per month for a minimum required /24 block, which comprises 256 IPv4 addresses.
On the flip side, Amazon’s public IPv4 addresses are charged at a rate of $0.005 per IP per hour. When calculated for an average calendar year, this comes up to approximately $3.65 per IP per month, or around $934.4 monthly for a /24 IP subnet. It appears Amazon is attempting to encourage clients to use their elastic IPs, possibly due to the substantial investment they’ve made in acquiring tens of millions of IPv4 addresses over the past six years.
This shift in strategy is further highlighted by Amazon’s decision to start charging for a service it has offered since 2018, which was previously free of charge.
The decision to begin charging for IPv4 addresses was officially announced in a July 2023 blog post by Amazon’s chief evangelist, Jeff Barr. He cited the growing scarcity of IPv4 and a 300% increase in the cost of acquiring IP addresses as the main reasons behind this policy change. The real IPv4 acquisition prices are going down for more than a year now, as we can see from the publicly avaialable IPv4 brokers data.
Notably, Amazon’s AWS services’ BYOIP pricing stands at $3.65 per month per address, or around $934 for a /24 block of 256 addresses. However, the pricing for Simple Email Service (SES) is significantly higher, reinforcing Amazon’s new strategy of charging for IP use.
As of now, Amazon owns over 100 million IPv4 addresses globally, placing them among the top 5 organizations with the most IP addresses in the United States. This vast pool of IP addresses, which are becoming increasingly scarce, is valued at over $6 billion today.
In classic Amazon style, the company has strategically invested in this market sector to dominate the competition. With this new pricing model, industry experts predict Amazon could generate an additional $400 million to $1 billion a year, according to The Register.
As we move forward, it’s likely that IPv4 addresses will become even more scarce, particularly because of Amazon’s consolidation of ownership. It wouldn’t be surprising if Amazon’s leasing prices increase over time.
Stay tuned to our blog for more updates and insights into the ever-evolving IP landscape. As always, we at IPv4DAO are committed to helping our members navigate these changes and manage their IP pools effectively.
