In the near future, a lack of Internet Protocol (IP) addresses to support tech companies could lead to “brownouts” or inability to “deploy certain technologies,” creating big problems across a variety of fields in China.

According to Peter Thimmesch, chairman and CEO of US-based Addrex, this lack of IP addresses could affect fast-developing fields like artificial intelligence.

“[If] you want to add additional services or add additional customers … you cannot do so without additional address space,” he said.

Internet Protocol is the set of rules through which data packets are sent between computers, forming the basis for the internet. IPv4 is its fourth incarnation and by far the most commonly used version today.

Thimmesch’s business provides a “global secondary marketplace” for businesses selling their unused IPv4 addresses, the vast majority of whom are based in the US.

He added that both Chinese and American internet giants are actively buying up addresses as they plan for future growth. As a limited resource that supports most of the internet today, addresses are crucial for cloud and mobile businesses, Thimmesch said, as well as the broad range of industries they support.

However, outside big names like Tencent or Alibaba, Thimmesch doesn’t see the same kind of demand in China as there is in regions like the US or Europe.

There are alternatives. The updated IPv6 protocol was developed in the 1990s as a replacement for IPv4 systems. It offered more addresses, promised better security, and on top of that, was supposed to give faster internet.

Some refute the latter two claims, however. In addition, worldwide implementation has been slow, in large part because IPv6 is not compatible with the current system. That means that in order to stay connected to the rest of the internet, companies or organizations must also keep running IPv4 at the same time.

Also, China has not been an early adopter: a 2018 report by Internet Society says that less than 5% of internet traffic is deployed via IPv6.

That may change. As of last December, TechNode reported the Chinese government was pushing forward an initiative to build the largest IPv6 network in the world.

But Thimmesch questions whether that’s a cost-efficient proposition when his company estimates there are still close to 1 billion unused IPv4 addresses.

“This supply could meet the demand of the entire world for more than 15 years, at the current pace of additional growth, while technical solutions are worked out,” Thimmesch wrote in a follow-up email.

He’s not entirely pessimistic about the future for the domestic tech industry: “China has such incredible know-how and smart people that maybe it could come up with ways of subdividing the network into a way that works.”

“But someone has to, otherwise the fragile gains of the economy are at risk,” he added.

Update: The image has changed to one of Addrex Chairman and CEO Peter Thimmesch.

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Bailey Hu

Bailey Hu is based in China’s hardware capital, Shenzhen. Her interests include local maker culture, grassroots innovation and how tech shapes society, as well as vice versa.

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