The original IPv4 address space is divided into classes A, B, C, D and E, with classes A, B and C now consisting of address blocks of varying sizes. There are 222 class A networks that can each hold up to 65,536 smaller networks. If each usable IP address is valued at $144 per year based on typical costs, a block of 253 addresses would be worth around $405,000. Extrapolating this model, a single class A network could be valued at over $26.5 billion. Applying this model, the total value of the 222 class A networks is estimated to be $5.9 trillion.

1. Have you ever asked how big the Universe is? It’s about 93billion light years across. So, now
that we are talking about big numbers, let’s talk about how big the Internet is.
The original 32-bit IPv4 address space is broken up into 5 “classes”, denoted by the letters A, B,
C, D, and E. Over time, ISPs have adopted classless routing systems, so everything in the A, B,
and C space is now a mishmash of address blocks varying in size from 256 on up to 16,777,216
IP addresses in a single block.
In the usable space, there are 222 routable “Class A” networks, starting at 1.0.0.0 and going up
to 223, not including 127, which has a special purpose. Each “Class A”, or more modernly re-
ferred to as a /8 (stylized as ‘slash eight’), can hold up to 65536 routable networks of the
smallest size.
The smallest block that is allowed to route independently on the Internet has approximately
256 IP addresses, of which 253 are usable, and 3 are reserved with a special meaning.
If you assign each usable IP address with some kind of monthly cash flow number, perhaps $12
per month, which is reasonable considering the cost of ISP services, data plans, hosting
charges, cloud instances, web sites, you get an annual revenue of $144 per IP address. Doing a
discounted cash flow analysis with a 5% growth rate, and the S&P growth rate at 11%, we ar-
rive at a valuation of $1,602.84 per IP address. That means these tiny blocks of 253 IP ad-
dresses are worth about $405,518.52 for a single block.
A medium sized company might have 65,536 IP addresses, and they can be valued at
$103,812,741.12. One hundred and three million dollars. There are a lot of companies out
there with that kind of address space and nowhere near the valuation of $103M.
THE VALUATION OF THE INTERNET
SEPTEMBER 15, 2014 | JONATHAN | LEAVE A COMMENT
Jonathan Kalbfeld
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2. A large sized company like Apple, the Post Office, or Level 3 might have one or many Class A
networks. If you extrapolate these out, you get a valuation of over $26.5billion per class A net-
work. Know of a bankrupt company with a Class A?
In case you were wondering, the 222 usable Class A networks are worth
$5,899,885,703,331.84 using this model.
The Valuation of the Internet | Jonathan Kalbfeld http://jon.la/?p=50
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