Technical and Economic Assessment of
Internet Protocol, Version 6 (IPv6)

National Telecommunications and Information Administration
National Institute of Standards and Technology

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The President’s National Strategy to Secure Cyberspace (National Strategy) directed the Secretary of Commerce to form a task force to examine the most recent iteration of the Internet Protocol version 6 (IPv6). The President charged the task force with considering a variety of IPv6-related issues, “including the appropriate role of government, international interoperability, security in transition, and costs and benefits.” [ 1 ] Formed in October 2003, the Task Force is co-chaired by the Administrator of the National Telecommunications and Information Administration (NTIA) and the Director of the Technology Administration’s National Institute of Standards and Technology (NIST) and consists of staff from those two agencies, with the assistance of a consultant, RTI International (RTI).

IPv6 merits study because of the growing importance of the Internet in the life of most Americans. Over the past decade, the Internet has revolutionized computer and communications activities. First envisioned as a tool for facilitating interaction among government and academic researchers, the Internet now touches almost every aspect of society. It has vastly expanded the individual and societal benefits of personal computers by becoming the primary mechanism for the dissemination, retrieval, and exchange of information between and among millions of computer users worldwide.

The social effects of these developments have been immense. The Internet has enabled consumers to shop more conveniently, choose from a wider selection of products and vendors, and customize their purchases. As a result, consumers spent $69.2 billion online in 2004, a 24 percent increase from 2003 and up more than 150 percent from 2000. [ 2] Similarly, the growth of online distance learning classes and medical reference Web sites has given people greater access to educational and medical resources. Government agencies and organizations can more easily process requests from and make information available to citizens, thereby facilitating interaction between citizens and government and reducing the costs to government of providing essential services. [ 3] The Internet also creates opportunities for individuals to participate more fully in the marketplace of ideas that is the foundation of American democracy.

The Internet’s effects on the economy have been equally profound. Although the Internet has helped increase competitive pressures in many product and service markets, it has also equipped many businesses to thrive in the new market environment. Internet-based electronic mail and business-to-business software applications have enabled companies to reduce transaction costs, increase managerial efficiency, and improve the ways in which they transmit billing, inventory, and other information. That, in turn, has allowed companies to bring better products to the market more quickly and at lower cost. In these and other ways, the Internet offers businesses the opportunity to manage the entire technology life cycle more efficiently from product or service development to operations and maintenance.

The United States has played a major role in the development of the networks, standards, and conventions that make up the Internet, and Americans have become major users of IP-based services. As a result, the United States has been and continues to be a major beneficiary of the Internet revolution. Americans’ extensive use of the Internet has contributed to the robust performance of our economy over the last decade, both in absolute terms and relative to other nations. America’s central role in the creation and operation of the Internet has also put U.S. companies on the cutting edge of information technology (IT) markets, which have been a primary engine of economic growth and job creation domestically over the last decade. For these and many other reasons, the United States has a substantial interest in the future evolution of the Internet and in ensuring that U.S. firms can continue to participate fully in that evolution and its economic spillovers.

1.1 The Internet Protocol and IPv6

This report focuses on one of the communications protocols [ 4] that define the infrastructure of the Internet — the so-called Internet Protocol (IP), which enables data and other traffic to traverse the Internet and to arrive at the desired destination. IP not only provides a standardized “envelope” for the information that is sent; it also contains “headers” that provide addressing, routing, and message-handling information that enables a message to be directed to its final destination over the various media that compose the Internet.

The current generation of IP version 4 (IPv4), has been in use for more than 20 years and has supported the Internet’s growth over the last decade. With the transformation of the Internet in the 1990s from a research network to a commercialized network, concerns were raised about the ability of IPv4 to accommodate emerging demand, especially the anticipated demand for Internet addresses. As a result, an international organization, the Internet Engineering Task Force (IETF), began work on the next generation IP. Its efforts led to the development of IPv6. [ 5]

IPv6 will enable an enormous increase in the number of Internet addresses currently available under IPv4. Demand for such addresses will increase as more and more of the world’s population request Internet access. Cisco Systems notes that if the 15 largest countries were to assign unique addresses to only 20 percent of their populations, the resulting demand would easily exhaust the remaining supply of IPv4 addresses. [ 6 ] Continued growth in mobile data services via wireless telephones and data terminals, such as personal data assistants (PDAs), will also expand demand for Internet addresses. The situation may become critical if, as some project, a market emerges for in-home devices (e.g., “smart appliances” and entertainment systems) that are accessible from outside the home via the Internet. [ 7] Although considerable disagreement exists as to whether, to what extent, and at what pace, such demand will develop, it is expected that deployment of IPv6 would provide the address space to accommodate whatever level of demand does emerge.

Besides affording exponentially expanded address space, IPv6 has been designed to provide other features and capabilities, including improved support for header options and extensions, simplified assignment of addresses and configuration options for communications devices, and additional security features. Development of IPv6, moreover, has stimulated enhancements to IPv4. As useful capabilities have been devised for IPv6, protocol developers and manufacturers have worked to incorporate a number of those same capabilities into IPv4. [ 8] As a result, IPv4 can now support, to varying degrees, many of the capabilities available in IPv6. [ 9] At the same time, additional mechanisms and tools have been developed to mitigate, to an extent, the IPv4 address exhaustion concerns that in large part prompted the development of IPv6. [ 10]

Most observers agree that, all things being equal, IPv6-based networks would be superior to IPv4-based networks. As noted above, IPv6 would adequately accommodate increased demand for IP addresses in the event that a proliferation of end-user devices or the emergence of a “killer application” outstrips the existing supply of IPv4 addresses.

In the United States, however, there is a massive embedded base of IPv4 equipment and applications in the communications system we know as the Internet. The capabilities of IPv4, which have been enhanced over time in response to the development of IPv6, make IPv4 functionality sufficient to serve the needs of many current Internet users and service providers. Consequently, an important policy question concerning IPv6 deployment in the United States is whether the incremental benefits of adopting IPv6 justify the costs of converting the large embedded IPv4 base to IPv6 on an accelerated basis (e.g., well in advance of an organization’s normal equipment replacement cycle). [ 11]

Because of conversion costs and the complexities involved in predicting a return on investment for IPv6 in the short term, most observers believe that there will be a considerable transition period during which IPv4 and IPv6-based networks will coexist. [ 12] During that transition, firms will incur costs to ensure interoperability among equipment, applications, and networks, both domestically and to a lesser extent internationally. Simultaneous operation of IPv4 and IPv6 may also require additional effort to ensure communications security and to protect networks from attack. These transition costs, in addition to the more obvious direct costs of converting to IPv6 and making any other necessary network changes, should be considered when assessing the benefits of adopting IPv6. Enterprises must determine whether the cumulative benefits of deploying IPv6 will justify the costs of migrating from IPv4 to IPv6.

1.2 Current Market Activities

1.2.1 Domestic Market Activities

Many domestic and foreign companies have incorporated or are steadily incorporating IPv6 capabilities into their hardware and software products. The two largest manufacturers of Internet routers, Cisco and Juniper, have included IPv6 capability in their equipment for several years. [ 13] Linux operating systems are generally capable of handling IPv6 traffic (“IPv6-capable”), [ 14] and Microsoft has moved aggressively to make its operating systems IPv6-capable. [ 15 ] Indeed, Cisco estimates that about one-third of desktop computers currently deployed in the United States are IPv6-capable. [ 16 ]

Microsoft is working to make more of its Windows applications capable of handling the larger IPv6 addresses, [ 17] and today consumers can download a limited selection of e-mail programs, multimedia software, remote access software, games, and Java applications that can operate in an IPv6 environment. Similarly, access software, email and World Wide Web servers, and firewalls are available that enable network administrators and users to interact with both IPv4 and IPv6 applications. [ 18]

Despite the availability of IPv6 products in the marketplace, a significant portion of the installed base of IT equipment in the United States, particularly in residences, appears to be capable of handling only IPv4 transmissions. [ 19 ] Furthermore, IPv6 has not been enabled, or activated, in much of the installed IPv6-capable equipment and software. [ 20 ] In June 2003, the United States Department of Defense (DoD) announced that all hardware and software “being developed, procured, or acquired” for its Global Information Grid (GIG) would have to be IPv6-capable beginning on October 1, 2003. [ 21 ] However, DoD apparently does not plan for the GIG to handle significant quantities of IPv6 traffic for several years. [ 22 ]

The bulk of the IPv6 traffic in the United States appears to be carried by government and university research networks, such as the Abilene backbone network. [ 23 ] Currently, NTT/Verio is the only commercial provider of IPv6-based Internet access service in the United States. [ 24 ] The company estimates that less than one percent of the Internet access users in the United States have IPv6 service. [ 25 ] MCI has announced that it has established a direct, high-capacity link between its commercial Internet backbone network and the Moonv6 test bed established by the North American IPv6 Task Force (NAv6TF), in collaboration with DoD and the University of New Hampshire. [ 26 ] This capability allows MCI’s customers to test the performance of IPv6 equipment and applications as part of the Moonv6 test bed over native IPv6 links. MCI views this move as preparing its backbone network to deliver IPv6 capabilities on a more commercial scale. Currently, the company provides customized IPv6 services on a limited basis in North America, Europe, Africa, and the Middle East. [ 27 ]

1.2.2 International Market Activities

Commercial adoption of IPv6 is proceeding faster in other parts of the world, although market statistics are not readily available. NTT Communications began offering commercial IPv6-based Internet access service in Japan in March 2000. An NTT competitor, Internet Initiative Japan (IIJ), followed suit in September 2000. [ 28 ] NTT/Verio reports that Telecom Italia Laboratory was the first company to provide commercial IPv6 service in Europe in July 2001. [ 29 ] Juniper indicates that several other companies are conducting commercial pilots in other parts of Europe. [ 30 ]

Foreign governments, particularly those in Asia, have taken various steps to promote deployment of IPv6. Japan’s support for IPv6 dates back to September 2000, when Prime Minister Yoshiro Mori emphasized the importance of IPv6 research.[ 31 ] In 2001, the South Korean Ministry of Information and Communication announced its intent to implement IPv6 within the country. In September 2003, the Ministry adopted an IPv6 Promotion Plan that commits $150 million through 2007 for funding IPv6 routers, digital home services, applications, and other activities.[ 32 ] In December 2003, the Chinese government issued licenses and allocated $170 million for the construction of the China Next Generation Internet (CGNI), with the goal of having that network fully operational by the end of 2005. [ 33 ]

For its part, the European Commission (EC) in 2001 funded a joint program between two major Internet projects—6NET and Euro6IX—to foster IPv6 deployment in Europe. The Commission committed to contribute up to €17 million over three years to enable the partners to conduct interoperability testing, interconnect both networks, and deploy advanced network services.[ 34 ] The EC has also allocated €180 million to support some 40 IPv6 research projects on the continent.[ 35 ] Finally, the EC is conducting a three-year, €10.7 million experiment with IPv6 networks that include household sensors for monitoring maintenance and meter reading. Sensors in automobiles could also be networked so that information about traffic and road conditions can be shared between vehicles. [ 36 ]

1.3 Department of Commerce IPv6 Task Force

Much of the IPv6 market activity internationally, particularly that in Asia, seems attributable to perceived shortages of IPv4 addresses. [ 37 ] However, some have said that foreign governments also see a swift transition to IPv6 as a way to gain a competitive advantage in the equipment and applications markets. [ 38 ] This, in turn, has raised concerns about the pace of IPv6 deployment within the United States and whether a “lag” in U.S. deployment could jeopardize the competitiveness of domestic firms in cutting-edge IT markets or have adverse security implications for this country.

To address these and other concerns about deployment of IPv6 in the United States, in January 2004, the Task Force published a Request for Comments (RFC) on various IPv6-related issues in the Federal Register. [ 39 ] In July 2004, based on the comments submitted in response to the RFC, as well as on extensive contacts with private- and public-sector stakeholders, the Task Force published a discussion draft that offered preliminary views on the questions presented by the ongoing deployment of IPv6 both domestically and internationally, including those issues identified in the National Strategy. [ 40 ]

On July 28, 2004, the Task Force convened a public meeting to examine IPv6 issues, including the discussion draft. [ 41 ] The information gathered at that meeting affirmed and supplemented many of the impressions set forth in the discussion draft and suggests that IPv6 has the potential to produce significant benefits for U.S. businesses and consumers. The vastly increased IP address space available via IPv6 could stimulate a plethora of new communications devices, all accessible directly by other Internet users on an end-to-end basis. That, in turn, could spur development and deployment of innovative services and applications. Over time, IPv6, as compared to IPv4, could become a more useful, more expandable mechanism for securing communications on an end-to-end basis.

Notwithstanding these potential benefits, deployment of IPv6 faces a number of hurdles. First and foremost, a large embedded base of IPv4-compatible equipment and applications exists, coupled with the fact that IPv4 has proven to be robust enough and flexible enough to serve the needs of many users and equipment/service suppliers. Additionally, full exploitation of the technical advantages of IPv6 will require not only capital and labor resources to transition to the new protocol, but also changes in the architecture of many user networks, including the removal or modification of devices that can interfere with end-to-end communications and the development of new security models. As a result, many firms may decide that the benefits of deploying IPv6 may not justify the costs, at least in the near term.

No substantial market barriers appear to exist that would prevent firms from investing in IPv6 products as their needs require or as consumers demand. As a result, the Task Force believes that aggressive government action to accelerate private sector deployment of IPv6 is unwarranted at this time. In terms of the public sector, the record indicates that IPv6 is increasingly being incorporated into Internet hardware and software. Consequently, the Task Force believes that federal agencies should initiate near term, focused, efforts to plan and operationally prepare for the increasing availability and use of IPv6 products and services in both internal and external networks. The vital importance of early planning efforts to ensure the safe and economic emergence of IPv6 within federal networks is also highlighted in emerging policy guidance from the Office of Management and Budget (OMB) [ 42] and a recent study by the Government Accountability Office (GAO). [ 43 ]

Pursuant to the President’s directive, this report addresses a variety of issues related to a move to IPv6. Section 2 assesses the potential benefits of IPv6 adoption, as compared to IPv4, as well as the principal direct and indirect costs that entities will likely incur to deploy IPv6. Section 2 also provides an assessment of the sorts of costs that stakeholders may incur to deploy IPv6. Section 3 discusses the potential security benefits of IPv6, as well as the possible hurdles to the full achievement of those benefits. Section 4 considers issues related to the interoperability of IPv4 and IPv6 equipment and networks, including interoperability across national borders. Finally, Section 5 examines possible rationales for U.S. government action to influence domestic IPv6 deployment, and describes actions that the U.S. government should take to (1) facilitate adoption of IPv6 by government agencies and (2) assist the private sector in identifying and addressing potential barriers to smooth and efficient implementation of IPv6 by the private sector.

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[1] The National Strategy to Secure Cyberspace, A/R 2-3, at 56 (Feb. 2003), at

[2] U.S. Dep’t of Commerce, Census Bureau, “Quarterly Retail E-Commerce Sales 1st Quarter 2005, Table 4 (May 20, 2005), at Note that retail e-commerce sales may include some sales over proprietary networks, although such sales are presumably small at the retail level. Total e-commerce sales, including business-to-business sales, are much larger ($1.7 trillion in 2003—the last year for which Census Bureau data are available), but they include a larger percentage of sales over proprietary networks.

[3] See, e.g., Robert Litan and Alice Rivlin, “Projecting the Economic Impact of the Internet,” 91 Am. Econ. Rev. 313 (2001) (noting studies suggesting the Internet can help government reduce the costs of receiving tax returns and registering for permits and licenses).

[4] A communications protocol defines the “[p]rocedures which are employed to ensure the orderly transfer of data between devices on a communications link, over a communications network, or within a system.” NEWTON’S TELECOM DICTIONARY 196 (20th ed. 2004).

[5] IPv6 can be defined with reference to the IETF Requests for Comments (RFCs) that contain the relevant standards. The “core” draft standards for IPv6 (e.g., RFCs 2460-2463) were approved in August 1998. Currently, the suite of IETF documents that define IPv6 comprise more than 70 RFCs. See The IETF continues its efforts to standardize the new protocol. See “WG Action: Recharter: IP Version 6 Working Group (ipv6),” at (as modified May 5, 2004).

For a brief discussion of the reasons for developing a next generation IP and the IETF’s activities in that area, see Geoff Huston, “Waiting for IP version 6,” at 1-4, The ISP Column (Jan. 2003),

[6] Comments of Cisco Systems, Inc. (Cisco), at 1, in response to Request for Comments on Deployment of Internet Protocol Version 6, 69 Fed. Reg. 2,890 (U.S. Dep’t of Commerce, National Institute of Standards and Technology [NIST] and National Telecommunications and Information Administration [NTIA] Jan. 21, 2004). Unless otherwise noted, all subsequent citations to Comments refer to comments filed in response to the January 21, 2004, Request for Comments (RFC). Copies of those comments are available at See also Tony Hain (Hain) Comments at 6.

[7] See, e.g., Cisco Comments at 1; MCI Comments at 3.

[8] See, e.g., Alcatel Comments at 3-4.

[9] See Cisco Comments at 6.

[10] See RFC, supra note Error! Bookmark not defined.6, 69 Fed. Reg. at 2,891-2,892, for a description of such address conservation mechanisms as network address translation (NAT) devices and Classless Intra-Domain Routing (CIDR). See also Sprint Corporation (Sprint) Comments at 4.

[11] An organization’s incentive to convert to IPv6 on an expedited basis may be lessened further by the fact that IPv6 has been designed to allow IPv4 users to migrate to IPv6 on a gradual basis.

[12] See GSA Federal Technology Service (GSA) Comments at 3; Network Conceptions LLC (Network Conceptions) Comments at 9; VeriSign, Inc. (VeriSign) Comments at 6.

[13] Cisco Comments at 20; Juniper Networks, Inc. (Juniper) Comments at 5.

[14] See NTT/Verio Comments at 27. For purposes of this discussion, a network, a piece of equipment, or an application is considered “IPv6-capable” if it can recognize IPv6 addresses. Such devices, however, cannot process IPv6 messages until those IPv6 capabilities have been “enabled” or “turned on.”

[15] Microsoft Corp. (Microsoft) Comments at 7-8. Windows XP was shipped with some IPv6 capabilities, and Microsoft representatives have stated that the next release of Windows called “Vista,” formally “Longhorn”, will have IPv6 enabled by default.

[16] Cisco Comments at 20.

[17] Microsoft Comments at 8.

[18] See NTT/Verio Comments at 32-37 for a list of IPv6-capable hardware, operating systems, and software applications.

[19] See Cisco Comments at 20 (citing wired and wireless end user devices, cable and digital subscriber line (DSL) modems, printers and other peripheral equipment).

[20] As noted, IPv6-“capable” devices cannot process IPv6 messages until those IPv6 capabilities have been “enabled” or “turned on.”

[21] See John Stenbit, “Internet Protocol Version 6 (IPv6)” (U.S. Dep’t of Defense memorandum of intent, June 9, 2003), at All IPv6 equipment must also be able to support IPv4. See also Dawn S. Onley, “Defense picks consultant for IPv6 transition,” Government Computer News, at 5 (May 24, 2004) at To date, however, DoD has not yet defined what IPv6-capable is. See William Jackson, “IPv.6-capable? That depends on your definition of “capable”, Government Computer News (May 25, 2005), at

[22] See Stenbit, supra note 21, at 2 (indicating that no DoD networks carrying operational data will be converted to IPv6 in the near term); Captain Roswell V. Dixon, “IPv6 in the Department of Defense,” at 9, Presentation at the North American IPv6 Task Force Summit, San Diego, CA, (June 25, 2003), (DoD IPv6 adoption plan contemplates a five-year transition period with a trial period of approximately three years in which IPv6 and IPv4 will be operated simultaneously). A DoD official recently indicated that the department will not reach its original deadline for full transition to IPv6 by 2008. He further stated that DoD will likely continue to operate IPv4 alongside with IPv6 well into the next decade. See William Jackson, “DoD applications will have to wait for IPv6,” Government Computer News (Nov. 30, 2005), at (remarks of Kris Strance, a senior analyst with the Department’s CIO office).

[23] See Internet2 Comments at 9 (Abilene network has supported native IPv6 since summer of 2002); Juniper Comments at 5.

[24] NTT/Verio Comments at 29. See also Cisco Comments at 20 (noting some private reports that other companies will provide IPv6 service if pressed).

[25] NTT/Verio Comments at 29.

[26] See “MCI takes step toward commercial IPv6 service,” NetworkWorld Fusion (Feb. 7, 2005), at NAv6TF is a subchapter of the IPv6 Forum dedicated to advancing and propagating IPv6 in North America. Acting as individuals, rather than as representatives of their employers, NAv6TF members provide technical leadership and innovative thought for the successful integration of IPv6 into all facets of networking and telecommunications infrastructure, present and future.

[27] See id.

[28] NTT/Verio Comments at 25; Juniper Comments at 6. In April 2001, NTT/Verio launched the first commercial global IPv6 backbone network connecting Japan, Europe, and the United States. NTT/Verio Comments at 25.

[29] NTT/Verio Comments at 25.

[30] Juniper Comments at 6.

[31] Prime Minister Yoshiro Mori, Policy Speech to the 150th Session of the Diet (Sept. 21, 2000), For further information on Japan’s IPv6 activities, see “e-Japan Strategy,” at (Jan. 22, 2001). See also IPv6 Promotion Council, “Our Background and Objectives” (2002), at (last visited Dec. 15, 2004).

[32] See Sangjin Jeong, “IPv6 Deployment and its Testing Activities in Korea,” at 9 (Sep. 22, 2003), at

[33] See Cisco Comments at 22; Juniper Comments at 6. It has been reported that 50 percent of the CNGI project will go to local vendors. Cisco Comments at 22.

[34] See “Europe Drives Next Generation Internet Deployment,” at (Dec. 4, 2001).

[35] See Juniper Comments at 6; Jordi Palet, “IPv6 in Europe: From R&D to Deployment” (June 2002), at (last visited Jul. 15, 2005).

[36] See William Jackson, “Europe begins its move toward IPv6,” Government Computer News (May 26, 2005), at For additional information on IPv6 activities in other nations, see U.S. General Accountability Office, Internet Protocol Version 6: Federal Agencies Need to Plan for Transition and Manage Security Risks, GAO-05-471, at 8-9 (May 2005), at

[37] See, e.g., NTT/Verio Comments at 25.

[38] See, e.g., Nobuo Ikeda and Hajime Yamada, “Is IPv6 Necessary?”, Glocom Tech Bulletin #2, at 2, 12 (Feb. 27, 2002), at; Motorola, Inc. (Motorola) Comments at 5; Michael Dillon (Dillon) Comments at 1. See also Cisco Comments at 22 (Chinese carriers may feel political pressure to showcase China as a technology leader).

[39] See RFC, supra note Error! Bookmark not defined.6.

[40] “Technical and Economic Assessment of Internet Protocol Version 6 (IPv6)” (July 2004), at

[41] For information about the agenda of the meeting and a list of the participants, see NTIA’s website, See also “IPv6 Public Meeting,” 69 Fed. Reg. 42,422 (July 15, 2004). A transcript of the meeting (hereinafter referred to in this report as “Public Meeting Transcript”) is also available at: All subsequent citations to that transcript will refer to the Microsoft Word version of that document.

[42] Statement of the Honorable Karen S. Evans, Administrator for Electronic Government and Information Technology, Office of Management and Budget, Before the House Comm. on Government Reform 2-3 (June 29, 2005) at (OMB House Government Reform Testimony). See also Memorandum from Karen S. Evans, Off. of E-Government and Information Technology, Off. Mgmt. and Budget, to Chief Information Officers, OMB Memorandum M-05-22 (Aug. 22, 2005) at (OMB IPv6 Policy Memorandum).

[43] U.S. General Accountability Office, Internet Protocol Version 6: Federal Agencies Need to Plan for Transition and Manage Security Risks, GAO-05-471, at 8-9 (May 2005), at (GAO IPv6 Report).

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