Planning Report 05-2

IPv6 Economic 

Impact Assessment

Prepared by:

RTI International

for

National Institute of

Standards & Technology

October 2005

U.S Department of Commerce

Technology Administration
October 2005 

IPv6 Economic Impact 

Assessment

Final Report

Prepared for 

Gregory Tassey, Ph.D. 

National Institute of Standards and Technology 

Building 101, Room A1000 

Gaithersburg, MD 20899-0001 

Prepared by 

Michael P. Gallaher, Ph.D. 

Brent Rowe 

RTI International 

Health, Social, and Economics Research 

Research Triangle Park, NC 27709 

RTI Project Number 008236.003 

As a part of this report by RTI International, NIST requested estimates of transition and 

other costs associated with the Internet Protocol. The quantitative information contained 

in the RTI report is based on an extremely limited number of participants, including 

interested stakeholders. Further, because of the early phase of transition to the new 

Protocol, all estimates obtained are preliminary in nature and subject to significant 

revision. The results presented, therefore, are not to be regarded as statistically 

significant, but rather as rough indications of how industry and government costs may 

unfold under different transition strategies. Thus, the quantitative information contained in 

this report is meant to be used only as an illustration, not as a definitive assessment. 

Contents 

 Executive Summary ES-1

 1 Introduction 1-1

 2 Methodology 2-1

2.1 Description of Stakeholder Groups ..............................................2-1

2.2 Affected Business Activities .........................................................2-2

2.3 Penetration Metrics ......................................................................2-5

2.4 Description of Cost Categories and Estimation Approach...........2-7

2.4.1 Cost Categories ..............................................................2-7

2.4.2 Quantitative Estimation Approach...................................2-7

2.5 Description of Benefit Categories and Estimation Approach.....2-10

2.6 Stakeholder Interviews, Request for Comments, and 

Public Meeting............................................................................2-11

 3 Baseline Penetration Estimates 3-1

3.1 Stakeholder Penetration Curves ..................................................3-1

3.2 Users’ Capabilities and Enabling Curves.....................................3-3

 4 Baseline Development and Deployment Costs 4-1

4.1 Cost Categories and Wage Data .................................................4-3

4.2 Infrastructure Vendors..................................................................4-6

4.2.1 Assumptions and Underlying Data..................................4-8

4.3 Application Vendors ...................................................................4-10

4.3.1 Assumptions and Underlying Data................................4-12

4.4 Internet Service Providers (ISPs)...............................................4-12

4.4.1 Assumptions and Underlying Data................................4-13

4.5 Internet Users.............................................................................4-16

4.5.1 Assumptions and Underlying Data................................4-18

 5 Baseline Benefits 5-1

5.1 Cost Reductions Resulting from Improved Security ....................5-4
ii 

5.2 Cost Reductions Resulting from Increased Efficiency .................5-5

5.2.1 NAT Removal Leading to Increased Efficiency...............5-5

5.2.2 VoIP Potential Savings....................................................5-7

5.3 Remote Access to Existing Products/Services ............................5-8

5.4 Innovations Leading to New Products and Services..................5-10

 6 Costs Under Alternative Deployment Scenarios 6-1

6.1 Scenario 1: Accelerating Enablement by Users..........................6-2

6.2 Scenario 2: Accelerating Capabilities by Users ..........................6-4

6.3 Incremental Scenario Costs.........................................................6-5

 Appendix 

A Interview Participants ...................................................................A-1
iii 

Figures 

 2-1 Supply Chain Stakeholders, Costs, and Benefits ..................................2-2

 2-2 Example of Penetration Curves Used for Cost Analysis .......................2-6

 2-3 Example of the Distribution of IT Staff Resources Needed to 

Enable IPv6 in a User Network..............................................................2-8

 2-4 Example of U.S. User Enablement Over Time ......................................2-9

 2-5 Example of U.S. Users’ Transition Costs Over Time...........................2-10

 3-1 Penetration Estimates of IPv6 in the United States...............................3-2

 3-2 IPv6-Capable and IPv6-Enabled U.S. User Networks...........................3-3

 4-1 Percentage of R&D Staff Dedicated to IPv6 Transition for 

Infrastructure Vendors ...........................................................................4-7

 4-2 Percentage of U.S. Infrastructure Vendors’ Products with IPv6 

Capabilities.............................................................................................4-7

 4-3 Annual Spending by U.S. Infrastructure Vendors on IPv6-Related 

R&D........................................................................................................4-8

 4-4 Percentage of R&D Staff Dedicated to IPv6 Transition for 

Application Vendors .............................................................................4-10

 4-5 Percentage of U.S. Application Vendors’ Products with IPv6 

Capabilities...........................................................................................4-11

 4-6 Estimated Annual Spending by U.S. Application Vendors on 

IPv6-Related R&D................................................................................4-11

 4-7 Percentage of IT Staff Dedicated to IPv6 Transition for ISPs..............4-14

 4-8 Percentage of U.S. ISP Networks Enabled to Provide IPv6 

Service .................................................................................................4-14

 4-9 Annual Spending by U.S. ISPs on Transitioning Provisioning 

Networks ..............................................................................................4-15

 4-10 Percentage of IT Staff Dedicated to IPv6 Transition for Internet 

Users....................................................................................................4-17

 4-11 Percentage of U.S. User Networks IPv6 Enabled ...............................4-17

 4-12 Annual Spending by U.S. Users to Become IPv6 Enabled .................4-18
iv 

 6-1 Acceleration Scenario 1.........................................................................6-3

 6-2 Acceleration Scenario 2.........................................................................6-4

 6-3 Acceleration Scenarios 1 and 2 .............................................................6-5
v 

Tables 

 2-1 Business Activities Affected by the Transition to IPv6...........................2-3

 2-2 Cost Categories by Business Activity ....................................................2-4

 2-3 Affected Groups by Benefit Category ..................................................2-11

 2-4 Informal Discussions, RFC Commenters, and Interviews ...................2-12

 4-1 Estimated U.S. IPv6 Adoption Cost Totals, Broken Out by Each 

Stakeholder Group ($ Millions) ..............................................................4-2

 4-2 Affected Staff (BLS Occupational Categories) by Stakeholder 

Group .....................................................................................................4-4

 4-3 Representative Training Costs by Stakeholder Group ($2003).............4-5

 4-4 Distribution of IPv6-Related Transition Costs for Infrastructure 

Vendors..................................................................................................4-9

 4-5 Distribution of IPv6-Related Transition Costs for Application 

Vendors................................................................................................4-13

 4-6 Distribution of IPv6-Related Transition Costs for ISPs ........................4-16

 4-7 Distribution of IPv6-Related Transition Costs for Users ......................4-19

 5-1 Several Benefit/Application Categories .................................................5-3

 5-2 Potential Annual Cost Reductions Associated with NAT Removal........5-6

 5-3 Potential Annual VoIP Savings ..............................................................5-8

 5-4 Potential Annual Benefits of Remote Access to Automobiles and 

Appliances............................................................................................5-10

 5-5 Growth in U.S. Mobile Phone Subscribers ..........................................5-11

 5-6 Growth in U.S. Wireless Data Revenue and Connections ..................5-12

 5-7 Percentage of U.S. Households with Computers and Internet 

Access..................................................................................................5-13

 6-1 Acceleration Costs ($ Millions)...............................................................6-6

ES-1 

 Executive Summary 

This report presents estimates of the costs and benefits associated with 

transitioning from Internet Protocol Version 4 (IPv4) to Internet Protocol 

Version 6 (IPv6). Cost estimates are based on likely development and 

deployment scenarios provided by stakeholders during interviews 

conducted by RTI International (RTI). Based on interviews, RTI 

estimates the present value of incremental costs associated with IPv6 

deployment over a 25-year period to be approximately $25 billion 

($2003),1

 primarily reflecting the increased labor costs associated with 

the transition. Although these cost estimates seem large, they are 

actually small relative to the overall expected expenditures on IT 

hardware and software and even smaller relative to the expected value 

of potential market applications. 

Because major applications for IPv6 have yet to emerge, it is more 

difficult to quantify their potential benefits. Stakeholders participating in 

this study identified several major categories of IPv6 applications that, in 

total, are estimated to have potential annual benefits in excess of $10 

billion2

. These categories include Voice Over IP (VoIP), remote access 

products and services, and improved network operating efficiencies. 

However, benefits estimates included in this report are more subjective 

than cost estimates because they are based on Internet applications that 

are yet to be well defined. In addition, benefit estimates are potentially 

conservative because they do not reflect future, next generation 

applications that may be enabled by IPv6. 

 

1

 All cost and benefit estimates are presented in 2003 dollars. 

2

 This statement represents a synthesis of the information gathered by RTI through 

extensive literature reviews, RTI’s informal discussions with stakeholders, commenters 

to the Department of Commerce (DoC) Request for Comment (RFC), participants in the 

DoC public meeting in July 2004, and stakeholder interviews conducted by RTI. See 

section ES-1 for a more detailed description of RTI’s research activities. 

Internet users incur 

approximately 90 percent 

of IPv6 transition costs. 

Vendors and ISPs account 

for the remaining costs. 
IPv6 Economic Impact Assessment 

ES-2 

 ES.1 INDUSTRY RESEARCH 

The cost and benefits estimates are informed by a series of 30 interviews 

with stakeholders. Stakeholders included infrastructure vendors, 

application vendors, Internet service providers (ISPs), and a variety of 

Internet users (e.g., infrastructure, corporate, government, institutional, 

and independent/home). In these interviews, RTI asked questions 

related to the timing of available IPv6 infrastructure components and 

applications and the likely adoption rates and costs for each stakeholder 

group. As shown in Table ES-1, interview findings were combined with 

other information provided through informal discussions and the 

Department of Commerce (DoC) IPv6 Task Force’s Request for 

Comment (RFC). 

Table ES-1. Informal Discussions, RFC Commenters, and Interviews 

Stakeholder Group 

Informal 

Discussions RFC Commenters Interviews 

Infrastructure vendors 7 5 5 

Application vendors 0 1 6 

ISPs 3 5 6 

Infrastructure users 1 1 4 

Corporate users 2 0 1 

Institutional users 3 0 2 

Government users 4 1 3 

Research consortiums 3 4 2 

Industry and academic experts 1 5 1 

Total 24 22 30 

 ES.2 BASELINE PENETRATION ESTIMATES 

Based on interviews with stakeholders, the penetration curves in Figure 

ES-1 were constructed to represent likely deployment/adoption rates for 

the four major stakeholder groups. The infrastructure (Inf) and 

applications (App) vendors’ curves represent the path over which vendor 

groups will offer IPv6-capable products to customers. For example, 

based on information provided in interviews, RTI estimates that 30 

percent of infrastructure products offered by vendors will be IPv6-

capable by 2003, and 30 percent of Internet applications offered by 

vendors are projected to IPv6-capable by 2008. 
Executive Summary 

ES-3 

Figure ES-1. Penetration Estimates of IPv6 in the United States 

0

10

20

30

40

50

60

70

80

90

100

2000 2005 2010 2015 2020

Year

Percent

Inf Vendors App Vendors ISPs Users

2025

The ISP curve represents the share of ISPs’ networks that are expected 

to be IPv6-enabled.3

 As shown in Figure ES-1, on average, RTI 

estimates that 30 percent of ISPs’ networks will be IPv6-enabled by 

2010.4

 Similarly, the users curve represents the share of users’ networks 

(including infrastructure vendors, application vendors, and ISPs’ internal 

network users) that are projected to be IPv6-enabled. For example, on 

average, 30 percent of users’ networks are projected to be IPv6-enable 

by 2012. 

 ES.3 COSTS 

Based on these penetration projections, RTI estimated that the present 

value of costs for all stakeholder groups to transition to IPv6 will be 

approximately $25 billion.5

 These costs will primarily occur over the 

period from 1997 to 2025.6

 As shown in Table ES-2, RTI estimates that 

users will incur approximately 92 percent of U.S. transition costs, with 

ISPs and vendors accounting for 0.5 and 8 percent, respectively. 

 

3

 “Enabled” means that some portion of internal networking infrastructure hardware and 

software (e.g., routers, servers, and operating systems) is able to send and receive 

IPv6 messages (as opposed to being IPv6 “capable,” which means the functionality is 

included within the hardware and software but is not “turned on.”) 4

 This figure is based on information provided by stakeholders participating in interviews 

conducted by RTI. 5 Id.

6

 Interview participants indicated that adoption of IPv6 by most stakeholders would be 

distributed over the next 20 years, and many costs have already been borne, back until 

at least 1997. Each generation of a major Internet standard, such as IP, has a long life 

time, as evidenced by the fact that IPv4 has been in use for more than 20 years. 
IPv6 Economic Impact Assessment 

ES-4 

Costs (Present Value [PV] 

Millions $2003)a

Infrastructure vendors $1,384 

Application vendors $593 

ISPs $136 

Users $23,321 

Total $25,434 

a Calculated using a 7 percent real social discount rate. 

Interviews with stakeholders indicated that hardware and software costs 

to upgrade to IPv6 will be negligible for the majority of Internet users 

because IPv6 capabilities will be deployed as part of routine upgrade 

cycles. Over the next 4 or 5 years, the majority of network hardware, 

operating systems, and network-enabled software packages (e.g., 

databases, email) sold will include IPv6 capabilities. 

As a result, labor costs will constitute the majority of the cost of 

upgrading to IPv6 for users, and training will constitute the majority of 

these additional labor costs. Training on the fundamentals and 

implementation of the IPv6 protocol will depend on individual staff’s 

relative needs based on past experience with IPv4 and potential future 

applications. 

 ES.4 BENEFITS 

A general consensus among participating stakeholders exists that IPv6 is 

technically superior to IPv4; however, there is wide disagreement over 

the timing, magnitude, and distribution across stakeholder groups of 

potential benefits. Many of the benefits that were mentioned in 

interviews hinge on removing and/or changing the management of 

middleboxes, such as Network Address Translation (NAT) devices and 

firewalls, because they currently disrupt certain types of end-to-end 

(E2E) communications.7

 Additionally, other potential IPv6 benefits, such 

as improved security and new quality of service (QoS) capabilities, will 

likely not be realized without major changes to Internet security models 

being used today and considerable research and testing in other areas. 

Because of the speculative nature of future IPv6 benefits, it is difficult to 

estimate future benefits in dollars. Thus, secondary data were combined 

 

7

 End-to-end (E2E) implies that the transmission can be implemented based solely on the 

knowledge of the applications at the end points of the communications system. 

Table ES-2. Summary 

of Transition Costs 

from IPv4 to IPv6 

Increased security is a 

frequently mentioned 

benefit associated with 

IPv6. However, the 

magnitude of security 

benefits is conditional on 

removing deployment 

barriers for existing 

infratechnologies, such as 

PKI, and developing other 

infratechnologies such as 

end-to-end (E2E) security 

models. 
Executive Summary 

ES-5 

with stakeholders’ hypothesized impacts to provide insights into the 

potential magnitude of IPv6 benefits. As shown in Table ES-3, benefits 

are grouped into four general categories. Near-term benefits include 

increased use of Voice over IP (VolP) and new mobile data services. 

Long-term benefits potentially include increased Internet security and 

efficiency gains from removing NATs.8

Table ES-3. Several Benefit/Application Categories 

Impact Metric 

Application/ 

Market General Description: Examples 

Cost reductions resulting 

from improved security 

IPSec/E2E 

security model 

• In the future, as security costs continue to rise, 

movement to the use of an E2E security model could 

reduce enterprise costs, both in downtime and 

preventative measures. 

Cost reductions resulting 

from increased efficiency 

VoIP • Movement to VoIP from traditional phone networks could 

save 20 percent or more on telephony expenditures. 

 NAT removal • Enterprise and application vendors’ spending on NAT 

workarounds accounts for up to 30 percent of IT-related 

expenditures. 

Value of remote access 

to existing 

products/services 

Increased life 

expectancy of 

products 

• Automobile and appliance owners could increase the 

functionality and life expectancy of their products through 

the use of remote monitoring and support services. 

 Service costs • Automotive and appliance owners could decrease 

service costs through the use of remote monitoring and 

support services. 

Innovation in 

communications and 

online products/services 

New mobile data 

services 

• Wireless companies could sell new features through 

expanded network capabilities. 

• Wireless companies need IPv6 to increase address 

capacity for peer-to-peer (P2P) (most mobile) 

applications. 

 Online gaming • Gaming and game console makers could see expanded 

functionality and thus opportunities for innovative new 

products. 

 

8

 In order for many of the potential benefits of IPv6 to be realized, NAT devices will likely 

need to be removed in a significant portion of the current Internet infrastructure. The 

cost of removing NATs will be potentially large due to redesigning and restructuring 

network connecting hosts, changing firewalls and established security procedures, and 

learning to function without a network component which has been in place in networks 

for almost a decade. 
IPv6 Economic Impact Assessment 

ES-6 

 ES.5 ALTERNATIVE DEPLOYMENT SCENARIOS 

Stakeholders indicated that IPv6 penetration could occur much more 

quickly than the “base case” scenario if, for example, some new 

application was developed that was highly demanded and required IPv6. 

Figure ES-2 presents the most likely transition timelines for IPv6 costs 

(to be borne by all stakeholders) based on interviews conducted by RTI. 

In general, this “base case” reflects the penetration of IPv6 capabilities

as part of normal hardware and software upgrades and the enabling

(turning on) of IPv6 capabilities at a later time as applications become 

available and demand for IPv6 functionality grows. 

However, participating stakeholders indicated that there is significant 

uncertainty about the projected timeline for IPv6 deployment. As a 

result, interview participants were asked to estimate differences in costs 

under two alternative accelerated deployment scenarios: 

1. Scenario 1: IPv6 capabilities are enabled at the same time as 

capabilities are acquired (i.e., during routine upgrades of 

hardware and software). 

2. Scenario 2: The penetration of IPv6 capabilities is accelerated, 

as well, leading to the early replacement of some hardware and 

software. Enabling is therefore further accelerated to match the 

earlier acquisition of capabilities compared to Scenario 1. 

Figure ES-2 illustrates the time series of costs under the base case and 

two accelerated deployment scenarios in $2003. In Scenario 1, 

participating stakeholders indicated that the level of effort (labor hours) 

associated with the transition to IPv6 will increase by approximately 5 

percent as activities are compressed as a result of accelerating 

enablement by 3 years. This 5 percent increase in effort, along with 

accelerating the time series of costs by 3 years, leads to a 25 percent 

increase in the present value (PV) of U.S. deployment costs. 

In Scenario 2, participating stakeholders indicated that accelerating the 

replacement of hardware and software by 1 year in addition to a 4-year 

acceleration of enablement would significantly increase the cost of IPv6 

deployment. Scenario 2 represents approximately a 285 percent 

increase in the PV of U.S. deployment costs. In other words, the degree 

of acceleration significantly affects the PV of the costs incurred. 
Executive Summary 

ES-7 

Figure ES-2. Timeline of Costs for Base Case and Accelerated Deployment Scenarios 

0

5,000

10,000

15,000

20,000

25,000

1995 2000 2005 2010 2015 2020 2025

Year

$ Millions 

Base Case Accel Scenario 1 Accel Scenario 2

1-1 

1 Introduction 

The Internet Protocol (IP) enables data and other information traffic to 

traverse the Internet and to arrive at the desired destination. 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. The 

transformation of the Internet in the 1990s from a research network to a 

commercialized network caused some stakeholders to raise concerns 

about the ability of IPv4 to accommodate emerging demand, particularly 

the anticipated demand for unique Internet addresses. As a result, the 

Internet Engineering Task Force (IETF) began work on a new version of 

IP, and IP version 6 (IPv6) was selected out of several proposals.1

IPv6 offers a number of potential advantages over IPv4, most notably a 

significant increase in the number of Internet addresses.2

 Demand for 

addresses will likely increase as more of the world’s population requests 

Internet access. The address availability situation may become critical if 

a market emerges for in-home devices (e.g., “smart appliances,” 

entertainment systems) that need to be accessible from outside the 

home via the Internet. Based on information from participating 

stakeholders, RTI observed considerable disagreement about whether, 

 

1

 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), http://www.potaroo.net/papers/isoc/2003-01/Waiting.html. 2

 The 32-bit address field in the IPv4 packet header provides approximately 4 billion (4x109) 

unique Internet addresses (See Microsoft Comments at 3 in response to Request for 

Comments on Deployment of Internet Protocol, Version 6, Docket No. 040107006-

4006-01, 69 Fed Reg. 2890 (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 21Request for Comments (RFC). Copies of comments are 

available at http://www.ntia.doc.gov/ntiahome/ntiageneral/pv6/index.html. See also

Sprint Corporation (Sprint) Comments at 3). The 128-bit address header in IPv6, in 

contrast, provides approximately 3.4x1038 addresses, enough to assign trillions of 

addresses to each person now on earth or even to every square inch of the earth’s 

surface. (See Sprint Comments at 3; Joe St. Sauver, “What’s IPv6 . . . and Why Is It 

Gaining Ground?”, http://cc.uoregon.edu/cnews/spring2001/whatsipv6.html, last updated 

December 28, 2004). 
IPv6 Economic Impact Assessment 

1-2 

to what extent, and at what pace such demand for addresses will 

develop, IPv6 would provide the address space to accommodate any 

level of demand that emerges. 

In addition to providing exponentially expanded address space, IPv6 has 

been designed to accommodate other features and capabilities. These 

include improved support for header options and extensions, simplified 

assignment of addresses and configuration options for communications 

devices, and additional security features. 

The objective of this report is to present quantitative cost and benefit 

estimates associated with the U.S. transition from IPv4 to IPv6. Cost 

estimates are primarily based on likely development and deployment 

scenarios provided by stakeholders during interviews conducted by RTI 

International (RTI). These estimates primarily capture the increased 

labor costs associated with the transition from IPv4 to IPv6. Benefits 

estimates are also quantitative, but they are more subjective than the 

cost estimates because they hinge on the development of, availability of, 

and demand for new, next generation Internet applications, most of 

which are yet to be well defined. Thus, RTI analyzed a series of 

potential applications to provide insights into the future benefits of an 

IPv6-based U.S. infrastructure. 

During the interview phase, RTI talked with a range of stakeholders, 

including infrastructure vendors, application vendors, Internet service 

providers (ISPs), and a variety of Internet users (e.g., corporate, 

government, institutional, and independent/home).3

 In interviews 

conducted by RTI, discussions surrounded issues such as the timing of 

available IPv6 infrastructure components and applications and the likely 

adoption rate and cost for each stakeholder group. 

In this report RTI presents numerous informed opinions regarding the 

costs and benefits of IPv6. These findings are based on extensive 

literature reviews, RTI’s informal discussions with stakeholders, 

commenters to the DoC RFC, statements given at the DoC Public 

Meeting in July of 2004, and, and stakeholder interviews conducted by 

RTI. Many of the statements made represent conclusions drawn by 

RTI subsequent to the aforementioned research. 

 

3

 Here and throughout the document, the term “user” is used in reference to Internet user 

organizations, not specific individuals using the Internet. See Appendix A for a list of 

stakeholders participating in interviews conducted by RTI. 
Section 1 — Introduction 

1-3 

The remainder of this report is divided into the following sections: 

Section 2 provides an overview of the methodology used to estimate 

costs and benefits and describes the interview process. The remainder 

of the section presents findings from interviews with stakeholders. 

Section 3 presents IPv6 penetration estimates. Cost and benefits 

estimates are presented in Section 4 and Section 5, respectively. 

Alternative penetration (acceleration) scenarios are presented in Section 

6. 

2-1 

2 Methodology 

This section describes the methodology used to estimate the costs and 

benefits associated with the transition from IPv4 to IPv6. It begins with a 

description of the affected stakeholder groups that are included in the 

analysis along with the general cost and benefits categories. 

 2.1 DESCRIPTION OF STAKEHOLDER GROUPS 

Figure 2-1 provides the general framework used to identify stakeholder 

groups that will incur costs and realize benefits associated with the 

transition from IPv4 to IPv6. For the purposes of this study, the supply 

chain is segmented into four major stakeholder groups: 

• infrastructure vendors, 

• application vendors, 

• ISPs, and 

• Internet users. 

Infrastructure vendors include manufacturers of computer networking 

hardware (e.g., routers, firewalls, and servers) and systems software 

(e.g., operating system) that supply the components of computer 

networks. Major companies in this category include Microsoft, IBM, 

Juniper, Cisco, and Hewlett Packard. 

Application vendors include suppliers of e-mail, file transfer protocol 

(FTP) and Web server software, and database software, such as 

enterprise resource planning (ERP) and product data management 

(PDM) software. SAP, Oracle, and Peoplesoft are some of the largest 

companies in this group. 
IPv6 Economic Impact Assessment 

2-2 

Figure 2-1. Supply Chain Stakeholders, Costs, and Benefits 

Cost Categories

(Inputs) (Benefits)

R&D

Transition for internal networks

Transition for provisioning services

Transition for internal networks

Lost productivity during transition

Transition for internal networks

Lost productivity during transition

Infrastructure vendors

Application vendors

ISPs

Users

Reduced R&D costs

Reduced provisioning costs

Reduced internal IT costs

Reduced internal IT costs

New functionality

Supply Chain Benefits Categories

ISPs are companies that provide Internet connectivity to customers. 

National backbone ISPs (e.g., MCI, AT&T, and Sprint) provide 

connectivity to larger companies, some institutional users, and national 

and regional ISPs (e.g., AOL and Earthlink) that provide Internet 

connectivity to home and small business users. 

Internet users represent a large, diverse group of entities ranging from 

corporate, institutional, and government organizations to independent 

users including small businesses and residential households. A subset 

of this stakeholder group is infrastructure users, companies that use the 

Internet to provide products and services to customers. Mobile 

telephone service providers and services such as OnStar are examples 

of these companies. 

 2.2 AFFECTED BUSINESS ACTIVITIES 

As shown in Figure 2-1, costs and benefits are measured where they are 

incurred throughout the supply chain. Costs include expenditures on 

additional labor and training to implement the transition of local networks 
Section 2 — Methodology 

2-3 

plus investments such as an increase in R&D for integrating IPv6 into 

products and services. 

Based on the vast information collected as background for this report, 

RTI believes that the majority of the benefits are likely to accrue to 

downstream Internet users in the form of new applications made possible 

by IPv6-enhanced functionality improvements for existing applications.1

 

This includes several types of benefits, such as 

• new services/products made possible by additional address 

space (e.g., IP-addressed automobiles, appliances, and mobile 

phones) and 

• new services/products made possible by improvements to the IP 

infrastructure (not invented/known currently). 

In addition, longer-term benefits may be realized from a decrease in IT 

costs for internal network operations (accruing throughout the supply 

chain) and from simplified R&D for new products and services developed 

by vendors. 

Table 2-1 identifies the primary business activities of each stakeholder 

group that will be affected and emphasizes that all stakeholders will bear 

costs associated with the transition of their own internal networks from 

IPv4 to IPv6. 

Product 

Development 

Provisioning 

Servicesa

Internal Network 

Operations 

Vendors ● ●

ISPs ● ●

Users ●

a

 “Provisioning Services” indicates the activities necessary to provide connectivity 

to the Internet to customers. 

As shown in Table 2-2, incremental vendor costs associated with the 

transition to IPv6 primarily involve modifying existing products and 

services to incorporate IPv6 capabilities and developing new products 

and services enabled by IPv6 functionality. These costs are largely 

incurred in the form of labor allocated to standards and protocol 

activities, research and development, and product testing. In addition, 

vendors will incur costs associated with the transition of their own 

internal network because they are also users of the Internet. Internal 

 

1

 For the purposes of this document, “improvements” should be considered as synonymous 

to “benefits.” 

Table 2-1. Business 

Activities Affected by 

the Transition to IPv6 
IPv6 Economic Impact Assessment 

2-4 

Table 2-2. Cost Categories by Business Activity 

Business Activity 

Product 

Development

Provisioning 

Services 

Internal 

Network 

Operations Brief Description 

Affected stakeholders Vendors ISPs 

Vendors, ISPs, 

and users 

Cost categories 

R&D ● Labor allocated to basic product 

design and development (e.g., 

coding or prototyping) 

Product testing ● ● Labor allocated to testing product 

interoperability, debugging, etc. 

R&D staff training ● Labor and training class expenses 

for R&D staff 

Standards and protocol 

activities 

● ● ● Labor allocated to developing 

internal standards for company 

products 

Network management 

software (upgrade)a ● ● Labor allocated to network-specific 

management and monitoring 

software 

Network testing ● ● Labor allocated to testing 

interoperability between network 

components with IP capabilities 

Installation effort ● ● Labor allocated to installing IPv6 

transition mechanisms 

Maintaining network 

performance 

● ● Labor allocated to maintaining 

transition mechanisms, such as dual 

stack, and ensuring high network 

performance 

Training (sales, marketing, 

and technical staff) 

● ● ● Labor and training class expenses 

for sales, marketing 

a

 This category is intended to include the costs of upgrades to any network management tools, assuming that these 

costs result from the need to transition to IPv6 network management tools. 

network transition costs are also primarily labor resources associated 

with upgrading network management software and network testing. In 

contrast, long-term benefits may be realized for vendors through 

increased efficiency in many of the business activities identified in 

Table 2-2. 

ISPs will incur costs associated with transitioning their Internet 

provisioning network, used for providing customer connectivity and 

network care, from IPv4 to IPv6, or more accurately, from IPv4 to a dual 

network in which IPv4 and IPv6 coexist.2

 These costs will include 

 

2

 This information was received by RTI during an interview in Arlington, VA, on December 

11, 2003, with Joe Houle, Technology Consultant of IP Network Architecture at AT&T. 

Houle indicated that to transition all provisioning networks to IPv6 would cause ISPs to 
Section 2 — Methodology 

2-5 

network testing, installation activities, and maintaining network 

performance according to participating stakeholders. As with vendors, 

ISPs also operate internal networks and will bear the costs associated 

with transitioning any Internet user networks. Participating stakeholders 

have suggested that all ISP and user networks could see long-term 

benefits associated with reductions in IT costs following adoption of IPv6. 

 2.3 PENETRATION METRICS 

As part of the interviews (described in Section 2.5), information was 

collected on the timing of development and deployment of IPv6 products 

and services. This information included the following: 

• when IPv6 capabilities will be integrated into infrastructure 

hardware and systems software and offered to customers; 

• when IPv6-capable applications will be available; 

• when IPv6 capabilities will be in place within ISP and users’ 

networks; and 

• when IPv6 will be enabled,3

 or turned on, by ISPs and users. 

The penetration of IPv6 is likely to be a gradual process and will probably 

never reach 100 percent of applications or users. Figure 2-2 illustrates 

the structure by which the cost analysis uses the timing associated with 

the development (availability) of IPv6 infrastructure products (hardware 

and software) and applications, as well as the enabling of these products 

and applications by ISPs and users. Events are generally sequential in 

that ISPs enabling their network is conditional on the availability of IPv6-

capable hardware and software. These four curves are the key 

penetration metrics for the cost analysis because they capture the timing 

of expenditures. Section 3 provides estimated penetration curves 

generated based on the information from the interviews. 

For vendors, R&D expenditures to integrate IPv6 into their products are 

the primary expenditure category associated with the transition from IPv4 

to IPv6. The primary expenditures for ISPs and users are labor costs 

associated with enabling IPv6 capabilities. As a result, these four 

 incur significant costs. Further, he does not believe that any major North American 

ISPs have any plans to provide only IPv6 service any time in the near future, rather, 

Houle suggests, IPv4 service will likely continue to be demanded for many years. 3

 For the purposes of this document, “enabled” is generally defined as the establishment of 

some form of IPv6 connectivity and, when looking at an overall network’s adoption, that 

some percentage of IP-dependent applications can operate in IPv6. When specific 

infrastructure components or applications are described as IPv6 enabled, this does not 

refer to the entire network but merely to that product’s ability to function via IPv6 once it 

has been turned on. 
IPv6 Economic Impact Assessment 

2-6 

Figure 2-2. Example of Penetration Curves Used for Cost Analysis 

2000 2005 2010 2015 2020

Infrastructure Products Capable

Applications Capable

Penetration

1997 2025

ISPs’ Enabled Networks

Users’ Enabled Networks

penetration curves are used to determine the timing of development and 

deployment costs associated with IPv6. 

Note that the penetration of IPv6 capabilities (i.e., when ISPs and users 

have IPv6-capable infrastructure components and applications in place, 

but they are not enabled) is not a key component in determining the 

timing of costs for these two groups. This is because the incremental 

variable cost of IPv6 products is negligible compared to IPv4 products—

almost all the costs are associated with applications R&D and enabling 

IPv6 functionality.4

 As a result, the penetration of capabilities is not a 

factor in determining baseline transition costs. However, the penetration 

of capabilities is important in assessing the alternative deployment 

scenarios presented in Section 6. As discussed in that section, the 

penetration of capabilities provides an upper bound on how much the 

enabling of IPv6 can be accelerated without adding the costs of early 

retirement of hardware and software. 

 

4

 RTI has generally assumed, based on information provided by participating stakeholders, 

that routine upgrades will provide hardware and software upgrades necessary prior to 

IPv6 enablement for almost all ISPs and user networks and that all interoperability 

problems have been solved (otherwise, purchasers could incur these latter costs). 
Section 2 — Methodology 

2-7 

 2.4 DESCRIPTION OF COST CATEGORIES AND 

ESTIMATION APPROACH 

 2.4.1 Cost Categories 

Participating stakeholders agree that labor resources will account for the 

bulk of the transition costs associated with IPv6. Although some 

additional physical resources may be needed, such as increased 

memory capacity for routers and other message-forwarding hardware5

, 

these expenses are treated as negligible in our cost analysis because 

interview participants indicated that they were quite small compared to 

the labor resources required. 

Labor resources needed for the transition are linked to three general 

business activities within the Internet supply chain—product 

development, Internet provisioning services, and internal network 

operations. Product development activities are conducted by 

infrastructure and application vendors; service provisioning activities are 

conducted by ISPs; and internal network operations are conducted by all 

vendors, ISPs, and users as indicated in Table 2-1. 

Table 2-2 shows the underlying transition cost categories included in 

each of the business activities. As is apparent, ISPs and users will incur 

costs in the same categories. Additionally, several other cost categories, 

such as network testing and standards and protocol development, span 

multiple business activities and thus several stakeholder groups. 

 2.4.2 Quantitative Estimation Approach 

The penetration curves described in Section 2.2 represent the estimated 

share of infrastructure products and applications that are IPv6 capable 

and the share of networks that are IPv6 enabled at a given time. This 

implies that costs will be distributed over time as stakeholders gradually 

engage in transition activities. 

The penetration curves derived from stakeholder interviews in Section 

2.2 represent the point in time when products and applications become 

available to customers and networks become enabled. However, 

activities leading to and supporting these achievements/milestones are 

 

5

 See Motorola Comments at 6. Motorola notes that routers would need at least four times 

their current content addressable memory to operate as efficiently as they do today 

when accessing both IPv4 and IPv6 addresses in a dual-stake environment. Further 

expanded buffers and routing tables would need more memory. Also see Alcatel 

Comments at 4. 
IPv6 Economic Impact Assessment 

2-8 

distributed before and after the point of product roll out or system 

enabling. 

Figure 2-3 provides an example of the potential time distribution of labor 

expenditures surrounding the enablement of a network system;6

 to be 

clear, this figure represents the likely cost distribution for one user, not all 

U.S. users. In the figure, t = 0 represents the date when the system is 

enabled. However, the majority of the costs are borne prior to t = 0 as 

networking staff are trained and the system is reconfigured. Lower costs 

associated with testing and monitoring are then experienced after the 

enabling date. 

Figure 2-3. Example of the Distribution of IT Staff Resources Needed to Enable IPv6 

in a User Network 

%∆ ITStaff

t - 3 t + 1 t - 2 t - 1 t = 0 t + 2 t + 3

10%

5%

Costs are expressed as the percentage of IT staff’s time devoted to IPv6 

transition activities. Thus, in this example, 10 percent of a company’s IT 

staff in the year prior to becoming enabled (t – 1) will be devoted to the 

IPv6 transition. In the year after enabling (t + 1) the share of resources 

decreases to 5 percent of IT staff time. This number is multiplied by the 

average IT staff wage rate to obtain the cost per IT staff member 

associated with the IPv6 transition for each year before and after 

enabling IPv6 systems. 

 

6

 Figure 2-3 is an example distribution based on RTI’s research and interview activities. 

Stakeholder-specific distributions are presented in Section 4. 
Section 2 — Methodology 

2-9 

Figure 2-4 shows the penetration of IPv6-enabled user systems and 

determines the timing of the costs. For example, in this hypothetical 

figure, 2 percent of systems are enabled in the year 2015 (t = 0).7

 This 

implies that 2 percent of affected U.S. IT staff8

 in 2014 (t – 1) were 

devoting 10 percent of their time to IPv6 transition activities, and 2 

percent of affected U.S. IT staff in 2015 (t = 0) were devoting 5 percent of 

their time to IPv6 transition activities. 

Figure 2-4. Example of U.S. User Enablement Over Time 

2000 2005 2010 2015 2020

Penetration

2% Share of

Users with

IPv6 Enabled

1997 2025

Combining the distribution of costs surrounding enabling (Figure 2-3), 

and the timing of system enabling (Figure 2-4)9

 yields the cumulative 

cost curve shown in Figure 2-5. As shown in Section 4, this cost 

distribution–timing approach is used to calculate the time series of 

transition costs for 

 

7

 This means that in the year 2015, 2 percent of users enabled or “turned on” IPv6 

capabilities. This does not mean that only 2 percent of all users are enabled by this 

point. 8

 IT staffing figures, including wage rates, were determined using data from the U.S. 

Bureau of Labor Statistics (BLS). U.S. Department of Labor, BLS, “National 

Occupational Employment and Wage Estimates,” May 2003, available at 

http://www.bls.gov/oes/2003/may/oes_15Co.htm. Table 4-2 in Section 4 provides more 

detail on the labor categories used to develop an average IT wage rate. 9

 The main curve in Figure 2-4 is the same as the “Users’ Enabled Networks” curve in 

Figure 2-2. 
IPv6 Economic Impact Assessment 

2-10 

Figure 2-5. Example of U.S. Users’ Transition Costs Over Time 

2000 2005 2010 2015 2020

$

1997 2025

• infrastructure vendors’ product development, 

• application vendors’ product development, 

• ISP’s provisioning service enabling, and 

• users’ system enabling. 

 2.5 DESCRIPTION OF BENEFIT CATEGORIES 

AND ESTIMATION APPROACH 

Participating stakeholders agree that benefits will accrue to organizations 

and consumers in the long run as IPv6 is adopted and integrated into 

networks and devices. However, currently no applications are available 

that require IPv6 or that have shown measurable benefits in conjunction 

with IPv6 adoption. Mobile phone manufacturers and some mobile 

service providers are planning to support the use of IPv6 addresses in 

mobile phones in the next several years, driven mainly as the result of 

their large need for IP addresses, rather than any technical advantages 

as compared to IPv4.10

 

10 This information was received by RTI during a phone interview on August 12, 2004, with 

Victor Gonzalez, Director of Core Network Development with Nextel. Gonzalez 

indicated that as more manufacturers integrate IP addresses into their products, the 

shortage of IPv4 addresses will increase very quickly, particularly given existing 

allocation policies. 
Section 2 — Methodology 

2-11 

In this analysis, RTI looks at four categories of potential benefits and the 

most likely affected groups.11 Most benefits currently appear to depend 

on the removal and/or restructuring of middleware, such as Network 

Address Translation (NAT) devices, within network architecture. As 

indicated in Table 2-3, application vendors and users may benefit from 

improved security in the long term.12 In addition, application vendors 

could benefit from cost reductions as they spend less time developing 

products that can work around NATs. Organizational Internet users 

(e.g., corporate, institutional, and government) could benefit from 

reductions in applications testing expenditures as well as increased 

network efficiency. Independent Internet users could benefit from 

improvements to existing products and services as well as new products 

and services in the future. 

Table 2-3. Affected Groups by Benefit Category 

Affected Group 

Cost 

Reductions Due 

to Improved 

Security 

Cost Reductions 

Due to Increased 

Efficiency 

Improvements to 

Existing 

Products and 

Services 

Willingness to 

Pay for New 

Products and 

Services 

Application vendors ● ● 

Users—organizations ● ● ● ●

Users—independent 

(consumers) ● ● ●

Section 5 discusses potential future applications of IPv6 qualitatively and 

then discusses several case studies that fit into the categories introduced 

in Table 2-3. However, this analysis is not intended to capture all 

possible benefits of IPv6 or to attribute the success of certain products 

and services to IPv6. 

 2.6 STAKEHOLDER INTERVIEWS, REQUEST FOR 

COMMENTS, AND PUBLIC MEETING 

Several activities helped to inform our analysis, as described in this 

document. After performing extensive literature reviews in the early 

 

11 Infrastructure vendors, application vendors, and ISPs are gradually incorporating IPv6 

into their services/products as consumer demand appears and competitors integrate 

IPv6 into their products. However, according to participating stakeholders, neither 

vendors nor ISPs expect to gain significant additional revenue from IPv6. Thus, our 

main focus will be on the benefit categories indicated in Table 2-3. 12 See discussion in Final Report for an expanded analysis of the potential security benefits 

of IPv6. 
IPv6 Economic Impact Assessment 

2-12 

stages of the project, RTI held 24 informal discussions with stakeholders 

throughout the Internet supply chain. The objective of these discussions 

was to gain an understanding of current and future development of IPv6 

products and services and of adoption rates by users, potential costs and 

benefits of IPv6, and any roadblocks and/or research barriers that exist 

today. In January 2004, the Department of Commerce (DoC) released a 

public Request for Comments (RFC) to which 22 organizations 

responded.13 In July 2004, the DoC held a public meeting in 

Washington, DC, at which several panel discussions solicited academic, 

government, and industry participation.14 Finally, RTI conducted an 

interview phase in which more than 60 stakeholders were contacted, 

resulting in 30 interviews across nine stakeholder groups. Table 2-4 lists 

the number of organizations responding to each information collection 

exercise. 

Table 2-4. Informal Discussions, RFC Commenters, and Interviews 

Stakeholder Group 

Informal 

Discussions RFC Commenters Interviews 

Infrastructure vendors 7 5 5 

Application vendors 0 1 6 

ISPs 3 5 6 

Infrastructure users 1 1 4 

Corporate users 2 0 1 

Institutional users 3 0 2 

Government users 4 1 3 

Research consortiums 3 4 2 

Industry and academic experts 1 5 1 

Total 24 22 30 

The estimates provided in this document were largely based on 

stakeholder interviews conducted by RTI. RTI identified potential 

interviewees by reviewing lists of participants from the informal 

discussions, RFC commenters, and stakeholders participating in the 

 

13 For a complete list of the commenters and comments received in response to the RFC, 

see NTIA’s Web site, “IPv6 Notice of Inquiry—Comments Received” at 

http://www.ntia.doc.gov/ntiahome/ntiageneral/ipv6/commentsindex.html. 14 Id. See Transcript of the August 8, 2004, IPv6 Public Meeting and a copy of the 

presentation by RTI at http://www.ntia.doc.gov/ntiahome/ntiageneral/ipv6/webcast.html. 

Unless otherwise noted, all subsequent citations to “Public Meeting” refer to the IPv6 

Public Meeting held on August 8, 2004. 
Section 2 — Methodology 

2-13 

public meeting. In several instances, stakeholders that were interviewed 

approached RTI and asked to be included in the study. 

3-1 

 Baseline Penetration 3 Estimates 

Based on information from interview participants, RTI estimated IPv6 

penetration curves for the four major stakeholder groups. The 

penetration curves were used to develop the base case cost estimates, 

by year, presented in Section 4. 

 3.1 STAKEHOLDER PENETRATION CURVES 

The penetration curves presented in Figure 3-1 reflect cumulative IPv6 

transition activities over time. The curves are dependent on each other 

in that hardware and software must be available prior to ISPs 

transitioning networks to support IPv6 users. The four curves in 

Figure 3-1 also represent different adoption activities for each of the four 

major industry stakeholder groups. The first two curves represent when 

IPv6 products and services will be capable, and the final two curves 

represent when components of the system will be enabled.

1

 For 

example, the four curves can be interpreted as follows 

• By 2003, the average infrastructure (Inf) vendor will have 

integrated IPv6 capabilities into 30 percent of the routers and 

network products it offers. 

• By 2008, the average application (App) vendor will have 

integrated IPv6 capabilities into 30 percent of the Internet 

software it offers. 

 

1

 Hardware and software become capable when the IPv6 functionality is integrated into 

products and purchased by organizations. According to Nortel Networks, IPv6-capable 

products were sold as early as 1997 (see “IPv6: FAQs” at Nortel Networks Web site, 

available at http://www.nortel.com/corporate/technology/ipv6/faqs.html). However, 

even after the necessary networking components are IPv6 capable, they will need to be 

enabled (turned on) to support IPv6 communications. 
IPv6 Economic Impact Assessment 

3-2 

Figure 3-1. Penetration Estimates of IPv6 in the United States 

0

10

20

30

40

50

60

70

80

90

100

2000 2005 2010 2015 2020

Year

Percent

Inf Vendors App Vendors ISPs Users

2025

• By 2010, the average ISP will have enabled 30 percent of its 

network to manage IPv6 transmissions. 

• By 2012, the average user will have enabled 30 percent of its 

local network to handle IPv6 communications. 

The penetration curves were developed to reflect the distribution of IPv6 

transition activity and hence provide the basis for estimating the time line 

of costs. Vendors were asked when they would have IPv6 products 

available, which provided information on the timing of their R&D 

activities. ISPs were asked when they expected to offer IPv6 services, 

indicating the timing of their enabling activities. Similarly users were 

asked when they would enable parts of their system, also indicating 

enabling activities. 

Participating stakeholders agree that IPv6 adoption rates will differ 

significantly across and within individual companies. For example, users 

in the financial, telecommunications, or defense sectors will likely be 

more aggressive in transitioning to IPv6 compared to other sectors that 

manage less-sensitive information. Also, within a company, certain 

divisions or business operations will transition before others. 
Section 3 — Baseline Penetration Estimates 

3-3 

The average penetration estimates presented in the curves in Figure 3-1 

capture both differences in adoption rates across companies and the 

gradual adoption process within companies.2

 3.2 USERS’ CAPABILITIES AND ENABLING 

CURVES 

RTI asked stakeholders participating in interviews to identify the time by 

which users will have IPv6 capabilities. Figure 3-2 presents users’ 

capable and enabled penetration curves and illustrates the lag between 

when users obtain IPv6 capabilities through product 

replacement/upgrades and the time at which they decide to enable these 

products. The enabled curve in Figure 3-2 is the same as the users’ 

enabled curve in Figure 3-1. 

Figure 3-2. IPv6-Capable and IPv6-Enabled U.S. User Networks Share %

Capable

Enabled

0

10

20

30

40

50

60

70

80

90

100

2000 2005 2010 2015 2020 2025

Users will acquire IPv6 capabilities primarily as part of routine hardware 

and software upgrades. For example, based on information provided by 

interview participants, RTI projects that 30 percent of users’ systems will 

 

2

 Note that the penetration curves should neither be interpreted as the percentage of 

companies that have transitioned to IPv6, nor as the volume of IPv6 traffic. For 

example, RTI projects, based on information from participating stakeholders, that most 

ISPs will be offering some level of IPv6 service in the near future by enabling a limited 

portion of their network; however, it could take several more years for all internal or 

provisioning networks to be completely IPv6 enabled. 
IPv6 Economic Impact Assessment 

3-4 

be IPv6 compatible by 2008. Nearly all edge routers3

 being sold today 

are IPv6 capable, either in hardware or software according to 

participating stakeholders. Large organizations, which routinely upgrade 

their networking components, should have IPv6 capabilities in the next 5 

to 7 years. However, medium and small businesses and independent 

users will likely not upgrade in significant numbers for several more 

years. 

On average, IPv6 hardware and software enablement will lag the time by 

which users receive capabilities by approximately 5 years. For example, 

using information from interview participants, RTI projects that users will 

have enabled 30 percent of their systems by 2012. As initial operating 

systems and routers become enabled and early adopters provide 

“lessons learned,” IPv6 adoption activities will likely accelerate as users 

begin to transition a significant share of their applications. 

 

3

 By edge routers, we mean the majority of routers used by enterprise users. This does not 

include larger backbone routers used by ISPs and large enterprises. 
4-1 

 Baseline 

 Development and 4 Deployment Costs 

In this section we describe the IPv6 transition costs that are projected to 

be incurred by the four major stakeholder groups—infrastructure vendors, 

application vendors, ISPs, and other Internet users (including corporate, 

institutional, government, and independent users). RTI undertook an 

extensive information collection effort in August and September 2004, 

involving individual experts and organizations representing the major 

stakeholder groups and gathered estimates of both past and future IPv6-

related costs (see Section 2.5). The methodology described in Section 2 

was used to develop cost impact estimates by stakeholder group. 

RTI estimates that expenditures for U.S. stakeholder groups to transition 

to IPv6 will be approximately $73 billion over the period 1997 to 2025.1

 

These transition costs over this period equate to a present value (PV), 

discounted to 1997, of $25 billion ($2003). The year 1997 is used as the 

base year because it is the year in which IPv6 costs were first incurred. 

From this point forward, all costs are in $2003 and are discussed in PV 

terms, referenced to 1997.2

Table 4-1 provides estimated annual transition costs broken down by 

stakeholder group. Government and nongovernment users account for 

approximately $23 billion of total U.S. IPv6 development and deployment 

 

1

 These years were selected because RTI analyses used “adoption” rates beginning with 

some infrastructure vendors in 2000, continuing until 2020. Thus, RTI estimated costs 

both before and after enablement/integration of IPv6. 2

 As discussed in the methodology, the primary factor determining stakeholder transition 

costs is the average share of IT staff and R&D resources required before and after the 

transition to IPv6. The estimated average percentage of IT resources is based on a 

relatively small number of in-depth interviews. The 95 percent confidence intervals for 

transition costs are $73 ± $65 billion over the period 1997 to 2025 and $25 ± $22 billion 

for present value discounted to 1997. 
4-2 

Table 4-1. Estimated U.S. IPv6 Adoption Cost Totals, Broken Out by Each Stakeholder Group ($ Mil

Infrastructure Vendors Application Vendors ISPs R&D Internal R&D Internal Total Vendors Provision Internal Total ISPs Government Users 

1997 17.7 0.0 0.0 0.0 17.7 0.0 0.0 0.0 0.0 1998 47.3 0.0 0.5 0.0 47.8 0.0 0.0 0.0 0.0 1999 88.6 0.0 2.1 0.0 90.7 0.1 0.0 0.1 0.0 2000 160.9 0.0 9.1 0.0 170.1 0.6 0.0 0.6 0.3 2001 234.8 0.2 21.9 0.0 256.9 1.5 0.0 1.5 3.5 2002 302.7 0.7 35.3 0.2 338.9 2.4 0.1 2.5 12.6 2003 329.3 1.5 49.1 0.3 380.2 4.7 0.2 5.0 25.7 2004 295.3 2.8 58.4 0.6 357.2 8.3 0.4 8.7 47.6 2005 223.0 5.5 71.3 1.2 301.0 12.5 0.8 13.3 92.6 2006 143.2 8.8 87.4 1.9 241.3 14.9 1.3 16.2 148.3 2007 79.7 11.7 100.4 2.6 194.5 17.5 1.7 19.2 198.9 2008 44.3 14.4 142.6 3.2 204.6 20.3 2.1 22.4 244.8 2009 25.8 16.8 169.6 3.7 216.0 25.1 2.5 27.6 284.8 2010 19.2 19.9 203.1 4.4 246.6 31.8 3.0 34.7 337.6 2011 16.2 25.0 171.2 5.5 218.0 40.7 3.8 44.4 423.8 2012 14.0 31.1 86.3 6.9 138.3 43.0 4.7 47.7 527.9 2013 10.3 35.1 48.0 7.8 101.2 34.1 5.3 39.4 595.4 2014 5.2 34.5 23.1 7.6 70.3 22.1 5.3 27.3 584.5 2015 2.2 27.8 4.5 6.1 40.6 15.1 4.4 19.5 471.6 2016 0.0 20.0 1.0 4.4 25.4 9.3 3.3 12.6 339.6 2017 0.0 14.1 0.0 3.1 17.2 5.1 2.5 7.6 239.3 2018 0.0 9.5 0.0 2.1 11.6 2.6 1.8 4.4 162.4 2019 0.0 5.9 0.0 1.3 7.2 0.9 1.2 2.2 100.4 2020 0.0 3.6 0.0 0.8 4.4 0.4 0.8 1.2 61.6 2021 0.0 2.0 0.0 0.4 2.5 0.1 0.5 0.6 34.5 2022 0.0 0.9 0.0 0.2 1.1 0.0 0.2 0.3 15.8 2023 0.0 0.4 0.0 0.1 0.5 0.0 0.1 0.1 6.7 2024 0.0 0.2 0.0 0.0 0.2 0.0 0.0 0.0 2.9 2025 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.7 TOTAL 2,059.8 292.6 1,284.8 64.7 3,701.9 313.0 46.1 359.1 4,963.8 Present Value ($2003) 

1,284.8 99.3 571.0 21.9 1,977.0 120.7 15.3 136.0 1,683.4 

a This does not include vendors’ and ISPs’ internal network transition costs. See separate columns.
Section 4 — Baseline Development and Deployment Costs 

4-3 

costs, or about 91 percent, with nongovernment uses representing the 

large majority, $22 billion of the U.S. total or 85 percent.1

 The remaining 

costs are associated with total vendors, $2 billion or 7 percent, and total 

ISPs, $136 million or 0.5 percent. 

For infrastructure and application vendors, Table 4-1 breaks out costs 

into additional R&D costs necessary to integrate IPv6 into products 

($1,855 million in PV 2003 dollars) and additional IT costs to transition 

internal company networks to IPv6 ($121 million). For ISPs, costs are 

broken into additional IT costs to transition service provisioning 

networks2

 to IPv6 ($121 million) and additional IT costs to transition 

internal company networks to IPv6 ($15 million). 

 4.1 COST CATEGORIES AND WAGE DATA 

The cost analysis focuses on valuing the labor activities associated with 

the transition from IPv4 to IPv6. Over the next 4 or 5 years the vast 

majority of network hardware, operating systems, and network-enabled 

software packages (e.g., databases, e-mail) are likely to be sold with 

IPv6 capabilities. Based on information provided by participating 

stakeholders, RTI predicts that IPv6 capabilities will penetrate the 

hardware and systems software markets and become integrated into ISP 

and user networks in an additional 2 to 3 years as part of routine 

upgrade cycles with little to no increase in product price (marginal cost) 

to ISPs and users.3

 Thus, our analysis assumes that hardware and 

software costs to upgrade to IPv6 will be negligible for most of Internet 

users (i.e., the upgrade costs will be no different than routine annual 

upgrade costs without IPv6) and that labor costs will constitute the 

majority of the cost of upgrading to IPv6 for users. 

Labor costs for ISPs and users are estimated by determining the share 

of IT staff resources needed to facilitate the transition to IPv6 and 

 

1

 All stakeholder cost estimates were calculated by RTI based on aggregated data provided 

by stakeholders in the interview phase. As such, RTI estimates government user costs 

will be approximately $1.7 billion, and nongovernment user costs will be approximately 

$21.6 billion. The sum is $23.2 billion. This amount is 92 percent of the estimated total 

cost to all stakeholders. 2

 “Provisioning networks," as discussed in this document, are defined as ISP subnetworks 

responsible for providing connectivity to the Internet to customers. These networks are 

always separate from internal networks used by employees. 3

 The exception is that for ISPs and large enterprises the transition of some networking 

pieces to IPv6 may require additional hardware and software costs. For example, 

additional memory will be needed in forwarding hardware pieces to continue current 

network performance given the larger size (128 bits vs. 32 bits in IPv4) of IPv6 

addresses. Additionally, mainframes and billing systems might need hardware or 

software upgrades ahead of routine upgrades, which occur very infrequently for these 

devices, depending on the specific needs of a network. See Motorola Comments at 6; 

Alcatel Comments at 4. 
IPv6 Economic Impact Assessment 

4-4 

applying this share to the total population of IT staff involved in Internet 

activities. As discussed in Section 2, RTI asked interview participants to 

estimate the percentage of staff time required for enabling IPv6 (see 

Figure 2-3). U.S. Bureau of Labor Statistics (BLS) employment figures 

were used to determine the number of ISP and user IT staff supporting 

Internet activities. Table 4-2 identifies the BLS staffing categories likely 

to be affected by a transition to IPv6. 

Table 4-2. Affected Staff (BLS Occupational Categories) by Stakeholder Group 

Occupational Categorya Mean Annual Wage 

($2003) Employment 

Computer Programmers $64,510 431,640 

Computer Software Engineers, Applications $75,750 392,140 

Computer Software Engineers, Systems Software $78,400 285,760 

Computer Systems Analysts $66,180 474,780 

Database Administrators $61,440 100,890 

Network and Computer System Administrators $59,140 237,980 

Network Systems and Data Communications Analysts $62,060 148,030 

Weighted Average Salary $67,996 

a These categories are all classified under “Computer and Mathematical Science Occupations” (15–0000) by BLS and 

represent approximately 2,000,000 employees. Computer Support Specialists, who also are IT staff employees, 

were excluded because stakeholder interviews indicated that these employees would spend a very small amount of 

time being trained on IPv6 and would not be involved in installing IPv6 products and updating services. Computer 

Support Specialists, representing approximately 200,000 employees in the United States, were used when training 

costs were incorporated into the total cost to ISPs and users. 

Wage data for each occupational category were also obtained from BLS. 

A single aggregate IT staff wage rate was calculated by weighting the 

category wage by the number of employees in each category. The 

average IT staff wage ($2003) is estimated to be approximately $68 per 

hour. 

BLS occupational categories are not available for infrastructure and 

application vendors staff engaged in product research and development 

(R&D), even though R&D expenditures are predominately labor costs. 

Thus, for infrastructure and application vendors, IPv6 transition costs 

were calculated as a share of R&D expenditures. The share and timing 

of R&D expenditures were estimated based on the interviews. Annual 
Section 4 — Baseline Development and Deployment Costs 

4-5 

R&D expenditures for Internet infrastructure and application venders 

were obtained from the National Science Foundation (NSF).4

Training costs for technical staff (direct costs and labor time) could 

constitute a significant portion of transition costs;5

 however, the 

magnitude of training costs for specific staff will depend on their relative 

needs based on past experience with IPv4 and potential future need, 

with costs ranging from $195 for a CD or $100 per person for a 1-day 

group training session of 50 or so people up to $2,600 per person for a 

5-day seminar, in addition to the opportunity labor cost of time away from 

work. Table 4-3 provides typical company-level training costs based on 

interviews6

 for significantly affected staff in several stakeholder groups 

and company size categories. Because of economies of scale, the 

average cost per employee for large Internet users is significantly lower 

than the average cost per employee for medium-size users and the other 

stakeholder groups with relatively small IT support staff. 

Table 4-3. Representative Training Costs by Stakeholder Group ($2003) 

Number of 

Affected 

Staff 

IPv6 Training 

Expenditure 

Labor 

Costs 

Total IPv6 

Costs 

Average 

Cost per 

Employee 

Medium Internet user 10 $11,600 $5,280 $16,880 $1,688 

Large Internet user 1,500 $171,200 $263,081 $434,281 $290 

ISP 30 $41,600 $19,015 $60,615 $2,021 

Vendor 10 $19,600 $9,457 $29,057 $2,906 

The following sections provide more detail on costs to specific 

stakeholder groups. All data and figures described therein were 

calculated by RTI based on information provided during interviews 

 

4

 NSF Report entitled “Research and Development in Industry: 2000,” Table E-2. To proxy 

for R&D expenditures for Internet infrastructure and application vendors, RTI used a 

combination of R&D figures for Software Publishing (NAICS 5112), Computer and 

Peripheral Equipment (NAICS 3342), and Other Computer and Electronic Products 

(NAICS 334). Available at http://www.nsf.gov/sbe/srs/srs02403/. 5 See BellSouth Comments at 6; Dillon Comments at 2; Hain Comments at 11. Cisco 

additionally indicated that these costs can be amortized over a gradual development 

cycle. Cisco Comments at 11. 6

 This information was received by RTI during a phone interview on September 2, 2004 with 

Yurie Rich, President of Native6. Rich provided training cost estimates and the basis 

for the allocation methodology used in these cost calculations. These costs should not 

be used to determine the level of training needed for a specific organization. They are 

merely examples of potential impacts for several potentially affected organization types. 
IPv6 Economic Impact Assessment 

4-6 

conducted by RTI. For each stakeholder group, three figures represent 

the cost analysis:7

• Spending Distribution—These graphs provide the likely 

distribution over time of IT resources needed to support 

transition to IPv6. This includes the time before and after the 

enablement or integration of IPv6 occurs (t = 0). These data 

were calculated by aggregating information from interview 

participants. 

• Adoption Rate—These graphs suggest likely adoption rates 

covering the period from 2000 to 2020. This information was 

provided by interview participants and commenters to the DoC 

RFC.8

• Total Spending—These graphs illustrate the potential time 

series of costs that each stakeholder group will incur in the 

United States over the period from 1997 to 2025; these years 

were selected because using adoption rates from 2000 to 2020 

resulted in estimated costs both before and after 

enablement/integration of IPv6. These figures were calculated 

by combining the spending distribution, adoption rate, and BLS 

wage data. 

Additionally, in each section, costs are broken out by various activities, 

summing to 100 percent. Assumptions are given to help provide a basis 

for interpreting the results and the limitations of the analysis. 

 4.2 INFRASTRUCTURE VENDORS 

To transition to IPv6, including integrating IPv6 into products and 

services and transitioning internal networks, RTI estimates that 

infrastructure vendors will spend approximately $1.38 billion between 

1997 and 2025 (see Table 4-1 for annual breakdowns). Further, RTI 

estimates that cost increases related specifically to R&D activities 

involving IPv6 and those necessary to transition internal networks to IPv6 

will equal $1.28 billion and $99.3 million, respectively9

. 

Figures 4-1 and 4-2 provide the basis for the time series of costs shown 

in Figure 4-3 for infrastructure vendors. As shown in Figure 4-1, the 

majority of expenditures occur in the 3 years prior to rolling out products 

with IPv6 capabilities; the data underlying this figure represent the 

aggregated information provided by stakeholders participating in 

interviews. Combining these data with the penetration curve in Figure 

 

7

 Section 2 provides more information on RTI’s methodology. 

8

 The official public Request for Comment (RFC), released by the Department of 

Commerce (DoC) in January 2004, and the comments received can be found at 

http://www.ntia.doc.gov/ntiahome/ntiageneral/ipv6/index.html. 9

 These figures are based on information provided by stakeholders participating in 

interviews conducted by RTI. 
Section 4 — Baseline Development and Deployment Costs 

4-7 

Figure 4-1. Percentage of R&D Staff Dedicated to IPv6 Transition for Infrastructure 

Vendors 

0

1

2

3

4

5

6

1

Year

 Percent of IT Staff 

t - 3 t - 2 t - 1 t = 0

Figure 4-2. Percentage of U.S. Infrastructure Vendors’ Products with IPv6 

Capabilities 

0

10

20

30

40

50

60

70

80

90

100

2000 2005 2010 2015 2020 2025

Year

Penetration

 (Percent) .
IPv6 Economic Impact Assessment 

4-8 

Figure 4-3. Annual Spending by U.S. Infrastructure Vendors on IPv6-Related R&D 

0

100

200

300

400

1995 2000 2005 2010 2015 2020 2025

Year

$ Millions 

4-2 (and using the methodology described in Section 2) results in the 

time-series cost curve in Figure 4-3. 

The data supporting Figure 4-3 were further used to generate the annual 

costs for infrastructure vendors’ R&D shown in Table 4-2, which 

suggests that infrastructure vendors’ product redesign costs related to 

IPv6 peaked around 2003. The information supporting these figures 

does not include the costs (and timing) for infrastructure vendors to move 

internal networks to IPv6, only to integrate IPv6 into their products and 

services. Infrastructure vendors’ internal network transition costs are 

captured in the Internet users stakeholder group (see Section 4.5). 

 4.2.1 Assumptions and Underlying Data 

Networking infrastructure vendors are currently integrating IPv6 into their 

products. These vendors, who design and manufacture routers, 

firewalls, operating systems, and other core networking hardware and 

software products, have reacted to IPv6 demand abroad and are 

anticipating growth in U.S. markets. 

However, there is wide variation in the level and timing of costs that 

vendors are anticipating. Some companies have already incorporated 

IPv6 into their products, some are currently testing and/or integrating 

IPv6 into their product lines, and others are expending no resources on 

IPv6 and do not plan to do so anytime in the near future. 
Section 4 — Baseline Development and Deployment Costs 

4-9 

Table 4-4 shows that product development costs are significantly greater 

than internal network costs for infrastructure vendors. Four major labor 

costs are likely to be incurred related to companies integrating IPv6 

capabilities into their products (see the costs listed under “Product 

Development Costs”). The percentages in Table 4-4 are based on 

aggregated information provided by the interview participants and 

represent the likely level of effort, as a percentage of total R&D labor 

expenditures, required for the transition to IPv6. 

Table 4-4. Distribution of IPv6-Related Transition Costs for Infrastructure Vendorsa

 Distribution of Total Transition Costs 

Category Product Development Costs Internal Network Costs 

Network management software (upgrade) 1.5% 

Network testing 1.5% 

Installation effort 2.0% 

Maintaining network performance 1.4% 

Training (internal IT staff) 2.1% 

Training (R&D staff) 19.3% 

Standards and protocol development 20.3% 

Research and development 4.8% 

Product testing 47.1% 

a The percentages in this table all sum up to 100 percent, comprising the distribution of all costs necessary for 

infrastructure vendors to move to IPv6. 

Although significantly less than product development costs, vendors will 

also bear costs associated with moving their internal networks to IPv6. 

These costs are described by the first five cost categories (quantified 

under internal network costs in Table 4-4). Like all Internet users, 

vendors’ intranetwork operators will have to decide whether to adopt 

IPv6 (separate from their decision to integrate IPv6 into their products), 

and if so, they must determine the appropriate timing. As such, these 

data identify the likely costs they will incur.10

 

10 Based on information provided by stakeholders, RTI assumed that all users, including 

ISP and vendor intranetworks, would transition at approximately the same time and that 

their costs would be spread over the same number of years. See Section 4.4 for 

curves describing these time shifts. 
IPv6 Economic Impact Assessment 

4-10 

 4.3 APPLICATION VENDORS 

To transition to IPv6, including integrating IPv6 into products and 

services and transitioning internal networks, RTI estimates that 

application vendor costs will be approximately $593 million between 

1997 and 2025 (see Table 4-1 for annual breakdowns). Of this total, RTI 

estimates that increased expenditures related specifically to R&D 

activities involving IPv6 and those necessary to transition internal 

networks to IPv6 will equal $571 million and $21.9 million, respectively11. 

Figures 4-4 and 4-5 are used to develop the time series of costs shown 

in Figure 4-6 for application vendors. Figure 4-4 indicates that most of 

the costs are borne the year prior to introducing products with IPv6 

capabilities; the information underlying this figure represents an 

aggregate of information provided in interviews conducted by RTI. 

Figure 4-4. Percentage of R&D Staff Dedicated to IPv6 Transition for Application 

Vendors 

0

2

4

6

8

10

12

14

16

18

1

Year

Percent of IT Staff 

t - 3 t - 2 t - 1 t = 0 t + 1 t + 2

 

11 These figures are based on information provided by stakeholders participating in 

interviews conducted by RTI. 
Section 4 — Baseline Development and Deployment Costs 

4-11 

Figure 4-5. Percentage of U.S. Application Vendors’ Products with IPv6 Capabilities 

0

10

20

30

40

50

60

70

80

90

100

2000 2005 2010 2015 2020 2025

Year

Penetration

 (Percent) 

Figure 4-6. Estimated Annual Spending by U.S. Application Vendors on IPv6-Related 

R&D 

0

50

100

150

200

250

1995 2000 2005 2010 2015 2020 2025

Year

$ Millions 

Combining these data with the penetration curve in Figure 4-5 (and using 

the methodology described in Section 2) results in the time-series cost 

curve in Figure 4-6. 
IPv6 Economic Impact Assessment 

4-12 

Figure 4-6 is a graphical representation of the annual costs for 

application vendors’ R&D shown in Table 4-1. RTI projects that 

application vendors’ annual R&D costs will peak around 2010.12 The 

information supporting these figures does not include the costs for 

application vendors to move internal networks to IPv6, only to integrate 

IPv6 into their products and services. Application vendors’ internal 

network transition costs are captured in the Internet users stakeholder 

group (see Section 4.5). 

 4.3.1 Assumptions and Underlying Data 

Application vendors are moving towards IPv6 at a much slower pace 

than infrastructure vendors, as indicated by comparing Figures 4-2 and 

4-5. Many have been testing IPv6 and planning to integrate IPv6 into 

their products; however, very few have actually begun selling IPv6-

capable products. Although infrastructure vendors have seen increased 

demand, particularly abroad and from the U.S. Department of Defense, 

the demand for application vendors related to IPv6 has emerged more 

recently. Many of these vendors are indicating that they plan to release 

IPv6-capable products as early as 2007. 

Application vendors’ costs include both product development and internal 

network costs. As shown in Table 4-5, the product development cost 

distribution differs slightly from that of infrastructure vendors’ (see 

Table 4-4). Of particular note is that costs are more equally distributed 

between training and product testing and development for application 

vendors than it is for infrastructure vendors, who need to focus more 

effort on product testing and development. The distribution of internal 

network costs is the same as it is for all users’ networks. 

 4.4 INTERNET SERVICE PROVIDERS (ISPS) 

To transition to IPv6, RTI estimates that ISPs will spend approximately 

$136 million between 1997 and 2025 (see Table 4-1 for annual 

breakdowns). This includes transitioning Internet provisioning networks, 

used solely to provide service to ISPs’ customers, and internal networks 

used by ISPs. Increases related specifically to transitioning provisioning 

networks and those necessary to transition internal networks to IPv6 

could reach $120.7 million and $15.3 million, respectively.13

 

12 Id. 13 Id.
Section 4 — Baseline Development and Deployment Costs 

4-13 

Table 4-5. Distribution of IPv6-Related Transition Costs for Application Vendorsa

 Distribution of Total Transition Costs 

Category 

Product 

Development Costs Internal Network Costs 

Network management software (upgrade) 1.5% 

Network testing 1.5% 

Installation effort 2.0% 

Maintaining network performance 1.4% 

Training (internal IT staff) 2.1% 

Training (R&D IT staff) 28.9% 

Standards and protocol development 17.7% 

Research and development 8.6% 

Product testing 36.3% 

a

 The percentages in this table all sum up to 100 percent, comprising the distribution of all costs necessary for 

application vendors to move to IPv6. 

Figures 4-7 and 4-8 provide the inputs to Figure 4-9, which describes the 

likely time series of costs for ISPs. As shown in Figure 4-7, the majority 

of the costs are borne the year leading up to transition (t = 0), with some 

costs trailing up to 5 years after transition; the data underlying this figure 

represent the aggregated response provided by stakeholders 

participating in interviews conducted by RTI. Combining these data with 

the penetration curve in Figure 4-8 (and using the methodology 

described in Section 2) results in the time-series cost curve in Figure 4-9. 

The data supporting these figures do not include costs for ISPs to move 

internal networks to IPv6, only to transition Internet provisioning 

networks. 

 4.4.1 Assumptions and Underlying Data 

For ISPs, the decision to move product development and service 

provisioning to IPv6 is tied to customer demand and future service 

support. At this point, there is very little demand in the United States for 

IPv6; therefore, many ISPs are not currently offering IPv6 connectivity 

because they do not want to incur costs without a clear return on 

investment (ROI). 
IPv6 Economic Impact Assessment 

4-14 

Figure 4-7. Percentage of IT Staff Dedicated to IPv6 Transition for ISPs 

0

5

10

15

20

25

1

Year

Percent of IT Staff 

t - 4 t - 3 t - 2 t - 1 t = 0 t + 1 t + 2 t + 3 t + 4 t + 5

Figure 4-8. Percentage of U.S. ISP Networks Enabled to Provide IPv6 Service 

0

10

20

30

40

50

60

70

80

90

100

2000 2005 2010 2015 2020 2025

Year

Penetration

(Percent)
Section 4 — Baseline Development and Deployment Costs 

4-15 

Figure 4-9. Annual Spending by U.S. ISPs on Transitioning Provisioning Networks 

0

10

20

30

40

50

1995 2000 2005 2010 2015 2020 2025

Year

$ Millions 

Many ISPs are currently engaged in testing activities and plan to offer 

limited IPv6 services. As soon as a significant number of mainstream 

customers require IPv6 connectivity, they will be prepared to provide 

service in 6 months to 1 year. However, similar to users, ISPs do not 

intend to offer IPv6 service until major hardware and software network 

components are in place. 

Table 4-6 lists the labor costs that will likely be incurred by ISPs, broken 

down by Internet provisioning costs and internal network costs. The 

same activity categories are relevant for both transition activities for 

ISPs; however, as indicated in Table 4-6, transition costs to support 

provisioning dominate internal network costs. 

If an ISP decides to move its Internet provisioning network to IPv6, it will 

undergo a variety of costs, but stakeholders participating in interviews 

indicated that the major costs for ISPs would be spent on training and 

network testing. IPv6 training would be a large cost because both 

technical staff and customer support staff would need to be involved; this 

would be particularly burdensome for small ISPs. Further, network 

testing would require significant resources. Although there were widely 

differing opinions among participating stakeholders on the effort needed 

to upgrade network management software, the aggregated figure implies 

a significant cost. 
IPv6 Economic Impact Assessment 

4-16 

Table 4-6. Distribution of IPv6-Related Transition Costs for ISPsa

 Distribution of Total Transition Costs 

Category 

Internet 

Provisioning Costs 

Internal 

Network Costs 

Network management software (upgrade) 19.3% 1.2% 

Network testing 18.3% 1.2% 

Installation effort 10.7% 1.6% 

Maintaining network performance 12.0% 1.1% 

Training (sales, marketing, and technical staff) 33.0% 1.6% 

a

 The percentages in this table all sum to 100 percent, comprising the distribution of all costs necessary for ISPs to 

move to IPv6. 

Again, similar to vendors, ISPs will bear costs associated with moving 

their internal networks to IPv6, as shown by internal network costs in 

Table 4-6. ISPs will make the decisions for their intra-network and 

Internet provisioning network separately, when appropriate, based on 

internal demand and intra-network needs. 

 4.5 INTERNET USERS 

To transition to IPv6, RTI estimates that users will spend approximately 

$23.3 billion between 1997 and 2025 (see Table 4-1 for annual 

breakdowns). This number includes both government- and 

nongovernment costs totaling $1.7 billion and $21.6 billion, 

respectively.14

Figures 4-10 and 4-11 were used to develop the time series of costs 

shown in Figure 4-12 for Internet users. As shown in Figure 4-10, most 

user costs occur in the 2-year period prior to enabling IPv6 capabilities, 

with follow-up transition activities ongoing for an additional 5 years; the 

information underlying this figure represents the aggregated response 

provided by stakeholders participating in interviews conducted by RTI. 

Combining these data with the penetration curve in Figure 4-11 results in 

the time-series cost curve in Figure 4-12. Annual costs for users are 

projected to peak around 2013. 

 

14 These figures are based on information provided by stakeholders participating in 

interviews conducted by RTI. 
Section 4 — Baseline Development and Deployment Costs 

4-17 

Figure 4-10. Percentage of IT Staff Dedicated to IPv6 Transition for Internet Users 

0

2

4

6

8

10

1

Year

Percent

t - 4 t - 3 t - 2 t - 1 t = 0 t + 1 t + 2 t + 3 t + 5

Figure 4-11. Percentage of U.S. User Networks IPv6 Enabled 

0

10

20

30

40

50

60

70

80

90

100

2000 2005 2010 2015 2020 2025

Year

Percent
IPv6 Economic Impact Assessment 

4-18 

Figure 4-12. Annual Spending by U.S. Users to Become IPv6 Enabled 

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

1995 2000 2005 2010 2015 2020 2025

Year

$ Millions 

 4.5.1 Assumptions and Underlying Data 

Internet users form the largest stakeholder group with approximately 

2,200,000 IT staff directly affected by the transition to IPv6.15 In 

Table 4-7, the relative cost distribution is broken down for users into 

activity categories. However, the costs will vary widely for individual 

organizations within each user group—corporate, institutional, 

government, and independent users. For example, based on information 

provided by stakeholders, RTI believes that independent users, 

comprising home users and small businesses, will incur virtually no cost 

to move to IPv6 because they would gain IPv6 enablement over time 

without additional testing and installation costs.16

Medium-sized businesses, on the other hand, will likely incur the largest 

relative increase in IT spending to transition to IPv6. The majority of 

these costs will be related to the core networking operations and staff 

training, the size of which does not increase proportionally to the size of 

an organization. As a result, the cost per IT staff for medium-sized 

businesses will be larger than for larger businesses (see Table 4-3). 

 

15 This figure represents RTI’s estimate based on BLS data and stakeholder interviews (see 

Table 4-2). IT staffing figures, including wage rates, were determined using data from 

the U.S. Bureau of Labor Statistics (BLS). U.S. Department of Labor, BLS, “National 

Occupational Employment and Wage Estimates,” May 2003, available at 

http://www.bls.gov/oes/2003/may/oes_15Co.htm. 16 These users do not have network management software or major networking hardware 

which would need to be enabled. Routing upgrades would provide equipment and 

software that would be IPv6 enabled several years into the future, but no additional cost 

should be seen. 
Section 4 — Baseline Development and Deployment Costs 

4-19 

Table 4-7. Distribution of IPv6-Related Transition Costs for Usersa

Distribution of Total Transition Costs 

Category Internal Network Costs 

Network management software (upgrade) 18% 

Network testing 17.6% 

Installation effort 24% 

Maintaining network performance 16% 

Training (sales, marketing, and tech staff) 24.4% 

a The percentages in this table sum to 100 percent, comprising the distribution of all costs necessary for users to 

move to IPv6. 

Regardless of cost differences, which are nonlinear in relation to 

organizational size, in general users’ costs will depend heavily on several 

common factors: 

• existing organizational network infrastructure, including servers, 

routers, firewalls, billing systems, and standard and customized 

software programs; 

• the type of organization (i.e., some types of services could be 

interrupted/damaged during a transition); 

• the future needs/desires of the organizational network; and 

• the level of security required during the transition. 

As an example, the Defense Research and Engineering Network 

(DREN), the Department of Defense’s recognized research and 

engineering network, recently completed an IPv6 pilot project in which 

IPv6 was deployed in infrastructure components in the core network and 

at 12 High Performance Computer Centers (HPCs). This process 

included upgrading networks, DNS software, other IP infrastructure, 

computer server operating systems, and desktop operating systems at 

each HPC. 

Costs for transitioning each site included approximately $500 to $2,000 

per router to expand the memory17 and train staff members at between 

$30 and $2,500 each in addition to time18 and approximately 400 hours 

 

17 This information was received by RTI during a phone interview on September 17, 2004, 

with John M Baird, IPv6 Pilot Implementation Manager with the DoD High Performance 

Computing Modernization Program (HPCMP). According to Baird, assuming a router 

runs at 40 percent of capacity regularly, if IPv6 addresses are used, the same routers 

would regularly be running at 80 percent of capacity. Therefore, routers will need 

approximately double the memory to ensure spikes do not crash the systems. 18 Several sites purchased commercial training at a cost of between $600 and $2,250 per 

person; DREN provided a half-day on-site orientation, training, and planning seminars; 

and staff used numerous books, CDs, and video to help them understand the 

implications of IPv6. 
IPv6 Economic Impact Assessment 

4-20 

of labor to transition numerous high-capacity networking components.19 

This process took a period of approximately 6 to 9 months to complete. 

Because DREN had previous experience both testing IPv6 and working 

with operational IPv6 networks, transition costs are likely to be low 

compared to many other organizations.20

 

19 Each site had several computers, massive file servers, a few high-speed networks, and 

an average of approximately 45 desktop/laptop computers and visualization 

workstations. 20 This information was received by RTI during a phone interview on September 17, 2004, 

with John M Baird, IPv6 Pilot Implementation Manager with the DoD High Performance 

Computing Modernization Program (HPCMP). 
5-1 

5 Baseline Benefits 

Several common themes exist regarding potential IPv6 benefits. There 

is a general consensus by stakeholders participating in this study that 

IPv6 is technically superior to IPv4;1

 however, there is great uncertainty 

concerning the timing, magnitude, and distribution across stakeholder 

groups of potential benefits. Many potential benefits hinge on removing 

and/or changing the management of middleboxes, such as NAT devices 

and firewalls, because they currently disrupt certain types of host-to-host 

connections. Additionally, other potential IPv6 benefits, such as 

improved security and new quality of service (QoS) capabilities, will likely 

not be seen without major changes to Internet security models being 

used today and considerable research and testing in other areas. 

Despite these caveats, stakeholders participating in this study indicated 

that widespread adoption of IPv6 could lead to a world of connected 

devices. In a “virtual home” individuals could manage their heating and 

cooling systems, take stock of their refrigerator or access files from their 

home computer while from another country. Companies could offer 

constant monitoring services to automobile and appliance owners to 

determine the best possible time to get certain services performed. 

 

1

 Although longer IPv6 addresses will require more memory in many network components 

than in IPv4-based networks to retain current transmission speeds, participating 

stakeholders indicate that in most cases this memory will be included in IPv6-capable 

products. Recent tests by Internet2 have indicated that transmission speeds are not 

affected by moving to IPv6 networks. See slide 19 of presentation entitled “IPv6 and 

Internet2 Update” by Bill Cerveny, Internet Engineer at Internet2, presented at the IPv6 

Summit in Reston, VA, on December 10, 2004, available at 

http://usipv6.unixprogram.com/usipv6_reston_2004/fri/Cerveny.pdf. The explanation 

for this result (no change in transmission speeds as reported by Internet2) is that 

although IPv6 has twice the header size of IPv4, it has faster route calculation by 

design, assuming hierarchical addressing is enforced. Further, IPv4 and IPv6 must be 

natively supported, and there must be hardware-supported processing between the two 

network implementations. This information was received by RTI during a phone 

interview on November 14, 2004, with John Streck, Director of CENTAUR Labs at NC 

State University. 
IPv6 Economic Impact Assessment 

5-2 

Meteorologists could use sensors with IP addresses on cars to more 

accurately predict and report current and future weather.2

Currently, major mobile phone service providers are planning to move to 

IPv6 because of the need for large numbers of IP addresses for new 

products and services and concerns about potential shortages of IPv4 

addresses.3

 However, it is less clear if other near-term IPv6-dependent 

applications will emerge. For example, teleconferencing quality and 

implementation simplicity could improve4

 (through the use of IPv6, the 

removal of NATs, and network restructuring) and potentially decrease 

the need for companies to incur large travel expenses. However, it is 

unclear to what extent improved teleconferencing will replace in-person 

interactions in the near future due to quality enhancements.5

The intent of the following discussion is to provide examples of benefit 

categories along with the relative magnitudes of the potential effects. 

The effects discussed are not intended to be a comprehensive list of 

benefit categories, and an assessment has not been performed to 

determine the likelihood that a certain benefit will materialize. 

Because of the speculative nature of future IPv6 benefits, stakeholders 

participating in this study were hesitant to provide empirical data. Thus, 

we leverage secondary data when possible to provide insight into the 

potential magnitude of the impacts. Benefits have been grouped into 

four general categories: 

• Cost reduction due to improved security—savings in both 

time loss resulting from security intrusions and preventative and 

repair costs 

• Cost reduction due to increased efficiency—operations 

improvements, holding the quality and functionality of products 

and services constant 

• Improvements to existing products and services—including 

traditionally non-Internet-related products and services 

• Innovations leading to new products and services—primarily 

information/communication services with significant increased 

functionality 

 

2

 See Public Meeting Transcript at 48-49 (Paul Liao Panasonic USA, and Stan Barber, 

NTT/Verio) (IPv6-addresses taxicabs in Tokyo can inform meteorologists when the 

cabs’ windshield wipers are on, providing the weathermen with more detailed 

information about rainfall patterns in the city). 3

 This information was received by RTI during a phone interview on August 12, 2004, with 

Victor Gonzalez, Director of Core Network Development with Nextel. 4

 See Microsoft Comments at 5. 5

 This information was received by RTI during an interview in Research Triangle Park, NC, 

on March 16, 2004, with John Streck, Director of CENTAUR Labs at NC State 

University. 
Section 5 — Baseline Benefits 

5-3 

Table 5-1 lists several benefit/application categories along with the 

associated measurement approach used to quantify the benefits of IPv6. 

These categories represent potential benefits that could be realized 

conditional on IPv6 adoption and significant network restructuring, such 

as removal of NATs. Although speculative in nature, the annual benefit 

estimates provided in this section give valuable insights into the 

magnitude of potential impacts resulting from IPv6 adoption. 

Table 5-1. Several Benefit/Application Categories 

Impact Metrics 

Application/ 

Market General Description: Examples 

Cost reductions resulting 

from improved security 

IPSec/E2E 

security model 

• In the future, as security costs continue to rise, 

movement to the use of an E2E security model could 

help save major enterprise costs, both in downtime and 

preventative measures. IPSec, an IP-based security 

protocol that is more common in IPv6 systems, would 

likely be part of this movement. 

Cost reductions resulting 

from increased efficiency 

VoIP • If enterprises move to VoIP from traditional phone 

networks, current studies suggest they could save 20 

percent or more on telephony expenditures. IPv6 could 

drive and/or facilitate the move to VoIP. 

 NAT removal • Enterprise spending on NAT workarounds is quite 

significant according to estimates from participating 

stakeholders that range up to 30 percent of IT-related 

expenditures. 

• Application vendors’ spending on NAT workarounds is 

also large, according to industry stakeholders; estimates 

range up to 20 percent of IT-related expenditures. 

Value of remote access 

to existing 

products/services 

Increased life 

expectancy of 

products 

• Automobile and appliance owners could increase the 

functionality and life expectancy of their products by 

using remote monitoring and support services. 

 Service costs • Automotive and appliance owners could decrease 

service costs by using remote monitoring and support 

services. 

Innovation in 

communications 

New mobile data 

services 

• Wireless companies could sell new features through 

expanded network capabilities (e.g., IP-addressed 

phones). 

• Wireless companies need IPv6 to increase address 

capacity for P2P (most mobile) applications. 

Innovation in online 

products/services 

Online gaming • Gaming and game console makers could see expanded 

functionality and thus opportunities for innovative new 

products. 
IPv6 Economic Impact Assessment 

5-4 

 5.1 COST REDUCTIONS RESULTING FROM 

IMPROVED SECURITY 

IPv6 adoption could be a significant driver (and potentially a necessary 

step) for networks to move to a more secure networked environment.6

 

To the extent that deployment of IPv6 can enhance network security, the 

potential benefits to organizations and individuals can be significant. 

However, empirical estimates of the cost of cybersecurity breaches vary 

widely because of differences in what is included in the cost estimates 

and disincentives for companies to publicly disclose the number of 

breaches or level of damage. For example, studies that focus on IT 

costs, such as the “2004 Computer Security Institute/FBI Computer 

Crime and Security Survey,” have reported total losses from 

cybersecurity breaches of approximately $142 million in 2004.7

 Similarly, 

a 2003 briefing by Richard Clarke, then-White House security chief, 

indicated that private companies were spending approximately $500 

million on IT security, including both preventative and repair activities.8

 

In contrast other studies that include a broader range of impacts estimate 

costs in the billions. Computer Economics, Inc., a research firm, put the 

damages of cybersecurity breaches at nearly $12.3 billion worldwide for 

2001,9

 and other worldwide cyber crime estimates have been cited as 

high as $200 billion per year.10

As security costs have continued to plague enterprises and home users, 

many experts have been discussing the need to move to a new security 

model, which is more responsive and customizable. Several experts 

have suggested that new E2E security models and/or major 

 

6

 See Public Meeting Transcript at 95-96 (Stan Barber, NTT/Verio), 146-148 (Marilyn 

Kraus, DoD IPv6 Transition Office). 7

 “2004 CSI/FBI Computer Crime and Security Survey” by Lawrence A. Gordon, Martin P. 

Loeb, William Lucyshyn, and Robert Richardson. Available at http://www.gocsi.com. 

Additionally, 50 percent of the CSI/FBI survey respondents reported spending 3 percent 

or more of their IT budget on security, and approximately 53 percent reported 

unauthorized use of computer systems within the last 12 months. 8

 “White House Advisor Richard Clarke Briefs Senate Panel on Cybersecurity” by Jeff 

Wynne with the U.S. Embassy in Japan, on February 14, 2002. Available at 

http://japan.usembassy.gov/e/p/tp-se1069.html. 9

 “Guard Up, Hacking Down” by Alix Nyberg with CFO Magazine, published on January 16, 

2002. Available at http://www.cfo.com/article.cfm/ 

3002790/c_2984786?f=archives&origin=archive. 10 “IT Theft Lucrative for Web Crooks” by CBS Evening News, December 7, 2004. 

Available at 

http://www.cbsnews.com/stories/2004/12/07/eveningnews/main659641.shtml. Cyber 

crime includes stolen identifications, credit cards, and bank accounts. 
Section 5 — Baseline Benefits 

5-5 

modifications to current models will be necessary to address today’s 

problems.11 This would include developing “trust models” that would 

allow hosts to confidently send and receive messages based on a Public 

Key Infrastructure (PKI) system.12

 5.2 COST REDUCTIONS RESULTING FROM 

INCREASED EFFICIENCY 

As introduced in Table 5-1, several categories of increased efficiency 

could result from a transition to IPv6. In this section, we discuss the 

removal of NATs (and the restructuring of additional network 

components) within networks and the potential savings accruing to 

vendors and Internet users as the result of increased use of VoIP. 

 5.2.1 NAT Removal Leading to Increased Efficiency 

IPv6 has the potential to lower costs associated with application 

development for software vendors and to reduce the costs of network 

management and the installation and testing of new applications for all 

enterprises. These represent long-term efficiency gains (net cost 

reductions) after the transition from IPv4 to IPv6 is complete; however, 

they are contingent on the removal of NAT devices and the restructuring 

of organizational networks, including the evolution of firewalls to be more 

versatile to allow seamless connectivity. 

According to stakeholders participating in interviews, application vendors 

on average allocate 8.8 percent of their labor for product design and 

testing activities to address NAT transversal issues. NAT transversal 

typically involves designing products so that they will work through NAT 

boxes. In addition, this work can stifle innovation by diverting time away 

from R&D activities and increasing the complexity of new applications. 

 

11 See Public Meeting Transcript at 93-95 (Henry Kafka, BellSouth) and 59-60 (Dr. Latif 

Ladid, IPv6 Forum), 95-96 (Stan Barber, NTT/Verio) 139 (Dr. Doug Maughan, 

Department of Homeland Security), 149-150,156, 160, 178, 179 (Preston Marshall, 

DARPA). 12 Simply, the sending host would encode his message with a “key” given to him/her by the 

PKI management organization, and the receiving host would decode the message with 

a different key given to him/her to the same organization, but only if the sending host 

gives permission. 
IPv6 Economic Impact Assessment 

5-6 

Based on stakeholder interviews, RTI estimates that NAT transversal 

expenditures account for as much as $500 million per year for 

application vendors (see Table 5-2).13

Table 5-2. Potential Annual Cost Reductions Associated with NAT Removal 

Description Value Source 

Application Vendors—R&D and Training Costs 

R&D expenditures $6.28 billiona NSF 

Reduction in level of effort x 8.8% RTI Interviews 

Annual cost reduction $552.6 million RTI calculations 

User Networks—Application Installation and Testing Costs 

IT staff (FTEs) involved 241,495b BLS 

Average fully loaded salary $85,280c

 BLS 

Reduction in level of effort x 6.7% RTI Interviews 

Annual cost reduction $1.38 billion RTI calculations 

a As an estimate of applications vendors’ R&D and training costs, RTI used 50 percent of R&D spent by software 

manufacturers in 2000. The original data are from an NSF report entitled “Research and Development in Industry: 

2000,” Table E-2. See R&D figures for Software Publishing (North American Industry Classification System 

[NAICS] 5112). The report is available at http://www.nsf.gov/sbe/srs/srs02403/tables/e1.xls. b As an estimate of IT staff involved in applications installation and testing, RTI used 50 percent of Computer Support 

Specialists (Standard Occupational Classification Systems (SOC) 15-1041) in the United States as reported by the 

Bureau of Labor Statistics (BLS). Available at http://www.bls.gov/oes/2003/may/oes151041.htm. c For IT staff involved in applications installation and testing, RTI used the BLS wage rate for Computer Support 

Specialists (SOC 15-1041) as of 2003, with a multiplier of two to incorporate overhead expenses incurred by 

employers. 

Similarly, RTI estimates that Internet users spend 6.7 percent of IT labor 

resources on managing NATs (and other middleware) and ensuring the 

interoperability of applications (including the installation, testing, and 

monitoring of applications) with NATs. Combining this estimate with data 

from the Bureau of Labor Statistics (BLS), RTI estimates a potential 

annual reduction of over $1 billion in IT (primarily labor) expenditures.14

NATs are network hardware components that allow a group of hosts on a 

private network to share a relative small number of public IP addresses 

used to send and receive messages over the Internet. 

 

13 The estimated 8.8 percent of application vendor R&D effort was based on a relatively 

small sample size, with respondents’ estimated savings ranging between 0 and 30 

percent of annual costs. Based on the individual responses, the 95 percent confidence 

interval for savings costs is 8.8 percent ± 9.3 percent of R&D effort, or $552 ± $585 

million. 14 The estimated 6.7 percent of users' IT efforts was also based on a relatively small 

sample size, with respondents’ estimated savings ranging between 0 and 35 percent of 

annual costs. The 95 percent confidence interval for users’ IT effort is 6.7 percent ± 4.6 

percent, or $1.38 ± 0.93 billion in annual savings from NAT removal for users. 
Section 5 — Baseline Benefits 

5-7 

Along with the benefits of NAT removal, many participating stakeholders 

indicated that over time NATs have evolved to serve several functions 

and potentially significant costs could be associated with removing NATs 

from user networks. Although not designed for security, many networks 

today use NATs to provide hosts with some level of obscurity from 

potential intruders.15 In most networks that use NATs, hosts are 

assigned external addresses only for the duration of each Internet 

session, and even during that period, the internal host cannot receive 

communications originated from the outside. Thus, NATs can help block 

some common viruses and worms that scour the Internet for exposed 

hosts. At issue is that this function can impede IPv6 applications that 

require or perform better when direct E2E connectivity is possible. 

For many of the potential benefits of IPv6 to be realized, NAT devices 

will likely need to be removed in a significant portion of the current 

Internet infrastructure. The level of NAT removal and network 

restructuring depends on the type of benefit. For example, if one 

network removes its NATs and moves to VoIP, it could see productivity 

improvements and decreased internal communications costs, but 

external calls would have to travel through NAT boxes, leading to 

potential problems. 

In addition, the cost of removing NATs could be significant. Although 

likely to be an order of magnitude less than total IPv6 transition costs,16

to remove NATs a network would redesign and restructure the networkconnecting hosts, change firewall and established security procedures, 

and learn to function without a network component that has been in 

place in many networks for almost a decade. Thus, many stakeholders 

expressed concern that if NATs disappear in their current form, firewalls 

alone could result in many of the same problems.17

 5.2.2 VoIP Potential Savings 

VoIP represents an increasing share of the telecommunications market, 

and IPv6 could allow companies to move to VoIP more easily and enable 

more extensive use of VoIP capabilities. According to a survey of 250 

U.S. executives performed by the Economist Intelligence Unit (EIU) in 

 

15 See Alcatel Comments at 4; NTT/Verio Comments at 13-14. 16 This information was received by RTI during a phone interview on November 14, 2004, 

with John Streck, Director of CENTAUR Labs at NC State University. Streck stated that 

costs associated with NAT removal would likely be much compared to IPv6 transition. 

This is because NAT impact fewer components of the system compared to IP 

standards. 17 See Public Meeting Transcript at 15 (remarks of Vint Cerf, MCI), 58 (remarks of Paul 

Francis, Cornell University), 178 (remarks of Preston Marshall, DARPA). 
IPv6 Economic Impact Assessment 

5-8 

association with AT&T, 43 percent are using or plan to use VoIP in the 

next 2 years.18 Without middleware (e.g., NATs), applications such as 

VoIP and real-time videoconferencing could be implemented much more 

simply, at a lower cost, and with more features. A direct connection (i.e., 

IP address to IP address) could be established and maintained without 

the need to establish additional protocols and procedures to traverse one 

or more NAT devices.

In a recent study, SouthTrust Bank indicated that installation of VoIP 

resulted in a 30 percent reduction in annual communications costs.19 

Other studies by Forrester Research suggest a savings from VoIP of 20 

percent compared to traditional network telecommunications spending.20 

A 20 percent reduction in traditional network spending represents 

approximately $7.8 billion in potential annual savings for U.S. businesses 

(see Table 5-3). 

Description Value Source 

Annual U.S. Fixed Telecom Market 

Retail Voice Connection Revenue 

$39.1 billion Gartnera

Reduction in phone network/ 

management enterprise spending 

x 20% Forrester 

Researchb 

Annual cost reduction $7.8 billion RTI calculations 

a

 Based on Total Business Connection Retail Service Revenue in 2003. 

Table 1-3 in Gartner report entitled “Forecast: Fixed Public Network Services, 

United States, 2002–2008” by Alex Winogradoff, April 2004. 

b

 Forrester Research prediction as reported by News.com at 

http://news.com.com/2001-7352_3-0.html?tag=ne.map. 

 5.3 REMOTE ACCESS TO EXISTING 

PRODUCTS/SERVICES 

Devices that are globally addressable so that they can be remotely 

accessed and controlled via the Internet represent a potential application 

of IPv6 addresses. Automobile components or subsystems, 

refrigerators, cameras, home computers, and other home appliances 

could be assigned IP addresses, linked together on home networks, and 

 

18 “Survey: VoIP to become new standard for voice traffic” by Matthew Friedman with 

CommsDesign, published on September 23, 2004. Available at http:// 

www.commsdesign.com/news/market_news/showArticle.jhtml?articleID=47902339. 19 “VoIP gaining ground, despite cost concerns” by Matt Hamblan with ComputerWorld, 

published on August 13, 2004. Available at https://www.computerworld.com/ 

printthis/2004/0,4814,95248,00.html. 20 “Get up to Speed: VoIP” by News.com, last accessed on December 7, 2004. Available 

at http://news.com.com/2001-7352_3-0.html?tag=ne.map. 

Table 5-3. Potential 

Annual VoIP Savings 
Section 5 — Baseline Benefits 

5-9 

connected to the Internet. Home owners could control such devices 

remotely, and automobile and appliance manufacturers, for example, 

could offer remote service and support packages. Existing products, 

such as OnStar, imply there is already demand for this type of service. 

OnStar has 2 million subscribers currently, and monthly charges vary 

from $16.95 to $69.95.21 OnStar can provide directions and emergency 

assistance. In the event of airbag deployment, the OnStar Center is 

automatically contacted by the car’s OnStar system to report the 

accident and location. The OnStar operator then contacts the nearest 

emergency-services dispatcher. Currently OnStar uses a combination of 

global positioning system (GPS) and cellular technologies; however, 

according to several stakeholders, a service similar to OnStar could be 

enhanced and operated much more efficiently using IPv6 addressing.22

Although it is difficult to predict whether or when products and services 

will develop that offer mobile monitoring, access, and support through IP, 

participating stakeholders indicated that IPv6 offers opportunities for 

wireless sensor networks and for machine-to-machine communications, 

potentially leading to a large proliferation of devices that will connect to 

the Internet. Currently, several Japanese companies offer IP-addressed 

products (e.g., cameras, printers),23 and other U.S. companies are 

involved in development and testing activities. 

Among the many benefits of remote access are the potential increased 

life expectancy of large-ticket items such as automobiles and appliances 

(durable goods) and an associated decrease in service/repair costs. 

Table 5-4 provides hypothetical benefit estimates based on a 1 percent 

increase in life expectancy and 1 percent decrease in service costs for 

automobiles and appliances. Whereas single directional 

communications (i.e., from the appliance to the service provider) are 

readily implemented using IPv4, the introduction of IPv6 and the removal 

of NATs greatly increases capabilities of mobility two-way 

communications. 

 

21 “OnStar enters 6th generation” by Earle Eldridge on March 22, 2004, USA Today. 

Available at http://www.usatoday.com/tech/news/2004-03-22-onstar_x.htm. 22 This information was received by RTI during an interview in Research Triangle Park, NC, 

on March 16, 2004, with John Streck, Director of CENTAUR Labs at NC State 

University. 23 See “IPv6 Ready Logo: Phase 1” for a list of products that the IPv6 Ready Logo 

program, operated by the IPv6 Forum, has approved. See list at 

http://www.usatoday.com/tech/news/2004-03-22-onstar_x.htm. Most of the companies 

with products listed are based in Asia. 
IPv6 Economic Impact Assessment 

5-10 

Table 5-4. Potential Annual Benefits of Remote Access to Automobiles and 

Appliances 

Description Automobiles Appliances Source 

Product life expectancy 

Annual U.S. expenditures $222.0 billiona $108.4 billionb Census data 

Increase x 1% x 1% Example impact 

Benefits $2.22 billion $1.08 billion RTI calculations 

Expenditures on services 

Annual U.S. expenditures $65.5 billionc $5.0 billiond Census data 

Reduction x 1% x 1% Example impact 

Benefits $655 million $50.0 million RTI calculations 

a

 Includes NAICS 33611 Automobile & Light Duty Motor Vehicle Manufacturing. Source: 2002 Economic Census. 

Available at http://www.census.gov/prod/ec02/ec0231i336111.pdf and 

http://www.census.gov/prod/ec02/ec0231i336112t.pdf. b

 Includes NAICS 3352 Household Appliance Manufacturing, 33421 Telephone Apparatus Manufacturing, 33422 

Radio & TV Broadcasting and Wireless Communications Equipment Manufacturing, 3343 Audio & Video 

Equipment Manufacturing. Source: 1997 Economic Census. Available at 

http://www.census.gov/epcd/ec97/industry/E3352.HTM, http://www.census.gov/epcd/ec97/industry/E3342.HTM, 

http://www.census.gov/epcd/ec97/industry/E3342.HTM, and http://www.census.gov/epcd/ec97/industry/E334.HTM. c

 Includes U.S. Standard Industrial Classification (SIC) codes 753 Automotive Repair Shops and 754 Automotive 

Services, Except Repair. Source: 1997 Economic Census. Available at 

http://www.census.gov/epcd/ec97brdg/E97B2_75.HTM. d

 Includes NAICS 811211 Consumer Electronic Repair and Maintenance and 811412 Appliance Repair and 

Maintenance. Source: 2002 Economic Census. Available at http://www.census.gov/prod/ec02/ec0281i01t.pdf and 

http://www.census.gov/prod/ec02/ec0281i01t.pdf. 

 5.4 INNOVATIONS LEADING TO NEW PRODUCTS 

AND SERVICES 

Participating stakeholders indicated that certain promoted features of 

IPv6—connectivity through a wider array of channels and transmission 

modes,24 the ability to maintain multiple simultaneous access paths for 

multiple networks/hosts without manual involvement,25 improved 

speed,26 and improved quality of connections27—could spur the 

deployment of new P2P or E2E networking applications. Without 

interference from middleware, such as NAT devices, the increased 

address space available from IPv6 use could simplify the provision of 

plug-and-play,28 “always-on,”29 and other E2E applications.30. 

 

24 See Sprint Comments at 11. 25 See Hain Comments at 4. 26 See Microsoft Comments at 5. 27 Id. 28 Plug-and-play applications are those that after being installed (or “plugged in”) can 

immediately be used (or “played”) without configuration requirements (e.g., a laptop on 

a new network). 
Section 5 — Baseline Benefits 

5-11 

In addition, participating stakeholders suggested that the recent 

emergence of mobile data services such as sending photos and text 

messages could drive the adoption of IPv6 so that more advanced 

services, such as remote data management and transmission, could be 

offered.31 The recent growth in mobile phone subscribers shown in 

Table 5-5, in addition to their constant desire for more features, and the 

looming potential shortage of available IPv4 addresses has already 

provided enough incentive for several mobile phone service providers to 

move to IPv6 addressing.32

Year Subscribersa U.S. Populationb

 Penetration Rate 

1984 91,600 236,789,000 0.04% 

1987 883,778 243,291,000 0.36% 

1991 6,390,053 255,419,000 2.50% 

1995 28,154,415 263,909,000 10.67% 

1999 76,284,753 273,828,000 27.86% 

2002 141,477,000c

 289,717,000 48.83% 

a Source (other than where noted): “Trends in Telephone Service” by the 

Industry Analysis Division of the Common Carrier Bureau at the Federal 

Communications Commission, released in March 2000, page 2-3, Table 2.1. 

Available at ftp://www.fcc.gov/pub/Bureaus/Common_Carrier/Reports/FCCState_Link/IAD/trend100.pdf. b Sources: “Monthly Estimates of the United State Population: April 1, 1980 to 

July 1, 1999” released on January 2, 2001 by the Population Estimates 

Program, Population Division, U.S. Census Bureau, Resident Population 

estimates in this report were used for 1984-1999 figures. Available at 

http://www.census.gov/popest/archives/1990s/nat-total.txt. For 2002, “Monthly 

National Population Estimates (in thousands): April 1, 2000 to September 1, 

2003” last revised August 6, 2004. Released by Population Estimates 

Program, Population Division, U.S. Census Bureau, Resident Population 

estimates in this report. Available at 

http://www.census.gov/popest/archives/2000s/vintage_2002/NA-EST2002-

06.html. c Source: Gartner report entitled “Mobile and Wireless Services and Service 

Providers in the United States” by Carol Skvarla and Brian Dooley, January 

2004, page 2, Table 1. 

The North America mobile data market, including text messaging (often 

referred to as short message service or SMS) and other data services, 

 

29 Always-on applications require constant reachability from the Internet to be used fully 

(e.g., video conferencing, voice telephony). 30 E2E applications use a direct connection between two hosts both of which accept 

connection requests from the other (e.g., computer gaming or video conferencing). 31 See Sprint Comments at 11. 32 This information was received by RTI during a phone interview on September 16, 2004, 

with Victor Gonzalez, Director of Core Network Development at Nextel. 

Table 5-5. Growth in 

U.S. Mobile Phone 

Subscribers 
IPv6 Economic Impact Assessment 

5-12 

such as Internet and e-mail access over Wireless WANs (Wide Area 

Networks), reached approximately 22.67 million connections in 2002 

(see Table 5-6), and Gartner predicts this market will grow approximately 

80 percent in the next 3 to 4 years.33 There were 18.7 million wireless 

Internet users in North America at the end of 2002, and that number is 

expected to grow to 95.6 million by 2007.34 Additionally, 14.5 percent of 

U.S. cell phone subscribers were using SMS messaging at the end of 

2003;35 however, penetration is much higher in Asia36 and Western 

Europe,37 an indicator of the future (or future loss of) potential in the 

United States. 

 1999 2000 2001 2002 

Wireless data 

connections 

1,833,600 6,260,210 14,930,489 22,671,000 

U.S wireless data 

revenue ($ millions)

$419 $697 $1,401 $1,972 

Source: Gartner report entitled “Mobile and Wireless Services and Service 

Providers in the United States” by Carol Skvarla and Brian Dooley, January 19, 

2004, page 3, Table 2. 

Historical data imply that consumers will be willing to pay for improved 

communication and information services. As shown in Table 5-7, 

household computer and Internet use continues to grow. This implies 

that the infrastructure capable of supporting always-on connectivity to the 

home, through DSL and cable modem broadband Internet, must become 

more robust. Further, with the emergence and rapid penetration of 

mobile telephones and the development of broadband Internet 

connectivity, telecommunications spending has significantly increased 

 

33 Gartner report entitled “Mobile and Wireless Services and Service Providers in the United 

States” by Carol Skvarla and Brian Dooley, January 19, 2004, page 3, Table 2. 34 Gartner report entitled “Mobile Data Communications Services: North America, 1999–

2007 (Executive Summary)” by Tole Hart, March 4, 2004, page 4. 35 Gartner report entitled “Market Trends: Mobile Wireless, North America, 2004 (Executive 

Summary)” by Tole J. Hart, Tuong Huy Nguyen, Hugues J. De La Vergue, and Michael 

J. King, June 30, 2004, page 1. 36 China Mobile (Hong Kong), which combined with its parent company China Mobile 

controls approximately 65 percent of the mobile service market in China, reported that 

70 percent of their subscribers were mobile data users. See Gartner report entitled 

“Mobile and Wireless Services and Service Providers in China” by Jayashri Dasgupta, 

April 8, 2004, page 2-3. 37 Approximately 70 percent of the 749 users surveyed by Gartner in France, Germany, 

Italy, Spain, Sweden, and the United Kingdom indicated that they use their mobile 

phones for text messaging. See Gartner report entitled “User Survey: Mobile Phones 

and Services, Western Europe, 2004 (Executive Summary)” by Stéphanie Pittet , 

November 15, 2004, page 1.

Table 5-6. Growth in 

U.S. Wireless Data 

Revenue and 

Connections 
Section 5 — Baseline Benefits 

5-13 

 1994a

 1997b 2001b 2003b 

Computer 24.1% 36.6% 56.2% 61.8% 

Internet use 18.6% 50.3% 54.6% 

a Source: “Trends in Telephone Service” by the Industry Analysis Division of the 

Common Carrier Bureau at the Federal Communications Commission, 

released in March 2000. Available at 

ftp://www.fcc.gov/pub/Bureaus/Common_Carrier/Reports/FCCState_Link/IAD/trend100.pdf. b Source: “A Nation Online: Entering the Broadband Age” by the National 

Telecommunications and Information Administration (NTIA) and the 

Economics and Statistics Administration at the Department of Commerce, 

released in September 2004. Available at 

http://www.ntia.doc.gov/reports/anol/NationOnlineBroadband04.pdf. 

over the past 10 years. As such, consumers have shown a willingness 

to pay as new Internet applications are identified and brought to market. 

However, for new E2E applications to succeed in the household market, 

applications developers must determine how to work with ISPs, for 

example, to develop an infrastructure and applications that can use the 

benefits of IPv6 and E2E connectivity. Today, many houses still lack 

broadband connections. According to a DoC report released in 

September 2004 entitled “A Nation Online: Entering the Broadband 

Age,” although 58.7 percent of the U.S. population uses the Internet, only 

33.9 percent of these users have broadband at home.38 Further, many 

of those people who have always-on Internet access also have small 

routers that operate as NAT devices and would inhibit many E2E 

services (or make them more complex). 

Whereas based on all information available,39 RTI concludes that 

consumers could benefit from new (next generation) IPv6-enabled 

products and services (given the proper infrastructure support), no 

specific new features of such applications, timing of availability, or 

willingness to pay for enhanced functionality enabled by IPv6 could be 

determined at the time of this report. Although currently several Asian 

companies are selling IPv6-addressed devices (and U.S. and European 

companies are designing and producing these), with NAT devices and/or 

 

38 “A Nation Online: Entering the Broadband Age” by the National Telecommunications and 

Information Administration (NTIA) and the Economics and Statistics Administration at 

the DoC, released in September 2004, page 7. Available at 

http://www.ntia.doc.gov/reports/anol/NationOnlineBroadband04.pdf. 39 This statement represents a synthesis of the information gathered by RTI through 

extensive literature reviews, RTI’s informal discussions with stakeholders, commenters 

to the Department of Commerce (DoC) Request for Comment (RFC), participants in the 

DoC public meeting in July 2004, and stakeholder interviews conducted by RTI. 

Table 5-7. Percentage 

of U.S. Households 

with Computers and 

Internet Access 
IPv6 Economic Impact Assessment 

5-14 

current firewall structures and associated procedures in the majority of 

homes and businesses, customers cannot take advantage of IPaddressed devices in most situations. No “IPv6-required” applications 

had been discovered (or disclosed) as of December 2004. 
6-1 

 Costs Under 

 Alternative 

 Deployment 6 Scenarios 

Section 3 presents the likely transition timeline for IPv6 based on the 

information provided during stakeholder interviews conducted by RTI. 

This study emphasizes that there is significant uncertainty over this 

projected timeline, in that it depends on future market and technology 

developments. For example, cost-sensitive design requirements (for 

each organization and individual) that are necessary to achieve security 

benefits from IPv6 have not been developed; therefore, the timing of 

such benefits cannot be projected easily. However, based on extensive 

information collection exercises, RTI believes that advances in the 

development of PKI or new E2E security models could potentially 

accelerate the development of and demand for IPv6 products and 

services.1

Conceptually, stakeholders participating in this study were not in 

agreement over an adoption path that would be in the best interest of the 

United States. Some stakeholders indicated that IPv6 deployment 

should be accelerated so that benefits can be realized earlier and that 

the United States does potentially lose its technological advantage by 

lagging other parts of the world in deployment. In contrast, other 

stakeholders believe that IPv6 deployment should be delayed until the 

magnitude and timing of potential benefits are more certain.2

 

1

 See BellSouth Comments at 8-9. 2

 This statement represents a synthesis of the information gathered by RTI through 

extensive literature reviews, RTI’s informal discussions with stakeholders, commenters 

to the Department of Commerce (DoC) Request for Comment (RFC), participants in the 

DoC public meeting in July 2004, and stakeholder interviews conducted by RTI. 
IPv6 Economic Impact Assessment 

6-2 

This section investigates the costs of accelerating the deployment of 

IPv6 in the United States. We focus on acceleration scenarios because 

participants in interviews indicated that the cost implications associated 

with delaying the deployment of IPv6 are negligible (e.g., the magnitude 

of the costs will not change), although a delay in adoption could affect 

the timing of benefits. However, participating stakeholders indicated that 

efforts to accelerate the deployment of IPv6 capabilities or the enabling 

of IPv6 capabilities could result in increased costs3

. This section 

investigates the cost implications of two acceleration scenarios, one that 

accelerates user enabling of IPv6 (keeping the penetration of IPv6 

capabilities unchanged) and a second that accelerates both the 

penetration of user capabilities and the enabling of IPv6. 

Users are the focus of the acceleration cost scenarios because interview 

participants indicated that acceleration costs for vendors and ISPs were 

negligible (within a reasonable time frame of several years) and that their 

products and services would be available when demand/applications 

materialized. Several participating stakeholders indicated that users 

would be capacity constrained (by limited IT staff) and would bear costs 

associated with accelerated training and enabling. In addition, if early 

retirement of hardware or software were required to facilitate 

acceleration of IPv6 adoption, interview participants suggested that this 

could potentially be extremely costly. 

The cost impact of both scenarios is measured relative to the baseline 

penetration of IPv6 user capabilities and enabling activities shown in 

Figure 3-2. The acceleration scenarios and the procedure for estimating 

costs are described below. 

 6.1 SCENARIO 1: ACCELERATING ENABLEMENT 

BY USERS 

Scenario 1 involves accelerating the enablement of IPv6 by users to the 

time when users become IPv6 capable. Based on interviews, RTI 

calculates that this represents approximately a 3-year acceleration of 

enabling activities. As shown in Figure 6-1, this represents a shift in the 

user-enabled curve presented earlier in Section 3 (see Figure 3-2). 

Accelerating the user-enabled curve has two cost implications. The first 

is that because of limited resources, an accelerated deployment of IPv6 

could increase the average enabling cost for users. The degree to which 

 

3

 See BellSouth Comments at 6. 
Section 6 — Costs Under Alternative Deployment Scenarios 

6-3 

Figure 6-1. Acceleration Scenario 1 

0

10

20

30

40

50

60

70

80

90

100

2000 2005 2010 2015 2020

Share %

IPv6-capable

IPv6-enabled

2025

acceleration would affect users’ transition costs is uncertain; however, it 

would likely lead to incremental cost increases. These cost increases 

reflect overtime for IT staff, potential outsourcing of some transitioning 

activities, and a decrease in companies’ ability to benefit from “lessons 

learned” over time. For example, less experience and time with IPv6 

could lead to more problems and issues that would need to be 

addressed during a transition. Based on information provided in 

interviews, RTI applied a 5 percent increase in users’ transition costs 

(maintaining the same relative cost distribution around t = 0) for 

Scenario 1. 

The second acceleration factor affecting deployment cost is that 

expenditures are incurred sooner than later. Accelerating expenditures 

increase the PV of the time series of costs. 

For this scenario, acceleration is bounded by the penetration of IPv6 

capabilities. Capabilities are still assumed to be deployed as part of 

routine hardware and software upgrades. Therefore, RTI assumes that 

incremental capital costs are negligible in Scenario 1. This assumption 

is relaxed in Scenario 2. 
IPv6 Economic Impact Assessment 

6-4 

 6.2 SCENARIO 2: ACCELERATING CAPABILITIES 

BY USERS 

Scenario 2 accelerates both the penetration of IPv6 capabilities and 

enabling of IPv6 by users. RTI projected the impact of a 1-year 

acceleration of capabilities. In addition, enablement still occurs at the 

time that capabilities become available, resulting in a 4-year acceleration 

of IPv6 enabling. Figure 6-2 provides a visual representation by 

adjusting the U.S. user-capable and enabled curves from Figure 3-2. 

Figure 6-2. Acceleration Scenario 2 

0

10

20

30

40

50

60

70

80

90

100

2000 2005 2010 2015 2020

Share %

IPv6-enabled

IPv6-capable

New IPv6-enabled

New IPv6-capable

2025

Similar to Scenario 1, costs increase in Scenario 2 due to a 5 percent 

increase in the cost of enabling activities and users incurring costs 

sooner than later. However the main incremental cost component in 

Scenario 2 is the early replacement of hardware and software needed to 

accelerate the penetration of user IPv6 capabilities. 

If users are to accelerate the penetration of IPv6 capabilities on average 

1 year earlier than would occur during normal upgrades and 

replacement, this implies a 1-year decrease in the average life 

expectancy of existing hardware and software. 

To capture this opportunity cost of early hardware and software 

retirement, RTI added to our cost model 1 year’s annual spending on 

affected hardware and software components. To approximate the 1-year 
Section 6 — Costs Under Alternative Deployment Scenarios 

6-5 

opportunity cost of the existing stock of Internet hardware and software, 

we used annual expenditures in 2003. Based on estimates provided in 

the “Gartner 2004 IT Spending and Staffing Survey Results” report4

 and 

Census data,5

 annual expenditures on Internet hardware and software in 

the United States in 2003 totaled approximately $123 billion. This cost is 

distributed over time based on the accelerated (new) penetration rate of 

user capabilities shown in Figure 6-2. 

 6.3 INCREMENTAL SCENARIO COSTS 

The time series of costs associated with acceleration Scenario 1 and 

Scenario 2 are compared to the base case in Figure 6-3. PV cost 

differences are shown in Table 6-1. Scenario 1 yields a PV increase of 

approximately $6.4 billion over the time period of this analysis. 

Figure 6-3. Acceleration Scenarios 1 and 2 

0

5,000

10,000

15,000

20,000

25,000

1995 2000 2005 2010 2015 2020 2025

Year

$ Millions 

Base Case Accel Scenario 1 Accel Scenario 2

 

4

 Gartner report entitled “Gartner 2004 IT Spending and Staffing Survey Results” by 

Barbara Gomolski, October 29, 2004. In this report, Gartner provides summary data 

based on a survey of approximately 400 organizations. RTI used data in Table 15 

(pages 15-17) concerning capital spending on client computing and storage hardware, 

servers, total capital software spending, in-building data networking (LANs), and 

external data communications (Internet/WAN/VPN/remote access). 5

 “2002 Economic Census: Table 1. Advance Summary Statistics for the United States—

2002 NAICS Basis” by the U.S. Census Bureau. RTI summed “Sales, receipts, 

revenue, or shipments” estimates to determine total U.S. revenue. Available at 

http://www.census.gov/econ/census02/advance/TABLE1.HTM. 
IPv6 Economic Impact Assessment 

6-6 

Table 6-1. Acceleration Costs ($ Millions) 

Peak Annual Cost 

($M), Year 

Incremental 

Maximum Annual 

Cost ($M) 

Present Value in 

2003 Dollars ($M) 

Incremental 

Costs over 

Base Case ($M) 

Base case $8,387 (2013) $25,434 

Acceleration Scenario 1 $9,361 (2010) $974 $31,879 $6,445 

Acceleration Scenario 2 $23,601 (2011) $15,214 $71,963 $46,529 

Scenario 2 becomes significantly more costly because of the early 

replacement of hardware and software 1 year ahead of schedule. The 

PV cost of the transition in Scenario 2 increases $46 billion over the base 

case to more than $70 billion. 

Table 6-1 also indicates the year in which annual IPv6 transition costs 

peak. In the base case, costs peak in 2013 at $8.3 billion. Scenario 1’s 

annual costs peak at $9.4 billion in 2010, and Scenario 2’s annual costs 

peak in 2011 at $23.6 billion. Scenario 1’s costs peak a year earlier than 

Scenario 2’s because Scenario 1’s costs are driven by enabling activities 

that can occur 1 to 3 years prior to early replacement of hardware and 

software.
Appendix A: 

Interview 

Participants 

A-1 

The following is a list of organizations and individuals who participated in 

the interviews conducted by RTI. 

Infrastructure Vendors 

• Boeing Integrated Defense Systems

• Hewlett-Packard Company

• Microsoft

• Native6

• Nortel Networks

Application Vendors 

• Arkivio

• Hexago 

• Level7

• Mentat

• OnStor, Inc.

• Red Storm Entertainment Inc.

Internet Service Providers (ISPs) 

• AT&T

• Earthlink

• Qwest

• Sprint

• Teleglobe

• Verio

Infrastructure Users 

• Motorola

• Nextel

• Nokia

• Panasonic

Internet Users 

• The Boeing Company

• CENTAUR/NC State University

• Defense Research Engineering Network (DREN) 

• ESNet

• Internet2

• U.S. Army
IPv6 Economic Impact Assessment 

A-2 

Other Interested Parties 

• IPv6 Forum

• North American IPv6 Task Force (NAv6TF)

• Paul Francis