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IP Address Management
An introduction to Internet Protocol (IP) address management

By: Bruce Bahlmann - Contributing Author (your feedback is important to us!)

Created: May 29, 2000

Note: Birds-Eye.Net offers a DHCP Stress Testing Suite [evaluation/buy] as well as expert consulting help for the peskiest of DHCP configurations [consulting].

Have you recently experienced being assigned a new area code or instructed that to phone a friend in a town only minutes from you that you now have to now dial 10 digits to reach them. If you have, you’ve witnessed first hand the process of managing a finite resource. This process always starts out easy – like the seven digit dialing and then gets more complex as the system grows.

Similar to managing phone numbers as phone companies try to do, Internet delivery companies try to manage a different kind of finite resource: IP addresses. Like phone numbers, IP addresses get dolled out to subscribers for the purpose of allowing them to access the Internet. Also similar to phone numbers that enables people to talk to one another, IP addresses allow subscribers’ computers to communicate with other Internet hosts.

Phone numbers and IP addresses are a unique type of finite resource in that they can be used again and again so long as while each is in use they reside with one and only one subscriber/device. They also don’t really cost anything (as they are just numbers) but indirectly have a cost associated with them in terms of facilitating/maintaining communications with them – i.e. they facilitate a service that people pay for.

There are several different ways to manage IP addresses depending on the number of IP addresses one has, the number of subscribers/devices that need them, and the operational needs and/or resource limitations one has. All these different ways to manage IP addresses fall into the following two categories:

Manual: Essentially a labor-intensive form of IP address management where anything that is assigned an IP address is written down either on paper or in electronic form. This resulting information is called an IP plan and when kept up to date can be a very useful and operationally sound means of managing a number of IP addresses. Manual IP plans have worked for years and are still widely in use today. They range from handwritten documents to elaborate databases however all information is hand entered.

Optimized For: Statically assigned IP addresses

Benefits: Allows highly customized entries including what resides at each IP address, where it is located (building, address, rack, etc.), what is it used for, and why is it placed where it is. Some companies allow service/maintenance records to be entered along side IP address details so as to provide more information about each specific host entered. In the end, this becomes a very powerful resource for management of not just IP addresses but also inventory, hardware, connectivity, and service/operations. It is extremely cheap to implement and can grow in complexity as needed with no up front investment.

Disadvantages: Very resource intensive and most likely company specific. Building and maintaining IP plans for large networks using a manual method become highly customized very quickly and seldom can leverage off the shelf software. Dynamically assigned hosts are typically only written as ranges of assigned addresses and are typically not defined beyond this. Building software in house can become a headache in terms of support and on-going evolution of functionality.

Automated/Assisted: In very large networks where information changes daily the use of the manual method of IP address management can become cumbersome. As a result, some manual tasks are replaced with automation such as topology discovery and association with information contained in other databases such as Dynamic Host Configuration Protocol (DHCP), Network Management System (NMS), etc.

Optimized For: Dynamically assigned IP addresses

Benefits: Provides extremely useful capability for managing dynamically assigned IP addresses by interfacing directly with DHCP lease databases or this functionality is actually part of the DHCP server software. Some vendors allow custom fields to be added and provide interfaces for manually entering/managing statically assigned hosts. Fully supported software that will grow in capability as you grow.

Disadvantages: Automated means of managing finite resources suffer from ambiguity – as they attempt to obtain some level of detail close to manual IP address management techniques. However, this is next to impossible since there is a big difference between listing some piece of hardware that resides at some IP address and actually explaining what resides there, what is it used for, and why is it there. Discovering hardware can also play tricks on you as if the device is not accessible via Simple Network Management Protocol (SNMP) it is very difficult to determine what it is based on its network interface. What’s more is the fact that each company’s idea of how it manages IP addresses may not fall into a boilerplate approach dictated by automated/assisted software – again IP address management typically becomes highly customized. Costs can be significant (per network node in most cases) and take a bite into on going revenue.

While both categories can provide adequate IP address management, each category uniquely provides best of class functionality for certain IP address management needs.

The timing of your selection of an IP address management system can also impact which one you chose. For example, if your network is already deployed (and running) only now you begin looking at both methods you may find yourself leaning towards a more automated means of IP address management. Why? Because staring up at the mountain of information that would need to get entered using manual methods could be daunting. However, those who started using manual methods look at the ever expansion of their network as a small manageable delta to their IP plan and thus see things much different.

IP address management is a process of allocating, assigning, tracking, and reallocating IP addresses (at least this is the process using the technology that exists today). Each phase in the process is explained below:


Allocation attempts to assign IP addresses that will permit existing operation and allow for some future growth. Allocation must also take into account current IP address utilization, the market for service in the area, install rates of the area being assigned, and potential route summarizations where possible. All in all, allocation is very difficult phase and something one can impact operations unnecessarily if not completed correctly. For example, lets say you just built out a new city and want to release it to new subscribers. How big of a network (number of addresses) would you allocate to this city? Determine your average penetration rate (e.g. 10%) and your install capability in the area (e.g. 10 per day), any other networks currently in use off the existing router (e.g. to see if there is any potential to summarize routes) and lastly what is your current overall utilization (e.g. 45%). Utilization may force you to initially allocate fewer IP addresses than you might initially think would be needed. However, experience will tell you that it is easier to split up (renumber) than reclaim unused addresses – my basic recommendation is aim low! For the above network I would not initially assign more than 128 addresses in the first round – realistically I may shoot for 64 and then renumber with growth. Note that when you allocate IP addresses you are actually sizing/creating a network that will service subscribers thus you have to follow standard network numbering configurations. A good web site to help you in slicing and dicing networks is the following (


Upon allocation, these IP addresses fall into one of two categories: free or assigned. Those that are free consist of IP addresses that are unassigned (available), and those that are assigned consist of IP addresses that have been associated with some device/client. IP addresses become assigned when they are either manually entered into some device or automatically assigned via DHCP. Once assigned/associated with a client, an IP address changes its status from “free” to “assigned”. This action has different implications depending on whether one is using manual or automatic methods. Using manual methods this may merely consist of entering information for that IP address – other unassigned (free) IP addresses are left blank. Automatic methods vary vendor to vendor on how they have implemented DHCP. It is also a good idea to standardize certain assignments (particularly those that replicated in other physical locations). For example, say your building out several hub sites with similar numbers/types of servers, routers, switches, etc. If you were to place all these equipment on similar IP addresses that will simplify operations knowing that in each hub for example, the router is the first address, the switch resides on the second, DHCP uses the third, and so on – this is an extremely useful practice!


Once a sufficient amount of IP addresses have been both allocated and assigned the next challenge is to begin tracking them. The goal here is to first stay operational (by keeping a sufficient amount of IP addresses available to continue installs) and second, to stay in good graces with the Internet Address Numbering Authority (IANA) by maintaining relatively high utilization of your allotted IP addresses. IANA will require particular utilization numbers be maintained or will ask you to surrender some of your allotted IP addresses or worst make it more difficult for you to obtain additional addresses needed to expand your allotted IP address space. Unfortunately, these goals work against each other – the first requires you to allocate as many free IP addresses as possible and the second requires you to consume (assign) as many free addresses as possible. As a result, you will find that to be successful at both of these goals will require some kind of policy (guidelines) be established. These guidelines will regulate your treatment of each phase in the process based on facts rather inclination. As a result, thoughtful allocation and assignment will make tracking and follow on actions significantly easier.

Tracking IP addresses requires documentation, reports, etc. to help keep tabs on where your allotted IP addresses are being allocated and assigned. Manual methods have the ability to break down IP address assignment & utilization by several more categories like use, location, and service history (depending on how it was implemented). Both methods likely allow you to rank or order lists by size, utilization, number of addresses remaining, etc. These reports provide tactical information to for use with previously established guidelines to determine intervention as needed.


As your original allocations become exhausted, you will need to begin preparations for reallocation. IP address management is critical during this phase especially the information you collected during the initial allocation such as utilization, installation rate, penetration rate, etc. In this way, you can determine if your original allocation was successful and feed that information/corrections back into your next allocation. Information collected during allocation also helps you split the exhausted network so as to create two equal populations of network hosts – both should contain about the same number of customers and continue with the same amount of growth. Next you’ll need to transition (renumber) one of these groups onto the newly allocated network – the remaining group will not be affected. Good IP address management paves the way to make these renumbering exercise as textbook as possible.


IP address management provides a means of overseeing a finite resource. Some consider keeping track of IP addresses and IP address management to be one in the same. However, proper IP address management oversees the whole process of handling IP addresses not just keeping track of which ones have been assigned and how many are utilized. Using this more comprehensive view of managing IP addresses one can proficiently oversee IP addresses on any data network.

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