Starting February 2024, Amazon will monetize their owned IPv4 addresses, leading to higher costs for BYOIP (Bring Your Own IP) on AWS EC2 instances. The new pricing model for their SES (Simple Email Service) product stipulates that customer-owned IPv4 addresses now incur a monthly fee of $6,387.20 for AWS BYOIP. This translates to $24.95 per IP per month for a minimum required /24 block (256 IPv4 addresses).
AWS Charges $6,387 Monthly for BYOIP /24
Amazon now charges $0.005 per IP per hour for using its public IPv4 addresses. This amounts to about $3.65 per IP per month or $934.40 per month for a /24 IP subnet. With this pricing, Amazon appears to encourage clients to use its elastic IPs instead of their own. This strategy likely reflects Amazon’s substantial investment in acquiring tens of millions of IPv4 addresses over the past six years.
This shift is backed by a service introduced in 2018, which was previously free, as detailed in a 2021 blog post.
Amazon Invests Billions to Lease IPv4 Addresses
Amazon has been acquiring IPs for years and now holds over 100 million IPv4 addresses globally. A recent analysis places the number of IPv4 addresses Amazon owns at around 132 million, positioning them among the top 5 organizations in the US with the most IP addresses. According to IPinfo.io, as of February 2024, Amazon is announcing just over 62 million IPs across AS AS16509 & AS14618, representing around 50% utilization of Amazon’s AS numbers in the US. It will be interesting to observe how this figure evolves over the next 12 months, given their new business model.
Just like real estate, these IP addresses have appreciated as they have become increasingly scarce. At an average of $50 per IP (for /16s and larger), Amazon’s holdings are valued at over $6 billion.
In its characteristic forward-thinking approach, Amazon invests heavily in specific market sectors to outpace the competition. With its new pricing model for IP use, Amazon is projected to generate an additional $400 million to $1 billion annually, according to The Register. This is a significant shift, considering IP addresses were previously free on most AWS services. As IPv4 addresses become scarcer—with Amazon’s consolidation playing a part—leasing prices are likely to rise.
Implications for BYOIP Moving Forward
Amazon’s decision to charge for Bring Your Own IP (BYOIP) may drive AWS clients to explore alternatives. Yet, Amazon controls 31% of the cloud services market as of Q4 2023, rivaling Microsoft and Google combined. Migrating large organizations from an established vendor is complex, making switching providers difficult.
With Amazon, Microsoft, and Google dominating the market, competitors may adopt similar BYOIP pricing models. This could further concentrate IPv4 addresses among top cloud providers as using customer-owned IPv4 addresses becomes more costly.
