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’s pricing updates indicate a charge of $0.005 per IP per hour for using their public IPv4 addresses. Annually, this equates to approximately $3.65 per IP per month, totaling around $934.4 per month for a /24 IP subnet. This pricing strategy seems to encourage clients to adopt Amazon’s elastic IPs over their own, possibly due to Amazon’s significant investment in acquiring tens of millions of IPv4 addresses in 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 strategy to charge for Bring Your Own IP might push AWS clients to consider alternatives. However, Amazon holds a commanding 31% share of the cloud services market as of Q4 2023, nearly equal to Microsoft and Google combined. The complexity of migrating large organizations from an established vendor adds to the challenge of switching providers.
In a market dominated by Amazon, Microsoft, and Google, it is feasible that these competitors might adopt similar pricing models for BYOIP services. This could lead to further consolidation of IPv4 addresses among top cloud service providers, as customers find their own IPv4 holdings increasingly expensive to utilize.
