The first services built with IPv6 in mind are just hitting the market. Microsoft’s upcoming Vista operating system, for example, includes a feature where two IPv6 compatible computers can work in the same Office document without going through a server or other host. This ad hoc networking, where one of the devices essentially acts as the server, has broad implications for computer gaming, sensors and RFID.

Will the Bet Pay Off?

Some Internet experts, such as Paul Francis, a computer science professor at Cornell University who also happened to invent NAT devices, say that upgrading networks to IPv6 will cost so much and take so long that engineers will develop workarounds—be it improvements to NAT devices or something new—that solve the problems with IPv4, keeping the current Internet in place forever. But most people familiar with IPv6 say that the protocol has too much promise and can save CIOs too much money for it not to be adopted. Plus, most equipment makers are already selling IPv6-capable equipment today, meaning you could be building a next-generation network without even knowing it (see "Your Hidden IPv6 Network" on Page 45). "In the next 10 years everyone will [begin] moving to IPv6," says Robert Atkinson, president of the Information Technology and Innovation Foundation, a technology policy think tank. "That is not in doubt." The question, he says, is how long it will take for the United States to reach critical mass on the new protocol.

The federal government is moving now, thanks to an Office of Management and Budget mandate that says agency networks must be IPv6-capable by 2008. But a June 2005 GAO study found that only one agency, the Department of Defense, even has a transition plan in place (an updated report due out this summer is expected to show more agencies making plans, however).

The major U.S. telecommunications companies, meanwhile, are taking a wait-and-see approach to IPv6, says Prodip Sen, director of data and service architecture at Verizon Laboratories. They are buying equipment that can handle both IPv4 and IPv6 traffic, and waiting for demand for the new standard to emerge. The result is a chicken-and-egg dilemma: No one wants to invest in the infrastructure until there are applications that require it, but few companies will develop those applications until there is a network that can run them.

The United States’ reluctance to invest in IPv6 makes it more likely that China will be in a position to gain the first-mover advantage it seeks. A draft version of a January 2006 report by the Department of Commerce on IPv6 contained a section on competitiveness that highlighted several threats to U.S. Internet leadership, including a further shift of high-tech R&D and product innovation eastward and less available investment capital because of the higher costs of maintaining IPv4 networks. What remains to be seen is whether China can develop the services that take advantage of the next-generation Internet. But China’s researchers are already working on it. At the IPv6 Global Summit in April, China’s major telecommunications and Internet companies got up on stage one by one and told the audience that they have research facilities dedicated to developing these services. "CNGI will continue to be the most important topic of research for us," says Zhao Huiling, vice president of the Beijing Research Institute of China Telecom. Similarly, the Chinese government decided that CNGI’s first users should be universities, research labs and leading companies precisely because that is where it imagines innovation will come from. Liu Dong, president of the Beijing Internet Institute sums it up succinctly: "We think we can develop the killer applications," he says.