Some observers see Iran’s technological developments — along with its participation in nuclear talks — as a sign that President Hassan Rouhani is eager to normalize relations with the outside world after years of isolation. (Atta Kenare/AFP via Getty Images)

As world powers have been working to curb Iran’s nuclear program, the Islamic republic has been bolstering its ambitions in cyberspace, positioning itself as a potential technological leader in a turbulent and strategically crucial region.

Iran in recent years has inaugurated a new, high-capacity data link to Europe, introduced 3G and 4G cellular service to millions of customers, and become a major buyer in a bustling new marketplace for IP addresses — the fundamental building blocks of the online world.

Western experts watching these developments see little evidence that they are intended to boost Iran’s already formidable cyberwar capabilities. Instead they see a nation making investments in civilian technology that could help Iran build a more modern, open economy, especially if a tentative nuclear deal struck last week yields a permanent accord and an easing of international sanctions.

Despite deep-seated wariness of Iran, some observers see these technological steps as a sign — along with the nuclear talks — that President Hassan Rouhani is eager to normalize his country’s relations with the outside world after years of combative isolation.

Iranian companies over the past 15 months have bought more than 1 million IP addresses, according to Dyn, a New Hampshire-based Internet performance analysis company. At roughly $10 per address, the investment is an effort to make it easier for Iranians to get online.

Any advances by Iran cause some unease in the West, given the nation’s history of aggressive foreign policy. But experts say they see no new danger in Iran buying IP addresses or improving cellular data service.

“My sense is that this is not only a good thing but a great thing,” said Richard Nephew, a former State Department official who once helped oversee the stringent U.S. sanctions regime against Iran and now is a fellow at the Center on Global Energy Policy at Columbia University.

Iran has made the investments despite a faltering domestic economy, weakening currency and increasingly punitive international sanctions. Western sanctions have generally allowed trade in personal telecommunications equipment to encourage freer communication among Iranians and access to foreign sources of information. Internet speeds there have long been slow by global standards.

Modernizers vs. hard-liners

Westerners tracking Iran’s developing Internet industry see contrary impulses at work, as modernizers struggle with hard-liners to shape the nation’s trajectory. The result, observers say, is a confusing mix of trends on a range of issues — such as human rights and nuclear development, as well as Internet policies.

Iran boasts one of the world’s most active teams of cyberwarriors and one of the most aggressive systems of online censorship, blocking such familiar Internet staples as YouTube, Facebook and Twitter. The nation also maintains an unusual internal computer network — often called the “halal Internet” — and in February launched its own Persian-language search engine.

“The problem for [Iran] is not letting their citizens know what’s going on in the rest of the world,” said James A. Lewis, a cybersecurity expert with the Center for Strategic and International Studies. “It’s politically risky, but more for them than for us.”

Yet the new fiber-optic data link to Europe — part of a 6,000-mile cable running from Germany to Oman — is an explicit move for better international connection. So is the introduction of 3G and 4G mobile services, which have the potential to dramatically expand global connectivity for Iranians. The same is true for Iran’s acquisition of new IP addresses, which allow more devices to easily connect to the Internet.

Together, observers say, these are signs of a nation preparing for a more connected, advanced economy — even while some hard-liners cling to more traditional, restrictive policies.

“There is dual intent,” said Collin Anderson, a researcher affiliated with the Annenberg School of Communication who has studied Internet access in Iran and its censorship regime. But he said that the Rouhani government, which took office in August 2013, appears to be “preparing for a healthier landscape.”

Anderson said that the acquisition of IP addresses “doesn’t facilitate any nefarious practices.”

One of the most common types of cyberattack, called a “distributed denial of service,” typically involves hundreds of thousands of computers worldwide but can be launched from a single IP address. Several technology experts said they saw no obvious benefit, from a military perspective, in buying more addresses. Civilian connections, however, are much easier with more IP addresses.

“The fact that they are acquiring IP address space means they want to be on the global Internet,” said Phillipa Gill, a Stony Brook University computer scientist who has studied Iran’s system of online censorship. “It’s a good sign that they want to get more connected.”

The nation’s development started from a weak foundation. Iran has abysmally slow Internet speeds, though its internal “halal” network is faster. Iran also, until recently, had relatively few fiber-optic data links and little mobile connectivity through its cellular networks.

Iran’s shortage of IP addresses is a common problem among non-Western nations that were latecomers to the Internet. The United States, where the Internet was first developed by a Pentagon research agency, has 1.6 billion IP addresses, enough for each resident to have five separate connections to the Internet. Iran has fewer than 11 million, meaning that only 1 in 7 Iranians can have their own IP addresses, limiting the ability to connect to the Internet.

Addresses in short supply

The growing market for IP addresses results from a mounting worldwide shortage. Internet protocols designed in the 1980s limited the number of IP addresses to 4.3 billion. The number seemed so large at first that addresses were given out for free to those who claimed a need. The U.S. Postal Service, for example, got a block of 16.8 million — more than all of Iran — as did the Massachusetts Institute of Technology, Ford and General Electric. Only in the past several years has a market emerged setting a price on blocks of addresses.

Recent transfers, which have caused only minor technical hiccups online, offer a more efficient way to allocate the world’s IP addresses, one-quarter of which are not used by the entities that nominally control them despite the overall shortage, according to a Dyn analysis.

“Our interests are not served by having [Iran] cut off from better Internet connectivity,” said Doug Madory, director of Internet analysis for Dyn (formerly called Renesys).

A new system, called IPv6, would make the number of IP addresses virtually limitless but has so far experienced limited uptake. The trade in traditional addresses, meanwhile, has grown increasingly robust and lucrative. Iran has made 85 separate purchases, mostly from companies in Romania. Other major buyers also are in the Middle East, including Saudi Arabia and the United Arab Emirates.

“It’s kind of like oil for IP addresses,” said Elvis Velea, chief executive of V4Escrow, based in Las Vegas.

Iran’s cellular industry also has lagged behind those in more advanced nations. MTN Irancell began offering 3G service in August and 4G in December. Even though the largest Iranian cellular provider hasn’t started offering such high-speed connections, an estimated 19 million Iranians are expected to have 3G or 4G by the end of this year and more than 40 million in 2019, according to Business Monitor International, an industry analysis company.

The fiber-optic data link, stretching from Frankfurt, Germany, to Oman on the vital Persian Gulf, is designed to eventually carry 3.2 terabytes of data per second, offering the potential to one day link India to Europe without traversing the Suez Canal or such trouble spots as Afghanistan, Iraq or Syria.

Iran also has engaged in on-again, off-again talks about building an Internet exchange point, which would allow much faster data connections, said Bill Woodcock, research director of the Packet Clearing House. The San Francisco-based nonprofit has built Internet exchange points throughout much of the world.

“All they’re trying to do is be like us,” Woodcock said. “They’re trying to build as much Internet as they can, as quickly as they can.”

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