DHCP Autoconfiguration / Automatic Private IP Addressing (APIPA)
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The IP address of a TCP/IP host is, in many ways, its identity. Every TCP/IP network requires that all hosts have unique addresses to facilitate communication. When a network is manually configured with a distinct IP address for each host, the hosts permanently know who they are. When hosts are made DHCP clients, they no longer have a permanent identity; they rely on a DHCP server to tell them who they are.
The dependency of DHCP clients on servers is not a problem as long as DHCP is functioning normally and a host can get a lease, and in fact has many benefits that we have explored. Unfortunately, a number of circumstances can arise that result in one of the DHCP processes not resulting in a lease for the client. The client may not be able to obtain a lease, re-acquire one after reboot, or renew an existing lease. There are many possible reasons why this might happen:
Without a lease, the host has no IP address, and without an address, the host is effectively dead in the water. The base DHCP specification doesn't really specify any recourse for the host in the event that it cannot successfully obtain a lease. It is essentially left up to the implementor to decide what to do, and when DHCP was first created, many host implementations would simply display an error message and leave the host unusable until an administrator or user took action.
Clearly this is far from an ideal situation. It would be better if we could just have a DHCP client that is unable to reach a server automatically configure itself. In fact, the IETF reserved a special IP address block for this purpose. This block, 169.254.0.1 through 169.254.255.254 (or 169.254.0.0/16 in classless notation) is reserved for autoconfiguration, as mentioned in RFC 3330:
Hosts obtain these addresses by auto-configuration, such as when a DHCP server may not be found.
Strangely, however, no TCP/IP standard was defined to specify how such autoconfiguration works. To fill the void, Microsoft created an implementation that it calls Automatic Private IP Addressing (APIPA). Due to Microsoft's market power, APIPA has been deployed on millions of machines, and has thus become a de facto standard in the industry. Many years later, the IETF did define a formal standard for this functionality, in RFC 3927, Dynamic Configuration of IPv4 Link-Local Addresses.
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