IP "Supernetting": Classless Inter-Domain Routing (CIDR) Hierarchical Addressing and Notation
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"Supernetting": Subnetting the Internet
In theory, then, what CIDR does is provide the central address-assignment authority with the flexibility to hand out address blocks of different sizes to organizations based on their need. However, when CIDR was developed, a shift was made in the method by which public IP addresses were assigned. Having everyone in the world attempt to get addresses from one organization wasn't the best method. It was necessary under the classful scheme because the hierarchy was only two levels deep: IANA handed out network IDs to everyone, who then assigned host IDs (or subnetted).
Under CIDR we have many hierarchical levels: we split big blocks into smaller blocks and then still-smaller blocks, and so on. It makes sense to manage blocks in a similar hierarchical manner as well. So, what happens is that IANA/ICANN divides addresses into large blocks, which it distributes to the four regional Internet registries (RIRs): APNIC, ARIN, LACNIC and RIPE NCC. These then further divide the address blocks and distribute them to lower-level national Internet registries (NIRs), local Internet registries (LIRs) and/or individual organizations such as Internet Service Providers (ISPs). This is all explained in the background topic on Internet authorities and registries.
ISPs can then divide these blocks into smaller ones that they allocate to their customers. These customers are sometimes smaller ISPs themselves, which repeat the process. They split their blocks into pieces of different sizes and allocate them to their customers, some of whom are even smaller ISPs and some of whom are end users. The number of times this can occur is limited only by how many addresses are in the original block.
It's also worth noting that while CIDR is based on subnetting concepts, subnetting itself is not used in CIDRor at least, not in the way it is used under classful addressing. There is no explicit subnetting using a subnet ID within CIDR: all IP addresses are interpreted only as having a network ID and a host ID. An organization does the equivalent of subnetting by dividing its own network into subnetworks using the same general method that ISPs do. This probably seems a bit confusing. Later in this section I have provided a detailed example of how hierarchical address block assignment and splitting works under CIDR.
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