Are Residential IP Addresses for a VPN a Good Idea?

If you follow the latest developments in VPN technology you may have come across some interesting news in recent days that could affect the way VPN’s are administered and provided to customers around the world. To date (January 2015), one company is changing their business model to focus on VPN servers that make use of residential IP addresses. This is a controversial move that bears some examination.

Data centers vs. Residential IP addresses

The common practice regarding VPN’s is for servers to be hosted in data centers around the world with some of the more popular locations being USA, UK, Canada & Hong Kong, and this has certainly worked very well for a long time. The only drawback with the mainstream VPN services is that someone checking the IP address can determine that it is not allocated to a residential address such as COMCAST cable, Time Warner Cable of the United States of America. Why is this a problem? Some governments and regions and even specific web applications might, in theory, be able to block the IP address of a VPN server to prevent access to restricted content or to simply preclude the use of a VPN.

One major company, IAPS Security Services, L.L.C. has developed a plan to use residential IP addresses to host their VPN servers. This would give the appearance that the IP address belongs to an individual instead of a VPN service provider.  As of January 2015 they appear to be offering residential VPN Service from the following countries:

• Andorra (Residential ISP: Servei de Telecomunicacions d’Andorra)
• Argentina (Residential ISP: Gigared, S.A.)
• Brazil (Residential ISP: CTBC / Algar Telecom)
• Canada (Residential ISP: Bell Canada)
• Chile (Residential ISP: GTD Internet, S.A.)
• China (Residential ISP: China Telecom)
• Costa Rica (Residential ISP: Radiografica Costarricense)
• Hungary (Residential ISP: Invitel Tavkozlesi Zrt.)
• India (Residential ISP: Tata Communications)
• Israel (Residential ISP: Bezeq International)
• Italy (Residential ISP: Telecom Italia)
• Italy (Residential ISP: Tiscali)
• Italy (Residential ISP: KPNQ West Italia)
• Mexico (Residential ISP: Iusacell Wireless Broadband)
• Mexico (Residential ISP: Mega Cable, S.A. de C.V.)
• Moldova (Residential ISP: Orange, S.A.)
• New Zealand (Residential ISP: Voyager Internet, Ltd.)
• Norway (Residential ISP: Altibox)
• Panama (Residential ISP: Cable Onda)
• Romania (Residential ISP: RCS & RDS)
• Singapore (Residential ISP: Tata Communications)
• Slovenia (Residential ISP: Tusmobil, D.O.O.)
• South Africa (Residential ISP: Mweb)
• Taiwan (Residential ISP: Chunghwa Telecom Co., Ltd.)
• United Arab Emirates (Residential ISP: Emirates Integrated Telecommunications Co.)
• United States (Residential ISP: Comcast Cable – Massachusetts)
• United States (Residential ISP: Time Warner Cable – California)

On the surface it sounds like a great idea, but digging deeper reveals a set of unique problems that could be faced.

The problems with a residential IP address for VPN

In some countries a VPN provider may be able to obtain residential servers for professional use. In others, however, VPN provider IAPS Security Services, L.L.C. is proposing a rather radical solution: contracting everyday individuals just like you to host a VPN server  in exchange for free residential VPN service.

If you are going to buy and use residential VPN service, you can but be aware of the security of the information your transmit. However, let’s say that you are interested in hosting a VPN server in exchange for a free vpn account. The idea would basically work like this. The VPN provider IAPS would get in touch and request that you give one of their qualified technicians remote access to the computer in order to set up the server and also provide ongoing maintenance. You would be asked to provide a laptop or desktop computer that can be left connected to your local ISP 24 hours per day. The VPN provider would then use a process of virtualization to basically isolate, or dedicate, a portion of your hardware to create the server that is operated on the Linux Debian (or some similar Linux distribution) operating system. While it would be entirely possible for you to use your system in tandem with the VPN server it has now become, the VPN provider will likely discourage you from doing so because using it will impact the data delivery of the VPN server. In exchange for doing all of this you will be given free VPN service for the duration of your willingness to host the server from your home or office.

Does all of this sound confusing to you? Well, let us simplify it. You would basically be allowing a VPN provider to use your hardware and residential internet and IP address to host their VPN server. Anyone that has had any experience with VPN services can immediately see the problems that are presented with this idea.

It is very likely that the VPN provider will tell you that the people who will use the VPN server hosted at your residence are fine upstanding people and will not be using their VPN access for anything other than streaming television programming that is blocked in their home country (such as the BBC iplayer). But can the VPN provider realistically guarantee that its users are responsible and upstanding? What if they are using a BitTorrent client to illegally download music? What if one of them looks at child pornography? What if the user is involved in credit card fraud, blackmail, or worse? Any VPN provider you ask will tell you it is not possible!

If any activities occur that are subject to the intervention of legal authorities, the residential IP address will be traced directly back to you. The police will only be interested in the person that owns the line. You might be able to convince them of your deal with the VPN provider after a lot of hassle and maybe even clear your name, but think of how your reputation might be irrevocably harmed.

Also, think about this. It might be entirely possible for someone else in your home, or even a neighbor that uses your unsecured Wi-Fi network without your knowledge (yes, people do it all the time), to make a deal with the VPN provider without your knowledge or consent. They will be receiving the benefit of free VPN service while putting you at risk. If any trouble occurs as a result, you will be the one to take the fall because you own the connection. Furthermore, you may be violating your Internet Service Provider terms and conditions by hosting the server on the network.

Lastly, all of the expenses such as electricity and Internet access is yours. You won’t receive any compensation for these expenses.

Should you host a residential VPN?

While we really think it is a great idea to implement the use of residential IP addresses for VPN servers, the cons at this time greatly outweigh the pros. If you are thinking about accepting and participating in this kind of arrangement it will be very beneficial to do additional research and fully explore the risks of such an arrangement.