IP addresses are allocated to ISPs based on their projected need. There are various registries responsible for geographic regions - ARIN in the Americas, APNIC in Asia, and RIPE in Europe. These registries also assign ASNs (Autonomous System Numbers) which identify distinct networks in the global internet routing table.
The registries have various guidelines for allocating addresses; see http://www.arin.net to read ARIN's guidelines. While the functions of these registries are not as saturated with politics as the functions of the Top Level Domain name registries, certain ISPs receive more generous allocations than others. In today's Internet it is very difficult for an end-user to receive IP assignments directly from ARIN, as end-users are expected to receive their assignments from their upstream ISPs.
There are many companies and individuals who did receive direct assignments pre-1995 who were "grandfathered" in. The registries occasionally revoke allocations and assignments but this rarely happens if someone shows good-faith that they are using a portion of their addresses.
The main goals of the registries are to allocate addresses to the ISPs that need them and prevent waste and to allocate in such a way that the global internet routing table is kept as small as possible. The latter is done by allocating networks in such a way that multiple networks can be represented with fewer aggregate routes.
IPv6, being deployed after the explosive growth of the Internet, will take advantage of what we have learned with address allocations and routing so as to prevent some of the problems we have faced with the IPv4 address space. During the 80s and early 90s few envisioned the current situation and there was little in the way of long-term address allocation strategy.
That the Internet functions as well as it does is testament to the brilliance of the technical folks who drafted Internet Standards such as CIDR (classless inter-domain routing) and BGP (Border Gateway Protocol) which, among other things, allowed the Internet to grow to match the current demand.
HTH,
Matt
-- PGP RSA Key ID: 0x1F6A4471 aim: beyondzero123 PGP DH/DSS Key ID: 0xAFF35DF2 icq: 120941588
yahoo msg: beyondzero123 If the jury feels the law is unjust, we recognize the undisputed power of the jury to acquit, even if its verdict is contrary to the law as given by a judge, and contrary to the evidence.
-4th Circuit Court of Appeals, US v. Moylan, 1969