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RIPE NCC Revenue in 1995

Daniel Karrenberg
RIPE NCC

Scope
This memo provides an overview of the number of European Local Internet Registries, the customers of the RIPE NCC and the associated revenue. It provides historical data as well as projections for the second half of 1995 and into 1996. The companion document "RIPE NCC Expenditure Planning 1995" describes the planned use of these funds.

Local Registries 1993-1996

The total number of local IRs has been recorded reliably and in a comparable fashion for quite some time. Data is collected at the end of each quarter. The table below combines this historical data with my current projections until early 1996.

+---------------------+
|Quarter Registries |
+---------------------+
|Q2/93 61 |
|Q3/93 75 |
|Q4/93 83 |
|Q1/94 96 |
|Q2/94 115 |
|Q3/94 130 |
|Q4/94 141 |
|Q1/95 179 |
|Q2/95 218 |
+---------------------+
|Q3/95 243 |
|Q4/95 275 |
|Q1/96 308 |
+---------------------+

A graphical representation of this data looks as follows:

350++---------------------------------------------------+
| |
| |
300++ *A |
| ** |
| *A |
| ** |
250++ *A |
| ** |
| A |
200++ ** |
| * |
| A |
| ** |
150++ * |
| **A***A |
| *A* |
100++ ** |
| **A |
| **A***A* |
| A* |
50++---+---+---+---+---+---+---+---+---+---+---+---+---+
Q2/933/934/931/942/943/944/941/952/953/954/951/96

There is a pronounced steepening of the curve at Q1/95. This increase in growth rate is also observed in DNS hostcount and registration services load data.


NOTE: In this memo the values for 2Q95 are treated as "observed" although the quarter is not completed yet. The projected values have been corrected with observed data of May 28th or later and carry a high degree of confidence.

Registries by Type and Size
Since the beginning of 1995 comparable data about the different types of registries as well as the associated revenue has been collected. The table.below gives the details about the number of registries:

+------------+-----------------+-----------------+
| | Observed | Projected |
|Registries | Q4 Q1 Q2 | Q3 Q4 Q1 |
| | 94 95 95 | 95 95 96 |
+------------+-----------------+-----------------+
| | | |
| Large ISP | 17 17 18 | 18 19 21 |
| Medium ISP | 28 31 37 | 42 47 54 |
| Small ISP | 51 84 115 | 134 159 182 |
| Enterprise | 14 15 16 | 17 18 19 |
|Last Resort | 31 32 32 | 32 32 32 |
| | | |
| Total | 141 179 218 | 243 275 308 |
+------------+-----------------+-----------------+


The number of registries in the "Projected" columns have been estimated using monthly averaged growth rates corrected with particular expectations, such as the closure of a number of registries now handled by EUnet's central IR. These projections have been made extremely conservatively, i.e. they do not extend the growth observed in Q1 and Q2 even linearily.

The latest observed data (May 28th) is shown between the observed and projected quarterly data points for comparison. It represents roughly two thirds of the Q2/95 period.

Revenue
The following table shows the revenue corresponding to the number of registries in the previous table:

+---------------+-----------------+----------------+
| | Observed | Projected |
|Revenue (kECU) | Q4 Q1 Q2 | Q3 Q4 Q1 |
| | 94 95 95 | 95 95 96 |
+---------------+-----------------+----------------+
| Contribution | 488 573 656 | 691 714 ? |
| Committed | 0 440 558 | 587 607 |
| Invoiced | 0 363 512 | |
| | | |
| Signup Fees | 0 74 152 | 202 266 ? |
| Committed(*) | 0 74 152 | 202 266 ? |
| Invoiced | 0 64 113 | |
| | | |
| Totals | 488 647 808 | 893 980 |
| Committed | 514 710 | 789 873 |
| Invoiced | 427 625 | |
| | | |
| Received | 195 443 | |
+---------------+-----------------+----------------+

(*) Commitments for signup fees are notrecorded separately at this point in time,however, the commitment rate of new registries is almost 100%.


The table shows quite clearly that we can safely expect to have, by the end of 1995, commitments for an amount of at least 873 kECU, which considerably exceeds the expenditures currently planned in the1995 budget (407 kECU). The rationale for this is given by reading the table as explained in the following paragraphs.

The total NCC revenue sources are given by all registries contributing their share, the Contributions, plus the signup fees received from new registries as they subscribe, the Signup Fees. The first lines in each section represent the amounts to be received assuming all registries would contribute what is due following the contributions model.

The "Committed" lines represents the amount committed by signed service agreements. The "Invoiced" lines represent the amount for which invoices have been sent out. It must be noted that amounts committed and invoiced are not directly comparable, because commitments are made on an yearly basis, while part of the invoicing is done half-yearly or quarterly.

The "Received" line gives the total amount of funds received. By comparing this line to the total invoiced, we can see that the situation is improving. During 1Q95, in fact, only 45% of the invoices was paid, while to date (end of 2Q95) already 70% of the invoices have been already paid.

The projected "Contribution" numbers are derived from the estimated number of registries by applying the 1995 charging scheme. The commitments projected are at 85% of the due value, which is very conservative as the bulk of the non-committed registries have been carried from previous years and new registries tend to sign the agreement. This predicts the income for the RIPE NCC core services from the existing registries as well as possible, but conservatively.

The projected "Signup Fees" are also algorithmically derived from the registry projection (shown in the previous table). At the end of Q4/95 we expect to have invoiced a total of ECU 266k in signup fees. This revenue is earmarked for the initial support of new registries. It is reasonable to spread the expenditure assuming an initial support period of 12 months for each registry. With this assumption we should spend approximately ECU 174k on new registry support in 1995.

The 1996 revenue cannot be predicted because the 1996 charging scheme has not yet been determined.


Conclusions
The RIPE NCC billing and cash-flow situation is excellent. The new billing system and the sanction "time permitting service" prove to be effective.

The currently projected 1995 revenue of ECU 873k considerably exceeds the currently planned expenditure of ECU 407k.

ECU 174k should be spent on support for new registries in 1995.