[members-discuss] Charging Scheme, Budget Questions

Hello,

Long time LIR, first time (I think?) list caller...

I confess, mea culpa, I was not on members-discuss at the time to see the earlier conversation and despite my best efforts to read the archive I have not yet seen some of the answers from RIPE on list that I would have hoped to see. Perhaps some of this was addressed, but not documented on-list from, the open house I saw that took place. 

I have to say that this seems to me to be a deeply cynical way to get the revenue increase that RIPE wants (i.e. equal to a +10% increase of the current cost model).

By presenting this "pay per size" proposal (which by my reading of RIPEs figures benefits nearly 70% of the vote and so seems a certainty if those members vote, as I expect, in their short term interest) as *only* being available with the option of increasing their revenue despite apparently fairly significant reserves, this seems likely to guarantee RIPE the same budget increase it clearly feels it needs as a 10% increase to the one-lir-one-fee model would (but which is, of course, much harder to get past a vote).

In some ways, perhaps, this is good in that it has made several LIRs I have flagged this proposal to now sit up and take notice, in much the same way as some of the same people eventually did over at Nominet, that something at least appears like it might have gone wrong.

This "final" option A charging model would see us paying more than we ever have, even after adjusting our 03-04 (also, then, 'pay per size') invoices for inflation (and our fees of course actually went down in 04/05). 

In the last 2 decades generally, we have made minimal demands of RIPE other than expecting them to maintain the database/RPKI. We nevertheless understand the utility and value of many "extra curricular" activities, but like others have questions about the amounts now apparently involved, the amount of staff required, and are a little dismayed at the options being presented at this point making a funding increase (not to mention a nearly 3x rise for us personally) a "fait accompli", as if the tapering in revenue from LIR memberships over the coming year was somehow unpredictable in November 2022 or previous years, when the budgets were set.

I accept that we are now late to the discussion/shaping party as these are "final" charging schemes, but I would still like some specific answers from RIPE (some of these questions have been asked before, but not answered anywhere that I can see); I appreciate there are a lot of them so I have tried to order and group questions by topic, starting with the charging scheme and then turning more generally to RIPE itself;

1. Why were there no "pay per size, shrink RIPE budget in real terms" options presented? 
Would just charging more for transfers (which I imagine some of the most 'expensive' activity RIPE undertakes per action in terms of verification, sanctions checks, etc) and keeping the current model be sufficient? I did not see this modelled, but I might have missed it.

2. Why are the categories (still) so coarse? 
A member with /19 + /24 pays as much as a member with 2 x /19, does this seem "fair"? 
I understand from someone I was discussing this with that apparently "per IP" had to be ruled out for "tax reasons", but I actually saw no evidence on list of this, so this is only hearsay.
Even if a linear scaling (i.e. per /24) model could not be used because of some tax implication - is the suggestion that the Dutch tax system really would only allow categories scaled in powers of two? 
RIPE certainly has plenty of computers - why was it not possible to make, say, 'categories' larger than the smallest sizes increase by say, /21s or /22s to reduce the steps between them?
Why could RIPE not just *tell* members exactly what their projected costs will be for the new A model without having to fill out a spreadsheet (a very evidently error prone process particularly when several revisions of the spreadsheet have existed since the beginning of this conversation)

3. Why does it cap out where it does (and at €10,000)? 
Does it seem "fair" that i.e. DTAG pays the same as much smaller firms that nevertheless fall into Cat 10?

4. Has RIPE included in their model the likelihood of firms being suitably financially motivated to close multiple medium sized LIRs to make a single large LIR to take advantage of the cap?

5. What happens to all of our costs under Model A in year 2 after all the projected LIRs close and budget has increased by 12% again? 
How much more % will our ~3x increase need to go up by then?

6. Why did RIPE seem to make (and apparently plan on continuing to make) increasing non-registry budget commitments on the back of extra revenue from what were very obviously always going to be short-term LIR memberships?
It seems from other messages on this list that RIPE already plans, conceptually, on a 5-12% budget increase in November... it seems we just voting to enable that now, without knowing what that money would be spent on?

7. If the outcome was that the membership somehow still voted against increasing the overall RIPE revenue this year, *what* areas would be cut?
Has this truly not been assessed/forecast already?
Are there really no RIPE / NCC functions, consultants, PR, outreach, etc that could be scaled back as the rest of industry has had to in the face of increasing costs to focus on more core RIR priorities?
(accepting that this line of questioning opens a can of worms about what those priorities should be as everyone will have different priorities, but we could always have a collective weighting vote over which activities should be prioritised)
What evidence is there of RIPE (NCC) working to ensure it's costs are in fact reasonable?

8. As someone who is old, but evidently not old enough, why are budget decisions decoupled by 6 months from discussions about how the funds to meet that projected budget should be collected? 
Is this to allow for inaccurate forecasting to be discovered during the 1H of the budget year to avoid a large shortfall at the end? 
If so is this not a remnant of times past before RIPE was a €40m a year entity that should be quite competent at forecasting?
Is it still necessary? 
Certainly, today it has the effect of focusing member attention at the "wrong end of the telescope"; many are discussing only about how much each member should pay and what category they should fall into (short term view), rather than on how much money it is that RIPE is (and ought to be) spending (long term view). When budget time rolls around, people are less engaged because the change has no immediate financial impact upon them. In the meantime, people are told "now is not the time to talk budgets, please just give us more money". Does this approach seem in the interest of members generally?

--
Regards,
Phillip Baker
Netcalibre - Managed Internet Solutions, Remote Hands & Network Engineering Services

Netcalibre Ltd, a company registered in England and Wales #5172812 at 41, E4 6NA - VAT Reg GB842975002

-----Original Message-----
From: ncc-announce <ncc-announce-bounces at ripe.net> On Behalf Of Raymond Jetten
Sent: Wednesday, April 26, 2023 4:31 PM
To: ncc-announce at ripe.net
Subject: [ncc-announce] [GM] Final RIPE NCC Charging Schemes for Members to Vote On

Dear all,

We have now published the final RIPE NCC Charging Scheme 2024 options that will be voted on by members at the General Meeting on 24 May, together with an updated calculator that allows you to see how the different options would affect you. This can be viewed at:
https://www.ripe.net/participate/meetings/gm/meetings/may-2023/documentation-and-archives/supporting-documents 

I would like to thank all members who contributed to the consultation on this important topic. A wide range of opinions were shared on many aspects of the RIPE NCC’s charging. Although not every suggestion could be accommodated, we did our best to produce voting options that took your feedback into consideration.

The outcome is that we propose four charging schemes for the membership to choose from, with three votes in total. The projected 2024 income for each option is included for comparison.   

- Vote 1:
Model A: Category-based model, (projected income: EUR 42M) Model B: Continuation of the “one LIR, one fee” model with a 10% LIR fee price increase (projected income: EUR 42M) Model C: Continuation of the “one LIR, one fee” model with a 5% LIR fee price increase (projected income: EUR 40M) Model D: Continuation of the “one LIR, one fee” model that is exactly the same as the 2023 model (projected income: EUR 38M)

- Vote 2: Additional charge for ASN assignments (Yes/No) (projected income: EUR 1.8M)
- Vote 3: Additional charge for transfer requests (Yes/No) (projected income: EUR 1.2M)

We decided to separate the votes for ASN assignments and transfer requests because we think members should have a clear choice on the charging models themselves. There can then be a separate discussion on whether these other charges are appropriate. Note that the income from either/both of these charges would be in addition to income from Models A, B, C or D.  

The Board believes that the category-based model (Model A) will put the RIPE NCC in the best position to manage change in the future. It addresses the perceived unfairness of the current model, based on an objective measure of members’ resource holdings. It spreads the burden more fairly if future price increases are required, and it allows us to reduce the uncertainty caused by multiple LIRs and the associated loss of income due to the consolidation of LIR accounts. Comments on the IPv6 category limits have also been taken into account and corrected in the model; the lowest category is now a /29 rather than a /31 as it was in the previous version. Model A introduces a new fee to join the IPv4 Waiting List of EUR 1,000, and a yet-to-be-determined fee before the allocation can be made. In effect, these fees replace the current practice and fees involved with creating multiple LIRs to request additional allocations. More details are in the charging scheme document.    
 
We note that we saw many requests for a pure usage-based model. However, such a model would greatly distort the RIPE NCC’s income dynamics and may present new risks. Making the RIPE NCC reliant on a small number of members for a large part of its income could undermine its stability and independence, and it is reasonable to think these larger companies would want a greater say in the organisation’s governance as a result of their increased contribution. This is why the Board would prefer to see all fees stay within a reasonable bandwidth.
 
The models B, C and D, which are based on the existing “one LIR, one fee” approach, are included not only to provide an alternative to Model A, but also to allow members to determine the level of the fees should they reject a category-based model. 

The Board’s advice to members is therefore to vote preferentially for Models A, B, C and D in that order, and to vote “yes” for votes 2 and 3 on additional charges for ASNs and transfers. Models A and B will provide for a cost-neutral budget compared to 2023 when inflation is taken into account. Approval of the separate charges for ASNs/transfers, together with approval for Models A or B, could see the RIPE NCC receive income in excess of its 2024 cost budget, which is set during the activity planning process every Autumn. However, this does not mean the RIPE NCC’s budget will automatically increase. The budget is set by the Board following consultation with the membership, and members also retain the ability to redistribute any future surplus in the following year.

****
Projected Financial Impact of Different Models:

Vote 1:
Model A: Allows for a budget that is neutral compared to 2023 (taking inflation into account) Model B: Allows for a budget that is neutral compared to 2023 (taking inflation into account) / 10% increase on the per-LIR fee Model C: Reduction in budget (after inflation) / 5% increase in per-LIR fee Model D: Significant reduction in budget even before inflation is taken into account / per-LIR fee is unchanged – note that any resulting shortfall may have to be covered by the RIPE NCC’s reserves 

Vote 2/3: When combined with Model A or B this could allow for budget to further develop services. Otherwise, it could provide for a neutral budget (compared to 2023) if combined with Models C or D. 
***

The RIPE NCC Managing Director, Hans Petter Holen, will also present on high level budget development at the General Meeting, to continue the discussion members have started regarding the RIPE NCC’s budget. The Board has paid close attention to this conversation, and we hope it continues as we work to develop the Activity Plan and Budget for 2024. I would like to remind members that it is during this yearly activity planning phase that feedback on the RIPE NCC’s budget and activities is sought and that the present discussion is about how we fund the RIPE NCC’s operations from 2024 onward. 

I would also like to bring your attention to a Board resolution that freezes the IPv4 Waiting List, until a full analysis is carried out on how this might be best accommodated within a category-based charging scheme model and a discussion can be had with the RIPE community on this issue:
https://www.ripe.net/ripe/mail/archives/ncc-announce/2023-April/001643.html 

Finally, I strongly urge you to exercise your voting rights at the upcoming General Meeting. We have charged the members in the same way for ten years, and we are now proposing changes that will have a financial impact for you. We have tried to provide meaningful options for you to consider, and now we pass the responsibility to you, the membership. We ask that you take on this responsibility by registering to vote and participating in the General Meeting.

Register to Vote:
https://my.ripe.net/#/meetings/active

Kind regards,

Raymond Jetten
RIPE NCC Executive Board Treasurer