[members-discuss] Response to Comments on the Charging Scheme Proposals

Dear Simon-Jan,

Until the fee for one resource becomes the same for everyone, we will look
for a way to distribute and pay for IPv4 resources indefinitely.
If we don't have enough resources now, it doesn't matter how someone has 1
billion addresses for some reason. If they need them, they MUST to pay
like everyone else!

I do not understand why the NCC do not offer to vote a scheme: 1 IP for
everyone = one price for everyone !!!??? Are there any reasons? They do
not want to pay for these addresses? OK! Somebody else will take it and
will be pay in happy.

Dmitry Serbulov.

> Dear all,
>
> I’d like to answer the comments and questions that have been raised
> since the Board Treasurer announced the final proposed charging scheme
> options.
>
> See Raymond’s mail announcing the options at:
> https://www.ripe.net/ripe/mail/archives/ncc-announce/2023-April/001645.html
>
> Also see my colleague Fergal’s mail explaining the instant run-off
> voting method and how it will work with the charging scheme vote:
> https://www.ripe.net/ripe/mail/archives/ncc-announce/2023-May/001647.html
>
> Purpose of the Charging Scheme and Budget
>
> The charging scheme is the mechanism the RIPE NCC uses to ensure it
> collects sufficient funds to carry out its promises to the members in
> future years. As a safeguard, any excess (or shortage) of funds is
> subject to a redistribution vote by the General Meeting. This
> redistribution has happened many times in the past. This ensures that
> the RIPE NCC operates on a cost-recovery basis, or in other words
> operates as a not-for-profit.
>
> The Charging Scheme does not define the cost budget of the RIPE NCC, but
> of course there is a relation between the two. The projected income does
> at the very least provide direction regarding discussion on the Activity
> Plan and Budget.
>
> The Activity Plan and Budget defines the planned activities and
> associated costs for a financial year. And for the longer term, we have
> developed a five-year strategy. Both of these documents are published
> for the members to provide input on, and they are then approved by the
> RIPE NCC Executive Board.
>
> The Draft Activity Plan and Budget is published on a yearly basis every
> autumn, specifically to consult with our membership. Additionally, this
> year there is the option to provide input and feedback via the RIPE NCC
> Survey 2023, which will launch next week. The Activity Plan and Budget
> is effectively the RIPE NCC’s promise to its members in terms of what it
> will do and how much it will spend in the coming year.
>
> The most recently approved Activity Plan and Budget (in this case 2023)
> forms the basis for projections of the required income for the following
> financial year, as this is the most recent approved “promise to our
> members”. All charging scheme projections are made with this promise in
> mind, to ensure sufficient income to continue that promise. If the
> Activity Plan and Budget 2024 requires us to cut or add activities or
> costs, then that is what we will do to fulfill our promise.
>
> That being said, efficient and effective use of membership funds is a
> priority and will remain a priority of the Executive Board and the
> management of the RIPE NCC.
>
> Why Change the Current Model?
>
> We need to ensure sufficient and sustainable income to continue our
> operations in a stable and predictable manner. The high market value of
> IPv4 resources combined with the possibility of multiple LIR accounts
> per member has created uncertainty and unpredictability for a
> significant part of our income. A member-based model rather than an LIR
> account model will help to reduce this uncertainty by removing the LIR
> account as the basis for the charging scheme.
>
> We are also addressing the stated unfairness in the current model.
> Although some members have expressed the desire for increased
> differentiation, we see the proposed change as a significant difference
> from the current one LIR-one fee model. It allows us to spread the
> funding burden differently because in the current model, all members
> with one LIR account pay the same fee (exception is the independent
> resources). Due to a significant inflow of New LIRs in 2019 and 2021,
> there is a considerable amount of members who hold more than one LIR
> account, and these members do pay additional LIR account fees. One of
> the major benefits of the category model is that it charges per member,
> and with that it reduces the uncertainty caused by multiple LIRs and the
> associated consolidation risk.
>
> We aim to achieve a clearer distinction between RIPE Policy and the RIPE
> NCC Charging Scheme by removing the LIR account as the basis of the
> charging scheme.
>
> And we want to ensure that the RIPE NCC together with its members is
> ready for any change the future might bring, by increasing the
> possibilities the charging scheme provides to adapt for this change. Of
> course, this can only happen with formal approval by the GM.
>
> The Category Model
>
> Under this model, the categories would apply as soon as a member holds
> IPv4 or IPv6 resources as defined in the charging scheme document.
> Limits as defined in the charging scheme document are the upper limits
> of the categories. The lower limit for Category 1 is one resource (one
> IPv4 address or one IPv6 address). The base category applies to all,
> including members with no IPv4 or IPv6 resources.
> We have been asked why there is not a per-IPv4 address model, with
> comments that the category model favours bigger members. In a way, it
> does, but less so than in the one-LIR account, one-fee model. We also
> need to stay true to the fact that we are a membership association, so
> while we can differentiate between members, this needs to stay within
> reason.
>
> Additionally, we need to ensure the independence of the RIPE NCC by not
> becoming too dependent on a small subset of our membership for a
> significant part of our income. Furthermore, protecting the one
> member-one vote principle could become significantly more difficult if
> the contribution differences become extreme. So we can facilitate
> differentiation between members in size of contribution, especially
> compared to the current model we have, but it is essential that this
> stays within reason. One clear benefit of the category model is that we
> can refine it over time, working towards a model that is acceptable for
> more members.
>
> On the pricing and category limits, they have been set with the latest
> Activity Plan and Budget in mind, to ensure at the very least that we
> can continue with our promise to members in 2024. If the Activity Plan
> and Budget 2024 requires the RIPE NCC to reduce or add activities or
> costs, we will act accordingly.
>
> Regarding the options presented for voting, our initial plan was to
> submit two charging schemes for a vote, to provide a clear choice to the
> members on a category-based model or the current model. Both of these
> models would provide income at the level of the 2023 budget if we apply
> a correction for expected inflation of 5%, resulting in a projected
> income of EUR 42 million.
>
> After feedback from members we wanted to ensure the GM could vote for
> “NO CHANGE” which is represented in Option D. Additionally to this “NO
> CHANGE” vote, I personally requested to add a vote to keep the income
> (before any correction for inflation) at the same level as in 2023,
> which is the reason Option C has been added. The 2nd or 3rd vote on
> charging for ASN assignments and/or transfers would (if approved)
> provide additional income over that provided by the charging scheme
> voted for by members.
>
> The Waiting List
>
> The current situation regarding the IPv4 waiting list and costs
> associated with a /24 IPv4 allocation is in our eyes an undesirable one.
> With the uncertainty of the waiting period (around 1.5 to 2 years) which
> can be shorter or longer, plus the two-year “non-transfer” policy, it
> means unpredictable costs for our members and income that is not
> transparent for the RIPE NCC.
> - Two-year waiting period = sign-up fee plus two years LIR service fee =
> 4,100 EUR
> - Two-year “non-transfer” policy = two years LIR service fee = 3,100 EUR
> - Indicative price 7,200 EUR
>
> To address this, we propose a one-time join-the-waiting list fee, and a
> to-be-determined /24 IPv4 allocation fee. This would replace costs that
> apply to members based on being on the waiting list for a long time
> without receiving resources, as members would be charged the waiting
> list fee upon placement on the waiting list, and the allocation fee only
> just before resources are allocated (with the opportunity to reject the
> resources).
>
> This is, in our opinion, a fairer way to charge for these resources. To
> define this charge and work out any possible issues with RIPE Policy, we
> are postponing this vote to allow for consultation with the membership
> because this to-be-determined fee will have an effect on who applies for
> the resources. We also need to consider fees already paid by LIR
> accounts, and whether a discount would be in order for fees already paid
> in relation to specific IPv4 allocations. And for this, time is needed
> to consult with membership.
>
> Additionally, this fee will also result in additional income for the
> RIPE NCC, which will be subject to a redistribution vote, assuming this
> provides excess funds.
>
> See the original announcement on the waiting list freeze:
> https://www.ripe.net/ripe/mail/archives/ncc-announce/2023-April/001643.html
>
> Finally, there are probably more questions and comments than I have
> answered here. But we are preparing for the General Meeting (GM) next
> week where there will be several presentations from our side on the
> charging and budgeting of the RIPE NCC. Our Managing Director will
> present at both the NCC Services Working Group on the past and future of
> the RIPE NCC, and he will present a more detailed presentation on budget
> developments in the GM. I will also present on the Charging Scheme
> options as well as give an update on our current financial situation.
>
> I hope you will register to join and follow these presentations, and you
> will have the opportunity to further ask questions and discuss the
> various options to vote on.
>
> https://www.ripe.net/participate/meetings/gm/meetings/may-2023
>
> Kind regards,
>
> Simon-Jan Haytink
> Chief Financial Officer
> RIPE NCC
>
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