[members-discuss] RIPE NCC Financial Perspective on Charging Scheme Model

Dear members,


I want to give you an insight into the financial perspective of the RIPE 
NCC in trying to come up with a charging scheme model for next year.


To start, I would like to say that we need to ensure stability and 
sufficient funding in the short-term so we can fulfill our commitments. 
Meanwhile, we also need to work on longer-term solutions that can ensure 
a sustainable funding model for the organisation and its members.


What constitutes a good charging model from the RIPE NCC’s perspective?


The model should generate sufficient income so we can fulfill our 
obligation in a stable and predictable manner. We cannot become too 
reliant financially on a limited number of members for a significant 
part of our income. This would risk a significant shortfall in income to 
execute our operations if these members leave. One benefit of our 
current “one LIR account-one fee” model is that it reinforces simplicity 
and predictability. But it also has its downsides, including no 
differentiation in contribution between members with more or fewer 
resource registrations, which is often seen as unfair.


We also need to ensure we can adapt for future developments. At some 
point in the future, it is likely that IPv6 will become the dominant 
protocol, so a charging scheme will need to be adaptable so we can adapt 
to changing circumstances.


We also need to ensure a low-risk profile. For any model, we need to 
understand what risk the model brings, from the known risks to the 
unknown risks. And the community and the RIPE NCC must be willing to 
accept this risk.


And as the RIPE NCC, we cannot take on a role that is not part of our 
mandate. The charging scheme is the mechanism by which we collect the 
funding to carry out the work we have committed to. Policies relating to 
the allocation of IP resources are formulated by the RIPE community in 
the Address Policy Working Group.


Is the RIPE NCC opposed to differentiation in contribution among members?


As seen by the category model proposed for the 2024 Charging Scheme 
vote, we as the RIPE NCC are not opposed to differentiation between 
members. We have heard and understood the feedback from a part of the 
membership, that the specific set-up of the proposed model was the 
reason for voting this down last year. This does highlight that this 
set-up is not a trivial one and will need good scrutiny by the RIPE NCC 
and more specifically its members. But I do want to stress that any 
model will be beneficial for some and less so for others.


A strict pay-per-IP model, i.e. charging per IP without categories, is 
something we as the RIPE NCC do have serious concerns about, and this 
has been discussed with the Executive Board. A system like this would 
increase the dependency for a significant part of our income on a very 
limited number of members.


I want to make it very clear that the consolidation that I have 
mentioned multiple times specifically refers to the consolidation of 
multiple LIRs. We do not see any trend or concern for consolidation of 
individual members as this number has remained stable at 20,000 since 
2020. We did see this consolidation of multiple LIR accounts coming and 
we did take action. One of the benefits of the category model we 
proposed last year would have been that charging would have been on a 
per-member basis and members would have been charged based on total 
resources in defined categories rather than per LIR account (removing 
the multiple LIR consolidation risk). In theory, we should have 
increased our fees based on inflation every year since 2016. But that 
would have been in years that we redistributed 5 to 10 million EUR per 
year, so asking the membership to approve a price increase would most 
likely have been rejected (and rightfully so).


What is the intended strategy for the Charging Scheme in the long and 
short term?


We fully agree that our charging scheme needs a good review or revamp to 
ensure we are ready for the future. And our Board member Remco has 
opened discussion on the broader topic of building a stable future for 
the RIPE NCC, and having a sustainable charging model will surely be 
part of that. I recommend you all to read his article:

https://labs.ripe.net/author/remco-van-mook/building-a-stable-future-for-the-ripe-ncc/ 
<https://labs.ripe.net/author/remco-van-mook/building-a-stable-future-for-the-ripe-ncc/>


In the short term, we need stability, which the proposed models provide. 
This will ensure we can operate continuously and protect the system we 
have. But we also need time because revamping a charging scheme that 
needs to facilitate 20,000 members who all have their own preferences, 
and which needs to facilitate the needs of the RIPE NCC (to ensure we 
can operate in a responsible and legally sound manner), will not be a 
trivial exercise.


The stability provided with the short-term solution will allow the RIPE 
NCC in cooperation with its membership to develop a charging scheme that 
will ensure our sustainability in the future. We will need the input of 
our members to get consensus on a model that works, but in reality there 
will be members who object strongly to any model that is accepted while 
others will be very content. Unfortunately, this is the reality and part 
of the day-to-day life of an association with 20,000 members.


Best regards,


Simon-Jan Haytink

Chief Financial Officer

RIPE NCC
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