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

Dear, Simon-Jan.

This is not the first time we talk about "the possible dependence of the
NCC on large payers."
To avoid this, you just need to divide their budgets, as has been written
by me more than once.

If your "operating" budget is filled with the same contributions, then
there will be no dependence from anybody to working NCC.

The "investment" budget can be initially calculated with a surplus, which
with a contribution of even 0.01 cents per year for Ipv4 will be almost
inevitable. From it must be paid RPKI, Atlas and other projects.

> 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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