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

Dear Simon-Jan,

The 2016 budget for RIPE NCC was just below €25MM - which adjusted for
inflation is just above €31MM.

The 2014 budget for RIPE NCC was €22MM - which adjusted for inflation is
just above €28MM.

The trend is obvious - the budget of RIPE NCC grows much faster than
inflation, and it does so every year.

How does the board and management justify that development?

We can always discuss how to distribute the expenses of the RIPE NCC in a
fair manner, but for now it looks like a diversion from the real question:
Why is scope creep within the RIPE NCC allowed to continue year after year?

Regards,

Yoel Caspersen
CTO
Kviknet.dk ApS


On Fri, Apr 19, 2024 at 2:45 PM Simon-Jan Haytink <simonjh at ripe.net> wrote:

> 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/
>
> 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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