APRICOT 2006

Special session: APNIC fee schedule

Minutes

Wednesday 1 March 2006, Perth Convention and Exhibition Centre (PCEC), Perth, Australia

Meeting commenced: 4:00 pm

Chair: Maemura Akinori

The Chair introduced this session, explaining that although there had previously been fee discussions in the NIR SIG at APNIC 20, this special session is being held to allow broader discussion. The APNIC Secretariat will present a possible fee scenario for discussion, although this is not yet being presented as a formal proposal.

Contents

  1. NIR fees discussion update
  2. APNIC membership fees
  3. Fees discussion from JPNIC
  1. NIR fees discussion update

  2. Toshiyuki Hosaka, JPNIC

    Presentation [pdf]

    This presentation updates the discussions held by the NIR SIG on NIR fee issues. The presenter explained the history of the discussion, which started with a JPNIC proposal to set a price cap on the NIR per-address fee. Subsequently there was a proposal to waive the IPv6 per-address fee followed by a decision by the APNIC EC to give a 90 percent discount of the IPv6 per-address fee. Finally, the proposal to abolish IPv6 per-address fees was passed by the APNIC 20 meeting, but failed to reach consensus in the final round of discussions on the mailing list.

    Questions and discussion

    • None.

    Action items

    • None.

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  3. APNIC membership fees

  4. Paul Wilson, APNIC

    Presentation [ppt | pdf]

    This presentation addresses the issues of the APNIC fee schedule more widely than just the NIR fees. It follows many discussions which have noted that there are some systemic problems within the APNIC fee structure. The presenter explained that this presentation does not actually propose a new structure, but merely sets out an example of how the fee structure could potentially be reformed.

    The presenter displayed charts showing comparisons of APNIC revenue and expenditure over time. For a four year period ending in 2003, APNIC made substantial annual surpluses. This allowed APNIC to build a cash reserve that provides security for APNIC and protects it against any major changes to its operating environment. The EC have resolved that this reserve should be maintained at the level of one year's operating expenses.

    Since 2003, the annual budgets have been very tight. In 2005, fluctuations in the exchange rate caused a surplus, but in general, it is now hard to plan for a balanced budget.

    The presenter noted a range of service expansions and new expense demands that have arisen in recent years, including ICANN fees, root server deployments, MyAPNIC, research and development, increased training delivery, improvement of meetings, increased communication and outreach activities, and commitments to Internet governance activities.

    The presenter explained that despite these increased expenditures, there have been no fee increase since 1996 (although there have been adjustments to the membership tier system). In this time, there has been a significant decrease in the value of the US dollar, which has meant that members have seen effective savings in fees. The low US dollar rate has resulted in lower incomes for the Secretariat.

    The presenter explained the background to the NIR allocation system. NIRs previously managed an address pool and still retain historical pools. However, APNIC now makes allocations directly to the members of NIRs.

    The presenter then provided details of the current fee structure and membership tiers. He also noted the NIR per-address fee, which is inconsistent with the standard membership fees. The per-address fee is a one-off fee charged to NIRs. This fee is also unpredictable and APNIC cannot accurately budget for per-address fees to be received.

    The presenter then described the principles that should be present in a new fee structure:

    • There should be overall maintenance of APNIC revenue, which should be predictable and not adversely affected by the formation of new NIRs.
    • There is a case for a revenue adjustment to take account of inflation and foreign exchange effects (the presenter suggested increasing the revenue by 15 percent).
    • Annual fees should be based on address holdings, reflecting the size of organisations and their capacity to pay.

    The presenter then provided examples of the operation of the current fee schedule, highlighting potential unfairness between small and large members and between standard members and NIR members.

    It has been suggested that members of NIRs should be in a similar position to standard members in terms of fee levels and voting entitlements. However, discounts could be provided to members of NIRs in recognition of the services provided by the NIR.

    The presenter described an example of how the fee structure could be reformed. In this example, there would be a minimum fee of $360 per year; the fee would double per tier; the minimum tier would include holdings up to /24; and address space would increment by 2 bits per tier. The presenter displayed tables showing the impact of this suggested structure across different levels of membership and on both standard and NIR members.

    The presenter then raised a series of questions for discussion to take this issue further:

    • that there should be a consideration of the specific parameters to guide the new structure and whether the parameters should be fixed or variable (such as in the RIPE region, where the fees are adjusted annually to meet the budgetary needs);
    • the appropriateness and level of discounts for NIRs (including the possibility of different discount levels across the NIRs);
    • recognition of existing one-off fees paid by NIRs; and
    • length of time for a transition to a new fee structure.

    Questions and discussion

    • There was a discussion of the historical addresses held by NIRs. A question to consider is whether or not there should be a transition of these addresses to the new system; however, there should not be any double charging for these addresses. It was clarified that the discussion of historical addresses in this context is separate from the ERX address space, where it would be very difficult to suddenly impose fees.
    • It was noted that there is a fee working group and it was suggested that this work should be done by there. However, it was noted that the group is a NIR fee working group which is not applicable to standard members. It was suggested to open that working group up to a broader audience.
    • It was suggested that there is currently not enough information available to allow informed discussion of this suggested fee reform.
    • It was noted that the suggested reform would lead to a substantial increase in fees for members in the top membership tiers.
    • It was suggested that having so many tiers could cause some ISPs to join the RIR rather than their NIR. However, it was explained that the operation of this would really depend on the charging level and service quality of the NIRs themselves. It was also clarified that the suggested new structure does include the discount for NIR members.
    • It was noted that the analysis has taken into account the amount of historical address space held by NIRs and what effect that may have on the discount level.
    • It was noted that the suggested reform of voting entitlements would have a very positive contribution to the level of involvement of NIRs' members. However, it was suggested that there needs to be consideration of the potentially very large number of proxies that an NIR may bring to meetings.
    • It was again clarified that this presentation was only an example to start discussion.
    • It was suggested that allowing NIRs to aggregate the membership charging and fee collection could be very useful.
    • There was a question about whether a structure such as this would encourage the formation of new NIRs and increased NIR membership levels. It was suggested that the analysis must take into account the possible change in the balance of standard and NIR memberships. However, it was noted that NIRs might not always be able to pass on the full discount, due to their own operational costs. It was noted that the current fee structure itself exposes APNIC to considerable risk from the formation of new NIRs.
    • There was a question of how to calculate the number of active members of NIRs. It was explained that in the example given, the figures were based on the information held about direct allocations. Other members of NIRs holding historical allocations were not considered in this context.
    • In relation to historical addresses, one of the problems is that once-only fees are inconsistent with the principle of address licensing.
    • There was a discussion of the need to share information about how direct allocation figures have been generated.
    • It was suggested that this issue should be formalised and presented as a proposal. It was noted that there will need to be much productive discussion on the mailing lists first. The discussion should include modelling of different parameters and approaches. Also, the direction of the EC in relation to the current budget process is also important.
    • The Chair encouraged an active discussion of this issue.

    Action items

    • None.

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  5. Fees discussion from JPNIC

  6. Toshiyuki Hosaka, JPNIC

    This presentation summarised a structure that has been suggested by JPNIC. This suggestion involves setting two new membership tiers at the top of the current structure, with a maximum annual fee of $80,000. The presenter also reviewed the pros and cons of the two suggestions made in this meeting. He also showed the likely impact of the two suggested models on JPNIC's current fees level.

    Questions and discussion

    • The Chair asked the other NIRs to also model the effects of the two suggestions on their current fees.
    • It was noted that the final impact on the NIRs would be very dependent on whether the 50 percent discount is applied to the historical address space.
    • It was argued that APNIC spends money to create services that NIRs and other members use. Therefore, it is necessary to consider how members should fund their organisation to provide the services they need.
    • There was a discussion of whether staying with the current fee schedule is an option. It was suggested that there are risks, especially in relation to the current tight budget environment and the possibility that other NIRs may form. It was suggested that the fee structure does not have to be reformed urgently, but that change is needed.

    Action items

    • None.

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Meeting closed: 5:30 pm

Minuted by: Gerard Ross

Open action items

  • None.

Minutes | Special session: APNIC fee schedule

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