                                       RIPE NCC Charging Scheme 1999
                                             van Draanen, Karrenberg

                ____________________________________________________




                           RIPE NCC Charging Scheme 1999


                                  Kees van Draanen
                                 Daniel Karrenberg

                                    Version 2.0

                                      RIPE NCC

                                 Document: ripe-187
                                 See Also: ripe-186
                                 Updates: ripe-163




    1.  Scope

                This document defines the 1999 RIPE NCC charging
                scheme.  The companion document 'RIPE NCC Activities
                & Expenditure 1999' (ripe-186) describes the activi-
                ties and the associated operational costs.  The
                charging scheme is based on the model used in previ-
                ous years.  This model was approved at the 1996 con-
                tributors meeting and has met with success.  Using
                the model we have developed the charging scheme pre-
                sented in section two below.  Section three details
                further steps to implement the scheme.  Section four
                provides details of the reasoning behind this scheme
                both for the record and those interested.


    Status

                This version of the document has been produced by
                the RIPE NCC management.  It has been approved by
                the membership at the Annual General Meeting on
                October 15th 1998.











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    2.  Charging Scheme

                The charges for 1999 will be fixed annual charges to
                be paid in advance and based on the size category of
                a local registry.  A minimum size category will be
                determined based on address space allocations held
                by the registry on November 1st 1998.  Registries
                can be assigned a size category higher than their
                minimum category upon request.  The categories will
                be published.  New local registries established dur-
                ing 1999 will be charged a sign-up fee and 25% of
                the yearly fee for each quarter that they are a mem-
                ber; their initial minimum size category will be
                SMALL. Enterprise registries are classed as small
                registries for charging purposes.  The amount of the
                charges are as follows:


                    +--------------+------+--------------------+
                    |       Charge | 1999 | 1998   1997   1996 |
                    +--------------+------+--------------------+
                    | Yearly SMALL | 2650 | 2450   2200   1500 |
                    |Yearly MEDIUM | 3700 | 3400   3000   4500 |
                    | Yearly LARGE | 4900 | 4500   4000   8500 |
                    |              |      |                    |
                    |      Sign-Up | 2100 | 2000   1300   2000 |
                    +--------------+------+--------------------+


    Discussion

                Due to the inflation and increasing expenditure
                charges for all registry types will have to rise by
                approximately 8% in 1999.  The increased expenditure
                is explained in the companion document 'RIPE NCC
                Activities and Expenditure 1999' (ripe-186).  By
                increasing charges evenly in percentage terms any
                cross subsidies are prevented.















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                We used the 1998 charging model algorithm to deter-
                mine the minimum size category for each registry,
                based on the address space allocations the registry
                holds.  We still consider this algorithm very fair,
                because the distribution it generates clearly sug-
                gests the three size categories.  Also the total
                number of registries per category is not dramati-
                cally different from the current distribution.
                There is however a trend that registries are growing
                in size, which is a sign of healthy industry growth.
                The following table compares the distribution of
                current size categories with that of the minimum
                size category determined from allocation data on
                September 1st 1998:


                         +---------------------------------+
                         |Category   New Minimum   Current |
                         +---------------------------------+
                         |   SMALL      72.4        77.3   |
                         |  MEDIUM      21.6        17.2   |
                         |   LARGE       6.0         5.5   |
                         +---------------------------------+


                While the distributions themselves suggest that few
                changes are happening, the breakdown of changes
                below shows the changes in detail:

                        +----------+------------------------+
                        |From \ To | SMALL   MEDIUM   LARGE |
                        +----------+------------------------+
                        |    SMALL |  785      73       1   |
                        |   MEDIUM |  15      161      15   |
                        |    LARGE |   4       6       51   |
                        +----------+------------------------+


                The minimum size category for each registry, for the
                purpose of charging, will be determined based on the
                address space allocations held by that registry on
                November 1st 1998.  Up to this date the minimum size
                category for all registries based on allocations
                received before November 1st 1998 can be found at
                ftp://ftp.ripe.net/ripe/local-ir/category-Nov and
                the allocation data this is based on together with
                current registry size can be found at
                ftp://ftp.ripe.net/ripe/local-ir/allocs-Nov All reg-
                istries are encouraged to check this data and report
                any inconsistencies to <billing@ripe.net>.



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    Conclusion

                We strongly believe that the charging model used in
                previous years is still fair, equitable and practi-
                cal.  Therefore the 1999 charging scheme follows
                exactly the same principles.  We are confident that
                this scheme as well as being fair to all contribu-
                tors will provide adequate stability for the NCC,
                since it will generate sufficient revenue to cover
                costs.  We consider that surpluses accumulated over
                the past years are sufficient reserves to provide
                for stable operation of the NCC in case of unfore-
                seen developments.








































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                                       RIPE NCC Charging Scheme 1999
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    3.  Steps to Implementation


                14 Sep 98
                     1999 charging scheme published

                     Preliminary allocation listing per registry
                     published.
                     Preliminary minimum size category listing pub-
                     lished.


                15 Oct 98
                     RIPE NCC Annual Membership Meeting

                     1999 Charging Scheme formally approved.


                14 Sep - 31 Oct 97
                     Registries can review preliminary data and
                     request any corrections.



                1 Nov 98
                     Billing procedures (methods of payment and
                     credit management
                      procedures) for 1999 published.

                     Definite allocation listing per registry pub-
                     lished.
                     Definite  minimum size category listing pub-
                     lished.


                15 Nov 98
                     Deadline for registries requesting to be moved
                     to a larger category.  If no response is
                     received it will be assumed that a registry
                     wishes to be in the minimum category allocated
                     on 1 November 1998.


                25-29 Nov 98
                     Invoices and contracts for services in 1999
                     sent out.


                31 Dec 98
                     Deadline for receipt of payment of invoice for
                     1999 services.


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                1 Jan 99
                     New charging scheme in effect for new local
                     registries.


                All registries are kindly requested to note and
                abide by the time schedule.














































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                                       RIPE NCC Charging Scheme 1999
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    4.  Detailed Reasoning of Charging Model

                This section aims to describe the reasoning behind
                the choice of the charging model laid down in
                section 2.  Since section 2 is intended as a stand
                alone description of the charging scheme itself some
                degree of repetition is inevitable in this section.
                It should be noted that the basis document upon
                which this reasoning is founded is ripe-143.  To
                that end this section should be read in conjunction
                with ripe-143.  The following three sub-sections
                will expound in turn on the determination of a reg-
                istry's size, the revenue required for 1999, and the
                mechanics of the charging model.


    4.1.  Determination of Minimum Registry Size

                To determine a registry's size, we have defined a
                measure N(reg) which produces a value in the range
                {0,1,2,...,100}.  N(reg) is a simplification of the
                charging measure discussed in Appendix C of
                ripe-143, and is described briefly below.

                Let k(reg,i) be the number of addresses allocated to
                the registry "reg" in year i.

                Let w(i) = i - 1992.

                Define use(reg) = sum(i in 1993 to 1998) k(reg,i) *
                w(i).

                Let MAX = max{use(reg)} be the maximum use measured
                for all registries.

                The normalised usage for a registry "reg" is then
                defined as:

                          N(reg) = (use(reg) * 1000) / MAX


                Based on this measure rounded to the nearest inte-
                ger, we could clearly identify three distinct groups
                of registries.  Those with:

                                  N(reg) <= 10  (SMALL)
                            11 <= N(reg) <= 100 (MEDIUM)
                             100 < N(reg)       (LARGE)



                This algorithm provides a distribution quite similar
                to the current distribution of size categories.
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    4.2.  Revenue Required for 1999

                The current estimate for the 1998 result is a sur-
                plus of 423kECU.  Reserves from previous years are
                476 kECU with the only significant long term liabil-
                ity being a possible  liability corporate taxes over
                1997 and before at a maximum of 130kECU. This brings
                the expected reserves to a minimum of 769kECU.  It
                should be noted that the surplus being realised this
                year 1998, will be held in current accounts for the
                individual members in the clearing house system
                described in ripe-165

                According to the experience of the past years and
                the expected developments in 1999 we consider this
                level of reserves to be sufficient. It equals 63% of
                the budgeted income from new registries.  We do not
                plan to increase this level during 1999.  Therefore
                the revenue required is equal to the budgeted oper-
                ating expenses (see ripe-186) of 4737kECU.


    4.3.  Income 1999

                The income generated according to this scheme is
                budgeted to be composed as follows (in kECU):


                            +--------------------------+
                            |     New Registries       |
                            |                          |
                            |365   Startup Fees    766 |
                            |365   Small           484 |
                            |                          |
                            |   Existing Registries    |
                            |                          |
                            |828   Small          2194 |
                            |242   Medium          895 |
                            | 81   Large           397 |
                            |                          |
                            |      Other Income        |
                            |                          |
                            |450   Ripe Meeting     45 |
                            +--------------------------+
                            |      Total Income   4781 |
                            +--------------------------+


                The revenue from new registries is composed of the
                start up fees plus the small service fee assuming an
                average service period of 6 months.  The RIPE meet-
                ing fees are budgeted to remain at 100ECU with a
                conservative estimate of 150 attendees at three
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                meetings.




















































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