[ARIN-consult] Consultation on Proposed 2018 Fee Schedule Changes

[John Curran]

On 9 Apr 2018, at 10:07 AM, Bill Woodcock <woody at pch.net> wrote:
> 
>> On Apr 9, 2018, at 6:43 AM, ARIN <info at arin.net> wrote:
>> ARIN has increased operating costs in recent years to meet
>> customer demand for improved and broader services
> 
> The membership seem to be relatively clear that they’re not in favor of scope-creep.  And there are already 88 staff, the majority of whom are in Engineering.  The theory was that they were supposed to be temporary contractors, doing one-time projects to automate ARIN registry functions.  Yet the “temporary” part never seems to come to a conclusion.
> 
> Can you present the budget, and explain what specific new services you’re proposing to perform with this additional money, and give us a status-update on the progress being made toward specific goals by the existing 45 engineers?

Bill (and David) -

    Both the specific deliverables accomplished, as well as the upcoming deliverables can be found online here
    <https://www.arin.net/features/ <https://www.arin.net/features/>>, and here <https://www.arin.net/features/planned.html <https://www.arin.net/features/planned.html>> respectively.

    The budget is always available online here <https://www.arin.net/about_us/corp_docs/strategic_plan.html <https://www.arin.net/about_us/corp_docs/strategic_plan.html>>
    along with the Strategic Plan and two-year operating plans which includes our annual objectives.   For 2018,
    we anticipate revenues of $20.9 USD million and expenses of $23.8 USD million, thus we are impacting our
    reserves in the short term.  Our base model does (as you note) include additional engineering “surge" staffing
    and this continues through 2018, although this does not continue in 2019.  Even with that adjustment, ARIN
    will be operating at approximately at $1.3 million USD net-to-reserves position each year on a going-forward
    basis.

    So while ARIN’s present medium-term (5 year) financial outlook is solid, it not as robust as the Board has
    traditionally sought – specifically, with present plan and fee schedule we’ll be taking our reserves from $25.9
    million to approximately $21.6 million though 2022.  This downward trajectory is likely to continue over the
    long-term, and could even accelerate, since our annual revenue includes about $1.4M of investment income
    that will drop in a corresponding manner with a declining reserve balance; hence why addressing the gap
    is a simpler matter if done sooner rather than later.

    The proposed fee change would provide the following net increase in annual revenues:

	• Facilitator fee - net revenue increase 					+      $34,000
	• End-user Maintenance fee: net revenue increase 		+ $1,400,000
	• LRSA holders Maintenance fees: net revenue increase	+      $33,500

    The total annual revenue increase with the proposed fee schedule change is 1.47M USD, which would have ARIN
    be net neutral to the reserves for the foreseeable future.  The increase to facilitator fees was deemed appropriate
    because we are seeing significant increased costs related to maintenance of that program (specifically in addressing
    parties who are not actual participants but still call themselves “ARIN Facilitators”. )

    Regarding the maintenance fee increases, our end-user community engages in significant ongoing interactions with
    ARIN and yet is approximately one fifth of ARIN's total revenue.  Our investment in systems (such as ARIN Online)
    benefit the entire ARIN community, and that community is disproportionately end-users.  In fact, much of our most
    improvements have been “easy-of-use” related for the benefit of those smaller organizations that are new to ARIN
    and doing requests for the first time.

    For the vast majority end-users, the fee change results in a modest $100 to $150 annual increase –depending on
    whether the organization has only one of IPv4 or IPv6 and an ASN, or both IPv4 block, IPv6 block, and an ASN.
    While the total impact is still quite small in terms of individual end-user invoice, it is true that it could be deemed
    a very significant increase when viewed on a percentage basis.  This increase is not without corresponding value,
    as the  services provided have been quite enhanced over time (including improvements to ARIN Online allowing
    easier administration, addition two-factor authentication, streamlined request and ticket sections, etc.) so those
    using ARIN services have indeed benefitted from ARIN’s investments in staff and systems in recent years.

    I will cover this material in more detail at ARIN 41, but felt that the communities consideration of this matter
    would be more productive with some fo the budget, development progress, and fee distribution information
    that was being sought in the interim.   Please do not hesitate ask any additional questions that would help
    in consideration of this consultation.

Thanks!
/John

John Curran
President and CEO
American Registry for Internet Numbers (ARIN)





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