Dear Maemura-san and all NIR colleagues,

The following is another proposal from JPNIC, which I have submitted by email today. Your questions, comments, and suggenstions are highly appreciated.

Looking forward to seeing you all in Fiji.

Thanks and best regards, Toshi@JPNIC

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Proposal: Changing NIR fee structure Author: Toshiyuki Hosaka, Japan Network Information Center (JPNIC) Version 1.0 as of August 4, 2004

_____________________________________________________________________ Introduction: (A very brief description of your proposal.) ---------------------------------------------------------------------

This document proposes new NIR fee structure, which could be acceptable for all stakeholders, i.e., APNIC, APNIC members, and NIRs. This proposed fee structure sets an per allocation fee charged to NIRs (indirectly to NIR members) at a reasonable level even when NIRs make a large allocation to their members, by setting an upper limit to the fee.

_____________________________________________________________________ Summary of the current problem: (Describe the situation that this proposal is intended to address.) ---------------------------------------------------------------------

NIRs are charged NIR fees, or per address fee, defined in APNIC-103 (Operational policies for National Internet Registries in the APNIC region), in addition to yearly membership fee, which all APNIC members pay as well.

1.3 NIR fees ----------------

APNIC charges fees for providing NIR services. These fees are set at a level that ensures that other APNIC members do not subsidise NIR members and that NIRs provide sufficient funding to cover the cost of providing the services they require. Details of the NIR fees are described in the APNIC document "APNIC Fee Schedule: Membership Tiers, Fees, and Descriptions", within the provisions describing the 'per address fee' for confederations.

This NIR fees increase in proportion to the address space allocated to NIRs (or NIR members), and there is no upper limit in the fee. This is the problem for NIRs/NIR members especially in large allocation.

For exapmle;

/10 in IPv4 : 4,194,304 * USD 0.02 (Extra Large) = USD 83,886.08 /20 in IPv6 : 5,534,417 * USD 0.02 (ditto) = USD 110,688.34

Such large allocations are feasible for JPNIC members. Our IPv4 address allocation size to our members shows a trend of increase. JPNIC has made 5 allocations exceeding /14 in recent 12 months, from July 2003 to June 2004, for instance.

Furthermore, revised IPv6 policy document (prop-016-v002) clarifies that LIRs can apply for larger IPv6 allocations based on the current IPv4 infrastructure, and that the allocation size is decided in accordance with the HD-ratio. So it is very likely for our members to request larger IPv6 allocations. In fact, JPNIC had inquiries recently from two of our members regarding large IPv6 allocation at /20 level.

This is actually a huge amount of fee, larger than yearly APNIC/JPNIC membership fee. JPNIC has to pass such cost to our members in either ways as below;

a) JPNIC passes this cost on our members b) JPNIC passee this cost on the requestor

Choice a) is not acceptable for JPNIC because this means small/medium ISPs are to pay larger ISP's per allocation fee.

Choice b) also has problems as below;

1) NIR members may lose the motivation to request large allocations under NIR membership, since the expense is far larger than receiving allocations directly from APNIC. This is not the situation we want.

2) This large per address fee is beyond the level that NIRs can justify as "value added service", such as local language/whois/ information/translation.

3) This large per address fee is beyond the intention described in APNIC-103.

4) In order to avoid a per allocation fee, NIR members *may* receive the large amount of IP resources as an APNIC member and after that it *may* transfer its membership to NIR. This causes much burden both APNIC and NIRs.

5) If Large NIR members flow out to APNIC direct membership, APNIC's opration cost could increase which might be transfered to membership fee applied to all APNIC members in the long run.

_____________________________________________________________________ Situation in other RIRs: (If applicable, describe any policies which may apply to this situation in ARIN,LACNIC, or RIPE NCC. If you are not sure, leave this section blank.) ---------------------------------------------------------------------

(blank)

_____________________________________________________________________ Details of your proposal: (Describe your proposal in detail.) ---------------------------------------------------------------------

JPNIC proposes to "set an upper limit on the per address fee for NIRs". Non-NIR confederations is not the target of this proposal.

This proposal consists of two parts. Details are as follows;

(1) JPNIC proposes to set an upper limit on the per address fee for a single allocation, provided that the NIRs make an allocation from APNIC common address pool (including Direct Member Allocation).

(2) JPNIC tentatively proposes that the upper limit of per address fee for a single allocation should be set at /14 in IPv4, and /28 in IPv6. However, this specific value is subject to a financial impact assessment by APNIC.

Proposed per address fee is calculated as follows;

(IPv4) /20 : 4,096 * (per address fee) /19 : 8,192 * (per address fee) /18 : 16,384 * (per address fee) /17 : 32,768 * (per address fee) /16 : 65,536 * (per address fee) /15 : 131,072 * (per address fee) /14 : 262,144 * (per address fee) /13 : 262,144 * (per address fee) /12 : 262,144 * (per address fee) ... ...

(IPv6) /32 : 7,132 * (per address fee) /31 : 12,417 * (per address fee) /30 : 21,619 * (per address fee) /29 : 37,641 * (per address fee) /28 : 65,536 * (per address fee) /27 : 65,536 * (per address fee) /26 : 65,536 * ... ... ...

_____________________________________________________________________ Advantages and disadvantages of adopting the proposed policy: (Explain what you believe to the be the main advantages and disadvantages that would flow if APNIC adopted your proposal.) ---------------------------------------------------------------------

1. Why adopt the upper limit for per address fee?

Changing the fee structure should be acceptable for all the stakeholders, APNIC, APNIC members, and NIRs (NIR members). That is;

(1) For APNIC - New structure should not have siginificant inpact on APNIC financlal condition.

(2) For APNIC members - New structure should not force current APNIC members to pay additional fee.

(3) For NIRs (NIR members) - New structure should solve current problem. - New structure should not cause unfairness amoung NIRs.

When we see those points, this proposal meets points mentioned above.

2. Other choices?

2.1 Discount per address (site) fee

Even if you discount per address fee (ex. USD 0.02 to USD 0.01), it won't help NIR so much since there is still no upper limit for per address fee.

2.2 Implement allocation fee (fixed fee per allocation)

If this scheme is implemented, APNIC has to charge larger fee than current per address fee corresponds to /20 or /19, in order to keep the revenue from NIRs. This means smaller NIRs and NIR members are charged more than current scheme, and this is not aceptable for them.

2.3 Raise membership fee for NIRs

This could be an appropriate solution for the problems, however we do not take this here since we cannot propose concrete NIR fee structure which is acceptable for all NIRs without knowing how much each NIR pays yearly including both membership fee and NIR fees.

2.4 Revise current fee structure as a whole, involving all APNIC members

It takes time and probably this is not acceptable for current APNIC members.

3. Why 262,144 hosts (65,536 sites in IPv4) are the upper limit?

Based on the stats JPNIC has, /14 (in IPv4) is the appropriate level we can agree on. If we set the upper limit at /14, APNIC doesn't lose much revenue from NIRs since currently there are not so many allocation over /14.

Below is the JPNIC allocation made to the members.

(1) Recent 12 months (July 2003 to June 2004)

/14+ : 5 (3%) /14 and under : 185 (97%) ---------- /11+ : 0 /12 : 2 /13 : 3 /14 : 1 /15 : 6 /16 : 15 /17 : 11 /18 : 20 /19 : 37 /20 : 95 -----------

(2) January 2002 to December 2002

/14+ : 2 (0.8%) /14 and under : 236 (99%)

(3) January 2001 to December 2001

no /14+ allocation

4. Why restrict to the allocation made from APNIC common address pool?

Without this restriction, NIRs with its own pool can pay less than NIRs allocating from APNIC pool, which may cause serious impact on APNIC revenue. For example;

(Case-1) - When APNIC allocates /12 (4*/14) to NIRs as their address pool, and NIRs allocate 4 * /14 to their members...

262,144 * USD 0.02 = USD 5,242.88 (/14 limit applied)

+-------+ +------+ +-----+ | APNIC |-----| NIRs |-------| LIR | +-------+ +------+ | +-----+ ----> | +-----+ /12 |---| LIR | | +-----+ |--- .. .. ------> 4 * /14

In this case NIRs are to pay only USD 5,242.88, and can allocate 4 * /14 to their members.

(Case-2) - When NIRs allocate 4*/14 to their members from APNIC addres pool...

262,144 * 4 * USD 0.02 = USD 20,971.52 >> USD 5,242.88

+-------+ +------+ | APNIC |-----| NIRs |------+ +-------+ +------+ | | +--+--+ |------------------->| LIR | | /16 +-----+ | +-----+ |------------------->| LIR | | /16 +-----+ .. .. .. ..

In this case NIRs are to pay USD 20,971.52, much larger than case-1. So we should have the restriction that proposed upper limit is only applicable to the allocation made from APNIC common address pool.

(*remark) ---------------------------------------------------------- Per address fee here is the one applied to ex.large members, and set /14 upper limit. --------------------------------------------------------------------

In IPv6 case all NIRs allocate IPv6 block from APNIC pool so this restriction is not applied. /28 (in IPv6) limit for per address fee is applied to all NIRs.

5. Detailed financial impact on APNIC operation

(Subject to the calculation by APNIC)

_____________________________________________________________________ Effect on APNIC members:

Briefly explain how you think this may affect APNIC members. For example will APNIC members save costs, have more efficient administrative procedures, and so on. ---------------------------------------------------------------------

There is no negative impact on current APNIC members.

_____________________________________________________________________ Effect on NIRs:

Briefly explain how you think this may affect NIRs. If you are not sure, leave this section blank. ---------------------------------------------------------------------

There is no fee raise for NIRs, and large NIR members can stay NIR membership so all NIR and NIR members have a merit.

(end of document)

-- Toshiyuki Hosaka hosaka@nic.ad.jp Japan Network Information Center (JPNIC) Tel: +81-(0)3-5297-2311 Fax: +81-(0)3-5297-2312