AARNet Copyright 2012 Commercial in Confidence 1 Internet Traffic Management and Accounting Workshop Brisbane August 28 th & 29 th, 2012 AARNet Copyright 2012 Commercial in Confidence AARNets Status 2 AARNet Pty Ltd: Not for profit AARNet Copyright 2012 Commercial in Confidence AARNets Status 3 AARNet Pty Ltd: Not for profit Australian Taxation Office: Charity = Exempt from income tax AARNet Copyright 2012 Commercial in Confidence AARNets Status 4 AARNet Pty Ltd: Not for profit Australian Taxation Office: Charity = Exempt from income tax Not constrained by: return on assets target dividends need to pay taxes AARNet Copyright 2012 Commercial in Confidence AARNets Status 5 AARNet Pty Ltd: Not for profit Australian Taxation Office: Charity = Exempt from income tax Not constrained by: return on assets target dividends need to pay taxes But: Need to earn surplus to: Ensure solvency maintain (re-invest in) network expand services bandwidth geography Capability Cover FX risks AARNet Copyright 2012 Commercial in Confidence Financial Result in 2011 Revenue Growth 2% Associates: 17% Members: < 2% AARNet Copyright 2012 Commercial in Confidence Pressure Points 7 Revenue steady growth new customers Revenue steady growth new customers AARNet Copyright 2012 Commercial in Confidence Pressure Points 8 Revenue steady growth new customers Revenue steady growth new customers Technology Refresh similar cost increased function Technology Refresh similar cost increased function Traffic Growth Transmission Transit Traffic Growth Transmission Transit Domestic International AARNet Copyright 2012 Commercial in Confidence Pressure Points 9 Revenue steady growth new customers Revenue steady growth new customers Technology Refresh similar cost increased function Technology Refresh similar cost increased function Traffic Growth Transmission Transit Traffic Growth Transmission Transit Domestic International Rate of growth offsetting declining unit cost Energy Costs Colocation Energy Costs Colocation AARNet Copyright 2012 Commercial in Confidence Where is this going? 10 AARNet Copyright 2012 Commercial in Confidence Earnings and Cash Usage 11 AARNet Copyright 2012 Commercial in Confidence Summary Revenue stable Non-member growth helps to defray running costs Traffic driven costs increasing in absolute terms Unit costs falling Uncertainties AUD New Regulator Need to increase member subscriptions Counter cost of rising traffic International capacity 12