Internet2 Financial Outlook – Member Dues & Abilene Fees for 2006 and 2007

Internet2 Financial Outlook – Member Dues & Abilene Fees for 2006 and 2007

Internet2 Business MeetingSpring 2005 Internet2 Member Meeting

May 3, 2005

Laurie Burns, Member & Partner Relations Internet2

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Priority discussionsPriority discussions

• Discussions held with Councils during first quarter of 2005, most extensively with NPPAC

• Priority rankings different, points to diversity of interests in community and importance of balancing what is paid for by member dues and what from other sources

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Financial outlookFinancial outlook

• Reserves have been managed to provide short-term bridging and to minimize impact of new resource needs on members

• Reserves are maintained to allow investments in the future, but can't absorb ongoing operational deficits such as projection for ’05 and beyond

• Facing a period of increased spending:• Next generation of Abilene• Related technology development (e.g., HOPI)• Ramped up work in security

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Closing the gapClosing the gap

Magnitude of resource needs requires:• Exploration of other sources of revenue• Continued and heightened control of costs,

including reducing activities in some areas• Examination of sustainable sources of

funding

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Closing the gapClosing the gap

Exploration of other sources of revenue• Grant and donations extremely important,

but can be one-time or otherwise limited• Potential competition with members may

mean Internet2 should not pursue certain grant opportunities

Cost control critical and will continue• Internet2 is reallocating $500,000 in 2005 to

absorb current year’s work in security without increasing deficit

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Sustainable sources of fundingSustainable sources of funding

• General Principles• Sustained sources of funding are crucial to

Internet2's financial health • Sustained sources of funding allow

Internet2 to remain independent• Small additional investments by each

member adds up to significant funding for priority efforts, allows forward progress that benefits whole community

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• Dues were not changed for first six years of Internet2’s existence

• Dues have remained flat for last two years, at $27,000, $10,800, and $2,500

• During the past two years, Internet2 has:• Reduced expenditures and controlled headcount growth• Shifted resources to take on new work• Found grant support for work deemed important to the

community• Maintained its reserves

Member dues

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• Reduced expenditures • Health care costs, conference calling, cell phones,

legal support specialization, outsourced travel• Headcount relatively flat, maintained flexibility in

staff force, voluntary and involuntary attrition

• Shifted resources• Absorbed earlier phase of security work and ramp-

up of InCommon work with existing staff and resources

• Reduced staffing for the Commons, digital video work, and end-to-end performance

Member dues

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Member duesMember dues

• Found grant support • Number of funded grants grew from 4 to 10 in past

two years• 10 of 19 (53%) of submissions were funded,

involving 40 member institutions• 5 of 10 are sub-awards with a member lead• Of remaining 5, over 70% of funds were

distributed to member institutions

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Member duesMember dues

• Maintained reserves• Financial model has been to build reserves to

support investments in important projects• 2002/2003 Abilene upgrade and investment in

NLR are recent examples

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Abilene primary participation feesAbilene primary participation fees

• Primary Participation fee of $20,000 has remained constant since launch

• During this time, Abilene has:• Been through a major upgrade• Seen major increases in utilization• Seen major decrease in revenue per

gigabit• Continued to decrease connection fees

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Abilene revenue 2000-2004Abilene revenue 2000-2004

Revenue per Gigabit of Abilene Traffic

$2.08

$1.17

$0.70 $0.62

$0.27$-

$0.50

$1.00

$1.50

$2.00

$2.50

2000 2001 2002 2003 2004

Year

Dollars per Gigabit

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Abilene primary participation feesAbilene primary participation fees

• Abilene’s costs aren’t dropping as fast as revenues per megabit

• Abilene continues to out-perform other point-to-point lit services

• New work in security and HOPI are directly relevant to next generation of Abilene

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New fees and dues New fees and dues

• Approved by Board of Trustees on April 17

• 2006: • Dues to $28,500/$11,500/$2,600• Participation fees to $21,000

• 2007:• Dues to $30,000/$12,000/$2,700• Participation fees to $22,000

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