Download Walter van Dijk, SURFnet

Cost-based tariff system SURFnet
Walter van Dijk
Highlights SURFnet
SURFnet is the Dutch National Research & Education Network (NREN)
Services, innovation, knowledge
Not for profit
Task organisation of SURF = ICT collaboration of higher education & research
Institutions fulfil two roles: - strategic control / policy
ol
ont r
- customer
cc
i
g
te
Stichting SURF
st
ra




A small operation serving a large
community:




85 employees
180 connected institutions
1 million end-users
Turnover 31 million Euro
 12 million: innovation subsidies
 19 million: tariffs incurred to customers
Institutions
SURFnet
SURFfoundation
SURFdiensten
cu s
t om e r r e
on
la t i
sh
ip
Guiding Principles
 Government funding solely used for innovation
 Running of services fully incurred to customers
 Not for profit structure
 Positioning: exclusively on the demand side of the market
 Global collaboration on innovation (GN3+, GLIF, Internet2, CERN)
 Various partnerships for innovation with industry
Tariff model
 Costs of most services are fixed and largely independent of actual usage
 Connection fee covers about 70% of income from tariffs

Distribution of connection fee based on cost-sharing model
 Other 30% comes from additional services, charged on a per
service/customer basis:

SURFlightpaths, SURFmailfilter, SURFcertificates (TCS), SURFdomainnames et cetera
 Avoid complexity





If service = infrastructure: included in connection fee (e.g. network, federation, eduroam)
If vast majority of customers uses a service: included in connection fee
If only selection of customers want a service: charge as additional service
Tariffs for additional services are cost-based
Yearly evaluation of cost schemes and tariffs
The why of tariff differentiation
 Some services are only used by specific subset of customers



e.g. SURFmailfilter: some customers do it themselves or use cloudservices
e.g. SURFcontact: HD videoconferencing, developed for academic hospitals
e.g. SURFlightpaths: heavy users in astronomy, high-energy physics and lifesciences
 NREN proposition is relative to commercial offerings

Opting for lump-sum model could discourage customers that require only IP-connectivity
versus
Beware of tariff differentiation
 Tariff leads to higher barrier for experimenting/using a service
 negative incentive for services that we want our
customers to use:
e.g. security services
 Negative spiral can be induced:
 fixed cost shared by fewer and fewer customers
Cost allocations
 Fairness of tariff differentiation requires accurate cost calculations:

Of course: other factors than costs will also determine tariff
Activity
Based
Costing
 ABC starts with determining direct and indirect (‘overhead’) costs
 KIS:
1) administration of all direct costs per service (HW, SW,
manpower)
2) attribute indirect manpower where possible to services (AA & CS)
3) attribute overhead (HRM, Finance, office etc.) to services
 Step-1: assessment of direct costs, per service (example)
 Step-2/3: inclusion of indirect costs, per service (example)
Tariff history
 Focus on costs and tariff differentiation (separate charges for additonal
services) resulted in significant decreases of connection fee:
2008: 7,5%
2011: 4%
2009: 5%
2012: 4%
2010: 4%
2013: 4%
 Number of ‘additional services’ has gradually increased:
2008: SURFlightpaths
2009: SURFmailfilter, SURFcertificates (TCS), SURFcontact
2010: SURFinternetpayments, SURFcertificates (code-signing)
2011: SURFfederation (only for SP’s)
2012: On-Demand lightpaths
 Tariffs for some services were decreased:
2009: SURFmedia, SURFdislocations
2010: SURFdomainnames
Tariff differentiation in perspective
 Tariff differentiation started at ±20% in 2009
 Percentage increased to 35% in 2012
 Percentage currently decreases due to:



Decommission of services like SURFmedia, SURFgroepen en SURFcontact
Decision to stop charging service providers that use SURFfederation/SURFconext
Decision to decrease the tariff for certain services like SURFdislocations &
SURFdomainnames
Tariff differentiation revisited
 Renewal of contracts for 2013-2016 timeframe
accentuates importance of tariff differentiation:
 as a means, not a goal
 Newly developed services require a business plan, including proposed
tariff model: constitutes business-case
 Trend of differentiation percentage expected to decrease further:

Financing of NGE Multi Service Port by not claiming room for 4% decrease of tariffs in
2013
 collective decision by universities
 Financing of “Point-of-Presence redundancy” by not claiming room for 4% decrease of
tariffs in 2014
 collective decision by universities
Customer interaction on tariffs
 Two separate roles:
Strategic policy control via SURF (College Board members)
Customer function via SURFnet (ICT-management, CIO’s)
te
c
gi
co n
t r ol
Stichting SURF
st
ra


Institutions
SURFnet
SURFfoundation
SURFdiensten
cu s
t o m e r r e la t io
ns
h
ip
 Annual meeting with representatives of customer sectors