Internet2 Financial Outlook – Member Dues & Abilene Fees for 2006 and 2007 Internet2 Business Meeting Spring 2005 Internet2 Member Meeting May 3, 2005 Laurie Burns, Member & Partner Relations Internet2

2 Priority 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

3 Financial 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

4 Closing 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

5 Closing 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

6 Sustainable 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

7 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

8 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

9 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

10 Member 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

11 Abilene 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

12 Abilene revenue

13 Abilene 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

14 New fees and dues Approved by Board of Trustees on April : Dues to $28,500/$11,500/$2,600 Participation fees to $21, : Dues to $30,000/$12,000/$2,700 Participation fees to $22,000

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