[Community-Discuss] Spearheading Internet Development in Africa / Late commentary on fee discussion

Coenraad Loubser coenraad at zenzeleni.net
Sun Sep 30 01:56:17 UTC 2018

Dear Mr. Moonesamy

I would like to add that we wholeheartedly support the current
recommendations - and that they do perhaps provide enough of a platform to
address the issue.

The caveat is that, for an LIR, there is still the initial hurdle to cross,
that has not been "smoothed out", and which the suggested provision can
"smooth out" - which I would like to unpack more.

Also, the addition of a clause such as the revenue-based one proposed could
potentially free up the board and/or CEO from having to consider a number
of individual applications - something that could also be a restricting
factor if the opportunities for such reviews are spaced too far apart, or
if they turn out to be too time consuming. Ie. if an ISP is starting up,
and can be convinced to get its own ASN, but has to wait some months before
it can actually get it, it might just start without it and conclude that
it's not really necessary - and only revisit the benefits much later when
truly necessary - or never.

I suppose that there is another side to this is - and that is the
possibility for "fly-by-night" ASNs - or ones created to be used for
nefarious purposes and then discarded. although I am not sure if there is a
blanket control for the board to reject an any application, is there? Then
again, going through the trouble of setting up a company, licensing it,
getting the financials in place, and applying for the concession, setting
up peering - is likely enough of a deterrent.

2018-09-29 12:55 GMT+02:00 S Moonesamy <sm+afrinic at elandsys.com>:

> Dear Mr Loubser,
> At 12:14 AM 29-09-2018, Coenraad Loubser wrote:
>> The main objective is to get more networks peering and using number
>> resources properly.
>> The ability to get great connectivity into even these areas is a good
>> side effect, hence our proposed amendment.
>> Connectivity in these areas are my main focus and perhaps my bias - of
>> course even people in- or close to very developed areas have access
>> problems. The ability to peer directly puts them in a better position to
>> accomplish this, not only technically but also socially.
> One of the recommendations in the Fees Review proposal [1] is to have
> annual fees calculated from the exact amount of each member's IPv4, IPv6,
> and ASN holdings.  That is meant to change the existing situation where a
> small change in number resource holdings may cause a move to a new category
> with a large change in fees.  A side effect of the proposed amendments is
> that it could undo that change.

I see - should the revenue threshold be crossed and the discount fall away,
and the cost jumps. More on this below.

> This is based on figures from the community I represent.
> Thank you for the information.  Afrinic Ltd has 1637 members.  It may not
> be feasible to have an analysis of revenue or profit to assess the impact
> of the proposed amendments.

How many of those are LIR's? Of course Afrinic can't be expected to apply
this pro-actively, or retrospectively, and only on a per-application basis,
on the condition of receipt of the necessary financial review or audit from
a qualified professional.

How many members follow the mailing lists, and stay appraised of every
amended policy, or attend every meeting? Is there any reason to believe
that a significant of the existing members will notice - and apply -
especially if it is something that they can clearly already afford?

> There are different angles to the main objective (please see above).  It
> might be outside the scope of the Fees Review proposal.  The annual fee
> could have an impact on that objective, e.g. the "very little formal
> economic activity ..." case in your comments [2].  Section 3.6.4 of the
> Fees Review proposal introduces a discount for non-profit or charitable
> organisations.  Would that cover some of the cases which you referred to in
> the proposed amendments, e.g. "Community Network"?

It would indeed - although it would exclude small ISPs who suffer from many
of the same (lack of-) funding / start-up capital issues and are *arguably
better suited to be resource users and get involved in training. *

The main problem I see here is the discrepancy between LIR's and End Users
- where ISPs, especially small ISPs are required to pay a premium (when
considered as a percentage of their overall revenues) *while these are
exactly the kind of entities that can make great allies for Afrinic in
strengthening the skill base.* An ISP is just a businesses, just like an
end user, with the same challenges in (lack of-) access to start-up capital
as any small venture. Traditional financiers still find ISP business models
unfamiliar - especially if they offer services on a pre-paid, or
month-to-month basis, as in the norm in many brackets - and finding funding
is even more difficult for those without a clear profit motive - which is
why the non-profit clause makes a whole lot of sense and could indeed play
a role in remedying this.

For possible future research into the topic, I would like to share the
Wireless Access Providers' Association 's Census Report, (attached, page 19
and 21) which shows how, in South Africa, in 2011, the revenue for 80% of
member ISPs fell under the $350k threshold proposed - during this time I
don't believe that *any* of the ISPs surveyed in this bracket, had their
own resources - meaning that they were all at the mercy of the whims of
bigger resellers, those being in that position purely because they had
access to capital that the smaller ones didn't. Today 40% of WAPA's members
still fall under the $350k threshold proposed - so in addition to the
community networks we represent, these are an additional 70+ potential
candidates just in South Africa - a significant number of which would be
getting resources in order to peer due to the great facilities available to
them. Considering the cashflow and cost models of the ISP's we've studied,
and how similar they all are, and the fact that even the new proposed
Afrinic fees amount to a not insignificant portion of the revenue of a
small business -eg. a  significant portion of the salary of a staff member
(easily 50% - who would work for half pay?), and that staff is the biggest
single expense and also the one on which a small ISP is least able to cut
back on - this perhaps explains why almost all of these entities opt for
staff instead of resources - if that was the choice... additionally their
staff will have no incentive to familiarize themselves with how to manage
resources and the associated peering and routing protocols if they don't
have access to it in the first place - again, skills and knowledge that
could benefit them - and our community as a whole - and it could benefit
them in other ways too. Ie. they can implement OSPF and BGP in their
networks from the get go - instead of having to duplicate work and make
changes later on.

Any small business with an anchor tenant, that effectively subsidizes these
costs, will not have these problems - but here again, this can be seen as a
bias against businesses who decide to only focus on small individual users,
or a pre-paid/vouchers-only ISP. for example.

>From this I hope that I am shedding more light on the potential benefits to
our community as a result of having the initial hurdle to lowered.

Perhaps a single discrete jump in cost, at some point - once the business
has had enough time to accumulate profits or revenues, is not as big a
problem as it was previously thought - because at the point of the jump,
the business would likely be in a better position to raise  capital, or
access an overdraft facility, having a proven financial record - or
ideally, at such a point, accumulated savings to dip into.

Again, the existing recommendations do provide an avenue to address this,
so the committee managed to come up with a way to accommodate even the
unforeseen (assuming they did not foresee this), for which they can be

And again, thanks for your insight, attention and consideration, even
considering that we did not manage to submit this during the process, and
before the dissolution of the committee.

> Regards,
> S. Moonesamy
> 1. https://www.afrinic.net/images/doc/fees-proposal-afrinic-20180523.pdf
> 2. https://lists.afrinic.net/pipermail/community-discuss/2018-
> September/002566.html

Coenraad Loubser

Office: <+27435552028> +27 (0)43 555 2028 <+27435552028>
Mobile: +27 (0) 73 772 1223 <+27737721223>
Skype: coenraad_loubser Twitter: @dagelf

*Zenzeleni Networks NPC *zenzeleni.net
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