Common Business Models 9/28/2006 What is Your Business? Common Business Models Among RON’s and GigaPoP’s

Common Business Models 9/28/2006 Founder’s ModelSwitching YardReciprocalNYSERNet Who provided initial funding? Equal split of start-up costs among members Members pay to get to hub – initial equipment provided by founding members N/AVaries from project to project. Company funds, member contributions, sometimes seed grant money. Who pays on-going costs? Founders share equal split of annual operational costs plus replacement equipment fund 1)Participants: pay dues and then only pay incremental costs 2)Non-Participants: no dues but pay higher ARC and NRC than members 3)Affiliates: Participate in a RON – pays no dues, but pays ARC and NRC (lower than non-member) Incremental operational costs incurred to support transport of other’s data is billed to partner organization Member contributions, along with outside participants have contributed to operational costs in the past. Methodologies for member cost allocations? For Founders: The principle is that the requesting university will pay RON the marginal cost of additional equipment needed to light new waves as well as an equal share of shelf costs Partner network only billed for equipment outlays to pass partner network traffic. No operational costs for maintaining additional equipment are billed Varies again by the project. Backbone access is postalized, local loops are not, rack space in NYC or BC Center is uniformly priced. Who makes cost decisions? Board comprised of founding members Board comprised of subset of participants By mutual decision of organizations The President and Chair together with the Board of Directors. On a daily operational level that authority is distributed. Examples:  MiLR  NEREN  BOREAS-Net  SLR  Merit/OSC

Common Business Models 9/28/2006 Founder’s ModelSwitching YardReciprocalNYSERNet Membership Categories1) Founders 2) Members 1) Member/Participants 2) Non-Members 3) Affiliates No membership levels – equal partners Today most of our members are major Carnegie institutions and are at the higher level of membership. We have a small but growing number of smaller institutions. Member Commitment Term Long Term, typically >5 years Depends on the project, from yearly for the research network to multiyear for capitol intensive projects How do you add incremental members? 1)By-Laws may state who may be members 2)Founding members bring subscribers on behind them w/in their geographic location Potential participants choose level of participation with Board approval Additional partners in the reciprocal model will be bound through responsibilities outlined in an MoU We reach out directly, as do NYSERNet institutions. Examples:  MiLR  NEREN  BOREAS-Net  SLR  Merit/OSC  NYSERNet

Common Business Models 9/28/2006 What is Your Business? Southern Light Rail (SLR) Financial Characteristics Q: Who provided the initial funding for your network? A: Southern Light Rail’s (SLR) Founding Participants - Georgia Tech, UGA, GSU, MCG and the Georgia Research Alliance (GRA) Q: Who pays the on-going costs of your organization? A: Ongoing O&M costs are paid from Participant Fee, GRA seed grant funding and Q: What is your methodology for allocating costs? A: Participant Fee: Operations & Maintenance costs are shared equally by all Participants Services: Participants – incremental costs + small service charge Affiliates – incremental costs + moderate service charge Non-Participant – base costs + incremental costs + fully loaded service charge Q: Who makes the cost decisions for your organization? A: Officers and Board of Directors

Common Business Models 9/28/2006 What is Your Business? Southern Light Rail (SLR) Membership Characteristics Q: What are your organizations membership levels? A: Participant (voting or non-voting / individual university or state affiliation) Affiliate (member of another NLR Member) Non-Participant Q: For what term do your members commit funds? A: On an annual basis over a five-year period Q: What is your process to add incremental members? A: Petition the SLR Board to become Participant according to established Participation categories and fee schedule

Common Business Models 9/28/2006 What is Your Business? Internet2 Financial Characteristics Q: Who provided the initial funding for your network? A: Initial funding came from connection fees paid by GigaPops / RONs / connectors and participation fees from the institutions connected to the network. The intent is to equitably distribute the costs of deploying, managing and maintaining the network among those using the services. Internet2 membership dues are not used to cover network costs. Q: Who pays the on-going costs of your organization? A: Internet2 membership fees cover all non-network related activities, including personnel and administrative staff, meeting- related activities, working groups, workshops and projects. Q: What is your methodology for allocating costs? A: Costs are allocated on a project by project basis, so that the costs for the network and network related activities come from the Network Services budget and are supported by that revenue.

Common Business Models 9/28/2006 What is Your Business? Internet2 Financial Characteristics – cont. Q: Who makes the cost decisions for your organization? A: Internet2 executive staff makes decisions on execution based on the strategic direction from the Board and input received from a combination of advisory councils, committees, and staff. Budgets are put together by the executive staff with this input, then presented to the Board for approval. Q: What are your organization’s membership levels? A: Internet2 Members: 208 University Members 70 Corporate Members 52 Affiliate Members 2 Associate Members Network Members: 34 Connectors 245 Participants 147 Sponsored Participants 37 SEGPs

Common Business Models 9/28/2006 What is Your Business? Internet2 Financial Characteristics – cont. Q: For what term do your members commit funds? A: Annually for both Internet2 membership and network participation. Q: What is your process to add incremental members? A: Internet2 membership is required to participate on the network (unless the institution is a connector, sponsored participant or member of a SEGP), but a member is not required to participate in the network. Typically, once membership and participation applications are received, the institution is directed toward their local GigaPop or RON for their connectivity.

Common Business Models 9/28/2006 What is Your Business? BOREAS-Net Financial Characteristics Q: Who provided the initial funding for your network? A: The University of Iowa, Iowa State University, the University of Minnesota, and the University of Wisconsin – Madison. Q: Who pays the on-going costs of your organization? A: The four universities. Q: What is your methodology for allocating costs? A: Some of the dark fiber was donated as an in-kind contribution, but generally the costs are equally shared by the four universities. Q: Who makes the cost decisions for your organization? A: The CIOs of the four universities.

Common Business Models 9/28/2006 What is Your Business? BOREAS-Net Membership Characteristics Q: What are your organizations membership levels? A:The four universities are founders. It’s likely there will also be associated members who can use the network, but have no governance rights. There may also be affiliate members who are connected through a founder or member. Q: For what term do your members commit funds? A:Our founders are committed for 20 years. There are no other members currently but the terms will likely be much shorter. Q: What is your process to add incremental members? A:No process has been established yet.

Common Business Models 9/28/2006 What is Your Business? OSC-Merit Partnership Financial Characteristics Q: Who provided the initial funding for your network? A: Under this model, initial funding provided by each individual network Q: Who pays the on-going costs of your organization? A: On-going operational costs are the responsibility of the individual network Q: What is your methodology for allocating costs? A: Partner network only billed for equipment outlays to pass partner network traffic. No operational costs for maintaining additional equipment are billed. Q: Who makes the cost decisions for your organization? A: By mutual agreement of organizations

Common Business Models 9/28/2006 What is Your Business? OSC-Merit Partnership Membership Characteristics Q: What are your organizations membership levels? A: No membership levels – equal partners Q: For what term do your members commit funds? A: Long term, typically more than 5 years Q: What is your process to add incremental members? A: Additional partners in the reciprocal model will be bound through responsibilities outlined in an MoU

Common Business Models 9/28/2006 What is Your Business? NYSERNet Financial Characteristics Q: Who provided the initial funding for your network? A: Varies from project to project. Company funds, member contributions, sometimes seed grant money. Q: Who pays the on-going costs of your organization? A: Member contributions, along with outside participants (such as international networks in NYC. Funds from spinoff companies have contributed to operational costs in the past. Q: What is your methodology for allocating costs? A: Varies again by the project. Backbone access is postalized, local loops are not, rack space in NYC or BC Center is uniformly priced. Q: Who makes the cost decisions for your organization? A: The President and Chair together with the Board of Directors. On a daily operational level that authority is distributed.

Common Business Models 9/28/2006 What is Your Business? NYSERNet Membership Characteristics Q: What are your organizations membership levels? A: Today most of our members are major Carnegie institutions and are at the higher level of membership, also major contributors of talent. We have a small but growing number of smaller institutions. Q: For what term do your members commit funds? A: Depends on the project, from yearly for the research network to multiyear for capitol intensive projects like the Manhattan Project or the Business Continuity Center. Q: What is your process to add incremental members? A: We reach out directly, as do NYSERNet institutions, The increasing deployment of fiber is shifting the landscape and opening new opportunities.