Pricing Model Detail

The pricing model sets forth the methodology used to determine the charges assessed to the units. These charges represent each unit's share of the University network costs based on their share of the University's users of the network and utilization of the Internet.

The basis for this model is:

  • Costs should be allocated to units based upon the factors that drive those costs.
  • The architecture of the network should not be influenced by the model. That is, decisions on architecture should be made based on an overall assessment of relevant factors, not influenced by attempts to game the cost recovery mechanism.
  • The model and mechanisms should be as simple as practicable.
  • The base charge should recover full cost of operations, including provisions for capital improvements.
  • Substantial changes in a unit's fees should be predictable based on knowledge of the cost drivers and the units' own changes in behaviors and use.

The model has two components:

Component Frequency Fee Based On:
1) UMnet Backbone Access Fee Annual # of people in the unit who use the network
2) Internet Utilization Fee Annual # of people in the unit who use the network

The model will not impact other backbone fees such as one-time installation fees and on-going fees for off-campus circuits.

1) UMnet Backbone Access Fee

This fee covers operational cost and provision for capital improvements to the backbone itself. Specifically, the fee covers all capital improvement to the core backbone switches. Local distribution switch hardware is improved largely at the building owners discretion and is therefore funded directly by the local unit. The fee also covers operation and maintenance of both core and distribution switches.

The majority of the backbone cost is determined by the number of buildings, the geographic distribution of the buildings, the number of local networks and the number of people using the backbone. Only a small portion of the backbone cost is due to the amount of utilization. Therefore, the total cost of the backbone is allocated based on the number of users (students, staff, and faculty) of the UMnet network.

This is an appropriate and effective model because:

  • It encourages effective network architecture since it is based on users rather than an architectural component such as a "router port."
  • The primary driver of cost is the number of users using the network rather than utilization and is based on access.
  • It is independent of the number of locations a unit occupies.
  • It enables everyone to take full advantage of backbone network improvements.

The allocation model incorporates weighted counts of faculty and staff who access the network, occupants of the residence halls, and all registered students.

Faculty and staff are assigned to units based on appointment information, students are assigned to units based on registration information, and all residence hall occupants are assigned to University Housing. Counts for individuals with more than one appointment are split among the appointing units. Counts for students with more than one unit of registration are split among those units. To make these counts, the number of Network Users in each category is determined and the costs are then allocated to those users.

To determine the number of Network Users, we define a Network User as someone who has full access to the network. More specifically, it is defined as someone:

  • whose unit attaches their building networks (LANs) to the UMnet backbone
  • who is able to attach a station to the network at 10Mbps or greater
  • who may have a station attached 24 hours per day, every day
  • who has used the U-M network.

The specific method for counting the users in each category is in the following sections.

a. Faculty and Staff

Faculty, staff, and temporary staff members from the previous fiscal year who fill the above criteria for a Network User are the baseline Network User and are assigned a "weight" of one (1).

Network Users are determined by log files captured in the fall which count:

  • Uniqnames that are in use
  • Windows Active Directory current authorized users

Headcount is determined as follows. ITS works with unit management to resolve any anomalies.

  • Regular faculty and staff are identified by matching uniqnames in use against the HR dataset in the central warehouse to acquire appointment information as of November 1, of the current year.
  • Temporary staff are those who were appointed on November 1st of the current year.
  • U-M students who are employed by the University are excluded from the counts.
  • Each staff or faculty member (not FTE) counts as one.
  • Counts for faculty and staff appointed in more than one unit are split evenly among appointing units.
  • Two appointments in the same unit count as one appointment.
  • Only paid appointments are counted unless a person only has unfunded appointments; that person is then divided among the unfunded appointments.
  • Regular appointments take priority over temporary appointments so an individual who has both types of appointment is only counted as regular.

The resulting counts are attributed to the unit.

b. Students

All students benefit from a number of on-campus services that provide convenient access to e-mail, the web, word processing and some large file transfers.

  1. Computing Labs
    ITS provides approximately 1,500 stations in about 40 Campus Computing Sites located across campus that are available for general purpose use to all students. 97% of the people who use these labs are students. In addition, many schools have their own computing labs for their students.
  2. Public Access Ports
    An increasing number of the public computing labs provide ports which enable students to connect a laptop computer to the network.
  3. Wireless
    An increasing number of schools provide wireless access that enables students to connect a laptop computer to their network.
  4. Computer classrooms
    A number of schools have computerized classrooms. These locations are distinct from the general use computing labs.

Student counts are assigned a fractional weight since their access is assumed to be more limited than that of faculty or staff. In general, students are assigned a "weight" of 20%. Medical students are handled differently as explained below. Students are assigned by unit of registration for each term in which they are registered. Students registered with multiple units are split among them.

The Medical Center also runs its own backbone network, which provides the primary means of network access for Medical School students. Therefore, they are also handled differently. Students in the Medical School also take some advantage of Campus Computing Sites which are attached to UMnet but no Medical School networks are attached to the UMnet backbone. Therefore, each Medical School student is assigned a "weight" of 5%.

The resulting counts are attributed to the unit.

c. Students in Residence Halls

Students who have a computer on the Residence Hall computer network (ResNet) have dedicated, always-on access to the network. Each computer can be used 24 hours per day to access academic and recreational resources. ResNet makes effective use of the UMnet backbone to connect the Residence Halls to each other and to the Internet. This circumstance means they have full access similar to residential broadband for faculty and staff users.

Starting FY07, Residence Hall occupants are assigned a weight of 100%. However, because the connection is only available to the student eight months out of the year this is multiplied by 2/3. Each student signed up for ResNet will therefore be given a "weight" of 8/12 or 67.7%.

The resulting counts are attributed to University Housing.

Note that the total weight for a student in a Residence Hall is 100% + 20% or 120%.

d. Groups with an Agency Relationship

These groups will be charged in one of two ways depending on how they are attached to the UMnet backbone.

  1. Those agencies attached to a U-M unit's LAN:

    Staff in these agencies use the network in much the same fashion as U-M faculty and staff. Therefore, each person (by headcount) at the agency will be counted as one Network User. The unit should ask how many people are at that location and bill them appropriately. The unit will roughly know whether the number they are given is accurate or not by the number of IP addresses the agency uses.

    The resulting counts will be attributed to one of the following:

    a) The unit, in which case the unit will need to charge the agency.
    b) ITS, in which case the agency will be charged by ITS. The unit will need to help make these arrangements.

  2. Those agencies that have a LAN attached to the UMnet backbone:

    If the agency has their own router port they will be charged rates comparable to Merit access rates as roughly determined by the following formula:

    U-M price = (Merit price / Merit circuit speed) * (U-M port speed / 2) + (Internet Utilization Fee)

    Therefore, a 10Mbps router port will be priced at roughly $20,000/year, plus the Internet Utilization Fee.

    Note that U-M only provides certain attachment speeds: (e.g. 10Mbps, 100Mbps, 1Gbps) Merit provides other speeds.

    This will be charged to the agency directly by ITS.

e. Other

There are also costs allocated to other access services.

  1. The price for a UMnet ADSL line will include the equivalent charge of 100% of a Network User. The cable modem service provides a speed of 20-50Mbps but utilization is constant and the network administrator overhead is high.

2) FY07 Internet Cost Allocation Model

Previous Internet cost allocation model, FY02-FY06:

  1. Reflected the previous cost allocation model from Merit
  2. Annual charges from Merit were fixed within a fiscal year, and the typical year-to-year change was less than five percent
  3. U-M model allocated cost to units based on previous year's utilization
  4. Any savings (decrease in use) one unit resulted in unexpected increased charges for other units

Current drivers:

  1. In FY07 the Merit fee model will change and U-M will incur a fixed rate from year to year
  2. With the large network "pipe" U-M Internet utilization could double with no real cost to Merit or U-M
  3. Increases in Internet bandwidth to Chicago will occur in one-time upgrade charges. 10Gbps current capacity could be doubled for a cost of <$100K.
  4. The cost driver continues to be utilization but capacity per unit of cost increases dramatically faster than use of capacity has increased.

Due to the decreased importance of utilization in determining cost and the ineffective competition between units, a change in cost allocation model is being implemented that will allow units to take advantage of a network resource at relatively little cost.

The basis for this model is:

  1. Costs should be allocated to units based upon the factors that drive those costs.
  2. Substantial changes in a unit's fees should be predictable based on knowledge of the cost drivers and the unit's own changes in behaviors and use.
  3. The model should not be influenced by architecture and administration of the network. (For example, as wireless use increases it will be increasingly difficult to link utilization with units.)
  4. The model and mechanisms should be as simple as practicable.
  5. The charge should recover full cost of operations, including provisions for capital improvements.

Internet Access Fee:

The typical industry charge for Internet access is based on utilization. In the industry, price and performance increases occur in a step function. On campus, individual unit needs vary but collectively the University's need is well above the normal industry scale. Therefore, the University has taken the next step and acquired infrastructure directly to the Internet. In total, this decreases cost to U-M and enables substantial increases in capacity with minimal investment. With this new model the total cost of the Internet is allocated based on a weighted number of users of the network by headcount. There is relatively little cost for additional utilization and it is most cost effective for all U-M units to use the same Internet attachment.

This is an appropriate and effective model because:

  1. It encourages effective network architecture since it is based on users rather than an architectural artifact such as to what network a user is attached.
  2. At our universities' level of utilization the primary driver of cost is the collective utilization by users of the network rather than specific unit utilization.
  3. Unit charges will not be impacted by the utilization of other units.
  4. It enables everyone to take full advantage of Internet network improvements.

Weighting:

The allocation model incorporates weighted counts of users who access the network including occupants of the residence halls and all registered students. In determining the number of Network Users, a "Network User" with a weight of one (1) is defined as someone who has full access to the network during the business day such as in their role as a faculty or staff member. Note that this does not cover a faculty or staff members' broadband access in a residence. In addition, a "Network User" with a weight of one (1) is a student, faculty or staff member who lives on campus such as in a Residence Hall or in Northwood. Therefore, it is possible for one individual to be allocated a total weight of two (2). More specifically, a "Network User" with a weight of one (1) is defined as someone:

  1. Whose non-Health System unit attaches their building networks (LANs) to a backbone attached to the U-M Internet in Ann Arbor.
  2. Who is able to attach a station to the network at 1Mbps or greater
  3. who may have a station attached during business hours or in their residence, and
  4. who is a "user" of a U-M backbone network.
  5. The Residence Hall user weight of one is multiplied by 8/12 to reflect the service is only of value to student residents for eight months.

The model recognizes that as a whole the U-M Health System has different business drivers than the academic side of the University. The Health System, which provides its own backbone network, will continue to be charged for Internet service based on utilization. The U-M Health System includes the Medical School. Outside organizations such as Google who use the U-M Internet network for their own business will also be charged based on utilization.

Model

  FY02-FY06 Weighting or Allocation FY07 Weighting or Allocation
UMnet Backbone Internet UMnet Backbone Internet
Unit Faculty and Staff 1 utilization 1 1
Hospital and Med School n/a utilization n/a utilization
Non Med Student 0.2 utilization 0.2 0.2
Med Student 0.05 utilization 0.05 0.05
Student in Residence Halls 0.53 utilization 0.67 0.67
Northwood Housing Contract 0.5 utilization 1 1

The general impact to unit charges is an increase in charge to those with relatively low Internet utilization per headcount (e.g. Music, LSA) and a decrease to those with a relatively high utilization per headcount (e.g. CoE, SI, Housing). There is an increase in Housings weighting that partially offsets this difference.

Regular Model Evaluation:

Campus must continue to monitor utilization, encourage responsible use and recommend model changes in the future if needed.

Lambdas:

In addition to regular Internet and Internet2 uses, the new infrastructure U-M has acquired also makes fiber wavelengths, or lambdas, to Chicago available. With current technology the lambdas provide a 10Gbps "circuit." Note that this circuit is not attached to a network at either end. This capability can be extremely useful to researchers. Those U-M units that participate in the headcount model may acquire lambdas for a monthly charge equal to incremental cost. Those U-M units acquiring Internet service based on utilization may acquire lambdas for a monthly charge equal to average cost.