[registrars] Analysis of ICANN fee position

[Tim Ruiz]

Bruce,

I really don't see where registrars have any "leverage" because we pay
the fees. ICANN "allows" us to pay the fee, but can collect it at any
time from the registries instead. So where's the leverage? 

If the registries pay directly and then raise their fees in accordance
with 7E, the registrars will still be the ones actually paying it. So if
we have leverage now, why would we lose it just because we pay ICANN
fees through the registries instead of directly?

If we must pay the fees directly to influence the process, then what are
the GNSO and the rest of ICANN's bylaws all about?

The DNSO/GNSO overwhelmingly gave the thumbs down on WLS when asked by
ICANN. ICANN gave it their thumbs up. Where was our leverage then?

VeriSign is limited to 5000 domain name registrations without having to
go through a registrar, yet with Site Finder they are attempting to
basically park somewhat less than 2 * 37^63 domain names on their own
page without having to register any of them. I'm not convinced that if
registrars were the only ones complaining that anything would have been
done about it.

Tim


-----Original Message-----
From: owner-registrars at gnso.icann.org
[mailto:owner-registrars at gnso.icann.org] On Behalf Of Bruce Tonkin
Sent: Tuesday, October 14, 2003 9:20 PM
To: registrars at dnso.org
Subject: [registrars] Analysis of ICANN fee position

Hello All,

Here is my take on the current situation, and where we need to move
forward for next year.

(1) Current situation
- the budget is approved by the ICANN Board
- Registrars have a limited ability to influence the budget during the
budget process, and have even less ability to directly influence the
Board members
- the 2003-2004 budget is now approved by the ICANN Board
(we should have been more vocal in the community before the budget was
approved)
- the current structure for meeting the ICANN budget is primarily from
the suppliers of domain name services
- presently ICANN can invoice registrars directly (if registrars agree
to this), or as a back up they can invoice the registries directly
- registries have built into their contracts the ability to pass on the
fee to registrars
- registries with significant market power are highly likely to pass on
the fee to registrars (e.g Verisign)
- registries with limited surpluses (cash reserves) will be forced to
pass on the fees to registrars

While registrars pay the fee to ICANN we have at least some chance to
influence ICANN in the areas that concern us.  This leverage is really
based on the fact that ICANN will need to change their processes to
invoice registries, and this will delay their receipt of funds and
direct scarce resources to deal with the change.  The leverage will only
work once, after that we will be bypassed in future years.

By refusing to pay the fee as a registrar, registries (especially
Verisign) in the short term will gain greater leverage over ICANN.

Based on the current situation, Melbourne IT will approve ICAN billing
us directly rather than collecting the same money from us mainly via
Verisign (as they represent the bulk of our gtld domain name
registrations).  Melbourne IT will also endorse the letter proposed by
Elana.


(2) Future situation

- registrars get more active in defining ICANN's budget
(lets start now for 2004-2005 financial year)
- registrars work within ICANN to consider alternative funding models
(e.g ICANN could run an auction for new tlds and keep the proceeds to
fund regulation, or even more radical ICANN could run an auction for the
wildcard entry in the .com and .net zones, why should Verisign as a
registrant get this entry at no cost)
- for the per domain name fee compoenent of ICANN fees, lets make it a
fixed fee per NEW/RENEWAL/TRANSFER transaction so that it can be clearly
indicated to our customers - rather than based on a retroactive number
of domains under management. 
- I think it is better that ICANN's revenue be tied in some way to
market growth rather than at present the budget is just apportined to
registrars based on the number of domains under management (thus a
company in the market for longer pays a larger portion of the fees) -
this would align ICANN's goals more clearly to the goals of registrars

So I think for the future year, we should begin to think about different
funding models for ICANN, and start campaigning.  Certainly the other
sections of ICANN (other than registrars and registries) are quite happy
for us to bear the burden of costs, and happy for ICANN budget to keep
growing (as they don't see the effects).

Maybe an agenda topic for Carthage should be future funding models for
ICANN.  If we don't do anything - expect the budget to increase again
next year, and for us to be the most affected party.



Regards,
Bruce