[registrars] ICANN Proposed budget is out for public comment

Tue May 18 17:41:54 UTC 2004

I can easily see the number of registrars drop drastically after the new
addition to ICANN's yearly fees. Imagine a registrar that went into business
thinking the max he would have to pay is $6000/year plus per domain fees who
now has to pay $4000/year + $19,000/year + per transactions fees (the
transaction model over the domain model is definitely much better). First
thing that comes to mind is that is there no law that prohibits such a big
rise in fees? Why aren't the larger registrars taxed and why aren't the
registries taxed? That's a drastic increase in yearly fees, I'm sure no
new/small registrar could have imagined it. Eventually it just becomes that
the larger registrars will be able to cut everyone else out of the business
purely based on fixed financial fees. The fee is supposed to indicate a
portion of fees that it takes to "support accredited registrars". Now you
can't tell me it takes $19,000 + to support each registrar equally. If I
remember right, the top 10 registrars control 75%+ of the domain names. This
number might be slightly more or slightly less now +-5%. I'm sure it takes
more to support these 10 registrars than the other 180. I don't believe this
is a registrar-support fee, but simply another way to pad ICANN's budget.
So, even after many registrars have dropped, I don't see this fee going down
by much. Every registrar is simply going to have to pay more of their share
even if they don't have an equal pie in the overall number of domains
registered.

If WLS doesn't happen, then its great for ICANN and registrars in general
because all domain-catching registrars will have no problem paying the extra
yearly fees. They'll simply drop a month or two or profit for ICANN fees.
This will not make those registrars disappear, but will force registrars who
don't currently participate in domain-dropping to do so. Then, if WLS does
happen, then we will see the domain-dropping registrars disappear first.
Then, the fee per registrar starts going up and we start seeing smaller
registrars disappear. In the end you only have the larger registrars left. I
simply don't see the ICANN fee going down. Its not like that portion of the
fee is only set for "registrar supporting activities". It made part of
ICANN's budget as a whole.

http://www.whois-search.com/deleting/who.php lists 117 names that take part
in this. Now I'm not sure of the complete accuracy of the count, but that
leaves 73 registrars that don't have fees supplemented by domain-drop fees.
Even if you cut that number down to 50, you can probably count at least that
number out once the new fee goes into effect. Cost of implementation also
goes up drastically for those that were taking their time to develop their
registrar systems.

 If the purpose is to cut out registrars who are only using their ICANN
accreditation for domain dropping services, then this is not the way to go
about doing it. Simply make it a part of the application process to enforce
that they must have a valid business model outside of domain dropping
(although I'm sure everyone probably submits applications with valid
business models).

-Nitin

----- Original Message ----- 
From: "Patricio Valdes" <valdes at parava.net>
To: "'Tim Ruiz'" <tim at godaddy.com>; "'Registrars Constituency'"
<registrars at dnso.org>
Sent: Tuesday, May 18, 2004 12:06 PM
Subject: RE: [registrars] ICANN Proposed budget is out for public comment

Tim,

Although you are correct in regards to accreditations being acquired for the
purpose of renting our connections, whats going to happen when WLS goes into
effect? These Registrars, which I am sure are many, will eventually go out
of business. What does this mean? That the remaining Registrars have to pay
for them! ICANN estimates 250 Registrars, which I doubt once WLS goes into
effect. I personally believe it going to be more like 150.

So $3.8M / 150 = $25k

Although for the big Registrars this means nothing, for us the smaller ones
is the difference between staying alive or becoming one of your resellers.

Patricio Valdes
Parava Networks, Inc.

-----Original Message-----
From: owner-registrars at gnso.icann.org
[mailto:owner-registrars at gnso.icann.org] On Behalf Of Tim Ruiz
Sent: Tuesday, May 18, 2004 7:54 AM
To: 'Registrars Constituency'
Subject: Re: [registrars] ICANN Proposed budget is out for public comment

Rick and All,

When I asked for the opportunity to represent the RC on the Budget Advisory
Group (BAG) I stated that I felt there were three primary areas of concern:

1. Reexamining the registrars' funding model.
2. ICANN's future, which I believe affects our businesses' future. 3.
Alternative forms of funding.

I believe the proposed budget addresses these concerns, keeping in mind that
it is part of a three plan.

1. Reexamining the registrars' funding model.
---------------------------------------------
The current funding model, based on names under management, is neither
predictable nor sustainable.

When we sell a multiple year registration we really have no idea what the
true cost is because we cannot predict what our fees to ICANN will be next
year, or ten years from now. The transactional model will help solve that.
First, we will know precisely the cost of registrations. If we sell a ten
year registration today we will pay the current transactional fee and be
done with it. Second, it allows us to more accurately set our pricing and
pass the true cost on to registrants.

I understand the concerns of some of the smaller registrars regarding the
per registrar portion of the variable fee. This is the feedback the reps on
the BAG need now. If registrars would prefer to see a higher transactional
fee in return for a lower per registrar variable fee I am confident that
your reps on the BAG, including myself, would represent that concern to the
ICANN staff and rest of the BAG.

I will point out however, that we have also heard concerns about
accreditations being acquired simply for the purpose of renting out
connections. Without commenting pro or con to such a business model, a
higher per registrar variable fee would ensure that such registrars pay an
appropriate portion in ICANN fees since the number of names under management
by such registrars is relatively very low. A significant portion of the
expense created by registrars does not depend on the number of transactions
or the number of names under management, but is roughly the same across all
accreditations. It seems appropriate that that portion be allocated equally
across all registrars, regardless of business model.

2. ICANN's future, which I believe affects our businesses' future.
------------------------------------------------------------------
Do we believe that ICANN is important to the future of the DNS and our
industry? If so:

--They need to be able to meet the requirements of the MoU. --They need to
be able to address threats such as law suites, the WSIS, etc. --They need to
be able to enforce their agreements.

The next three years' budget should reflect the ability to appropriately
address those issues. I believe the level of this years' budget is
appropriate based on those goals. Note, it has been reduced at least twice
based on feedback and concerns expressed by various stakeholders, primarily
registrars.

3. Alternative forms of funding.
--------------------------------
Again, this year's budget proposal is part of a three year plan. You will
note that it fixes the transactional fee at the proposed level over that
three year period, relying instead on increases in transactional activity.
Since transactional fees are based on realized revenue, increases in
transactional activity will somewhat increase funds to ICANN yet have much
less impact on registrars. By holding this fee steady, ICANN will also be
motivated to meet appropriate goals in acquiring funding from alternative
sources.

Your reps on the BAG, as well as numerous other stakeholders, have suggested
many alternative funding ideas to the ICANN staff, as well as encouraged
increased funding from ccTLDs and the RIRs.

While we do not see the level of funding from these sources increasing as
much as we would like in this years budget, there are reasons to be
encouraged that that will change over the next two years of this three plan.

The RIRs funding has increased over 50% this year, and holding steady on the
level of the registrar transactional fee will motivate ICANN to pursue its
commitment to increase RIR funding to more appropriate levels. The
establishing of the NRO and its MoU with ICANN will also put ICANN in a
better position to pursue that goal.

The formation of the ccNSO also creates a better situation for ICANN to
pursue agreements with ccTLD operators and increase funding from them over
the coming years.

There will be new agreements with new sTLD and gTLD operators over the next
few years. The ICANN staff has indicated that consideration will be given to
increased funding from these new TLDs: increased fees; fees associated with
new registry services, etc. As existing TLD agreements come up for renewal
they can be brought into line with such additional sources.

ICANN has committed to pursuing funding opportunities associated with other
stakeholders and commercial entities that benefit from ICANN functions.

Again, funding from these sources is not at the level we would like to see
in this year's budget proposal. But I am encouraged from the level of
participation that the ICANN staff has sought this year in formulating its
budget. I am encouraged by having seen them make numerous adjustments to the
budget based on feedback and input from numerous stakeholders, including
registrars. And I believe we will see the same level of commitment in the
upcoming years as ICANN pursues and increases these other areas of funding.

I encourage all registrars to study the entire proposal carefully and submit
your comments, concerns, and questions to your BAG reps (Rob, Elana, and
myself).

Tim

-----Original Message-----
From: owner-registrars at gnso.icann.org
[mailto:owner-registrars at gnso.icann.org] On Behalf Of Rick Wesson
Sent: Monday, May 17, 2004 8:58 PM
To: Jean-Michel Becar
Cc: 'Registrars Constituency'
Subject: Re: [registrars] ICANN Proposed budget is out for public comment

would those that have served on the budget committee provide specific
comments on just what they did?

It appears that the registrars burden will have increased 150% and I'm
doubting that our reps did the registrars any good.

would the reps on the budget committee please provide specific comments
on just how they "helped" us this time?

thanks,

-rick

Jean-Michel Becar wrote:

>Dear fellows registrars,
>
>The ICANN proposed budget for 2004 just get out for public comment.
>Enjoy the reading. Jean-Michel
>
>