2MM cap (was: [registrars] knowing when to fold 'em)

[Paul Goldstone]

Just back in town.  I see your point Tim, but ICANN efforts are partially proportional to registrar size and as those one or two registrars grow beyond 8 million names or $2MM cap, wouldn't ICANN's expenses for those registrars increase while their revenue does not?  At some stage it seems possible that the remaining registrars will pay for those missing funds even if it's not in the immediate future.

Whether or not this individual issue will be a concern is only one of several anyway.  Elmar's points about those registrars having an unequal advantage and possibly avoiding future ICANN fees are even more pertinent. There just doesn't seem to be a good reason to include the cap but several to exclude it.

Similarly, the forgiveness clause favors another group of registrars.  The remaining registrars who do not fit into either of these categories will be following the same ICANN rules and regulations as the first two groups but will not get any breaks at this time.

As a solution, I would prefer to see all registrars pay an evenly distributed per domain fee to handle this portion of the ICANN budget.  That way all registars would continue to be treated equal regardless of size or business model and their fees would only increase or decrease in proportion to their own success.

ie. (registrar budget fees) / (total # of domains) X  (# of domains at registrar) = (individual registrar fee)

Best,
~Paul

At 10:21 AM 10/17/2004 -0700, Tim Ruiz wrote:
>My comment was directed to Paul. I guess I replied to the wrong email.
> 
>Paul was concerned that the $2MM cap would mean that smaller registrars might have to pay more to make up for some shortfall. I was pointing out that because of the way the two components work that could not happen, and that if one or more registrars hit that cap it would likely mean a reduction in the annual portion (paid quarterly). Of course, as you point out, all registrars would benefit from that reduction.
> 
>I was not commenting on the viability or fairness of the $2MM cap itself.
>
>Tim
>   
>From: "Elmar Knipp" <Elmar.Knipp at corenic.org> 
>Date: Sun, October 17, 2004 11:21 am 
>To: "Tim Ruiz" <tim at godaddy.com> 
>Cc: "Bhavin Turakhia" <bhavin.t at directi.com>, "'Registrars List'" 
><Registrars at dnso.org>, "Paul Goldstone" <paulg at domainit.com>
>
>On Sat, 16 Oct 2004, Tim Ruiz wrote:
>
>> The $2MM cap has no affect on smaller registrars whatsoever. The annual 
>> portion of the variable fee (the $3.8MM) is billed quarterly so it will 
>> be paid first before any registrar will hit the $2MM cap. It will be the 
>> transaction fees that cause a larger registrar to hit the cap. And 
>> actually, if one or more large registrars hit that cap it will mean lower 
>> fees for everyone else. 
>>  
>> The reason is that ICANN will have obviously underestimated what the 
>> transaction fee will bring in, and the budget calls for using any excess 
>> transaction fees to reduce the annual portion.
>
>Tim,
>
>I am not sure whether I got the point in your message. The cap has nothing 
>to do with the quarterly collection of the fees. The quarterly collection 
>is only the technic of charging and is independent of the yearly result.
>
>
>
>Assume the following simplified two scenarios:
>
>Scenario 1)
>
>350 Registrars, nobody gets forgiveness, 1 registars has 7 million domains 
>(called R-7), all other have the same number of domains, which is lower 
>than 7 million (called R-all).
>
>Every registrar has to pay 3,800,000 USD / 350 = 10,857 USD. 
>Every registrar also has to pay 0.25 USD per domain year.
>
>R-7 will have payed at the end of the year 10.857 USD + 7,000,000 * 0.25 
>USD = 1,760,857 USD.
>
>
>
>Scenario 2)
>
>Same as above, but 7 million domains are transfered from R-all to R-7 
>(20,000 domains from each R-all). R-7 has now 14 million domains.
>
>In my view, R-7 has to pay at the end of the year 10.857 USD + 14,000,000 
>* 0.25 USD = 3,510,857 USD. But in the ICANN model he only has to pay 
>2,000,000 USD, the cap.
>
>
>
>Conclusion: With the ICANN model R-7 gets a relief of 1,5 million USD or 
>pays only 14 cent per domain. This seems to me inequitable.
>
>If there is more income than expected in the budget, the balance could go 
>to 50 % in the reserves and the other 50 % should reduce the variable fees 
>*of all* and *not only* from the huge registrars.
>
>
>
>Best Regards, 
>Elmar 
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