To, Paul Twomey ICANN cc: Vint Cerf, ICANN Budget Committee, Registrar Budget Advisory Group, Registrars Constituency, Alliance Registrars, other Participants Subject: ICANN Budget 2004-2005 Hyperlink: A Copy of this letter is available at http://www.icannbudget.org We represent an alliance of 75 Registrars (and growing, please refer to - http://www.icannbudget.org <http://www.icannbudget.org/> ) who have common concerns about the proposed new budget and believe that certain fundamental modifications are required to the budget in order to make the budget a win-win situation and a feasible proposition for the Registrar community. The current budget in its proposed form has significant ambiguities for both ICANN and the Registrars, and we therefore have detailed out an alternative budget proposal which we believe achieves mutual objectives. All of us 75 Registrars believe the current proposed budget is harmful to our business, and harmful to ICANN too. We therefore DO NOT support the current budget. We recognize and respect the need for a strong ICANN and a well financed ICANN, however the growth of the budget in terms of the amount, as well as its controversial structure comes somewhat as a shock to the entire Registrar community. We realise that this budget document has been a result of significant debate and discussion within ICANN and we appreciate the efforts taken by ICANN in the last few weeks to actively discuss and work around the issues in cooperation with the Registrar community. Instead of spending time on random conversations, we have within our group discussed multiple strategies and in the end formulated a budget strategy that we believe is fair and represents a win-win situation for everyone. Please note, as you will see in the budget proposal document below that we have not in our efforts attempted to at all thwart the existing budget, nor attempted to unreasonably and irrationally cut it down. Infact quite the contrary what we have proposed are extremely fair and reasonable points and structure/amount changes which are well within the current scope of the budget, and which provide a long term feasible budget for all the parties involved. All of the 54 Registrars listed below stand by this alternative proposal as detailed out below and WILL SUPPORT the budget as is exactly laid out below Thanking you Yours sincerely Representing the Registrar Community listed below Bhavin Turakhia Chairman & CEO Directi Our Proposed Budget items and points (assumption 250 Registrars - which figure should be reached in the next quarter and should increase beyond that too) * ICANN's total budget figure should reduce in whatever cost-cutting manner that is possible * ICANN should also give an idea of its approximate projected budget for the next 3 years, especially considering that this years budget is twice that of last years * Registrars contribution of the budget will be $11 million per annum totally including fixed and variable fees. This amount will be capped for the next 3 years, after which it may increase at 10% per year * ICANN will charge $4000 per Registrar per year as annual accreditation fees for all TLDs * This fee is charged once a year at the beginning of the year for each Registrar. With 250 Registrars this would come to $1 million * Next ICANN charges a variable fee of 25 cents per transaction on a quarterly basis for every domain year added through an Add, Renew or Transfer for each Registrar. Based on calculations and data this should come to around $2.7 million per quarter * The total of the above therefore comes to $11.8 million * If ICANN has already collected $11 million then ICANN must in the last quarter adjust its per transaction fees (reduce it) such that it does not cross the $11 million mark. The $11 million serves as a cap of what ICANN can make from the Registrars totally in a year. So if ICANN finds in the last quarter that the per transaction fee is yielding it greater than $11 million it must reduce the per transaction fee. * If ICANN finds that it has not managed to collect $11 million by the end of the year then in the last quarter ICANN has the right to charge upto $6000 per Registrar uniformly. So for instance if ICANN falls short by $500,000, it can charge $2000 per Registrar. If ICANN falls short by $750,000 it can charge $3000 per Registrar and so on. The maximum however it can charge a Registrar is $6000 * In 1999 the ICANN budget task force had divided the ICANN budget and put a burden of 50% of the budget onto gTLD Registrars. In this budget $11 million of $15.8 million is funded by Registrars - which accounts for 70% of ICANN's budget. ICANN must take proactive steps to ensure that this contribution percentage to ICANN's budget must reduce to reasonable levels in the next budget round and thereafter. * There must be a provision in the budget to allow for an audit process. This audit maybe carried out by a task force or an audit committee with representatives from various constituencies in the proportion of contribution from those constituencies. The audit committee would NOT engage in micro management of the budget. However the audit committee would be able to ascertain that the fund allocation required for each specific macro objective was appropriately allocated and well-spent. It would also give intelligent inputs on the amount of funds that would be required to be allocated to such objectives in future years. This audit committee should have appropriate representation from the cross section of the community * In this model the Registrar fixed fee will typically be $4000 and can maximum reach $10000. It is most likely that ICANN will be able to recover $11 million without charging an extra $6000, since transactions are on a rise each year * In this model there is NO forgiveness factor and therefore no ambiguous forgiveness criterias * All Registrars are charged equally. There is no contention of a batch pool fee and ICANN's budget is not based upon selective business models of Registrars * This model does NOT break apart if WLS comes in Registrars out of the alliance who have already signed this Budget Document 1. ! $ ! Bid It Win It, Inc. 2. !!! BB Bulk, Inc. 3. !$6.25 DOMAINS! Network, Inc. 4. 007Names, Inc. 5. 123 Registration, Inc. 6. 1stDomain.Net 7. A Mountain Domains, Inc. 8. A. W. B. Trading, Inc. 9. Alice's Registry 10. All West Communications,Inc. 11. BB Online UK Limited 12. BestRegistrar.com 13. CADiware AG 14. Colorado Names Domains, Inc. 15. Directi 16. DNS:NET Internet Service GmbH 17. Domain Name 18. Domain The Net Technologies Ltd 19. DomainRegistry.com Inc. 20. Dynadot 21. easyDNS Technologies Inc. 22. Emily Names Domains, Inc. 23. Encirca 24. Esoftwiz Inc. 25. French-Connexion, SARL. 26. Future Media Network K.K. 27. Get SLD, Inc. 28. GKG.NET, INC. 29. Globedom Datenkommunikations GmbH, 30. HJ Linnen 31. I.D.R Internet Domain Registry LTD 32. Initials Online Limited 33. JJH Investments, L.L.C. 34. Korea Information Certificate Authority, Inc. 35. Le Grand Nom, Inc. 36. Lead Networks Domains Pvt. Ltd. 37. Moniker Online Services LLC 38. Name Share, Inc. 39. Netpia 40. Online Orders Network 41. Parava Networks, Inc. 42. RegisterSite 43. Registry Info Avenue 44. RJG Ventures, L. L. C. 45. Secura GmbH 46. Server-Service GmbH 47. Signature Domains 48. Total Calories, Inc. 49. Transecute (I) Pvt Ltd 50. Transecute Inc. 51. Vivid Domains, Inc. 52. Walela Brook, Inc. 53. Webagentur.at Internet Services GmbH 54. Webmasters.com