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[registrars] ICANN Funding

Many of you have asked questions about the $1.00 per name ICANN fee that was
originally proposed and subsequently withdrawn by ICANN.  Prior to July 1999
there was broad consensus on some type of proportional fee.  However, the
TFF is interested in exploring sustainable and fair alternatives to the
$1.00 fee.  I have provided a link to Esther Dyson's letter to
Representative Bliley and also cut and pasted the section from her letter
regarding the fee.

I am glad to see that many of you are taking this seriously and contributing
to help us think about solutions to ICANN's funding problem.


Richard Forman
President & CEO
Register.com, Inc.

(from Esther Dyson's letter to Bliley July 22, 1999)


Permanent cost-recovery structure.
ICANN has decided to defer the implementation of its volume-based
cost-recovery registrar fee (mischaracterized by some as a "Domain Name
Tax"), and to convene a task force to study available funding options and
recommend to ICANN and the Internet community a fair and workable allocation
of the funding required to cover ICANN's costs.

The task force will include representatives of the key entities involved in
the DNS infrastructure: the domain name registries, address registries, and
domain name registrars that have (or are likely to have) contractual
relationships with ICANN. Charged with reviewing the options for fair and
workable cost-recovery mechanisms, the task force will be asked to make its
recommendations by October 1, 1999, with an interim report (if possible)
prior to the Santiago meeting in late August. ICANN will, of course, post
those recommendations for public comment, so that the Board (which will then
consist of a full complement of 19) will be able to consider those
recommendations at its November Annual Meeting.

Nevertheless, let me say a few words about ICANN's now-deferred
cost-recovery structure. The volume-based user fee that has been
mischaracterized as a "Domain Name Tax"  in which the competing registrars
contribute to ICANN's cost-recovery budget based on the volume of their
registrations  seemed to be a fair and workable way to spread the costs
among the companies and organizations that benefit from ICANN's DNS
coordination and pro-competition activities. The registry fee was adopted
following a thorough process of public notice and comment, and was broadly
supported by an apparent consensus of the community. For example, the
Coalition of Domain Name Registrars, a group consisting of most of the
registrars that would actually be responsible for paying those fees, has
written to Congress indicating that they have no objections to paying their
fair share of ICANN's costs in this way. I understand that the Subcommittee
will have an opportunity to hear from three of the competing registrars
later today.

In sum, we continue to believe that a volume-based fee is a fair and
appropriate way to spread ICANN's cost-recovery needs. Indeed, in its
response to the Chairman's questions, the Department of Commerce (which was
fully apprised of the process that produced this consensus position) agreed
that this was a rational and appropriate approach that (1) was the result of
full notice and comment, (2) was consistent with the White Paper, and (3)
was fully authorized by ICANN's Memorandum of Understanding with the DoC.
Nevertheless, the DoC suggested that, because it has become controversial,
ICANN should suspend this approach until there are elected Board members.
ICANN has agreed to do so, pending the recommendations of the new task force
on funding options.

Obviously, ICANN must have a stable source of income adequate to cover the
costs of its technical coordination and consensus-based policy development
functions. The United States Government has asked ICANN to do an important
job, but it has not provided the means by which to carry it out, leaving the
job of providing funds to the Internet community itself. To date, ICANN has
relied on voluntary donations, and a number of people and organizations have
been very generous. But this is neither an equitable way to allocate the
recovery of costs nor a means to assure stability over the long term. Thus,
if ICANN is to continue, it is simply not possible to abandon the
cost-recovery mechanism that has been produced by the consensus-development
process and replace it with nothing.

ICANN's goal is simple: to establish a funding structure for the technical
coordination of the Internet that is stable, effective, and equitable. Any
proposed method that would meet this goal will receive serious attention
from ICANN and the Internet community at large.