RE: [registrars] New Budget proposal is unfair and should not be implemented

["Patricio Valdes" <valdes@xxxxxxxxxx>]

I have two big concerns regarding the budget;

1) At 59 employees and $5.7M for personnel, that constitutes $100k per
employee. Where do we sign up? What are all these $100k people doing?
Besides this, there still is the $3M in Professional and Technical Services
and $1.5M for Administrative.

2) $2.4M for travel? Enlighten me, but why does ICANN need 3 meetings and
why do they have to be in such exotic places as Malaysia? Why not just
Marina del Rey? In the end, all attendees have to travel regardless of where
the location is. Why spend $2.4M in such exotic places?

Although I wish not to use these words, I can't hold myself back, this
budget is "preposterous" and "outrageous"!

Patricio Valdes
Parava Networks, Inc.
 


-----Original Message-----
From: owner-registrars@xxxxxxxxxxxxxx
[mailto:owner-registrars@xxxxxxxxxxxxxx] On Behalf Of Bhavin Turakhia
Sent: Tuesday, May 18, 2004 11:04 AM
To: 'Registrars Constituency'
Cc: 'Dan Halloran'; twomey@xxxxxxxxx
Subject: [registrars] New Budget proposal is unfair and should not be
implemented



Hi all,

It is difficult to write this email without using words such as
"preposterous" or "outrageous" but I shall nevertheless try :)

I have gleaned through the proposed budget multiple times and there are
simply too many issues with this budget -

* As everyone already knows, Registrar profit margins are only going
downhill continuously. Registry profit margins on the other hand are stable
and fixed no matter what happens. Judging from this fact, it should be the
Registry budget share that should increase and not the Registrar share to
ICANN's budget. Ironically the reverse has just occurred and I am wondering
why out budget committee and everyone else fails to see this

* Larger registrars have now the ability, thanks to this new budget proposal
to continue charging the same domain name fee that they used to since due to
their volumes they will easily absorb the $19000 fee within their costs. For
instance lets take Godaddy

 - Godaddy has 3.9 million domain names. So for them $19000 translates to
$0.0048 per domain name

Thus as one can clearly see the $19000 fee has NO IMPACT on GODADDY's per
domain cost.

Smaller Registrars on the other hand will see a huge shoot up in their cost
per domain. For instance a Registrar with around 50000 domains will see an
additional cost of $0.38 per domain.

* This budget talks of imposing a $19000 fee on every Registrar. The very
survival of a LARGE number of small Registrars in small geographies is in
question. Infact to a certain extent some of the larger Registrars may
consider this new budget an advantage since it would raise the barrier to
entry, and decrease competition. I am sincerely hoping that the fact that
the current budget committee consists of representatives from the larger
Registrars only will not adversely affect us smaller Registrars in the
process

* While I appreciate all the comments that everyone has been making about
aspects such as Registrars obtaining accreditations for the purpose of
selling their threads etc, those are short-lived business models in the
light of WLS. However the budget is a permanent long-term change we have to
live with. With due consideration to remarks by eliott and Tim, our budget
building process need not be guided or steered based on side-business profit
models that other Registrars are engaged in

* This change goes against the principles on which ICANN was built - namely
creating and fostering competition

* this fee will discourage newer Registrars from starting up. We are looking
at a multiplication of the variable fee component to double of what it was
($0.12 to $0.25 per domain) and the annual icann fees to 5 times what it was
($5000 to $25000). In direct proportion therefore you are looking at
reducing the potential applicants by dramatic amount

* Already new Registrar applicants have an issue because they are atleast 4
years behind existing Registrars in terms of technology. Add to that the
fact that they have to enter into the market and begin selling at prices
between $6.49 to $8.99. On top of this now the annual fees are multiplied by
a factor of 5. Over and above this in many jurisdictions the ICANN
requirements of insurance are far more expensive than others. This new
budget will basically ensure that NOONE new applies for becoming a
Registrar. Especially from small countries where the Domain Name market
share is small Registrars cannot exist due to this new expense

* ICANN assumes 250 Registrars in their budget document. Due to this budget
imposition this number will definitely reduce to 150 or lesser. This will
further hike up the prices which inturn will further reduce the number of
Registrars, and so on, until only the large ones with deep pockets remain.
The whole healthy competitive environment which has been created by ICANN in
the last few years will completely get eroded and replaced with a far lesser
number of Registrars

* there exists some provision in the budget document to allow certain class
of Registrars to waive off a part of their fees. This portion initself is
quite ambiguious and will result in further partial treatment to the entire
class of Registrars

* The old Budget was favourable to Registries and not favourable to
Registrars, since Registrars ended up footing a large chunk of it. The new
budget makes life further unfair by being partial towards Registries and
LARGE Registrars and being unfair towards smaller Registrars. So we are
moving from one unfair budget to another even more unfair budget

* a large chunk of the entire set of Registrars are based out of the US.
Most of the large ones are certainly there. Insurance costs in the US are
also lower than elsewhere in the world. ICANN Accreditation and Accredited
Registrars has not yet become a global phenomenon. A budget like this will
nip globalisation in the bud. Now potential applicants in other countries
will have to become resellers of the existing Registrars in the US. This
will result in these US Registrars growing bigger and other companies
worldwide becoming more and more dependant on these US Registrars, leading
to a geographical monopoly, the very thing ICANN was created to prevent.

There are so many many reasons why this new budget is entirely wrong. I will
attempt to draft out several possible emails to put forward my thoughts and
perspectives on this in a more structured fashion

Best Regards
Bhavin Turakhia
Founder, CEO and Chairman
DirectI
--------------------------------------
http://www.directi.com
Direct Line: +91 (22) 5679 7600
Direct Fax: +91 (22) 5679 7510
Board Line (USA): +1 (415) 240 4172
Board Line (India): +91 (22) 5679 7500
--------------------------------------  

> -----Original Message-----
> From: owner-registrars@xxxxxxxxxxxxxx
> [mailto:owner-registrars@xxxxxxxxxxxxxx] On Behalf Of 
> Jean-Michel Becar
> Sent: Tuesday, May 18, 2004 7:43 AM
> To: 'Registrars Constituency'
> Subject: [registrars] ICANN Proposed budget is out for public comment
> 
> Dear fellows registrars,
> 
> The ICANN proposed budget for 2004 just get out for public comment. 
> Enjoy the reading. Jean-Michel
>