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

[Tim Ruiz <tim@xxxxxxxxxxx>]

<div>My comment was directed to Paul. I guess I replied to the wrong
email.</div>
<div>&nbsp;</div>
<div>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.</div>
<div>&nbsp;</div>
<div>I was not commenting on the viability or fairness&nbsp;of the $2MM
cap itself.<BR><BR>Tim</div>
<div>&nbsp;</div>
<BLOCKQUOTE style="PADDING-LEFT: 8px; MARGIN-LEFT: 8px; BORDER-LEFT:
blue 2px solid"><BR>-------- Original Message --------<BR>Subject: 2MM
cap (was: [registrars] knowing when to fold 'em)<BR>From: "Elmar Knipp"
&lt;Elmar.Knipp@xxxxxxxxxxx&gt;<BR>Date: Sun, October 17, 2004 11:21
am<BR>To: "Tim Ruiz" &lt;tim@xxxxxxxxxxx&gt;<BR>Cc: "Bhavin Turakhia"
&lt;bhavin.t@xxxxxxxxxxx&gt;, "'Registrars
List'"<BR>&lt;Registrars@xxxxxxxx&gt;, "Paul Goldstone"
&lt;paulg@xxxxxxxxxxxx&gt;<BR><BR>On Sat, 16 Oct 2004, Tim Ruiz
wrote:<BR><BR>&gt; The $2MM cap has no affect on smaller registrars
whatsoever. The annual<BR>&gt; portion of the variable fee (the $3.8MM)
is billed quarterly so it will<BR>&gt; be&nbsp;paid first before any
registrar will hit the $2MM cap. It will be the<BR>&gt; transaction
fees that cause a larger registrar to hit the cap. And<BR>&gt;
actually, if one or more large registrars hit that cap it will mean
lower<BR>&gt; fees for everyone else.<BR>&gt; &nbsp;<BR>&gt; The reason
is that ICANN will have obviously underestimated what the<BR>&gt;
transaction fee will bring in, and the budget calls for using any
excess<BR>&gt; transaction fees to reduce the annual
portion.<BR><BR>Tim,<BR><BR>I am not sure whether I got the point in
your message. The cap has nothing <BR>to do with the quarterly
collection of the fees. The quarterly collection <BR>is only the
technic of charging and is independent of the yearly
result.<BR><BR><BR>Assume the following simplified two
scenarios:<BR><BR>Scenario 1)<BR><BR>350 Registrars, nobody gets
forgiveness, 1 registars has 7 million domains <BR>(called R-7), all
other have the same number of domains, which is lower <BR>than 7
million (called R-all).<BR><BR>Every registrar has to pay 3,800,000 USD
/ 350 = 10,857 USD.<BR>Every registrar also has to pay 0.25 USD per
domain year.<BR><BR>R-7 will have payed at the end of the year 10.857
USD + 7,000,000 * 0.25 <BR>USD = 1,760,857 USD.<BR><BR><BR>Scenario
2)<BR><BR>Same as above, but 7 million domains are transfered from
R-all to R-7 <BR>(20,000 domains from each R-all). R-7 has now 14
million domains.<BR><BR>In my view, R-7 has to pay at the end of the
year 10.857 USD + 14,000,000 <BR>* 0.25 USD = 3,510,857 USD. But in the
ICANN model he only has to pay <BR>2,000,000 USD, the
cap.<BR><BR><BR>Conclusion: With the ICANN model R-7 gets a relief of
1,5 million USD or <BR>pays only 14 cent per domain. This seems to me
inequitable.<BR><BR>If there is more income than expected in the
budget, the balance could go <BR>to 50 % in the reserves and the other
50 % should reduce the variable fees <BR>*of all* and *not only* from
the huge registrars.<BR><BR><BR>Best Regards,<BR>Elmar </BLOCKQUOTE>