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

[Tim Ruiz <tim@xxxxxxxxxxx>]

<div>Paul, I hear you, and we&nbsp;should revisit the $2MM cap with ICANN
during the next budget process.<BR></div>
<div>What you propose for a fee calcualtion though sounds a lot like what
we had been doing. I'd like to see how the transactional fee works out
before going back to that. For example, if the fees brought in from
transactions are higher than projected (and I personally think that may
be the case) the annual portion will be reduced. We may find that it all
works out pretty well for registrars large or small.</div>
<div>&nbsp;</div>
<div>Tim</div>
<div><BR>&nbsp;</div>
<BLOCKQUOTE style="PADDING-LEFT: 8px; MARGIN-LEFT: 8px; BORDER-LEFT:
blue 2px solid"><BR>-------- Original Message --------<BR>Subject: RE:
2MM cap (was: [registrars] knowing when to fold 'em)<BR>From: "Paul
Goldstone" &lt;paulg@xxxxxxxxxxxx&gt;<BR>Date: Wed, October 20, 2004
11:24 am<BR>To: "Tim Ruiz" &lt;tim@xxxxxxxxxxx&gt;<BR>Cc: "Elmar Knipp"
&lt;Elmar.Knipp@xxxxxxxxxxx&gt;, "Bhavin
Turakhia"<BR>&lt;bhavin.t@xxxxxxxxxxx&gt;, "'Registrars List'"
&lt;Registrars@xxxxxxxx&gt;<BR><BR>Just back in town.&nbsp; 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?&nbsp; 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.<BR><BR>Whether or not this individual issue
will be a concern is only one of several anyway.&nbsp; 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.<BR><BR>Similarly, the forgiveness clause favors another group of
registrars.&nbsp; 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.<BR><BR>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.&nbsp; 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.<BR><BR>ie. (registrar
budget fees) / (total # of domains) X&nbsp; (# of domains at registrar)
= (individual registrar fee)<BR><BR>Best,<BR>~Paul<BR><BR>At 10:21 AM
10/17/2004 -0700, Tim Ruiz wrote:<BR>
<BLOCKQUOTE class=cite cite="" type="cite">My comment was directed to
Paul. I guess I replied to the wrong email.<BR>&nbsp;<BR>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.<BR>&nbsp;<BR>I was not commenting on the viability or
fairness of the $2MM cap itself.<BR><BR>Tim<BR>&nbsp; 
<DL>
<DD>From: "Elmar Knipp" &lt;Elmar.Knipp@xxxxxxxxxxx&gt; 
<DD>Date: Sun, October 17, 2004 11:21 am 
<DD>To: "Tim Ruiz" &lt;tim@xxxxxxxxxxx&gt; 
<DD>Cc: "Bhavin Turakhia" &lt;bhavin.t@xxxxxxxxxxx&gt;, "'Registrars
List'" 
<DD>&lt;Registrars@xxxxxxxx&gt;, "Paul Goldstone"
&lt;paulg@xxxxxxxxxxxx&gt;<BR><BR>
<DD>On Sat, 16 Oct 2004, Tim Ruiz wrote:<BR><BR>
<DD>&gt; The $2MM cap has no affect on smaller registrars whatsoever.
The annual 
<DD>&gt; portion of the variable fee (the $3.8MM) is billed quarterly so
it will 
<DD>&gt; be paid first before any registrar will hit the $2MM cap. It
will be the 
<DD>&gt; transaction fees that cause a larger registrar to hit the cap.
And 
<DD>&gt; actually, if one or more large registrars hit that cap it will
mean lower 
<DD>&gt; fees for everyone else. 
<DD>&gt;&nbsp; 
<DD>&gt; The reason is that ICANN will have obviously underestimated
what the 
<DD>&gt; transaction fee will bring in, and the budget calls for using
any excess 
<DD>&gt; transaction fees to reduce the annual portion.<BR><BR>
<DD>Tim,<BR><BR>
<DD>I am not sure whether I got the point in your message. The cap has
nothing 
<DD>to do with the quarterly collection of the fees. The quarterly
collection 
<DD>is only the technic of charging and is independent of the yearly
result.<BR><BR><BR><BR>
<DD>Assume the following simplified two scenarios:<BR><BR>
<DD>Scenario 1)<BR><BR>
<DD>350 Registrars, nobody gets forgiveness, 1 registars has 7 million
domains 
<DD>(called R-7), all other have the same number of domains, which is
lower 
<DD>than 7 million (called R-all).<BR><BR>
<DD>Every registrar has to pay 3,800,000 USD / 350 = 10,857 USD. 
<DD>Every registrar also has to pay 0.25 USD per domain year.<BR><BR>
<DD>R-7 will have payed at the end of the year 10.857 USD + 7,000,000 *
0.25 
<DD>USD = 1,760,857 USD.<BR><BR><BR><BR>
<DD>Scenario 2)<BR><BR>
<DD>Same as above, but 7 million domains are transfered from R-all to
R-7 
<DD>(20,000 domains from each R-all). R-7 has now 14 million
domains.<BR><BR>
<DD>In my view, R-7 has to pay at the end of the year 10.857 USD +
14,000,000 
<DD>* 0.25 USD = 3,510,857 USD. But in the ICANN model he only has to
pay 
<DD>2,000,000 USD, the cap.<BR><BR><BR><BR>
<DD>Conclusion: With the ICANN model R-7 gets a relief of 1,5 million
USD or 
<DD>pays only 14 cent per domain. This seems to me inequitable.<BR><BR>
<DD>If there is more income than expected in the budget, the balance
could go 
<DD>to 50 % in the reserves and the other 50 % should reduce the
variable fees 
<DD>*of all* and *not only* from the huge registrars.<BR><BR><BR><BR>
<DD>Best Regards, 
<DD>Elmar </DD></DL></BLOCKQUOTE></BLOCKQUOTE>