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ICANN Proposed Budget Leaked on the Web

Citing a need to stabilize its operations, the Internet Corporation for Assigned Names and Numbers (ICANN) has proposed a nearly 20-percent budget increase for its new fiscal year, which begins July 1.

The non-profit group which oversees the Internet's domain name system plans to hike spending by $811,000 to $5.03 million in its proposed 2001-2001 budget, which will be approved by the ICANN board at its meeting in Stockholm, Sweden, June 4.

While it has been plagued in the past with financial problems, ICANN is projecting a $1M budget surplus for the forthcoming year, which it intends to salt away in an operating reserve fund.

An ICANN spokesperson said the proposed budget, a draft of which was posted last week to a restricted mailing list for ICANN-accredited registrars, was not a final product and adheres to the process established by the group's Task Force on Funding.

According to the spokesperson, the current proposal should come as no surprise given that the group previously published a preliminary fiscal 2001-2002 budget at its web site in February.

That preliminary version, however, called for a smaller, 8.6-percent spending increase, and projected lower revenues for the non-profit than the latest proposal. ICANN President and CEO Stuart Lynn is expected to post a final draft of the proposed budget next week.

Personnel expenses constitute the biggest line item in the proposed spending plan and will nearly double over last year's levels to $2.2M, as ICANN seeks to expand its payroll and provide salary increases for current officers and staff. Among the new positions to be created under the new budget are an associate general counsel, a director of communications, and a full-time webmaster.

The draft budget document, which was originally authored by former ICANN CEO Michael Roberts, justified the staff expansion this way: "The organization is vulnerably dependent on a few key individuals without adequate backup. The workpace is frenetic and interrupt-driven, loaded with sudden additional priorities, such as governmental hearings sprung with little notice."

One new expense anticipated by the technical coordination body is $200,000 for the implementation of ICANN's root server plan, under which the group will take control of the Internet's master domain name servers from Verisign. ICANN intends to add at least one member to its technical systems staff to support this plan.

ICANN has made no budget provision in the upcoming fiscal year for the October 2002 elections of at-large board members. However, the group has earmarked nearly half a million dollars to fund a study of how individuals can participate in setting ICANN's policies.

PAYING THE PIPER TO CALL THE TUNE

Of ICANN's projected revenues of $6.03M, the lion's share -- $5.45M -- will come from fees paid by registrars and registries. However, ICANN's budget plan notes that this estimate assumes payments of $1.2M from country-code domain name registries, even though those organizations have not formally agreed to pay those amounts.

According to the proposed budget document, "An approved budget is not a license to spend. It is an authorization provided that actual revenues materialize to provide for those expenditures."

In exchange for their financial support of ICANN, registrars and registries receive considerable input on the group's spending plans. Domain registration businesses hold most of the positions on ICANN's 12-person Budget Group, which developed the budget in consultation with ICANN's board and Finance Committee.

But at least one ICANN observer believes registration firms' funding role shouldn't entitle them to a preview of the non-profit's spending priorities ahead of other Internet constituencies.

"It appears that he who pays the piper calls the tune," said Michael Froomkin, a professor of law at the University of Miami in Florida. "Why do the registrars get the inside track and get to comment before the rest of us? The answer is obvious. They've got lawyers, and they've got money."