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.”

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