ICANNs Bid to Double Budget Raises Ire

In its budget proposal, ICANN says it is expecting to raise $8.4 million from a 25-cent transaction fee that registrars would pay for each yearly domain-name registration, which is $2.6 million more than last year.

It also has added a new per-registrar fee for fiscal year 2004-05 to raise an additional $3.8 million. Based on the current number of registrars, it would cost about $19,290 per registrar.

Herndon, Va.-based Network Solutions, Mitchell said, would add the additional registrar fee onto the cost of a domain-name registration. He said he fears that the biggest losers in the budget increase would be small businesses and individuals registering only a few domain names.

Smaller registrars worry that the higher fees could put them out of business, said Patricio Valdes, president of Parava Networks Inc., a Houston-based registrar of about 65,000 domain names.

At the same time, he said, ICANN staff has suggested that smaller registrars could pay the fees from the revenue many of them receive by leasing their registry connections to domain-name back-ordering services, which attempt to grab domain names as they are deleted.

But ICANNs board has approved the controversial wait-listing service (WLS), a back-ordering service to be managed through VeriSign. Valdes said that with the main registry handling back-ordered names, the additional revenue stream would end, bringing a double-whammy down on smaller registrars. ICANN and VeriSign have yet to say when the WLS would begin.

Click here to read more about ICANNs approval of the WLS.

"A lot of the smaller registrars are not going to make it, and we might be in trouble," Valdes said. "Theyre increasing all the fees on the registrars but, on the other hand, our customers are expecting prices to be lower. Theyre not going to react well if we have to increase prices."

Peter Forman, president and CEO of New York-based Register.com Inc., said he doubts that the additional registrar fees will lead to higher domain-name registration costs for businesses and consumers.

Instead, he said, most registrars will eat the cost. Forman said that while he supports ICANN, he also is opposed to registrars carrying the burden for a bigger budget.

"They need to diversify their revenue streams," Forman said. "Its onerous for registrars, who are a competitive community, to bear over 80 percent of the budget and for registries that are granted limited-term monopolies not to bear a significant portion."

ICANN has less flexibility to raise fees on the registries that manage particular domains such as .com or .net because it entered into multiyear agreements that stipulate by how much it can increase fees, he said.

When asked if theyd rather see another organization, such as the UN, take over ICANNs duties, most of the registrars shared a sentiment similar to Formans.

"You know what they say about democracy, it is the worse form of government except for all others," Forman said. "ICANN is worst form of government for the Internet—except for all others."

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