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  • To: "op-budget-fy2009@xxxxxxxxx" <op-budget-fy2009@xxxxxxxxx>
  • From: Kieren McCarthy <kieren.mccarthy@xxxxxxxxx>
  • Date: Thu, 8 Jan 2009 15:00:48 -0800


(17 May – 17 June 2008)


ICANN established a comment period from 17 May to 17 June 2008 seeking public 
input from the community regarding its proposed FY09 Operating Plan and Budget. 

Eleven responses were received, of which seven are summarized in this document 
(three submissions were irrelevant commercial solicitations and one was an 
announcement). The full text of the responses is available at 
http://forum.icann.org/lists/op-budget-fy2009/. A list of the seven respondents 
appears at the end of this document. 

This document provides a summary only of the responses.  A response to 
questions raised will be posted separately by ICANN’s Chief Financial Officer.


The responses provide input and recommendations for improving the overall 
process of creating and executing the ICANN Operating Plan and Budget, as well 
as comments and requests for additional detail about numerous, specific budget 
line items. The general comments addressed: increasing the clarity, 
organization and transparency of ICANN’s Operating Plan and Budget process; 
keeping the focus on ICANN’s core mission; ICANN serving the needs of the broad 
community; and improving ICANN efficiency and internal operations. The specific 
issues comments included discussion of: fees; expenses; allocated funds; 
contract compliance; travel support; parity issues among supporting 
organizations and constituency contributions and activities; and new gTLDs 
budgeting. The “Summary of Input” section below provides a detailed summary 
organized into two sections—“I. In General” and “II. Specific Issues”—with 
topic subheadings.     



Transparency—New Classification System Needed in Strategic and Operating Plans 
and Budgets
ICANN should classify its activities as either ongoing or development projects, 
with key performance indicators, major milestones for completion and success, 
and regular status reports. ICANN’s Operating Plan and Budget does not describe 
the project selection process in a way that allows clear understanding of 
priorities or how projects meet priorities. See SSAC at 2 (17 June 2008). All 
projects that support ICANN’s core mission should be funded; ICANN should work 
with constituencies (e.g., SSAC) to provide basis and rationale for selecting 
projects; projects must have fiscal year benchmarks and metrics to assess 
performance. See SSAC at 5 (17 June 2008). 

Assessing ICANN Efficiency
The budget’s organization into “initiatives” is helpful for understanding 
aspirations but makes it difficult to judge whether ICANN efficiently uses 
funds contributed by the community with respect to various categories, 
including:  staff v. non-staff expenses; direct (salaries, bonuses) and 
non-direct staff costs (travel, computers, etc.);”technical” v. “policy” 
mission costs; staff expenses reimbursed by year (with average amount per staff 
member); number of consultants and their costs per year; number of staff miles 
flown by year. See Van Couvering (13 June 2008). 

New Organization Categories Needed for Security and Stability Activities in 
Plans and Budget
ICANN should organize security and stability activities into the following 
specific categories: (1) root zone management; (2) ICANN managed subordinate 
zones; (3) address system management; (4) IETF protocol parameter registries; 
(5) gTLD registry and registrar support; (6) ccTLD registry support; (7) L root 
operation; (8) externally visible enterprise systems, e.g. email, web site, 
etc.; (9) internal enterprise systems; and (10) other.  See SSAC at 2 (17 June 
2008; at 3-4, SSAC seeks ICANN’s consideration, for operating plan and budget 
discussions, of proposed “Security and Stability-Related Projects” tables 
matching budget projects and projects discussed by SSAC to the ten proposed 
categories with an annotation system identifying whether the project supports 
ICANN’s core mission and if it is funded).  

Proportion of Direct Business (External) and Process (Internal) Items
The budget requires more transparency between “pure business related” 
(external) and process, organization and other “improvement” (internal) items. 
See Knoben (note: 11 Feb. 2008 response; questions external/internal 
proportions in IDN/new gTLD expenses).  

Priorities:  Focus on ICANN’s Core Mission
Top funding priority should go to projects that uniquely and directly support 
ICANN’s core mission (e.g., root zone management; Internet addressing systems 
for IPv4 and IPv6; protocol parameter registries; and security and stability of 
the TLD registries and registrars). Funding for secondary “outreach activities” 
should instead go to projects which improve ICANN’s core functions, such as 
essential security projects; other groups (e.g., regional TLD organizations and 
ISOC) currently perform outreach activities without requiring ICANN funds. 
Outreach activities should be reviewed and re-prioritized with clear 
deliverables and milestones; those which can be better performed by other 
groups should be eliminated. See SSAC at 1, 5 (17 June 2008). ICANN must give 
reasonable priority to security and scalability of its systems that support its 
mission (e.g., L Root and enterprise system operations). See SSAC at 1 (17 June 

Lack of Focus on “Capture” by Contracted Parties in the Operating Plan
ICANN’ s Operating Plan lacks awareness of the risk of capture by contracted 
parties (i.e.,  gTLD registries and registrars who directly pay ICANN, 
accounting for 93% of ICANN’s revenue in 2009) and programs to counter such 
capture. The Plan seems to assume that a main ICANN goal is to cater to the 
needs of contracted parties. In general, ICANN statements reflect an incomplete 
understanding of the importance of business participation in ICANN beyond the 
fact that many Internet networks are private-sector owned. IPC members’ stake 
in ICANN decision-making extends far beyond network ownership, especially with 
respect to protecting consumers’ and creators’ intellectual property rights. 
See IPC at 2 (16 June 2008).

Staff Service Levels
Given uneven quality of staff service, ICANN should consider establishing 
service levels for staff that deal with the community (e.g., maximum times for 
request acknowledgements). See IPC at 3 (16 June 2008). 


Security Projects Must Be Added to the Budget
The following “absent” security projects should be added to the budget as line 
items: (1) support for signing the root zone; (2) implementing the role defined 
for ICANN in the root server management transition agreement; and (3) 
management of certificates for the addressing system (RPKI). See SSAC at 1 (17 
June 2008).

Contract Compliance
ICANN needs to explain differences in FY08 and FY09 comparison numbers for 
contract compliance provided in the February and May draft FY09 budgets. More 
contract compliance resources--especially regarding contracted registries and 
registrars--are one key part of a broader need for a “culture of compliance” 
throughout ICANN with strategic focus on efforts that deliver the greatest 
impact for registrants and Internet users. See IPC at 1 (16 June 2008). 

GNSO Improvement Allocation; GNSO Subsidizing ASO and ccNSO
ICANN should identify how much of the $1.55 million increase for the Policy 
processes initiative will be allocated to GNSO improvements. See gTLD RyC at 1, 
para. 1 (17 June 2008). ICANN should address if anything is being done to 
reverse the trend of more subsidization of the ASO and ccNSO by the GNSO. See 
gTLD RyC at 2, para. 14 (17 June 2008). 

Parity:  ccTLD Activities and Contributions
ICANN should explain how it will deal with parity inequities regarding the 
amount of resources being spent on ccTLD activities relative to their estimated 
less than 4% contribution to the total budget in FY09. See gTLD RyC at 3, para. 
1 (17 June 2008).  ICANN should state whether any work was done (and if not, 
when it will be done) to address questions raised in the previous year about 
the amount of ICANN costs related to support for the RIRs and ccTLDs. See gTLD 
RyC at 2, para. 15 (17 June 2008). 

Add Grace Period (AGP) Modifications
The impact of special exemptions (granted by registries to registrars) on 
reporting should be addressed in the budget; amended language should be applied 
to budget page 15.  The ICANN budget language on AGP modifications is 
inconsistent with the GNSO Council motion on this issue and raises the 
potential for inaccurate billing of registries and registrars. See gTLD RyC at 
3, para. 2 (17 June 2008; response provides further details).  

Allocation of New gTLD Revenue; Fees and Costs
ICANN should consider whether it needs to identify in its separate new gTLD 
budget how new GTLD revenue proceeds will be allocated. See gTLD RyC at 3, 
para. 3 (17 June 2008). ICANN should confirm if it is correct that 
“[a]pplications and dispute fees for new gTLDs will be designed to cover 
associated costs so the revenue and costs should be a wash which is why 
revenues and expenses are not in the budget.” See gTLD RyC at 1, para. 3 (17 
June 2008). ICANN should also confirm if it is correct that revenue and costs 
for the new gTLD application and evaluation processes will be a “wash.” See 
gTLD RyC at 1, para. 5 (17 June 2008). ICANN should state if it can be assumed 
that all costs for designing and launching the new gTLDs will be included in 
the application fees; if not, it should identify what design and launch costs 
are included in the fees. See gTLD RyC at 1, para. 4 (17 June 2008). ICANN 
should explain why current registrants should pay so disproportionately for new 
TLDs when that should be self-funding. See RrC at 1, para. 4 (11 June 2008). 
ICANN should consider a financial incentive for completing new TLDs 
faster–e.g., no additions to the Reserve Fund without new TLD revenue. See RrC 
at 2, para. 9 (11 June 2008).  

New gTLD Budget: In General; Personnel Costs
Taking the new gTLD program “off budget” is sensible at this time, but the 
community should be given maximum feasible opportunity to review the separate 
budget (it could approach or surpass the entire annual ICANN budget set forth 
in the Plan). See IPC at 3 (16 June 2008). ICANN should state whether proposed 
positions are full time in support of new gTLDs and, if so, why. It should 
address if some positions could support other ICANN functions (e.g., proposed 
IANA project specialist(s), information officer, IDN manager).  See gTLD RyC at 
2, para. 12 (17 June 2008). 

FY08 v. FY09 Forecasted ccTLDs Revenue 
Given that ccTLD FY08 forecasted revenue is predicted to fall short by $0.5M 
(27%), ICANN should explain why it budgets a $0.5M increase in ccTLD revenue 
over FY08 (a more than $1M (54%) increase above the FY08 forecast). See gTLD 
RyC at 2, para. 8 (17 June 2008).  

Effect on Registrars of GNSO Domain Tasting and ICANN Registrar Transaction Fee 
on AGP Deletes 
ICANN should state whether more registrars will qualify for fee forgiveness 
with implementation of the GNSO domain tasting policy and/or application of the 
ICANN registrar transaction fee to AGP deletes, and also state the impact on 
registrar revenue and registrar fees. See gTLD RyC at 2, para. 9 (17 June 

ASO Support Costs
ICANN should state whether its ASO support costs will increase in FY09 due to 
increased work needed for IPv4 and IPv6 issues, and if RIR contributions fully 
cover ASO support costs (with any shortfall identified). See gTLD RyC at 2, 
paras. 10 & 11 (17 June 2008). 

Status of IDN Activities
ICANN should state whether completion of the protocol revision efforts is a 
prerequisite for introducing fast track ccIDNs and IDN gTLDs. See gTLD RyC at 
2, para. 6 (17 June 2008).

More Details on Specific Line Items; Reserve Fund
ICANN should provide details on:  new TLD expenditures; Contingency Fund 
(should be reviewed and reduced); bad debt expense estimates (should be 
reviewed and reduced); travel expenses; ccTLD revenues; costs for broadening 
participation; and the amount of one year of operations (i.e., the Reserve 
Fund).  See RrC at 1-2, paras. 1, 3, 6, 8 (11 June 2008). ICANN should explain 
why 67% of the Reserve Fund is not sufficient now given that new TLDs should 
provide $10-15M to the Fund. See RrC at 1, para. 5 (11 June 2008).  Details 
need to be provided for: legal expenses; Board Compensation; and Foreign 
Exchange. See RrC at 1-2, para. 6 (11 June 2008). 

Amount and Uses of .Net Registry-Level Transaction Fees 
The total amount generated by the fees imposed under Section 7.2 of the .net 
registry contract should be provided, as well as the specific amounts allocated 
to: (a) the developing country communities restricted fund (and how dispersed); 
(b) the security and stability restricted fund (and how spent); and (c) the 
general operating fund. See Younger (6 June 2008).   

Administrative Expenses 
ICANN should identify the major elements of the 87% projected increase in 
administrative expenses. See gTLD RyC at 2, para. 7 (17 June 2008). It should 
also address discrepancy of administrative costs shown in FY09 Budget Summary 
($7,566,468) and on page 21 ($6.5M). See gTLD RyC at 2, para.13 (17 June 2008). 

Necessity and Application of GNSO Travel Policy 
ICANN should review whether the proposed GNSO travel support policy, which 
seems to be a major change, is necessary and what is its basis (i.e., not 
enough participation or lack of quality participation). ICANN should ensure 
that any such travel monies are allocated to people most in need (not to 
advocates and lobbyists paid by others). See gTLD RyC at 3, para. 4 (17 June 
2008). ICANN should (1) state the basis for travel support and how it justifies 
that support of certain groups is disproportionate with their contributions; 
and (2) consider whether the GNSO or the constituencies should receive the 
allocation for travel funding. See RrC at 2, para. 7 (11 June 2008). 

At-Large Summit and Community Travel Support
ICANN should state, out of the $1M increase in the budget for Policy processes, 
the amount of funds for community travel support, and whether the $1M increase 
is included in the key initiatives table on page 8. See gTLD RyC at 1, para. 2 
(17 June 2008). 

RAA Incentive for Registrars
Registrars should be given a financial incentive to sign the new Registrar 
Accreditation Agreement (RAA) before its renewal date given the increased 
compliance costs in the new RAA. See RrC at 1, para. 2 (11 June 2008).  


GNSO Intellectual Property Constituency (IPC)
gTLD Registry Constituency, David Maher, Chair (gTLD RyC)
ICANN Registrar Constituency, Jon Nevett, Chair (RrC)  
Wolf-Ulrich Knoben (Knoben)
Security and Stability Advisory Committee (SSAC)
Anthony Van Couvering (Couvering)
Danny Younger (Younger)

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