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Do you agree with our fee hike? Press 1 to answer Yes; or 2 for Yes

by Prasad Krishna last modified Oct 01, 2015 03:28 PM
It has long been a concern that domain-name overseer ICANN is largely funded by companies reliant on the organization to make money.

The article by Kieren McCarthy was published in the Register on September 29, 2015.

Every biz that wishes to sell domain names – called a registrar – has to pay the organization $4,000 a year, plus 18 cents on every domain they sell.

In addition, they have to pay a variable fee that comprises the money ICANN says it spends on registrar-related activities divided by the number of companies that are accredited. This year that cost was $3.8m and with roughly 1,150 companies, that's $3,300 a head.

The pricing structure provides California-based ICANN with just under $40m a year, more than a third of its total budget. But in order to make sure the non-profit organization doesn't abuse its market control to hike up its fees, each year the registrars have to formally approve the fee structure that the ICANN Board has adopted. And they do that through an online vote.

This year, some registrars are wondering whether the $3.8m spent by ICANN is a good deal for them.

"What do your ICANN fees get you?" ICANN asks itself in an email sent to all registrars. "In addition to helping cover the expenses associated with ICANN meetings and ICANN's day-to-day operations, your fees have allowed us to conduct regular outreach with registrars through 'roadshow' type training seminars, webinars, in-person events, and site visits."

Don't ask, don't tell

It's not clear how that money is spent nor on what, since ICANN continues to provide only the vaguest details over its budget, providing annual sums for "travel" and for "meetings" across the entire organization.

ICANN is also actively refusing to hand that information over, telling one outfit that formally asked for additional financial data that for it to do so would be "extremely time consuming and overly burdensome." That organization – the Centre for Internet and Society – is appealing that decision [PDF] to ICANN's Board with a decision made two days ago but still unpublished.

ICANN expenditure is increasing: in 2014 alone, its "travel" costs jumped by 85 per cent to $17m; its meetings budget nearly doubled from an average of $3.2m per public meeting in 2013 to $6m in 2014. But there is almost no information on where this money has been spent, and so far no explanation for why it spent $113m in 2014 with an income of just $84m.

What else is ICANN spending registrars' fees on? "We've recruited Registrar Services staff dedicated to serving Europe, the Middle East/Africa, and Asia and have already begun a series of (low-cost) micro-regional events in China, Japan, Singapore, and South Korea, with plans taking shape for events in Europe, Africa, the Middle East, and the Americas in the near future," we're told.

But existing registrars are wondering whether all these new staff and events are needed. Are there hundreds of new registrars entering the market? Are they in Asia?

Unfortunately, ICANN has stopped providing that kind of information. In 2009, under pressure to be more open about what was going on, the organization made big play of the fact it was going to produce statistics showing how many registrars there were, how big they were, and where they were based in a new "dashboard."

But those stats stopped being produced two years ago and the most recent data provided is from 2012.

Software and security

Where else do the millions of dollars from the companies that support ICANN go? "We're building up the 'GDD Portal'," says a note from ICANN's staff, "which will become a one-stop destination for all registrar resources at ICANN, and transitioning our customer relationship management software from RADAR to"

This is the same GDD Portal that ICANN had to shut down earlier this year because of a security breach. It had misconfigured out-the-box software and exposed every user's information, including financial projections, launch plans, and confidential exchanges, to every other user. Having at first claimed there was "no indication" that confidential information was exposed, it later admitted that it had in fact happened 330 times.

As for RADAR, it was specifically named in a report by Verisign as a security risk; this is one of the things on a "growing list of examples where ICANN's operational track record leaves much to be desired."

We're listening...

Finally, in explaining why the registrar fees are a good deal for the companies, ICANN's staff note: "Most importantly, we're doing our best to listen to you to ensure that our work is of real value to you."

Unfortunately that listening does not extend to hearing any complaints about the fees, or what they are spent on.

All registrars receive an email during the annual approval of the fees levied against them with a link to an online survey. Incredibly enough, however, they are only allowed to agree to the fees – there is no option to disagree. Or in fact do anything other than sign up for another year.

And what is ICANN's explanation for why the companies that provide it with over a third of its budget are not allowed to express anything but approval of the fees ICANN sets? Problems with the voting software:

The system is only able to accept affirmative expressions of approval. (A technical limitation in the voting software prevents us from knowing when we've reached the level of approval required if we offer both a 'yes, I approve,' and a 'no, I don't approve' option.) But if you have reservations about approving the budget or concerns you'd like addressed first, please let me know and I'll be happy to try to address those directly with you.

So despite charging the companies $3,500 each a year to run the systems that they use, ICANN has been unable to find voting software that is capable of accepting more than one answer. Money well spent.

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