RE: [registrars] ICANN Task Force on Funding Update

["Richard Forman" <rforman@register.com>]

Jason,

Thank you very much for your input.  Option A, the Donation Strategy, does
not seem feasible.  It turns ICANN into a fund raising entity which adds an
additional layer of cost and effort to an already burdened organization.  I
have heard of charitable organizations that only spend 25-35% of their money
on actual work.  They are spending 65-75% of their funds just on
fundraising.  Clearly, this is not what we want from a fund raising group.
However, it would be great to consider other groups (working groups,
supporting organizations, etc.) that could provide funding for ICANN in
addition to the registrars.

In Option B, getting debt financing is not the issue.  Rather it is a how
will ICANN eventually be funded.  In your email (Option B, Step 3, part c.)
you indicate that each registrar is required to pay $x per domain.  It is
unlikely that it will be feasible at this time.  In the future, it may quite
be realistic.  However, there is enough controversy over ICANN and the TFF
is interested in finding alternative bases for fees.

The TFF is interested in seeing if there is a consensus on tiers for fees
for registrars/registries.

Thank you very much for your input.  Let's keep the dialogue open and get as
much input as possible to get a solution that will work for everybody.

Richard Forman
President & CEO
Register.com, Inc.



> -----Original Message-----
> From: owner-registrars@dnso.org [mailto:owner-registrars@dnso.org]On
> Behalf Of Jason Hendeles
> Sent: Thursday, September 23, 1999 6:12 PM
> To: rforman@register.com; registrars@dnso.org
> Subject: RE: [registrars] ICANN Task Force on Funding Update
>
>
> Jason Hendeles wrote:
>
> Essentially, there are two options which stand out in my mind as the most
> logical...a donation strategy and or an equity market strategy.  In either
> case, ICANN must begin to develop a comprehensive budget and business plan
> which the participating registrars are prepared to approve (which in my
> opinion may be the more complicated battle).  The following is an
> outline of
> these two strategies in more detail:
>
> OPTION A:	DONATION STRATEGY
>
> STEP 1:	ICANN develops a comprehensive budget outlining
> their minimum and
> optimistic capital requirements.  These numbers will require substantiated
> assumptions and supporting information.
>
> STEP 2:	A select group of qualified consulting company(s)
> will create
> budgets and business planning information and evaluate potential donation
> candidates.  This plan will provide:
>
> 		- Projected annual expenditures and capital requirements
> 		- a list of potential contributors
> 		- Tax benefits realizable by donations
> 		- Non-profit legal re-organization
> 		- Some signage rights or means of rewarding contributors
> 		- Potential fundraising management candidates
> focusing on an experience
> chairman
> 		- Possible Department of Commerce assistance and support
>
> STEP 3:	Define intangible benefits of donating and create a
> marketing/fundraising strategy.
>
>
>
>
> OPTION B:	DEBT AND EQUITY MARKET STRATEGY
>
> STEP 1:	ICANN develops a comprehensive budget outlining
> their minimum and
> optimistic capital requirements.  These numbers will require substantiated
> assumptions and supporting information.
>
> STEP 2:	A select group of qualified consulting company(s)
> will create
> budgets to create a prospectus and/or institutional package enabling the
> creation of a debt financing instrument.  This prospectus/package will
> provide:
>
> 		- Industry growth information
> 		- Projected revenue from registrations
> 		- Capital Securitization strategies
> 		- Projected financial statements supported by a top
> 3 accounting firm
> 		- Commitment agreements signed by all the
> participating registrars
> 		- Capital risk evaluation (which will effect the
> issues pricing)
>
> STEP 3:	ICANN will then distribute/shop the package among leading
> institutional players.  Once the issue is priced/evaluated, it
> can be either
> offered to one large scale institutional company or pieced off in the form
> of a public debt offering.
>
> The debt based offering might have the following characteristics:
>
> 	a.	The $ amount will be adequate to support ICANN for
> a minimum of 3 years.
> 	b.	The amount will be evenly be distributed on a per
> registration basis
> across the participating registrars.
> 	c.	All registrars will sign a contract whereby they
> agree to are legally
> bound to contribute $x per domain name registration until such time as the
> interest and principal of the ICANN loan is repaid.  Failure to perform
> provisions will apply.
> 	d.	The debt offering will have a competitive interest
> rate to the risks
> involved, thereby enticing the investment community.  It may also have
> special tax incentives as well.
>
> STEP 4:	Upon successfully securing the capital, there could
> then be a
> pre-designed process to move towards a flat rate annually based on
> registration volume.
>
> This approach seems to be the fastest way to secure strong financing for
> ICANN.  I doubt a fundraising effort would be successfully considering the
> commercial potential of the industry.
>
> I would be happy to begin to meet with several financing company's to
> explore this option further...but we need a plan first.
>
> Jason Hendeles
>
> > -----Original Message-----
> > From: owner-registrars@dnso.org [mailto:owner-registrars@dnso.org]On
> > Behalf Of Richard Forman
> > Sent: Thursday, September 23, 1999 4:48 PM
> > To: registrars@dnso.org
> > Subject: [registrars] ICANN Task Force on Funding Update
> >
> >
> >
> > Fellow Registrars,
> >
> > As some of you may know, ICANN has created a task force on funding to
> > review ICANN's sources of revenue and to recommend to the Board how to
> > fund ICANN going forward.
> >
> > The ICANN board asked a number of individuals to participate in this
> > task force, myself included.  The other members include representatives
> > from the IP address registries, ccTLD registries, gTLD registry and
> > other registrars (specifically Peter Gerrand from Melbourne IT, Don
> > Telage from Network Solutions and Per-Anders Hurtigh from Port
> > Information System). As you can tell, the task force is quite diverse
> > from both a geographic and a business perspective.
> >
> > I wanted to take this opportunity to share some of the initial
> > recommendations of the committee and solicit your input so that I may
> > take it back to the full group when we convene again in a few weeks.  I
> > would like to reiterate that these are initial thoughts.  Nothing has
> > been finalized as of yet, which is why I wanted to get your input now.
> >
> > On a personal note, I believe that a variable cost allocation method
> > (e.g., $1 fee per domain name) will continue to promote the taxation
> > debate.  This is not just a US issue.  The European Union will not stand
> > for anything that smells like a tax. Therefore, I am strongly in favor
> > of finding a solution to the ICANN funding debate.
> >
> > Specific issues that are now on the table include:
> >
> > A) Should all ICANN constituencies contribute to the ICANN budget?
> > B) What % of the overall cost should gTLD registrars absorb?
> > C) Of that %, should individual registrar contributions be flat or
> > tiered?  If tiered, what are the boundaries?
> > D) Are there other sources of funding that should be considered?
> >
> > I am interested in hearing your thoughts on the four issues listed
> > above.
> >
> > ICANN will be posting the minutes from our first meeting on the ICANN
> > web site shortly.  I will also keep you updated on any new
> > developments.  Please let me know if you have any questions or comments.
> >
> > Sincerely,
> >
> >
> > Richard Forman
> > President & CEO
> > Register.com, Inc.
> >
>