Preliminary Fiscal Year 20032004 Budget
Posted: 15 March 2003
BudgetFiscal Year 2003-2004 (FY04)
This Preliminary FY04 Budget has been prepared by the incumbent President and CEO (Stuart Lynn) to provide background materials for discussion of ICANN's 2003-2004 budget. This is the first posted step in the annual ICANN budget process that will culminate with the Board adoption of the Adopted FY04 Budget on 26 June 2003 following posting in accordance with the bylaws of the Proposed FY04 Budget on or about 15 May 2003.
This is an important year for ICANN. It will be a year of significant change. Undoubtedly there will be a new Board of Directors and a new CEO to lead ICANN through its next stages of service to the Internet community. For the first time in ICANN's history there is (at least with the adoption of a budget along the lines of what is proposed in this document) the expectation that its staffing and other resource levels will be commensurate with its mission. The reforms adopted by the Board hold out the hope that ICANN operating as a public/private partnership can finally place effectiveness ahead of process in pursuit of that mission, while strengthening ICANN's core values of bottom-up consensus building and policy development, and of openness, accountability, and transparency. There is still much work to be done in implementing these reforms, but important progress has already occurred.
Subject to certain cautions noted in this document, ICANN's financial performance continues to improve. Furthermore, the budget changes that occurred between FY02 and FY03 have led to increased staffing and funding levels. Although recruiting has proceeded slower than expected, ICANN now has 6 more staff on board than at this time a year ago; this has helped to relieve some of the backlog and to allow ICANN to respond more effectively to service and other demands. Coupled with the additional resources realized (if funded as proposed in this document) from the transition to the reformed ICANN, now known as ICANN 2.0, ICANN will, for the first time, be in a position where (a) it has resources at its disposal commensurate with its obligations, and (b) where it can plan to build its reserves to a fiscally prudent level. The community, especially those that provide the bulk of ICANN's funding, have responded in a supportive and statesmanlike manner to previous management calls for the need to stabilize ICANN's resources and staffing environment at adequate levels.
This Preliminary FY04 Budget incorporates some advice received from the ICANN Finance Committee and from members of the ICANN Budget Advisory Group (see Budget Process for FY04).1 It builds substantially on the budget requirements imposed as a result of the reforms adopted and incorporated into revised bylaws by the ICANN Board in October 2002 and December 2002.
ICANN is undergoing a change of CEO. It is anticipated that the new President and CEO (who has not been selected at this time) will be in place before the Adopted Budget is approved by the Board in June 2004. It is quite possible that the new President and CEO may well have other ideas that s/he would wish to propose in the final Proposed FY04 Budget.
All financial figures in this document are in US$. ICANN's fiscal year runs from July though June, that is, the fiscal year FY04 runs from 1 July 2003 through 30 June 2004.
This Preliminary FY04 Budget builds on the Adopted FY03 Budget primarily by providing for the expansion of ICANN staff and other resources required to meet the obligations required by the approved ICANN reforms as embodied in the bylaws and in board resolutions. The Adopted FY03 Budget represented a meaningful expansion over the Adopted FY02 Budget and provided resources to support pre-reform that is, ICANN 1.0 obligations. This Preliminary FY04 Budget now provides for:
In addition, one new program is proposed, that is, a modest outreach effort to facilitate communications with developing countries in certain regions. This is proposed as a "pilot" program and is more fully described in Appendix 3.
Resources are also provided to increase ICANN's levels of reserves closer to board-approved levels (see Building the Reserves).
The Adopted FY03 Budget was designed to bring ICANN's level of expenditures much more in line with requirements imposed by its mission, as understood at that time. However, as stated in that budget document, that budget did not provide for the effects of reforms designed to improve ICANN's effectiveness, including the financial implications of the revised ICANN Mission and Core Values. The rationale for these reforms has been discussed and commented on extensively in posted documents, and is not repeated here. The reforms have been adopted by the Board. One key purpose of this Preliminary Budget is to set forth the budgetary implications and the proposed means for funding them. As was forecast in the Blueprint for Reform and other ERC documents, the effects on the budget of ICANN 2.0 are significant and result in a correspondingly significant increase in required contributions from name registries under agreement with ICANN in accordance with those agreements. Whereas this comes as no surprise, it should nevertheless be recognized that this places a strain on registry/registrar funding sources.
In summary, the effects of these reforms require staffing increases as follows:
and, depending on the outcome of the formation of the ccNSO, 1.5 FTE to support ccNSO policy development and the ccNSO Secretariat. Although these ccNSO support positions have been assumed in this Preliminary FY04 Budget, these are placemarkers only because the precise requirement cannot be determined at this time. The FY04 Preliminary Budget also provides for modest travel and administrative support for the ALAC during its formative stage; and continuing administrative support for teleconferences and travel for the ALAC Liaison to the Board.
Because of the need to implement its reforms as rapidly as possible, as approved by the Board of Directors ICANN has already commenced recruitment in FY03 for some of the additional ICANN 2.0 positions noted above, and expects (subject to recruiting delays) that six (all but the ccNSO positions, one of the the Ombdusman support positions, and one of the Office of Public Participation positions), of these "ICANN 2.0" positions will be filled before 30 June 2003, the close of the fiscal year. Funding for these positions has derived from savings accrued in the FY03 budgeted because of lower-than-planned expenditure levels. In particular, "ICANN 1.0" positions have not been recruited as fast as anticipated, although it is expected that all 27 ICANN 1.0 positions will be filled by the end of the fiscal year, 30 June 2003.
One of the difficult issues in formulating a budget for FY04 at this time is that ICANN is still in discussion with the address registries regarding their mutual relationship. For purposes of this Preliminary Budget, the assumption is made that the future will continue along the lines of past practice. This should clarify before the development of the Proposed Budget to be posted 15 May 2003.
One critical factor driving this Preliminary Budget is the continuing need to build ICANN's financial reserves to acceptable levels. Without such reserves, ICANN remains in a financially precarious position. Although it appears that a key step forward will have been taken in FY03, there will still be a gap between the actual level of reserves and what is prudent. Furthermore, achieving the projected level of reserves in FY03 is still dependent on ccTLD and RIR contributions, neither of which can as noted above be predicted with certainty at this time.
One key reason behind ICANN's inability to accumulate reserves is that contributions from ccTLDs while generously donated in the absence of any agreements between ICANN and most of the ccTLDs fall far short of what has been budgeted under the formula followed for splitting financial responsibility between gTLDs and ccTLDs. This results in actual revenues falling far short of budgeted revenues, and as a consequence budgeted contributions to the reserves do not materialize. As with the Adopted FY03 Budget, this Preliminary FY04 Budget attempts to make allowances for this discrepancy by providing for a modest Contribution to Reserves even in the face of a shortfall in the ccTLD contributions. However, realization of this Contribution to Reserves still depends on a modest contribution from the ccTLDs and a contribution from the RIR Address Registries in keeping with past understandings and the practices of previous years.
Although not reflected in this Preliminary Budget, it is my view that it is timely to reconsider the basis of allocations of costs to ccTLDs. This perspective is reflected in more detail later in this document in "Cost allocations to ccTLDs". This perspective is based on the observation that the current financial structure acts as a disincentive for ccTLDs to enter into agreements with ICANN and share appropriately in the financial costs of funding ICANN. Removing these disincentives would benefit all registries under agreement, both gTLDs and ccTLDs.
It is also timely to consider whether ICANN can reduce the number of major meetings per year from three to two. This would save about $200,000 each year. Certainly there are tradeoffs to consider. Provided there were sufficient telephonic Board meetings, the major drawbacks would be less opportunity for regional participation. Progress on items that require Public Forum discussion could also be slowed by a more drawn-out schedule. There could also be an impact on the business of constituencies and SOs that conduct their business alongside ICANN general meetings.
Fiscal Year 2003-2004 (FY04) is the fifth full budget year for the corporation, and is based on significant operating experience obtained over the previous three years. It is also based on the transition from ICANN 1.0 to ICANN 2.0 reflected in the adoption by the ICANN Board of reforms that occurred in October and December 2002.
In the fall of 1999, the ICANN Board adopted the recommendations of its Task Force on Funding (TFF) which included a number of provisions relating to the annual budget cycle. These recommendations were the basis of the detailed annual budget process that has since been followed and, with minor procedural revisions, are continued in the 2002-2003 budget cycle. The TFF report is available at <http://www.icann.org/committees/tff/tff.htm>. Although this is framed as a draft report, the Board resolution adopting the recommendations of the TFF accepted it as a final report.
In December 2000, the ICANN Board appointed a Finance Committee. Its charter provides that the committee is "responsible for consulting with the President on the annual budget process of the corporation; for reviewing and making recommendations on the annual budget submitted by the President; and for developing and recommending long range financial objectives for the corporation."
The membership of the Finance Committee for 2002-2003 is Directors Linda Wilson (chair), Jonathan Cohen, Ivan Moura Campos, and Helmut Schink. Additional information about the Finance Committee is posted at <http://www.icann.org/committees/finance>.
In December 2002, ICANN's President appointed the original members of what is now termed the Budget Advisory Group. The BAG was formed in accordance with the recommendations of the TFF Report. Its membership changes each year based on nominations from Domain Name and Address Registries and Registrars. Although nominated by the various constituencies, the Budget Advisory Group's advice to the President is based on the perceptions of the individual members and may or may not be representative of the constituency as a whole.
In FY03, the composition of the Budget Advisory Committee (BAG) is different than the previous two years. Previously, the BAG was composed of three representatives from each of the four groups that provide the lion's share of the funding to ICANN: the gTLD registrars constituency, the gTLD registries constituency, the ccTLD constituency, and the RIR address registries. However, there are two changes in FY03:
With this background, the FY03 members of the Budget Advisory Group and their affiliations are:
The ICANN Bylaws require that the President submit a proposed budget to the Board of Directors at least forty-five days in advance of the beginning of the fiscal year, or approximately 15 May. For FY04, the Board expects to act on the proposed budget at its meeting on 26 June 2003 in Montreal, Canada.
The ICANN annual budget-development cycle follows three general phases:
The first phase involves review of the financial results for the first six months of the current fiscal year, and the development of an updated forecast of actual results for the entire fiscal year. The intent is that this cycle be completed in January, but experience has shown this requirement to be unrealistic given the time it takes to close the second quarter of the fiscal year and delays in completing the annual audit of the previous year.
This year (FY03) has proven to be no exception. Posting of official six-month figures, however, has again been delayed this year because of the need to reconcile with the final audited figures for FY02 and for the requirement to close the second quarter. The FY02 final audit has been posted at http://www.icann.org/financials/financial-report-fye-30jun02.htm. The financial report for the first six months of FY03 will be posted around the middle of March 2003. These are unaudited figures prepared by ICANN's external accountant. The projections contained in the Preliminary Budget Schedule and Accompanying Notes are based on staff estimates.
It should be emphasized that the six month figures are unaudited. Furthermore, they are in "accounting" format consistent with audit principles used by our external auditors for the annual audit. This format differs substantially with the format used for budgeting and forecasting, that is for "management" purposes, although the two formats can readily be reconciled.
For example, official "accounting" reports defer revenues associated with services that are rendered across the fiscal year and across fiscal year boundaries. Annual Registrar Accreditation Fees, as one example, are distributed throughout the period of accreditation regardless of when they are actually received. "Management" practice for budgetary purposes, however, is to include and project income at the time it is invoiced. This is to provide for greater clarity of understanding.
The President and the Chair of the Finance Committee solicited input to the Preliminary Budget from ICANN's Supporting Organizations and constituent units in the Open Forum at the meeting in Shanghai in October 2002, and in a widely distributed written solicitation in December 2002. To date, the only input has been a request from the Interim ALAC for budget support, mostly for FY03 but with some effect on the Preliminary FY04 Budget. This has been included.
The second phase of the budget-development cycle includes the preparation of a Preliminary Budget for the next fiscal year based on the updated forecast for the current year, plus other known variables affecting the next year's budget. This Preliminary Budget (this document) is posted in advance of the first meeting of the calendar year (in 2003, this will be the March meeting in Rio de Janeiro, Brazil). A summary of the Preliminary 04 Budget will be presented at the Public Forum to be held in Rio de Janeiro on 26 March 2003, and will form the basis for open discussion.
The third phase includes preparation of the Proposed Budget for the next fiscal year, based on review of the Preliminary Budget. The Proposed Budget, after internal review and development by ICANN management, the Budget Advisory Group, and the Finance Committee, is posted for public comment at least three weeks before the second quarterly meeting, but no later than 45 days before the beginning of the next fiscal year. In the case of the Proposed Budget for FY04, this posting will occur on or before 15 May 2003.
The Proposed Budget, modified as appropriate from analysis of comments received, is presented to the Board for adoption at its second meeting of the calendar year, resulting in the Adopted Budget. This year, that will occur on 26 June 2003 in Montreal, Canada.
The calendar of currently scheduled budget related meetings and teleconferences for the FY04 budget is as follows. The Finance Committee also meets as needed during the budget process in addition to the meetings listed below.
This Preliminary Budget does not anticipate any reduction in expenditures that may result from growth in the use of higher-level naming systems that may relieve or replace pressure on the DNS to provide solutions to problems for which it was not originally designed (higher level naming systems could, for example, reduce or eliminate the need, if any, for more top level domains). Any shift from the DNS to these higher-level naming systems could conceptually provide relief to ICANN because they are outside of ICANN's scope and ICANN would not need to provide for any coordination of suchs systems within its budget. However, it continues to be premature to make any assumptions at this time.
The basic philosophy driving this Preliminary Budget was discussed earlier in this document (see "Budget Issues for FY04"). From a workload perspective, this Preliminary Budget builds on the ongoing and highlight priorities as follows:
Specific priorities for FY04 that fit within the above framework include:
The proposed new Outreach Program is described in Appendix 3.
Although this budget represents an expansion from previous years, there are many exclusions. For example, it does not provide for:
Four years ago as part of the approval of the 1999-2000 budget, the Board stated: "It is the intention of the ICANN Board to create a reserve account of at least one year's operating expenditures, to be funded over several fiscal years." Approval by the Board of the 1999-2000 budget implied that the Board accepted this statement about the appropriate level of reserves.
Prior to FYO3, we made essentially no progress towards this goal. The primary reason is that full budgeted contributions to reserves never materialized, largely because ccTLD revenues always fell considerably short of budgeted levels. Since there are relatively few agreements with ccTLDs, most ccTLDs are under no legal obligation to support ICANN financially. Many, however, generously make voluntary contributions even in the absence of agreements. In aggregate, however, these contributions in the past totalled considerably less than the share budgeted for all ccTLDs based on the allocation of costs recommended by the Funding Task Force report adopted by the Board. In 2000-2001, for example, budgeted ccTLD revenues were $1,277,000 whereas actual revenues were approximately $880,000.
This perennial shortfall became an institutionalized reality. Action to address the problem was taken in a new budgeting approach that was adopted in FY03 by raising the planned "contribution to reserves" to a sufficient level so that, even with a shortfall in realizing budgeted ccTLD revenues commensurate with historical experience, there would still remain a meaningful "contribution to reserves" at the end of the financial year. That is, the budget was set at a level that anticipated a shortfall in ccTLD contributions yet nevertheless anticipated a reasonable level in the contribution to the reserves (about $840,000).
One important effect of planning for a larger budgeted contribution to reserves and a "shortfall" in ccTLD contributions (it is not a true shortfall since most of these contributions are voluntary) is that the amount that must be allocated between the gTLD and ccTLD registries is correspondingly larger, resulting in a greater burden falling on the shoulders of the gTLD registrars and those ccTLDs under agreement.
Costs allocated to name registries under agreement are now allocated among individual registries according to the number of domain names in those registries (see Appendix 2). The question is often raised, particularly by many ccTLDs, as to whether this is the most fair or the most effective way to allocate costs. Over the past years, this has been a particularly divisive issue that has not been resolved to anyone's satisfaction. Yet no fairer way has been proposed that is generally acceptable. With the potential advent of the ccNSO, it is quite possible that a fresh approach can be initiated, and other ways to address cost allocation, or to adjust current models, can be explored. This is something to which the community can look forward. In the meantime, because of contractual obligations, we must work within the current model.
Even within the current framework, one key question that arises as the effective amount allocated per domain name increases is whether the burden is falling fairly on gTLDs and ccTLDs according to efforts expended in relative support of these registries. In this context, it should be noted that the overall budgetary philosophy that underscores financial support for ICANN is not based on any kind of dedicated financial support for dedicated services. Financial support is intended to support the overall mission of ICANN whether specifically directed to the needs of a given funding organization or not. Nevertheless, some reasonable form of proportionality is worthy at least of consideration.
It is clear from analysis of staffing and organization charts (see Appendix 1), particularly in the context of ICANN 2.0 that considerably more ICANN resources are dedicated to the support of gTLDs than to the support of ccTLDs. What is less clear, however, is whether this is true on a per-domain-name basis. Direct staff support for ccTLDs is about 35-50% (the variance depending on the outcome of ccNSO formation) of direct staff resources. On the other hand, ccTLDs (both those under and not under agreement) house about 38% of all domain names. These ratios are not out of line with each other.
This is a little misleading, in that the staff resources allocated to ccNSO policy development and secretariat support are included in the analysis. The current thinking of the ccNSO Assistance Group, however, is that this should be funded directly by the ccNSO out of specific fees charged to ccTLDs as a price for membership in the ccNSO. This would separate the funding from the general ICANN funding and from the ccTLD contributions to this funding. Should this approach come to fruition, the Proposed Final Budget would be appropriately adjusted. Should this happen, it would be clearer that, on a per domain name basis at least, the direct support costs for ccTLDs would be less than those for gTLDs.
The problem, however, is that relatively few ccTLDs are under agreement (although that number is steadily growing), whereas all gTLD registries and registrars are under agreement. The burden, therefore, falls most heavily on those ccTLDs who do enter into agreements, acting as a financial disincentive to enter agreements. The amounts required to fund ICANN are falling most heavily on the shoulders of gTLD registries/registrars and those ccTLDs under agreement. The more ccTLDs that are under agreement, the further that burden can be shared and the amount per domain name contributed by any given registry under agreement would be reduced.
I believe the incentives are precisely in the wrong direction, and that a case can be made to lower, at least temporarily, the allocation per ccTLD domain name until there are many more ccTLD registries under agreement. Whereas this would result in gTLD registries paying (either directly or, as now, through registrars) a fraction of a cent2 more per domain name in the short run, in the long run they would pay less as more ccTLD registries enter into agreements. I would recommend consideration that the Final Budget reflect a reduction for 2003-2004 for ccTLDs under agreement of their required contribution to one half of what is currently required by agreement. This reduction would need to be reconsidered each year.
However, even were this suggestion to be considered to be of interest to the community, there are contractual constraints that may require the assent of existing registries under agreement for it to go into effect. As such, this Preliminary Budget does not reflect this reduction. Nevertheless, I believe it should be seriously considered over the coming two months.
The Tier 1 and Tier 2 boundary conditions would also need to be adjusted to maintain some degree of overall consistency. Tier 1 registries are currently those that house fewer than 5,000 domain names; this should be increased to 7,500. Tier 2 registries currently house between 5,000 and 50,000 domain names; these boundaries should be increased to 7,500 and 75,000, respectively. However, to maintain overall consistency, the contributions would need to be increased from $500 and $5,000 to $750 and $7,500, respectively. Under this proposal .ms, .ro, and.hk would revert to Tier 2 registries (.mx lies right on the boundary).
Column D of the Budget Schedule displayed in the following section summarizes the projected financial performance for the current year, FY03, displayed in the format adopted for these budgeting purposes. This projects an operating surplus (contribution to reserves) of $663,000 compared with a budgeted figure of $843,000, even after allowing for originally unbudgeted expenditures towards the transition to ICANN 2.0 of $446,000. This projected contribution to reserves, however, assumes ccTLD contributions totaling $600,000 and commitments from RIR address registries totaling $535,000, both of which must remain uncertain at this time given that the ccNSO is a work in progress and that relations with the RIRs have not been fully defined, although there are very constructive discussions underway.
Furthermore, there is a difference between contributions to reserves in a budget forecast document, and actual cash reserves. This is because not all commitments are realized in cash, at least in the near-term, but remain on the books as accounts receivable. The level of cash reserves is what counts. However, ICANN's cash reserves are projected to suffice through the beginning of the next fiscal year to meet planned operating obligations, although they would not suffice to meet any unplanned emergencies or to address unusual levels of litigation.
These cautions notwithstanding, ICANN's financial performance continues to improve. Furthermore, the budget changes that occurred between FY02 and FY03 have led to increased staffing and funding levels. Although recruiting has proceeded slower than expected, ICANN now has 6 more staff on board than at this time a year ago; this has helped to relieve some of the backlog and allow ICANN to respond more effectively to service and other demands. Coupled with the additional resources realized from the transition to ICANN 2.0 (if funded as proposed in this document), ICANN will, for the first time, be in a position where (a) it has resources at its disposal commensurate with its obligations, and (b) where it can plan to build its reserves to a fiscally prudent level. The community, especially those that provide the bulk of ICANN's funding, have responded in a supportive and statesmanlike manner to previous management calls for the need to stabilize ICANN's resources and staffing environment at adequate levels.
|PRELIMINARY 2003-04 BUDGET
|2002-03 Approved Budget||2002-03 Year-End Projection without Transition Costs||2002-03 Transition Costs||2002-03 Year-End Total Projection||2003-03 Difference Projection to Budget||2003-04 Base Budget (ICANN 1.0)||ICANN 2.0 Addtitional Costs||Other Additional Costs||Preliminary 2003-04 Budget||Difference Budget to Budget||See Notes in Text|
|Staff Full-Time Equivalents||27||27||6||33||6||27||10||1||38||11||(1)|
|Professional and Technical Services||715||687||20||707||(8)||450||75||90||615||(100)||(3)|
|Board & Public Meetings||550||750||35||785||235||800||147||947||397||(4)|
|Other Travel & Meetings||395||365||13||378||(17)||500||60||60||620||225||(5)|
|Administrative & Systems||978||1,202||85||1,287||309||1,400||203||20||1,623||645||(6)|
|Subtotal: Base Expenditures||$5,339||$5,190||$325||$5,515||$176||$5,799||$1,506||$320||$7,625||$2,286|
|Public Meetings & sponsored events||150||0||0||(150)||0||0||(150)||(7)|
|At Large Activities||200||5||75||80||(120)||0||40||40||(160)||(8)|
|Subtotal: Other Expenditures||$675||$271||$75||$346||($329)||$325||$40||$0||$365||($310)|
|Variable Registry/Registrar Revenues|
|TLD Name Registries/Registrars (with agreements)||$3,872||$3,872||$3,872||$0||$4,400||$1,431||$170||$6,001||$2,129||(11)|
|IP Address Registries||$535||$535||$535||$0||$535||$535||$0||(12)|
|Subtotal: Variable Registry/Registrar Revenues||$4,407||$4,407||$0||$4,407||$0||$4,935||$1,431||$170||$6,536||$2,129|
|Fixed gTLD Registry Fees (with agreements)|
|New gTLD Initial Fixed Fees||58||58||58||0||0||0||(58)||(15)|
|Subtotal: Fixed TLD Registry Fees||$700||$709||$0||$709||$9||$747||$0||$0||$747||$47|
|Other Registry/Registrar Revenues|
|Registrar Accreditation Application Fees||35||50||50||15||35||35||0||(16)|
|Annual Registrar Accreditation Fees||700||950||950||250||900||900||200||(17)|
|Subtotal: Other Registrar Revenues||$735||$1,000||$0||$1,000||$265||$935||$0||$0||$935||$200|
|Less: Bad Debts or Bad Debt Allowance||(165)||(230)||(230)||(65)||(250)||(250)||(85)||(18)|
|Subtotal: Base Revenues||$5,677||$5,886||$0||$5,886||$209||$6,367||$1,431||$170||$7,968||$2,291|
|ccTLD Voluntary Contributions|
|Fair Share Contribution||2,153||2,153||2,153||0||2,756||862||102||3,721||1,568||(19)|
|Less: Estimated difference||(1,353)||(1,532)||(1,532)||(179)||(2,256)||(812)||(52)||(3,120)||(1,767)||(20)|
|Subtotal: ccTLD Voluntary Contributions||$800||$621||$0||$621||($179)||$500||$50||$50||$601||($199)|
|Public Meetings Sponsored Events||150||0||0||(150)||0||0||(150)||(21)|
|At Large Activities||200||2||2||(198)||0||0||(200)||(22)|
|Subtotal: Other Revenues||$380||$32||$0||$32||($348)||$50||$0||$0||$50||($330)|
|CONTRIBUTION TO OPERATING RESERVE||$843||$1,078||($400)||$678||($165)||$793||($65)||($99)||$629||($214)||(24)|
|New gTLD Operating Reserve|
|Balance brought forward||372||372||372||0||0||0||0||0|
|Balance carried forward||$0||$0||$0||$0||$0||$0||$0||$0||$0||(25)|
|Dot Org Application Reserve|
|Balance brought forward||$0||$319||$319||$319||$78||$0||$0||$78|
|Balance carried forward||$0||$78||$0||$78||$78||$0||$0||$0||$0||(26)|
The following notes detail the assumptions underlying the proposed Preliminary Budget:
1. As of the time of the posting of the Preliminary Budget, the Budget Advisory Group has not met as a whole. There have been separate consultations with the various subgroups, however. The BAG will first meet as a whole at the ICANN meeting in Rio de Janeiro at the end of March 2003.
ICANN's functional organization is outlined in Figure 1 (click here for full size). The various boxes indicate the functional responsibilities. Also shown are FY03 budgeted FTE and planned additional FTE for FY04 to meet requirements of ICANN 2.0.
The staffing schedule is indicated in Figure 2. With the new organization in place (Figure 2), some positions have been renamed to more accurately reflect the duties of the position.
The following tables detail the assumptions made regarding domain name counts for purposes of the Preliminary Budget. These assumptions are important since they form the basis for allocating budgeted revenues among gTLDs and ccTLDs (see Note (11)). The counts used will need to be refined between posting of the Preliminary Budget and of the Proposed Budgeted. This will require the cooperation of those TLDs affected by these counts.
The domain name counts for ccTLDs have jumped 22% over the numbers used last year. The count for gTLDs, however, has declined 5%, largely due to a drop-off in .com whose statistics dominate the overall gTLD count because of its comparative size.
The Tier 3 ccTLD counts as of 1 February 2003 are provided below. They will need to be updated to provide 1 July 2003 estimates or actual. The other ccTLDs are Tier 1 or Tier 2.
The Tier 3 gTLD counts will also need to be updated for purposes of the Final Approved Budget:
The split between gTLDs and ccTLDs is thus calculated as follows:
Tier 2 registries are those estimated to house between 5,000 and 50,000 domain names. The budget assumes that each of these would be requested to contribute $5,000. The 31 ccTLD registries assumed to be in this category are listed in the table at the end of this Schedule. In addition, .coop is also now a Tier 2 registry.
The remaining 192 registries (including .museum, and .aero) are assumed to be Tier 1 for purposes of this Preliminary Budget.
The purpose of this program is to provide an improved vehicle for ICANN to explain its policies and procedures, and its other activities, to Internet communities in developing countries, including governments. We now do visit many of these countries and give talks at regional meetings, but there is need for a continuing presence "on the ground" to ensure follow-through and continuing coordination. In spite of current visits, communication problems are made more difficult by the frequency with which governments and other players change so there may be little continuity of knowledge.
The proposed Outreach Program would be a pilot program of outreach, education, and communication in which ICANN would hire two part-time Internet activists in two key developing regions who would be resident in each region, that is, "locally" accessible. These outreach "evangelists" would be responsible for fielding queries from governments, institutions, businesses, and individuals in their respective regions, preparing outreach materials suitable for local distribution (online, in print, via CD-ROM, etc.), making presentations at relevant meetings and conferences, and communicating with the media.
Initially, this program would be piloted in two regions of the world. The reason for piloting before committing to an established program is to learn more about what is most effective and what difference such a program makes. In considering this budget request, the proposal should be thought of as a two-year pilot to allow ample time for tuning and to evaluate its effectiveness. This would be a more considered approach before asking the ICANN Board to commit to a more permanent and fully-defined program.
To support this two-year pilot, as stated above two articulate, knowledgeable communicators would be hired probably as consultants who are actually located in and are from developing countries in the selected regions, charged with making the ICANN process, its policies and activities, and the DNS more fully transparent, less mysterious, more responsive, and more welcoming to Internet communities in developing countries. They could also help to catalyze "at large" activities in the region in support of the ALAC's activities. Subject to Board approval, of course, the first two hires in this prototype effort should be in (a) Africa and (b) either the Pacific Islands or Latin America.
The kinds or problems, for example, that these consultants would address are processes to be followed in effecting a redelegation (the most common problem as more countries wish to "repatriate" their ccTLDs); where to find basic information on ccTLD operations (there is room here for a cooperative educational effort with ISOC, for example); how to address situations where the administrative or technical contact is not doing their job; understanding ICANN and its role in the global community.
The pilot program would have modest costs in its first year of operation, about $170,000, of which $90,000 would be for salaries and benefits, $40,000 for travel (mostly within the region, but with some for training at Marina del Rey), $20,000 for administrative costs, including the costs of production of appropriate materials and for mini-workshops (mostly attached to other regional workshops), and $20,000 for administrative costs. These individuals can likely either work out of their homes or collocate for free with some established entity.
This important effort that will support our activities to enter into agreements with ccTLDs in developing countries. ICANN would also collaborate with UNICT and with the ITU-D as appropriate to see to what extent their activities can be beneficial in amplifying the modest steps proposed with this effort.
It should be noted that other avenues are being explored for establishing this program, including the possibility of grant funding and of collaboration with other parties.
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