FINAL VERSION TO BE SUBMITTED IF RATIFIED
The final version to be submitted, if the draft is ratified, will be placed here by upon completion of the vote.
FINAL DRAFT VERSION TO BE VOTED UPON BY THE ALAC
The final draft version to be voted upon by the ALAC will be placed here before the vote is to begin.
The ALAC appreciates the opportunity to comment on the proposed reserve fund replenishment strategy. As presented, the strategy is:
- The replenishment period should not exceed 5 years, in line with principle (i).
- Over the 5-year period, the ICANN Org should plan for operational savings in order to make a contribution of US$ 15 million in total, in line with principle (ii)
- A contribution from the Auction Proceeds should be considered. The amount under consideration would be US$ 36 million, corresponding to the total amount of withdrawals from the Reserve Fund to finance the IANA Stewardship transition.
- The remaining shortfall of US$ 17 million ($68m less $15m and less $36m above) could possibly come from one of the following sources, in no specific order of preference:
- Contribution from leftover funds from the new gTLD program, if any.
- Additional contribution from ICANN Org.
- Additional contribution from the Auction Proceeds.
The ALAC supports this overall strategy but with the following conditions and additions:
- The ALAC supports the allocation of operational savings at the average level of US$ 3 million per year, but with the understanding that this implicit reduction on spending budgets must be spread evenly over the entire budget. As seen in the draft FY19 budget, there is a temptation to focus reductions on specific (vulnerable) parts of the community, potentially endangering the multistakeholder model. That must not happen in this case.
- US$ 36 million from the Auction Proceeds should be subject to a limit of 25% of available funds. If the .web funds ultimately are fully or partially available, the suggested US$ 36 million could be increased to the 25% limit.
- ICANN should not shy away from seriously considering a temporary increase on per-domain registrar fees. In past years, where ICANN finances were growing, we did not hesitate to reduce registrar fees in some years. We similarly should not hesitate to increase them in this case. A US$ 0.02 increase per domain per year would net ICANN roughly US$ 18 million over five years. It is likely that registrars will pass this increase on to registrants, but a US$ 0.02 increase per year, even if marked up by registrars, is not going to be a deterrent to registering a domain. At a nominal domain cost of US$ 10.00 per year, that is just an increase of 0.2%, far less than the inflation rates we see on most everything else.
- The interest and other revenue from the reserve fund investments should be included in the replenishment calculations. Moreover, ICANN should consider using the interest and similar revenue on the other funds under management (the Auction Proceeds and the New gLTD surplus) to replenish the reserve instead of being returned to those funds.
Lastly, the ALAC notes that there are some in the community (including within At-Large) who feel that the Auction Proceeds should not be touched. The ALAC believes that the Auction Proceeds may be destined to do a lot of good, but doing so at the expense of an ICANN which is not financially stable is not wise.
FIRST DRAFT SUBMITTED
The first draft submitted will be placed here before the call for comments begins.
The ALAC appreciates the opportunity to comment on the proposed reserve fund replenishment strategy. As presented, the strategy is:
- The replenishment period should not exceed 5 years, in line with principle (i).
- Over the 5-year period, the ICANN Org should plan for operational savings in order to make a contribution of US$ 15 million in total, in line with principle (ii)
- A contribution from the Auction Proceeds should be considered. The amount under consideration would be US$ 36 million, corresponding to the total amount of withdrawals from the Reserve Fund to finance the IANA Stewardship transition.
- The remaining shortfall of US$ 17 million ($68m less $15m and less $36m above) could possibly come from one of the following sources, in no specific order of preference:
- Contribution from leftover funds from the new gTLD program, if any.
- Additional contribution from ICANN Org.
- Additional contribution from the Auction Proceeds.
The ALAC supports this overall strategy but with the following conditions and additions:
- The ALAC supports the allocation of operational savings at the average level of US$ 3 million per year, but with the understanding that this implicit reduction on spending budgets must be spread evenly over the entire budget. As seen in the draft FY19 budget, there is a temptation to focus reductions on specific (vulnerable) parts of the community, potentially endangering the multistakeholder model. That must not happen in this case.
- $36 from the Auction Proceeds should be subject to a limit of 25% of available funds. If the .web funds ultimately are fully or partially available, the suggested US$ 36 million could be increased to the 25% limit.
- ICANN should not shy away from seriously considering a temporary increase on per-domain registrar fees. In past years, where ICANN finances were growing, we did not hesitate to reduce registrar fees in some years. We similarly should not hesitate to increase them in this case. A US$ 0.02 increase per domain per year would net ICANN roughly US$ 18 million over five years. It is likely that registrars will pass this increase on to registrants, but a US$ 0.02 increase per year, even if marked up by registrars, is not going to be a deterrent to registering a domain. At a nominal domain cost of US$ 10.00 per year, that is just an increase of 0.2%, far less than the inflation rates we see on most everything else.
- The interest and other revenue from the reserve fund investments should be included in the replenishment calculations. Moreover, ICANN should consider using the interest and similar revenue on the other funds under management (the Auction Proceeds and the New gLTD surplus) to replenish the reserve instead of being returned to those funds.
Lastly, the ALAC notes that there are some in the community (including within At-Large) who feel that the Auction Proceeds should not be touched. The ALAC believes that the Auction Proceeds may be destined to do a lot of good, but doing so at the expense of an ICANN which is not financially stable is not wise.
27 Comments
Ricardo Holmquist
"H - Replenishment strategy The Board has considered the above the possible sources of funding (Section E), the guiding principles (Section F), and public comments made by the community on the first consultation paper (Section G), and proposes the following strategy to replenish the Reserve Fund shortfall of US$ 68 million:
§ The replenishment period should not exceed 5 years, in line with principle (i).
§ Over the 5-year period, the ICANN Org should plan for operational savings in order to make a contribution of US$ 15 million in total, in line with principle (ii)"
Just copied the first two items, I do agree with the strategy, 5 years for the replenisment is a reasonable time. My concern is that this 15 Million in 5 year period, or about 3 million a year are not reduced from (the already reduced planned FY19 budget) of the community.
As a possible source of funding, most of the funds (auctions, gTLD, regular incomes, etc.) earn interests, interests that last year were over 7 million dollars, acording to the results. If all this interests are allocated to the reserve, instead to each fund, they should cover half of the proposed 68 Million replenishment.
Holly Raiche
I agree with Richard's staement. My question - is the $7 million already included in the budget. If so, then allocating most of it to the reserve will mean the budget will have to be cut somewhere. And, like Richard, I would hope that the cuts are across the board - not just from the communit's budge.
Alfredo Calderon
As mentioned in the summary statement, my biggest concern is that the projrction is based on a projection where ICANN operations will not increased. Is the projected increase in staff (salaries, compensations, etc.) been considered in the 12 month reserve? It seems a little bit confusing when it is set at a specific level, when in another point it clearly states that it is to “replenish” on a specified figure.
Krishna Seeburn
The strategy proposed has many flaws in it. I do not support taking money from the auction proceeds at all. ICANN org should review the risk based strategy, operational cost is high for sure ad too many new projects being accepted. I recommend various potential solutions:
The report suggested is to be Budgeted v/s actuals based on the budget. Operational costs and infrastructure costs etc., needs a reviewed attention. Throw in Program based budgeting as well. Followups are to be handed to the heads to ensure if a project is not bring anticipated objectives to be stopped reviewed and see a better way to improve and if not it should be cancelled. For transparence community be advised why!!
These are some of my suggestions since being the Chair of Finance from Afrinic Board which we managed as team to get us in green. And have really started building the reserves.
Eduardo Diaz
There must be a prioritization list set for the replenish strategy. The Auction Proceeds (AP) should be at the end of that list just before the Registrants. AP should be directed to the community and as such its contribution to the fund should be minimized. Registrants should never contribute to replenish the fund. .
I recommend increasing ICANN’s contribution from $3 M/yr to $6M /yr. This increase can be supported by reducing ICANN public meetings from three to two per year. Resume to three years meetings once the fund is replenished.
I recommend the following prioritization list:
Alan Greenberg
Eduardo, although I am not necessarily advocating a price increase, do you really think there is harm in a modest increase?
There are about 180,000,000 gTLD domains registered. An increase of $0.01 per year (that is, 1 cent per year)would net ICANN would result in an additional $1.8m per year for ICANN.
Eduardo Diaz
I do not see why registrant have to pay for this. There is enough $$ from the other sources like I mentioned. If there is a short fall in the gTLD program then that gap can be filled with Auction Proceeds, however, I expect to be less than the $36 millions you mentioned below. ICANN can manage with only two meetings a year during a 5yr period. I agree with you in that other people's face to face meetings is out of our remit.
Judith Hellerstein
I do not support using the funds from Auction Proceeds to replenish the funds. That was never the goal when it was set up and it should not be co-opted. Auction Proceeds money is menat for capacity building and not for ICANN itself. I also agree with other people that perhaps we should only hold two meetings a year and use the savings from this to replenish the reserve fund.
I think that there is no need for additional yearly meetings by different constituencies. the Contracted parties and non-contracted parties have a gathering each year where people are brought together for a face to face meeting. This could be eliminated and moved to happen every 2-3 years.
All programmes have and need to be reviewed annually as proposed by SO/ACs as to there viability, qualifying the success rate and what it has brought to ICANN in return same for fellowships.
Alan Greenberg
I would be careful suggesting that other people's face to face meetings be curtailed at the time that we will be asking for confirmation of funding for our ATLAS and GAs.
Alan Greenberg
I support the Board's proposed replenishment methodology with certain caveates.
The strategy is:
My caveates:
Alan Greenberg
During its monthly teleconference on 24 April 2018, the ALAC decided to issue a statement based on the above draft, but with the following conditions/changes/additions:
Maureen Hilyard
I think that the ALAC did agree to looking to the Auction funds to provide some support up to $36m over 5 years, if we get the whole amount $260m - but to ensure that this is all. Limiting it to 25% or $36m tops would be my benchmark.
As Richard and Holly have said, the savings have to come from across the board - why is it that it is the funds that should made available to volunteers that are getting raided, yet there is little effort that is being made from within ICANN Org itself to make ongoing savings. What happens when the 5 years is over and there are no auction funds left?? Where will the reserves come from then??
If ICANN Org's strategic plan does not plan for replenishing their own reserve then it is not being fair to the rest of the community. ICANN Org is already too top heavy. Do their own 5 year plans demonstrate that they too are taking savings seriously?? That there are going to be chops to what they consider is important to them, as is happening to the volunteer community as they lose important resources that are supposed to help us do our job as contributors to policy, capacity building and outreach about ICANN in our communities.
After 5 years of adding a cent a domain, we will be up to 5c a domain but then that is assuming that registrars will restrict the additional costs to what ICANN is requesting and pocket the rest. Will anyone be monitoring what registrants do? It is still the end-user community that is going to bear the brunt of their lack of foresight and poor management of a new gTLD process that ICANN developed and yet will have impacted end users in the long term, both as domain registrants, and as volunteers within the ICANN community.
Evan Leibovitch
I am fully supportive of advocating a raise in fees before one cent is taken out of auction proceeds. That was from the beginning supposed to be a pool of funds kept untouched by conventional day-to-day operations, even IANA transition costs. The WG to develop criteria for allocating the pool isn't even done its work, yet already the funds are greedily seen as fair game by ICANN. It's an absolute shame that ALAC considers condoning such bad fiscal behavior.
To dip into the auction pool to replenish reserves is to invalidate the previous work done by At-Large and others. We need to provide stable funding for outreach, education, security and other programs that would benefit ICANN's global accountability at a time when its reputation and indeed reason for being is at greater risk than ever.
I am absolutely astonished that anyone in At-Large would object to a 5¢ per domain increase. The only people significantly impacted by such an increase would be domainers, and a price increase may have the beneficial side-effect of freeing up "borderline" domains currently serving no purpose but being reserved on speculation. The reduction of locked-away speculative domains is clearly in the interests of genuine providers of Internet-based services and the people who would use such services (that is, END USERS), The only people significantly negatively impacted by such a price increase are those who profit from the collection of pools of domains for speculation without any added value. It is not the role of ICANN to prop up the speculation business model at the expense of its own finances by refusing to price domains on a cost-recovery basis; if anything ICANN should prefer to have speculation minimised so most domains may actually be used.
For ALAC to advance that it's OK to lop off 25% of the auction reserve – the reserve so fought for by At-Large! – to compensate for ICANN's under-pricing of domains to serve the domain industry, is to act directly against the interest of Internet end-users. And if ALAC won't unabashedly advocate for the interests of end-users, who will?
Holly Raiche
I agree with a lot that Evan has said. I think we need to say more srongly that the auction funds were to be set aside - and should not be used simply becauses ICANN Org won't take measures to reduce their funds. So make it clear that ICANN Org must clarify how it is reducing expenditure, and then any other cuts must - as has aleady been said =- be across the SOs/ACs
Maureen Hilyard
I think that the "additional contribution from the auction proceeds" in line 3 of bullet-point 4 should be removed.
The auction proceeds will already have provided $36m and ICANN Org $15m.. over 5 years?
If there is any extra needed, then it should come from ICANN Org by reducing expenditure (eg reducing their head count.)
Bartlett Morgan
Just chiming in to record my view on the Auction Proceeds.
I largely agree with the sentiment underlying many of the views already espoused, warning against using the auction proceeds as readily available .
That said, I am willing to accept that a hard line against using the auction proceeds may not be completely practical. My suggestion: frame the use of auction proceeds as a 'break in case of emergency' option.
As an aside, this closing line seems a bit... cheeky(?)
"Lastly, the ALAC notes that there are some in the community (including within At-Large) who feel that the Auction Proceeds should not be touched. The ALAC believes that the Auction Proceeds may be destined to do a lot of good, but doing so at the expense of an ICANN which is not financially stable is not wise."
Depending on the final direction of the statement, I'd suggest rewording or removing altogether.
Judith Hellerstein
I agree with Holly and Evan regarding the use of funds from Auction Porceeds. In the discussion we had at the CCWG-Auction Proceeds many in the group were opposed to giving this money to ICANN for budgetary issues even if it asked for it. The discussion was put on hold since ICANN was not asking. I agree with both Evan and Holly that we need to say more strongly that the auction funds were to be set aside - and should not be used simply becauses ICANN Org is not able to take measures reduce its expenditures. I would take this out of the statement all together. I do agree that we should advocate in an increase in the costs of domains to reainse enough money for ICANN
Eduardo Diaz
I disagree in increasing the cost of domains, even for 1 cent. I am and end user, buy domains for legitimate businesses and do not want to pay more "taxes". So there you have it, and end-user from At-Large opposed to a "tax" increases, specially when the increase will go to support a Corporation that instead of scaling down its head count and save on other Operating costs, it starts by cutting down outreach and engagement programs.
Like I said before, ICANN can cut down the Public Meetings from three to two a year and direct those savings to the fund. Once the fund is replenished, by this measure and others, then go back to the three meeting per year.
Evan Leibovitch
Eduardo and I obviously disagree on the benefits of dealing with ICANN's shortfall through a price increase. I believe that financial prudence dictates that ICANN deal with its current issues through both increased revenue and reduced costs, though it is still clear to me that ICANN has for a long time under-priced its domains and is now having to deal with the consequences.
On cost cutting I agree with Eduardo but would go even further. I would advocate ICANN permanently going to a single face to face meeting each year – the AGM – and to have all other meetings done virtually.
The massive savings benefit of doing this could be partially used to fix its virtual meeting technical issues. Solutions exist but have only halfheartedly implemented. Forcing more ICANN meetings to be virtual would force an improved competence in this field.
Furthermore, while it appears counter-intuitive, making more meetings virtual is actually good for At-Large and other public-interest constituencies. Even with the two dozen At-Large members currently funded to attend existing meetings, we are numerically overwhelmed by lobbyists and industry staffers paid to assert corporate interest ahead of public interest through informal "hallway" meetings, social events and dominating the Public Forum. Forcing more meetings virtual actually "levels the playing field" by making access equally easy for anyone whether or not they have an expense account.
The domain industry is constantly griping about the funds used to have At-Large attend ICANN meetings. Going virtual will certainly reduce cost, but will also in the process reduce the favored access afforded the well-monied "policy salespeople" at physical meetings.
In any case, I maintain that the auction pool should be left untouched by ICANN operations as a matter of ALAC policy advice.
Dev Anand Teelucksingh
Support the ideas that the auction pool should not be touched by ICANN operations unless it was a "break glass in case of emergency" situation, reducing ICANN Public meetings from 3 to 2 (see past suggestion) and use the savings to replenish the fund. And if the timeframe can't be met, then an modest increase in per-domain registrar fees.
Seun Ojedeji
Maureen Hilyard
I know its a bit off the wall, but if ICANN Org can't live without all the people they currently or intend to employ, then maybe they need to review its meeting structure again, because they can't afford to do what they are currently doing. And they are definitely not looking at cheap venues.
Perhaps the short policy meeting (if it remains) should be exactly that and one that focuses on policy and only invites those participants who are actively involved in the process (ccwgs and other important policy related meetings). It would give the ACs/SOs time to really look at how they can impact more effectively on the policy issues (and it might make people more actively attend and contribute to WGs). Perhaps at those meetings we don't invite the general public, or have Fellows, Next Gen etc unless they are alumni and already involved in policy development (I know I will be slandered for this suggestion!).
Also, ICANN Org and the workers within the SO/AC structures could actually get to talk to each other about their policy perspectives without having to worry having to be so "politically correct" because of so many observers. We could hold the meetings in Los Angeles and get more work done. Visas to US might be a problem for some but who doesn't have visa issues when ICANN holds its meetings around the world? But the savings could easily replenish the reserve and more..
Judith Hellerstein
Maureen, I like your points and your out of the box thinking on these issues. I agree with you that we may need to restructure how we think. I think we should explore more your idea of not inviting the general public or having fellows or next gen at the meetings. It would get more people to be involved in policy discussions . Since staff seems to always be increasing and there is not much we can do about that I think yours and other people's ideas of cancelling one of the meetings is a good way of raising money. Along with increasing the money charged for domains.
Holly Raiche
I have to disagree with Evan and Ed on cutting meetings out all together. There are huge benefits in people meeting face to face, talking through their views and reaching a better understanding if not agreement on views. That does not happen if people meet virtually. The only way virtual meetings really work is when the people know each other already. So virtual meetings are valuable - but as part of a mix that includes face to face as well.
I also have to agree with Marueen on rethinking who attends the policy meetings (or others, for that matter). What benefit do the general public get by attending something that must be largely incomprehensible. So maybe restructure at least the 'policy' meeting so it is just that??
On venues,I really do see the value in moving it around - if nothing else to ensure that different constituencies can be part of a meeting (and I am not convinced LA is necessarily an inexpensive venue anyway. But I take the point - find ways to relook at those costs.
Evan Leibovitch
I don't think either Eduardo or I were advocating cutting F2F "altogether".
Eduardo suggested cutting the annual F2F to two rather than three until the fund is replenished.
I suggest permanently going from three F2F to one – the AGM – and doing the rest virtually. I grant that there may be benefit in having specific working groups meet F2F; two intense days churning policy can accomplish more than a year's worth of phone calls. But having F2F limited to one general meeting or a bunch of as-needed small groups meeting F2F is still way cheaper than the status quo.
I am also thinking on the issue of access and inclusiveness. Right now, remote access to F2F meetings is a dreadful afterthought; the choice of Adobe Connect as the appropriate tool is proof of that. If virtual video meetings are the default way to meet, the technology and sensibilities change, and the inability to travel because of illness or visa issues is no longer a barrier to 100% participation. Provision of accessibility features (such as multilingual support now, and looking forward to tools for the blind or deaf) is also easier and less expensive.
Maureen Hilyard
An hour of virtual meeting on you tube would use about a GB of broadband and I wouldn't have much GB left after I have used my affordable limit of 20GB for the month on my ICANN meetings, emails, skypes and calls. The hour of virtual meeting would cost me $20 per hour for excess GB... So despite our internet being among the cheapest in the Pacific, I don't think my meagre pay packet would allow me to watch too many hours of virtual meeting. Despite its shortfalls, AC is cheaper for us, if we can get a connection.
So a virtual ICANN meeting would be missing a whole ISOC Chapter of over 600 members from 22 countries who would be hard pressed to watch even at least one session of a meeting. No access and inclusiveness in this corner.
We have to find some other way.
Evan Leibovitch
That can be addressed. ICANN subsidizing bandwidth for attendees would still be orders of magnitude less expensive than travel.
And not all meeting systems have the video bandwidth draw of YouTube. One of the reasons that a number of organisations (including mine and ISOC itself) use Zoom extensively is because of its low bandwidth needs.