ICANN Ruckus

E-mails were flying today and blogs were a buzz regarding ICANN (Internet Corporation For Assigned Names and Numbers), which in turn had webmasters up in arms ready to take action. Unfortunately, the author didn’t quite get things right and caused a big ruckus over nothing. This is one of those cases, when it is important to remember you can’t believe everything you find on the web or even in your inbox.

"There are BIG changes proposed to the domain name registry system – and they are definitely NOT GOOD for us. In fact, they could put a lot of us out of business, or at a minimum subject us to a massive "tax" – based on the market value of our domains – every time we go to renew them.

Got a valuable web business? You might be facing a $1,000 or $10,000 – or an unlimited number – boost to your domain name renewal fee.

The Board of Directors of ICANN (they control many of the major top level domains) are looking at making this change right now. They call it "variable pricing."

So far they’ve slipped it through quietly and the public comment period ends today. I only just learned about it late last night.

You can get more information on my blog here: Domain Name Madness

It wasn’t long before a response came, but the response was not one anyone could have predicted, unless of course they actually read the information from ICANN.

It’s not what the person who sent this to you is making it out to be.

First, these are in regards to the agreements between ICANN and the Registry Operators for certain Top Level Domains (TLDs), not individual domain registrants.

While ICANN is the authoritative body on domain issues politically, creating policies, which registrars and users must enforce, they actually farm out the registration services to entities who contract with them to manage a given TLD. Verisign manages ".com;" Afilias manages ".info." Many countries operate their own TLDs in one way or another.

These entities are called "Registry Operators." Their purpose in life is to provide "the" authoritative registration servers for a given TLD, and they (usually) subsequently farm out the actual registration process to what amount to subcontractors.

In order to "pay" ICANN for the service they provide (basically keeping the policies and structure behind the domain system alive and well), a fee is imposed on every domain registration. Until last year, this fee was included directly into the domain fees when you registered a domain.

Policy changes last year have enabled the ICANN fee to be a separate line item in the invoice in order to demonstrate to the users that not all of the value is going directly to the entity you’re registering with, but some is being used to help keep the domain system running smoothly. The extensiveness of a given TLD may require more administration than others. “.com” requires more administration because it’s by far the largest TLD and has more arbitration requirements and other issues. When it comes to things like this, ICANN has to step in.

With the Internet progressing so quickly, ICANN has to enter into agreements with these businesses so that the registry operator can plan to function in their given fashion for at least a given period, but also so that ICANN can plan for their fees and expenses based on how quickly domains of a certain TLD expand and normal inflation, without any way to reliably estimate this. Variable rate fees help ICANN to relay the expenses on to the most successful TLDs in proportion to their marketability.

The ‘variable fee’ actually means that the fees will not be directly set in stone for a given TLD when the contract is actually signed with the Registry Operator. It does NOT mean that ICANN will impose arbitrary fees based on a given DOMAINs marketability. The fees can be adjusted across a sliding scale based on the volume of domains an individual TLD operator manages. The actual verbiage in the contract even specifies a cap on the fee “if” the variable rate fee is imposed on that TLD:

Section 7.2

(c) Variable Registry-Level Fee. For fiscal quarters in which ICANN does not collect a variable accreditation fee from all registrars, upon receipt of written notice from ICANN, Registry Operator shall pay ICANN a Variable Registry-Level Fee. The fee will be calculated by ICANN, paid to ICANN by the Registry Operator in accordance with the Payment Schedule in Section 7.2(b), and the Registry Operator will invoice and collect the fees from the registrars who are party to a Registry-Registrar Agreement with Registry Operator.

The fee will consist of two components; each component will be calculated by ICANN for each registrar:

(i) The transactional component of the Variable Registry-Level Fee shall be specified by ICANN in accordance with the budget adopted by the ICANN Board of Directors for each fiscal year but shall not exceed US$0.25…

The fees for 7.2(b) (for the .info operator, anyway) are scaled from a mere US$0.15 to a whopping US$0.25. All of them are capped at the same value. Twenty-five cents. That’s the maximum that can be imposed under the variable rate – which is intended to help ICANN raise funding to pay for what they do. And what they do (help people resolve disputes, manage the entire domain name system, create policies and formalize standards) is worth every penny of that “outrageous” potential US$0.25 fee.

Please don’t worry about this ever becoming a profiteering and price gouging enterprise, at least as far as ICANN is concerned. ICANN exists to prevent that.

Shawn K. Hall

I hope this clears up some of the misconceptions that have been making their way around the web today. We must all start being more cautious of what we share with others and take the time to check things out before we begin to panic and spread false information and rumors.

  • Shawn K. Hall says:

    Hi Ross,Actually, I do know what I’m talking about.First, you obviously don’t understand that the THREE agreements in question do not apply to *every* gTLD. They only apply to .biz, .info and .org. Should cox.net or blogger.com be concerned? Absolutely not. THESE AGREEMENTS DON’T APPLY TO THEM!Second, the ARBITRARY values suggested in the FUD going around are exactly that: FUD (that’s ‘Fear, Uncertainty and Doubt’ for you AOLers). No registry operator agreement requirement has EVER existed that prohibited certain domains from being charged more for the same term, and different registrars have often charged whatever they see fit when invoicing their users, while maintaining a given allocation for each ICANN and the Registry Operator. These TYPICALLY are relatively similar for each TLD at each registrar, but even you have to be aware that registering a domain through Network Solutions is more expensive than, well, almost anywhere else. What a registrar actually charges is up to the registrar and the registry operator.The original complaint I responded to was about a chicken-little misunderstanding of the Variable Rate Fees – which apply to ICANN, not the Registry Operator. The FUD you’re pushing here appears to be related to ICANN lifting Price Controls. That is wholly another topic, unrelated to Variable Rates. Yet, it, too, is immaterial.The Registry Operator has to provide registrars 6 months notice before raising rates, and they cannot arbitrarily raise rates *only* for specific domains. They can only raise Operator Rates for the entire TLD. Which means that if they were trying to screw eff.org, they’d also get redcross.org in the crossfire. The actual registrars have had this ability forever.While I can imagine you suffering cold sweats at night fretting that some offended bean counter with a vendetta is going to decide to rake you over the coals because you whined about him on a blog, charging you five million for your next annual domain renewal, that’s just not the way it is.For most people I wouldn’t recommend it, but just for you, ‘seek therapy.’ Or at least ask a lawyer to read the proposed agreements – preferably one that can explain the big words to you.

  • Ross Rader says:

    Shawn K. Hall has no clue what he is talking about.These proposed agreements essentially allow any gTLD registrar to charge whatever they want for the registration or renewal of any specific domain names (like blogger.com, cox.net, eff.org, etc…)This has nothing to do with the variable contributions singled out in your article.If you have any questions, feel free to give me a call and I would be more than happy to walk you through the specifics of each agreement and why this is a terrible thing for end-users.Ross Rader416.538.5492