I always enjoy reading John's posts.

SForrest on Free2Innovate.net: "Crocker promised the report during a public forum on SiteFinder back on Oct. 30, 2003, and ICANN said it would be done within a month. The last time I heard from Crocker - in late February, in response to an email, he informed me the report was 'still in progress.' And in mid-March, ICANN Chairman Vint Cerf told News.com the report was delayed because ICANN lacked sufficient clerical help. Last night, I emailed Dr. Crocker and inquired again as to the status of the report. Here is his reply...."

PFIR Conference Announcement: "People For Internet Responsibility (PFIR) is pleased to announce an 'emergency' conference aimed at preventing the 'meltdown' of the Internet -- the risks of imminent disruption, degradation, unfair manipulation, and other negative impacts on critical Internet services and systems in ways that will have a profound impact on the Net and its users around the world. The dates for this conference are Monday through Wednesday, July 26 through 28, 2004 -- with all sessions and working groups at the Furama Hotel Los Angeles, just five minutes north of Los Angeles International Airport (LAX)."

Andy Sullivan for Reuters: "'Maybe it's the Klingons, where the Klingon association plays a role in keeping the identity of Klingons,' said ICANN President Paul Twomey in an interview."

Silly as that quote looks, especially when pulled out of context, it gives me great hope that ICANN is now on the right track for the introduction of new TLDs. In other words, I read Dr. Twomey as saying that if the Klingons want a TLD, managed by the Imperial Klingon High Council, intended for use by Klingons, why should ICANN say no? (And, in the case of .kgn, would it even dare, under fear of bij?)

Netcraft: "The new fee structure would likely mean annual fee increases of $536,000 for Network Solutions, $273,000 for Tucows and $253,000 for GoDaddy, according to ICANN's Kurt Pritz."

This may be completely sick, but everyday I look forward to receiving my e-mail report of new case filings in Los Angeles County state and federal courts. For instance, today's report brings this: "Martin Diaz v. Gruma Corporation 5/26/2004 BC316086 Judge McCoy: Class action alleging Gruma has blocked meaningful competition in the market for tortillas." Who knew there was a market for tortillas? But for some company, this is the most important thing to its business.

Like WLS.

Chris Ambler on ICANN's Budget. I'll bet he even could go one better and pay the entire fee -- if not alone then with the help of .mobi and .travel and .xxx (not to mention .iii). A number of folks would pay to play; they just need the gate to the playground unlocked.  

The better question, perhaps, is whether the ICANN envisioned in the budget is the ICANN that was endorsed in the reforms implemented in 2002. I'm not so sure it is (though the reform conversation was notable for the fact that it took place largely without consideration of the actual cost).

Perhaps even more importantly, the ICANN process as presently funded will never be able to fulfill its intended coordination and consensus building tasks, its IANA and other technical tasks, its security responsibilities, its legal coordination and contract monitoring tasks, and its management tasks. Furthermore, costs are increasing even to pursue its current activities. Overall, the ICANN process is understaffed by at least 10-12 fulltime employees, and possibly more [the budgeted staffing level was then 21]– depending on what it is expected to accomplish. A fully funded ICANN probably requires an operating budget of 300-500% of its current budget level [the budgeted expense level was then $5,030,000], plus funding for significant one-time expenditures if funding of root name server operators and the establishment of appropriate reserves are included.

The Board should pursue a funding mechanism that requires those registries and registrars with whom ICANN has an agreement to forward to ICANN a per-name fee (estimated to be about $0.25) adequate to meet the needs of ICANN as reformed, including the building of adequate reserves. This fee is collected by registrars and/or registries as appropriate on behalf of all beneficiaries of the ICANN process.

The Blueprint suggested that the way to provide the funding required to support the activities of ICANN would be to provide that 25 cents of the price paid for each domain name registered in those domain name registries that have entered into agreements with ICANN be earmarked as direct funding for ICANN. The ERC, based on an analysis presented by the President, now believes this figure is higher than required to achieve the necessary goals. In the steady state, a maximum passthrough equivalent to 17 cents per domain name should suffice to cover operational requirements, including the additional costs implied by the proposed reform activities (estimated to require the addition of 7 FTEs to the ICANN staff). This number should, in our view, be appropriately restated every year to ensure that the total revenue to ICANN does not increase, except for inflationary reasons, as the number of applicable domain names grows (unless otherwise justified and approved as part of the annual budgetary cycle). By comparison, the current ICANN budget provides for a passthrough of approximately 13 cents per domain name. In addition, the ERC recommends that the passthrough be increased an additional 3 cents per domain name (to a total of 20 cents) until such time as ICANN's audited unrestricted reserves rise to the level of one year's operating costs, following which this additional amount should be discontinued. We note that other funding sources, such as voluntary contributions from ccTLDs not under agreement, may also contribute to the rise in these reserves.

Section here.

These recommendations were essentially implemented in the next budget (the current one for 2003-2004), which provides for $8,273,000 in expenses, with registrar fees then projected at 18.9 cents per name.

The above history seems to bear out your initial assessment ("I'm not so sure it is") that the budget now proposed is not consistent with the mission defined by the evolution and reform process.

A concerned reader

Free2Innovate.net: Who Does Paul Twomey Work For?

I believe Mike Roberts had a similar arrangement when he was President, and no one complained. (That's not really a precedent though because I always understood that Mike was an interim CEO simply tasked with getting ICANN off the ground. It took longer than he -- or anyone else -- expected, but the arrangement with his consulting firm still made sense as a temporary arrangement. For Dr. Twomey though, this is a permanent gig.)

I doubt if the Argonaut arrangement makes a difference though. Under U.S. law, officers in a corporation, even a non-profit one, have a duty to loyalty to the corporation. Even if Dr. Twomey's pay comes from Argonaut, he is still an officer in ICANN, so he has that duty of loyalty regardless of which company issues his paycheck. If his duties between ICANN and Argonaut ever conflict, the law also imposes certain duties to both corporations with regard to that conflict (duties of disclosure and possibly recusal). All things being equal, it would probably be better to have the President be an employee of ICANN rather than of a third-party, but I assume other factors were at play when the Board selected Dr. Twomey as ICANN's President. (This also may have been a simple way to expedite the hiring, since a non-resident, non-citizen employee would need a work visa and might face difficult tax problems.)

Eric Sinrod (a former partner of mine) in USAToday: "All is not lost for Verisign in this case. The judge has permitted Verisign an opportunity to amend its complaint to cure its defects. However, if the facts are not there, Verisign's antitrust claim will be lost, because any allegations added to the complaint must be grounded in actual facts. Antitrust allegations raise serious issues, and without rigorous factual support, antitrust cases will be knocked out of court."

Or at least that's what this piece could easily lead you to think. It's not so much that he takes on .mobi -- I get his argument that a TLD designed to designate the sort of device used to access the web doesn't line up with his view of how the Internet should evolve. I disagree with his point, but at least I understand his perspective. It's his argument that new TLDs generally -- any new TLD -- causes "brand dilution" that makes me wonder which corporate conglomerate threatened to pull its funding from W3C. Yeah, that's unfair, but so's his piece. The three center sections of his paper, on "The Cost of Change", "The Economics of Domain Names", and "Unfairness" are far outside his areas of expertise. They fail to take into consideration the needs of individual Internet users, small businesses, or the world outside the United States. It's an amazingly near-sighted piece. His input ought to get the credit its due, but not undue credit just because he's Tim Berners-Lee.

Add: Michael Froomkin on the same subject.

The opinion on ICANN motion to dismiss is now out, and those interested in the issues should grab a copy. It's worth reading.  Here are a few choice quotes:

[I]n order to sufficiently plead a conspiracy, Verisign must allege that ICANN's decisionmaking process was controlled or greatly influenced by economic competitors who have agreed to injure Verisign.... ICANN properly notes that Verisign's factual allegations fall far short of the mark. There is not even an allegation (much less factual allegations supporting it) that the Board of ICANN has actually conspired with any of Verisign's competitors.  Nor are there sufficient allegations that competitors control or influence ICANN.  Verisign has not alleged how ICANN operates, makes decisions, and regulates Internet registries and registry services.

and

[Verisign's] Complaint seems to be based on the unstated assumption that ICANN has a duty to help it compete more effectively.  Verisign has not alleged anything more than injury to its own business and therefore, does not have antitrust standing.

That can't be what Verisign "expected."

Encirca's Tom Barrett: "The only way ICANN will be forced to make hard choices, is to deny it the full budget it is asking. There needs to be a fiscal discipline and a growth cap imposed on ICANN funding." Read the entire post too.

Rob Hall, Registrar-Appointed Member of ICANN's Budget Committee: "The budget committee did not agree upon anything, least of all the increased fees. We were given the budget a week ago, and told this was it."

If I didn't know that this budget (along with the mysterious strategic plan) already had been privately vetted among various participants in the ICANN arena, I'd view it as a strawman set up to provoke debate and hard choices. In other words, I'd see the $15.8 million as the sum total of everything anyone had asked ICANN to do, presented solely to make the community pull some things off of ICANN's task list.

But this isn't a first draft. This budget came out of a budgetary process, which included members of the community, and at least a few members of the Board of Directors have reviewed it. So I'm not sure what to make of this... or of ICANN. Susan asks the right question: What is ICANN? I don't share Susan's minimalist view, but I'm much closer to her position than I am to the ICANN descibed by this budget, with 60 staff members and millions in new revenue. The problem with asking the question again now is that we just spent two years on that subject.

The better question, perhaps, is whether the ICANN envisioned in the budget is the ICANN that was endorsed in the reforms implemented in 2002. I'm not so sure it is (though the reform conversation was notable for the fact that it took place largely without consideration of the actual cost).

Susan Crawford on ICANN's Budget: "ICANN is under attack precisely because it believes itself to be (and appears to be) important. ICANN should remember what it is...." This is well worth reading.

Free2Innovate.net: "I'd say it's clear the lawsuit is already having a positive impact on ICANN."

Verisign Spokesperson Brian O'Shaughnessy on a Motion to Dismiss: "It's a fairly arcane court procedure."

For the non-lawyers (and that's you, Brian), it's the rare case that doesn't have a motion to dismiss. It's about as arcane in litigation as .COM is in the namespace. 

Verisign Spokesperson Brian O'Shaughnessy on Today's Ruling: "This is nothing that unexpected...."

Overheard: "For $15.8 million, they can not only replace Jon Postel, they can clone him."

I caught the tail end of this morning's argument on ICANN's Motion to Dismiss Verisign's Complaint. The news is that the Court has dismissed Verisign's First Cause of Action -- the antitrust claim under the Sherman Act -- with 15 days leave to amend. The Court did not rule on the other aspects of ICANN's motion or on ICANN's anti-SLAPP motion (in fact, the Court noted that it hadn't even read the anti-SLAPP motion).

The reason the Court took such a narrow focus is that the only basis for Verisign, a California corporation, to assert a claim in federal court against ICANN, a California non-profit, is by asserting a claim under federal law. The Sherman Act claim is the only federal claim Verisign made. As a consequence, if the Sherman Act claim is ultimately dismissed without leave to amend, as seems probable now, what's left of the case (essentially breach of contract claims) will move to state court. Today the Court gave Verisign 15 days to see if it can amend its complaint to state a valid Sherman Act claim. If it can't, the federal court will lose jurisdiction and send the breach of contract claims to state court.

News Follow-up:  AP Story, Declan McCullagh.

The Proposed ICANN Budget for Fiscal Year 2004-05.

CNN.com: "KUALA LUMPUR, Malaysia (AP) -- The al-Qaeda-linked Web site that first posted a video of American civilian Nicholas Berg's beheading was shut down Thursday by the Malaysian company that hosted it -- because it was drawing too much traffic. A senior officer of the company, Acme Commerce Sdn. Bhd., said Thursday it was not aware that the site, www.al-ansar.biz, may have been connected to al-Qaeda or that offensive material had been posted on it. If it had, the company would likely have shut it down earlier, said Alfred Lim, Acme Commerce's business manager."

When the stories first started coming in about the brutal murder of Nicholas Berg, they all noted that the video was released through a well-known web site connected with al-Qaeda. With this latest story, we now know the domain name associated with the site: al-ansar.biz. That's a GoDaddy-sponsored domain name in Neustar's .BIZ TLD -- two connections to the United States. It's illegal, of course, for U.S. businesses to work with al-Qaeda or certain other terrorist organizations specifically identified by the Treasury Department. The web host for this al-Qaeda organization was located in the next city in ICANN's world tour (see poll in left margin), but before it reappears, it could (should?) be cut off by these two U.S.-based companies as well.

Rob Hall on the Registrars' List: "[T]he ICANN Budget committee received it's first draft copy of the budget on Monday night. This was my first chance to see the budget ICANN was proposing. There was also conference call to discuss the draft with ICANN staff and the other members of the committee yesterday (Tuesday). The budget was created by ICANN staff before Rome, and has been in the hands of the ICANN Board's Finance Committee until this point. I am told it has undergone several revisions and cuttings by the ICANN staff and the Board Finance Committee. I believe Mike Palage is a participant on the Board Finance Committee, and from his comments in Rome, I understand he has been working closely with staff to review and refine the budget prior to it's release. I know many of you are anxious to see the budget details. Some of you may have already seen it as I know ICANN has had discussions with some Registrars directly to gain their input on the new model. While I know the delay for those of you who have not yet seen the budget may be frustrating, I am pleased to report that ICANN should be posting it publicly on their website within the next few days...."