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ICANN running out of money 
By Courtney Macavinta
Staff Writer, CNET News.com
July 7, 1999, 1:15 p.m. PT 

If the new nonprofit corporation chosen to manage the Net's
vital addressing system had a nickel for every complaint
it has generated, its coffers would be overflowing.

Unfortunately for the Internet Corporation for Assigned
Names and Numbers (ICANN), that isn't the case. The body
is running out of cash.

"ICANN can't do anything if it's broke, which we are,"
ICANN's interim president Mike Roberts told CNET News.com
today.

ICANN's projected budget is $5.9 million for the fiscal
year that began July 1. Its projected expenses are $4.2
million. Right now, however, ICANN has less than $100,000
in the bank and bills are going unpaid, Roberts said.

ICANN is a nonprofit corporation recognized by the
Commerce Department in November to implement a Clinton
administration white paper that aims to loosen Network
Solutions' grip on the billion-dollar domain name
registration market and privatize maintenance of the Net's
address system. Under an evolving government contract,
NSI has been the sole registrar for names ending in ".com,"
".net," and ".org" for the past six years.

After just seven months in operation, however, ICANN's
existence is in grave danger. The corporation's dire
financial situation could not only lead to its demise but
also could derail the historical transition of control
of the Net's technical underpinnings, which are critical
in allowing any computer or Web site to go live on the
global network.

While there is an ongoing, heated debate over the
breadth of ICANN's power, the fact remains that the
U.S. government has turned to the body to sort out a
labyrinth of complicated issues. The body is expected to
do everything from ensuring that the Net's domain name
system is not disrupted and can handle the surge in demand
triggered by e-commerce, to resolving disputes over the
ownership of certain names.

The U.S. government's desire to let go of the reins over
the DNS hinges on the private sector stepping up to the
plate to run and fund the administration of the system.

ICANN was anointed to lead this process, but operating
the corporation isn't cheap.

"We have costs from outreach around the globe and very
extensive legal fees," Roberts said. "There is over
$100,000 due in unpaid travel reimbursement dating back
to March."

In an effort to ameliorate the problem, ICANN is on an
impromptu road show to raise money. For instance, Roberts
and ICANN's lawyer Joe Sims met with a group of about two
dozen industry executives and trade group representatives
last week in Washington to discuss the body's progress,
and the conversation ultimately turned to funding.

Initially, the corporate sector kicked in about $500,000
for ICANN's start-up fund, which was principally raised
by the Global Internet Project, whose 13 members include
AT&T Worldnet, Netscape Communications, and IBM.

But countless other stakeholders whose Net names are
their primary storefront or marketing vehicle have yet
to step forward to support ICANN, which could be due to
a lack of understanding of what the corporation is doing,
observers say.

"It's very difficult to get companies to care about
this--it's like having companies get involved in setting up
the new Department of Motor Vehicles when naturally they
just want someone else to deal with it," said Barbara
Dooley, president of ISP trade group the Commercial
Internet Exchange, which is working with ICANN.

"To fail because of politics would be one thing, but
to fail because of money would be a catastrophe," she
added. "The alternative is for some intergovernmental model
to be put in place, which would be a lot less robust than
letting the private sector lead."

Further compounding the problem is NSI's refusal to
sign an accreditation agreement with ICANN. Under the
agreement, NSI would promise to comply with numerous
terms and conditions to operate as a registrar as well
as concede to pay the nonprofit $1 for each Net name it
registers to offset ICANN's administrative costs. NSI has
refused, because executives say it would interfere with
the company's control over its business.

The five initial competing registrars chosen to test NSI's
shared registration system, along with 52 other companies
that are expected to eventually tap in, have already singed
the agreement--but so far only two test-bed registrars
are up and running and began paying the fee July 1.

Still, what ICANN really needs is a piece of NSI's
pie--the company already has registered more than 5
million names and is expected to keep a healthy portion
of its market share even in the face of new competition,
analysts have predicted. Nonetheless, NSI is the first to
say ICANN shouldn't count on it to pull the nonprofit out
of the hole.

"We have a serious problem with the funding of an unelected
body," said NSI spokesman Brian O'Shaughnessy.  "It was
never contemplated in the administration's white paper
that there would be a $1 tax--this was decided in secret
by this unelected interim ICANN board."

NSI isn't the only one harping on the implementation
of the $1 fee. House Commerce Committee chairman Thomas
Bliley (R-Virginia) last month sent a letter to ICANN and
Secretary of Commerce William Daley announcing that he will
hold hearings to explore ICANN's authority and stating
that he was "greatly concerned" about the fee. ICANN has
until Tuesday to respond to the letter.

Although the white paper didn't mention a specific fee,
both NSI and ICANN have agreed to the terms laid out in the
White House's Statement of Policy, which says that "once
established, the new corporation [i.e. ICANN] could be
funded by domain name registries, regional IP registries,
or other entities identified by the board."