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ICANN breaks budget impasse

The nonprofit in charge of Internet addresses ends a months-long budget battle that pitted small registrars against big ones.

The nonprofit agency in charge of the Net's address system has gained approval for its controversial 2004-2005 budget, following months of acrimony between large registrars and their smaller competitors.

The Internet Corporation for Assigned Names and Numbers (ICANN) hammered out the agreement Friday after resolving a key disagreement that had delayed the measure. The sticking point was a tripartite fee structure that smaller registrars organized to fight, claiming it unfairly disadvantaged them.

"We're declaring that the budget is adopted and the fee structure has been approved," said Kurt Pritz, ICANN's vice president for business operations. "This is not a victory over the registrars. It's a victory with the registrars."

ICANN's budget woes come as the group fends off numerous costly lawsuits. The highest profile of these, by Verisign, was thrown out of federal court in August and immediately revived in California state court.

Pritz said ICANN was defending itself in more than a half dozen other suits, and that from last fiscal year to this one its legal expenses had risen by $1.4 million, more than doubling.

ICANN's budget this year leapt to $15.8 million, up from $8.3 million last year.

ICANN then had to gain approval for increased fees by two-thirds of the very domain name registrars paying the fees. ICANN has more than 300 registrars.

While ICANN's board of directors approved the budget at the group's Kuala Lumpur meeting this July, the registrars held out until Network Solutions signaled its approval on Friday, putting ICANN just over the two-thirds threshold. For the purpose of counting votes on the budget, registrars are weighted according to the size of the fee they pay.

A turning point for ICANN was in winning over its most vocal critic, Bhavin Turakhia, chief executive of Bombay-based registrar Directi and an organizer of the original registrar revolt.

Turakhia's Web site lists 76 smaller registrars who are opposed to ICANN's original fee proposal. But now, Turakhia has thrown his weight behind the budget, Pritz said

Turakhia could not be reached for comment.

Pritz said Turakhia helped craft the modified budget, which introduced a mechanism to forgive part of the per-registrar fee that the smaller registrars found inequitable. Another key part of ICANN's revenue comes from a 25-cent-per-transaction fee.

ICANN's fiscal year runs from July to July, and the budget will become effective Nov. 1. Since July, ICANN has been working on some projects without fully funding them.

In addition to waging its legal battles, ICANN will use the money to:

•Start monitoring its members for anticompetitive practices, such as denying legitimate domain name transfer requests.

•Speed and in some cases automate response to requests for IP addresses made by regional Internet registries to ICANN's Internet Assigned Numbers Authority (IANA).

•Allow the registration of non-English top level domains, for example Dutch or Chinese versions of ".com."

Pritz said ICANN also plans to establish a number of regional offices around the world but expects to fund those offices by contributions from nongovernmental organizations, rather than by registrar fees.