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How much does it cost to oversee the Internet?

Too much and a third extra next year

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How much do you think it costs to oversee the Internet a year? Not pay for any servers or cables or set up any domains or deal with customers or anything like that, but simply act as an overseeing body, listening to what people are saying and, if necessary, making a decision on what should be done.

A few thousand? A hundred thousand? Maybe even a million dollars? No, according to ICANN's newly released budget figures, six million dollars. And in what may be the most extravagant rebranding in history, next year it will cost $8 million - up a third.

Now, $8 million (£5 million) may not seem like much for overseeing the Internet but let's draw some comparisons. Nominet is the UK organisation that runs the .uk domain on a not-for-profit basis. That means it is behind and responsible for every .uk Internet domain - which themselves now make up just over 8 per cent of the entire Internet. Nominet has a staff of 100 and an annual budget of £8 million.

However, ICANN does not actually run anything as such, so a second comparison could be the regulatory body that oversees the UK telecommunications industry - Oftel. Oftel has 200 staff and an annual budget of £17 million.

But both these are UK based, so let's also look at one of the largest international bodies in the world that deals with the telecommunications industry - the International Telecommunications Union. The ITU in 2000 had a budget of £77.5 million and 782 staff.

Now, to get an idea of the cost of the different roles, let's divide the budget by the staff. This gives a comparable figure across all three organisations irrespective of their size and role. Doing this gives £80,000 in the case of Nominet, £85,000 for Oftel and £99,000 for ITU.

The same calculation for ICANN gives a figure of £112,000 this year and £133,000 next year.

And no, we haven't confused dollars for pounds and we have used the most conservative figures available ($1=£0.632 - $5.86 million and "projected" 33 staff; $7.99 million and "projected" 38 staff). If you use the appropriate figures for the staff actually currently employed (27), you get £141,000 and £143,000 respectively.

Now Nominet and Oftel are no slouches when it comes to bureaucracy and the ITU wrote the rulebook, so it should surprise many to find that ICANN is a third to two-thirds more expensive than comparable organisations - and not only that but it is becoming even more bureaucratic and even more expensive.

The ICANN reorganisation due to start this year - essentially a rebranding - is calculated separately in the accounts and will cost just under $2 million - a startling third of its entire previous year's budget.

While when most companies reorganise, staff numbers go down and cost savings are made, ICANN's new structure will see it take on more staff and cost significantly more.

In another irritating aspect, the accounts have been deliberately fudged to give the impression that the organisation actually came in under budget by $153,000.

By listing expected costs of public meetings and discussions in expenditure and counter-balancing them with the exact same amounts in revenue, and then claiming that this accounting practice will be ended this year ("this line item is now carried for historical alignment, and will not be present next year"), the organisation has managed to turn $176,000 over budget into $153,000 under budget.

ICANN is still managing to meet its increasing costs by taxing global domain names and country-code domains however. It was noted though that the ccTLDs "voluntary contributions" are not all that great - just $621,000 in fact, and $179,000 less than expected.

The reason for this is that ICANN is trying to force countries to sign over ultimate control of their domains to it and so the countries that have refused are also not playing ball when it comes to contributions.

Of course, ICANN sees things differently. "The problem," it says, "is that relatively few ccTLDs are under agreement (although that number is steadily growing), whereas all gTLD registries and registrars are under agreement."

The solution of course is for all ccTLDs to sign up. Then they can help "share the burden" by being forced to pay what ICANN asks.

ICANN is managing to put away around $650,000 a year in its bid to achieve a reserve of one year's running costs - a wise financial move, but one that will become increasingly difficult as the bloated organisation swells with each year. ®

Related link
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