FY11 Operating Plan and Budget Thursday, 24 June 2010 ICANN Meeting Brussels, Belgium >> Good morning, ladies and gentlemen. We're about to start our program. [Scribes have Spanish in the audio.] >>KEVIN WILSON: -- breakout meetings here today -- this week, which I'll share some of the comments from that as well. The next step is we had the Board Finance Committee meeting and we're fortunate to have Ramaraj and George here from the finance committee. I don't see Gonzalo, but also met with the finance committee earlier this week and they've recommended that the board adopt it, so we'll be submitting the final budget at the board meeting tomorrow for adoption. Just a few comments on the community feedback. Anecdotally, the quality and the quantity has steadily increased, and this year was no exception. It was a great pleasure to read and hear some of the comments. Some of them are tough to hear, and hard to synthesize, but just the quality of the comments in the community, so I feel like we've made significant progress on that. And for those who like numbers, there was about 20 conferences, calls, and meetings, up through the Brussels meeting here, and there's been about 8 or 10 meetings during the Brussels meeting as well. We had about 70 pages of online comments, and we had two board briefings as well, Webinars on the budget. This year, we also had a -- first time in -- at least in my three years at ICANN, we had a GNSO resolution for a specific request for WHOIS fact-based studies, to help the policy development process, which was received. The 19-page analysis that's on -- posted online and then the Appendix C as well highlights some of the comments, but roughly there's a request for more information. In broad terms, I'd describe it this way. There's a request for more information. There's some need for more resources in certain areas. We'll talk about that in a few minutes. There's some suggestions for revenue management, revenue forecasting, which we've addressed. There's always operational suggestions on how to improve the way ICANN runs. And then of course there's strong suggestions for cost reductions as well. Our responses to the community feedback I'd summarize as this: That the requests for more information, we have a growing fairly thick document -- I think it's 83 pages -- of charts and tables and executive summary. We tried to make it organized. So for the A- level reader that can read it, and the B-level and C-level readers can read it as well, to gather as much information as they need. We also highlight the EAG, the expense area group, which identifies ICANN's spending and the view of the supporting organizations and advisory committees. We provided more and more details on that, which was specifically requested. As I mentioned, the GNSO and others asked for the fact-based studies to support the -- and promote the policy development process, and we provided more resources in that area. At-large support, another policy development support. We increased more incremental staff in that area. And then as far as fees and cost reductions and adjustments and increases, there's a number of suggestions in that area, and we're going to essentially put those in consideration for future, and there's more discussions about how to adjust those. Another development this year is the revenue be as accurate as possible. ICANN has got -- has become better and better at revenue forecasting, and this year's no exception to that. We're expecting to come quite close to our revenue budget. And this year we queried each of the sources, each registry, each registrar group, the RIRs, cc community, as well as even the meeting sponsorship group, and our investment bank. We also asked them what they thought a good conservative estimate would be. For the revenue assumptions that get into the budget. In summary, these are -- all the comments are summarized and in accordance with the finance committee direction and oversight we provided responses to each of those. Based on community feedback we've received this week, I think we made significant progress on that, in identifying that. I think we can do better based on some of the specific questions. We'd like to - - people would like to know exactly how their specific comment was really incorporated or specifically why it wasn't incorporated. Just briefly to summarize some of the comments that I've heard this week in some of the breakout sessions, I think contractual compliance, concern with contractual compliance. I think our thinking is although there's a 7% overall growth in the contractual compliance area, I think there's -- the thought is that under the current RAA agreements and the registry agreements, that we have sufficient resources. We've made really significant progress over the last couple years. Off the top of my head, I think 30 registrars have been terminated for contractual compliance issues. So we have a fairly robust -- we can always -- you know, always have many more auditors and many more folks and resources to improve upon that, but we believe that with the current structure, that we have adequate resources to continue to make significant progress on that. That being said, we realize that with the vertical integration discussions and the new RAA discussions and the new gTLD registry agreements, there could possibly be a need to rethink and reconsider some of the contractual compliance support for that, and we plan to do that. But for the FY11 budget, just to clarify, we do believe that there's adequate resources and there's significant growth in that area. A point on that. Just a brief primer for those who might not be familiar with the ICANN budgeting and revenue and operating expense budget over the past few years. Over the past few years, there's been very significant growth in the revenue side of ICANN's budget, and I'd just point out the slide there. 45% over the last four years. A lot of that has been based on the contractual agreements that we have with the registries. In particular, the dot com agreement which had a very fixed step-up. I think it's at $18 million in the fiscal year '10 year, and once again it's going to be -- or, again, it's going to stay the same in the next year. So what does that mean? It means that the rapid growth in revenue that we had over the last few years is essentially stopped. We are expecting some domain name growth, so we've estimated about 3% growth in the revenue. So that's the revenue side. Over on the operating expense side, as you know there's been more and more activities, more and more demands on ICANN's role in Internet governance, and so cons consequently, those operating expenses have increased over time. I think our staffing is up to 125 and our budget is close to $59 million, so the expenses have approached the revenue side of the equation. Given -- even so, over that -- the last few years, there has been contribution to the revenue fund, a total of $44 million, and it has also allowed an opportunity for the transaction fees to be -- for registrars per transaction to be discounted from 25 cents down to 18 cents, stepping down over a period of time. So what does that mean and what's that? I'll put that all together. The equation says that it's really important that ICANN, just like many organizations in the world today, really needs to prioritize our operating activities, become very good at forecasting, get better and better at estimating our costs and communicating those and play that zero-sum game. So the prioritization of activities is more important than ever. I'd emphasize that. This slide here, Slide 6, summarizes the budget overall and you can see there that the FY11 budget on the revenue side is 65 million. The operating expenses, with contingency of a million and a half, is totaling -- operating expenses are 59 million, so the 1 1/2 million contingency brings it up to 60.8 million noncash expense. So the contribution to reserve from operations is estimated at 2.1 million. And the fiscally responsible finance committee, with the oversight of the finance committee and the board, has made it very clear that we still need to be fiscally responsible. Even though there's these budget pressures to perform all these activities, that we still need to plan for a contribution to the reserve fund, in accordance with the strategic plan. So we've built into that an opportunity to do that. That being said, there -- we did feel that there was a need, based on community feedback and the strategic direction of ICANN, to increase some resources in some areas of ICANN's operations, so you can see there these are the 15 organizational activities of ICANN. We often call this the "functional reporting view" of ICANN, and the areas of growth that we've identified are internal operation -- internal security, stability, and resiliency efforts, business continuity, and coordination efforts. Just as a point of clarity, this question also came up in the earlier meetings and even a couple of the meetings here today. The DNS CERT operations is not in the budget, was not in the budget in the framework. I think there was some confusion on -- from some community members on that, so I just wanted to make that really clear that that is not -- that the budget of the -- that it's not -- there's not a budget assumption of DNS CERT. Obviously there's staff effort in exploring that with the community, but not a budget assumption associated with that. And in addition to that, there's been some growth in policy and then some growth in -- well, significant growth percentage-wise, anyway, on the DNSSEC. More staffing and support on the DNSSEC efforts. So what -- so what gave? What were the -- we mentioned before it's a zero-sum game, so what gave? Well, there was a general overall scrubbing of the budget. Another set of questions came -- concerned the FY10, our current year fiscal operating expenses, so this year we're planning -- we're expecting that our operating expenses will exceed the budget by a couple million dollars on the operating expense line item. Overall, ICANN is still financially healthy. We're still expecting to contribute to the reserve fund this year, but there has been more operating expenses for unplanned activities, and the activities are greater. So what that required us to do is really take a close look at all our activities, all the travel support. We delayed some hiring. And scrubbed all the numbers throughout. We've also identified some larger areas of reduction. In particular, the new gTLD line item year-over-year. And I wanted to make sure I'm clear on this too. This came up in several of the discussions this week that we did not -- this doesn't mean that the gTLD program is going to be delayed or we're going to -- from a budget standpoint. That's not the meaning of that. All that really means is much of the work for gTLD is complete. A lot of the heavy lifting and heavy spending on studies and efforts related to that has been complete. There's still a significant -- I think it's $8 million for FY11 between IDN and new gTLD efforts, so there's still significant funding for that, for the -- in this fiscal year operating budget. In addition to that, we'll talk about it in a second, there's a separate new gTLD budget which is not part of this, but it's an important concept to understand. And so there's been some activities that have been moved into that separate budget to accommodate and make sure that we're fiscally responsible with this fiscal year budget. Another area of discussion has been the planning process itself, and so as you can see from the slide, there's a current process which has the strategic plan update. The three-year strategic plan is updated every year in the first six months of the year, and then there's an operating plan and budget development in the second six months of the year. So we're essentially starting the strategic plan development now, and then next January we'd normally start the operating plan and budget efforts following the strategic plan. There's some discussions about maybe we could -- with the strategic plan being fairly stable, an opportunity to update that but an opportunity to shorten that period to several months, for example, and this would allow more time to adjust what seems to be more of concern to the community and ICANN board and staff is to make sure that we're adjusting our priorities. Budget exercise is really a -- an operating plan exercise is really a prioritization effort and so the idea there is we'd have more time -- maybe eight or nine months of the year -- where we'd be working on budget and resource allocation on a broad basis. This alternative process also considers that there be more and earlier supporting organizations and advisory committee involvement in the budget process earlier in the year, and this will take some time and the community needs to consider this change in the process, but we wanted to let you know that that question's been put out there. We are committed this year to engage the SOs and AC chairs, and their community members, earlier in the process here. So September/October, we'll initiate those discussions, rather than waiting for the online forum in the framework as we've done in the past year in the March time frame. So accelerating that process to make sure that we land the prioritization as well we can. Final slide here is the new gTLD budget. This has been posted for community comment, and -- excuse me just a second. Thank you. I wanted to highlight just a couple of points on this. Number one is that the new gTLD budget -- it really has three components to it. The first component is the development aspects of it, so that's the implementation of the GNSO policy for the new gTLD, and this has taken some time. It's also taken actually several years of effort. So that -- those costs have been in each year's operating plan and budget, including this year, and I mentioned earlier an $8 million number for that. The second and third aspects of the new gTLD budget would be handled in a separate budget, not part of this budget that we're submitting to the board tomorrow, but is still an important part of the new gTLD budget. The second one of -- that I mentioned is the deployment, and those are the costs associated with getting ICANN's operations and application processing ready. So these are the software and the real estate and some of the hiring that's required that have long lead times, that have more complexity to it, and so we feel like it's important to go back to the community and request this and get this, so that we don't have delay -- further delays in the new gTLD program if and when the program is announced, is approved, ready for launch. The third area is the application processing. So these are the costs -- the revenue associated with the new gTLD applications, but it's also the revenue -- it's the costs associated with processing applications. So the panelists' costs. Very significant dollar amount from an operating expense, but also associated with the revenue that brings in that. Put that all together, that's the revenue/cost-neutral cost recovery mechanism of each round of the new gTLD program, so I wanted to just emphasize that, that that's out for community comment. I think the public forum today has some time set aside for that. We're looking forward to making progress on that. So that if and when we're ready for those, then we can -- we can move forward on that. So I think that closes my prepared remarks on that, and I'm open for questions either online or for those of you here, and happy to take that on. Any questions? Comments? Thank you. Marilyn? >>MARILYN CADE: Kevin, thank you. My name is Marilyn Cade, and I am the chair of the business constituency. I think there will be if not other people from the constituencies speaking, there -- I'll highlight just a couple of overall concerns. Before I do that, though, I'd like to make a comment that's related to perhaps how you may think about organizing outreach in your efforts to deepen the participation of the community, particularly in the GNSO. The GNSO has been restructured into four stakeholder groups, and there is no chair of the GNSO. There's a chair of the council. But each of the stakeholder groups has a leadership group itself, and I think maybe as you look at your -- the new three-part process, that it might be helpful to think about approaching the leadership of those groups. Not only the chair of the council. So that would be one -- >>KEVIN WILSON: Thank you. Point well taken. >>MARILYN CADE: And we're just getting used to the new structure ourselves. I like the reorganization because I think it's going to help us with a problem that I'm going to give you. I would like to see some changes in this budget before the board votes on it. Now, I think there may be other people in this room who have the same feeling. I don't -- I'd like to know whether it's at all possible to accommodate a change by the time the board votes on it. >>KEVIN WILSON: Well, let's hear the comment. >>MARILYN CADE: Okay. You've spoken about the effort to reduce expenses by not bringing as many staff to the face-to-face meetings, and about delaying hirings, and while those are appropriate management responses to budget gaps, they may not be in the interest of the community. We have staff who are very, very stretched when they are at these meetings and it is the only time for the vast majority of the stakeholders -- I understand the staff meet with the registries and the registrars, but they do not have an opportunity to interact with the broad community, with those who are building this organization and stabilizing it and taking it forward, except at these face-to- face meetings. And I really think it has to be a priority to understand that the staff to be effective and for the community to be effective, we must have these opportunities. I don't support changing the number of meetings from three to two, and I think my -- the reason I mention it here is related to the comment I just made. For us to get our work done, we must know each other, we must interact with each other, and it is the only time the community gets to interact with the board as well. >>KEVIN WILSON: Okay. >>MARILYN CADE: So one more. >>KEVIN WILSON: Okay. >>MARILYN CADE: Delaying hiring of staff is not a good answer to the community's need for informed, capable, aware staff who can hit the ground running, because the longer you delay hiring staff, the greater the stress on the existing staff, the greater the workload on the existing staff, and then you add buildup time when staff need -- the new staff need to learn their jobs. So in the area of compliance and enforcement in particular, I'm not satisfied with the amount of money and I'm not satisfied with the percentage of growth. We are throwing money at SSR, which happens to be a topic I am strongly interested in. I'd like to see us throw some money, between now and Friday when the board votes on the budget, and increase the amount of money that is going into enforcement and to compliance. >>KEVIN WILSON: Okay. Good. Thank you. Let me try to address those. I -- 1 and 3 are -- sound like they're very related so let me address that, which is about staffing. So I mentioned that we had a -- we're forecasting in FY10 an increase -- an operating expense line item that's greater than our budget, and we realized that at midyear. We had a midyear review. We met with the finance committee. We communicated that pretty extensively with the community and the board on what the situation is. So we went through this FY10 cost containment project where we brought all the executives together and came up with a long list of items to consider, including those you mentioned and many, many more. I think there were 70 or 80 on our project list to hit. One of the key directions that the finance committee and others provided to us is, "Let's not cut any essential activities of ICANN. Let's not be penny wise and pound foolish to try to just make the budget and not make significant progress on the work of ICANN." So that was a key point, and that's the reason why, although we were able to cut some costs, there's still some increases, so we're still expecting a million or two -- million and a half, about -- over our operating expense line item. So -- so to address the issue of cutting staff or delaying staff, I think the -- each one has carefully been managed and there has been no intention to delay or cut an open position at the cost of creating an operating -- you know, fulfilling an essential activity. Obviously, we always like to have more resources and spend more money on many things, but we felt from a financial -- fiscally responsible position, we needed to land that correctly. We're happy to get specific suggestions on that. As far as the point about three meetings to two, the budget assumption in this budget is that there's three ICANN international meetings, along with other support meetings through -- you know, inter-sessional meetings, obviously, board meetings, board conference calls, and all the conference calls. So there's still an assumption on that. No that's open for discussion and the budget assumption will follow what the discussion is on that, so I appreciate your comment on that. Obviously there's a forum for that. As far as the contractual compliance, I think I'd just sort of echo what I said earlier, which was very conscious effort to make sure that we are making significant progress in contractual compliance. I'm sure that every budget owner, every department manager, would love to get more resources. I heard several people mention the Atomic Energy Commission model of, you know, you have a hundred staff in contractual compliance and a thousand that are doing actual auditing. I don't think that's the ICANN model, but the intention is doing that. We're happy to take and listen to specific requests for - - for that, but I think the assumption now is that the contractual compliance efforts of ICANN are working fairly well with the existing structures. With the -- as I mentioned before, with the vertical integration issues, with the new RAA being discussed and considered, and obviously with the new gTLD registry agreements, we have to rethink that to make sure that the contractual compliance support function is -- will address those. That's a very important role for ICANN. >>MARILYN CADE: So I have one final comment and this is made in my individual capacity. It was in Ghana, at one of our meetings, when I went to the microphone, as did others from business, and said, "We fund ICANN. We are the registrants. And lowering our fee to 17 or 18 cents might not be the wisest strategy." At that point, I think it was 8 cents or 4 cents. We called for a 25-cent fee, and I -- at every meeting, ICANN reports with great focus how much they're lowering the transactional fee, but if we are lowering the transactional fee, which is, after all, paid by registrants, I wonder if we maybe need to reevaluate that, in order to make sure that we are stepping up to the challenges that we face. >>KEVIN WILSON: Great. Thank you very much. Yeah, the -- for those of you that don't know, the registrar transaction fee, based on domain names, is 25 cents. It's been slowing reducing over the last few years. It's now at 18 cents. The budget assumption is that it remains at 18 cents per domain name transaction year, and there -- your point is well taken and heavily discussed on future revenue models and what the right fees would be, given -- given, you know, changes in ICANN. New gTLD program and other changes. So point well taken. Thank you. Is there a question from online or the remote participation? Not yet. Okay. Good. You want to go ahead? >>STEVE METALITZ: Thank you, Kevin. Steve Metalitz from the Coalition for Online Accountability and the intellectual property constituency. I want to thank you for coming to our commercial stakeholders group meeting. It was probably not the highlight of your week, but I think it was a good opportunity for a good exchange of views on some of these issues. I'm not going to repeat what I said there or what was discussed there. One issue was contract compliance, and I appreciate hearing your opinion that everything is fine in the contract compliance world. I think your view is distinctly a minority view in this organization. And if you were in this room between 5:30 and 7:00 on Monday or if you were up on the third floor yesterday in the meeting on WHOIS accuracy, I think you would find your view is distinctly in the minority. I'm not sure why your view should determine what is spent on contract compliance anyway, but I think you detect a lot of frustration about ICANN's failure to step up fully on this issue. Second, on the question of constituency support or what is labeled constituency support in the budget, which actually is support for contracted party stakeholder groups, there will be a joint statement on this in the public forum from the commercial stakeholder group and the noncommercial stakeholder group. So I will just -- I noted that when we made this comment in April, your appendix on this in the budget document says, "Point noted and passed on to executive team and board." I'm just not quite sure where that leaves us. So I guess I would appreciate your thoughts on who we should go to to pursue this point further. The third issue that was raised in our commercial stakeholder group had to do with whether there was adequate explanation for the largest increases in the budget, which were in the SSR and DNS operations area. That was discussed earlier this morning, and I hope that we will have the opportunity to get some more detail about that. But the final point I would like to make really builds on what Marilyn says. I mean, it is a cliché that a budget document is a policy document and that it is really the place where policies and priorities are set. I think that is true. Our strategic plan document was so nebulous this year that no one -- I didn't feel anybody could really meaningfully comment on it. So it all came down to the operational plan. And when we see that virtually none of the points that we raised in commenting -- I'm talking about the intellectual property constituency now, we raised a lot of points -- we're trying to participate in this process. We raised these points in April. There was very little change in the document and very little response, we felt, in the May 17th document. And then we get to this meeting. And, realistically, I don't think anybody really thinks the budget is going to be substantially changed based on all of the meetings that are taking place here. I would be shocked if there is a substantial increase in contract compliance or if there is an earmarking of some funds for support of constituencies other than those of the contracted parties. Maybe I'll be totally wrong about that. But, realistically, there's not going to be any change. So just from a accountability and transparency standpoint, this system seems broken to me. There doesn't seem to be any good way for the community to express its views about priorities, what's important, what's most important for ICANN to do, what ICANN needs to do to -- as a proof of concept of the ICANN experiment. I just think this goes into a black hole in the budget process, and I think we need a better way of setting these priorities. Thank you. >>KEVIN WILSON: Thank you, Steve. I do appreciate that. I really do. I'm a -- you know, you talk about it's my personal opinion, but I think the one thing I can say is that I am a really big supporter of accountability and transparency. And one of the great things about ICANN is that I do believe that the operating planning process has significantly improved over the last X number of years in terms of, you know -- just personally in terms of the number of pages read and synthesized and discussed with staff and community members on the specific comments and the number of meetings I attend and hear these comments and have those dialogues. I personally believe that that's made significant improvement in process, the number of pages in there, the feedback. I. Really did hear you in the meeting the other day that those -- some of those comments, although maybe -- even pat myself on the back or pat ourselves on the back that we actually have an Appendix C now that actually says that. It also means we need to step on the gas a little bit further and beef that up rather than just having a quick response saying, "go see Section 5" as you mentioned the other day or send it to the board. I do believe that it has been more and more accountable and more transparent, and I do agree there could be more. Let me just address some of your specific questions, if I could. Several of your comments, I think, have to do with more details. And we really heard this articulated in some of the meetings, that people appreciated, especially some of the areas and the level of detail. And you really could see that in those prioritizations and could comment on specific things. There are other areas that are just harder to -- I'm getting from the community members and others that it is harder to understand exactly what those are. And so we'll provide those more. I'm not sure -- it is 83 pages now. I'm not sure at what point it's too much detail, but I think the message is clear that we need to have more detail in. Also, this proposal -- I'm a big fan in the earlier involvement in the SOs and ACs, and I hear Marilyn's point that it is not just the chair of those groups. More involvement earlier on because I think that will spark the discussion of we need more detail on this item so that we can really identify the priorities and make sure we're landing it right. And the point about the contractual compliance, it's not a -- I don't feel like it is my opinion that the contractual compliance department is the function -- is properly resourced. Believe me, I hear about the challenges out there as much as anyone. And I personally would love to have much more than that. But it is a budget-balancing exercise. And I think we've made a good shot at doing that. We certainly would like to hear specific ideas on how we can do more. I guess I'm also pointing to the fact the contractual compliance really has made -- from what I've heard and what I understand, has made significant process and could make significant more -- some of the confusion I had that I tried to make clear early on today, some of the confusion I heard earlier in the week had to do with vertical integration issues that are being discussed and why -- and that we need to have a contractual compliance program beefed up to what might happen in that area or what might happen in the RAA. So the thought being that the budget and the resources to be fiscally responsible needs to follow the policy of those kinds of things rather than plan for and be budget resourced for -- in anticipation that it might happen. Happy to take more comments on that. Let's see. SSR is the same issue about more details. I'm hearing that clearly on that point. I want to make that really clear. And this constituency support also as well. You know, we decided a few years ago to break up ICANN's functional activities into 15 organizational activities. We identified that. One of them we called constituency support. We might be able to come up with a better name for that, but the thought isn't that it is not just contracted parties' support. It is support -- you still have the meetings space for the various community member groups, and that's just a placeholder. I think we could make some improvements, as you pointed out the other day, in describing that so that it's clear to you on exactly what those resources are. I think I answered your questions as best as I can. This system being broken, I really want to understand what your thoughts are on that. We take great pride in the operating and planning process and making it robust and making it a community process. So when your comment about the system being broken, I want to address that. And I think the executive team and the board want to make sure that happens. So that's what this alternative proposal is trying to address to make sure we really do account for that. >>STEVE METALITZ: We can pursue that last question offline. I do want to say that I agree with you that there has been significant progress in the contractual compliance area, and we are very supportive of that. We just feel that the status -- you know, continuing at the current rate is not going to really achieve the objective. >>KEVIN WILSON: Good. Point well taken. I wrote it down. I forgot to mention, too -- you had mentioned one of the comments -- and I put that several places about the point -- the comment has been forwarded to the executive staff. Those are comments that I -- when we read that, it wasn't just me, it was a team of us that read those comments. When we read those comments, we didn't think it was a budget or an operating plan issue. It seemed like it was more an operations issue. And so -- or a board issue or -- for example, Greg Rattray who spoke before me, it was more of an issue there rather than a resource budget issue. That's why we passed it on and noted it. So that was the thought there. If we missed it -- maybe I misunderstood a couple of them, I would like to understand that. And we'll -- that Appendix C will no doubt get better over time. Thank you. Any other questions? Oh, yes. >> MARY UDUMA: Okay. My name is Mary Uduma. I'm speaking in my personal capacity. I'm from Nigeria. And I want to appreciate the way you have presented the budget and the budget process and just to say that there needs to be enhancing of the clarity of the presentation. For instance, you presented the budget, the year 2010/year 2011. The comparison with the increase should increase 2010 contribution of each expense to the total of the expenditure was not presented. It would give a greater idea or meaningful understanding of where the major expense heads are. That is one. And, again, when you said "budget 2010", do you mean there's an expense, there is a budget? Do you mean that is the actual expenditure? Okay. Or is still the budget -- there is an estimate. There is a budget. Do we mean that the budget is the actual expenditure so that it could make more meaning to anybody who is reading the presentation? That's one. Secondly, there is some process on outreach awareness creation, communication at a regional level. If this would be done in the year -- financial year 2011, it would create a lot of awareness within the -- among the developing countries. So there would be greater interest to participants in ICANN meetings and ICANN processes. So one would expect that greater budgeting of resources would be allocated to participation at ICANN level, especially for those of us from the developing country. So there's an increase quite all right. But with the awareness that's going to be created, it will actually increase that. So you look at that. And then, finally, I want to say that there's nothing in the budget that indicates that ICANN is working on its commitment to remain as non-profit corporate headquarters. According to the AoC, paragraph 8b, "with headquarters in USA, with offices around the whole world to meet the needs of the global community." So that aspect of the work of ICANN, or appreciation of the work of ICANN, is neither in the year 2010 strategic plan. So one would have expected to see that there's an indication that you're exploring the possibility of having international offices. Thank you very much. >>KEVIN WILSON: Thank you, Mary. I appreciate that. I think I heard three questions. I want to make sure I understand them, or address each one. So the point about enhancing clarity in the budget numbers year over year, I think that's what you were referring to. You weren't saying it was year over year. We made a conscious effort, and the finance committee worked with us on creating a year over year, so that's not the issue. I think the issue is the word "budget" versus what does budget mean. It is really clear there. Each year at this meeting, the June meeting, the board adopts a budget after a long process which I described in the first slide. And that's the budget. And that's set each year, and that's the number and we hold ourselves to that accountable. Obviously during the year, as reality unfolds, we have actual expenditures, and that's -- as many of you know, we've posted the actual expenditures and revenue and performance of the reserve fund on the dashboard each month. We have audited financials, so those show up on the Web site as well. We have the Form 990. We have lots and lots communication on our financial performance. In this year, also, in the budget we made a very conscious effort to include a budget line for FY10, a forecasted item which is our estimate based on the data -- the actual data at the time, extending that forward on our best estimate of the forecast. And then obviously the FY11 budget is compared to it. So we made a specific effort to do that. It is the first time I have heard that question recently, so I would like to make sure that we answer that. As far as your second question on outreach, it is a similar paradigm to what's done in other areas of compliance and whatnot, a desire to have more and more effort on that. So we hear that, and we like to involve that. And I think next year we talk about this new process. I think it is important to get the priorities straight from one who sees every expenditure -- we do spend a lot of money on translation and interpretation. We do spend a lot of money on these ICANN meetings, as you can imagine. We do spend a lot of money on the global partnership and the regional liaisons and the fellowships. And I'm probably forgetting some large bucket of areas we do spend money on. Of course, we always want to look at it and make sure, A, we are spending money efficiently to provide that outreach which is a very important part of ICANN and also that it's prioritized correctly in conjunction with all the other expenditures of ICANN. And as far as the comment on commitment to not for profit, I think that's very clear. It is in the affirmation. It is in the bylaws. It is in our corporate structure. So that's not changing. But I hear your point that maybe we need to put that up front and center in the communication. And I thought it was there, but we'll address that point. Well taken. Okay? Thank you. >> MARY UDUMA: I hope you got my point. I'm not saying you should be a not-for-profit. I'm saying in the Affirmation of Commitments, there is a line that is saying that there would be international offices. So I'm saying that in the budget there is no project or program that shows that they're exploring the possibility of opening international offices. >>KEVIN WILSON: I see. >> MARY UDUMA: It should be in the year 2010, 2011 strategy plan as well as the financial year 2011. That's what I'm raising. It is not the non-profit or profit, no. >>KEVIN WILSON: I see, okay. So your point is to emphasize more the exploration and opening up international offices. >> MARY UDUMA: Yes, yes. >>KEVIN WILSON: Okay, thank you. Point well taken. Lesley? >>LESLEY COWLEY: Hi, Kevin. Lesley Cowley from Nominet U.K. Thank you for your presentation, which was excellent, as always. I have a comment and question, and they are linked for me. So the comment is about financial measures. We discussed in the ccNSO what appears to be some quite short-term measures to reduce costs. I made the joke that we were cutting biscuits. But, certainly, in terms of maybe delaying staff hires and cutting travel arrangements, the view that some of us hold is that that actually may be counterproductive and they're not very long-term. And so the comment I made in the ccNSO earlier this week -- and I'll just repeat now for a wider audience -- is that we would encourage ICANN to look at longer term costs -- cost-reduction measures. And my associated question is about the new strategic process, and it makes sense to me to follow the revised process that you outlined earlier. But a key stage in strategic planning and turning planning into budgets and operating plans is actually figuring out whether you have the resources to deliver the strategic plan. And will this new process have an iterative stage where, in effect, one has to change or maybe even drop some priorities because, in effect, they cannot be afforded? Or is the strategic plan a wish list, as I heard it referred to earlier this week? >>KEVIN WILSON: So I'm not sure I fully understand your question, part of it. Can you restate the exact part of that second question? >>LESLEY COWLEY: The new process, would it have a stage where it would say, "We actually would love to do all of those things but we can't afford to?" >>KEVIN WILSON: That's the point being that rather than having a wish list in January and say, "Go do that" and I think Steve or someone mentioned that was a fairly general document with four focus areas. A one-pager, I call it. And then quickly put together something for the community feedback. The idea is this proposal -- it is not my proposal, it is an idea that the community is considering, board and community. The idea is to bring that process much earlier. And so, yes, of course, it would be an iterative process where we would get initial ideas, put that forth. And put to use my favorite analogy is get the large dial adjustments on the priority of the spending on those major areas. See if we are landing generally right and slowly over time fine-tune it so by the time we get to this place we are -- in the budget process, we're not discussing major adjustments to the budget. That's already been discussed and agreed upon as much as possible. That's definitely the plan. >>LESLEY COWLEY: Okay. My point is also then about closing the loop and going back to the strategy and saying, "And this is what we're now doing." >>KEVIN WILSON: Yes, that would be the communication. >>LESLEY COWLEY: Thank you. >>KEVIN WILSON: That's the intention. As far as your first point, I would like to -- maybe it's one of those ones the devil is in the details again because we really had a strong intention of not being penny wise and pound foolish as much as we could. So we didn't just say, "Let's delay all staff hiring, let's cut all staff in the budget." We looked at each position, each decision on spending and contracting and hiring, et cetera, and looked at that on the overall process. We really wanted to do that. If we didn't land it right, you have some specific suggestions, we, of course, want to hear that. >>LESLEY COWLEY: It feels short-term, which is why I'm focusing on strat plan. >>KEVIN WILSON: Got it. Yeah. Appreciate that. Understood. Okay. Yes, Bruce? Thank you. >>BRUCE TONKIN: Just to, I guess, respond in a little bit more detail to Lesley's comments, I think one of the things we're conscious of is that the planning -- >>KEVIN WILSON: Sorry, for the record, could you state your name. >>BRUCE TONKIN: Sorry, my name is Bruce Tonkin, and I'm on the ICANN board, amongst other things. One of the things is to start that budget dialogue in a bit more depth with each of the, let's call it, functional areas. So if we're talking, say, in the areas of interest of the ccTLDs, that there is -- that we start the cycle earlier and we are getting into a little bit more depth at the budget level. At that level, it is much easier to start looking at tradeoffs. Because if you take at a group level or the high-level strategy level, that's presented at a fairly high level. And you can't really see any of the tradeoffs at that level. To delay the tradeoffs, we have got to say, We will sit down with the ccTLDs four months, maybe even six months earlier and say, "Here are some of the things you would like to achieve. This is how much some of those things will cost." And you might say, "Actually, if that activity is going to cost that much, maybe we shouldn't do it." Or that one you have said you'll put in 100,000. We don't think that's enough. When we come to the conversation of "what's enough," that actually means we need some measures. One of the things I'm keen on seeing as we mature -- and this is a maturing process -- is that when we start looking at some of these high-level objectives, particularly in the strategy plan but also in the operating plan, we try to establish a measure for whether we have been successful or not. If you were talking about, say, internationalization, you might sort of say, Is my measure of success that I have an office in every country? And there is ten people per office. You multiply that out, and it is obviously a massive budget. Or your measure of success might be we have four regional offices in each of the major cities. That's my measure of success, and this is how much it's going to cost. We've got to convert from the high-level objective into how we are going to measure it, and then you can look at the budget against that measure and then make tradeoffs. >>KEVIN WILSON: Great, thank you. >>LESLEY COWLEY: Is that back on? At the risk of this turning into duets, I think that would be welcomed, Bruce. And for me, there's also not just financial resources taken into account but staff resources and community capacity as well. So that dialogue would be very beneficial. Thank you. >>BRUCE TONKIN: And that's kind of an exercise that's happening in the GNSO at the moment, in that the GNSO Council is now trying to have a much more structured prioritization process. And that process absolutely is volunteer resources as well as ICANN resources. >>KEVIN WILSON: Yeah. Thank you very much, both of you. Ramaraj? >>RAJASEKHAR RAMARAJ: Yeah. My name is Ramaraj. I chair the finance committee. And I wanted to answer one question that Lesley's asked a couple of times this week. What is the long-term way in which we are containing costs or planning to contain costs? And one way we're looking at it, Lesley, is that the strategic plan looks at a three-year view and the operating plan looks at a one-year view. Therefore, it starts looking like everything is short-term when it comes to expense planning. So the view at the finance committee is how do we make the operating plan also have a three-year view and align it to the strategic plan? So that's what we're going to do. Thank you. >>KEVIN WILSON: Great, thank you, Ramaraj. Good. We just have a minute or two left. If there are any final questions. Carol, is there anyone online that has a question, I should say? People online. Great. Welcome everybody online. I want to reach out to those in remote participation. Going once? Twice? Great. Thank you very much. I appreciate your attending the budget. And we'll appreciate this, and we'll submit this to the board for the adoption at the board meeting tomorrow. Thank you very much. [Applause]