[Gnso-newgtld-wg-wt1] Actions/Discussion Notes: Work Track 1 Sub Team Meeting 08 August 2017

Tue Aug 8 14:14:11 UTC 2017

Dear Sub Team Members,

Please see below the action items and discussion notes captured by staff from the meeting on 08 August.  These high-level notes are designed to help Work Track Sub Team members navigate through the content of the call and are not a substitute for the recording.  Please also see the recording on the meetings page at: https://community.icann.org/display/NGSPP/Work+Track+1+Meetings.

Please note that for ease of reference chat excerpts are included below and excerpts from the CC2 responses are attached.  

Best,

Julie

Julie Hedlund, Policy Director

Actions/Discussion Notes:

Review of CC2 responses to WT1 questions:  Application Fees

1.4.1 -- Should another mechanism be considered for application feeds?  Such as cost plus reasonable returns, fixed, plus variable, etc.

-- Nominet, GAC UK, BRG, RySG, Valideus, and BC supported a model based on the principle of cost recovery.

-- Afilias, CIRA, and Demys provided more detailed feedback on the future cost model.

-- John Poole suggested an alternate model.

-- Don't know if we can have a policy for different model for different TLD type.  Maybe put that aside.  Agree that it should be put aside until after categories.  For example, brand will be a specific type of domain.  May not have to do the same type of financial analysis.  Note to come back to this after we have fleshed out the categories.

1.4.2 -- Do you believe $185,000 was a reasonable fee?  Is it still a reasonable fee?

-- Some concerns about not ramping up compliance.  (See BC comment).

-- As we go forward need to make sure compliance can handle what we are giving them.

-- Not sure it within our purview to say how funds are spent.

-- Ongoing fees are to fund ongoing operations, if we go down the cost recovery model.

Slide 13: -- Question 1.4.3

Slide 14 -- Against a cost ceiling

Slide 15 -- Excessively high fees barrier to entry

-- While we are talking about a lower application fee to encourage participation, one of the consequences for reducing the fee is multiple applications from applicants who can afford it.  To the extent that other entities are submitting multiple applications reducing the fee may have unintended consequences.

1.4.4 -- Price floor: How should excess funds be justified?

-- Jannik Skou, CIRA, Nominet, and RySG provided input on recovery of shortages.

-- Afilias, CIRA, and RyST provided input on the management of excess funds.

-- Helpful to agree on the principle of the application fee to fund the application versus funding ICANN operations. If we agree on that it makes the argument simpler.  Is that a principle we can carry forward?

-- Agree with that and it is consistent with the principle of cost recovery.

-- Support the wider thing that it is not just the cost of the applications.  Need to understand the implications of a lower fee.  Need to also understand the implications of a higher fee.

-- There must be a document of the accounting of the historical costs from the last round.  Having something like that might help us to know what are the break-even costs with the next round.

1.4.5 -- Should the WG seek to establish more clarity in how the excess or deficiency of funds are utlilized/recovered/Any suggestions?

-- Nominet, Afilias, and RySG suggested means for establishing. clarity in the comments.

-- Can some excess fees be used for refund/support/subsidy?  Seems that there is support for cost recovery.  Biggest problem is knowing how many applications will be received.  Excess fees should be redistributed to the applicants.  Base the fee on cost recovery.

-- It also addresses the issue of if there are benefits to batching of processing; if we go to cost recovery the cost may well change.

-- Agree with setting conservatively and then allowing for a refund.  We do have enough data to know that the cost of the evaluation etc. we have room to play.  Room to set a conservative application fee.  But no definition of when the program stops and refunds start.  The 2012 round is still open.  Costs should be lower than in 2012.

-- One thing that occurs is that the 2012 process is still ongoing so ICANN could argue that costs are still a concern.  Should recommend that ICANN be transparent.

>From the chat:

Rubens Kuhl: While Brand TLDs might have a different financial analysis, it also has a Spec13 validity or not for that TLD, which is an added cost... so it could be higher than the standard type. 

Michael Flemming: Rubens, are you meaning that the verification of the Spec 13 requires a different cost than other applicants?

Rubens Kuhl: Michael, yes. 

Donna Austin, Neustar: Good point Rubens. Similarly, geographic names also require additional evaluation if the government support requirement stays in place. It would be simpler to maintain a astandard application fee. 

Michael Flemming: If that is the case, then I would like to see if we can reach out to ICANN or ask for Trang's input in regards to the impact of the verification procedure for Spec 13 applicants and if there was any data on how much that cost was.

Rubens Kuhl: Donna, I'm more inclined to a standard application fee... but if we open this box for TLD types, my warning is that it might not be lower as some people think it would be. 

Donna Austin, Neustar: we are in agreement Rubens.

Michael Flemming: I think it is a good point. Lets see if we can get the data that argues that point.

Rubens Kuhl: If it's cost-recovery, then it can't be used for compliance or returned to community. So the two are contradictory.

Donna Austin, Neustar: Agreed Rubens.

Donna Austin, Neustar: Surplus from 2012 is not within our scope.

Donna Austin, Neustar: Important distinction Jeff.

Rubens Kuhl: BTW, ongoing fees are also outside of the picket fence. 

Justine Chew: Good point, Jeff

Rubens Kuhl: Underserved Regions is an invitation for gaming. I'm from one such region, but I don't want to see people exploiting it as an arbitrage tactic. 

Michael Flemming: If we are talking about reducing fees for underserved regions, I think we need to talk about that together with Applicant Support.

avri doria: and personally I would have to see us price the whole world except for the very rich out of the market.

Justine Chew: Agree with Donna, perhaps we should consider a reasonably high entry point application fee but offer "subsidy-type" rebate to underserved regions. +1 Michael

avri doria: ... would hate to see ...

Michael Flemming: That is why we have Applicant Support and considerations for underserved regions should be done so there.

avri doria: Does this just become a way for ICANN to make money?

Michael Flemming: But also, we need to review the Applicant Support conditions, of course.

Rubens Kuhl: And Flint, MI might be as underserved as Brazil... 

avri doria: Rubens, I agree on the defintion of underserved.  it needs thinking.

Justine Chew: @Michael, I'm not sure that Applicant Support applies to a reduction of fees as opposed to support in putting the application together for submission. 

avri doria: Justine in the last round it covered both, though not successfully.

Michael Flemming: Applicant Support covered financial support and the complexity of the procedure.

Justine Chew: Yes definition of underserved needs reconsideration.

Jeff Neuman: i agree with the way Donna phrased it

Justine Chew: Application fees goes towards cost of processing applications only, no?

Jeff Neuman: I would also include things like covering the communication period, setting up the application systems, etc.

Jeff Neuman: So Donna's version was more accurate than my formulation

Alan Greenberg: @Justine, no, in the first round, there was a VERY substantive program development cost that was repaid via the fees.

Donna Austin, Neustar: @Justine, there is going to be establishment costs, for example TAS has been retired and a new TAS needs to be developed. the application fee should, in my opinion, cover those establishment costs.

Rubens Kuhl: As I mentioned in the list, I oppose keeping 185,000 as the application fee. 

Justine Chew 2: Thanks, Alan, Donna, and Jeff. I was attempting to clarify what Jeff had said earlier when my connection dropped.

Michael Flemming: +1

Alan Greenberg: I wasn't assuming that, and that is one of the reasons I would support differential application fees depending on the type of registry.

Rubens Kuhl: Brand TLDs are more of an ongoing cost for ICANN than commercial TLDs, due to them not being dedicated to the domain industry. Lots of compliance activity related to lack of payment of fees, lack of CZDS approvals etc. So from an administrative standpoint, brands are not that cheapear for ICANN. 

Alan Greenberg: HAve we lost Donna?

Donna Austin, Neustar: sorry all, not sure what happened.

Donna Austin, Neustar: Let me dial back in.

Donna Austin, Neustar: but please don't wait for me

Steve Chan: All, I think this is the last Cost Considerations document: https://archive.icann.org/en/topics/new-gtlds/cost-considerations-04oct09-en.pdf

Jeff Neuman: I think this has been a good call in the sense of further refining the concept of cost recovery

Steve Chan: The document I shared helps illustrate how the $185k was determined

Justine Chew 2: Great, thanks Steve.

Donna Austin, Neustar: @Christa, I disagree, I think there is agreement on cost recovery.

Donna Austin, Neustar: I don't think the ceiling or floor clouds that principle. 

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