[Gnso-newgtld-wg-wt1] [EXTERNAL] Work Track 1 Agenda for 8 August 2017 @ 3:00 UTC

Wed Aug 9 12:10:50 UTC 2017

Hi,

After the gNSO call Monday (not the WT 1 call Tuesday) it seems that we have these variables:

*        Application related effective costs (incl. reimbursed fees etc.)

*        Number of applications that ICANN can process annually

*        Number of applications submitted by

We can influence ICANN to a degree and make them processing say 1,000 or probably max 2,000 applications annually (in the last round that number was WAY lower). The number of incoming applications is likely simply a function of the cost: The less expensive the more avalanche. If for a company their own gTLD is cheaper than a three letter .com domain: Well, let’s go for a gTLD instead of feeding “Domain Investors”. 

In the same time we discuss the application submission method for AFTER the 2nd round. Some want a short period between rounds to fix minor problems. Others want to “open the floodgates” just a few month after the 2nd round application window closed.

If we get 10k applications and ICANN can process 2k (or we get 2k applications and ICANN can process 1k annually) we have clocked up the system for 2 to 5 years. 

If we take this as a basis I think a few things become instantly clear:

1.      It doesn’t make ANY sense to reduce the effective application fees in the 2nd round: it leads to a big delay of the 3rd round (or whatever follows the 2nd round). We shouldn’t make ourselves slaves of a mantra called “Cost Recovery”. 

2.      Instead it would make GREAT sense to double or even triple the application fees in the next round: To reduce the “load”. (I know: there are arguments to the counter; and what would be the justification; and what to do with all the excess fees? If not money: what other “hurdle” could we install?)

3.      Once ICANN publishes the application roster we know exactly how long it takes until ICANN could process new applications: number of apps divided by ICANN’s annual processing speed. We could already now include a provision in the new AG that states that the next submission opportunity (ongoing or round is another discussion) starts after the X years – with X being a function from the calculation once the roster has been published! That creates predictability – yet preserves flexibility as it includes the unknown number of applications submitted in the solution! If we get 3k applications, and ICANN promises to process 1.5k annually – the next round starts 2 years later. It would be set in stone – and the next applicants could prepare themselves. 

4.      At US $500k (or better $1 Million) application fee that period would likely be one year or less – and just in case we had only 200 applications at that application fee point; so what: The next round we drop the fee by 50%. This way we have a very smooth introduction of TLDs – and a very predictable schedule. Neither geos nor brands have anything to fear at all (as their names are unique – and objection phases exist: so if they deem it too expensive they just wait a little) and generic term based gTLDs: well, all the better if someone thinks he can recover higher costs they will have to work harder.

In any case: Once it is foreseeable that the ICANN system is clocked up for “X” years (e.g. 2 to 5 years) – accepting new applications right away doesn’t make any sense. Especially not if this would be conducted in a “first come first serve” manner. Instead we should use the time to identify flaws and injustices – fix these WHILE ICANN processes the applications and let demand pent up. Competition is the fuel that drove the Internet after all – I do not think it is ICANN’s mission to eliminate competition.  Pent up demand is not a flaw; it is a feature. At least in the United States of America and Europe.

Nutshell: Higher applications fees in the 2nd round; the 3rd round window already defined in the AG as a function of app number divided by application processing speed of ICANN, pent-up demand instead of 1st come 1st serve. Once we see a round WITHOUT much contention we can “open the floodgates”.

Thanks,

Alexander 

From: gnso-newgtld-wg-wt1-bounces at icann.org [mailto:gnso-newgtld-wg-wt1-bounces at icann.org] On Behalf Of Sara Bockey
Sent: Montag, 7. August 2017 23:38
To: Vanda Scartezini <vanda at scartezini.org>; Austin, Donna <Donna.Austin at team.neustar>; Rubens Kuhl <rubensk at nic.br>
Cc: gnso-newgtld-wg-wt1 at icann.org
Subject: Re: [Gnso-newgtld-wg-wt1] [EXTERNAL] Work Track 1 Agenda for 8 August 2017 @ 3:00 UTC

Thank you, Donna, Vanda and Rubens for your feedback on this.  You’ve all made some excellent points and suggestions.  We look forward to discussing this further and additional input during our next call in a few hours.

Best,

Sara

sara bockey

policy manager | GoDaddy™

 <mailto:sbockey at godaddy.com> sbockey at godaddy.com  480-366-3616

skype: sbockey

This email message and any attachments hereto is intended for use only by the addressee(s) named herein and may contain confidential information. If you have received this email in error, please immediately notify the sender and permanently delete the original and any copy of this message and its attachments.

From: Vanda Scartezini <vanda at scartezini.org <mailto:vanda at scartezini.org> >
Date: Monday, August 7, 2017 at 1:06 PM
To: "Austin, Donna" <Donna.Austin at team.neustar <mailto:Donna.Austin at team.neustar> >, Rubens Kuhl <rubensk at nic.br <mailto:rubensk at nic.br> >
Cc: Sara Bockey <sbockey at godaddy.com <mailto:sbockey at godaddy.com> >, "gnso-newgtld-wg-wt1 at icann.org <mailto:gnso-newgtld-wg-wt1 at icann.org> " <gnso-newgtld-wg-wt1 at icann.org <mailto:gnso-newgtld-wg-wt1 at icann.org> >
Subject: Re: [Gnso-newgtld-wg-wt1] [EXTERNAL] Work Track 1 Agenda for 8 August 2017 @ 3:00 UTC

Thanks for your feedback Donna. I understand having string conflict will be difficult to postpone but I was thinking only for cities ( government) which can face some pontual difficulty depends on the election calendar of each region. In general I would follow the idea to stick with same price for this next round. May be will be some surplus with such value but we can use as reserve to face any litigation, as suggested by Rubens or well as to define some alternative for reimbursement. 

Vanda Scartezini

Polo Consultores Associados

Av. Paulista 1159, cj 1004

01311-200- Sao Paulo, SP, Brazil

Land Line: +55 11 3266.6253

Mobile: + 55 11 98181.1464 

Sorry for any typos. 

From: "Austin, Donna" < <mailto:Donna.Austin at team.neustar> Donna.Austin at team.neustar>
Date: Monday, August 7, 2017 at 15:10
To: Rubens Kuhl < <mailto:rubensk at nic.br> rubensk at nic.br>, Vanda Scartezini < <mailto:vanda at scartezini.org> vanda at scartezini.org>
Cc: Sara Bockey < <mailto:sbockey at godaddy.com> sbockey at godaddy.com>, " <mailto:gnso-newgtld-wg-wt1 at icann.org> gnso-newgtld-wg-wt1 at icann.org" < <mailto:gnso-newgtld-wg-wt1 at icann.org> gnso-newgtld-wg-wt1 at icann.org>
Subject: RE: [Gnso-newgtld-wg-wt1] [EXTERNAL] Work Track 1 Agenda for 8 August 2017 @ 3:00 UTC

Hi Rubens and Vanda, comments inline below.

From: Rubens Kuhl [ <mailto:rubensk at nic.br> mailto:rubensk at nic.br] 
Sent: Sunday, August 06, 2017 3:23 PM
To: Austin, Donna < <mailto:Donna.Austin at team.neustar> Donna.Austin at team.neustar>
Cc: Sara Bockey < <mailto:sbockey at godaddy.com> sbockey at godaddy.com>;  <mailto:gnso-newgtld-wg-wt1 at icann.org> gnso-newgtld-wg-wt1 at icann.org
Subject: Re: [Gnso-newgtld-wg-wt1] [EXTERNAL] Work Track 1 Agenda for 8 August 2017 @ 3:00 UTC

Donna,

I believe the data points you mentioned do exist, in the form of the actual expenses incurred by ICANN in the 2012-round. And considering the gains of scale foreseen by aggregating technical evaluation per back-end, with or without RSP program, the actual cost for further rounds is clearly expected to be lower. 

DA: I agree that there is data available from 2012 that could be helpful to our discussion and to that end, we should ask Trang if she can provide an overview of the costs associated with the 2012 round, but we would need to define the cost parameters. I agree that an RSP program could reduce the costs associated with the technical evaluation, but current discussions suggest that the technical evaluation could still occur during the application process.

But we could adopt something in between specifying a new application fee and the reimbursement idea, like this:

- Application fee will be no less than 50% of the 2012-round fee, and designed to be of a cost-recovery target; in the event it generates more surplus than expected, the reimbursement will be available either as credit towards registry fees for successful applicants or reimbursement for non-approved or drop-out applicants. 

DA: I have no objection to the concept, but 50% seems to be a large reduction in terms of fairness and competition for 2012 applicants, but I accept your note below that 2012 applicants will have a time-to-market advantage over future entrants. Any number we come up will largely be arbitrary at this point so the challenge is to come up with a reasoned rationale. We should also look for options to address Vanda’s point about not making the upfront fee too prohibitive, or finding a mechanism that would allow applicants from underserved regions to pay post-evaluation. This would become complicated where there is contention for the string, but if there was no competition for the string then perhaps this would be a little easier.

It’s also important to decide whether the application fee would change over time. I must admit that when I was thinking about this, it was only from the perspective of the next application window and not beyond that. It would be fair to assume that a lot of the setup costs for the next application window will not be repeated for processes beyond that, particularly as it relates to infrastructure or software development. The outcome of the rounds v first-come-first-serve discussion will be important to this one.

One issue to calculate the reimbursement is how much does the legal reserves need to be; the 2012-round proved that litigation either thru internal accountability or legal courts will happen, but how much ? If someone from the work track, or someone from ICANN Board risk committee, could provide an actuary's point of view would be interesting. 

DA: Agree that a % of the application fee should be set aside for legal reserves, on the condition that the reserves are set aside for a designated period of time.

We should note that 2012-round applicants got a 4 to 6 years time-to-market advantage, and that could be worth much more than the application fee difference. 

Rubens

On Aug 4, 2017, at 7:13 PM, Austin, Donna via Gnso-newgtld-wg-wt1 <gnso-newgtld-wg-wt1 at icann.org <mailto:gnso-newgtld-wg-wt1 at icann.org> > wrote:

Hi Sara, all

I’ve had a look at the responses to the CC2 responses as they relate to Application Fees and believe that the responses are largely consistent with the discussions we have already had within the working group on this topic. 

My rudimentary analysis of the comments suggest the following:

Based on the CC2 responses it would appear that most of the respondents support the principle of an application fee that is cost neutral or break even, which is consistent with the cost-recovery model that was developed for the 2012 round. However, many of the responses acknowledge that the assumptions of the 2012 round was off the mark because the number of applications exceeded expectations and resulted in a considerable surplus of funds (approximately $100M).

It would appear from the responses that there is little support for maintaining the $185,000 application fee into the future, with many responses suggesting a reduction, with the exception of John Poole who recommended that each applicant require a $1m deposit. However, there was support for the principle that the application fee should maintain a bar sufficient to ensure that applications are worth dedicating resources to evaluation and processing; and fees should not be too low as to be detrimental to security and stability and competition between rounds.

It would also appear that there is support for the WG providing direction on the use of excess funds, in the event that future rounds result in a surplus of funds.

Some suggested considerations for moving this conversation forward:

·        While it appears that there is consensus around the concept of an application that achieves the principle of cost-recovery, it is impossible for this group to come up with an actual number for any future round because we have no way to predict how many applications there will be.

·        The number of applications for a future application window will depend on a range of factors, including the amount of the application fee.

·        We could ask ICANN to provide estimates for costs associated with preparing for the next application window, but I don’t believe we are far along in deciding some of the core issues to provide them with enough guidance on which to base any estimates or predictions.

·        What we do have from the 2012 application round is an application fee of $185,000 that resulted in 1930 applications—some 1400 more than was predicted.

The policy for the WG could potentially be something along the lines of:

·        The application fee should be based on the principle of cost recovery.

·        Based on the principles of fairness and competition to 2012 new gTLD applications, $185,000 will be the application fee for any future application window.

·        In the event of surplus application fees, ICANN will provide all applicants (successful/unsuccessful?) with a reimbursement of an equal share of the surplus application fees; or

·        In the event of surplus applications fees, ICANN will provide all applicants a reimbursement up to an amount of $50,000/$80,000/$100,000 (successful applicants may choose this reimbursement as a contribution to ICANN’s annual fee); and

·        The remainder of the surplus application fees will be used to support ICANN’s efforts in Universal Awareness and Universal Acceptance (or some other designated activity)

Some exemptions/exceptions:

·        Applications from underserved regions would/could (depending on the policy) have the application fee waived so that it is not considered a barrier to entry.

·        There may be other exclusions or exemptions from the application fee that could be developed to remove other possible barriers to entry perceived by some as being too high.

Rationale:

·        We have a principle of cost recovery, but rather than requiring complex economic modelling (or somebody’s best guess) to arrive at the amount of the application fee, we achieve the principle in an order of reverse by providing a reimbursement of a portion of the application fee equal to the distribution of excess funds.

I don’t believe we can solve this problem absent a considerable amount of data that at this point in time simply doesn’t exist, so I offer this as a possible way to enable us to move forward and certainly to encourage discussion.

Donna

From:  <mailto:gnso-newgtld-wg-wt1-bounces at icann.org> gnso-newgtld-wg-wt1-bounces at icann.org [ <mailto:gnso-newgtld-wg-wt1-bounces at icann.org> mailto:gnso-newgtld-wg-wt1-bounces at icann.org] On Behalf Of Sara Bockey
Sent: Thursday, August 03, 2017 9:31 AM
To:  <mailto:gnso-newgtld-wg-wt1 at icann.org> gnso-newgtld-wg-wt1 at icann.org
Subject: [EXTERNAL] [Gnso-newgtld-wg-wt1] Work Track 1 Agenda for 8 August 2017 @ 3:00 UTC

Dear All,

The next call for the New gTLD Subsequent Procedures Sub Team – Track 1 - Overall Process/Support/Outreach Issue will take place on Tuesday, 8 August 2017 at 3:00 UTC.

The proposed agenda is as follows:

1.	Welcome & Agenda Overview
2.	SOIs
3.	Review of CC2 responses to WT1 questions

1.	Application Fees
2.	Systems

4.	AOB

The CC2 responses we will be covering may be review in the google document:    <https://urldefense.proofpoint.com/v2/url?u=https-3A__docs.google.com_spreadsheets_d_1427pgTCkguOj2NZZzMnz-5FH-5FlPe54dtvUErSJd9uhkZw_edit-23gid-3D1442059046&d=DwMGaQ&c=MOptNlVtIETeDALC_lULrw&r=CwipU91YB6EkpFXK9ynnT_QUef4yC5p7jpsDm8cU97g&m=KxXpBeMo6gbRQ-BqdZ0TqFv_TRF2rGQiCdN-DB_qN84&s=4vy3M-5mmpfeBvqqyXWRPSI-t6ZrUwBiYzDw4G8yxqQ&e=> https://docs.google.com/spreadsheets/d/1427pgTCkguOj2NZZzMnz_H_lPe54dtvUErSJd9uhkZw/edit#gid=1442059046. 

Chat soon!

Sara

sara bockey

policy manager | GoDaddy™

 <mailto:sbockey at godaddy.com> sbockey at godaddy.com  480-366-3616

skype: sbockey

This email message and any attachments hereto is intended for use only by the addressee(s) named herein and may contain confidential information. If you have received this email in error, please immediately notify the sender and permanently delete the original and any copy of this message and its attachments.

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