[Gnso-newgtld-wg-wt1] Notes and Action Items - New gTLD Subsequent Procedures PDP WG Work Track 1 Meeting 17 October

[Julie Hedlund]

Dear Work Track Members,

 

Please see below the action items and discussion notes from the meeting on 17 October. These high-level notes are designed to help Work Track Sub Team members navigate through the content of the call and are not meant to be a substitute for the recording.

 

Slides are attached and excerpts from the chat room are included for reference.  

 

Kind regards,

Julie

Julie Hedlund, Policy Director

 

 

Action Items and Notes, Work Track 1, 17 October

 

1. SOIs: None

 

2. Discussion on Variable and Fixed Costs & Clarity of Application Process:

 

Slide 4: Variable Fees Rationale for Policy Development

 

Slide 5: Variable Fees: One is "user pay" and one is "one fee fits all"

 

Slide 6: Variable Fees -- Public Policy

 

-- How does a public policy change from break-even to say, cost-plus impact our decisions on variable fees?

-- Impact on "User Pays"

-- If Cost Plus -- suggest a percentage of what the WG thinks is acceptable?

-- If Cost Plus -- same percentage or different percentages based on type of application?

-- Impacts on risk analysis.

 

Slide 7: Variable Fees [build out]

-- Financial support different from application support.

 

Slide 8: Variable Fees -- One Fee Fits All

 

"One Fees Fits all"

-- ...and there is a difference in costs by type of application >10%

-- ...is justified if the difference in costs by type of application are >10%

 

Discussion:

-- If it was 20% or 30% different would we say the same thing?

-- I thought it was a fairness issue and not an affordability issue.  Response: That is correct.  We thought the cost would go down and that is how the issue of "cost plus" arose, including ceilings and floors.

-- Problem merging what happens if the costs is too low and you get someone who can't operate without stability issues -- don't know what hoops people have to jump through. This is a different area than cost based on a cost-recovery system.

-- Consider whether ICANN should operate as a registry of top level domains if the costs is too low.  Saying that ICANN is a registry is a misnomer since they aren't performing a function that stands in the path of resolution -- only entity is IANA.  On stability we do have requests out ot the SSAC and OCTO on delegation in the root.

-- Got feedback that cost recovery was the way to go but we guessed on the costs.  We now have data on the actual costs.  

-- Still need to decide on whether to set a floor.

-- On the cost recovery understanding -- at the moment we still have determined.

-- Should costs be spread across multiple rounds or do you approach each round as independent of each other?

-- On whether ICANN is a registry on top level domains -- we could be the registry and IANA could be the back-end provider.  Not sure if it is a benefit to you those terms.

-- The issue of too many domains is party whether we want speculators.  Policy decision to make. Whether compliance operations -- whether we can ensure our policies are being followed is a significant concern.  We don't pay for compliance with the application fee.

-- Point out that we had a couple of rounds prior to the last one where the application fee was $50K and didn't see a lot of speculation.

-- Our goal is to encourage innovation and competition.  Not sure picking $185K is the right thing to do just because it was the price for 2012.

-- If we want to discourage speculation there could be other ways to do than keeping the price artificially high.

-- Don't know how you spread out costs among different rounds since we don't know how many there will be.  But if there is a way to determine the steady-state operation perhaps we could do it that way, but that will be very difficult until we know what a steady state would look like.

-- One way to do that would be to make the policy that ICANN redistributes any excess.

-- One idea could be that we make a policy that X% is costs and X% is separated from the application fee to pool for systems.  If we do have that gap between the application fee and the floor there will be that excess.

 

Slide 9: Variable Fees [Gaming the System]

 

-- Not hearing that 10% is a good or bad number, but on trying to prevent issues going forward -- is there policy that would prevent gaming the system?  Do we think $185K is the right number to prevent gaming?

-- 10% was kind of like a line in the sand on why we should have different costs for different types of applications.

-- It would make sense if you assumed apples to apples because the cost of a generic application that goes through contention is going have a higher costs than a generic one without contention.  It could be a very big range.  

-- Is 10% an okay number or do we want to change that to something else?  

-- 10% seems low.  There may be a much greater differential between different types application.   If it is within 25% they still should be priced at around the same amount.

-- So where do those excess funds go -- the surplus between our cost and the application fee.  Could be used for systems and development costs.

-- You could say that some should go to the reserve fund, so could go back to the applicants if we can figure out how to do that -- but we have no idea how much we will have.  Do need to make it much more definitive other than a huge surplus fund.

-- Don't have the number of applications we can process in a certain period [letter to SSAC/RSSAC/OTCO] but we could use that number in our equation.  Don't think we'll get a definitive answer.

 

Slide 10: Variable Fees -- User Pays

 

-- How does a "user pay" system impact variable fees on evaluation, complexity, costs and time?

-- Types of risk associated with each type of application?

-- Concern is applicants who "game" the system, does the WG want to address this concern?

-- Sanctions for applying for a cheaper/faster application type (or the reverse)

-- Compliance costs associated with ensuring activities match the type of application.

 

Discussion:

-- If there are differences among the types and someone wants to change it then paying the difference or penalty fee could be assessed.

 

>From the chat:

Jonathan Robinson: Regardless of cost-recovery or cost-plus basis, is it established at this point, as to whether this is on a per round basis or across the program as a whole?

Vanda Scartezini: i I beleive on one fits all cost  since in my survey in this developing region cost was not the issue

Cheryl Langdon-Orr (CLO): I suspect the issue of "affordability" will vary accross both Regions and sectors

avri doria: Alan, should one raise the cost to prevent applicantions?

Phil Buckingham: I think that it would be important to separate out the variable  costs to run the  "round " and the fixed costs / development costs that ICANN ( the corporation ) needs  to implement / rollout R2  ( ie a new computer system / new application system etc ) 

avri doria: Alan, should one raise the cost to prevent applicantions?

Phil Buckingham: I think that it would be important to separate out the variable  costs to run the  "round " and the fixed costs / development costs that ICANN ( the corporation ) needs  to implement / rollout R2  ( ie a new computer system / new application system etc ) . 

Vanda Scartezini: I agree with ALAN - it is our intention to especulate on gTLDs more than we had  in 2102?. 

avri doria: What price level discourages speculation? Was there speculation in 2012?

Cheryl Langdon-Orr (CLO): fair point to noJeff a good reminder 

Jonathan Robinson: @Phil. Regardless of slpitting across variable and fixed costs, there is a point of principle as to whether or not the cost-recovery should be spread across multiple rounds

Cheryl Langdon-Orr (CLO): should say to note Jeff

Alan Greenberg: I think the first rounds were in a very different world and cannot be used to predict behaviour going forward.

Vanda Scartezini: previous rounds the general investors were not alert about the opportunity, now they are

Alan Greenberg: I don't much care if we use price or something else to discourage "speculation", but I beleive we do not want the equavalent of parked domains in the TLD space. And certainly not when they may predominate.

Vanda Scartezini: understand we are not creating artifitial price but now lower the prices for no reason

avri doria: well, there are apporximations.  you could estimate the  cost of the the orunds in a year,  and then roll any surplus or deficit forward and rebudget and re cost the next year.

Jeff Neuman: we could do that, but so long as there is a much more scientific method of determining the costs of the application process.  $185,000 was a pure guess

avri doria: but now that approximation can be adjusted.

avri doria: based on what was learned in this round

Cheryl Langdon-Orr (CLO): I also suspect that whilst we can look towards history of previous "rounds" regarding predicting uptake for future ones is not a simple correlate...  Yes things are different between "now" and "then" but we do not have any ideas on what is a saturation point or steady state for opportunity uptake, nor do we hold predictable data relating to other non purely DNS Industry related effects... we are in some ways trying to crystal ball gaze regarding price point : Impact on speculation / uptake  and  what you see in a "crystal ball" is very much biased by postition and perspective.

Jonathan Robinson: Can the apporximation be adjusted? ICANN seens to take the view that the excess application fees may still be required.

Jonathan Robinson: ICANN certainly does not seem to concede that 185k is too much.

Jeff Neuman: In this paper, ICANN states that it has $128million of unspent gTLD application fees (https://www.icann.org/en/system/files/files/draft-reserve-fund-12oct17-en.pdf) 

Jonathan Robinson: THere is still the notional 1,000 per year limit AFAIK

Jeff Neuman: A letter was sent from WT 4 to the SSAC, RSSAC, the office of chief technology officer of ICANN, and the GDD to see if their thnking on that has changed.

Alan Greenberg: I do not understand why Compliance is not part of the equation.

Jonathan Robinson: @JEff. Thanks. Good point; there are two issues regarding what the rate limiting condition is i.e. GDD processing capability and SSAC / RSAC security & stability issues.

Steve Chan: @Jeff, i think the question posed to SSAC, RSSAC, and GDD was more about root-zone scaling. I don't believe we've asked the operational questions yet, as there are quite a few variables this WG would probably need to provide in order for them to do so.

Jonathan Robinson: @Jeff. To your point that we know that 185k will generate significant excess. To be clear, we do not know that US$185,000 will generate signifiacnt excess. We simply do not know what the number of applications will be at 185k or higher or lower.

Jeff Neuman: I am not sure we have agreement on what "gaming" of the process means

Vanda Scartezini: yeah if there will be a difference then applicant shall pay the difference if change the type

avri doria: gaming - any opportunistic use of policies in a way people frown upon?

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