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--></style></head><body bgcolor=white lang=EN-US link="#0563C1" vlink="#954F72"><div class=WordSection1><p class=MsoNormal><span style='font-size:10.5pt'>Dear Sub Team Members,<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'> <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Please see below the action items and discussion notes captured by staff from the meeting on 08 August. <i>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</i>. Please also see the recording on the meetings page at: <a href="https://community.icann.org/display/NGSPP/Work+Track+1+Meetings">https://community.icann.org/display/NGSPP/Work+Track+1+Meetings</a>.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'> <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Please note that for ease of reference chat excerpts are included below and excerpts from the CC2 responses are attached. <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'> <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Best,<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Julie<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'> <o:p></o:p></span></p><div style='border:none;border-bottom:solid windowtext 1.0pt;padding:0in 0in 1.0pt 0in'><p class=MsoNormal><span style='font-size:10.5pt'>Julie Hedlund, Policy Director<o:p></o:p></span></p></div><p class=MsoNormal><span style='font-size:10.5pt'> <o:p></o:p></span></p><p class=MsoNormal><b><span style='font-size:10.5pt'>Actions/Discussion Notes:</span></b><span style='font-size:10.5pt'><o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'> <o:p></o:p></span></p><p class=MsoNormal><i><span style='font-size:10.5pt'>Review of CC2 responses to WT1 questions: Application Fees<o:p></o:p></span></i></p><p class=MsoNormal><span style='font-size:10.5pt'><o:p> </o:p></span></p><p class=MsoNormal><u><span style='font-size:10.5pt'>1.4.1 -- Should another mechanism be considered for application feeds? Such as cost plus reasonable returns, fixed, plus variable, etc.<o:p></o:p></span></u></p><p class=MsoNormal><span style='font-size:10.5pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>-- Nominet, GAC UK, BRG, RySG, Valideus, and BC supported a model based on the principle of cost recovery.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>-- Afilias, CIRA, and Demys provided more detailed feedback on the future cost model.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>-- John Poole suggested an alternate model.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>-- 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.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'><o:p> </o:p></span></p><p class=MsoNormal><u><span style='font-size:10.5pt'>1.4.2 -- Do you believe $185,000 was a reasonable fee? Is it still a reasonable fee?<o:p></o:p></span></u></p><p class=MsoNormal><span style='font-size:10.5pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>-- Some concerns about not ramping up compliance. (See BC comment).<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>-- As we go forward need to make sure compliance can handle what we are giving them.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>-- Not sure it within our purview to say how funds are spent.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>-- Ongoing fees are to fund ongoing operations, if we go down the cost recovery model.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Slide 13: -- Question 1.4.3<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Slide 14 -- Against a cost ceiling<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Slide 15 -- Excessively high fees barrier to entry<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>-- 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.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'><o:p> </o:p></span></p><p class=MsoNormal><u><span style='font-size:10.5pt'>1.4.4 -- Price floor: How should excess funds be justified?<o:p></o:p></span></u></p><p class=MsoNormal><span style='font-size:10.5pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>-- Jannik Skou, CIRA, Nominet, and RySG provided input on recovery of shortages.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>-- Afilias, CIRA, and RyST provided input on the management of excess funds.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>-- 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?<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>-- Agree with that and it is consistent with the principle of cost recovery.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>-- 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.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>-- 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.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'><o:p> </o:p></span></p><p class=MsoNormal><u><span style='font-size:10.5pt'>1.4.5 -- Should the WG seek to establish more clarity in how the excess or deficiency of funds are utlilized/recovered/Any suggestions?<o:p></o:p></span></u></p><p class=MsoNormal><span style='font-size:10.5pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>-- Nominet, Afilias, and RySG suggested means for establishing. clarity in the comments.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>-- 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.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>-- 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.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>-- 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.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>-- 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.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'> <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>From the chat:<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>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. <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Michael Flemming: Rubens, are you meaning that the verification of the Spec 13 requires a different cost than other applicants?<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Rubens Kuhl: Michael, yes. <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>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. <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>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.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>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. <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Donna Austin, Neustar: we are in agreement Rubens.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Michael Flemming: I think it is a good point. Lets see if we can get the data that argues that point.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Rubens Kuhl: If it's cost-recovery, then it can't be used for compliance or returned to community. So the two are contradictory.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Donna Austin, Neustar: Agreed Rubens.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Donna Austin, Neustar: Surplus from 2012 is not within our scope.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Donna Austin, Neustar: Important distinction Jeff.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Rubens Kuhl: BTW, ongoing fees are also outside of the picket fence. <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Justine Chew: Good point, Jeff<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>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. <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Michael Flemming: If we are talking about reducing fees for underserved regions, I think we need to talk about that together with Applicant Support.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>avri doria: and personally I would have to see us price the whole world except for the very rich out of the market.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>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<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>avri doria: ... would hate to see ...<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Michael Flemming: That is why we have Applicant Support and considerations for underserved regions should be done so there.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>avri doria: Does this just become a way for ICANN to make money?<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Michael Flemming: But also, we need to review the Applicant Support conditions, of course.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Rubens Kuhl: And Flint, MI might be as underserved as Brazil... <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>avri doria: Rubens, I agree on the defintion of underserved. it needs thinking.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>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. <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>avri doria: Justine in the last round it covered both, though not successfully.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Michael Flemming: Applicant Support covered financial support and the complexity of the procedure.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Justine Chew: Yes definition of underserved needs reconsideration.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Jeff Neuman: i agree with the way Donna phrased it<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Justine Chew: Application fees goes towards cost of processing applications only, no?<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Jeff Neuman: I would also include things like covering the communication period, setting up the application systems, etc.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Jeff Neuman: So Donna's version was more accurate than my formulation<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Alan Greenberg: @Justine, no, in the first round, there was a VERY substantive program development cost that was repaid via the fees.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>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.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Rubens Kuhl: As I mentioned in the list, I oppose keeping 185,000 as the application fee. <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Justine Chew 2: Thanks, Alan, Donna, and Jeff. I was attempting to clarify what Jeff had said earlier when my connection dropped.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Michael Flemming: +1<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>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.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>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. <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Alan Greenberg: HAve we lost Donna?<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Donna Austin, Neustar: sorry all, not sure what happened.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Donna Austin, Neustar: Let me dial back in.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Donna Austin, Neustar: but please don't wait for me<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>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<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Jeff Neuman: I think this has been a good call in the sense of further refining the concept of cost recovery<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Steve Chan: The document I shared helps illustrate how the $185k was determined<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Justine Chew 2: Great, thanks Steve.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Donna Austin, Neustar: @Christa, I disagree, I think there is agreement on cost recovery.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:10.5pt'>Donna Austin, Neustar: I don't think the ceiling or floor clouds that principle. <o:p></o:p></span></p></div></body></html>