[Gnso-sc-budget] Next Meeting(s) - ICANN's Reserve Fund Replinishment

Erika Mann erika at erikamann.com
Wed Apr 4 11:03:03 UTC 2018 

Hi Ayden, hi team -

Here are few thoughts from my end. I copied the relevant text from the
ICANN Reserve doct and then added my comment below.

Kind regards,
Erika


B - Agreed Target Level After taking into account public comments, the
ICANN Board approved, during its recent meeting in Los Angeles on 4 Feb
2018, a resolution that recommended changes to the ICANN Investment Policy
to include (a) an updated rationale for the Reserve Fund and (b) a
confirmation that the target level of the Reserve Fund will be set at a
minimum of 12 months of Operating Expenses (See resolution
https://features.icann.org/confirmation-reserve-fundtarget-level).

   - *I wonder whether a target level of 12 months of Operating Expenses is
   really needed for this relatively small organization. The future risk
   factors will be much lower than in the recent past in most areas and, those
   areas that carry high risk, are unlikely to be able to be financed from the
   Operating Budget anyhow, like for example a root zone update are other kind
   of security related issues. *
      - *new gTLD program will have to fight with less problematic issues,
      procedures are more established and I would expect that there
will be less
      interest in gTLDs;*
      - *IANA transition passed *


C - Second and Third Consultation Papers The Board also determined that,
once the rationale and target level have been updated, further work would
be required to define a strategy to replenish the Reserve Fund from its
current level to its minimum target level of 12 months of Operating
Expenses, which is the subject of this second consultation paper on the
Reserve Fund.

   - *I would recommend to delete: "minimum target level of 12 months of
   Operating Expenses". We shouldn't classify a target level of 12 month as a
   'minimum level'; *
   - *Not certain if we want to make a recommendation concerning the
   following wording "further work would be required to define a strategy to
   replenish the Reserve Fund" but, if yes, then I recommend to base such a
   strategy on future risk and harm factors. *


E - Sources of funding

*Auction Proceeds*: ICANN currently has US$ 104 million collected from
auctions that were held as the mechanism of last resort to resolve string
contention in the new gTLD program (including investment returns). This
amount excludes US$ 132 million relating to the auction of the .WEB string
net of auction fees (https://www.icann.org/resources/pages/ruby-glen-v-
icann-appeal-2017-01-23-en).

   - *In principle I find this idea okay but I have major legal concerns
   with it. In the Ruby Glen LLC case (.web) ICANN explicitly argued not to
   use the Auction Proceed money for operating purposes.  Look in particular
   at page 16/17 (document, see attachment). If the GNSO is going to support
   this point, then we need to be certain that the IANA transition can be
   declared post ante as a non-operational budget portion of the reserve
   fund. *
   - *Second, a much needed funding for special major projects (for example
   a root zone update) could come from the Auction Proceed future fund without
   storing this money first in the reserve fund. *

*Leftover funds* at the end of the new gTLD program: the most recent
financial projections for the new gTLD program indicate that an amount of
US$ 80 million remains designated for the purpose of covering for
“hard-to-predict costs”, including legal risks. Should the program’s risks
lead ICANN to incur lower expenses than the current designated amount, then
funds could be left over at the end of the program.

   - *I believe that an allocation of the so called potential 'left over'
   to the reserve fund might be a problematic idea. I can't see contracting
   parties agreeing to this. *


*Additional Funds* from Contracted Parties: either as a one-time fee
entirely allocated to the Reserve Fund or as a fee increase allowing to
generate on-going operational surpluses which would then be allocated to
the Reserve Fund.

   - *I recommend to not accept this idea*


H - Replenishment strategy
 § A contribution from the Auction Proceeds should be considered. The
amount under consideration would be US$ 36 million, corresponding to the
total amount of withdrawals from the Reserve Fund to finance the IANA
Stewardship transition. § The remaining shortfall of US$ 17 million ($68m
less $15m and less $36m above) could possibly come from one of the
following sources, in no specific order of preference: - Contribution from
leftover funds from the new gTLD program, if any. - Additional contribution
from ICANN Org. - Additional contribution from the Auction Proceeds.

   - *See comments made above *


Kind regards,
Erika



On Wed, Mar 21, 2018 at 3:01 PM, Erika Mann <erika at erikamann.com> wrote:

> Thank you Berry!
> I will send few thoughts to this list later in the evening today (ET
> time).
>
> Cheers,
> Erika
>
> Sent from my iPhone
>
> On Mar 21, 2018, at 8:19 AM, Michele Neylon - Blacknight <
> michele at blacknight.com> wrote:
>
> Thanks Berry
>
>
>
>
>
>
>
> --
>
> Mr Michele Neylon
>
> Blacknight Solutions
>
> Hosting, Colocation & Domains
>
> https://www.blacknight.com/
>
> http://blacknight.blog/
>
> Intl. +353 (0) 59  9183072
>
> Direct Dial: +353 (0)59 9183090
>
> Personal blog: https://michele.blog/
>
> Some thoughts: https://ceo.hosting/
>
> -------------------------------
>
> Blacknight Internet Solutions Ltd, Unit 12A,Barrowside Business Park,Sleaty
>
> Road,Graiguecullen,Carlow,R93 X265,Ireland  Company No.: 370845
>
> *From: *Gnso-sc-budget <gnso-sc-budget-bounces at icann.org> on behalf of
> Berry Cobb <mail at berrycobb.com>
> *Date: *Wednesday 21 March 2018 at 12:16
> *To: *"gnso-sc-budget at icann.org" <gnso-sc-budget at icann.org>
> *Subject: *[Gnso-sc-budget] Next Meeting(s) - ICANN's Reserve Fund
> Replinishment
>
>
>
> Hi All,
>
>
>
> Welcome back from San Juan for those that travelled.  As noted by Ayden
> regarding the open public comment on the Replenishment of ICANN’s Reserve
> Fund, it seemed as though there is support to provide the Council with a
> draft of comments for their consideration and submission.
>
>
>
> The public comment closes on 25 April (https://www.icann.org/public-
> comments/reserve-fund-replenishment-2018-03-06-en ) and the next GNSO
> Council meeting is scheduled for 26 April.  Thus, the Council’s
> consideration will have to occur via the email list.
>
>
>
> Here’s a link to the comment submitted by the Council regarding the
> Reserve Fund Target Level:  https://mm.icann.org/pipermail
> /comments-reserve-fund-12oct17/2017q4/000013.html
>
>
>
> In preparation for discussions on this topic, you will see shortly two
> SCBO meetings invitations for April 2nd and 9th at 14:00UTC, each for 60
> minutes.
>
>
>
> Thank you.
>
>
>
> B
>
>
>
> Berry A. Cobb
>
> 720.839.5735
>
> mail at berrycobb.com
>
> @berrycobb
>
>
>
> _______________________________________________
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>
>
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