[council] Registry SG questions - JAS WG answers

Thu May 19 10:34:55 UTC 2011

Hello,

I am forwarding the WG response to the registry SG questions, you will find
the answers below in red.

Regards

Rafik

*Q&A Registry Constituency and JAS WG*

The WG thanks the Registry Constituency for the comments and questions
submitted. The answers can be found below.

On a general note, the WG notes that criteria different from matrix.
Criteria was part of the charter, but matrix not.

*3.2 Notes on Financial Need*

The overriding consensus of the WG is that financial need and capability is
the primary criteria for determining eligible applications. Such need and
capability is to be demonstrated through the following criteria:

1.            Applicants must be capable of of contributing $45,000 towards
ICANN's application fee, unless ICANN waives, or lowers application fees.

2.            Where applicants anticipate scheduled fees, such as for
extended evaluation, the applicant must be capable of contributing a quarter
of the scheduled fees.

*[RYSG]  How was this determined? Is it sufficient to demonstrate viability?
Some explanation of the WG thinking on this would be helpful.*

3.            Applicants must be capable of contributing $45,000 towards
registry operational costs, if the applicant proposes to operate its own
registry platform. If the applicant proposes to share registry operational
costs with other qualified applicants, the applicant must be capable of
contributing the pro- rated proportional share of this cost.

*[RYSG] Is the $45,000 amount an annual figure?  It might make up a very
small percentage of operational costs.*

*[JASWG]*  Answer to 3.2 questions:

ICANN used figures in this range in 2000 and 2004. As the final fee is not
yet fixed, see fee reductions, elsewhere, this minimum applicant capability
is subject to increase, or decrease.

Current offers of record by registry technical service providers to
potential applicants are significantly lower than this figure. The total
marketing budget PuntCat invested in .cat was 2,000 euros.

4.            Applicants must be capable of of contributing $45,000 towards
registry continuity operational costs, if the applicant proposes to fund its
own continuity operation. If the applicant proposes to share registry
continuity operational costs with other qualified applicants, the applicant
must be capable of contributing the pro-rated proportional share of this
cost.

*[RYSG] It would be helpful to explain the basis for the $45,000 amount.*

Part 4 - What benefits do qualified applicants receive?

The WG recommends a number of different kinds of support to be made
available for eligible applicants, which fall into the following categories:

4.1 Financial support/relief from ICANN

4.1.1 Cost Reductions

The WG recommends the following fee reductions to be made available to all
applicants who are determined as meeting the criteria established for
support:

•             Waive (consensus for this in the Milestone report) the Program
Development Costs (US$26,000)

•             Lower risk/contingency cost (US$60,000)

*[RYSG] If these contingency funds are actually needed at the amount
estimated, where would the deficit come from?*

•             Review Base cost (US$100,000) to see if reduction can be made

•             Cost reductions to encourage the build out of IDNs in small or
underserved languages.

*[JASWG]* Current offers of record by registry technical service providers
to potential applicants are significantly lower than the $45,000 figure.

If ICANN is correct in the cost estimates, then cost increase will be
transferred to other applicants. Lowering fees for few applicants
automatically rises to others.

Regarding contingency, this is a risk cost. As applications are reviewed to
a higher standard for eligibility, rational risk must, of necessity, be
altered downward, reducing rational contingency funding requirements. The
same question arises if the contingency funds actually needed are in excess
of the amount estimated, for applications not reviewed to a higher standard
for eligibility.

*[RYSG] Does the WG believe that costs will be less for ‘IDNs in small or
underserved languages’?  If not, what is being suggested here?*

•             Lower registry Fixed Fees

*[JASWG]* The WG is not making any assumptions the cost will be different
for IDNs. This is, nonetheless, not a leveled field.

*[RYSG]  Assuming the fees are reasonable with regard to services provided
to registries, would other registries be expected to make up the deficit?
Or does the WG believe the fees are too high?  If the latter, was any
analysis done to support that position?*

•             Exemption or deferment of IPv6 implementation requirements as
possible

*[JASWG]* If ICANN is correct in the cost estimates, then cost increase will
be transferred to other applicants. Lowering fees for few applicants
automatically rises to others.

*[RYSG]  Could this put the registry at a competitive disadvantage compared
to registries that support IPv6? *

Further reductions recommended

•             Reduction of the Financial Continued Operation Instrument
Obligation to 6-12 months

*[JASWG]* In the WG’s opinion, no. DNS providers who don't keep up with the
market (which means IPv6 and DNSSEC  in this context) will lose business to
those who do. However, this will not, in our opinion, be relevant to new
registries during the initial year(s) of operation, while the IPv6
requirement is deferred.

In some countries the IPV6 infrastructure might not yet be there. Also, the
cost of having theis technology is high for some applicants.

The WG further suggests the IPV6 capability is offered to the applicants in
need at advantageous terms.

*[RYSG]  What if the registry fails?  Does the WG suggest a higher tolerance
for failure in exchange for a smaller continued operation obligation?*

*[JASWG]* The presumption of failure applies to all registries, including
the 2000 and 2004 round applicants now, or their successors in interest,
operating registries. The staff choice of three years of continuity funding
rationally reflects the failure scenario for applications made by
speculators and other uninformed investors. The eligibility criteria for
applicants seeking support eliminates these likely-to-fail applicants.
Eligibility criteria ensure that the likely elapsed time to continuity
operator discovery for registries "in continuity" arising from support
eligible applicants is significantly less than that of random speculator
driven failures. See also the response concerning contingency risk, as the
same higher review standard lower risk cost principle applies here.

The WG is not suggesting high tolerance for failure, however, the WG
believes that the continued operations following the failure is considerable
less than the ICANN estimates.

4.1.2 - Staggered Fees

Instead of paying the entire fee upon acceptance of the applications,
applicants meeting the criteria established for support could pay the fees
incrementally. Staggered fees payment enables an applicant to compete for
strings that might otherwise have gone to the first and/or only group with
enough money to apply.

*[RYSG]  Staggered over what period of time?  What happens if progress
payments are not made on time?*

*[JASWG]* These details must be specified, but we are not yet done. ICANN's
schedule, or process, is not under the control of the working group.

Part 5 - Evaluation process and relationship to the new gTLD Applicant
Guidebook (AG)

The WG has determined, at this time, that best possible process to provide
support for such applications is to be done through a process that is
parallel to, and not a replacement of, the ICANN Applicant Guidebook. Thus,
even after the Guidebook is formally approved, this WG can continue its work
to refine those components of its mandate which remain unresolved. It is
important that the AG make mention of this program and refer interested
potential applicants to it, however it is not the WG's intention to
otherwise affect the existing application process. To qualify for support
applicants may be required to demonstrate that they meet this program's
criteria on financial need and public interest; however such activity is
intended to supplement, not replace, existing mechanisms in the AG.

The WG had full consensus that Applicants that receive support under this
program should repay that support as possible, and that such repayments go
into a sustainable revolving fund used to support the future applications.
Repayment is dependent on the gTLD Operator's financial success and will
take the form of either

•             a capital contribution or lump sum; or

•             an income contribution or annual installment of until a lump
sum is repaid; or

•             repayment of the full or a percentage of the reduced base cost
fee expended by the Support Development Program.

The following broad steps did not obtain thorough evaluation or full
consensus by the WG, but have been suggested as a starting point to this
process and will be further refined by the WG based on the Parts 1 to 4
above. Note the process is meant to be to be in parallel with the AG-

1.     the Application is assessed using the criteria described in Part 3
and this Step takes place before the Application enters the AG process

*[RYSG]  Is there enough time for this?*

*[JASWG]* We hope so :-)
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