[Gnso-newgtld-wg] Notes and Action Items - New gTLD Subsequent Procedures PDP WG - 23 July 2019

[Julie Hedlund]

Dear Working Group members,



Please see below the notes from the meeting today, 23 July 2019. These high-level notes are designed to help WG members navigate through the content of the call and are not a substitute for the recording, transcript, or the chat, which will be posted at: https://community.icann.org/display/NGSPP/2019-07-23+New+gTLD+Subsequent+Procedures+PDP.



Kind regards,

Julie

Julie Hedlund, Policy Director



Notes and Action Items:

Action Items:

From 15 July 2019:
ACTION ITEM 1: Applicant Freedom of Expression - Input on Implementation Guidelines - LRO:  Work on language for the high-level agreement to reflect fairness and balance.
ACTION ITEM 2: Universal Acceptance: Rewrite the high-level agreement text.  Include a link to the USAG work.

From 18 July 2019:
ACTION ITEM 3: On this comment: Concerns: ICANN org - ICANN org is not aware of any “75 steps” document and is unclear about what “documentation related to the process used in setting fee in the 2012 round is being referenced in this section. It would be helpful if the PDP Working Group could clarify.  ACTION: To the WG to clarify.

Notes:

1. Updates to Statements of Interest: No updates to statements of interests.

2. Review of summary document: (continued) – See: https://docs.google.com/document/d/11mtncTwPLPx6vpbunACToRZy1vWyls-MxVAb3wqEYsk/edit?usp=sharing

Overarching process comment: Call out when decisions on whether or not to accept/support new ideas will be taken well ahead of the meeting where decisions will be made.

a. Application Fees, start with timing of disbursement of excess funds, page 6:

Outstanding Items - New Ideas/Concerns/Divergence

Timing of Disbursement of Excess Funds:
-- INTA Comment: Think if this is a good idea, we'd have to think about how this relates to the cost component.
-- ACTION Re: These comments - link this topic to the entire discussion on what it means to close around and then just leave it at this point.

Revenue shortfall:
-- The whole idea of excess funds and shortfalls is kind of artificial.  Seems like an accounting question and the idea of whether there's a shortfall or excess funds. Especially excess funds really seems to depend on kind of how you decide to think about the money that that comes from the fees. And the idea that you know that you would somehow refund.
-- So you have to go back to the original premise right when we first started talking about fees, we agreed on the notion that this program should be self-funded. It should not draw on funds from other I can't programs and that it should be essentially a cost recovery. The fee should be selling a cost recovery basis, albeit potentially with a floor that we talked about on the last call.
-- Essentially what we're saying on the front end is that this program should be self-funded and that it should be treated separate and apart and accounted for separate and apart from the rest of icons activities. So it does stand to reason that because it is a separate program there will, or could easily be access or funds or a shortfall. And the question is: What we do with those. And right now I can doesn't have any kind of guidance in terms of what to do.  Well with the existing access. But putting that aside because we're not, this is not a policy that is able to be retroactive. But this is a policy that's got to look to future rounds. So I'm not sure why you think it's theoretical.
-- The reason we're sticking to that original premise is because that's what we had in our initial report, and that's what the comments seem to support.  The original premise is still in play.
-- We've been told that there has been no cross subsidization.
-- Not questioning the premise that the fees should be set, you know, essentially, in a, you know, cost recovery mode. But, in other words, that the fee should not be, you know, intentionally a cash cow.  For ICANN to intentionally run a deficit.  If there are refunds, then we have the whole question of who gets a refund.  But that's meant to say is that money should go back to applicants. So at that point, actually probably be mostly registries.
-- Understanding that ICANN will develop a business case at some point in the future.
-- If the policy is that fees are set on a cost recovery. How is there any other conclusion than to return the access to the applicants.
-- So it is cost recovery. But there's also a concept of if cost recovery turns out to be too low. There is this notion that seemed to get some level of support in the community about setting a floor.
-- If we went purely on cost recovery then logic would dictate that it would be refunded.  But if we set a floor. Then there's going to be some access that would need to be dispersed.  Alternatively, there doesn't need to be any link between cost recovery based pricing and refunds.

Warehousing/squatting and potential deterrents [related to notion of an application fee floor]:
-- Some commenters said there is no evidence of warehousing/squatting.
-- But that if we do want to turn a certain type of behavior that we would classify as one of these, we have to be very careful in defining or creating definitions so that we understand what behavior we're trying to discourage. And right now there are no definitions of what it means to warehouse or squat on a top level domain.
-- There definitely were comments in support of setting a floor if the fees were too low, but a lack of agreement in the comments as to what behavior we're trying to deter.  It doesn't mean that these aren't legitimate concerns. It's just that there is no agreement that what this actually means.
-- Set a price, where the money for this isn't a money losing proposition for I can, nor is that a total cash cow is a perfectly valid concept, but at the same time that can't be the only concept on which we price and it can't be the only concept by which we account for the money.  Anything that is just a blind obsession with cost recovery.
-- The question is: what does speculation mean, where's the line between speculation and essentially a legitimate secondary market where the ones that weren't doing as well were selling out to the ones that could do something with it.
-- But what is that behavior that we're trying to deter by setting that floor, what it means, what the behavior is that we're trying to guard against so that when we do a review after the fact, we could say, you know what it turns out that price was too low or that floor was too low, because we have this type of activity that's occurring and therefore we should increase or decrease the floor. What we're looking for a criteria for how you judge whether you've achieved your cost recovery.
-- There's a certainly a fear that if the price is too low. It will encourage some less desirable behaviors. What we're being asked to do is to set out what we would think would be those less desirable behaviors such that when we do a subsequent review, we could say that price that was set the floor didn't work because of X, Y, and Z. So we're trying to establish some criteria.
-- One thing obviously will have to be a formula to determine what the floor is. But another one is, what is the behavior we're trying to guard against so that when we do review after the fact, we can you know assess whether that floor achieved its goal.

Considerations/implications of revenue neutral in continuous rounds:
-- Really to make sure we think about this in a holistic approach where you have multiple rounds. Number two, you provide some sort of periodic review and three that you can make adjustments as needed in between, at least in between.

ICANN being a so-called “registry of registries” (i.e., does the community envision ICANN approving a few thousand / hundreds of thousands / millions of gTLDs to be added to the root? Should there be a cap?) [Connection to 2.2.5 Application Submission Limits & 2.7.6.1 (Root Scaling)]  [ACTION: MOVE THESE COMMENTS TO THOSE SECTIONS]
-- These comments really refer to two other points. One is application submission limits and we already addressed that subject several weeks ago and the other is on root scaling, which we also addressed.
-- Make sure that these items are moved from this section, which deals with fees to the sections that deal with either application submission limits or root scaling.

Structuring fee to encourage competition and innovation:
-- Comments support the notion of increasing competition by not artificially raising fees higher than the costs.
-- Doesn’t make sense to couple the cost recovery question with a question whether pricing is so high that you freeze out all but the largest potential competitors, or so low that you have other unintended consequences.
-- What the comments are saying is if you set a floor and that floor is higher than the cost recovery, then you need to make sure that whatever floor you are setting does not adversely impact competition.

b. Variable Fees, page 10:

High-Level Agreements -- none.

Outstanding Items - New Ideas/Concerns/Divergence:
-- Comments do still support recovering costs associated with the new gTLD program.
And to make sure that whatever fee is set that it fully funds, the program being at being revenue neutral and that it's not subsidized by existing contribution. So that is the principle that no matter what we do with variable pricing, we need to keep in the back of our mind.
-- Lots of varying comments.
-- The most diverse group of comments supported the notion that no, we should just have the same price per application, no matter what they are applying for.
-- Some commenters support the notion of same fee for no matter what type of application.
-- Some commenters talked about potential different fees for different groups.
-- ACTION: We'll put this out to the list as well. But do we think we should have further discussions. Is there a support for the notion of if someone wants to apply for multiple strings that there should be some kind of discount because in theory, you don't have to do the full evaluation every single time.
-- Question to consider: if you have different legal entities, one for each application would those still have to be treated as individual applications and not the same, or as we talk about a registrar world with, you know, with families?  Answer: Get agreement on the high-level concept first, then consider the details.
-- If we are going to get into the game of variable pricing then we have to examine every plausible and probable argument for discounts, such as discounts for communities or discounts for brands or discounts, but on a policy basis.  If we go down this road, it's, it's a complete rabbit hole.  And ultimately just ends up making all kinds of value decisions and probably also power based decisions.
-- Based on the comments and the discussion on this call there doesn’t seem to be support for going down this path.

c. Application Submission Period, page 14:

High-Level Agreements:
-- We think there's high-level agreement that if the next application opportunity structured as a round commenters generally support a fixed application window of at least three months.
-- Also, support for in the event that following the next round of new gTLDs, application opportunities are organized as a series of application windows, steps related to application processing and delegation should be able to occur in parallel with the opening of subsequent application windows.

3. AOB: Items from Jim Predergast

a. String similarity:

-- Kobe meeting -- ccNSO Council and GNSO Council met and ccNSO said they would be doing work on string similarity in their fast-track process.  Potential to create a CCWG on this topic.
-- Discussions came down to the fact that the processes in the fast track are very different.  Common element of visual analysis there are elements that are different.
-- GNSO has been discussing these issues so we are far down that path.
-- Regardless of what happens, we still need to do a PDP, so not in favor of forming a new group.
-- Council will have to decide what it wants to do, but our recommendation was that we keep moving with the process that we're going down now.

b. Update to the GNSO Council:

-- All PDP WG leadership teams were on the agenda at the GNSO Council meeting on 18 July.
-- Cheryl and Jeff presented on where we could use the GNSO Council’s help and areas they should be paying attention to.
-- GNSO and ccNSO Councils do meet regularly.
See the recording of that session for those who are interested – starts at 1:14 into the recording and runs for about 15 minutes: https://icann.zoom.us/recording/play/Qr81olKVJKfzG2mpwOcYGSN659FwXIPfAa8VJ_YWaXwE-jEBWhVKRYR-DQUOo7vl?startTime=1563483748000


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