[Gnso-newgtld-wg] Notes and Action Items - New gTLD Subsequent Procedures PDP WG - 13 January 1500 UTC

[Poncelet Ileleji]

+1 Anne I agree with the compromise language.

Kind Regards

Poncelet

On Mon, 13 Jan 2020 at 16:42, Aikman-Scalese, Anne <AAikman at lrrc.com> wrote:

> Re Goal # 4, I wanted to propose compromise language:
>
>
>
> “to reduce the risk of bad faith applications, i.e. applications made for
> purposes of profiteering and/or speculation, especially as it relates to
> financial transactions”  ….etc etc etc.”
>
> Anne
>
>
>
> *From:* Gnso-newgtld-wg <gnso-newgtld-wg-bounces at icann.org> *On Behalf Of
> *Julie Hedlund
> *Sent:* Monday, January 13, 2020 9:39 AM
> *To:* gnso-newgtld-wg at icann.org
> *Subject:* [Gnso-newgtld-wg] Notes and Action Items - New gTLD Subsequent
> Procedures PDP WG - 13 January 1500 UTC
>
>
>
> *[EXTERNAL]*
> ------------------------------
>
> Dear Working Group members,
>
>
>
> Please see below the notes from the meeting on 13 January at 1500 UTC. *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/2020-01-13+New+gTLD+Subsequent+Procedures+PDP
>
>
>
> Kind regards,
> Emily
>
>
>
> *Notes and Action Items:*
>
>
>
> *Actions:*
>
>
>
> *Goal #3:* *Reduce the risk of “bidding wars” in which the winner
> ultimately overpays for the TLD. a. Tentative, related goal for discussion:
> encourage applicants to bid their true value for a TLD.*
>
> ACTION ITEM 1: Bracket language change -- delete text up to: “Encourage
> applicants to bid their true value for a TLD”.
>
>
>
> *Goal #2:* *if there is no mutual agreement, a claim to support a
> community by one party will be a reason to award priority to that
> application. If there is no such claim, and no mutual agreement a process
> will be put in place to enable efficient resolution of contention*
>
> ACTION ITEM 2: Proposal to change #2: *If there is no such claim, and no
> mutual agreement a[N AUCTION] process will be put in place to enable
> efficient resolution of contention”*
>
>
>
> *Goal #4:* *Reduce collusion, profiteering, and/or speculation,
> especially as it relates to financial transactions external to the program
> (Note, while this is not an explicit goal for the mechanisms of last
> resort, it has been discussed as a motivation for altering the auction
> mechanism).*
>
> ACTION ITEM 3:  Add “reduce the risk” and insert before “collusion…”.
>
>
>
> ACTION ITEM 4: Add a new goal #11: “applications should not be submitted
> as a means to engage in private auctions, including for the purpose of
> using private auctions as a method of financing their other applications.”
>
>
>
> *Notes:*
>
>
>
> 1. Updates to Statements of Interest:
>
>
>
> -- Susan Payne: I am now a member of the IRP-IOT.  officially this
> happened in November but the re-populated group is now having its first
> meeting this week.
>
>
>
> 2. String Contention Mechanisms of Last Resort:
> https://docs.google.com/document/d/16qDoiK6vydQp6a0v9tMvU2l5fcypJY24hCzTIVTjKwk/edit?usp=sharing
>
>
>
> * Goals:*
>
>    1. *resolve contention between them within a pre-established
>    timeframe**
>    2. *if there is no mutual agreement, a claim to support a community by
>    one party will be a reason to award priority to that application. If there
>    is no such claim, and no mutual agreement a process will be put in place to
>    enable efficient resolution of contention*
>    3. *Reduce the risk of “bidding wars” in which the winner ultimately
>    overpays for the TLD. a. Tentative, related goal for discussion: encourage
>    applicants to bid their true value for a TLD.*
>
>
>    1. *Reduce collusion, profiteering, and/or speculation, especially as
>    it relates to financial transactions external to the program (Note, while
>    this is not an explicit goal for the mechanisms of last resort, it has been
>    discussed as a motivation for altering the auction mechanism).*
>    2. *Increase transparency.*
>    3. *Resolve contention more quickly.*
>    4. *Increase predictability.*
>    5. *Encourage new entrants into the field. a. Which could include,
>    making it easier to implement “multipliers” for certain types of
>    applicants, such as those eligible for Applicant Support.*
>
>
>    1. *Increase efficiencies in application evaluation by way of
>    understanding the contention set?*
>    2. *Increase creativity in the resolution of contention sets.
>    [Underlying question - do we want to encourage private resolution of
>    contention sets?]*
>
>
>
> *Note that some of the terminology may need to be further defined if the
> above goals are adopted. In order to ensure that recommendations align with
> goals, it is important for the Working Group to agree on specific
> objectives.*
>
>
>
> Discussion:
>
>
>
> -- Need to think about prioritization.
>
> -- Item #1 is still agreed upon, so #2 is up for discussion.
>
> -- #4 re: “collusion” -- need to define it and why it isn’t a good thing.
> What does "collusion" mean?  How does it vary from creative problem solving
> by enlightened companies that don't buy into the "enrich ICANN" orthodoxy?
>
> -- Clearly we have goals that are in conflict with each other, but also
> how we are thinking about this is in conflict.  We want to resolve things
> and we want creativity, but we don’t always like the results (“innovation”
> versus “gaming”).
>
> -- We need to think through what these are, where they come from, and
> where ICANN gets the legitimacy to sell these.
>
> -- We should also talk about whether we deem these as quasi-public assets
> then does it follow that the only way out of a contention set is to enrich
> ICANN, or whether we can use creative problem solving.
>
> -- Statement of ICANN Board:  "Request information on likelihood and types
> of abuse resulting from new procedures: One of our major concerns in
> reading the discussions in the Supplementary Final report relates to new
> procedures that may be open to abuse in ways that have not yet been
> understood. We would like to better understand the analysis that has gone
> into determining the likelihood, and types, of abuse that may open up with
> any new procedures. We believe that any new recommendations should guard
> against bad faith applications to the extent possible. These concerns
> mostly center on the issues of auctions of last resort and on private
> auctions. . . We also take note of the abuse that becomes possible in
> alterations to the change request mechanisms.”(
> https://mm.icann.org/pipermail/comments-new-gtld-subsequent-procedures-supp-initial-30oct18/2018q4/000002.html
> )"
>
> -- Need to address the perception that if ICANN allowed private auctions
> for the next round some applicants might participate just to make money.
>
> -- When we talk about someone profit or speculate on a TLD, if you go to a
> private resolution then you need to have more than one party.
>
> -- Regarding question 2.7.4.e.2 on “gaming” or abuse of private auction,
> the Board believes that applications should not be submitted as a means to
> engage in private auctions, including for the purpose of using private
> auctions as a method of financing their other applications. This not only
> increases the workload on processing but puts undue financial pressure on
> other applicants who have business plans and financing based on their
> intention to execute the plan described in the application. In particular,
> we are concerned about how gaming for the purpose of financing other
> applications, or with no intent to operate the gTLD as stated in the
> application, can be reconciled with ICANN's Commitments and Core Values.
> https://mm.icann.org/pipermail/comments-gtld-subsequent-procedures-initial-03jul18/attachments/20180926/a3fc7066/2018-09-26CherineChalabytoCLOandJeffNeumanBoardCommentonSubproInitialReport2-0001.pdf
>
> -- Like the idea of having a list of options if someone wants to go to
> private resolution -- expanding options.
>
> -- COMMENT:  To the degree that public comment did NOT support elimination
> of private negotiations to resolve string contention, we aren't really in
> the realm of "public assets" in our policy work and we must, however, try
> to eliminate "gaming' without taking away private negotiations.  Submitting
> sealed bids at the time of application seems appropriate, but if there is a
> Community Priority Application or if there is a Intent-To-Object is filed,
> then the bids should be able to be revised because the value of the TLD is
> different in terms of costs the applicant is facing.
>
> -- If private resolution results in $$$ changing hands instead of funding
> some community agreed upon ICANN function (Like Root zone governance or
> RIRs) It does affect everyone.  We have an opportunity to bolster ICANN’s
> effectiveness and legitimacy.
>
> -- But no one had to apply to start with.  The funds are not an ICANN
> entitlement.
>
> -- The program should not be a means for ICANN to profit from the program
> either. We have agreed that the program is intended to be cost-recovery.
>
> -- Need to get back to the theory before we start talking about
> mechanisms.  There seems to be varying points of view.
>
> -- The only mechanism that got support in the comments was an auction.
> Ultimately we ended up with auctions as the preferred mechanism for
> resolving contention sets.
>
> -- Question: How restrictive is the comment from the Board (see above)?
> Answer: This was a comment, but not meant to be an official Board
> position.  We asked all the groups to comment.
>
> -- Don’t think current auction proceeds report is relevant to this
> discussion.
>
> -- Look at what we are trying to achieve.
>
> -- In that Board comment to the supplemental report they parsed out
> private auctions that they had concerns about.  This WG had parsed out
> private auctions version other private resolution mechanisms.  Are we
> lumping together all private resolutions in this discussion?
>
>
>
> Specific Goals:
>
>
>
> *Goal #3:* *Reduce the risk of “bidding wars” in which the winner
> ultimately overpays for the TLD. a. Tentative, related goal for discussion:
> encourage applicants to bid their true value for a TLD.*
>
>
>
> -- Any resolution that involves some sort of payment there is the
> implication that is somehow wrong -- relates to goal #3.  There may have
> been overpayment in the previous round, but the value of the TLD is
> arguably what someone is willing to pay for it, which depends on all sorts
> of factors, including not allowing someone else to have it (that risk).
>
> -- Is there anyone that things that #3 should stay as a goal?  Support to
> remove it as a goal; support to keep it.
>
> -- Concern with the Vickrey model -- could potentially have someone
> overpay since an applicant may not have enough information to make a value
> judgment.
>
> -- Remove the first part about overpaying and keep “Encourage applicants
> to bid their true value for a TLD”.  That language keeps to the spirit of
> not up-bidding in auction to get a bigger payout as the loser
>
> -- How about we encourage "realistic value"?
>
> -- Why would an applicant not bid/pay a "true" or "realistic" value?  I
> don't understand.  Either bid/pay what you think it's worth or not.
>
> -- How do you decide what the true value is?  It’s only known to the
> applicant.  What is the consequence if someone pays what someone else
> thinks is excessive?
>
>
>
> ACTION: Bracket language change -- delete text up to: “Encourage
> applicants to bid their true value for a TLD”.
>
>
>
> *Goals #1 and #2:*
>
>    1. *resolve contention between them within a pre-established
>    timeframe**
>    2. *if there is no mutual agreement, a claim to support a community by
>    one party will be a reason to award priority to that application. If there
>    is no such claim, and no mutual agreement a process will be put in place to
>    enable efficient resolution of contention*
>
>
>
> Goal #1:
>
> -- Re: “pre-established timeframe” -- not sure there was one in the
> previous round.
>
> -- Once every application in the contention set passed all of the hurdles
> then ICANN said that they would start auctions in X days if there was no
> resolution, but parties could request extensions.  Applicants in a
> contention set were notified when an auction was scheduled - they could
> also request to postpone.
>
> -- Agree that this is still a goal.
>
>
>
> *Goal #2: *
>
> -- Comments supported auctions as a mechanism with some limitations.
>
>
>
> ACTION: Proposal to change #2: *If there is no such claim, and no mutual
> agreement a[N AUCTION] process will be put in place to enable efficient
> resolution of contention”*
>
>
>
> *Goal #4:* *Reduce collusion, profiteering, and/or speculation,
> especially as it relates to financial transactions external to the program
> (Note, while this is not an explicit goal for the mechanisms of last
> resort, it has been discussed as a motivation for altering the auction
> mechanism).*
>
>
>
> -- Substitute “bid-rigging” for “collusion”?
>
> -- Collusion is a secret cooperation or deceitful agreement in order to
> deceive others, although not necessarily illegal, as is a conspiracy. A
> secret agreement between two or more parties to limit open competition by
> deceiving, misleading, or defrauding others of their legal rights, or to
> obtain an objective forbidden by law typically by defrauding or gaining an
> unfair market advantage is an example of collusion. It is an agreement
> among firms or individuals to divide a market, set prices, limit production
> or limit opportunities.
>
> -- But do we agree that "collusion" means illegal/improper practices and
> not "private settlement".  If we don't agree that then we need a different
> term instead of "collusion.
>
> -- Reduce the risk of profiteering should be a separate goal from
> collusion and/or speculation."
>
> -- Any reference to "Exclude" or "reduce" collusion will be a problem
> because private resolutions are PRIVATE and this is going to open up a
> whole mess of issues.
>
> -- Creative applicants will find a way to resolve their contention at any
> point, but sealed bid cuts most of the opportunity for “unseemly
> cooperation”.
>
> I am not sure "horse trading" is actually a form of collusion - not if
> private resolution is permitted.  However, we should develop policy to
> deter application for purposes of resale and profiting from that resale -
> in other words, that is bad faith.
>
> -- Not sure what “collusion” means here.  It means something different to
> different people.
>
> -- Just want to note that Board did not use the terms 'collusion' or
> 'profiteering' in its comment.
>
>
>
> ACTION:  Add “reduce the risk” and insert before “collusion…”.
>
>
>
> *Goal #5:* *Increase transparency.*
>
>
>
> -- That goal is there in order to stop private auctions.
>
> -- When we talk about different models of auctions we need to be clear
> what we mean by “transparency”.
>
> -- Question: Are we talking about transparency in negotiations or in
> outcomes? Answer: We were focused on outcomes.
>
> -- Is it possible for the program to impose such transparency requirements?
>
>
>
> *Goal #6:* *Resolve contention more quickly.*
>
>
>
> -- Potential dependency of timing of future rounds.
>
> -- Resolving contention more quickly will require all prior elements of
> the application process (i.e. evaluations, objections, etc) to also move
> more quickly.
>
> -- If we have predictability and transparency, resolution of contention
> sets arguably would be quicker.
>
> -- Could state that the period in which parties in a contention set can
> resolve this situation can only be extended X number of times.
>
> -- In the previous rounds most contention sets moved fairly expeditiously,
> so maybe we could say, “resolve contention expeditiously”.
>
>
>
> *Goal #7: Increase predictability.*
>
>
>
> -- This is still a goal.
>
>
>
> *Goal #8:* *Encourage new entrants into the field. Which could include,
> making it easier to implement “multipliers” for certain types of
> applicants, such as those eligible for Applicant Support.*
>
>
>
> -- Still important to encourage new entrants.
>
> -- 8a looks like an implementation detail.  Regardless of policy or
> implementation, this WG has jurisdiction to cover both should we choose to.
>
> -- Need to better define “new entrants” so as to not simply introduce
> subsidiaries of existing players.
>
>
>
> ACTION: Add a new goal #11: “applications should not be submitted as a
> means to engage in private auctions, including for the purpose of using
> private auctions as a method of financing their other applications.”
>
>
>
> Start at Goal #8 for the next meeting.  Go through the goals and then see
> what mechanisms fit within those goals. Then we will prioritize.
>
>
>
> ------------------------------
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-- 
Poncelet O. Ileleji MBCS
Coordinator
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