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<p class="MsoNormal" style="margin: 0cm; font-family: Aptos, sans-serif;"><span style="font-family: Helvetica; font-size: 14px;">Dear Lars,</span></p>
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<p class="MsoNormal" style="margin: 0cm; font-family: Aptos, sans-serif;"><font face="Helvetica" style="font-size: 14px;">As requested by Xavier in the last IRT meeting, I am writing to provide more specifics on the level of granularity requested on the application
and RSP fees and to provide rationale for using the 1,500 applications volume as the basis for determining the application fee.<o:p></o:p></font></p>
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<p class="MsoNormal" style="margin: 0cm; font-family: Aptos, sans-serif;"><b><font face="Helvetica" style="font-size: 14px;">Cost Breakdown<o:p></o:p></font></b></p>
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<p class="MsoNormal" style="margin: 0cm; font-family: Aptos, sans-serif;"><font face="Helvetica" style="font-size: 14px;">To assist ICANN, it is crucial to have more detailed information on cost breakdowns. Many of us have dedicated significant time to reviewing
and improving the previous round, and we are passionate about ensuring the program’s effective implementation. While staff turnover means some may lack experience from the last round, the IRT team’s experience is invaluable for refining implementation plans
to ensure they achieve their intended goals efficiently and effectively.<o:p></o:p></font></p>
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<p class="MsoNormal" style="margin: 0cm; font-family: Aptos, sans-serif;"><font face="Helvetica" style="font-size: 14px;">Xavier asked for specifics on the information needed. At a minimum, I suggest a detailed breakdown of line items, distinguishing between
fixed and variable costs that indicates when these costs would be incurred (e.g., pre-application vs. post-application window). <o:p></o:p></font></p>
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<p class="MsoNormal" style="margin: 0cm; font-family: Aptos, sans-serif;"><font face="Helvetica" style="font-size: 14px;">I understand ICANN org’s concerns about publishing information that could impact vendor negotiations. However, this should not be an issue. Even
if vendors gain some insight into budgeted costs, it would only be beneficial as they would need to come in lower on price and service capabilities and are still competing against other vendors. In fact, transparency might improve the quality of RFP responses.
As Xavier noted, some functions include multiple vendors, thereby not providing any helpful insights on the projected budget for the service(s). <o:p></o:p></font></p>
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<p class="MsoNormal" style="margin: 0cm; font-family: Aptos, sans-serif;"><font face="Helvetica" style="font-size: 14px;">Any detailed information on the breakout of the $4.1m RSP Pre-Evaluation would also be appreciated, along with breakdown of the $22 million
costs associated with the 2012 Technical and Registry Operation Evaluation (referenced in the FAQ). <o:p></o:p></font></p>
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<p class="MsoNormal" style="margin: 0cm; font-family: Aptos, sans-serif;"><b><font face="Helvetica" style="font-size: 14px;">Volume Projections<o:p></o:p></font></b></p>
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<p class="MsoNormal" style="margin: 0cm; font-family: Aptos, sans-serif;"><font face="Helvetica" style="font-size: 14px;">Marika requested feedback on the application volume and related fees. Like many, I was also very surprised by ICANN org’s conservative
estimates.<o:p></o:p></font></p>
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<p class="MsoNormal" style="margin: 0cm; font-family: Aptos, sans-serif;"><font face="Helvetica" style="font-size: 14px;">Several factors suggest an increased number of applications for the next round:</font></p>
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<ul class="MailOutline">
<li><span style="font-family: Helvetica; font-size: 14px; text-indent: -18pt;">Improved awareness and outreach: A significant budget has been allocated for this effort, which should lead to broader, global interest and resulting volume. ICANN did not undertake
this activity in the last round and these efforts should result in a broader audiences resulting in a higher volume. </span></li><li><span style="font-family: Helvetica; font-size: 14px; text-indent: -18pt;">Increased relevance of TLDs: The digital landscape has evolved significantly since 2012, from new technologies and industries to new threats requiring organizations to protect their
customers and their businesses.</span></li><li><span style="font-family: Helvetica; font-size: 14px; text-indent: -18pt;">Smoother process: The next round is expected to be more predictable and streamlined, attracting those who chose to wait for a more refined process.</span></li><li><span style="font-family: Helvetica; font-size: 14px; text-indent: -18pt;">Historical data: The last round anticipated 500 applications but received nearly 2000, despite minimal outreach efforts.</span></li></ul>
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<p class="MsoNormal" style="margin: 0cm; font-family: Aptos, sans-serif;"><font face="Helvetica" style="font-size: 14px;">Given these factors, 1,500 applications is a conservative volume estimate. Based on the projected costs and revenue provided, I envisage
the following scenario could be our focus for determining the fee level:<o:p></o:p></font></p>
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<p class="MsoNormal" style="margin: 0cm; font-family: Aptos, sans-serif;"><font face="Helvetica" style="font-size: 14px;">Fee set at $220k with 1,500 applicants:</font></p>
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<ul class="MailOutline">
<li><span style="font-family: Helvetica; font-size: 14px; text-indent: -18pt;">Surplus generated ($330m received vs. $295m total costs)</span></li><li><span style="font-family: Helvetica; font-size: 14px; text-indent: -18pt;">Possible refund to applicants ($35k each, approximately 50% of the contingency element), resulting in net fee $185k </span></li><li><span style="font-family: Helvetica; font-size: 14px; text-indent: -18pt;">The outcome satisfies both ICANN and the applicants.</span></li></ul>
<p></p>
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<p class="MsoNormal" style="margin: 0cm; font-family: Aptos, sans-serif;"><font face="Helvetica" style="font-size: 14px;">A 1,500 application volume offers a balanced approach, ensuring reasonable pricing to attract applicants while minimizing fiduciary risks
for ICANN org.<o:p></o:p></font></p>
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<p class="MsoNormal" style="margin: 0cm; font-family: Aptos, sans-serif;"><font face="Helvetica" style="font-size: 14px;">By using a reasonable yet conservative volume and resulting fees of $220k, it allows the community to move forward in an expedient manner
without spending further cycles on the price, and being no further ahead in determining the expected volume. More transparency would allow the IRT and the wider community to support ICANN org more effectively, and was echoed frequently in the Final Report
and the PDP meetings. <o:p></o:p></font></p>
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<p class="MsoNormal" style="margin: 0cm; font-family: Aptos, sans-serif;"><font face="Helvetica" style="font-size: 14px;">I look forward to receiving the detailed information and any feedback on the volume figure and scenario above.</font></p>
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</font></p>
<p class="MsoNormal" style="margin: 0cm; font-family: Aptos, sans-serif;"><font face="Helvetica" style="font-size: 14px;">Kind regards,</font></p>
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</font></p>
<p class="MsoNormal" style="margin: 0cm; font-family: Aptos, sans-serif;"><font face="Helvetica" style="font-size: 14px;">Martin</font></p>
<span style="font-size: 14px;"><br>
</span>
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<span style="font-size: 14px;"><b>Martin Sutton</b><br>
Co-Founder, TLDz<br>
martin@tldz.com<br>
+44 (0)7774 556680<br>
<a href="http://tldz.com">Tldz.com</a></span></div>
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