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<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri",sans-serif">Thanks, Martin.
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri",sans-serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri",sans-serif">In relation to the cost breakdown, we’ll review internally what further details we are able to share without undermining our ability to obtain competitive prices from vendors
and will come back to the IRT. Do note that page 6 (question 1) of the FAQ already provides a breakdown of the implementation budget (pre-application costs).
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri",sans-serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri",sans-serif">In relation to the volume projections, thanks for sharing your recommendation and rationale for it. We’ll take this feedback to the board who will also be further considering
this question. If others on the IRT have additional or differing views, please feel free to share those. As a reminder, page 10 (question 7) of the FAQ provides further details on the deficit / excess that would be incurred if fewer or more applications than
anticipated are received in the different scenarios. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri",sans-serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri",sans-serif">Best regards,<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri",sans-serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri",sans-serif">Marika<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri",sans-serif"><o:p> </o:p></span></p>
<div style="border:none;border-top:solid #B5C4DF 1.0pt;padding:3.0pt 0in 0in 0in">
<p class="MsoNormal"><b><span style="font-family:"Calibri",sans-serif;color:black">From:
</span></b><span style="font-family:"Calibri",sans-serif;color:black">SubPro-IRT <subpro-irt-bounces@icann.org> on behalf of Martin Sutton <martin@tldz.com><br>
<b>Date: </b>Saturday, 15 June 2024 at 12:29<br>
<b>To: </b>"subpro-irt@icann.org" <subpro-irt@icann.org><br>
<b>Subject: </b>[SubPro-IRT] Request for Detailed Cost Breakdown and Application Fee Rationale<o:p></o:p></span></p>
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<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica">Dear Lars,</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica">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.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica"> </span><o:p></o:p></p>
<p class="MsoNormal"><b><span style="font-size:10.5pt;font-family:Helvetica">Cost Breakdown</span></b><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica">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.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica">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). </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica">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). </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica">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). </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica"> </span><o:p></o:p></p>
<p class="MsoNormal"><b><span style="font-size:10.5pt;font-family:Helvetica">Volume Projections</span></b><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica">Marika requested feedback on the application volume and related fees. Like many, I was also very surprised by ICANN org’s conservative estimates.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica">Several factors suggest an increased number of applications for the next round:</span><o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<ul type="disc">
<li class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;mso-list:l0 level1 lfo1">
<span style="font-size:10.5pt;font-family:Helvetica">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><o:p></o:p></li><li class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;mso-list:l0 level1 lfo1">
<span style="font-size:10.5pt;font-family:Helvetica">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><o:p></o:p></li><li class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;mso-list:l0 level1 lfo1">
<span style="font-size:10.5pt;font-family:Helvetica">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><o:p></o:p></li><li class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;mso-list:l0 level1 lfo1">
<span style="font-size:10.5pt;font-family:Helvetica">Historical data: The last round anticipated 500 applications but received nearly 2000, despite minimal outreach efforts.</span><o:p></o:p></li></ul>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica">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:</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica">Fee set at $220k with 1,500 applicants:</span><o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<ul type="disc">
<li class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;mso-list:l1 level1 lfo2">
<span style="font-size:10.5pt;font-family:Helvetica">Surplus generated ($330m received vs. $295m total costs)</span><o:p></o:p></li><li class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;mso-list:l1 level1 lfo2">
<span style="font-size:10.5pt;font-family:Helvetica">Possible refund to applicants ($35k each, approximately 50% of the contingency element), resulting in net fee $185k </span><o:p></o:p></li><li class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto;mso-list:l1 level1 lfo2">
<span style="font-size:10.5pt;font-family:Helvetica">The outcome satisfies both ICANN and the applicants.</span><o:p></o:p></li></ul>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica">A 1,500 application volume offers a balanced approach, ensuring reasonable pricing to attract applicants while minimizing fiduciary risks for ICANN org.</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica">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. </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica">I look forward to receiving the detailed information and any feedback on the volume figure and scenario above.</span><o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica">Kind regards,</span><o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:Helvetica">Martin</span><o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal"><b><span style="font-size:10.5pt;font-family:Helvetica;color:black">Martin Sutton</span></b><span style="font-size:10.5pt;font-family:Helvetica;color:black"><br>
Co-Founder, TLDz<br>
martin@tldz.com<br>
+44 (0)7774 556680<br>
<a href="http://tldz.com">Tldz.com</a></span><span style="font-family:Helvetica;color:black"><o:p></o:p></span></p>
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