Comment from Radix Registry - Unfair for applicants in Contention Sets

["Shweta Sahjwani" <shweta.s@xxxxxxxxxxx>]

We would like to bring to the attention of ICANN how the system of the
Prioritization Draw has certain flaws with respect to its management of
Contention Sets.

 

1)      Flaw Number 1: Not fair to penalize or prioritize one group of
applicants 

a.       We would like to point out that ICANN made certain policy guidance
that we and other applicants relied on to make choices about string
applications. Based on the original guidance at the time of submission of
$185,000 per application, we believed that batches of 500 applications would
be created. In that model, contention set strings were supposed to be
brought forward to the applicant with the earliest batch number, and almost
certainly the most applied for strings would have been in the first batch.
Obviously this system prioritized contention set applications, which isn't
fair to non-contention set applicants. 

b.      In the currently proposed model, the first flaw in the process is
that Contention set applicants face is that they must all wait until Initial
Evaluation results are announced for all the applicants in their contention
set in order to move forward in the process. In other words, the more
contention there is for a particular string, the more delayed will be the
resolution of that string. The contention set strings are being pushed to
the end of the process, possibly moving them by over a year after our
projections based on ICANN's original guidance. This is a material change to
the policy guidance we relied upon, and ICANN needs to align the policies of
the new system to be more fair than anything else. This model penalizes
applicants who are part of contention sets, and consequently offers relative
priority to non contention set applicants, which once again is not a fair
system.

 

Proposed Solution: The system needs to be modified such that there is no
undue advantage to either contention set applicants or non-contention set
applicants. We believe that a system that allows a Contention Set to have a
single Draw Number, which could be absolutely any Draw Number, might help
solve this problem. It would put all Contention set applicants and
non-Contention set applicants on a level playing field when it comes to
proceeding through the stages of this program. 

 

2)      Flaw Number 2: Puts applicants within a Contention Set on an uneven
playing field: Consider the situation in which Draw Numbers 1 and 1900 are
in contention. As things stand, Draw Number 1 would wait until the end of
June, when the I.E. result for Draw Number 1900 is published. Now assuming
they cannot resolve their contention between themselves, and opt for an
auction. Assume this auction is held during the first week of July. Keep in
mind the fact that post this auction, the winner would have to take a
pre-delegation testing appointment to move forward in this process. Since
there are approx 1400 unique strings, and there are only 20 pre-delegation
testing appointments per week, if Draw Number 1900 wins, he stands to get
his pre-delegation testing appointment approximately in Week Number 65 - 70.
Compare this to if Draw Number 1 wins, he stands to get his pre-delegation
appointment within 1 week. This time gap between potential delegation for
the two Draw Numbers creates 2 problems for Draw Number 1900:

a.       Draw Number 1 could expect to start receiving cash-flows MUCH
EARLIER than Draw Number 1900, thus significantly increasing the value of
the string for the former in July 2012 i.e. the time of the auction.

b.      Draw Number 1900 has to factor in the impact of hundreds of other
generic TLDs being available to the general public before his string is
delegated 65 weeks later, whereas Draw Number 1 does not have to factor this
in. Once again Draw Number 1 would value this string a lot higher than Draw
Number 1900 at the time of the auction.

Bottom-line: Draw Number 1 has a much higher relative willingness to pay in
the auction, and win it. In summary, since the time to delegation for a
particular contention set is not determined prior to the auction, it
actually forces applicants of a contention set to bid on an asset which is
effectively different for each one of them. If effectively puts all
applicants within a contention set on an uneven playing field. This makes
the system grossly unfair for contention set applicants with a higher Draw
Number. 

 

The above proposed solution in (1) of allotting a single Draw Number to the
whole contention set would alleviate this problem successfully.

 

3)      Flaw Number 3: It will result in Delayed Auctions: Continuing from
the situation in (2) above, it is obvious that given the choice, the
applicant with Draw Number 1900 would likely delay the auction as much as
possible to level the playing field between himself and Draw Number 1.
Ideally, he would delay it until Week 65, during which time pre-delegation
appointments for strings between 1901 and 1923 are available. Thereby
ensuring that he would receive the same priority as Draw Number 1 for a
pre-delegation appointment. Which once again guarantees that strings with
the highest number of applicants would be the last strings to be resolved
and delegated. Extremely unfair to Draw Number 1. 

 

Once again, the solution offered in (1) of allotting a single Draw Number to
the whole contention set would alleviate this problem successfully.

 

Warm regards,

Shweta Sahjwani

Strategic Partner Manager

Radix Registry