Re: [soac-newgtldapsup-wg] First JAS WG call - follow-up

[Andrew Mack <amack@xxxxxxxxxxxx>]

Evan,

I too was thinking about the idea of cost recovery for past efforts and trying 
to understand the logic. You say:

It is reasonable to assert that future TLD applicants should not have 
to pay for historic inefficiencies or poor decisions by staff, and that 
ICANN should not be rewarded for such behaviour. If you allow that "cost 
recovery" means specifically covering the direct expense of evaluation 
and setup of the specific application, the current fee structure can be 
reduced sharply while maintaining fidelity to the mandates.

This seems to make sense.  These past efforts are in essence sunk costs at this 
point and as the process moves forward it does not appear that ICANN will be 
struggling for resources.  Why not just "write off" these past expenses and 
move forward with actual expenses?

 
Andrew A. Mack 
Principal
AMGlobal Consulting
+1-202-256-1077  
amack@xxxxxxxxxxxx  
www.amglobal.com




________________________________
From: Evan Leibovitch <evan@xxxxxxxxx>
To: Tijani BEN JEMAA <tijani.benjemaa@xxxxxxxx>
Cc: Rafik Dammak <rafik.dammak@xxxxxxxxx>; soac-newgtldapsup-wg@xxxxxxxxx
Sent: Tue, May 4, 2010 10:58:32 AM
Subject: Re: [soac-newgtldapsup-wg] First JAS WG call - follow-up

On 4 May 2010 05:12, Tijani BEN JEMAA <tijani.benjemaa@xxxxxxxx> wrote:
 

 >
>
>
>As per the Board
>resolution, we are asked to develop a sustainable approach to providing
>support to new gTLD applicants requiring assistance in applying for and
>operating new gTLDS. One of the possible ways to provide support to apply for a
>new gTLD is to reduce the application fees.

Agreed. This is neither outside the scope of the board mandate NOR the GNSO one.

The has been a long-standing position of At-Large that an overly broad  'cost 
recovery' mandate has enabled ICANN staff to include in the gTLD fees many 
expenses that are not incurred by the real-time application process. It 
includes "historical" costs to enable ICANN to recover policy-development 
expenses of its own making -- expenses that should, theoretically, rise every 
month as ICANN expends more resources on new gTLDs before earning one cent. 
This means that the "cost recovery" includes, for instance, the cost of the 
opaque, poorly-conceived and ultimately disgraced IRT committee -- as well as 
the cost (in both money and time) of replacing it.

 It is reasonable to assert that future TLD applicants should not have to pay 
for historic inefficiencies or poor decisions by staff, and that ICANN should 
not be rewarded for such behaviour. If you allow that "cost recovery" means 
specifically covering the direct expense of evaluation and setup of the 
specific application, the current fee structure can be reduced sharply while 
maintaining fidelity to the mandates.

(It is also here where we can establish that certain "low risk" applications, 
such as uncontested community TLDs, will incur less cost to process and thus 
may be entitled to lower registration costs)

Compounding the false calculation of cost recovery is the 
rarely-stated-publicly but common sentiment (I have heard it frequently in 
informal conversation) that the current high cost, even if totally arbitrary, 
is a good technique for keeping out applicants that may not have the financial 
stability to maintain the TLD. If you can't afford $185K, the theory goes, how 
will your registry afford all the ongoing operational and compliance expenses 
that will occur if registration volume doesn't meet expectations?

I personally find such logic unacceptable but we will still need to answer it. 
Wanting to lower the cost of applications does not absolve ICANN's need to 
reasonably ensure the sustainability of registries. While acknowledging the 
realities of the free market and that some of these new registries *will* fail, 
we need to have some checks, balances, and appropriate contingencies in place.  
While that itself is out of scope of our work, I think it is necessary for us 
to recommend to ICANN that effective policies in this area are essential.

I am personally in favour of lowered fees for certain kinds of registries 
rather than subsidies and other forms of arbitrary charity. The first is a 
policy that applies to all and based on policy, the second's availability is 
dependent on outside factors (ie, how many auctions have there been in a given 
year?) and frequent changes to its "implementation details". This is also a 
matter of attitude. As a matter of publicly-minded policy ICANN should not make 
the emergence of culturally valuable TLDs -- especially non-profits -- 
dependent on the volatile handouts of others.

- Evan