Re: [soac-newgtldapsup-wg] charter language
- To: "soac-newgtldapsup-wg@xxxxxxxxx" <soac-newgtldapsup-wg@xxxxxxxxx>
- Subject: Re: [soac-newgtldapsup-wg] charter language
- From: Alan Greenberg <alan.greenberg@xxxxxxxxx>
- Date: Wed, 12 May 2010 00:23:49 -0400
At 11/05/2010 10:19 PM, Andrew Mack wrote:
I think we're making two assumptions here if I'm understanding correctly:
1) That the $185k is a good number -- i.e. what it needs to be for
cost recovery. We've already asked whether cost recovery should
include past costs but that issue doesn't seem to have been
addressed. I think there is a legitimate argument that these costs
are sunk costs, which -- if we were to write them off -- should lead
to lower application fees across the board. Please tell me if I'm
getting that wrong, but that's the way it seems to me.
The rationale was that the gTLD process development costs reduced
ICANN's ability to build its reserve, and that when received for new
applications, would go into the reserve. There was a strong negative
reaction to this at the time it was first introduced, and no change
was made. I am not optimistic that at this point, where the projected
FY11 budget is rather constrained and the contribution to the reserve
has been reduced, that this is a productive path to follow.
One possibility is that we do not argue against recovering these sunk
costs in general, but that we do recommend that they be waived for
whatever group of applicants meets the criteria developed under
Objective 1. That will be a moderately small percentage of the
overall applicant group and may be palatable.
There is one more consideration. You may have noticed that this
entire new gTLD process has gone on for far longer than originally
expected. The costs to be recovered have no doubt FAR exceed the
amounts that were used in the $185k calculation. I do have some fear
that if we try to get the overall pricing re-considered, it could
push the application fee even higher.
2) We're making the assumption that everyone should pay the same
fees -- which is what is implied in the idea of a "subsidy" versus a
two-tier pricing structure. I recognize the gaming risk in a two
tier system but am a bit concerned that if we argue for subsidies we
may be effectively saying to groups that need help (that we agree
deserve it) "once we raise some money we'll get back to you". This
seems a bit outside of the spirit of the Nairobi meeting.
The issue of some sort of subsidy or preferential pricing has been on
the table for years now. The staff answer has always been that we
need to wait for the second round. That put off the need to consider
the gaming issues, and to consider differential pricing. It also
allowed some of us to dream that the windfall revenue from auctions
might be available then. For reasons that have never been clear to
me, the staff proposals always presumes a single fee for all. The
description of how the fee was determined
makes it clear that to the extent that one could forecast the number
of applications in the various categories (that is, a "category"
corresponding to a different path through the decision tree on page 9
of the document), the total costs were summed and divided by the
number of projected applications.
So, if you accept the arithmetic (which is veiled in calculations and
simulations we are not privy to, and so have no basis on which to
argue) and the principle of one-fee-fits all, we don't have a lot of
room to play here.
Arguing the one-fee-fits all principle has not been successful in the
past. Perhaps with the Board resolution, it can be raised again. But
I think that it does imply that if some fees go down, others will go up.
One way to approach a solution might be to not request a reduction in
the "application" fee, but, for our Objective 1 group, have part of
the fee deferred coupled with a reduced ongoing fee once the TLD is
operational. This would have the net effect of a reduced fee but
without actually lowered it on paper.
Should we assume that everyone pays the same fees? I'm not
sure. As Baudouin and others noted, non-English speakers (who need
translation) and Emerging Markets applicants and NGOs (who may have
less access to/budget for legal fees) are already at a disadvantage,
as these challenges function to some extent as a tax on them.
I think that if we want have ICANN revisit the issue of differential
fees, it must be done on a basis of fairness - that is, why should
those who take a simple path through the decision tree subsidize
those who take other paths. But I fear that this was not the intent
of the Board resolution, and it may not be the best use of our time.
More creative approaches such as the ones above may be more effective.
Just want us to be mindful of our assumptions.
Andrew A. Mack