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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 (http://www.icann.org/en/topics/new-gtlds/cost-considerations-23oct08-en.pdf) 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.

Cheers, Andrew

Andrew A. Mack
AMGlobal Consulting

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