Re: [soac-newgtldapsup-wg] Financial instrument

[Avri Doria <avri@xxxxxxx>]

On 1 Oct 2010, at 19:41, Eric Brunner-Williams wrote:
> 
> 
>> I think it might make the recommendation more complicated and make the 
>> recommendation would get lost in the discussion.
> 
> 
> We all have our thoughts. If you prefer to offer a simple alternative to the 
> continuity instrument as-is, fine. What I wrote was to recap the mail and 
> vacation-interrupted conversation I had with Karla, and to explain that 
> "continuity" is quite different for applicants in-isolation than for 
> applicants in-cooperation.
> 

This i a business model that they or may not pick.  I do not see this group 
recommendations as putting a requirement on anyone to do so.

I also have not seen any consensus up to this point for the proposition that 
the recommended support mechanisms actually encourage such a business model.  I 
know that you do but I do not know to what extent others do. SO i encourage 
people to speak up on this proposal, one way or the other.  Should we make a 
recommendation that has the efect of encoriaging this model.

If we must do a poll, this might be one target, as I certainly have no sense of 
the WG view on this.


> One of our fundamental issues is whether our framework assumes (and promotes) 
> needs-qualified applicants acting in isolation from each other or assumes 
> (and promotes) needs-qualified applicants acting in cooperation with each 
> other.

> 
> CORE, Afilias, CoCCA, are all instances of cooperation in the registry and 
> registrar markets, as are ARIN, RIPE, APNIC, and LACNIC, and at some level of 
> abstraction, ICANN itself, as cooperation among the SOs.


Interesting way to put it.  The whole model of the new gTLD is one of 
individual applicants.  As someone who personally support ideas of collective 
behavior, i personally think it is interesting for this group to consider such 
models, but I am sure to what extent they match the opportunities presented by 
the new gTLD program or to what extent people in the group support the idea.  

Again, I have not heard many people commenting on these ideas.

> 
> If there is consensus to offer a continuity instrument related proposal, then 
> all the rational drops away and one of us, you or me or someone else, simply 
> writes the declarative prose proposal.

There are two aspects to the continuity proposal:

1. the individual requirement which I see a consensus for reducing, though the 
amount of the recommendation varies in the group

2. the idea that a collective model is another way to satisfy that requirement 
beyond the finaical bond.


>>> 
>>> This (Tijani's variation on Richard's suggestion) lowers the months at some 
>>> cost per month from 36 to 6.
>>> 
>>> What this doesn't do is provide a rational basis for the cost per month.
>>> 
>>> There is a fixed costs, the monthly reports to ICANN being one.
>>> 
>>> There are the variable costs, the minimum power, cooling, connectivity, 
>>> computational capacity, office space and staffing, for operations "during 
>>> continuity".
>>> 
>>> My first claim (really a CORE operational observation) is that both the 
>>> fixed and variable costs are so small that an operator providing back-end 
>>> services to a very few registries would write off the overhead of both 
>>> costs.
>>> 
>>> So, where a few applicants share facilities (line 253 Avri), the proper 
>>> amount the applicants should deposit as a continuity instrument is zero.

understood, but this model is not, the primary model that this grup is 
proposing, as I understand it, not do i expect it will be the primary model 
chosen by applicants.

>>> 
>>> My second claim is that where two or more registries being "continuity", 
>>> there is only nominal cost for each additional registry being "in 
>>> continuity". The incremental cost of doing the N+1 monthly report to ICANN 
>>> is nominal. The incremental cost of operations is nominal.
>>> 
>>> So, as long as some of the applicants who form shared facilities (again, 
>>> line 253) are not "in continuity", there is no additional cost from sharing 
>>> applicants going "into continuity".
>>> 
>>> Now suppose the Board rejects this too, and the applicants must all set 
>>> aside some amount representing N months (possibly 36) at a burn rate the 
>>> Board finds credible.

At the moment, I think that has to be the primary consideration.

>>> 
>>> What happens when an registry commences "continuity" operations?
>>> 
>>> Does the current operator draw from the fund or does the fund go to some 
>>> other operator, who will then draw from the fund, until the fund is 
>>> exhausted, or possibly until the operations are profitable, and the 
>>> operator (original or subsequent) replenishes the continuity fund?

>>> 
>>> Is this a "contingency" capability, or is it a transfer of resources from 
>>> an applicant meeting the "needs" criteria to an operator, perhaps one of 
>>> VGRS, AF, NS, CORE, ... that does not meet the "needs" criteria, which is 
>>> triggered at any time ICANN, or a market dominated by VGRS, AF, NS, CORE, 
>>> ..., causes small registries early in their operational history to have 
>>> revenues that don't meet expenses for a quarter?



This are good general question with two possibilities, though I am not sure to 
what extent that is a need-ortiented only question.  I have always assumed it 
was the latter, but not sure at this point that I have a good reason for that 
judgement.  As far as I know we don't yet have any practical actually to point 
to as an example of what has happened.  In some sense I would not suppose it 
might be a situational issues where the response would vary, based on the 
circumstance for the failing registry.

I wonder whether Karla, or some other sufficiently knowledgeable staff person 
can give an answer.

a.