Re: [soac-newgtldapsup-wg] RESENT Proposal for application fee reduction

[Eric Brunner-Williams <ebw@xxxxxxxxxxxxxxxxxxxx>]

Mike,

> > Following Peter Dengate Thrush's statement at the GAC/Board meeting
> > in March that a fee reduction will be considered for needy applicants.
> I have no recollection of such a statement being made. Can you please
> point us to the transcript?
I'll pass on that. Cintra will provide the transcript reference.

> > I propose that we suggest a fee removal/reduction
> Can you please explain the use of the term removal/reduction?
> Are you proposing the fee be waived in its entirety by the term "removal"?
> What is the preferred choice?
> If reduction - by what amount and how is this justified? If on a
> sliding scale - then using which criteria?
The series of proposals I've seen reduce, but do not eliminate the 
application fee.
Asking "what amount" assumes we've already answered the question of 
where does the money come from, assuming that Peter didn't say what 
Cintra wrote, or he did and he may change his mind (see unilateral 
amendment of registry agreement), or alternatively, that staff has 
informed us details about the structure, and its conditional waiver, 
of the application fee, which they have not.
So that's carts before horses.

Asking "how is this [a reduction] justified?" also assumes that the 
above set of offset, through external funds or reduction in fees 
required by the corporation, has a positive number, which at present, 
while non-negative, is also not yet positive.
Additionally, is the justification sought for a reduction in fee, or 
for specific reductions for specific applications? The "sliding scale" 
suggests you're asking a questions who's predicate condition we've 
actually not yet resolved.
If the former, that also is carts before horses, or at least a 
non-zero preference before we know what range of non-zero numbers form 
our working set.
If the latter, that's bales before carts before horses.

> > to apply to the legal part of the application cost.
> Having just rechecked the DAG and the supporting documentation, I
> cannot find any reference to a "legal fee". Possibly that is shorthand
> that has been used in the group for another component of the
> application fee - in which I apologise for my ignorance and ask to be
> better informed.
>
> Are you referring to the Risk Costs?
>
> I quote from the cost considerations document 04 October 2009:
>
> "3. Risk costs. Uncertain costs and costs that are harder to predict,
> or risks, include unanticipated costs such as variations between
> estimates and actual costs incurred. These costs expected value amount
> to $30,000,000, or $60,000 per application."
I'll pass on this too. Without knowing better the fine structure of 
the application fee, and any conditions associated with each element, 
forming alternatives is likely to result in confusion.
> > The legal part will instead be covered
> Covered by whom?
> > by the needy applicant by -
> >
> > a) Passing our criteria for needy applicants;
> Again - will this be a full waiver, a partial waiver or a sliding
> scale contribution.
See above.

> > b) Taking out and maintaining Indemnity Insurance to some minimum
> > coverage amount e.g. US$5million; and
> Who will take out and maintain the insurance? In whose favour? In
> respect of which incidents / occurrences?
There is at least one area of draft applicant obligation towards the 
corporation, the continuity instrument. This has been the subject of 
some discussion on the TDG-Legal list. The treatment of obligations 
should be specific to each one the corporation seeks, and the set of 
assumptions contained, which may not be universally applicable, or 
have uniform actual cost to applicants.
> > c) Contributing annually to the body evaluating the criteria for need
> Who will make this contribution?
The unreflected draft application creates a uniform obligation upon 
the part of all applicants. An alternate to the corporation as the 
entity holding instruments of indemnification requires a means to 
fulfill the application obligation, whether by the applicant or by a 
third party.
> > (suggest ICANN Non profit company created for this purpose)
> I am not sure what this means? Are you suggesting that ICANN plays
> this role or a new entity? If a new entity - who will take the
> responsibility for the new entity including establishment costs,
> appointment of a Board (or similar), staff and salaries, tax exemption
> (if applicable), location of establishment (USA or elsewhere), audit
> and audit costs and other running costs?
Most of the discussion has assumed that an entity exists that could be 
induced to provide the corporate form. Pretty much the same as the 
HSTLD AG assumed that some entity could be induced to put a seal of 
approval (for some value of "approval") on zero or more "HSTLD" 
branded TLDs.
More broadly, we assume that ICANN will exist, that a compliance 
function will exist, and so on. There are a lot of assumptions.
One of the attractions of the GNSO's model for support (direct from 
{incumbent registry operators, registrars, gTLD consultants (whatever 
those are)), is that it only offers assistance for which no necessity 
arises for a third party, to hold a bag or risk or reward.
To be fair, that form of intermediary free non-fungible assistance 
appears likely to result in "discounted dependency" relationships than 
fungible (assignable) assistance, so there are cost issues for both an 
intermediary agency (ALAC form) and an agency-free (GNSO) form of 
assistance.
Some awareness on the part of the corporation seems advisable. Just 
how informed it seeks to be is up to it. This is an attempt to find an 
alternative to the uniform obligation of the unreflected draft 
application, which may be in conflict with the Board's nominal 
indications of support for some diversity, which has some economic and 
institutional consequences.
> > a specific amount to ICANN'S gTLD Compensation Fund. This fund is to
> > be managed for the payment of losses in excess of that covered by
> > insurance or for other purposes and is to be disbursed and managed
> > solely by the body evaluating the needy criteria. See
> > http://www.sra.org.uk/sra/regulatory-framework/solicitors-compensation-fund-rules-2009.page
> I see absolutely no equivalence between grants to persons who have
> suffered losses or damage due to the actions of solicitors and the
> current situation.
>
> If you are suggesting the creation of a compensation fund for
> consumers - that is a massive exercise (which could be quite
> interesting) but would involve a policy change at gNSO (and possibly
> ccNSO) level.
>
> If you read the DAG - ICANN enforces certain rules against registries
> but does NOT step in to compensate anyone who has suffered damages.
> There is no element of the application fee that relates to 3rd party
> damage. The fees relate to ICANN's costs and risks.
I'm not going to comment on a regulatory framework I'm unfamiliar with.

> > The aim of indemnity insurance is to allow aggrieved parties to
> > directly claim against the gTLD owner through their insurance
> > provider.See
> > http://www.insuranceprofessionalindemnity.org/
> > http://en.wikipedia.org/wiki/Professional_indemnity_insurance
> > http://ezinearticles.com/?How-Professional-Indemnity-Liability-Insurance-Works&id=2658423
> > <http://ezinearticles.com/?How-Professional-Indemnity-Liability-Insurance-Works&id=2658423>
> > http://www.bytestart.co.uk/content/20/20_3/hiscox-professional-indemnity-insurance.shtml
> > http://www.sra.org.uk/siir/
> > Interestingly, we may also cater for matters dealt with by the
> > Ombudsman e.g. as set out in the link above
> > 1/.8/
> >
> > /Award by regulatory authority/
> >
> > /The Insurer will indemnify each Insured against any amount paid or
> > payable in accordance with the recommendation or determination of
> > the Legal Services Ombudsman, the Legal Complaints Service, the
> > Office for Legal Complaints (including the Legal Ombudsman pursuant
> > to sections 137(2)(c) and section 137(4)(b) of the Legal Services
> > Act 2007) or any other regulatory authority to the same extent as it
> > indemnifies the Insured against civil liability provided that the
> > Insurer will have no Liability in respect of any determination by
> > the Legal Ombudsman pursuant to section 137(2)(b) of the Legal
> > Services Act 2007 to refund any fees paid to the Insured./
> >
> > This also has the benefit of taking ICANN out of the equation as the
> > party being sued and in fact may allow ICANN to join the aggrieved
> > party in its claim if it is found that the gTLD holder also caused
> > some damage to ICANN's reputation etc.
> ICANN has never been IN the equation.
Ummmmmmmm. The original filings by IODesign named the corporation, as 
well as CORE, as respondents. There is no shortage of people making 
claims that they will sue ICANN (Professor Meuller on at least one 
occasion, Mr. Footie, etc.)
Additionally, the transactional history of the corporation and 
Verisign has included more than nominal references to suits.
> I am not sure how this proposal adds anything as it seems to be
> totally unrelated to the any version of the DAG to date or current
> practice in any TLD?
> > This is just a framework I am suggesting, we will have to modify it
> > to the gTLD process. But I think it is applicable and a good way to
> > reduce fees and build some assurance that ICANN will not have to
> > constantly be on guard for litigation.
> I really do not see how this is applicable or how it can reduce fees.
> The ICANN concern about litigation does NOT necessarily relate to 3rd
> parties.
>
> In addition - ICANN cannot force anyone to use such a process. At best
> ICANN can take out insurance - but will have to pay for it and hand
> over litigation to the insurance company.
After several readings I fail to see where there is understanding. I 
suggest taking smaller bites that may be resolved.
Eric