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

[Mike Silber <silber.mike@xxxxxxxxx>]

Avri

An excellent suggestion!

Not wanting to re-litigate that report (however you do know my views 
about it), some questions:
On 25/03/2011 09:00, Avri Doria wrote:
> Hi,
>
> We already have proposals for ways to reduce fees in the Milestone report, 
> section 2.2.
>
> > 1. Full consensus: Waive the cost of Program Development11 (US$26,000) for 
> > applicants meeting the criteria for assistance. The US$26,000 is not part of 
> > the implementation budget, but rather to reserve repayment of previously 
> > budgeted funds. The WG expects relatively few applicants (relative to the total 
> > number of new gTLD applicants) to meet the criteria for assistance, so the 
> > financial burden of waiving these fees should be reasonable.
On what basis is this assumption (the expectation of relatively few 
applicants likely to qualify) being made? Will this WG set an absolute 
number (no more than x) or a relative number (no more than y%)? What if 
the majority of applicants qualify for assistance? How will this get 
managed and by whom?
> > 2. Full consensus: Staggered Fees. Instead of paying the entire fee upon acceptance of 
> > the applications, applicants meeting the criteria established for support could pay the 
> > fees incrementally (perhaps following the refund schedule in reverse). Allowing an 
> > applicant to have a staggered fee payment schedule gives the applicant more time to raise 
> > money, and investors will be more likely to back an application that passes the initial 
> > evaluation. Staggered fees enable an applicant to compete for strings that might 
> > otherwise have gone to the first and/or only group with enough money to apply. If the 
> > applicant does not proceed through the entire process, they are not "costing" 
> > ICANN the full projected amount, therefore cost recovery remains intact.
I really like this approach! It reminds me of what happens in the real 
world where entrepreneurs approach VCs and others for funding and then 
have to pay that money back. Just here the applicant is not likely to be 
an entrepreneur (criteria still awaited) so access to VC and related 
funding is more limited.
> > 3. Full consensus: Auction Proceeds. Qualified applicants receive a partial 
> > refund from any auction proceeds - for which they can repay any loans or invest 
> > into their registry, and/or the auction proceeds could be used to refill the 
> > disadvantaged applicant’s foundation fund for subsequent rounds.
Do we have any more detail on this? What part? What is the "foundation 
fund" referred to?
> > 4. Full consensus: Lower the Registry fixed fees that are due to ICANN. In lieu 
> > of the Registry-Level fixed fee of US$25,000 per calendar year, only charge the 
> > Registry-Level Transaction Fee per initial or renewal domain name registration 
> > to a fee comparable to a minimum used for other gTLDs. An annual fee of 
> > US$25,000 to ICANN is a barrier to sustainability for an applicant representing 
> > a small community. If a minimum is absolutely required, then lower this fee to 
> > 30% for qualified applicants.
Does a small community really need a gTLD? If yes - then surely it can 
find the funds to sustain it? If not - should it have applied in the 
first place? A small gTLD is making a minute contribution to the costs 
of compliance, security, stability etc. but potentially placing an 
identical burden on ICANN as far larger TLDs do. Surely this fee should 
increase and not decrease for small gTLDs?
> > 5. Full consensus: Reconsider the Risk/Contingency cost per applicant 
> > (US$60,000). The Working Group questions if ICANN really expects a total of 
> > US$30,000,000 (US$60,000 x 500 applications) in unknown costs to surface. This 
> > fee should be eliminated for applicants that meet the criteria established by 
> > the WG. If elimination is not possible, then it should be drastically reduced.
Has staff provided an answer to this?

Have staff ever been asked the question (other than through this 
milestone report - the status of which is unclear)?
 If not - I suggest this WG pull out a series of questions for staff 
and does not rely on really dangerous assumptions.
Cintra is proposing a mechanism to assist ICANN while reducing this fee. 
I am not really convinced that it works - but agree with you that the 
mechanism is not as critical right now as some of the other work.
> > 6. Consensus: The US$100,000 base cost to be reviewed in order to determine if 
> > any reductions could be made available to suitable applicants in need.
Has this review been done?

Who should do it?

Have they been asked to perform such a review (except in the milestone 
report .... the status of which is uncertain)?
> In terms of Item 6,  perhaps some further reductions based on the nature of the 
> unanalyzed 100KUSD  portion of the fee - the place where past litigation fees 
> might be buried,  neither the GNSO nor the ALAC felt that this further analysis 
> should be part of our work, despite our consensus recommendation in the 
> milestone report.
>
> What was missing, and we are working on now, were the specific criteria by 
> which one would be qualified for such fee reductions.
>
> I suggest that we do not redo the work on fee reduction, but stick with our 
> initial recommendations for reductions.
I am in agreement - if the WG still has consensus on items 1 - 6?

Possibly a call should go out to ascertain if such consensus exists?

I also think that the criteria for qualification will determine the 
amount of consensus you get on the reductions. What do I mean by this? 
Well - if an entrepreneur will qualify for assistance merely because she 
is geographically located in a LDC, but intends to run the gTLD for 
profit: the likelihood of consensus on fee reductions is low. However, 
if for profit / entrepreneurial / income generating applications will 
NOT qualify or will qualify for a far more limited reduction: consensus 
on those reductions is far higher (IMHO at least).
Regards

Mike