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

[Avri Doria <avri@xxxxxxx>]

Hi, 

I will do my best to respond to some of the issues in line.


On 25 Mar 2011, at 12:29, Mike Silber wrote:

> 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?

I do not think that an absolute number will be set.
We are working on defining the conditions for qualifying.

Already have outline a number of those in the report.

Additionally there is a presumption that we are targeting those who could not 
apply without help.  Difficult to define, but that is the goal.

But the question you are asking is exactly the question one of the sub teams is 
working on.


>>> 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.

In general we were against including entrepreneurs.  But the feedback we got 
from Afralo and others pointed out that the notion of the non profit is not 
universal and that in some places it will have to support small entrepreneurs.

>>> 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?

How such a thing to be identified and set up is one of the current work items 
for this Working Group.  


>>> 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?

Who defines 'really need.'  From a cultural perspective or a small language 
community, the answer may be yes if the culture or community wants to 
survive/thrive in the digital world.  Some people don't think any new TLDs are 
needed, so to them of course no one really needs it.  Some people see TLDs as a 
purely business issues so to them, no cultural entities really need one.  Some 
people think that .com is sufficient for businesses and that only the cultural, 
and linguistic communities need new TLDs and the only reason to allow 
businesses to apply for them is to create a program that has enough economy of 
scale so that the cultural and linguistic can get the TLDs they need at a lower 
cost.  the notion of who really needs a TLD is quite problematic as far as i 
can tell.

>>> 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?

I have not seen one?

> 
> Have staff ever been asked the question (other than through this milestone 
> report - the status of which is unclear)?

Good question.

> 
> If not - I suggest this WG pull out a series of questions for staff and does 
> not rely on really dangerous assumptions.

Good idea.

> 
> 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?

Not that I know of.

> 
> Who should do it?

We suggested that this WG together with the staff take a look at this.  The 
chartering organizations did not accept that we should work on this.  So 
perhaps this is something that the Board itself can work on based on our 
recommendation that this needs to be looked at by someone.  After all, who does 
staff answer to other than the Board?

> 
> Have they been asked to perform such a review (except in the milestone report 
> .... the status of which is uncertain)?

We submitted the milestone report as the final report of the work done under 
the first charter for the group.  It is up to our chartering organization to 
bless it and pass it on to the Board for implementation. I know the GNSO has 
not done so, and  I do not think ALAC has either.  In the mean time we got 
further questions from the Board which have inspired the charter's extension - 
the issues we are working on now.


>> 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?

Wouldn't that involve redoing the work of the first report?  Getting to the 
consensus statement was quite of bit of work and took quite a bit of time.  To 
recheck for consensus could involve a really long deviation from the new work.  
I suggest that we should be working on our current charter items and not the 
items of the past.

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

I would not support such a call at this point on the work that is already done 
and passed on.

> 
> 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).


I think we will have to ascertain the level of support we have for the 
solutions we propose to the current charter items.  But that does not involve 
ascertain the level of consensus on the original wrk the group did.

a.