Re: [soac-newgtldapsup-wg] Q&A - RyC and JAS WG - PLEASE REVIEW by Friday May 20

[Cintra Sooknanan <cintra.sooknanan@xxxxxxxxx>]

Dear Karla,

Please also refer to my responses emailled to the list earlier this week.

I do feel strongly that the insurance to cover some contingency risk is a
viable option and would like my responses particularly to that issue
included.

Thank you for your help.

Cintra

On Wed, May 18, 2011 at 8:59 AM, Elaine Pruis
<elaine@xxxxxxxxxxxxxxxxxxxx>wrote:

> Nearly a year ago the staggered fee schedule was discussed as an inverse of
> the refund schedule:
> The applicant submits the $5,000 filing fee, and then
> $50,000 at submission of application, $65,000 after the initial
> evaluation, and then the final $65,000 when they are approved for
> delegation.
>
> These figures might change if the applicants are not required to pay
> that entire fee,  but it could still follow the
> reverse schedule of how the refunds would be issued.
>
> Reasons this helps the applicant:
> No need to raise the entire amount up front.
> If the applicant gets through the initial evaluation
> and then they see they might have a contention string, they wouldn't
> have had to put out the entire fee up front.
> if it's clear there is no contention set they could raise the final amount
> of money from
> their financiers.
>
> Elaine
>
> On May 17, 2011, at 7:56 AM, Karla Valente wrote:
>
> Dear all,
>
> Please see attached (also below) the answers to the RyC questions
> summarized from today’s meeting and Eric’s e-mail (. Please review for
> accuracy and completeness. If you send me comments via e-mail on the word
> document with track changes, I can make the necessary changes.
>
> *Rafik, Carlton:* let me know what else you need from me. I assume either
> you or someone else from the WG will pass the final answer document to the
> RyC.
>
> Thanks,
>
> Karla Valente
>
> *Q&A Registry Constituency and JAS WG*
>
> The WG thanks the Registry Constituency for the comments and questions
> submitted. The answers can be found below.
> On a general note, the WG notes that criteria different from matrix.
> Criteria was part of the charter, but matrix not.
>
> *3.2 Notes on Financial Need*
> The overriding consensus of the WG is that financial need and capability is
> the primary criteria for determining eligible applications. Such need and
> capability is to be demonstrated through the following criteria:
> 1.            Applicants must be capable of of contributing $45,000 towards
> ICANN's application fee, unless ICANN waives, or lowers application fees.
> 2.            Where applicants anticipate scheduled fees, such as for
> extended evaluation, the applicant must be capable of contributing a quarter
> of the scheduled fees.
> *[RYSG]  How was this determined? Is it sufficient to demonstrate
> viability? Some explanation of the WG thinking on this would be helpful.*
> 3.            Applicants must be capable of contributing $45,000 towards
> registry operational costs, if the applicant proposes to operate its own
> registry platform. If the applicant proposes to share registry operational
> costs with other qualified applicants, the applicant must be capable of
> contributing the pro- rated proportional share of this cost.
> *[RYSG] Is the $45,000 amount an annual figure?  It might make up a very
> small percentage of operational costs.*
> *[JASWG]*  Answer to 3.2 questions:
> ICANN used figures in this range in 2000 and 2004. As the final fee is not
> yet fixed, see fee reductions, elsewhere, this minimum applicant capability
> is subject to increase, or decrease.
> Current offers of record by registry technical service providers to
> potential applicants are significantly lower than this figure. The total
> marketing budget PuntCat invested in .cat was 2,000 euros.
>
> 4.            Applicants must be capable of of contributing $45,000 towards
> registry continuity operational costs, if the applicant proposes to fund its
> own continuity operation. If the applicant proposes to share registry
> continuity operational costs with other qualified applicants, the applicant
> must be capable of contributing the pro-rated proportional share of this
> cost.
> *[RYSG] It would be helpful to explain the basis for the $45,000 amount.*
> Part 4 - What benefits do qualified applicants receive?
> The WG recommends a number of different kinds of support to be made
> available for eligible applicants, which fall into the following categories:
> 4.1 Financial support/relief from ICANN
> 4.1.1 Cost Reductions
> The WG recommends the following fee reductions to be made available to all
> applicants who are determined as meeting the criteria established for
> support:
> •             Waive (consensus for this in the Milestone report) the
> Program Development Costs (US$26,000)
> •             Lower risk/contingency cost (US$60,000)
> *[RYSG] If these contingency funds are actually needed at the amount
> estimated, where would the deficit come from?*
> •             Review Base cost (US$100,000) to see if reduction can be made
> •             Cost reductions to encourage the build out of IDNs in small
> or underserved languages.
> *[JASWG]* Current offers of record by registry technical service providers
> to potential applicants are significantly lower than the $45,000 figure.
> If ICANN is correct in the cost estimates, then cost increase will be
> transferred to other applicants. Lowering fees for few applicants
> automatically rises to others.
> Regarding contingency, this is a risk cost. As applications are reviewed to
> a higher standard for eligibility, rational risk must, of necessity, be
> altered downward, reducing rational contingency funding requirements. The
> same question arises if the contingency funds actually needed are in excess
> of the amount estimated, for applications not reviewed to a higher standard
> for eligibility.
>
> *[RYSG] Does the WG believe that costs will be less for ‘IDNs in small or
> underserved languages’?  If not, what is being suggested here?*
> •             Lower registry Fixed Fees
> *[JASWG]* The WG is not making any assumptions the cost will be different
> for IDNs. This is, nonetheless, not a leveled field.
>
> *[RYSG]  Assuming the fees are reasonable with regard to services provided
> to registries, would other registries be expected to make up the deficit?
> Or does the WG believe the fees are too high?  If the latter, was any
> analysis done to support that position?*
> •             Exemption or deferment of IPv6 implementation requirements as
> possible
> *[JASWG]* If ICANN is correct in the cost estimates, then cost increase
> will be transferred to other applicants. Lowering fees for few applicants
> automatically rises to others.
> *[RYSG]  Could this put the registry at a competitive disadvantage
> compared to registries that support IPv6?*
> Further reductions recommended
> •             Reduction of the Financial Continued Operation Instrument
> Obligation to 6-12 months
> *[JASWG]* In the WG’s opinion, no. DNS providers who don't keep up with
> the market (which means IPv6 and DNSSEC  in this context) will lose business
> to those who do. However, this will not, in our opinion, be relevant to new
> registries during the initial year(s) of operation, while the IPv6
> requirement is deferred.
> In some countries the IPV6 infrastructure might not yet be there. Also, the
> cost of having theis technology is high for some applicants.
> The WG further suggests the IPV6 capability is offered to the applicants in
> need at advantageous terms.
>
> *[RYSG]  What if the registry fails?  Does the WG suggest a higher
> tolerance for failure in exchange for a smaller continued operation
> obligation?*
> *[JASWG]* The presumption of failure applies to all registries, including
> the 2000 and 2004 round applicants now, or their successors in interest,
> operating registries. The staff choice of three years of continuity funding
> rationally reflects the failure scenario for applications made by
> speculators and other uninformed investors. The eligibility criteria for
> applicants seeking support eliminates these likely-to-fail applicants.
> Eligibility criteria ensure that the likely elapsed time to continuity
> operator discovery for registries "in continuity" arising from support
> eligible applicants is significantly less than that of random speculator
> driven failures. See also the response concerning contingency risk, as the
> same higher review standard lower risk cost principle applies here.
> The WG is not suggesting high tolerance for failure, however, the WG
> believes that the continued operations following the failure is considerable
> less than the ICANN estimates.
>
> 4.1.2 - 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. Staggered fees payment enables an applicant to compete for
> strings that might otherwise have gone to the first and/or only group with
> enough money to apply.
> *[RYSG]  Staggered over what period of time?  What happens if progress
> payments are not made on time?*
> *[JASWG]* These details must be specified, but we are not yet done.
> ICANN's schedule, or process, is not under the control of the working group.
>
> Part 5 - Evaluation process and relationship to the new gTLD Applicant
> Guidebook (AG)
> The WG has determined, at this time, that best possible process to provide
> support for such applications is to be done through a process that is
> parallel to, and not a replacement of, the ICANN Applicant Guidebook. Thus,
> even after the Guidebook is formally approved, this WG can continue its work
> to refine those components of its mandate which remain unresolved. It is
> important that the AG make mention of this program and refer interested
> potential applicants to it, however it is not the WG's intention to
> otherwise affect the existing application process. To qualify for support
> applicants may be required to demonstrate that they meet this program's
> criteria on financial need and public interest; however such activity is
> intended to supplement, not replace, existing mechanisms in the AG.
> The WG had full consensus that Applicants that receive support under this
> program should repay that support as possible, and that such repayments go
> into a sustainable revolving fund used to support the future applications.
> Repayment is dependent on the gTLD Operator's financial success and will
> take the form of either
> •             a capital contribution or lump sum; or
> •             an income contribution or annual installment of until a lump
> sum is repaid; or
> •             repayment of the full or a percentage of the reduced base
> cost fee expended by the Support Development Program.
> The following broad steps did not obtain thorough evaluation or full
> consensus by the WG, but have been suggested as a starting point to this
> process and will be further refined by the WG based on the Parts 1 to 4
> above. Note the process is meant to be to be in parallel with the AG-
> 1.     the Application is assessed using the criteria described in Part 3
> and this Step takes place before the Application enters the AG process
> *[RYSG]  Is there enough time for this?*
> *[JASWG]* We hope so :-)
>
> <Q&A RyC.docx>
>
>
> Elaine Pruis
> VP Client Services
> elaine@xxxxxxxxxxxxxxxxxxxx
> +1 509 899 3161
>
>