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

[<Mary.Wong@xxxxxxxxxxx>]

Dear all,
 
Thank you all for the hard work that's gone into this effort. Having
been graciously included on this mailing list as an observer from the
GNSO Council, I thought you might like to know that if some of this
information can be transmitted to the Council prior to the scheduled
Council meeting tomorrow (Thursday), it may be helpful to the Council as
it considers a motion relating to this group's Second Milestone Report
that has been proposed by Rafik. 
 
Thank you also for the discussions and the answers that have already
been sent to the Council relating to previous questions that had been
asked regarding the Report. 
 
Thanks and cheers
Mary

 
Mary W S Wong
Professor of Law
Chair, Graduate IP Programs
Director, Franklin Pierce Center for IP
UNIVERSITY OF NEW HAMPSHIRE SCHOOL OF LAWTwo White StreetConcord, NH
03301USAEmail: mary.wong@xxxxxxx.eduPhone: 1-603-513-5143Webpage:
http://www.law.unh.edu/marywong/index.phpSelected writings available on
the Social Science Research Network (SSRN) at:
http://ssrn.com/author=437584>>> 


From: Cintra Sooknanan <cintra.sooknanan@xxxxxxxxx>
To:Karla Valente <karla.valente@xxxxxxxxx>,
<SOAC-newgtldapsup-wg@xxxxxxxxx>
Date: 5/18/2011 10:18 AM
Subject: Re: [soac-newgtldapsup-wg] Q&A - RyC and JAS WG - PLEASE
REVIEW by Friday May 20
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 ( tel:%2B1%20509%20899%203161 )