[soac-newgtldapsup-wg] Re: Q&A - RyC and JAS WG VERSION 2 - PLEASE REVIEW by Friday May 20

[Cintra Sooknanan <cintra.sooknanan@xxxxxxxxx>]

Dear JAS Members,

Please see my reviewed draft below for your kind attention and expeditious
comment. I have done some shifting of text with it and made some additions
in blue to aid readability.

Thanks in advance for your responses/approval and to Karla for her
assistance.

Best regards

Cintra



On Wed, May 18, 2011 at 10:37 PM, Karla Valente <karla.valente@xxxxxxxxx>wrote:

> Dear Cintra, Elaine and all:
>
>
>
> Please see attached (also below) the revised responses incorporating
> Cintra’s and Elaine’s answers received via e-mail. It would be great if you
> could review before our Friday meeting.
>
>
>
> Let me know what else I can do to help.
>
>
>
> Thanks,
>
>
>
> Karla
>
>
>
> *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 are different from matrix.
> Criteria was part of the charter, but matrix is 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.*
>
> *
> *
>
>
>
> First Milestone Report states that the applicant must be able to cover half
> the costs of the AG process.
>
> 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.*
>
>
*[JASWG]*  Answer to 3.2 questions:

ICANN previously used figures in this range in 2000 and 2004. As the final
fee is not yet fixed (see fee reductions and 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 e.g. The total marketing budget PuntCat
invested in .cat was 2,000 euros.




> 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.
>
> **
>
*[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?*



> *[JASWG]* As stated above, current offers of record by registry technical
> service providers to potential applicants are significantly lower. But, if
> ICANN is correct in the cost estimates (both for this figure and the $45K
> above), then any cost increase will be transferred to other applicants and
>  lowering fees for few applicants automatically rises to others.A deficit or
> mitigation of risk can also be catered for in several ways not yet
> explored by the WG, with Insurance being one possible mechanism. There seems
> to be confusion as to what this $60K figure is meant to represent, which
> requires clarification from staff.
>
 Also regarding contingency or risk costs, as applications are reviewed to a
higher standard for eligibility, then rational risk (must of necessity) be
altered downward. Thereby reducing rational contingency funding
requirements. The same question arises if the contingency funds actually
needed are in excess of the amount estimated for regular 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.
>
> What is being suggested is that ICANN consider support build out of IDN
> language applications and there are cost reductions for an additional IDN
> language application when the Applicant is already applying for a Latin
> script string.
>
>
>
> **
>
•           Exemption or deferment of IPv6 implementation requirements as
possible

> *[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. IPv4 numbers are starting to be treated
> as an asset with financial value; e.g. Microsoft recently paid $11 per
> IPv4 address. These companies wait, or even find it in their interest to
> obstruct, while the underprivileged battle against the bugs in IPv6. It
> makes no sense for anyone to be a pioneer in transitioning to IPv6; it only
> makes sense to go there as and when others go there as well. At that
> point 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.
>


> 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, 
> implementation
> is likely to come with a host of problems and he cost of having their
> technology is high for some applicants. It is unconscionable to expect the
> developing world applicants to tackle these problems on their own, therefore
> it should be deferred or some form of special support be given (so that 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).
> The staff's 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 eliminate these
> likely-to-fail applicants, as the criteria ensure that the likely elapsed
> time to continuity operator discovery failure (for registries "in
> continuity" arising from support eligible applicants) is significantly
> less, than that of random speculator driven failures. As stated above inthe 
> response concerning contingency risk, as the same higher review standard is
> utilised, a 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 considerably
> less than the ICANN estimates.
>


> Such lower cost for the financial continued operation instrument
> obligation can also be catered for in several ways not yet explored by the
> WG e.g. insurance
>

>
> 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]*
>
Nearly a year ago the staggered fee schedule was discussed as an inverse of
the refund schedule:

It was suggested that 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.



Here are few reasons the WG believes 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; and

·         If it's clear there is no contention set they could raise the
final amount of money from their financiers.

The full details must be specified, but have not yet been fully explored by
the WG. ICANN's schedule or process is not under the control of the working
group. Therefore the period of time and points of payment depend on the
unbundling of the AG, which must be given by staff. If payment is not made the
WG must consider and discuss the options for the applicant e.g. the
application is put on hold subject to the sunset period defined.

>
>
> 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 :-), the WG needs to know when the gTLD program will
> commence to answer this.
>
>
>
>
>
> *From:* Cintra Sooknanan [mailto:cintra.sooknanan@xxxxxxxxx]
> *Sent:* Wednesday, May 18, 2011 7:17 AM
> *To:* Karla Valente; SOAC-newgtldapsup-wg@xxxxxxxxx
> *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
>
>
>
>
>
>
>