Re: [soac-newgtldapsup-wg] Q&A RYC/JASWG - version 3

[Rafik Dammak <rafik.dammak@xxxxxxxxx>]

Hello Karla,

thank you for sending the document,
unfortunately we couldn't reply to Wolf-Ulrich questions today , can you
Karla post his questions again so maybe we can work on them at the mailing
list ?

Best Regards,

Rafik

2011/5/20 Karla Valente <karla.valente@xxxxxxxxx>

> Dear all,
>
>
>
> Please see the version 3 of the RyC responses below (also attached). I
> believe I incorporated Cintra’s feedback as well as language from CLO as
> discussed today.
>
> Eric, could you please make the revision you mentioned on the document?
>
>
>
> Any other comment/change?
>
>
>
> Kind regards,
>
>
>
> 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 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.*
>
> *[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.
>
>
>
> 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.
>
>
>
> 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;
>
> ·         If it's clear there is no contention set they could raise the
> final amount of money from their financiers.
>
> The WG discussed this figure extensively and  considered it a better than
> best guess figure that was sufficiently significant to demonstrate a degree
> of viability. The WG discussed that 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 for instance, In 2004 the total marketing budget PuntCat invested in
> .cat was 2,000 euros.
>
>
>
>
>
> 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.*
>
> 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]* 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.
>
>
>
> *[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. These fees seem high.
>
> *[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.
>
>
>