Questions from eECOM-LAC
Forwarded on behalf of Tony Harris (please see attached document) eECOM-LAC, the Latin America and Caribbean Federation of Internet and Electronic Commerce, has been part of the group that worked for more than two years, within the context of the GNSO, to produce a consensus-based set of recommendations that would facilitate the introduction of new gTLDs. The current Draft Applicant Guidebook and related Memoranda which have been published for comment, prompt us to formulate these initial observations and/or questions. The texts referred to are in blue, and our comments are in black. Evaluation Fee The Evaluation Fee is designed to make the new gTLD program self-funding only. This was a recommendation of the Generic names Supporting Organization (GNSO). A detailed costing methodology - including historical program development costs, and predictable and uncertain costs associated with processing new gTLD applications through to delegation in the root zone - estimates a per applicant fee of $US185,000. This is the estimated cost per evaluation in the first application round. The first consideration is that this fee is substantially higher than the USD 50.000 application fee charged to applicants in the previous round. Thus new applicants are essentially suffering discrimination vis-a-vis previous round applicants, who were not burdened with such a significant application fee. It is particularly discouraging to non-profit applicant initiatives, who may not be targeting large numbers of potential registrants, and some of whom have already expressed their inability to participate due to this fee. The following statement is also noteworthy: "If ICANN receives 500 applications in the first round (as forecast), the total fees to ICANN would be approximately $92.500.000 for the first application round." (EM-Cost considerations page 3). This is a very significant amount, and it is difficult to conceive how the evaluation and processing of 500 applications, which follow a standard template format, will most probably have a limited character entry per field, and will allow limited margins for applicant confusion and data-entry errors, can justify charging almost USD 100 million... The total fee per applicant takes into account close to $US13 million invested by ICANN since October 2007 to put the design of the implementation program in place. It includes allocated staff time, direct consulting expenses and other fixed costs. This cost will be allocated across the new gTLD applications until it is reclaimed and amounts to $US26,000. Comments from the floor during the Cairo Public Forum, interestingly suggested that ICANN as a non-profit entity has no obligation to seek recovery of past expenditures from ongoing processes involving the community. We would further add that these expenses were, after all, incurred in fulfillment of ICANN's "foundational principle...to promote competition in the domain name marketplace..." Thus they might well have been spent on activities that ICANN is committed to undertake, and not be considered as "extraordinary" and requiring recovery. The fee also includes $US100,000 per applicant relating to both fixed and variable costs of processing each application. We would calculate that fixed costs relate to ICANN Staff dedication and Panel Evaluators' stipends, which combined should not be in excess of $US 25.000 per application. The Objection Filing and Applicant Response process requires both objector and applicant to pay the DRSPs, and thus does not impact ICANN with these direct additional costs. Then there is the transition to delegation phase, which would involve ICANN legal/technical staff and perhaps could justify an additional $US20.000 in variable costs. The $US100.000 would seem rather excessive. A final element of the evaluation fee is a provision for risks related to non-standard processing of applications, or the application and evaluation process. An analysis of these and other risk elements performed by independent specialist, Willis Inc, the world's third largest insurance broker and risk consultant. This analysis identified approximately $US60, 000 to be allocated to each application. With all due respect to this undoubtedly qualified opinion, we would point out that not all applications will necessarily result in "non-standard processing of applications" and other potential risks, and thus all applicants are being "punished" for a few potential "entangled" applications. Here again this concept was not applied to previous round applicants, and thus is discriminatory against new applicants. It is possible ICANN will over-collect or under-collect for the first round of applications. If fee collection exceeds ICANN expenses, the community will be consulted as to how that excess is to be used. Firstly the concept of "over-collect" would not appear to be an equitable practice. Since ICANN has spent "close to $US13 million" which includes direct consulting expenses for the implementation program, it would seem logical that some degree of certainty on the costs could have resulted, that could considerably reduce any potential for "over-collection". DRSP Fees 3.3.2 Response Filing Fees At the time an applicant files its response, it is required to pay a nonrefundable filing fee in the amount set and published by the relevant DRSP, which will be the same as the filing fee paid by the objector. If the filing fee is not paid, the response will be disregarded. This does not seem fair to the applicant, who must pay a significant Application Fee as it is, which already includes a provision for "risks" in the amount of $US 60.000, plus the $US 100.000 "relating to both fixed and variable costs of processing each application". It is appropriate that the objector pay the filing fee, as this will lessen the posibility of "spurious" objectors coming forward. Annual Registry Fee Building on existing registry fee models, new gTLD registry fees are projected to be the greater of $75.000 of approximately 5% of registry transaction revenue. We respectfully suggest that this is unfair on new entrants, and that it would be far more just to apply a percentage fee at least for the first three years of operation, to give the new registry time to develop a registrant customer base. One alternative would be to apply this percentage concept only to non-profit applicants. To avoid any "gaming" of this option, non-profit applicants should be entities that have been duly registered/incorporated as such, at least two years prior to application date. It is obvious that the enforcement of a high Annual Registry Fee, will most likely result in higher costs to the end registrant, and will thus be in detriment of market development, and the generation of more competition in the domain namespace. To Summarize The initiative to introduce new gTLDs into the namespace, will contribute substantially to the fulfillment of ICANN's foundational principle "to promote competition in the domain name marketplace". It would seem essential that, in the eyes of the global community, ICANN not be seen as turning away potential new entrants from the non-profit, cultural, indigenous community and NGO sectors, by demanding overwhelming payments from them which preclude their participation. ICANN deserves better... We would thus urge ICANN to reconsider the fee structure as it applies to new applicants, with a view to: * Reducing the Application Fee * Refraining from the 'minimum fee' stipulation for the Annual Registry Fee, at least during the initial 3 years of operation of the new string. * Eliminating the requirement for applicants to pay DRSPs when responding to an objection. Glen de Saint Géry GNSO Secretariat gnso.secretariat@xxxxxxxxxxxxxx http://gnso.icann.org Attachment:
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