Jeff and Cheryl - in the spirit of not only identifying problems but also providing solutions, see below proposed language that reflects my concerns as expressed during the last plenary call and earlier in the meeting about including feedback on auctions from the Initial Report. Replace the second to last paragraph of section 1.2b which starts with: Private resolutions, including private auctions, have been noted as a particular area of concern by a number of community members...... With the Following ...... While not specifically asking for feedback on private resolutions (including private auctions) during the recently closed comment period on the Initial Report, the Working Group did receive feedback by a number of community members, as well as the ICANN Board. The group has not had a chance to deliberate on this feedback as of yet but provides appropriate excerpts below for the benefit of the community as they consider this topic: ICANN Board - full comment at https://mm.icann.org/pipermail/comments-gtld-subsequent-procedures-initial-0... Regarding question 2.7.4.e.2 on "gaming" or abuse of private auction, the Board believes that applications should not be submitted as a means to engage in private auctions, including for the purpose of using private auctions as a method of financing their other applications. This not only increases the workload on processing but puts undue financial pressure on other applicants who have business plans and financing based on their intention to execute the plan described in the application. In particular, we are concerned about how gaming for the purpose of financing other applications, or with no intent to operate the gTLD as stated in the application, can be reconciled with ICANN's Commitments and Core Values. IPC - full comment at https://mm.icann.org/pipermail/comments-gtld-subsequent-procedures-initial-0... The IPC believes it would be beneficial to study abusive behavior and/or gaming that may have occurred in the 2012 round, as well as further resolution mechanisms outside of auctions. ALAC - full comment at https://mm.icann.org/pipermail/comments-gtld-subsequent-procedures-initial-0... At this point, the community does not know enough about abuse that may have occurred in the 2012 round of auctions, both ICANN and private ones. Even the legality of private auctions is in question. A study should be completed to resolve these issues. Alternatively, ICANN should explore other contention resolution mechanisms outside of auctions that may serve as more equitable (e.g., like a draw). RySG - Full Comment at https://mm.icann.org/pipermail/comments-gtld-subsequent-procedures-initial-0... The Registry Stakeholder Group believes that insufficient discussion and analysis has yet taken place in the Subsequent Procedures PDP WG on the important topic of considerations for resolution of contention sets. These include auctions of last resort, private auctions and other alternatives although a lottery solution seems to have been rejected, but without sufficient explanation as to the basis. The SubPro WG has never considered the legality of private auctions. Some members of the RySG think SubPro WG should consider the legality of such auctions as part of its work going forward. Without significant completion of the work from the CCWG new gTLD Auction Proceeds it is difficult to assess the opportunities and risks of successful last resort auctions. While the auctions of last resort have worked as a process, there may need to be additional transparency processes put in place. Known issues that have been discussed in the Sub Pro PD WG include; * During the 2012 new gTLD application round, the private auction process was not created until after applications were submitted. However, in subsequent procedures, applicants will be aware of the potential financial benefit of 'losing' in auction and it may become a commonplace component of an applicant's application strategy * Concerns that private auctions are not in the public interest because the proceeds are shared by auction participants * All auctions favor well-funded applicants and communities and minority interests are underrepresented * The legality of Private Auctions have not yet been considered or determined. We are mindful also that private auctions have permitted competitors to split among themselves hundreds of millions of dollars that might otherwise have been put to use for the public benefit if such auctions were held by ICANN as auctions of last resort. While acknowledging concerns about private auctions, the Initial Report contains one short paragraph, addressing none of these concerns in detail and providing no substantive advice or recommendations. In light of the magnitude of the issues raised by private auctions an updated and complete initial report should be considered as any final report that does not address the many issues surrounding private auctions should be considered deficient. The RySG observes that several CC2 comments have been filed, but we do not believe sufficient investigation or deliberations on these comments, or the issues they raise, have occurred, nor has the Sub-Pro PDP WG, to our knowledge, obtained sufficient data upon which appropriate deliberations could take place. Jim Prendergast The Galway Strategy Group jim@galwaysg.com<mailto:jim@galwaysg.com> +1 202-285-3699 @jimpren