Dear Working Group members, Please see below the notes from the meeting today, 24 September 2018. These high-level notes are designed to help WG members navigate through the content of the call and are not a substitute for the recording, transcript, or the chat, which will be posted at: https://community.icann.org/display/NGSPP/2018-09-24+New+gTLD+Subsequent+Pro... Please also see the attached referenced documents. Kind regards, Julie Julie Hedlund, Policy Director ----------------------------------------------------------------------------------------------------------------------------------------- Notes and Action Items Actions: Call for volunteers for Initial Report public comment review: ACTION ITEMS: WG members should send an email to: gnso-secs@icann.org to volunteer as a participant or observer by 08 October. 2) Leadership and staff will send a proposed schedule of meetings. Review of Section 1.5: ACTION ITEM: Christopher Wilkinson comments/paper will go to section 2.10 of the Initial Report. ACTION ITEM: In paragraph 3 in section (f), page 22.  Fix the typo (registries vs. registrars). 1.1 Auctions: Mechanism of Last Resort: ACTION ITEM: Add text about the rationale for the drawing option to the deliberations section. 1.2 Auctions: Use of Private Auctions: ACTION ITEM: Include drawings as an option for private auctions and  add text about the rationale for the drawing option to the deliberations section. ACTION ITEM: For the Co-Chairs to send a communication to the WG to request feedback on options to avoid auctions. ACTION ITEM: Add an option on limiting the number of auctions in which a company can participate; also in the deliberations that the "draw" method will enable bad actors to force good actors to "buy them out". Input on SAC090 matrix: ACTION ITEM: We will add to this document so that when we say that the work as completed or nothing identified at this time that mean that there is nothing that needs to be changed about the way we are approaching this issue -- such as reviewing the comments from the public forum and issuing a Final Report.  Compile comments and clarifying questions prior to Barcelona by 28 Sept 2018, to get out to the SSAC by 01 October. AOB -- Comments on the Initial Report: ACTION ITEM: Co-Chairs to send an informal note to the SSAC, RSSAC, and GAC to describe the roles that we are asking for representation; but not as a formal process. Notes: 1. Agenda review/SOIs -- Greg Shatan -- President and Chair of the New York Chapter of the Internet Society. 2. Supplemental Report: Review of section 1.5 continued/second reading (Start on Page 19, Section 1.5) -- Registrar Support for New gTLDs/Top-Level Domains -- Don't have any preliminary recommendations on this.  Would expect there would be strong feelings in the registrar community.  May not see this until we put this out for public comment.  How will we get feedback and what will we do to formulate recommendations? -- Likely registries will have strong views too. -- Unless there are comments in the WG to support any of these options these will remain options and we will seek feedback on these options to see if any of them rise to the level of recommendations. -- These were topics that came up as a result of going through the AGB to see if there were areas we didn't cover.  -- When we get liaisons from each of these groups it would be great to have those liaisons bringing those recommendations back to those groups to get feedback. -- The problems described are the direct result of the flawed decisions made in the past round -- anticompetitive aspects, for example.  The main point on the one hand -- make sure this doesn't happen again, on the other hand it is extremely important to make sure there is not risk to new geographical registries.  Within the present registry registration market what has happened is an inefficient...if anybody starts accumulating registries of geographic title that they aren't using geographic there will be a reaction internationally. -- A lot of these comments are related to the general topic of registry/registrar separation/structural integration -- so we may move these to comments on the Initial Report. -- This relates to whether there are things we can do within the current model that would allow registries to take certain types of action with or without the approval of registrars.   There are complications around what types of actions are/are not allowed. -- Problem is the horizontality of the new registry and the existing registries. -- Re: Recommendation that registries must use only ICANN-accredited registrars.  Has there been any discussion about the reverse of this?  Whether registrars have an obligation to support registries given that there is a very diverse range of registries and how they conduct their operations?  This we had that discussion in section 2.10 of the Initial Report.  Whether or not registrars had to carry all TLDs was based on market forces.  See: paragraph 3 in section (f), page 22.  Fix the typo. ACTION ITEM: Christopher Wilkinson comments/paper will go to section 2.10 of the Initial Report. ACTION ITEM: In paragraph 3 in section (f), page 22.  Fix the typo.

From the chat:

Rubens Kuhl: Actually, one of the ideas has already been informally discussed with registrars, and the numbers mentioned are actually based on their feedback. Rubens Kuhl: That mention above is about the phrase "Working Group members suggested a new limit of 5,000 or 10,000". Maxim Alzoba (FAITID): Are we supposed to replace anti-monopoly agency? Maxim Alzoba (FAITID): @Cristopher, could you clarify the reference to geo domains? Maxim Alzoba (FAITID): without the support of the respective government - there will be no geo application approval. Greg Shatan: Vertical Integration was a policy(non)making morass the last time around.... Cheryl Langdon-Orr (CLO PDP Co-Chair): Indeed @Greg Rubens Kuhl: "Market Research" is my suggestion. Greg Shatan: It would be cleaner if some of the registrars were not also competing registries.... Maxim Alzoba (FAITID): @Greg, is it a reference to some particular strategy? Maxim Alzoba (FAITID): I am not sure that following marketing strategies is limited Rubens Kuhl: A registrar that is not a registry could still apply to being a registry in a subsequent procedure... so even not asking VI-registrars, that doesn't prevent that from happening. Cheryl Langdon-Orr (CLO PDP Co-Chair): Yes Rubens it can become quite complex... Christopher Wilkinson: @Maxim:  1.  ICANN IS the competition regulator for the DNS. Vanda Scartezini: + 1 Chris. we need to go further with these points... Christopher Wilkinson: 2.  Suppose that non-geo use is permitted, then a large Regitrar Michael Casadevall: The question is how far must a registry and registar be seperated. It's possible for a parent organization to own both. Would that count as vertical intergration or the cases where companies merge and such. There's a lot of complexity here that would need defined and worked out. Rubens Kuhl: CW, as you can in RSEP procedures, ICANN is not a competition regulator... otherwise it wouldn't refer a new service to competition authorities,  it would just make a call. Greg Shatan: Christopher, on number 1, not de Jure but de facto. Maxim Alzoba (FAITID): the same for monopoly (ICANN is a "historical phenomena", and not one - formally) Maxim Alzoba (FAITID): or for example - a Registry accepts only local currency, and Registrars do not think it is a good idea to get involved into having this kind of accounts with banks ... Greg Shatan: ICANN is more a market maker than a competition regulator, which in a sense is worse.  A governmental competition regulator can allow or prohibit activity, levy fines, etc., without liability (though it is subject to review).  ICANN is not privileged in that way.... Christopher Wilkinson: WE Rubens Kuhl: Donna, a "must-carry" obligation was discussed, but it was ruled out since that was seem as only having merit if there was a clear channel defect, backed by economic studies. Jim Prendergast: i have a similar recollection as Rubens Christopher Wilkinson: Well, not de jure but de facto. See my comments from 2010. Christopher Wilkinson: If must carry is necessary, it is because cross-ownership results in the Registrar having incentive to prioritise its 'own' registries. Not about the size of the entities. Rubens Kuhl: CW, the most mentioned registrar people would like having "must carry" is GoDaddy, which aside from .godaddy Brand TLD is not vertically-integrated. 3. Supplemental Report: Review of sections 1.1, 1.2, 1.3, 1.4 continued Auctions: Mechanism of Last Resort Auctions: Private Auctions -- primary change to add alternatives to auctions of last resort. -- Already have in there the other options from ICANN staff; added seeking feedback on a drawing that was raised on the last call. -- Suggestion for drawing was an umbrella statement, or as an overarching concept -- could affect private auctions too. -- Also include the rationale for the drawing in the deliberations section on the benefits. -- If we do include auctions as a mechanism of last resort we should also include the recommendation that the proceeds need to be address. -- Good if we can try to get some sort of concerted communication going to the full WG to get feedback. -- Potential issue that those companies with the most resources could outbid and push others out.  Should we ask if there could be mechanisms to mitigate the possibility of monopolization of a particular strings of a sector/industry? -- Another reason we should consider to have some sort of barrier to entry.  -- Seems like one option could be to limit the number of auctions someone can participate in. -- In the Initial Report there is a general agreement that there shouldn't be any limits in the overall round or on applicants. 1.1 Auctions: Mechanism of Last Resort: ACTION ITEMS: Add text about the rationale for the drawing option to the deliberations section. 1.2 Auctions: Use of Private Auctions: ACTION ITEM: Include drawings as an option for private auctions and  add text about the rationale for the drawing option to the deliberations section. ACTION ITEM: For the Co-Chairs to send a communication to the WG to request feedback on options to avoid auctions. ACTION ITEM: Add an option on limiting the number of auctions in which a company can participate; also in the deliberations that the "draw" method will enable bad actors to force good actors to "buy them out".

From the chat:

Jim Prendergast: so propose the draw as a way to eliminate both types of auctions? Phil Buckingham: If we are to still have an ( ICANN )  auction of last resort  we  need clear recommendation of what to do with the proceeds Maxim Alzoba (FAITID): chain of P2P negotiations will used even if all auctions are forbidden (so I am not sure if it is wise to try ) Michael Casadevall: Is there a mechanism in place in case of multiple contested strings to prevent one company from essentially ending up in a de-facto monopoly on gTLDs strings (within a given sphere) Rubens Kuhl: <Still about registrars> Donuts wasn't vertically integrated until the Rightside acquistion brought Name.com with it. So the first years they were still a pure-play registry. Christopher Wilkinson: @Maxim: I know that certain ccTLDs who work with Registrars have lost confidence in the neutrality of Registrars that own competing Registries. Vanda Scartezini: Christopher.. last meeting I also commnet on the situation here in LAC region Maxim Alzoba (FAITID): @Cristopher, ccTLDs are quite diffrent, lots of local orientation instead of global with TLDs Rubens Kuhl: Strings of the same sector, perhaps ? Christa Taylor: That theory was kinda mentioned -  auctions where an applicant was applying for TLDs to 'lose' in auction and receive a financial windfall and how that might vary from an applicant with numerous differernt application and related or different industryies Rubens Kuhl: .CAR, .AUTO, .AUTOMOBILE ... Christa Taylor: #industries Rubens Kuhl: BTW, those strings were individual registries, which then formed a consortium to operate them together. Steve Chan: @Michael, the issue you are talking about seems to be potentially present whether or not there is string contention? Phil Buckingham: @ Michael  - there is nothing to stop a big  pocketed company at the moment acquiring other  TLD Registries within a  specific sector .  Do you think we should limit this ? Rubens Kuhl: "Be a dominant player" Greg Shatan: Agree with @Steve. Christa Taylor: Oligopoly Steve Chan: @all, I mention that only because it's being discussed that this topic/concept be included in section 1.1 or 1.2 and might be more applicable somewhere else Alexander.berlin backup: Another reason we need to keep the application fees HIGH! Greg Shatan: High fees favor the deep pockets, just in a different way. Michael Casadevall: I think string contention is the case here; if no one is contending a string, then either you grant it to the solo applicant or deny it Christa Taylor: Raising the application fees when you have the option of auction is very tough to justify as the fees would have to be significant - also to the detriment of legitimate applicants Phil Buckingham: Exactly Alexander . We need different application fee entry  levels Greg Shatan: @Michael, on what basis would you deny it? Michael Casadevall: Greg: I won't; I'm just saying that would be the only alternative. Rubens Kuhl: High fees is also anti-competitive, since it favors incumbents. Christa Taylor: Neat idea... Alexander.berlin backup: The "draw" method will enable bad actors to force good actors to "buy them out". Christopher Wilkinson: @ Replies: The chat is scrolling so fast and the chat window is so small that it is not possible to reslpond in real time. Maxim Alzoba (FAITID): will that prevent bunches of "5 TLD" applicants to be bought after the process is finished? Greg Shatan: @Alexander, only if you think bad actors have the “luck of the draw.” Alexander.berlin backup: No Greg: The good actors won't wait for the draw - they will pay to prevent the draw. Christopher Wilkinson: @Steve - that needs to be commented upon. If only to exclude WT5 . 1.3 Role of Application Comment 1.4 Change Requests -- Some minor changes. -- Supplemental report will go out on 12 October for comment before the ICANN meeting.  May extend the time of the comment period due to the ICANN meeting. 4. Input on SAC090 matrix -- This is not a last call.  It was meant as a last call on the matrix and not the content. -- In light of that we need to reflect the further work that the WG needs to do in these comments.  We don't refer to our need for further work and the need to review public comments. ACTION ITEM: We will add to this document so that when we say that the work as completed or nothing identified at this time that mean that there is nothing that needs to be changed about the way we are approaching this issue -- such as reviewing the comments from the public forum and issuing a Final Report. 5. ICANN63 -- All scheduled for 20 October. -- WT5 in the morning; WT1-4 in the afternoon.  WT5 is 09:00-13:15 and the full WG is 13:30-18:30 local time. -- The do conflict with the EPDP sessions, but that is unavoidable. -- First session will look at the supplemental initial report; another session to go over the rules of engagement and discussion on the sub groups. -- Will come out with the document with a high-level summary on how these groups will work.  Should be similar to how the Work Tracks have conducted their work. -- Third topic will be to discuss not the work this WG will need to do to get to completion on the Final Report, but also what else needs to be done from a community standpoint to begin the thinking on implementation for the next round. 7. AOB -- Comments on the Initial Report -- We can do a more formal request to groups for comment, if comments are not forthcoming -- or the WG members from those groups could do so.  Example would be the SSAC.  ACTION ITEM: Co-Chairs to send an informal note to the SSAC. RSSAC, and GAC to describe the roles that we are asking for representation; but not as a formal process.