Good morning

I just wanted to note what a very useful and comprehensive note this was, one I am sure the UK and many in GAC would completely agree with.  I am sure you are correct in noting the potential demand; I recall speaking to several entities in 2012 who had missed the boat for one reason or another.

The fundamental concern of GAC, as expressed in Kigali and as you will see in Communique, is ensuring there are applications from developing countries.  Here the amount of fee is critical; as it is for applications under Application Support Programme (ASP) where only 75% of fee may be covered.  Having money back later is not useful for these applications.

Best

Nigel

Sent from Outlook for iOS

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From: SubPro-IRT <subpro-irt-bounces@icann.org> on behalf of Martin Sutton <martin@tldz.com>
Sent: Saturday, June 15, 2024 12:28:28 PM
To: subpro-irt@icann.org <subpro-irt@icann.org>
Subject: [SubPro-IRT] Request for Detailed Cost Breakdown and Application Fee Rationale

Dear Lars,

As requested by Xavier in the last IRT meeting, I am writing to provide more specifics on the level of granularity requested on the application and RSP fees and to provide rationale for using the 1,500 applications volume as the basis for determining the application fee.

Cost Breakdown

To assist ICANN, it is crucial to have more detailed information on cost breakdowns. Many of us have dedicated significant time to reviewing and improving the previous round, and we are passionate about ensuring the program’s effective implementation. While staff turnover means some may lack experience from the last round, the IRT team’s experience is invaluable for refining implementation plans to ensure they achieve their intended goals efficiently and effectively.

Xavier asked for specifics on the information needed. At a minimum, I suggest a detailed breakdown of line items, distinguishing between fixed and variable costs that indicates when these costs would be incurred (e.g., pre-application vs. post-application window). 

I understand ICANN org’s concerns about publishing information that could impact vendor negotiations. However, this should not be an issue.  Even if vendors gain some insight into budgeted costs, it would only be beneficial as they would need to come in lower on price and service capabilities and are still competing against other vendors.  In fact, transparency might improve the quality of RFP responses. As Xavier noted, some functions include multiple vendors, thereby not providing any helpful insights on the projected budget for the service(s). 

Any detailed information on the breakout of the $4.1m RSP Pre-Evaluation would also be appreciated, along with breakdown of the $22 million costs associated with the 2012 Technical and Registry Operation Evaluation (referenced in the FAQ).  

Volume Projections

Marika requested feedback on the application volume and related fees.  Like many, I was also very surprised by ICANN org’s conservative estimates.

Several factors suggest an increased number of applications for the next round:

• Improved awareness and outreach: A significant budget has been allocated for this effort, which should lead to broader, global interest and resulting volume. ICANN did not undertake this activity in the last round and these efforts should result in a broader audiences resulting in a higher volume.  
• Increased relevance of TLDs: The digital landscape has evolved significantly since 2012, from new technologies and industries to new threats requiring organizations to protect their customers and their businesses.
• Smoother process: The next round is expected to be more predictable and streamlined, attracting those who chose to wait for a more refined process.
• Historical data: The last round anticipated 500 applications but received nearly 2000, despite minimal outreach efforts.

Given these factors, 1,500 applications is a conservative volume estimate. Based on the projected costs and revenue provided, I envisage the following scenario could be our focus for determining the fee level:

Fee set at $220k with 1,500 applicants:

• Surplus generated ($330m received vs. $295m total costs)
• Possible refund to applicants ($35k each, approximately 50% of the contingency element), resulting in net fee $185k 
• The outcome satisfies both ICANN and the applicants.

A 1,500 application volume offers a balanced approach, ensuring reasonable pricing to attract applicants while minimizing fiduciary risks for ICANN org.

By using a reasonable yet conservative volume and resulting fees of $220k, it allows the community to move forward in an expedient manner without spending further cycles on the price, and being no further ahead in determining the expected volume. More transparency would allow the IRT and the wider community to support ICANN org more effectively, and was echoed frequently in the Final Report and the PDP meetings. 

I look forward to receiving the detailed information and any feedback on the volume figure and scenario above.

Kind regards,

Martin

Martin Sutton
Co-Founder, TLDz
martin@tldz.com
+44 (0)7774 556680
Tldz.com

Illumiati Limited. 77 Camden Street Lower, Dublin, D02 XE80

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