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Will ICANN approve cheap gTLDs for poor applicants?

Kevin Murphy, October 21, 2011, 17:47:17 (UTC), Domain Policy

One of the big questions at ICANN’s 42nd public meeting in Dakar next week is whether the board of directors plans to approve subsidized new gTLD application fees for worthy applicants.

A volunteer working group known as JAS came up with a set of recommendations last month that would lower the $185,000 fee for applicants from developing nations with public benefit missions.

It was a wide-ranging set of proposals that would stretch beyond the scope of the $1 million to $2 million ICANN approved for applicant support initiatives at its last meeting in June.

Chiefly, JAS wants the application fee reduced to $45,000 for qualified developing-world applicants, meaning ICANN would have to find the funds to cover the $140,000 shortfall elsewhere.

In addition, JAS wants ICANN to set up a fund to loan money to these same applicants. It also wants these applicants to be able to pay fees on a staggered schedule.

Whether it was deliberate or not (I suspect it was semi-deliberate), the JAS wish-list seems to me to go above and beyond the support the ICANN board said it was prepared to offer in June.

I don’t think the board will grant those wishes when it meets next Friday, and here’s a few reasons why.

First, CEO Rod Beckstrom has already basically ruled out blanket fee reductions, even for poorer applicants, and he did so after the board had already discussed them.

At an ICANN panel on new gTLDs in London last month, Beckstrom was asked by an audience member if the application fee could be reduced before January.

At roughly 32 minutes into the embedded video, this is what he said:

There’s no plans to reduce the fee and I could not contemplate that happening before the program opens. The fees have been determined and there’s no process to review them, and there would be no basis at the present time because the costing estimates in the program appear to be reasonably accurate.

He went on to say that economies of scale may lead to a reduction in fees in future rounds, but did not mention the JAS recommendations at all.

As I was also on the panel, I called him on the omission later in the discussion, roughly 45 minutes into the video above. He said:

The board of directors did make a directional indication in Singapore to set aside up to a million to two million dollars for financial support for applicants…

However, it’s not a repricing of the fees, it would be some type of support for those applicants. A reduction in the application fee or effectively subsidizing the application fee is one possible concept, but what I can tell you as the CEO and as a board member is that board’s indication is one to two million dollars, not an unlimited number, so can do math and figure out what might be possible and what might not.

We’re not going to change the program fees, it just means there might be some benefit to or some support for some applicants, but it may not come in the form of that subsidy for the fee.

What we have here is JAS asking for a fundamental restructuring of the application fee in certain circumstances, and ICANN’s CEO saying that’s not likely to happen.

At that time, the JAS report had not been formally submitted to the board, but it had nevertheless been seen and discussed by the board at its two-day retreat in mid-September.

The GNSO, which had been frustrated with the cross-constituency structure of the JAS for some time, didn’t even formally approve the report before forwarding it to the board, due to time constraints.

Another indication of the board’s thinking on the JAS recommendations comes from the minutes of its Finance Committee meeting, September 15. Here’s an extract:

Staff has initiated efforts to be ready for implementation if and when approved. Establishment of a fund – a short-term mechanism for earmarking funds for applicant support, and a long-term formal mechanism for several purposes. Meeting community expectations: Board had approved US $2mm, while the JAS/GAC-ALAC recommendations would be more costly. Four tasks: developing criteria based on the JAS report plus practical concerns, developing procedures, entity for considering applications, and mechanism for holding the funds. Discussed the need to stay within the mission and purpose of ICANN and the ability to set-up special funds.

There’s no mention of application fees, but there is an acknowledgment that the JAS recommendations would be more expensive to implement than just the $2 million ICANN has already set aside.

There’s also talk of “practical concerns” and the “need to stay within the mission and purpose of ICANN”, all of which says to me that there’s a worry JAS asked for too much.

We’ll have to wait until next Friday to find out for sure, but my guess is that the board will likely side with ICANN’s bean-counters and that the JAS will not get much of what it asked for.

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Comments (3)

  1. up.biz says:

    Nice and useful information, Thanx for such a detailed article with video.

  2. Avri Doria says:

    One thing that your report, good though it is, left out is that the fee reduction is not only a JAS WG request but also the Advice of the both the GAC and the ALAC.

    But more that just advice, it is really a key to determining whether ICANN understands ‘in the public good’ to mean it has to serve more than just the interests of the rich? Or does ICANN accept that it has a mission to also serve the public good of applicants from developing economies.

    The JAS report goes into some detail explaining that the funding neutrality of the program relies on cost recovery for only 100KUSD of the fee. The rest of the fee is earmarked for the reserve fund and for undefined risk. All the JAS is asking for is that some of the funds marked for the reserve fund be used to help applicants from developing economies have a fair chance in this process. It also indicates that the funds to be expected from auctions of some of the prime gTLD real-estate be used later to replenish an already large reserve fund.

    So the question for the ICANN Board boils down to, what is more important, equitable treatment of applicants from developing economies, or a big fat reserve fund?

  3. Philip Corwin says:

    Whatever monies ICANN devotes to a JAS program don’t come from “the rich” but from registrants, who provide the overwhelming majority of all ICANN funding via domain registration fees. New gTLD application fees have been set by ICANN to recover costs, so if they have set the right price that is a zero sum game that provides no net “profit” from which to provide applicant subsidization. As for cost recovery from JAS-supported applicants, only time will tell if that goal can be realized.
    This is not to deny the importance of making the new gTLD program relevant to the developing world and not just to developed world entrepreneurs and corporations. But JAS is a first step down the worrisome road of cross-subsidization within ICANN and has to be very carefully designed and monitored lest it set the precedent for ICANN becoming a taxing and income transfer organization, something that is far outsuide its technical coordination mission. Perhaps it would be better to aim to have JAS-type funding provided by outside foundations rather than from ICANN revenues.

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