Self funding Requirement
In terms of funding the new gTLD program, there are two aspects:
- Cash flow for the application process
- Final accounting to match the established budget
In terms of the cash flow for processing applications, the ICANN Staff budget figures show that $99000 USD of each fee paid is needed for processing an application. If each JAS WG eligible applicant is required to provide $45000 USD of the fee as determined by the JAS WG recommendations, then the balance of the immediate application costs would be $54000 USD. One way this balance can be covered by short-term usage of the contingency fees paid by a single non-JAS eligible applicant; i.e. an applicant paying the full fee. This means that half of the applicants could, theoretically, be processed as JAS eligible partial fee waiver applicants without affecting the cash flow of the application process. No one, however, expects that half of the applicants would be eligible for a partial fee waiver; an optimistic estimate would be that 10-20% of the applications might be able to meet the JAS WG eligibility and that would be a surprise as the eligibility conditions are rather narrow.
This, of course, leaves a deficit in the longer-term contingency fund. The assumption is that the full measure of contingency fees would need to be available before contingency costs start to accrue in the later phases of the program. The proposal is that auction funds, once they are available, would be used to cover the reallocated funds as well as the $86000 USD deficit in the fees paid by JAS WG eligible applicants. This means that for every JAS WG eligible application, $140000 USD would be taken from the auction proceeds as they become available.
While there may be some risk to the risk contingency fund in this process, it is a relatively small one as there is a near certainly of some significant auctions and if one assumes that 90% of applications will be full price applications, then out of the 500 applications budgeted by ICANN, 450 would pay the full fee and the contingency fund, after the reallocation to the application process, would still consist of $27 Million USD[1|#_ftn1]. Even if 20% of 500 applications were JAS WG eligible, 400 applications would pay the full fee and the contingency fund, after the short-term reallocation to the application process, before auction replenishment would be equal to $24 Million USD.
Likewise, if the development repayment cost were to be applied to cover the cost of fee reductions for the JAS qualified applicants, at 10% JAS WG eligible applications, would see a 'reimbursement' of $11.7 Million USD whereas at 20% JAS WG eligible applications, would see a 'reimbursement' of $ 10.4 Million USD before the deposit of proceeds obtained from the auctions.
It does appear that with this proposal there should be enough money coming in to ICANN in the short term to cover ICANN expenses in 2012-2013 budgets, and with use of expected auction proceeds to make up the difference, the ICANN coffers would be indeed be filled and the new gTLD program would pay for itself when the final project accounting was done as required by the GNSO Policy recommendations[2|#_ftn2]
[1|#_ftnref] This, and the next, are approximate calculations and assume that $60,000 USD would be reallocated to the application process and not $54000 USD per JAS WG eligible applicant.
[2|#_ftnref] This argument takes as given the appropriateness of including recovery of development costs and legal contingency costs as part of the application cost which the GNSO required be program neutral. There are many who would not accept this assumption, but that argument has not prevailed in any discussions to date.
