Version 3 Working Draft

As a followup to the production of (and subsequent response to) the JAS Second Milestone Report (MR2), this document is intended to identify areas of MR2 that require clarification, detailed explanation, other refinement and revision. It is starting with MR2 and is intended to first identify, and then address, text requiring modification.

The work given to this community working group (WG) has presented enormous challenges to its membership, most of whom care deeply about reducing obstacles for proposed TLD applications by or supporting communities in developing economic environments.
The WG has determined that a detailed description of the process flow, metrics and procedures for determining whether an application meets the criteria and how this application will be dealt with is required. Given the eventual target audience of this document and our desire to have it presented and read unedited, the authors have attempted to adopt a simple format while maintaining accuracy and consistency with previous consensus.
*Part 1: WHY provide applicant support?*
*Part 2: WHEN should support be provided?*
*Part 3: WHO qualifies for support? and **HOW do we evaluate the applications?*
*Part 4: WHAT do qualified applicants get?*
*Part 5: HOW will the process work and how does it relate to the** gTLD Applicant Guidebook (AG)?*

Part 1 - Why provide new applicant support?

During the International ICANN Meeting in Nairobi in March 2010, ICANNs Board recognized the importance of an inclusive New gTLD Program and the concern expressed by ICANN stakeholders regarding the financial and technical obstacles faced by applicants from developing economies seeking to offer new gTLDs. The Board issued a Resolution (#20) at requesting ICANN stakeholders…
"...to develop a sustainable approach to providing support to applicants requiring assistance in applying for and operating new gTLDs."
In April 2010 the GNSO and ALAC co-chartered a Joint Working Group on Applicant Support, also known as the “JAS WG” (and referred hereafter as the WG), in direct response to this Board resolution. The main objective of this WG is to develop a sustainable approach to providing support to Applicants requiring assistance in applying for and operating new gTLD Registries.
In November 2010 the WG presented the Board with a Milestone Report which suggested several mechanisms for providing support to Applicants. These included cost reduction support, sponsorship and funding support, modifications to the financial continued operation instrument obligation, logistical support, technical support for applicant in operating or qualifying to operate a gTLD, and exception to the rules requiring separation of the Registry and Registrar function.
Since the release of the Milestone Report, both the ICANN Board and the Government Advisory Committee (GAC) have requested further clarification and details from the WG. And while the Board (at its Trondheim meeting) refused to approve differential pricing for applicants in need of assistance, the GAC (in its “Scorecard”) has requested that the issue be reconsidered and the WG will continue to explore this option.  At its Brussels meeting with the GAC in late 2010 held to discuss the Scorecard, the Board confirmed that ICANN could implement a differential fee schedule for applicants in need of assistance, but added that appropriate criteria and mechanisms would need to be proposed to enable it to happen.
This WG is comprised of members who support these aims and are committed to lowering the barriers to full participation in the gTLD program by a truly global and inclusive community. It is Chartered by both ICANN's At-Large Advisory Committee (ALAC) and its Generic Names Supporting Organization (GNSO); though the two charters are similar but not identical; a comparison between the two charters is available in [this downloadable document|https://docs.google.com/viewer?url=https://community.icann.org/download/attachments/9405724/ALAC-JAS-Charter-ProposedRevised-23Feb2011.doc?version=1&modificationDate=1298545040000&embedded=true&chrome=true\].

Part 2: When should support be offered? In this round or wait until later?

This WG has determined that in order to be most effective, this program (of support for in-need applications) be implemented for the first and subsequent rounds. Several reasons are provided in support of this recommendation:
* Board Resolution 2010.03.12.46-47 clearly expressed the need to ensure that the New gTLD Program is inclusive. Much of the ICANN global community, particularly from developing regions, has welcomed this decision.
* With every new gTLD application round, the market competitive disadvantage of under-served communities increases. ICANN should not cause or allow the New gTLD Program to further the gap in gTLD Registry representation from other regions. The diversity, competition and innovation the New gTLD Program could bring should be an opportunity to all around the world since the Internet is a global resource that belongs to all. ICANN has the obligation to look closely into this issue and fulfill its responsibility to serve the global public interest by allowing accessibility and competition for all around the world.
* There  is no indication whether, in subsequent rounds, fees will be reduced and, in case there is any reduction, by how much. Therefore there is no benefit in waiting.
* Informal market research by some of the WG members indicates there is built-up demand for new gTLDs, including IDN gTLDs. There is expectation for a considerable number of applications. One of the main concerns is that, without some sort of assistance program, the most obvious and valuable names (ASCII and IDNs), will be taken by wealthy investors. This may limit opportunities in developing regions, for local     community institutions and developing country entrepreneurs. Of the current 21 New gTLD Registries, 18 are located in USA and three are in western Europe (with one having a sales/marketing presence in Asia). None are located anywhere else.
* While, per policy, ICANN plans for a second round, the timeline for this to happen is, at best, uncertain. Experiences from previous rounds add to the uncertainty. For example, ICANN communicated during the last round that this was to be followed soon by new rounds, nevertheless, it is taking almost a decade for a new round to materialise. Since ICANN cannot give guarantees and certainty of when future rounds will take place, those who cannot afford to participate in the program during this round, due to the current elevated fees, is perceived as an unfair and non-inclusive treatment.

Part 3 - Who qualifies for support? and How are gTLD applications evaluated against the above criteria?

The WG has determined a number of criteria to be used in the determination of a gTLD application eligible for support and/or cost relief (in this document called the “eligible application”):
*To qualify for elibility under this program,*
*1. **The Application must demonstrate service to the public interest, including one or more of the following characteristics*
# Support by and/or for distinct cultural, linguistic and ethnic communities
# Service in an under-served language, the presence of which on the Internet has been limited
# Operation in an emerging market or nation in a manner that provides genuine local social benefit
# Sponsored by non-profit, civil society and non-governmental organizations in a manner consistent with the organizations' social service mission(s)
# Operated by local entrepreneur, providing demonstrable social benefit in those geographic areas where market constraints make normal business operations more difficult
*AND*
*2.* *The Applicant **must demonstrate financial capabilities and need*
# (See notes below)
*AND* 
*3.* *The Application must NOT have any of the following characeristics:*
# From a governmental or para-statal applicant (subject to review, see below)
# A TLD string explicitly based, and related to, a trademark (ie, a "dot brand" TLD)
# A string that is, or is based on, a geographic name
# Sponsors or partners who are bankrupt or under bankruptcy protection
# Sponsors or partners who are ubject of litigation or criminal investigation
# Otherwise incapable of meeting any of the Applicant Guidebook's due diligence procedures
*Applicants will be expected give a self-declaration that they are eligible to receive support under these criteria*

3.1 Notes on the application's public interest qualifications

3.1.1 - Support by and/or for distinct cultural, linguistic and ethnic communities

The “.cat” Catalonian TLD is seen by many linguistic, ethnic and cultural communities as a success story that has helped to preserve and indeed grow the language and culture. Many such groups -
- especially those with geographically dispersed diasporas -
- see a TLD as unifying icon that will facilitate Internet use while encouraging community growth. We would note especially, linguistic minorities protected by treaties such as the European Charter for Regional or Minority Languages and the Council of Europe Framework Convention for the Protection of National Minorities.The WG agreed that the applications by such communities, should they meet the requirements of need, should be eligible for relief/support.

3.1.2 Service in an under-served language, the presence of which on the Internet has been limited

A number of WG members have advocated support for the build out of TLD strings in non-Latin scripts by communities that use these scripts and have to date been un-served or under-served on the web. 
As a part of this, the group has identified two categories of groups that might receive support -- communities that regularly use more than one script but might otherwise be unable to afford full-price build out of two scripts; and smaller script communities whose scripts are very limited on the web.
The WG did achieve consensus that as long as the Applicant is providing build-out of a language whose web-presence is limited and they meet the other criteria we should give support. 
To address the needs of these groups, partial (but not consensus) support has been expressed for concept of “bundling” -
- that is, reducing the price of a TLD string in an “underserved” language script that accompanies a conventional application for the similar string in a Latin script. 
3.1.3 - Operation in an emerging market or nation
The WG achieved full consensus in agreeing that the criteria offered to judge applications give preference to those originating within the world’s poorer economies. Rather than having ICANN undertake the distracting task of determining where such economies are located, we would refer instead to the internationally agreed upon UN DESA list:
# Least developed countries: category 199;
# Landlocked Developing Countries: category 432; or
# Small Island Developing States: category 722.
# Indigenous Peoples, as described in Article 1 of Convention No. 169 of the International Labor Organization and the UN Declaration on the Rights of Indigenous Peoples

3.1.5 Operated by local entrepreneur, in those geographic areas where market constraints make normal business operations more difficult

While for-profit companies, private-public partnerships and hybrid entities can be eligible, the WG agrees that this support program must not be used as a substitute for conventional business risk; and the applicants set out in 3.3 are not eligible for support. It should be used to enable new gTLDs that could -
- without this program -
- be unimaginable.
Note for 3.1.3 and 3.1.5 The WG agreed that other forms of social benefit (including but not limited to: increasing skills; investment in the skills base of a target community; fostering gender balance and presence of minorities; positive contribution to regional or national economies) must be considered.

3.2 Notes on Financial Need

The overriding consensus of the WG is that financial need and capability is the primary criteria for determining eligible applications. Such need and capability is to be demonstrated through the following criteria:
# Applicants must be capable of of contributing $45,000 towards ICANN's application fee, unless ICANN waives, or lowers application fees.
# Where applicants anticipate scheduled fees, such as for extended evaluation, the applicant must be capable of contributing a quarter of the scheduled fees.
# Applicants must be capable of of contributing $45,000 towards registry operational costs, if the applicant proposes to operate its own registry platform. If the applicant proposes to share registry operational costs with other qualified applicants, the applicant must be capable of contributing the pro rated proportional share of this cost.
# Applicants must be capable of of contributing $45,000 towards registry continuity operational costs, if the applicant proposes to fund its own continuity operation. If the applicant proposes to share registry continuity operational costs with other qualified applicants, the applicant must be capable of contributing the pro rated proportional share of this cost.
To demonstrate need, Applicants will be required to submit materials to the program administrators, detailing the various constraints which negatively affect the Applicant's ability to acquire and implement a gTLD without assistance under this program. Applicants should provide background on economic, technical, administrative, legal, and/or socio-cultural factors within their environment which are causing these constraints. As well, Applicants will be requested to detail any applicable constraints on management, human resources, IT infrastructure and the Applicant's technical capabilities. 

3.3 Notes on ineligible criteria

Applications by governments or government-owned entities

By consensus of the WG, purely Governmental or para-statal applicants have been listed as not entitled to receive support. However, at the ICANN San Francisco meeting the WG received a request from the GAC to consider including Government applications from Developing Countries for support.  The WG will work to obtain a mutually acceptable definition and criteria to fit Government applications with the GAC WG, but recognizes the difficulty in measuring a government’s “need” and concern of the appropriateness of offering support for one government over another if resources are limited. The GAC WG has offered to review the JAS criteria and provide its recommendations on a formulation of a solution for possible support to Developing Country Government applications.

Part 4 - What benefits do qualified applicants receive?

The WG recommends a number of different kinds of support to be made available for eligible applicants, which fall into the following categories:
*4.1 Financial support/relief from ICANN*
4.1.1 - Cost Reductions
The WG recommends the following fee reductions to be made available to all applicants who are determined as meeting the criteria established for support:
* Waive (consensus for this in the Milestone report) the Program Development Costs (US$26,000) 
* Lower risk/contingency cost (US$60,000)
* Review Base cost (US$100,000) to see if reduction can be made
* Cost reductions to encourage the build out of IDNs in small or underserved languages.
* Lower registry Fixed Fees
* Exemption or deferment of IPv6 implementation requirements as possible
Further reductions recommended
* Reduction      of the Financial Continued Operation Instrument Obligation to 6-12 months
4.1.2 - Staggered Fees
Instead of paying the entire fee upon acceptance of the applications, applicants meeting the criteria established for support could pay the fees incrementally. Staggered fees payment enables an applicant to compete for strings that might otherwise have gone to the first and/or only group with enough money to apply.
4.1.3 - Partial refund from any Auction proceeds
Qualified applicants receive a partial refund from any auction proceeds - for which they can repay any loans or invest into their registry. It could be used to refill the disadvantaged applicant’s foundation fund for subsequent rounds.
*Note**: Ongoing support will be limited to five years*
*4.2* * Non-financial support/relief from ICANN *
* Logistical      assistance
* Technical      help
* legal      and filing support
* Awareness/outreach      efforts including efforts to ensure more people in underserved markets are      aware of the new gTLD program and what they can do to participate in it
* Deferred      requirement of DNSSEC
* Relaxed      vertical integration regulations
*4.3 Support from third parties facilitated by ICANN*
4.3.1 - Pool of collected resources and assistance
* Translation      support 
* Logistical      help
* technical      support
* Awareness      and outreach
* Infrastructure      for providing IPv6 compatibility
* DNSSEC      consulting
* IDN      implementation support
* Possible      technical  setups
4.3.2 - Directory and referral service only for eligible applicants
* Facilitating      contacts with granting agencies and foundations
* ICANN      would facilitate but cannot commit to providing
4.3.3 
- IPv6 Support
* For registries located in areas where IPv6 connectivity is limited or unavailable, ICANN will facilitate support from IPv6 providers to provide IPv6 gateways into the registry IPv4 services.
 IPv6 Support
For registries located in areas where IPv6 connectivity is limited or unavailable, ICANN will facilitate support from IPv6 providers to provide IPv6 gateways into the registry IPv4 services.
*4.4 Financial support distributed by an ICANN originated (Development)* *fund*
For any funding provided through ICANN by a benefactor that does not wish to administer that funding itself, these funds would be allocated by a specially dedicated committee. The Working Group recommends the creation of a development fund directed at new gTLD applicants who were determined as meeting the criteria established for support.
4.4.1 - Support Program Development function
The working group recommends that ICANN establishes a _Support Program Development_ function with an initial goal of securing a targeted commitment for an ICANN based development fund.
*4.5* * Financial support Distributed by External Funding Agencies*
There is consensus in the group that external funding agencies would make grants according to their own requirements and goals. ICANN would only provide those agencies with applicant information of those who met the criteria established for support.

Part 5 - Evaluation process and relationship to the new gTLD Applicant Guidebook (AG)

The WG has determined, at this time, that best possible process to provide support for such applications is to be done through a process that is parallel to, and not a replacement of, the ICANN Applicant Guidebook. Thus, even after the Guidebook is formally approved, this WG can continue its work to refine those components of its mandate which remain unresolved. It is important that the AG make mention of this program and refer interested potential applicants to it, however it is not the WG's intention to otherwise affect the existing application process. To qualify for support applicants may be required to demonstrate that they meet this program's criteria on financial need and public interest; however such activity is intended to supplement, not replace, existing mechanisms in the AG. 
The WG had full consensus that Applicants that receive support under this program should repay that support as possible, and that such repayments go into a sustainable revolving fund used to support the future applications. Repayment is dependent on the gTLD Operator's financial success and will take the form of either 
* a capital contribution or lump sum; or
* an income contribution or annual instalment of until a lump sum is repaid; or
* repayment of the full or a percentage of the reduced base cost fee expended by the Support Development Program. 
The following broad steps did not obtain thorough evaluation or full consensus by the WG, but have been suggested as a starting point to this process and will be further refined by the WG based on the Parts 1 to 4 above. Note the process is meant to be to be in parallel with the AG-
1. the Application is assessed using the criteria described in Part 3 and this Step takes place before the Application enters the AG process
2. the Application enters the AG process (that is, it is registered in the TAS and the Applicant pays the $5,000 deposit; the Application is checked for completeness, posted; Objection period; Background Screening; IE results posted)
3. a Due Diligence Review is done on the Application, Applicant and its partners to ensure it is still  eligible/needy during Step 1. and at points of the AG. This Review ensures the Applicant is still  eligible for support. It is suggested that this Review occurs at three points: upon initial evaluation of the Application, in the AG process
- after the IE results are posted and after there is no string contention.
4. the Application progresses in the AG through Objections phase to String Contention. If there is a string contention then the Application will go through normal ICANN channels with the Applicant funding this additional step of the AG
5. once there is no string contention then the Application progresses to Contract execution, Pre-delegation check and Delegation
6. there is a Sunset Period for support with a cut off of 5 years after which no further support will be offered
7. if the new gTLD is granted the Applicant will fall under the safeguards provided by ICANN for all gTLD operators; but we should ensure that needy Applicants are aware of these requirements and are able to fulfil them 
NOTE the Applicant is only reviewed for the duration of our support. If at any stage during the Support Development Program Evaluation Process or the new gTLD process, in particular during the Due Diligence Review-
* the Applicant does not give information of the Application, itself and/or its partners when requested;
* the Application's, Applicant’s and/or its partners’ financial and other circumstances change so that they are no longer eligible;
* the Applicant withholds information about the Applicant, itself and/or its partners regarding its financial and other circumstances; or
* it is discovered that the Application, Applicant and/or its partners are no longer eligible
Then Support may stop in two ways
A. Discharged
- Aid stops upon notification to the Applicant and the Applicant and/or its partners may have to repay some or all of the funds already spent on the application. The Applicant may proceed with the Application at this point at its own cost.
B. Revoked or cancelled
- used in cases where the Applicant was wrongly granted support (for example granted support as a result of giving false information about finances), the Applicant and/or its partners will have to pay all the funds already spent on the application and the application will be revoked/discarded at that point
    

APPENDIX - QUERIES WITH RESPONSES

The following text includes comments and questions received subsequently to the release of Milestone Report 2, and may be useful in further clarifying the document's goals and mechanisms. The JAS CWG's responses are shown in red.
To insert final version of responses to GNSO (Jeff) comments and ALAC (Wolf) comments here
From Karla's email on 20th May 2011:
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
The  WG thanks the Registry Constituency for the comments and questions  submitted. The answers can be found below.  On a general note, the WG  notes that criteria are different from matrix. Criteria was part of the  charter, but matrix is not.
3.2 Notes on Financial Need
The  overriding consensus of the WG is that financial need and capability is  the primary criteria for determining eligible applications. Such need  and capability is to be demonstrated through the following criteria:
1.     Applicants must be capable of of contributing $45,000 towards ICANN's  application fee, unless ICANN waives, or lowers application fees.
2.     Where applicants anticipate scheduled fees, such as for extended  evaluation, the applicant must be capable of contributing a quarter of  the scheduled fees.
[RYSG]   How was this determined? Is it sufficient to demonstrate viability?  Some explanation of the WG thinking on this would be helpful.
3.     Applicants must be capable of contributing $45,000 towards registry  operational costs, if the applicant proposes to operate its own registry  platform. If the applicant proposes to share registry operational costs  with other qualified applicants, the applicant must be capable of  contributing the pro
- rated proportional share of this cost.
[RYSG] Is the $45,000 amount an annual figure?  It might make up a very small percentage of operational costs.
[JASWG]  Answer to 3.2 questions:
ICANN  previously used figures in this range in 2000 and 2004. As the final  fee is not yet fixed (see fee reductions and elsewhere), this minimum  applicant capability is subject to increase, or decrease.
Current  offers of record by registry technical service providers to potential  applicants are significantly lower than this figure e.g. the total  marketing budget PuntCat invested in .cat was 2,000 euros.
Nearly a year ago the staggered fee schedule was discussed as an inverse of the refund schedule:
The  applicant submits the $5,000 filing fee, and then $50,000 at submission  of application, $65,000 after the initial evaluation, and then the  final $65,000 when they are approved for delegation.
These  figures might change if the applicants are not required to pay that  entire fee, but it could still follow the reverse schedule of how the  refunds would be issued.
Here are few reasons the WG believes this helps the applicant:
* No need to raise the entire amount up front;
* If  the applicant gets through the initial evaluation and then they see  they might have a contention string, they wouldn't have had to put out  the entire fee up front;  
* If it's clear there is no contention set they could raise the final amount of money from their financiers.
The  WG discussed this figure extensively and  considered it a better than  best guess figure that was sufficiently significant to demonstrate a  degree of viability. The WG discussed that ICANN previously used figures  in this range in 2000 and 2004. As the final fee is not yet fixed (see  fee reductions and elsewhere), this minimum applicant capability is  subject to increase, or decrease. Current offers of record by registry  technical service providers to potential applicants are significantly  lower than this figure for instance, In 2004 the total marketing budget  PuntCat invested in .cat was 2,000 euros.
 First Milestone Report states that the applicant must be able to cover half the costs of the AG process.
4.     Applicants must be capable of of contributing $45,000 towards registry  continuity operational costs, if the applicant proposes to fund its own  continuity operation. If the applicant proposes to share registry  continuity operational costs with other qualified applicants, the  applicant must be capable of contributing the pro-rated proportional  share of this cost.
[RYSG] It would be helpful to explain the basis for the $45,000 amount.
Part 4 - What benefits do qualified applicants receive?
The  WG recommends a number of different kinds of support to be made  available for eligible applicants, which fall into the following  categories:
4.1 Financial support/relief from ICANN
4.1.1 Cost Reductions
The  WG recommends the following fee reductions to be made available to all  applicants who are determined as meeting the criteria established for  support:
•    Waive (consensus for this in the Milestone report) the Program Development Costs (US$26,000)  
•    Lower risk/contingency cost (US$60,000)
[RYSG] If these contingency funds are actually needed at the amount estimated, where would the deficit come from?
•    Review Base cost (US$100,000) to see if reduction can be made
•    Cost reductions to encourage the build out of IDNs in small or underserved languages.
[JASWG] As stated above, current offers of record by registry technical service providers to potential applicants are significantly lower. But, if ICANN is correct in the cost estimates (both for this figure and the $45K above), then any cost increase will be transferred to other applicants and lowering fees for few applicants automatically rises to others.A deficit or mitigation of risk can  also be catered for in several ways not yet explored by the WG, with  Insurance being one possible mechanism. There seems to be confusion as  to what this $60K figure is meant to represent, which requires  clarification from staff.
Also regarding contingency or risk costs, as applications are reviewed to a higher standard for eligibility, then rational risk (must of necessity) be altered downward. Thereby reducing rational contingency funding requirements. The same question  arises if the contingency funds actually needed are in excess of the  amount estimated for regular applications (not reviewed to a higher standard for eligibility).
[RYSG]  Does the WG believe that costs will be less for ‘IDNs in small or  underserved languages’?  If not, what is being suggested here?
•    Lower registry Fixed Fees
[JASWG] The WG is not making any assumptions the cost will be different for IDNs. This is, nonetheless, not a leveled field.
What is being suggested is that ICANN consider support  build out of IDN language applications and there are cost reductions  for an additional IDN language application when the Applicant is already  applying for a Latin script string.
[RYSG]   Assuming the fees are reasonable with regard to services provided to  registries, would other registries be expected to make up the deficit?   Or does the WG believe the fees are too high?  If the latter, was any  analysis done to support that position?
•    Exemption or deferment of IPv6 implementation requirements as possible
[JASWG] If ICANN is correct in the cost estimates, then cost increase will be  transferred to other applicants. Lowering fees for few applicants  automatically rises to others. These fees seem high.
[RYSG]  Could this put the registry at a competitive disadvantage compared to registries that support IPv6?
Further reductions recommended
•    Reduction of the Financial Continued Operation Instrument Obligation to 6-12 months
[JASWG] In the WG’s opinion, no. IPv4 numbers are starting to be treated as an asset with financial value; e.g. Microsoft  recently paid $11 per IPv4 address. These companies wait, or even find  it in their interest to obstruct, while the underprivileged battle  against the bugs in IPv6. It makes no sense for anyone to be a pioneer  in transitioning to IPv6; it only makes sense to go there as and when  others go there as well. At that point DNS  providers who don't keep up with the market (which means IPv6 and  DNSSEC in this context) will lose business to those who do.
This  will not, in our opinion, be relevant to new registries during the  initial year(s) of operation, while the IPv6 requirement is deferred.
In some countries the IPV6 infrastructure might not yet be there, implementation is likely to come with a host of problems and he cost of having their technology is high for some applicants. It  is unconscionable to expect the developing world applicants to tackle  these problems on their own, therefore it should be deferred or some  form of special support be given (so that IPV6 capability is offered to the applicants in need at advantageous terms).
[RYSG]   What if the registry fails?  Does the WG suggest a higher tolerance  for failure in exchange for a smaller continued operation obligation?
[JASWG] The presumption of failure applies to all registries (including the 2000 and 2004 round applicants now, or their successors in interest). The staff's choice of three years of continuity funding rationally reflects the  failure scenario for applications made by speculators and other  uninformed investors.
 
The eligibility criteria for applicants seeking support eliminate these likely-to-fail applicants, as the criteria ensure that the likely elapsed time to continuity operator discovery failure (for registries "in continuity" arising from support eligible applicants) is significantly less, than that of random speculator driven failures. As stated above in the response concerning contingency risk, as the same higher review standard is utilised, a lower risk cost principle applies here.
The  WG is not suggesting high tolerance for failure; however, the WG  believes that the continued operations following the failure is  considerably less than the ICANN estimates.
Such lower  cost for the financial continued operation instrument obligation can  also be catered for in several ways not yet explored by the WG e.g.  insurance
4.1.2 - Staggered Fees
Instead  of paying the entire fee upon acceptance of the applications,  applicants meeting the criteria established for support could pay the  fees incrementally. Staggered fees payment enables an applicant to  compete for strings that might otherwise have gone to the first and/or  only group with enough money to apply.
[RYSG]  Staggered over what period of time?  What happens if progress payments are not made on time?
[JASWG] Nearly a year ago the staggered fee schedule was discussed as an inverse of the refund schedule:
It was suggested that the  applicant submits the $5,000 filing fee, and then  $50,000 at  submission of application, $65,000 after the initial evaluation, and  then the final $65,000 when they are approved for delegation.
These  figures might change if the applicants are not required to pay that  entire fee, but it could still follow the reverse schedule of how the  refunds would be issued.
Here are few reasons the WG believes this helps the applicant:
* No need to raise the entire amount up front;
* If  the applicant gets through the initial evaluation and then they see  they might have a contention string, they wouldn't have had to put out  the entire fee up front; and 
* If it's clear there is no contention set they could raise the final amount of money from their financiers.
The full details must be specified, but have not yet been fully explored by the WG. ICANN's schedule or process is not under the control of the working group. Therefore the period of time and points of payment depend on the unbundling of the AG, which must be given by staff. If payment is not made the WG must consider and discuss the options for the applicant e.g. the application is put on hold subject to the sunset period defined.
Part 5 - Evaluation process and relationship to the new gTLD Applicant Guidebook (AG)
The  WG has determined, at this time, that best possible process to provide  support for such applications is to be done through a process that is  parallel to, and not a replacement of, the ICANN Applicant Guidebook.  Thus, even after the Guidebook is formally approved, this WG can  continue its work to refine those components of its mandate which remain  unresolved. It is important that the AG make mention of this program  and refer interested potential applicants to it, however it is not the  WG's intention to otherwise affect the existing application process. To  qualify for support applicants may be required to demonstrate that they  meet this program's criteria on financial need and public interest;  however such activity is intended to supplement, not replace, existing  mechanisms in the AG.
The  WG had full consensus that Applicants that receive support under this  program should repay that support as possible, and that such repayments  go into a sustainable revolving fund used to support the future  applications. Repayment is dependent on the gTLD Operator's financial  success and will take the form of either
•    a capital contribution or lump sum; or
•    an income contribution or annual installment of until a lump sum is repaid; or
•    repayment of the full or a percentage of the reduced base cost fee expended by the Support Development Program.  
The  following broad steps did not obtain thorough evaluation or full  consensus by the WG, but have been suggested as a starting point to this  process and will be further refined by the WG based on the Parts 1 to 4  above. Note the process is meant to be to be in parallel with the AG-
1.      the Application is assessed using the criteria described in Part 3  and this Step takes place before the Application enters the AG process
[RYSG]  Is there enough time for this?
[JASWG] We hope so \:-), the WG needs to know when the gTLD program will commence to answer this.
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-
From Eric's email on 20th May 2011:
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-
NOTE THAT IN THE ORIGINAL THE "STAGGERED FEE" TEXT APPEARS TWICE. ONCE IS SUFFICIENT.Nearly a year ago the staggered fee schedule was discussed as an
inverse of the refund schedule:
The applicant submits the $5,000 filing fee, and then $50,000 at
submission of application, $65,000 after the initial evaluation, and
then the final $65,000 when they are approved for delegation.
These figures might change if the applicants are not required to pay
that entire fee, but it could still follow the reverse schedule of how
the refunds would be issued.
Here are few reasons the WG believes this helps the applicant:
·No need to raise the entire amount up front;
·If the applicant gets through the initial evaluation and then they
see they might have a contention string, they wouldn't have had to put
out the entire fee up front;
·If it's clear there is no contention set they could raise the final
amount of money from their financiers.
This is the section which I pointed out mixes the v6 issue and the COI  issue. A proposed clean copy, much shorter, is provided below the  original.• Exemption or deferment of IPv6 implementation requirements as possible
*[JASWG]*If ICANN is correct in the cost estimates, then cost increase
will be transferred to other applicants. Lowering fees for few
applicants automatically rises to others. These fees seem high.
*/[RYSG] Could this put the registry at a competitive disadvantage
compared to registries that support IPv6? /
*
Further reductions recommended
• Reduction of the Financial Continued Operation Instrument Obligation
to 6-12 months
*[JASWG]*In the WG’s opinion, no. IPv4 numbers are starting to be
treated as an asset with financial value;e.g.Microsoft recently paid
$11 per IPv4 address. These companies wait, or even find it in their
interest to obstruct, while the underprivileged battle against the
bugs in IPv6. It makes no sense for anyone to be a pioneer in
transitioning to IPv6; it only makes sense to go there as and when
others go there as well. At that point DNS providers who don't keep up
with the market (which means IPv6 and DNSSEC in this context) will
lose business to those who do.
This will not, in our opinion, be relevant to new registries during
the initial year(s) of operation, while the IPv6 requirement is deferred.
In some countries the IPV6 infrastructure might not yet be
there,implementation is likely to come with a host of problems and he
cost of having their technology is high for some applicants. It is
unconscionable to expect the developing world applicants to tackle
these problems on their own, therefore it should be deferred or some
form of special support be given(so thatIPV6 capability is offered to
the applicants in need at advantageous terms).
Begin proposed clean copy:
• Exemption or deferment of IPv6 implementation requirements as possible
*/[RYSG] Could this put the registry at a competitive disadvantage
compared to registries that support IPv6? /
*
In the WG’s opinion, deferment of the IPv6 implementation requirement is unlikely to create competitive advantage.
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-
From Tijani's email on 16th May 2011:
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*Stéphane*
 Page 6 says that one criteria for eligibility is "Service in an under‐served language, the presence of which on the Internet has been limited". This is further explained in 3.1.2. But I don't understand what the metrics for these criteria are? What makes a language under-served and how can we measure if its presence on the Internet is limited?
 Stéphane is right: our mission is to design mechanisms to encourage the build out of Internationalized Domain Names (IDNs) in small or underserved languages (Item j of the charter), not to redefine and detail the underserved languages.
 Page 9, section 3.3 goes back to my earlier question about where and from whom the group has been getting input. Here it says that the group had agreed on one set of recommendations (govs not entitled to support) but are now working to change those after the GAC has asked them to. Do you, as co-chairs, feel comfortable with this?
 This should be explained as the update of the original milestone report according to the comments received (including the GAC’s ones).
 Page 12, section 4.2 Do you not feel the deferment of DNSSEC is not in keeping with ICANN's mission of ensuring a stable and secure Internet? As DNSSEC is such a clear security feature, would it not be better to seek (financial) support for applicants that find the cost of implementing it too high, rather than suggesting they need not implement it upon start-up (with the risk that it may then be years before they actually do implement it)?
 For countries (areas) where the infrastructure doesn’t support DNSSEC, it would be difficult to implement it by the applicant
*Wolf*
 3. Qualification of applicants: I've some doubt's an applicant's self declaration might be sufficient. At least appropriate references should be provided.
We can modify the sentence to read: “Applicants will be expected give a self-declaration, with due proofing documents when applicable, that they are eligible to receive support under these criteria.
3.1.2 under-served language: similar to Stéphane, what are the criteria to define these communities (number of members...)
Already commented
3.2 Financial need: How is the contribution of 45,000 $ calculated? Is this just 25% of the regular application fee?
It was my question when I saw it. This section wasn’t discussed or even read during a call. It was one of the few elements of the document that are part of our mission and that we should address with the maximum of attention.
4.1 Financial support/relief: should this be on top of 3.2?
4.1 dealt with the kinds of support, while 3.2 dealt with the criteria for support
4.4 Development fund: I've concern that this should be under the direction of applicants meeting the support criteria only. At least representatives of the "ICANN community" as well from the ICANN executive management should be part of the directive body.
This needs further discussion.
4.5 The function of an "External funding agency" is not clear to me.
Such as World Bank or any other funding agencies that would like to fund some applicant out of
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From Eric's email on 16th May 2011:
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> below you find the question from Wolf-Ulrich.
...
> 3.2 Financial need: How is the contribution of 45,000 $ calculated?
> Is this just 25% of the regular application fee?
No, and yes. It is the figure ICANN used in 2000 and 2004, and it is also
a quarter of the current application fee.
Assuming the Board approves some reduction in fee (and 50% is just such
a presumption), then if the applicants are capable of meeting 50% of that
cost, before external support, then the applicants need to be capble of
self-funding at the 2000-2004 level.
Ultimately, what fee reduction the Board directs, and what external cost
support exists, are controlling.

Version 3 Working Draft

As a followup to the production of (and subsequent response to) the JAS Second Milestone Report (MR2), this document is intended to identify areas of MR2 that require clarification, detailed explanation, other refinement and revision. It is starting with MR2 and is intended to first identify, and then address, text requiring modification.

The work given to this community working group (WG) has presented enormous challenges to its membership, most of whom care deeply about reducing obstacles for proposed TLD applications by or supporting communities in developing economic environments.

The WG has determined that a detailed description of the process flow, metrics and procedures for determining whether an application meets the criteria and how this application will be dealt with is required. Given the eventual target audience of this document and our desire to have it presented and read unedited, the authors have attempted to adopt a simple format while maintaining accuracy and consistency with previous consensus.

*Part 1: WHY provide applicant support?*

*Part 2: WHEN should support be provided?*

*Part 3: WHO qualifies for support? and **HOW do we evaluate the applications?*

*Part 4: WHAT do qualified applicants get?*

*Part 5: HOW will the process work and how does it relate to the** gTLD Applicant Guidebook (AG)?*

Part 1 - Why provide new applicant support?

During the International ICANN Meeting in Nairobi in March 2010, ICANNs Board recognized the importance of an inclusive New gTLD Program and the concern expressed by ICANN stakeholders regarding the financial and technical obstacles faced by applicants from developing economies seeking to offer new gTLDs. The Board issued a Resolution (#20) at requesting ICANN stakeholders…

"...to develop a sustainable approach to providing support to applicants requiring assistance in applying for and operating new gTLDs."

In April 2010 the GNSO and ALAC co-chartered a Joint Working Group on Applicant Support, also known as the “JAS WG” (and referred hereafter as the WG), in direct response to this Board resolution. The main objective of this WG is to develop a sustainable approach to providing support to Applicants requiring assistance in applying for and operating new gTLD Registries.

In November 2010 the WG presented the Board with a Milestone Report which suggested several mechanisms for providing support to Applicants. These included cost reduction support, sponsorship and funding support, modifications to the financial continued operation instrument obligation, logistical support, technical support for applicant in operating or qualifying to operate a gTLD, and exception to the rules requiring separation of the Registry and Registrar function.

Since the release of the Milestone Report, both the ICANN Board and the Government Advisory Committee (GAC) have requested further clarification and details from the WG. And while the Board (at its Trondheim meeting) refused to approve differential pricing for applicants in need of assistance, the GAC (in its “Scorecard”) has requested that the issue be reconsidered and the WG will continue to explore this option.  At its Brussels meeting with the GAC in late 2010 held to discuss the Scorecard, the Board confirmed that ICANN could implement a differential fee schedule for applicants in need of assistance, but added that appropriate criteria and mechanisms would need to be proposed to enable it to happen.

This WG is comprised of members who support these aims and are committed to lowering the barriers to full participation in the gTLD program by a truly global and inclusive community. It is Chartered by both ICANN's At-Large Advisory Committee (ALAC) and its Generic Names Supporting Organization (GNSO); though the two charters are similar but not identical; a comparison between the two charters is available in [this downloadable document|https://docs.google.com/viewer?url=https://community.icann.org/download/attachments/9405724/ALAC-JAS-Charter-ProposedRevised-23Feb2011.doc?version=1&modificationDate=1298545040000&embedded=true&chrome=true\].

Part 2: When should support be offered? In this round or wait until later?

This WG has determined that in order to be most effective, this program (of support for in-need applications) be implemented for the first and subsequent rounds. Several reasons are provided in support of this recommendation:

* Board Resolution 2010.03.12.46-47 clearly expressed the need to ensure that the New gTLD Program is inclusive. Much of the ICANN global community, particularly from developing regions, has welcomed this decision.

* With every new gTLD application round, the market competitive disadvantage of under-served communities increases. ICANN should not cause or allow the New gTLD Program to further the gap in gTLD Registry representation from other regions. The diversity, competition and innovation the New gTLD Program could bring should be an opportunity to all around the world since the Internet is a global resource that belongs to all. ICANN has the obligation to look closely into this issue and fulfill its responsibility to serve the global public interest by allowing accessibility and competition for all around the world.

* There  is no indication whether, in subsequent rounds, fees will be reduced and, in case there is any reduction, by how much. Therefore there is no benefit in waiting.

* Informal market research by some of the WG members indicates there is built-up demand for new gTLDs, including IDN gTLDs. There is expectation for a considerable number of applications. One of the main concerns is that, without some sort of assistance program, the most obvious and valuable names (ASCII and IDNs), will be taken by wealthy investors. This may limit opportunities in developing regions, for local     community institutions and developing country entrepreneurs. Of the current 21 New gTLD Registries, 18 are located in USA and three are in western Europe (with one having a sales/marketing presence in Asia). None are located anywhere else.

* While, per policy, ICANN plans for a second round, the timeline for this to happen is, at best, uncertain. Experiences from previous rounds add to the uncertainty. For example, ICANN communicated during the last round that this was to be followed soon by new rounds, nevertheless, it is taking almost a decade for a new round to materialise. Since ICANN cannot give guarantees and certainty of when future rounds will take place, those who cannot afford to participate in the program during this round, due to the current elevated fees, is perceived as an unfair and non-inclusive treatment.

Part 3 - Who qualifies for support? and How are gTLD applications evaluated against the above criteria?

The WG has determined a number of criteria to be used in the determination of a gTLD application eligible for support and/or cost relief (in this document called the “eligible application”):

*To qualify for elibility under this program,*

*1. **The Application must demonstrate service to the public interest, including one or more of the following characteristics*

# Support by and/or for distinct cultural, linguistic and ethnic communities

# Service in an under-served language, the presence of which on the Internet has been limited

# Operation in an emerging market or nation in a manner that provides genuine local social benefit

# Sponsored by non-profit, civil society and non-governmental organizations in a manner consistent with the organizations' social service mission(s)

# Operated by local entrepreneur, providing demonstrable social benefit in those geographic areas where market constraints make normal business operations more difficult

*AND*

*2.* *The Applicant **must demonstrate financial capabilities and need*

# (See notes below)

*AND* 

*3.* *The Application must NOT have any of the following characeristics:*

# From a governmental or para-statal applicant (subject to review, see below)

# A TLD string explicitly based, and related to, a trademark (ie, a "dot brand" TLD)

# A string that is, or is based on, a geographic name

# Sponsors or partners who are bankrupt or under bankruptcy protection

# Sponsors or partners who are ubject of litigation or criminal investigation

# Otherwise incapable of meeting any of the Applicant Guidebook's due diligence procedures

*Applicants will be expected give a self-declaration that they are eligible to receive support under these criteria*

3.1 Notes on the application's public interest qualifications

3.1.1 - Support by and/or for distinct cultural, linguistic and ethnic communities

The “.cat” Catalonian TLD is seen by many linguistic, ethnic and cultural communities as a success story that has helped to preserve and indeed grow the language and culture. Many such groups -
- especially those with geographically dispersed diasporas -
- see a TLD as unifying icon that will facilitate Internet use while encouraging community growth. We would note especially, linguistic minorities protected by treaties such as the European Charter for Regional or Minority Languages and the Council of Europe Framework Convention for the Protection of National Minorities.The WG agreed that the applications by such communities, should they meet the requirements of need, should be eligible for relief/support.

3.1.2 Service in an under-served language, the presence of which on the Internet has been limited

A number of WG members have advocated support for the build out of TLD strings in non-Latin scripts by communities that use these scripts and have to date been un-served or under-served on the web. 

As a part of this, the group has identified two categories of groups that might receive support -- communities that regularly use more than one script but might otherwise be unable to afford full-price build out of two scripts; and smaller script communities whose scripts are very limited on the web.

The WG did achieve consensus that as long as the Applicant is providing build-out of a language whose web-presence is limited and they meet the other criteria we should give support. 

To address the needs of these groups, partial (but not consensus) support has been expressed for concept of “bundling” -
- that is, reducing the price of a TLD string in an “underserved” language script that accompanies a conventional application for the similar string in a Latin script. 

3.1.3 - Operation in an emerging market or nation

The WG achieved full consensus in agreeing that the criteria offered to judge applications give preference to those originating within the world’s poorer economies. Rather than having ICANN undertake the distracting task of determining where such economies are located, we would refer instead to the internationally agreed upon UN DESA list:

# Least developed countries: category 199;

# Landlocked Developing Countries: category 432; or

# Small Island Developing States: category 722.

# Indigenous Peoples, as described in Article 1 of Convention No. 169 of the International Labor Organization and the UN Declaration on the Rights of Indigenous Peoples

3.1.5 Operated by local entrepreneur, in those geographic areas where market constraints make normal business operations more difficult

While for-profit companies, private-public partnerships and hybrid entities can be eligible, the WG agrees that this support program must not be used as a substitute for conventional business risk; and the applicants set out in 3.3 are not eligible for support. It should be used to enable new gTLDs that could -
- without this program -
- be unimaginable.

Note for 3.1.3 and 3.1.5 The WG agreed that other forms of social benefit (including but not limited to: increasing skills; investment in the skills base of a target community; fostering gender balance and presence of minorities; positive contribution to regional or national economies) must be considered.

3.2 Notes on Financial Need

The overriding consensus of the WG is that financial need and capability is the primary criteria for determining eligible applications. Such need and capability is to be demonstrated through the following criteria:

# Applicants must be capable of of contributing $45,000 towards ICANN's application fee, unless ICANN waives, or lowers application fees.

# Where applicants anticipate scheduled fees, such as for extended evaluation, the applicant must be capable of contributing a quarter of the scheduled fees.

# Applicants must be capable of of contributing $45,000 towards registry operational costs, if the applicant proposes to operate its own registry platform. If the applicant proposes to share registry operational costs with other qualified applicants, the applicant must be capable of contributing the pro rated proportional share of this cost.

# Applicants must be capable of of contributing $45,000 towards registry continuity operational costs, if the applicant proposes to fund its own continuity operation. If the applicant proposes to share registry continuity operational costs with other qualified applicants, the applicant must be capable of contributing the pro rated proportional share of this cost.

To demonstrate need, Applicants will be required to submit materials to the program administrators, detailing the various constraints which negatively affect the Applicant's ability to acquire and implement a gTLD without assistance under this program. Applicants should provide background on economic, technical, administrative, legal, and/or socio-cultural factors within their environment which are causing these constraints. As well, Applicants will be requested to detail any applicable constraints on management, human resources, IT infrastructure and the Applicant's technical capabilities. 

3.3 Notes on ineligible criteria

Applications by governments or government-owned entities

By consensus of the WG, purely Governmental or para-statal applicants have been listed as not entitled to receive support. However, at the ICANN San Francisco meeting the WG received a request from the GAC to consider including Government applications from Developing Countries for support.  The WG will work to obtain a mutually acceptable definition and criteria to fit Government applications with the GAC WG, but recognizes the difficulty in measuring a government’s “need” and concern of the appropriateness of offering support for one government over another if resources are limited. The GAC WG has offered to review the JAS criteria and provide its recommendations on a formulation of a solution for possible support to Developing Country Government applications.

Part 4 - What benefits do qualified applicants receive?

The WG recommends a number of different kinds of support to be made available for eligible applicants, which fall into the following categories:

*4.1 Financial support/relief from ICANN*

4.1.1 - Cost Reductions

The WG recommends the following fee reductions to be made available to all applicants who are determined as meeting the criteria established for support:

* Waive (consensus for this in the Milestone report) the Program Development Costs (US$26,000) 

* Lower risk/contingency cost (US$60,000)

* Review Base cost (US$100,000) to see if reduction can be made

* Cost reductions to encourage the build out of IDNs in small or underserved languages.

* Lower registry Fixed Fees

* Exemption or deferment of IPv6 implementation requirements as possible

Further reductions recommended

* Reduction      of the Financial Continued Operation Instrument Obligation to 6-12 months

4.1.2 - Staggered Fees

Instead of paying the entire fee upon acceptance of the applications, applicants meeting the criteria established for support could pay the fees incrementally. Staggered fees payment enables an applicant to compete for strings that might otherwise have gone to the first and/or only group with enough money to apply.

4.1.3 - Partial refund from any Auction proceeds

Qualified applicants receive a partial refund from any auction proceeds - for which they can repay any loans or invest into their registry. It could be used to refill the disadvantaged applicant’s foundation fund for subsequent rounds.

*Note**: Ongoing support will be limited to five years*

*4.2* * Non-financial support/relief from ICANN *

* Logistical      assistance

* Technical      help

* legal      and filing support

* Awareness/outreach      efforts including efforts to ensure more people in underserved markets are      aware of the new gTLD program and what they can do to participate in it

* Deferred      requirement of DNSSEC

* Relaxed      vertical integration regulations

*4.3 Support from third parties facilitated by ICANN*

4.3.1 - Pool of collected resources and assistance

* Translation      support 

* Logistical      help

* technical      support

* Awareness      and outreach

* Infrastructure      for providing IPv6 compatibility

* DNSSEC      consulting

* IDN      implementation support

* Possible      technical  setups

4.3.2 - Directory and referral service only for eligible applicants

* Facilitating      contacts with granting agencies and foundations

* ICANN      would facilitate but cannot commit to providing

4.3.3 
- IPv6 Support

* For registries located in areas where IPv6 connectivity is limited or unavailable, ICANN will facilitate support from IPv6 providers to provide IPv6 gateways into the registry IPv4 services.

 IPv6 Support

For registries located in areas where IPv6 connectivity is limited or unavailable, ICANN will facilitate support from IPv6 providers to provide IPv6 gateways into the registry IPv4 services.

*4.4 Financial support distributed by an ICANN originated (Development)* *fund*

For any funding provided through ICANN by a benefactor that does not wish to administer that funding itself, these funds would be allocated by a specially dedicated committee. The Working Group recommends the creation of a development fund directed at new gTLD applicants who were determined as meeting the criteria established for support.

4.4.1 - Support Program Development function

The working group recommends that ICANN establishes a _Support Program Development_ function with an initial goal of securing a targeted commitment for an ICANN based development fund.

*4.5* * Financial support Distributed by External Funding Agencies*

There is consensus in the group that external funding agencies would make grants according to their own requirements and goals. ICANN would only provide those agencies with applicant information of those who met the criteria established for support.

Part 5 - Evaluation process and relationship to the new gTLD Applicant Guidebook (AG)

The WG has determined, at this time, that best possible process to provide support for such applications is to be done through a process that is parallel to, and not a replacement of, the ICANN Applicant Guidebook. Thus, even after the Guidebook is formally approved, this WG can continue its work to refine those components of its mandate which remain unresolved. It is important that the AG make mention of this program and refer interested potential applicants to it, however it is not the WG's intention to otherwise affect the existing application process. To qualify for support applicants may be required to demonstrate that they meet this program's criteria on financial need and public interest; however such activity is intended to supplement, not replace, existing mechanisms in the AG. 

The WG had full consensus that Applicants that receive support under this program should repay that support as possible, and that such repayments go into a sustainable revolving fund used to support the future applications. Repayment is dependent on the gTLD Operator's financial success and will take the form of either 

* a capital contribution or lump sum; or

* an income contribution or annual instalment of until a lump sum is repaid; or

* repayment of the full or a percentage of the reduced base cost fee expended by the Support Development Program. 

The following broad steps did not obtain thorough evaluation or full consensus by the WG, but have been suggested as a starting point to this process and will be further refined by the WG based on the Parts 1 to 4 above. Note the process is meant to be to be in parallel with the AG-

1. the Application is assessed using the criteria described in Part 3 and this Step takes place before the Application enters the AG process

2. the Application enters the AG process (that is, it is registered in the TAS and the Applicant pays the $5,000 deposit; the Application is checked for completeness, posted; Objection period; Background Screening; IE results posted)

3. a Due Diligence Review is done on the Application, Applicant and its partners to ensure it is still  eligible/needy during Step 1. and at points of the AG. This Review ensures the Applicant is still  eligible for support. It is suggested that this Review occurs at three points: upon initial evaluation of the Application, in the AG process
- after the IE results are posted and after there is no string contention.

4. the Application progresses in the AG through Objections phase to String Contention. If there is a string contention then the Application will go through normal ICANN channels with the Applicant funding this additional step of the AG

5. once there is no string contention then the Application progresses to Contract execution, Pre-delegation check and Delegation

6. there is a Sunset Period for support with a cut off of 5 years after which no further support will be offered

7. if the new gTLD is granted the Applicant will fall under the safeguards provided by ICANN for all gTLD operators; but we should ensure that needy Applicants are aware of these requirements and are able to fulfil them 

NOTE the Applicant is only reviewed for the duration of our support. If at any stage during the Support Development Program Evaluation Process or the new gTLD process, in particular during the Due Diligence Review-

* the Applicant does not give information of the Application, itself and/or its partners when requested;

* the Application's, Applicant’s and/or its partners’ financial and other circumstances change so that they are no longer eligible;

* the Applicant withholds information about the Applicant, itself and/or its partners regarding its financial and other circumstances; or

* it is discovered that the Application, Applicant and/or its partners are no longer eligible

Then Support may stop in two ways

A. Discharged
- Aid stops upon notification to the Applicant and the Applicant and/or its partners may have to repay some or all of the funds already spent on the application. The Applicant may proceed with the Application at this point at its own cost.

B. Revoked or cancelled
- used in cases where the Applicant was wrongly granted support (for example granted support as a result of giving false information about finances), the Applicant and/or its partners will have to pay all the funds already spent on the application and the application will be revoked/discarded at that point

    

APPENDIX - QUERIES WITH RESPONSES

The following text includes comments and questions received subsequently to the release of Milestone Report 2, and may be useful in further clarifying the document's goals and mechanisms. The JAS CWG's responses are shown in red.

To insert final version of responses to GNSO (Jeff) comments and ALAC (Wolf) comments here

From Karla's email on 20th May 2011:

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The  WG thanks the Registry Constituency for the comments and questions  submitted. The answers can be found below.  On a general note, the WG  notes that criteria are different from matrix. Criteria was part of the  charter, but matrix is not.

3.2 Notes on Financial Need

The  overriding consensus of the WG is that financial need and capability is  the primary criteria for determining eligible applications. Such need  and capability is to be demonstrated through the following criteria:

1.     Applicants must be capable of of contributing $45,000 towards ICANN's  application fee, unless ICANN waives, or lowers application fees.

2.     Where applicants anticipate scheduled fees, such as for extended  evaluation, the applicant must be capable of contributing a quarter of  the scheduled fees.

[RYSG]   How was this determined? Is it sufficient to demonstrate viability?  Some explanation of the WG thinking on this would be helpful.

3.     Applicants must be capable of contributing $45,000 towards registry  operational costs, if the applicant proposes to operate its own registry  platform. If the applicant proposes to share registry operational costs  with other qualified applicants, the applicant must be capable of  contributing the pro
- rated proportional share of this cost.

[RYSG] Is the $45,000 amount an annual figure?  It might make up a very small percentage of operational costs.

[JASWG]  Answer to 3.2 questions:

ICANN  previously used figures in this range in 2000 and 2004. As the final  fee is not yet fixed (see fee reductions and elsewhere), this minimum  applicant capability is subject to increase, or decrease.

Current  offers of record by registry technical service providers to potential  applicants are significantly lower than this figure e.g. the total  marketing budget PuntCat invested in .cat was 2,000 euros.

Nearly a year ago the staggered fee schedule was discussed as an inverse of the refund schedule:

The  applicant submits the $5,000 filing fee, and then $50,000 at submission  of application, $65,000 after the initial evaluation, and then the  final $65,000 when they are approved for delegation.

These  figures might change if the applicants are not required to pay that  entire fee, but it could still follow the reverse schedule of how the  refunds would be issued.

Here are few reasons the WG believes this helps the applicant:

* No need to raise the entire amount up front;

* If  the applicant gets through the initial evaluation and then they see  they might have a contention string, they wouldn't have had to put out  the entire fee up front;  

* If it's clear there is no contention set they could raise the final amount of money from their financiers.

The  WG discussed this figure extensively and  considered it a better than  best guess figure that was sufficiently significant to demonstrate a  degree of viability. The WG discussed that ICANN previously used figures  in this range in 2000 and 2004. As the final fee is not yet fixed (see  fee reductions and elsewhere), this minimum applicant capability is  subject to increase, or decrease. Current offers of record by registry  technical service providers to potential applicants are significantly  lower than this figure for instance, In 2004 the total marketing budget  PuntCat invested in .cat was 2,000 euros.

 First Milestone Report states that the applicant must be able to cover half the costs of the AG process.

4.     Applicants must be capable of of contributing $45,000 towards registry  continuity operational costs, if the applicant proposes to fund its own  continuity operation. If the applicant proposes to share registry  continuity operational costs with other qualified applicants, the  applicant must be capable of contributing the pro-rated proportional  share of this cost.

[RYSG] It would be helpful to explain the basis for the $45,000 amount.

Part 4 - What benefits do qualified applicants receive?

The  WG recommends a number of different kinds of support to be made  available for eligible applicants, which fall into the following  categories:

4.1 Financial support/relief from ICANN

4.1.1 Cost Reductions

The  WG recommends the following fee reductions to be made available to all  applicants who are determined as meeting the criteria established for  support:

•    Waive (consensus for this in the Milestone report) the Program Development Costs (US$26,000)  

•    Lower risk/contingency cost (US$60,000)

[RYSG] If these contingency funds are actually needed at the amount estimated, where would the deficit come from?

•    Review Base cost (US$100,000) to see if reduction can be made

•    Cost reductions to encourage the build out of IDNs in small or underserved languages.

[JASWG] As stated above, current offers of record by registry technical service providers to potential applicants are significantly lower. But, if ICANN is correct in the cost estimates (both for this figure and the $45K above), then any cost increase will be transferred to other applicants and lowering fees for few applicants automatically rises to others.A deficit or mitigation of risk can  also be catered for in several ways not yet explored by the WG, with  Insurance being one possible mechanism. There seems to be confusion as  to what this $60K figure is meant to represent, which requires  clarification from staff.

Also regarding contingency or risk costs, as applications are reviewed to a higher standard for eligibility, then rational risk (must of necessity) be altered downward. Thereby reducing rational contingency funding requirements. The same question  arises if the contingency funds actually needed are in excess of the  amount estimated for regular applications (not reviewed to a higher standard for eligibility).

[RYSG]  Does the WG believe that costs will be less for ‘IDNs in small or  underserved languages’?  If not, what is being suggested here?

•    Lower registry Fixed Fees

[JASWG] The WG is not making any assumptions the cost will be different for IDNs. This is, nonetheless, not a leveled field.

What is being suggested is that ICANN consider support  build out of IDN language applications and there are cost reductions  for an additional IDN language application when the Applicant is already  applying for a Latin script string.

[RYSG]   Assuming the fees are reasonable with regard to services provided to  registries, would other registries be expected to make up the deficit?   Or does the WG believe the fees are too high?  If the latter, was any  analysis done to support that position?

•    Exemption or deferment of IPv6 implementation requirements as possible

[JASWG] If ICANN is correct in the cost estimates, then cost increase will be  transferred to other applicants. Lowering fees for few applicants  automatically rises to others. These fees seem high.

[RYSG]  Could this put the registry at a competitive disadvantage compared to registries that support IPv6?

Further reductions recommended

•    Reduction of the Financial Continued Operation Instrument Obligation to 6-12 months

[JASWG] In the WG’s opinion, no. IPv4 numbers are starting to be treated as an asset with financial value; e.g. Microsoft  recently paid $11 per IPv4 address. These companies wait, or even find  it in their interest to obstruct, while the underprivileged battle  against the bugs in IPv6. It makes no sense for anyone to be a pioneer  in transitioning to IPv6; it only makes sense to go there as and when  others go there as well. At that point DNS  providers who don't keep up with the market (which means IPv6 and  DNSSEC in this context) will lose business to those who do.

This  will not, in our opinion, be relevant to new registries during the  initial year(s) of operation, while the IPv6 requirement is deferred.

In some countries the IPV6 infrastructure might not yet be there, implementation is likely to come with a host of problems and he cost of having their technology is high for some applicants. It  is unconscionable to expect the developing world applicants to tackle  these problems on their own, therefore it should be deferred or some  form of special support be given (so that IPV6 capability is offered to the applicants in need at advantageous terms).

[RYSG]   What if the registry fails?  Does the WG suggest a higher tolerance  for failure in exchange for a smaller continued operation obligation?

[JASWG] The presumption of failure applies to all registries (including the 2000 and 2004 round applicants now, or their successors in interest). The staff's choice of three years of continuity funding rationally reflects the  failure scenario for applications made by speculators and other  uninformed investors.

 

The eligibility criteria for applicants seeking support eliminate these likely-to-fail applicants, as the criteria ensure that the likely elapsed time to continuity operator discovery failure (for registries "in continuity" arising from support eligible applicants) is significantly less, than that of random speculator driven failures. As stated above in the response concerning contingency risk, as the same higher review standard is utilised, a lower risk cost principle applies here.

The  WG is not suggesting high tolerance for failure; however, the WG  believes that the continued operations following the failure is  considerably less than the ICANN estimates.

Such lower  cost for the financial continued operation instrument obligation can  also be catered for in several ways not yet explored by the WG e.g.  insurance

4.1.2 - Staggered Fees

Instead  of paying the entire fee upon acceptance of the applications,  applicants meeting the criteria established for support could pay the  fees incrementally. Staggered fees payment enables an applicant to  compete for strings that might otherwise have gone to the first and/or  only group with enough money to apply.

[RYSG]  Staggered over what period of time?  What happens if progress payments are not made on time?

[JASWG] Nearly a year ago the staggered fee schedule was discussed as an inverse of the refund schedule:

It was suggested that the  applicant submits the $5,000 filing fee, and then  $50,000 at  submission of application, $65,000 after the initial evaluation, and  then the final $65,000 when they are approved for delegation.

These  figures might change if the applicants are not required to pay that  entire fee, but it could still follow the reverse schedule of how the  refunds would be issued.

Here are few reasons the WG believes this helps the applicant:

* No need to raise the entire amount up front;

* If  the applicant gets through the initial evaluation and then they see  they might have a contention string, they wouldn't have had to put out  the entire fee up front; and 

* If it's clear there is no contention set they could raise the final amount of money from their financiers.

The full details must be specified, but have not yet been fully explored by the WG. ICANN's schedule or process is not under the control of the working group. Therefore the period of time and points of payment depend on the unbundling of the AG, which must be given by staff. If payment is not made the WG must consider and discuss the options for the applicant e.g. the application is put on hold subject to the sunset period defined.

Part 5 - Evaluation process and relationship to the new gTLD Applicant Guidebook (AG)

The  WG has determined, at this time, that best possible process to provide  support for such applications is to be done through a process that is  parallel to, and not a replacement of, the ICANN Applicant Guidebook.  Thus, even after the Guidebook is formally approved, this WG can  continue its work to refine those components of its mandate which remain  unresolved. It is important that the AG make mention of this program  and refer interested potential applicants to it, however it is not the  WG's intention to otherwise affect the existing application process. To  qualify for support applicants may be required to demonstrate that they  meet this program's criteria on financial need and public interest;  however such activity is intended to supplement, not replace, existing  mechanisms in the AG.

The  WG had full consensus that Applicants that receive support under this  program should repay that support as possible, and that such repayments  go into a sustainable revolving fund used to support the future  applications. Repayment is dependent on the gTLD Operator's financial  success and will take the form of either

•    a capital contribution or lump sum; or

•    an income contribution or annual installment of until a lump sum is repaid; or

•    repayment of the full or a percentage of the reduced base cost fee expended by the Support Development Program.  

The  following broad steps did not obtain thorough evaluation or full  consensus by the WG, but have been suggested as a starting point to this  process and will be further refined by the WG based on the Parts 1 to 4  above. Note the process is meant to be to be in parallel with the AG-

1.      the Application is assessed using the criteria described in Part 3  and this Step takes place before the Application enters the AG process

[RYSG]  Is there enough time for this?

[JASWG] We hope so \:-), the WG needs to know when the gTLD program will commence to answer this.

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From Eric's email on 20th May 2011:

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NOTE THAT IN THE ORIGINAL THE "STAGGERED FEE" TEXT APPEARS TWICE. ONCE IS SUFFICIENT.Nearly a year ago the staggered fee schedule was discussed as an

inverse of the refund schedule:

The applicant submits the $5,000 filing fee, and then $50,000 at

submission of application, $65,000 after the initial evaluation, and

then the final $65,000 when they are approved for delegation.

These figures might change if the applicants are not required to pay

that entire fee, but it could still follow the reverse schedule of how

the refunds would be issued.

Here are few reasons the WG believes this helps the applicant:

·No need to raise the entire amount up front;

·If the applicant gets through the initial evaluation and then they

see they might have a contention string, they wouldn't have had to put

out the entire fee up front;

·If it's clear there is no contention set they could raise the final

amount of money from their financiers.

This is the section which I pointed out mixes the v6 issue and the COI  issue. A proposed clean copy, much shorter, is provided below the  original.• Exemption or deferment of IPv6 implementation requirements as possible

*[JASWG]*If ICANN is correct in the cost estimates, then cost increase

will be transferred to other applicants. Lowering fees for few

applicants automatically rises to others. These fees seem high.

*/[RYSG] Could this put the registry at a competitive disadvantage

compared to registries that support IPv6? /
*

Further reductions recommended

• Reduction of the Financial Continued Operation Instrument Obligation

to 6-12 months

*[JASWG]*In the WG’s opinion, no. IPv4 numbers are starting to be

treated as an asset with financial value;e.g.Microsoft recently paid

$11 per IPv4 address. These companies wait, or even find it in their

interest to obstruct, while the underprivileged battle against the

bugs in IPv6. It makes no sense for anyone to be a pioneer in

transitioning to IPv6; it only makes sense to go there as and when

others go there as well. At that point DNS providers who don't keep up

with the market (which means IPv6 and DNSSEC in this context) will

lose business to those who do.

This will not, in our opinion, be relevant to new registries during

the initial year(s) of operation, while the IPv6 requirement is deferred.

In some countries the IPV6 infrastructure might not yet be

there,implementation is likely to come with a host of problems and he

cost of having their technology is high for some applicants. It is

unconscionable to expect the developing world applicants to tackle

these problems on their own, therefore it should be deferred or some

form of special support be given(so thatIPV6 capability is offered to

the applicants in need at advantageous terms).

Begin proposed clean copy:

• Exemption or deferment of IPv6 implementation requirements as possible

*/[RYSG] Could this put the registry at a competitive disadvantage

compared to registries that support IPv6? /
*

In the WG’s opinion, deferment of the IPv6 implementation requirement is unlikely to create competitive advantage.

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From Tijani's email on 16th May 2011:

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*Stéphane*

 Page 6 says that one criteria for eligibility is "Service in an under‐served language, the presence of which on the Internet has been limited". This is further explained in 3.1.2. But I don't understand what the metrics for these criteria are? What makes a language under-served and how can we measure if its presence on the Internet is limited?

 Stéphane is right: our mission is to design mechanisms to encourage the build out of Internationalized Domain Names (IDNs) in small or underserved languages (Item j of the charter), not to redefine and detail the underserved languages.

 Page 9, section 3.3 goes back to my earlier question about where and from whom the group has been getting input. Here it says that the group had agreed on one set of recommendations (govs not entitled to support) but are now working to change those after the GAC has asked them to. Do you, as co-chairs, feel comfortable with this?

 This should be explained as the update of the original milestone report according to the comments received (including the GAC’s ones).

 Page 12, section 4.2 Do you not feel the deferment of DNSSEC is not in keeping with ICANN's mission of ensuring a stable and secure Internet? As DNSSEC is such a clear security feature, would it not be better to seek (financial) support for applicants that find the cost of implementing it too high, rather than suggesting they need not implement it upon start-up (with the risk that it may then be years before they actually do implement it)?

 For countries (areas) where the infrastructure doesn’t support DNSSEC, it would be difficult to implement it by the applicant

*Wolf*

 3. Qualification of applicants: I've some doubt's an applicant's self declaration might be sufficient. At least appropriate references should be provided.

We can modify the sentence to read: “Applicants will be expected give a self-declaration, with due proofing documents when applicable, that they are eligible to receive support under these criteria.

3.1.2 under-served language: similar to Stéphane, what are the criteria to define these communities (number of members...)

Already commented

3.2 Financial need: How is the contribution of 45,000 $ calculated? Is this just 25% of the regular application fee?

It was my question when I saw it. This section wasn’t discussed or even read during a call. It was one of the few elements of the document that are part of our mission and that we should address with the maximum of attention.

4.1 Financial support/relief: should this be on top of 3.2?

4.1 dealt with the kinds of support, while 3.2 dealt with the criteria for support

4.4 Development fund: I've concern that this should be under the direction of applicants meeting the support criteria only. At least representatives of the "ICANN community" as well from the ICANN executive management should be part of the directive body.

This needs further discussion.

4.5 The function of an "External funding agency" is not clear to me.

Such as World Bank or any other funding agencies that would like to fund some applicant out of

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From Eric's email on 16th May 2011:

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> below you find the question from Wolf-Ulrich.

...

> 3.2 Financial need: How is the contribution of 45,000 $ calculated?

> Is this just 25% of the regular application fee?

No, and yes. It is the figure ICANN used in 2000 and 2004, and it is also

a quarter of the current application fee.

Assuming the Board approves some reduction in fee (and 50% is just such

a presumption), then if the applicants are capable of meeting 50% of that

cost, before external support, then the applicants need to be capble of

self-funding at the 2000-2004 level.

Ultimately, what fee reduction the Board directs, and what external cost

support exists, are controlling.