[At-Large] FW: My comments on new gTLDs and the role of ICANN

[Olivier MJ Crepin-Leblond]

Vittorio,

as I've mentioned, I'm neutral on this matter.
My feeling, though, is that the largest cost might not come from the
actual process itself, but from complications to the process which are
hard to estimate. An example would be a lawsuit from an applicant not
happy to have been refused an application.
You are completely correct in saying that all of these figures are all
very hard to estimate. This is all pioneering work...

Perhaps should ICANN subscribe to some kind of liability insurance
against lawsuits, the cost of which they will then have as a fixed
cost, to be calculated in the price of a gTLD. Yes, I know, the good
people will pay for the bad people, but that's how the world of
insurance works...

Clearly a dichotomy here - one the one hand, spending more time on the
pricing model & discussing it might be needed. On the other,
applicants have waited for so long for things to move forward...

Thanks for keeping us all informed on the subject.

Kind regards,

Olivier

----- Original Message ----- 
From: "Vittorio Bertola" <vb at bertola.eu>
To: "Olivier MJ Crepin-Leblond" <ocl at gih.com>
Cc: "At-Large Worldwide" <at-large at atlarge-lists.icann.org>;
"Sivasubramanian Muthusamy" <isolatedn at gmail.com>
Sent: Wednesday, November 12, 2008 12:44 PM
Subject: Re: [At-Large] FW: My comments on new gTLDs and the role of
ICANN


> Olivier MJ Crepin-Leblond ha scritto:
> > Hello Vittorio,
> >
> > your reasoning wrt costs is one which has been echoed by many
> > participants.
> >
> > However, have you read the document entitled "New gTLD Programme:
> > Draft Applicant Guidebook (Draft RFP), Explanatory Memoranda and
> > Supporting Documents"?
> > Do you disagree with the methodology described in the part of the
> > document entitled "Cost Considerations of the New wwgTLD Program"?
> > Of particular inteest, do you disagree with the diagram shown on
page
> > 9 of the document?
>
> It's not that I "disagree", it's that the numbers in that document
are
> insufficient to make any real evaluation. They could be true or not,
we
> can't know. I actually sent an evaluation about this to someone who
> replied to my original message to the Board, so here it is:
>
> ===
> First the paper says: we spent $1.8M to process ten applications in
> 2003, so the processing cost was $180k/application.
>
> Then ICANN also estimated the cost bottom-up. The paper says that
ICANN
> already spent $12.8M, mostly in salaries, on this program, which
makes
> $26k/application.
>
> Then it estimated the work-hours required by the processing itself,
> attaching a probability to each possible processing path; here there
are
> no published numbers to support the conclusion, but it adds up to
> $100k/application.
>
> Then there is a final figure, which is what in a business plan you
> usually add as "misc" or "reserve" to cover for unexpected expenses,
> which was estimated by Willis to be $60k/application.
>
> The total, $185k/application, is actually very similar to the 2003
cost.
>
> Now, we have really no information to verify these evaluations - you
> would have to go through the entire data set. Seen from the outside,
> however, there are some things that are not convincing, and most
people
> I've talked to have questioned them.
>
> The most frequent points are:
> - how come that per-application costs for processing 500
applications in
> a structured manner are the same than for processing 10 applications
on
> an experimental basis several years ago?
> - how can you have a 'risk fee' of 1/3 of the total? isn't that
> excessive, or just a way to inflate the fee?
> - almost all the cost is made up by people's work; now, with $185k
one
> could hire 4-6 people for a year, per each application - or, with
$80M
> one could hire hundreds of people for a year; do you really need
that
> much work? what will those people be actually doing?
> - even if this was the actual cost of processing these application,
> isn't ICANN making this thing excessively complex? couldn't it just
pick
> a simpler process that would have a lower cost?
>
> (I actually disagree with the last objection, but I agree about the
> first three.)
>
> > BTW I am entirely neutral on the matter. I can understand ICANN's
> > explanation for the high fees, but I also understand that for
> > applicants such as yourself, this is very expensive. As such, I
fear
> > that there may not be any win-win position on this.
>
> The problem here is that we all should win, not ICANN or the
applicants.
> So, how can you get the best and fairest result from this process?
>
> ICANN's role is supposed to be that of a neutral steward and
supplier of
> a service which is necessarily provided under a monopoly. This is
why it
> should just charge its costs, not more. Several people really can't
see
> how, in the end, one can claim that it costs $92.5 million to add
500
> new TLDs to the root (when Verisign can add millions of .com domains
for
> $7 each and still make huge profits). This doesn't mean that this
cost
> is necessarily false, it just means that it's hard to believe and
better
> proofs are needed.
>
> For example, let's pick the 12.8 million dollars that ICANN claims
to
> have already spent on this project, of which almost 8 million are
> salaries. Whose salaries are they? For how long? What did these
people
> do? Are these expenses really and directly related to new gTLDs, or
not?
> We really can't say and we need much deeper information.
>
> Otherwise, the result will just be a rush of people saying that it's
> just "empire building" by people at ICANN who enjoy fat salaries and
> five star travel at the expense of Internet users, and want to
extract
> as much money as possible to further the situation. This is quite a
> simplistic and ingenerous view, yet it's what emerges from many.
>
> Ciao,
> -- 
> vb.                   Vittorio Bertola - vb [a] bertola.eu
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