Re: Tired of Waiting

["Roeland M.J. Meyer" <rmeyer@mhsc.com>]

At 05:50 PM 7/17/98 -0400, John Charles Broomfield wrote:
>Hi Roeland,
>
>> MHSC is looking at the same business operations model as IOD (which Chris
>> is not directly involved with anymore, he works for Microsoft now). I see
>> no benefit in breaking out the registry. Most of the cost is in the
>> registrar anyway. Especially if the hardware is already sunk-cost for other
>> operations. In that case the registry is no cost, just a postgreSQL
>> table-set, occupying disk space, and CPU, which other operations are
>> already paying for. IOW, your argument carries no weight.
>
>Yup. You're completely right. In a scenario where you own/control the
>registry and you are the only one doing registrations, outsourcing the
>registry has little or no advantages. One thing that just about everyone
>agrees is the prevailing vision (even Chris Ambler I think, though he says
>he doesn't like it), is that registry should be separate from registrar to
>allow customers to be able to registrar under a given TLD through different
>companies, and not be forced to go through one companies horrible procedures
>when they'd prefer another companies simple procedures (or so that they can
>get a no frills service as opposed to a hand-holding process, etc...)

MHSC is talking no-frills. But we have to have a customer care call-center
anyway. They need work to do. It'll be under the same roof as our NOC, in
Colorado. In any case, it's is provided our of slack-time from the other
services. Ergo, sunk-cost anyway.

>One thing that you seem to agree with however is that the registry part,

>once operating is nect to nothing as far as operating costs... (more on this
>later).

Yep.

>> The trick is that no single-service ISP can do this. The same reason that
>> we can cut Verisign's price structure out from under them, it's not our
>> main source of revenue, it's gravy. We pay the rent from other, more
>> profitable, services. However, we will never operate a service at a loss,
>> but we don't have to. It's the incremental profits, from a full range of
>> services, that make the next generation ISP profitable.
>
>Agreed completely. Take a look at the UK, and tell me how many companies you
>find that survive solely on ".uk" registrations and do no other services
>(Purely out of coincidence, in the UK is where one of the largest
>"registrars" for .everything is based, but that's another story). My guess
>is that you'll find none. Count how many registrars there are for ".uk"
>(doing it with nominet), and look at them. Most are ISPs that interface with
>the registry to update/enter records for the customers that they have that
>host webs with them, or are directly connected, or need email, or...

Yep, a single-service business model doesn't work anyway.

>A domain name on its own is something pretty useless. You need a link
>somewhere or a web server or a mail forwarder or a bunch of hosts or...
>In just the same way that GENERALLY a customer doesn't get his IP addresses
>from one place and then sets up somewhere else (I'm talking about general
>cases), it would make sense that in general a customer would also get his
>domain names through his upstream provider. Most ISPs would eventually
>become registrars.

Yes, exactly the vision I see, with one caveat. I see the customer getting
his Access through thier IAP, usually the local telco, and getting their
services elsewhere becasue the telco is so bad at those. This concept is
integral to our business plans. We see a separation between IAPs and ISPs.
Access is the only place that absolutely no one can compete with the
telcos. They have scads of raw switch capacity, which is already paid-for,
therefore, no one can touch their operations cost levels. Having been in
management at both MCI and Pacific Bell, I have seen this personally.
Access is another place where initial investment cost is a serious barrier
to entry.

>> > (maybe Chris can inform us of how much that part costs him in
>> >systems, staff and personal time, but I'd be surprised if he was
managing at
>> >less than $10 per name. I think he has around $1000 names registered,
so if
>> >he wants to argue that he has spent less than $10.000 I would be very

>> >surprised),

>I said I would be surprised if he had spent less than $10K, but you say that
>the development of the software costs $600K. That's exactly what I was
>talking about... So if under your calculations he has spent $600K, and he
>has taken back around $35K in registration fees, then he's heavily broke...

Unless the base-line software was available as open-source. MHSC is
primarily an R&D house, not an ISP. Further, we're a Linux shop and heavily
invested in the open-source concept. On that note, we are looking into
opportunities to provide those services as well. Including an Enterprise
Server diistribution for Linux, but that's another story.

Consider this; SLD registration software is not much different, in
essential operation, from user registration software, which the typical ISP
*also* has to have. The only difference is the data, which are the objects
wrapping the pSQL statements. Ergo, one should be able to get close to 80%
re-use. Suddenly, the cost of the SLD registration software drops to $120K,
as an add-on development. Further, if it's is bundled as part of a Linux
distribution, the development cost is now part of a product, therefore
carried on a different ledger entirely, as part of investment cost for a
software product, rather than being charged against the service. The SLD
registry, for a given TLD, now operates essentially for free and the
product only has to recover $120K against software sales.

<gotcha!><grin>

>(Maybe that's why he so badly needs the monopoly over '.web')
>You put forward a good case for having just one registry. The same

>hardware/software setup to deal with one TLD should be able to handle 1000
>TLDs, just spreding out the initial cost until it goes so low that its
>ridiculous. 

Thousands?!?! Lets talk millions, just add sufficient RAID5 space, a half
T-byte should do it. I can get 23GB SCSI-UW drives for $1600, normal price.

>That was the initial philosophy of CORE. However the consensus
>seems to be that there should be more than one registry (I feel it's a
>political imposition by people like Ira Magaziner or others who haven't
>really looked as deep as they should, but with some impositions like this
>its best to work with them than ignore them). In any case, thanks anyway for
>defending the choice of a single registry.

But, the other half of the argument was only just presented <grin>.

>Having covered initial cost, running costs are ridiculously low, and service
>is relatively simple to give, so allowing a for-profit company to have a
>strangle-hold on this (ie allowing him to charge whatever he wants for
>example) would be bad practice.

Why? The customers would simply go to another TLD. BTW, we're consiidering
$35/year for a SECURE TLD list to be quite profitable and fair. As we add
value, of course, the price will go up to reflect the increased customer
support costs, plus a profit margin. In any case, we do not envision it
going over $75US/year, in 1998 dollars. It's the *other* SECURE services
where we intend to make the majority of the profits.

>Chris says "hey, then put a price cap". It's actually the other way around:
>The conglomerate of registrars should actually say "we're willing to pay
>THIS for the business of having a company run this registry for us. Who's
>taking?" All the while, the ownership of the TLD stays in the hands of the
>overall structure, but not owned by any one group (if you like it's nIANA

>that owns all TLDs).

BTW, you do realise that you've already agreed that a single-service ISP
can not make enough to stay in operations. A non-profit TLD operator would
not be allowed to field the other services that would keep them
operational. Therefore, a central TLD, a la CORE, can not remnain solvent
for long.


___________________________________________________ 
Roeland M.J. Meyer, ISOC (InterNIC RM993) 
e-mail: <mailto:rmeyer@mhsc.com>rmeyer@mhsc.com
Internet phone: hawk.mhsc.com
Personal web pages: <http://www.mhsc.com/~rmeyer>www.mhsc.com/~rmeyer
Company web-site: <http://www.mhsc.com/>www.mhsc.com/
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