.MUSIC comments for ICANN DAG4: Vertical Integration

[Constantine Giorgio Roussos <costa@xxxxxxxx>]

RE: Vertical Integration
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100% Vertical Integration exceptions should be granted to community-based
organizations with a structure that ensures registry data can not be abused
and used to raise prices and make valuable, premium domains unavailable to
the public. Exceptions should include organizations that do not require the
assistance or the marketing distribution channels of current registrars that
would not provide any value to the community TLD. Newcomer/new entrants with
no prior business in the registry/registrar business and with innovative
business models and technology should be allowed to 100% vertically
integrate in order to help level the playing field and compete with the
likes of Verisign, Afilias or Godaddy, who are primed to most benefit from
new TLDs with or without Vertical Integration.

We strongly oppose any proposal made in the Vertical Integration Working
Group which ensures the advancement of the existing large registries and
registrars with significant market power. Allowing such players make
proposals and vote on proposals not only ensured there would not be
consensus, it also achieved their goal of keeping the status-quo if no
decision has been reached.

We strongly oppose the Afilias/PIR proposal (RACK) because it is
anti-competitive and only serves the interests of the big registries. We
further believe that the CAM proposal can create unintended complications,
expenses and delays, since it is well known who the big
registries/registrars are and mechanisms can be put in place so they do not
abuse their influence and power. We also oppose accepting any arbitrary
percentage or numerical threshold in regards to cross-ownership or a cap on
the number of registrations a vertically-integrated registry can have. The
JN2 is anti-competitive and discriminates against new entrants, newcomers
and disadvantaged applicants. Any artificial limitations in regards to
registry-registrar vertical integration, cross-ownership and caps on
registrations must be eliminated to ensure ICANN is in alignment with the
core mission of introducing new TLDs, bring innovation, increase real
competition and serving the public interest.

We opposed ICANN's decision to create a working group which included the big
registries and big registrars to come up with proposals. A working group
with the GNSO chair of Verisign's Chuck Gomez and other big
registries/registrars ensured that the final outcome would be rigged against
any possible consensus. Their goal is simple: keep their monopolies intact
and vote against anything that is not in their self-interest. Using the
excuse of "registry abuse" as the sole determinant for having vertical
separation is not consistent with the needs of today's Internet age and
demands of Internet users. The solution is simple: if any harm is made, then
ICANN can deal with it immediately. This type of compliance enforcement is
effective, cost-efficient and simple and in alignment with how ICANN handles
its business in many matters today.

We support the Free Trade model that was proposed, which would also impose
restrictions on big registries/ big registrars who should not be allowed to
vertically integrate given their existing market power and the benefits they
would gain through the introduction of new TLDs. Nearly all new entrants
will choose to use the big registries to handle their backend registry
operations, thus benefiting them. In regards to big registrars, new entrants
will be competing for big registrar shelf space. The big registrars will
benefit greatly from being able to offer new TLDs to consumers.

We proposed that the highly restrictive and anti-competitive language of
Article 1.2.1 of Module 1 and Articles 2.9a, 2.9b and 2.9c of the proposed
new gTLD Agreement be replaced by language that would allow 100% vertical
integration for new entrants with no prior registry/registrar history. The
existing language in DAG4 will put ICANN in anti-trust litigation since it
decreases competition between registries and is inconsistent with the intent
of the introduction of new gTLDs "to open up the top level of the Internet's
namespace to foster diversity, encourage competition, and enhance the
utility of the DNS". ICANN should remove  restrictions that serve only the
established big players of the domain industry and ensure they provides a
fair and open process open to all applicants and service providers by
leveling the playing field and allowing the marketplace take care of demand
and supply.

Registries should be free to distribute their own TLDs if they decide that
there is no value of using the traditional registrar equal-access
distribution system. Some registries might decide that self-distribution is
the best way to be consistent in pricing and giving the savings that would
have gone to registrar "middlemen" to their respective communities or to
lowering prices. In addition, self-distribution would enable a more flexible
model for innovation and offering bundling and special deals or coupons in
an uncomplicated manner. Lastly, technology integration would be simpler as
well as less costly and time-consuming. If an existing registrar can bring
value to the table, then the registry can choose to partner and work with
any registrar that can create value. In most cases though, new TLDs will
choose to use all existing registrar distribution marketing channels to
market their TLD. It is in the case of specialized community TLDs, that are
restrictive and have no beneficial interest to sell to the general crowd,
that the traditional registrar distribution marketing channel will not be
advantageous to use. Just like any business, a TLD registry can choose their
partners depending on what value is created. The market will play itself
out.

We urge ICANN to remove any anti-competitive restrictions and allow full
vertical integration for specialized communities and new entrants without
any limitations in cross-ownership or registration caps which are arbitrary,
artificial and only benefit the existing market leaders. The European Union,
the U.S and other nations have strong laws and regulatory enforcement
agencies to guard against anti-competitive activity and unfair business
practices. We hope ICANN moves away from issues that might invite anti-trust
litigation and changes the language in regards to allowing full
registrar-registry vertical integration.


Constantine Roussos
Founder & CEO
.music

http://www.music.us

468 N. Camden Dr #123, Beverly Hills, CA 90210, USA - Tel: +1 310 860 4745
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