RE: [bc-gnso] Draft GNSO Council letter to the GAC

[Marilyn Cade <marilynscade@xxxxxxxxxxx>]

I do a good deal of work on externalities in another part of my advisory work 
for corporates in the areas of Internet connectivity. I would however, for the 
BC, refer you to the commissioned report prepared by a highly respected 
economic consulting firm, based in the UK, but with global focus -- Analysys 
Mason.  The report, commissioned by AT&T, and prepared by the external 
consulting firm, clearly identifies SOME of the externalities.  The externality 
of shifted economic implications, burdens of increased monitoring for fraud and 
abusive use of domain names, which is impacted by but not limited by trademark 
infringements, cannot be misunderstood, or ignored. 
I note with concern that ICANN has ignored completely the importance of well 
founded economic analysis, choosing instead to buy opinions, which one can 
always do, or to cite the few who do want to operate a registry, whether for 
non profit or for profit purposes, without doing the due diligence that would 
be expected of the "trusted and objective" coordinator and manager of the 
unique name space/indicators. Regretfully, increasingly, I see this Board, and 
some of staff buying the concept that ICANN is for 'growth and expansion" of 
the TLD space, as though that is what a trusted steward of the overall space 
would focus on.  I was just at a session with 20 developing countries -- 4 of 
them are reviewing their ccTLDs and want to improve the governance. NONE of the 
4, although they have awareness of the ICANN 'staff', wanted to start there 
with a conversation about what to do. All of them welcomed introductions to 
other ccTLD managers who have 'integrity' and worry about fraud and abuse. 


Among other things, the BC has stood for security and stability as a priority.
ICANN's role is to manage -- e.g. govern this space. It is continues its 
accelerated shift to thinking of itself as 'free market' and 'commercially 
driven' it is abdicating the purpose for which it was established, abandoning 
the principles that those of us who crafted it and drafted its introductory 
bylaws and mission agreed to, across a very diverse core of Internet 
stakeholders -- who were, by the way, private sector led, but multi stakeholder 
in nature.  And will force the hands of governments to take oversight of some 
of its core functions. This is a 'shared space'. Should ICANN not treat it as 
such, it will become only a e facto trade association for registries and 
registrars, who then want to set the rules for their competition. Customers of 
services do not accept that a supplier speaks for their interests.   It will 
increase the likelihood of registry failure. It will abandon any safe harbors 
it has for non profit status, and anti trust 'shelter'. 

And I'll be spending even more time at the ITU and other fora, trying to 
prevent intergovernmental takeover. And we will undoubtedly see the gTLD 
registry and registrars added to the definition of Internet Intermediary, and 
subject to licensing country by country.

Yesterday, I talked to two governments who asked me why they should not add 
gTLD registries and registrars to parties subject to entry and  'iicensing 
requirements' in their country, describing behaviors that harm their consumers 
in their interactions. They described ICANN's failures to take action. They 
were familiar with domain name tasting and parking. 
The pursuit of an irrationally enthusiastic approach to change in any part of 
the DNS is immature and irresponsible for a 'trusted steward' who must look at 
all aspects of the eco system that it supports.  
Only when the community insists, does ICANN even slowly show signs of 
recognition of the need to make changes. 
I'm seeing ICANN failing to recognize the yellow signs of caution, " hairpin 
turn" ahead road signs.  And ignoring the implications of imposing 
externalities on the subsystems is just one of the 'bad indicators', in my view.
In the meantime, for anyone who wants a good read about only some of the 
externalities that were identified by the economist from Analyses Mason, you 
can find as an attachment to AT&T's posting on the economic 'position papers' 
from Dennis Carlton that ICANN commissioned to defend their view that they do 
not need to do an economic analysis. 
Marilyn Cade






> Date: Fri, 15 May 2009 07:30:46 -0400
> Subject: Re: [bc-gnso] Draft GNSO Council letter to the GAC
> From: icann@xxxxxxxx
> To: lizawilliams@xxxxxxx
> CC: bc-gnso@xxxxxxxxx
> 
> 
> Hello,
> 
> On Fri, May 15, 2009 at 3:37 AM, Liz Williams wrote:
>> George
>> It is usual for you to provide validation and research that supports your
>> points.  You have mentioned "negative externalities" -- apart from the need
>> to protect legitimate trademarks through existing mechanisms and introducing
>> improvements where we can, what other negative externalities are there?
> 
> I've made extensive comments in the new gTLD comment archives already,
> so don't wish to duplicate all of those again for all who've read
> them. You might want to refer to the words of Tim Berners-Lee who I
> quoted from at:
> 
> http://forum.icann.org/lists/2gtld-guide/msg00020.html
> 
> "And because the DNS tree is so fundamental to the Internet
> applications which build on top of it, any uncertainty about the
> future creates immediately instability and harm."
> 
> "Our first instincts, then should be not to change the system with
> anything but incremental and carefully thought-out changes. The
> addition of new top-levels domains is a very disturbing influence. It
> carries great cost. It should only be undertaken when there is a very
> clear benefit to the new domain."
> 
>  "The chief effect of the introduction of the .biz and .info domains
> appears to have been a cash influx for the domain name registries."
> 
> "Introducing new TLDs has two effects.
> 
> The first effect is a little like printing more money. The value of one's
> original registration drops. At the same time, the cost of protecting one's
> brand goes up (from the cost of three domains to four, five, ...).
> 
> The value of each domain name such as example.com also drops because
> of brand dilution and public confusion. Even though most people
> largely ignore the last segment of the name, when it is actually used
> to distinguish between different owners, this increases the mental
> effort required to remember which company has which top level domain.
> This makes the whole name space less usable."
> 
> "The second effect is that instability is brought on. There is a flurry of
> activity to reserve domain names, a rush one cannot afford to miss in
> order to protect one's brand. There is a rash of attempts to steal
> well-known or valuable domains. The whole process involves a lot of
> administration, a lot of cost per month, a lot of business for those
> involved in the domain name business itself, and a negative value to
> the community."
> 
> "When the benefits of the new domain itself are small or negative (as
> we discuss below), then one looks for incentive. The large amount of
> money that has changed hands for domain names might lead a person to
> suspect that this was the motivation."
> 
> "The root of the domain name system is a single public resource, by
> design. Its control must be for and, indirectly, by the people as a
> whole. To give away a large chunk of this to a private group would be
> simply a betrayal of the public trust put in ICANN."
> 
>> You mention "not demonstrated any widespread support outside of a tiny
>> minority who wish to direct profit from their launch". How does that account
>> for people wanting a TLD that is a not for profit, public benefit, non
>> commercial TLD?  More broadly, what is wrong with making a profit?
> 
> The folks who claim they are "not for profit" often still receive
> healthy salaries, pay consultants large ongoing amounts of money, etc.
> Dot-org is a perfect example of this, with PIR maximizing revenues at
> the expense of registrants with massive annual price increases so that
> they can direct the cash to their own causes.
> 
> I'm certainly not against making profits, but am against it when it is
> parasitic (causing the negative externalities imposed upon everyone
> else) or is anti-competitive/monopolistic (e.g. VeriSign with a no-bid
> contract for dot-com, all the gTLDs with presumptive renewal, etc.).
> 
>>  Could you be more precise about long-term and lasting damage to the public?
> 
> See the comments above by Tim Berners-Lee for starters, or all my past
> comments in the new gTLD comments archive. The elimination of price
> caps, for example, which could propagate back into *existing* gTLDs
> and lead to tiered pricing is another obvious example.
> 
> Sincerely,
> 
> George Kirikos
> 416-588-0269
> http://www.leap.com/
>