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Afilias seeking to become an unregulated, price discriminating monopolist

  • To: biz-tld-agreement@xxxxxxxxx
  • Subject: Afilias seeking to become an unregulated, price discriminating monopolist
  • From: Ben Johnson <bj@xxxxxxxxxxxxxxxxxxxxxxxx>
  • Date: Fri, 13 Oct 2006 13:49:52 -0400

The language proposed by Afilias creates multiple opportunities to engage in "tiered pricing" -- which is essentially a nice name for what economists call discriminatory monopoly pricing.

If the contract language Afilias is has proffered were to be accepted by ICANN, Afilias would have its monopoly power unleashed, and would have the ability to maximize monopoly profits by raising it fees for renewal of existing (already registered) domains to the maximum price level each domain owner, or class of owners, is capable of paying.

While the letter from Afilias creates the impression that it isn't seeking the opportunity to engage in discriminatory pricing, the actual contract language it is suggesting would enable it to engage in discriminatory "tiered pricing" under at least half a dozen different circumstances or legal arguments.

Every enumerated item in the indented paragraph on page 2 of their letter to ICANN represents a loop hole or opportunity to impose discriminatory pricing .

For example, Afilias is trying to reserve the right to discriminate, provided the tiered prices are applied using a uniform price schedule. Thus, for example, domains with 3 characters could be charged higher renewal fees than those with 4 or more characters. Or, domains with substantial traffic could be charged more than those with minimal traffic.

Similarly, Afilias is trying to reserve the right to discriminate, provided the domain in question was originally registered pursuant to a marketing program.

Ditto for domains registered using any "New Registry Service" -- whatever those may be.

Plus, they want "me too" rights to match the discriminatory pricing rights granted to any other gTLD.

The key flaw in their position is their totally invalid, and utterly unsupported contention that registry operators don't enjoy any market power.

In reality, the registry operators (including Afilias) have enormous amounts of market power with respect to existing, registered domains -- there isn't any practical way for domain owners to retain the benefits of their ownership without paying whatever amounts the registry operators demand -- whether it's $1 per year, $6 per year, $10 per year, or $10,000 per year.

Instead of approving the requested contract language, ICANN should insist on a fixed schedule of rates, capped for the duration of the new contract, which are lower than the existing capped level., with no presumption in favor of renewal. If Afilias is unwilling to accept those terms, ICANN should allow other firms to bid for the contract.
Ben Johnson, Ph.D.
Consulting Economist

http://benjohnsonassociates.com

--
Ben Johnson, Ph.D.
President and Consulting Economist
Ben Johnson Associates, Inc.®
2252 Killearn Center Blvd.
Tallahassee, Florida 32309
Voice:  (850) 893-8600
Fax:  (850) 668-2731
E-Mail:  bj@xxxxxxxxxxxxxxxxxxxxxxxx
Websites:  benjohnsonassociates.com
          utilityregulation.com
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