Re: [gnso-vi-feb10] First stab at objectives and a definition of VI

[Avri Doria <avri@xxxxxxx>]

Hi,

I would like to caution against strict text book definitions of Vertical 
Integration.  I think we have to account for similar arrangement that allow 
similar degree of exclusively.  For example, various definitions of Affiliation 
between Registrars and Registries and some forms of cross ownership could have 
similar effects as text book 'single corporate structure' Vertical Integration. 
 I think within the ICANN context of the term and restrictions on vertical 
Integration have to be extended beyond the strict text book definitions and we 
have to look at these related situations.

Part of the information gathering work at the beginning of the WG could include 
an investigation of these related situations.   At least that is how I was 
viewing it.  

BTW: I noticed that Vertical Integration was on the Board's agenda for the 
meeting today.  Any updates that contribute to this effort?

a.


On 3 Feb 2010, at 20:24, Milton L Mueller wrote:

> Thanks, Chuck, for getting things rolling.
>  
> As my email yesterday indicated, the DT needs to define the objectives and 
> scope of the PDP. I also indicated that definitions of terms would be 
> important. Here is an initial proposal as to how the objectives could be 
> defined. I will also propose a definition of vertical integration.
>  
> OBJECTIVES
> If I read the motion authorizing this PDP carefully, I actually discern two 
> distinct objectives. It is important to keep them distinct.
>  
> Objective 1: to set policy and procedures that provide clear direction to 
> ICANN staff and new TLD applicants on whether, and if so under what 
> conditions, contracts for new TLD registries can permit vertical integration 
> or otherwise deviate from standard forms of registry-registrar separation and 
> equal access.
>  
> Objective 2: to examine current gTLD contracts and practices approved by 
> ICANN staff and determine if any of them are outside the current policy 
> framework regarding vertical integration, and, if so make recommendations as 
> to how to respond to these exceptions.
>  
> DEFINITION
>  
> In economics, vertical integration is defined as a situation where the 
> activities of a firm extend over more than one successive stage in the 
> production process. (Pearce, D.W. (ed.) MIT Dictionary of Modern Economics, 
> 4th Edition 1996, p. 450.) Applied specifically to the domain name industry, 
> a registry and a registrar can be considered successive stages in the 
> production process. Vertical integration is thus defined as a business 
> structure in which there is no separation between the registry operator and 
> the registrar; they are owned and operated by the same company and the domain 
> name supplier is not required to provide access to independent firms to sell 
> names under its TLD. Note that a vertically integrated entity may voluntarily 
> contract with independent entities to distribute or resell its names, but a 
> policy that permits vertical integration means that the firm is not required 
> to do so on regulated terms and conditions.
>  
> I’m thinking the definition should be uncontroversial, the objectives also 
> seem straightforward to me but could spark a lot more discussion. I have 
> further ideas about how to go forward from there, but let’s take it one step 
> at a time.
> --MM
>