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

  • To: "Gnso-vi-feb10@xxxxxxxxx" <Gnso-vi-feb10@xxxxxxxxx>
  • Subject: RE: [gnso-vi-feb10] First stab at objectives and a definition of VI
  • From: Milton L Mueller <mueller@xxxxxxx>
  • Date: Thu, 4 Feb 2010 11:00:07 -0500

> -----Original Message-----
> From: owner-gnso-vi-feb10@xxxxxxxxx 
> [mailto:owner-gnso-vi-feb10@xxxxxxxxx] On Behalf Of Avri Doria
> I would like to caution against strict text book definitions 
> of Vertical Integration. 

I would like to caution against ignoring 50+ years of policy debate about 
vertical integration in numerous industry sectors under the pretense that the 
internet and how we govern it is somehow "different" simply because some of us 
are unaware of that legacy. 

We need to adhere to a correct and accepted definition of VI. Whether we look 
at other situations or not, we still need a careful definition of what these 
"related situations" are. If they are not vertical integration you don't create 
any value or analytical traction by calling them vertical integration - quite 
the opposite, you confuse things. 

> 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.

Two responses to this. 

First, whether or not your concern about "similar effects" is valid and 
justified, one still needs an agreed definition of vertical integration to know 
whether the effects are similar or not, and whether other structural 
arrangements that fall short of VI actually raise these concerns. 

Second, we don't want this PDP - or any PDP - to become a fishing expedition 
that can encompass any and every economic concern related to registries and 
registrars. We need to bound the scope of the PDP. As I read it, the PDP is 
fundamenally about vertical integration. The term is in the motion that created 
the WG and this DT. If the issues that concern you are NOT caused by vertical 
integration then a PDP about vertical integration does not address them. 

> 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.

No - the answer to your problem is to expand the definition of the scope of the 
WG. It is not to try (a futile attempt) to change the definition of vertical 
integration. You are arguing for a broader scope for the WG. It is not an 
argument about the definition of VI. 


> 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.
> >  
> > 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.
> >  
> >  
> > 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
> >  

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