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

  • To: Gnso-vi-feb10@xxxxxxxxx
  • Subject: Re: [gnso-vi-feb10] First stab at objectives and a definition of VI
  • From: Avri Doria <avri@xxxxxxx>
  • Date: Thu, 4 Feb 2010 12:13:42 -0500


I am not trying to expand the scope of the PDP. 

And I am not trying to change the definition of VI, just trying to keep us from 
concentrating on the pure academic form of Vertical Integration which is rare 
outside of textbooks and oil companies.

You quoted one definition.  As with all things academic there are broader 
definitions accepted in economics.   While this DT does not need to become a 
symposium on the definitions of Vertical Integration I think that even as 
simple a reference as wikipedia (and I know that is academically rigorous), 
will show you there are more considerations then just the pure balanced 
vertical integration model you are defining.

Common ownership, e.g. falls within the definitions.  This is also true for 
certain times of affiliation.

Also (from http://en.wikipedia.org/wiki/Vertical_integration - and if need be I 
will find some more rigorous definitions that include common/cross ownership 
and certain types of affiliation)

> The three varieties noted are only abstractions; actual firms employ a wide 
> variety of subtle variations. Suppliers are often contractors, not legally 
> owned subsidiaries. Still, a client may effectively control a supplier if 
> their contract solely assures the supplier's profitability. Distribution and 
> retail partnerships exhibit similarly wide ranges of complexity and 
> interdependence. 

I am arguing we need to deal with some of the subtle variations that exist in 
the ICANN context and that doing so is within the context of the PDP and the 
definitons of VI.

Now that you and I have both stated the positions that kept us a loggerheads in 
the NCSG debate on this, and the reason we both wanted to be on this DT, I am 
hoping that some of he other members of the DT join in.  I would hate to see a 
repeat of our long and sometimes acrimonious debate.



On 4 Feb 2010, at 11:00, Milton L Mueller wrote:

>> -----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. 
> --MM
>> 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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