[gnso-vi-feb10] RE: cross-ownership definition

[Jeff Eckhaus <eckhaus@xxxxxxxxxxxxxxx>]

Finally catching up through these emails so hopefully I am not too far behind 
on the CO definition issue.

I believe Milton is correct in his definition since minority ownership is 
currently allowed so the term Controlling (over 50%) needs to be in there. 


Jeff
-----Original Message-----
From: owner-gnso-vi-feb10@xxxxxxxxx [mailto:owner-gnso-vi-feb10@xxxxxxxxx] On 
Behalf Of Milton L Mueller
Sent: Sunday, February 07, 2010 5:19 AM
To: Avri Doria; Gnso-vi-feb10@xxxxxxxxx
Subject: [gnso-vi-feb10] cross-ownership definition


> > Don't we also need a definition of cross-ownership, just to avoid
> further confusion about that?
> >
> > Here's a stab at that:
> > "Cross ownership" is defined as the ownership of a controlling share of
> a registry by a registrar, or vice-versa, while maintaining the
> contractual and functional separation and equal access arrangements
> required by ICANN policies and contracts. As long as equal access
> arrangements are in place, cross-ownership that permits the registrar to
> sell the names of the cross-owned  TLD registry shall not be considered a
> form of vertical integration.
> 
> 
> While I agree with what the end result would be, i am somewhat troubled by
> bundling Recommendation 19 into the definition of CO.

?? I don't see any mention of Rec 19 there. Can you explain?

> I also do not know
> if controlling share is a necessary part of the definition.

Ok, it doesn't have to be. My reason for putting it in was that I was under the 
impression that minority ownership is already allowed by current policy. So the 
purpose of the definition is to make it clear that the WG will be concerned 
only with CO issues that involve acquisition of a controlling share. With a 
controlling share, CO moves somewhat closer on the spectrum towards VI, which 
makes it a concern of this PDP.

> And I think
> there has to be some notion of verifying that in those cases were cross-
> ownership is allowed, the fair and equal access can be verified.

Here I think you are getting away from definitions and into specifying policy. 
One of the chief policy debates about cross ownership has to do with the 
verifiability of equal access/nondiscrimination. The registries have argued 
that unless there is a ban on selling a cross-owned TLD, we cannot enforce 
nondiscrimination. The registrars have argued that such a ban is not needed. By 
including the word "verifiable" in there you may be viewed as pre-judging that 
issue.

The definition of CO I proposed above was meant to define the type of CO this 
WG will consider as in scope, and to distinguish it from pure VI. It was not 
intended to specify the appropriate policy for allowing or not allowing CO, nor 
is it appropriate for a DT charter to do that. 

I think the issue of verifiability should be left to the WG as a policy issue, 
and left out of the definition. If you like, we can explicitly mention it in 
the description of the WG scope or objectives. 

> What would we call a relation where a registrar owns a strong minority
> share of a registry and they have concluded a marketing deal that gives
> priority to that registrar in selling the names of that Registry's new
> gTLD.  It seems that we would have a cross-ownership situation with a
> question of VI and degree.

Sure, there is a gradation here but again I am under the impression that 
current contractual arrangements already allow minority shares. Perhaps the 
registrars and registries on this list can clear up that factual issue. 

If we decide to remove the "controlling share" language from the CO definition, 
then the easy solution is to specify a threshold (say, 30%); above that we 
consider the share large enough to be considered "cross ownership" below that 
we don't. Advantage: the definition is clearer. Disadvantage: the threshold is 
somewhat arbitrary. 

--MM