Re: [gnso-vi-feb10] A case for minority caps

[Avri Doria <avri@xxxxxxx>]

Hi,

Interesting.

you explain why having some Rr ownership of Ry and Ry ownership of Rr can be 
helpful especially in CCLs.

why a cap? 
why nominally 15%?

why restrict to minority?
is there gradient in the benefit?  
is there a point where the %age is too high and the benefit stops in your 
calculation?

a.

On 8 Apr 2010, at 12:17, Eric Brunner-Williams wrote:

> 
> We attempt to solve two problems by the least means.
> 
> -----
> 
> For a minority cap on registry ownership of registrars, nominally 15%.
> 
> Few existing registrars are equally or preferentially capable of
> offering sales channels for registries which are IDN-centric, or
> local-currency-centric, or regional, and other reasonable properties.
> 
> With .cat we had four registrars "in Catalonia". Other linguistic and
> cultural applicants are not so lucky. There is only one ICANN
> accredited registrar in all of Africa, etc.
> 
> A minority interest cap sufficient to allow equitable access to
> registries operating a shared registrar is adequate to solve the
> problem that at registry start-up, where the registry is sufficiently
> distinct from the current market, it will lack registrars.
> 
> A consequence of economically executing a shared registrar is that the
> EPP and business model divergence among the participating registries
> is self-limiting, and any registrar implementing the same EPP and
> business model supporting registration profiles has access to all of
> the participating registries, reducing the cost of entry for second
> and subsequent competitive registrars.
> 
> The competition policy benefit is that applications are not invisibly
> constrained to the existing dominant model defined by ASCII, dollars
> (or euros or ...) and the OEDC economies, creating diversity of models.
> 
> The public interest policy benefit is ending structural economic
> discrimination reducing the abilities of unserved and underserved user
> populations to use the domain name system.
> 
> The ICANN policy benefit is that exception to the general requirement
> for registrars is not necessary to achieve these fundamental policy goals.
> 
> -----
> 
> For a minority cap on registrar ownership of registries, nominally 15%.
> 
> The existing dominant economic terms are $6 to VGRS and $1 to a
> registrar. Prices have gone up some, and some registrars compete on
> value propositions other than lowest price, but 6-and-1 characterize a
> significant portion of the existing prices. Actual per entry cost for
> domain database is on the order of $1/year.
> 
> Under this system, no competition for Verisign has emerged.
> 
> A minority interest cap sufficient to allow equitable access to
> registrars operating a shared registry is adequate to create a 1-and-6
> alternative to the 6-and-1 allocation of margin exists in the current
> market.
> 
> A consequence of economically executing a shared registry with a
> equivalent price point is that the registrar margin will be sufficient
> to motivate registrars to preferentially sell the 1-and-6  over the
> 6-and-1, creating competition for Verisign. For margin reasons, the
> cooperating registrars may chose to set a price point below Verisign,
> expanding the competitive benefit to registrants.
> 
> The competition policy benefit is that applications may rationally be
> framed as price competitive with legacy market, rather than price
> indifferent, or worse, and only "brand" or "other services"
> competitive, with Verisign.
> 
> The public interest policy benefit is ending structural economic
> price-support for the legacy market.
> 
> The ICANN policy benefit is that existing, and new registrars, rather
> than some unanticipated, and possibly non-existent third party, are
> sufficient to achieve these fundamental policy goals.
> 
> -----
> 
> Summary: Caps allowing minority cross ownership are a constructive
> tool for achieving important competition and public interest policy goals.
> 
> Minority registry participation in registrars allows expansion of the
> registries outside the existing market, in particular for IDN
> registries, linguistic and cultural or geographically purposed
> registries, and non-{dollar,euro,...} denominated markets.
> 
> Minority registrar participation in registries allows registrars to
> set both registry and registrar margins, creating price competition to
> the registry-capped incumbent monopoly, for which no competition has
> been created by any other means, other than redelegation.
> 
> -----
> 
> "No change but symmetry on the pre-Nairobi cap" is the one-liner.
> 
> Comments, corrections, on the list or privately. To those that read
> this, thanks for your time and thoughts.
> 
> Eric