Re: [gnso-vi-feb10] Question on Proposals

[Eric Brunner-Williams <ebw@xxxxxxxxxxxxxxxxxxxx>]

You're welcome Richard.

It seems to me that the 1% questions, a cap of 1% and a cap of 99%,
have to be asked, and if any point of meaningful difference from the
0% cap (Board Res. #5) and 100% cap (various) can be identified,
discussed.

Somewhere between these margins, and we are in effect discussing how
many equal and independent "votes" are needed to create a stable
policy (registrar business policy) making body. At CORE we've 5 on our
ExCom, though only 4 at present, with member elections schedule, and a
choice of odd numbers to prevent deadlock starts at 3 and runs to
one's choice for manageability, let us say 15, that gives caps from
33.3% to 6.6%.

The body of N must avoid preference to some of N, be competitive with
other registrars with other ownership structures, such as yours or
mine, and effectively distribute their owner's inventories, so that
their owners are competitive with other registries having other
distribution channel ownership participation models, e.g., "none", or
some other shared registrar(s).

I suspect that advocacy positions ignored, there is sufficient
expertise in the corporate board formation problem in the working
group to adequately address the problem.

If such a model of minority ownership by registries in registrars is
assumed, there is the question of whether a case for exception to
Recommendation 19 exists, and what characterizes this rational(s) for
exception(s).

As there are two equivalencies frequently offered as solutions to the
problem of registries lacking registrars, exception in time and
exception in volume, it seems desirable to me that there is discussion
of large and small values for each, to find if there are points at
which these are distinguished from never-or-none and always-and-all,
time and numbers, respectively.

Eric


On 4/10/10 9:39 AM, Richard Tindal wrote:
> Thanks Eric.
> 
> Interested to hear responses to this from the WG.    Especially from those 
> who haven't been active so far.
> 
> RT
> 
> 
> 
> On Apr 10, 2010, at 2:17 PM, Eric Brunner-Williams wrote:
> 
>> On 4/9/10 11:45 PM, Richard Tindal wrote:
>>>
>>> Eric B-W and Jeff N,
>>>
>>> Your proposals strictly limit a registry operator from controlling a 
>>> registrar in its TLD.
>>
>> Correct, at least w.r.t. CORE's.
>>
>>> What is the purpose of this limitation  (i.e.  what harms do you see coming 
>>> from a registry controlling a registrar in its TLD)?
>>
>> 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.
>>
>> But you've read all that twice and are really asking why not some cap
>> significantly in excess of the 11.2% to 15% in the current contracts.
>>
>> First, because the policy goal of ending structural economic
>> discrimination, in the presence of significantly larger than the 2000
>> to 2006 experience cohorts of registries entering operations per
>> quarter, is removed by a lower cap.
>>
>> Second, because there does not appear to be even a linear relationship
>> in control and benefit, to support a 2x claim for the nominal 30%, or
>> a 3x claim for the nominal 45%, ... so the reduced diversity of
>> control, the reduced size of the pool of registrar sharing registries,
>> has no corresponding benefit, and at the figure you asked privately,
>> 75% control, is indistinguishable from 100% control, which is an
>> exception from Recommendation 19.
>>
>> Third, because the least change to effect an identified goal is the
>> best change.
>>
>> Fourth, because the number of registries which must offer an EPP
>> server set of extensions which a registrar is economically rational in
>> implementing in its client is significantly greater than 1, the
>> variation in EPP extensions, a problem since the 2000 round, is 1/Nth,
>> where N is the number of registries necessary to form a registrar,
>> nominally 7 at a 15% cap, the variation possible, and unfortunately
>> likely, if the registry associated registrar had no economic
>> motivation for commonality.
>>
>> Restated, where registries are incented to deviate minimally from the
>> core EPP standard, registrars are incented to implement their
>> deviations from the core EPP standard, to mutual benefit.
>>
>> Re-restated, a minority ownership or control cap provides nearly an
>> order of magnitude reduction in the overall technical and contractual
>> complexity of registry and registrar relationships. Complexity is
>> cost, and as the number of registries approaches the number of
>> registrars, the growth of complexity cost, to registrars, and to
>> ICANN, and others with multi-registry interests, does not scale. This
>> affects no registry directly until a complexity cost limit, at which
>> point new registries have no default registrar interest.
>>
>> Reminder, at Paris and subsequent I've asked the RC, now RSG, "who is
>> going to implement the EPP warts of the new gTLDs?" I've never gotten
>> a single registrar to indicate interest in the new gTLDs -- as a
>> registrar.
>>
>> Thanks for your question about the registry cap on ownership or
>> control of registrars. Don't forget the other direction.
>>
>> Eric
> 
> 
>