RE: [gnso-vi-feb10] Joint Proposal

["Michael D. Palage" <michael@xxxxxxxxxx>]

Richard,

Let me try to answer your questions from my own perspective, and not on
behalf of MMA.

Answer to Question #1 - Very constructive comment and as noted in footnote
#3 of our proposal we were very concerned about ICANN staff being required
to make market share determinations and the potential for false positions.
If we had an extra 24 hours to discuss the expanded ranger of scenarios,
including those as you have proposed, we may have just removed the 40% bar.
However, it was decided to leave it in and see what the feedback was from
the group. I do not believe any of the co-authors view this as a
non-starter.

Answer to Question #2 - Our objective was to create a fair a level playing
field for all applicants. The co-authors discussed specifically the market
realization as you have cite, e.g. NeuStar as an existing registry operator
would be apply for registrar accreditation on day one of any policy approval
in advance of the new gTLD process.  We discussed various options to create
a pre-approval process for registrars that wanted to be registries and/or
registry service providers. However, the more we discussed how to create a
separate process, the more we became concerned about an overall delay in the
new gTLD process. After reaching the conclusion that most competition
agencies would likely not object to a registry with 0% market share from
using its own registrar, we decided why complicate the process, e.g. Keep It
Simple Stupid (KISS). This of course was dependent upon the self dealing
safeguards we have identified later in our proposal. 

Answer to Question #3 -Team MMA did not discussed this specific scenario,
however, speaking in an individual capacity that was not my intention.
However, a competition agency would be free to open an investigation at any
time. Additionally, ICANN does retain the right under the existing registry
funnel process to refer any matter to a competition agency in connection
with new registry service. Our proposal in no way was designed to limit this
existing ICANN legal right under the registry agreement.

 
Answer to Question #4 - I do not believe that any of the co-authors are
opposed to vertical integration with a registry operator going to direct,
our objective in the proposal was an incremental approach to prevent
substantial push back from the registrar community. Our proposal after is
intended as a foundation for consensus building - trust me getting the three
of use to reach consensus took some work.  With regard to
community/cultural/linguistic TLDs, our main objective is to advance the
idea that mandated use of registrars is not always in the registrants best
interest. I will defer to Avri to elaborate more on this issue as this one
she is very passionate about. However, as evidenced by the text of our
proposal, we are open to discussing the specific criteria to implement this
policy decision. 

Answer to Question #5 - I will strongly disagree with you that ICANN's fees
are set on a cost recovery basis. However, with regard to how ICANN accesses
fees, we recognize that this is a much bigger policy issue to discuss. While
it is totally outside the scope of this working group, we felt strongly that
this be identified as an issue that the Board and the broader community
needs to be aware of as it would directly impact the potential success of
some business models that we believe are out there. In fact, the GAC has
already included similar statements in their communiqués. You will notice in
Footnote #7 how I have already taken the opportunity to raise this issue in
connection with ICANN current budget planning cycle. 

Again these are my personal viewpoints, and I will defer to my fellow Team
MMA members to agree/disagree, we tend to do that occasional as part of our
internal consensus building exercise.

Hopefully that adequately addresses your questions/concerns.

Best regards,

Michael



-----Original Message-----
From: Richard Tindal [mailto:richardtindal@xxxxxx] 
Sent: Sunday, April 11, 2010 10:51 PM
To: Michael D. Palage; Gnso-vi-feb10@xxxxxxxxx
Subject: Re: [gnso-vi-feb10] Joint Proposal

MMA,

Thanks for this.   

Here are some questions I plan to ask on tonight's call.  Wanted to give you
time to consider them:

1.  Under your proposal a single registrar with 41% market share would be
denied the ability to apply for a new TLD.    However,  four registrars
might collectively control 90% of the registrar market and those registrars
could own 60% of a new registry (15% each).    Let's say the four registrars
agree to market their new TLD to the exclusion of other TLDs.   Under your
proposal this combined entity would not be referred to competition
authorities and would not be stopped by ICANN.    Do you see that as an
inconsistency?     In other words,  what do you see as the difference
between one registrar with more than 40% market share versus  multiple,
contractually colluding registrars who together have more than 40% market
share?

2.  If a new registry applicant was <15% affiliated with any existing
registry or registrar it could apply (pre-launch)  for 100% ownership of a
new registrar in its own TLD.   This would be referred to the relevant
competition authority.  As, at that time, the TLD had zero market share I
assume most competition authorities would approve it.  If such approval was
given the registry could immediately (at launch) own 100% of a registrar in
its TLD.  Is that your intention?    

3.  If a registrar/ or registry with 30% (say)  market share applied to own
100% of a new TLD registry it would be referred to a competition authority.
Let's say the competition authority approved the new registry to proceed.
Some time later the original registry or registrar owner might exceed 40%
market share.  Do you intend that the new TLD registry should go back to the
competition authority for review?  

4.  You've suggested community, cultural and linguistic TLDs might be
permitted to have full vertical integration (i.e. no separate registrar
accreditation - rather the registry entity also performs some functions of a
registrar).  'Community' is defined in the DAG but 'cultural' and
'linguistic' TLDs are not.  How are you defining them?    Also, what is it
about community, cultural and linguistic TLDs that makes vertical
integration beneficial?   Asked another way, what is it about
non-cultural/community/linguistic TLDs that makes vertical integration
harmful?

5.  You've proposed that ICANN fees be revised (assume this means lowered)
for registries that provides free names to customers.   ICANN's fees are set
on a cost recovery basis.   Are you suggesting that free domains generate
less work for ICANN?   If so, this seems counter intuitive.   Very cheap (or
free) names generally result in higher registration volumes and are often
more associated with malicious activity.    What is the principle you are
applying to correlate cheap names with low fees?  

Thanks.  Look forward to discussing this on call

RT



On Apr 12, 2010, at 2:18 AM, Michael D. Palage wrote:

> <Vertical Integration Co-Ownership Joint Proposal.pdf>