RE: [gnso-vi-feb10] Joint Proposal

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

Jeff E.,

I was the chief proponent of the 15% baseline in the proposal so allow me to
explain my individual thinking. This new gTLD process will likely generate
tens or potentially hundreds of millions of dollars in revenue. Therefore
parties that feel that they have been denied an opportunity to fairly
compete in that marketplace could litigate. Seeing how a lawsuit would
potentially slow down the launch of the new gTLD process, I was looking for
a legal construct that would create parity within the existing marketplace
(going forward and retroactively) and maximize ICANN's ability to prevail in
any lawsuit. 

Now when you look at the test that we have proposed it is highly unlikely
that a competition agency would reject any co-ownership application (0-100%)
from any entity with less than 40% market share. Therefore 15% could have
effectively been 0%. However, by using a 15% baseline we created parity with
the majority of the existing registry operator agreements. (This approach I
believe was also articulated in Jon Nevett's proposal). It is this same
concern for parity on why I began to have serious second thoughts on the 40%
market share absolute bar in the original proposal.  

In discussing the history of VRSN 15% contractual requirement, it had
nothing to do with creating competition, and was just a by-product of what
minor ownership VeriSign retained after selling NSI. As we discussed in our
group, competition had already been created in the registrar market place
notwithstanding VeriSign owning the registry and registrar, in part because
of the structural separation and no self dealing rules that had been in
place since 1999. 

I would really encourage you and other entities interested on entering the
marketplace to focus on the >15% threshold and how competition authorities
will handle those situations. Is the 15% threshold an historical artifact -
yes. However, any inconvenience by leaving it in this next draft agreement
is clearly outweighed in my opinion by the parity it creates within the
marketplace.  As my favorite ICANN General Counsel Louis Touton use to say,
ICANN is about protecting competition, not protecting competitors.

Best regards,

Michael


-----Original Message-----
From: owner-gnso-vi-feb10@xxxxxxxxx [mailto:owner-gnso-vi-feb10@xxxxxxxxx]
On Behalf Of Jeff Eckhaus
Sent: Sunday, April 11, 2010 8:11 PM
To: Gnso-vi-feb10@xxxxxxxxx
Subject: RE: [gnso-vi-feb10] Joint Proposal


Team MMA,

First off MMA is the best acronym yet,  now I think of Mixed Martial Arts
competitions inside a steel cage. Thanks for that.

The proposal looks good and look forward to hearing the details tomorrow. 

I do not want to jump the gun on the list but would like to ask a question
that I hope you can address in your presentation tomorrow. The 15% limit is
a legacy number that I believe is contractually based and is rooted in the
VeriSign / NSI sale and how they structured the deal. 

Could you discuss tomorrow the value of maintaining that 15% limit going
forward ? Why is that the appropriate percentage of ownership?  How is 15%
better than 5% or 51% or 100% ? 


Thanks

Jeff E



________________________________________
From: owner-gnso-vi-feb10@xxxxxxxxx [owner-gnso-vi-feb10@xxxxxxxxx] On
Behalf Of Michael D. Palage [michael@xxxxxxxxxx]
Sent: Sunday, April 11, 2010 9:18 AM
To: Gnso-vi-feb10@xxxxxxxxx
Subject: [gnso-vi-feb10] Joint Proposal

Hello All,

Attached is the proposal which is being jointly submitted by Avri, Milton
and myself to the working group for consideration.  We look forward to
formally presenting this concept to the group on tomorrow's call, and
answering any questions that you may have.

Best regards,

Michael Palage (on behalf of Team MMA)