Re: [gnso-vi-feb10] Joint Proposal

[Richard Tindal <richardtindal@xxxxxx>]

Thanks for that.

With respect to Question 2 (below).     I think the large majority of 
Applicants will have less than 40% share of today's market.   Hence, most 
applicants who want to own a registrar in their own TLD will be automatically 
referred to a competition authority.  

>From a practical perspective which competition authority will be approached?   
>If it's the authority in the country where the registry is incorporated do you 
>foresee a lot of registries incorporating in countries where competition rules 
>are know to be very liberal?

RT

 
On Apr 12, 2010, at 2:27 PM, Michael D. Palage wrote:

> 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>
> 
>