RE: [gnso-vi-feb10] Joint Proposal

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

Richard,

As I tried to elaborate in my response to Jon, we were not really trying to
make up a new process, but just use an existing mechanism that has been in
the RSEP for the last 5 years, e.g. "ICANN shall refer the issue to the
appropriate governmental competition authority or authorities with
jurisdiction.". Perhaps it would be best to queue this question up for ICANN
legal counsel who will be on the call today, as hopefully they would be able
to provide an answer to a provision that has been in a contract they
executed over five years ago and have entered into with around 15 gTLD
registry operators.

However, this raises a very valid concern. If ICANN's legal department
cannot provide any level of specificity with regard to how national
competition agencies are consulted in connection with funnel requests within
the 15 existing gTLDs, do we really want to add another 400 and then try to
figure out the problem. I raise this question NOT to slow down the new gTLD
process, but to request that ICANN provide some specific guidance on how
these matters are processed so that the Working Group can proceed with its
work.

With regard to your initial question, yes most would be referred to their
national competition authority, and yes I doubt few if any would give rise
to any type of enforcement action.

Best regards,

Michael Palage

P.S. Question to the co-chairs any response from ICANN in connection with
the previous questions that we asked?


 


-----Original Message-----
From: Richard Tindal [mailto:richardtindal@xxxxxx] 
Sent: Monday, April 12, 2010 9:44 AM
To: Michael D. Palage; Gnso-vi-feb10@xxxxxxxxx
Subject: Re: [gnso-vi-feb10] Joint Proposal

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>
> 
>