RE: [gnso-vi-feb10] Competition authorities

[Milton L Mueller <mueller@xxxxxxx>]

Richard:

There' something fishy about the economic analysis underlying your 
Yahoo/reseller example, and I look forward to discussing it with real 
economists on the call Thursday.  

I have some specific questions for you:

First, when I talk about harm, I am interested in harm to consumers i.e., the 
people who actually pay for all this. Tell me how this gambit hurts them. (Just 
want to be clear: that's C, O, N, S, U, M, E, R, S. It is not the same concept 
as suppliers). I know your audience here is overhwlemingly dominated by 
suppliers, but it would be nice to learn a bit about the effect on the rest of 
us.

Second, You've pointed out that if Yahoo as a registry can find a registrar 
willing to work out a reselling deal with it for R+N (Registry wholesale price 
R + registrar partner markup N), then it can act as a registrar for an 
"incremental cost" of N. This raises a number of interesting questions.
 - Would Yahoo's .WEB gain more in profit from the additional N cents per name 
(minus its own operational costs of reselling) it received from reselling than 
it would lose from driving away the many independent registrars who would no 
longer be willing to market and sell .WEB? Wouldn't it be a lot simpler to just 
raise the wholesale R than to play games with N? Or do you think competition 
among new TLDs would constrain R? 
 - If one registrar was willing to act as the reselling basis for Yahoo for the 
price of N, and N is as small as you postulate, what does that tell you about 
the economies that can be achieved through vertical integration? 
 - If Yahoo signaled to the market that it wanted to enter into such an 
arrangement, and this arrangement really could dominate the market for .WEB 
registrations, and such domination was attractively profitable, wouldn't 
various registrars compete against each other to become the reselling agent for 
Yahoo? Would they not bid down N as far as it could go? Would this not 
constitute a perfectly acceptable form of competition that benefits consumers? 
(See question 1)
 - I guess one way to summarize all these questions is: is the "threat" of this 
"loophole" nothing more than a threat to the current market boundaries that 
protect existing players from competition?
 
Third, if, as I understand to be the case, this loophole currently exists, is 
it happening how and if so who is doing it? If no one is doing it, can you 
explain to me what stops existing registries from doing that?

--MM