Re: [gnso-vi-feb10] Competition authorities

[Richard Tindal <richardtindal@xxxxxx>]

These are all reasonable questions and I look forward to a discussion of them 
tomorrow.

I'm not making an argument in favour of any particular proposal.   I'm simply 
making the point that a reseller can act with the same power as a registrar.   

If we decide to recommend limits on cross-owned registrars then these limits 
must also apply to cross-owned resellers,  or they will have no effect.      If 
we recommend no limits on cross-ownership then we do not need to worry about 
resellers.

For example,  if we adopt the MMA proposal and a national competition authority 
has concerns about Registry XYZ owning a registrar in its TLD then we should 
also be concerned about Registry XYZ owning a reseller in that TLD.    In the 
context of cross-ownership,  registrars and resellers are essentially the same 
thing.

RT


On Apr 28, 2010, at 5:10 PM, Milton L Mueller wrote:

> 
> 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
>