RE: [gnso-vi-feb10] Fwd: Note from Scott Austin -- control/percentages

[Jeff Eckhaus <eckhaus@xxxxxxxxxxxxxxx>]

OK, so Jeff Neuman and I are agreeing twice in one day, so please take note.

Scott and Jeff N are both correct, the numbers are not the issue here, it is 
critical we look at the control and the power that one can hold through the 
co-ownership regardless of percentages.

The reason why the current 15% number keeps getting thrown in to the ring is 
because it will allow the existing registries to participate in new TLDs, keep 
out the competition , while maintaining the illusion that 15% is the magic 
number that keeps the whole world safe.

I do want to make mention that Neustar has been extremely progressive about 
these issues, realized where control and gaming can possibly occur and placed 
restrictions while still allowing for competition on the world of new gTLDs.
This can be reflected in the JN2 proposal,  specifically with the premise of 
allowing Registry Operator or its Affiliate to serve as an ICANN-Accredited 
Registrar in any top-level domain other than the TLD for which Registry 
Operator or its Affiliate serves as the Registry Operator.  They have also made 
sure that this cannot be gamed by restrictions of resellers and affiliated 
parties.

This seems like a fair proposal and compromise since it allows for competition 
while maintaining consumer protections.


Jeff Eckhaus



From: owner-gnso-vi-feb10@xxxxxxxxx [mailto:owner-gnso-vi-feb10@xxxxxxxxx] On 
Behalf Of Neuman, Jeff
Sent: Monday, May 24, 2010 2:37 PM
To: Mike O'Connor; Gnso-vi-feb10@xxxxxxxxx
Subject: RE: [gnso-vi-feb10] Fwd: Note from Scott Austin -- control/percentages

Scott's points about percentages and control are critical and have been points 
I have tried to emphasize as well (although Scott did probably a better job 
than I have!).   Of course I do not believe that weighs in favor of 100% 
ownership, as it could just as easily weigh in favor of zero ownership or 
control.  I don't believe either of those extremes are the right answer, but 
that does not take away from the fact that we need to stop focusing on numbers.

Jeffrey J. Neuman
Neustar, Inc. / Vice President, Law & Policy
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From: owner-gnso-vi-feb10@xxxxxxxxx [mailto:owner-gnso-vi-feb10@xxxxxxxxx] On 
Behalf Of Mike O'Connor
Sent: Monday, May 24, 2010 5:26 PM
To: Gnso-vi-feb10@xxxxxxxxx
Subject: [gnso-vi-feb10] Fwd: Note from Scott Austin -- control/percentages

hi all,

Scott meant to copy the list on this note to me, but he did it from a 
smartphone and it picked up the wrong address.

Begin forwarded message:

From: "Austin, Scott" <SAustin@xxxxxxxxx<mailto:SAustin@xxxxxxxxx>>
Date: May 24, 2010 3:44:50 PM CDT
To: <mike@xxxxxxxxxx<mailto:mike@xxxxxxxxxx>>, 
<owner-gnso-vi-feb10@xxxxxxxxx<mailto:owner-gnso-vi-feb10@xxxxxxxxx>>


Mikey:

I didn't get to finish my thought on the call questioning the focus on 
percentages alone as a guage for control  as a red herriing,  but since the 
debate over percentages took up a lot of time I thought I should clarify my 
point an extra step as I have seen bald percentages used as a subterfuge or 
worse, create a false sense of security in the corporate context.

As I mentioned on the chat thread that contol on a purely percentage basis 
usually refers to 51 percent majority interest and anything less is not a 
controlling interest from a voting standpoint. But even a majority interest 
percentage cannot be viewed as contolling in a vacuum.  As much as less than 51 
percent is typically thought of as not having control (and 15 percent is well 
below that) even a 1 percent owner has control if the organization's organic 
documents (which will probably not be publicly available) require unanimoius 
consent to act on a particular matter (e. g. Adoption of the registry's 
corporate policy on re-deployment of expired domain names by its registrars).

More to the point, the real issue that is often frequently overlooked is that 
the low percentage owner (let's say 15 percent or less ownership in the 
registry) could  still have the right to 100 percent access to company records 
and informationn including the registry database of expired names and every 
other trade secret in the registry organization. Will ICANN be auditing each 
applicant entity's articles and bylaws before duriing and after application 
filing? Is this a point in favor of 100 percent separation? Or jiust requiring 
contractual safeguards of registry database access by partial owner registrars. 
What if 4 different registrars each own 15 percent in the same registry? 
Permitted or aggregated as a "class" with too much control?

Scott


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