[gnso-vi-feb10] RE: Neustar Concerns with Afilias Proposals

[Milton L Mueller <mueller@xxxxxxx>]

Thanks for a thoughtful response, Jeff N. Sorry to respond slowly but have been 
traveling. Here are my comments:
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>As you know from the beginning, Neustar has opposed the complete 
>vertical integration of registries and registrars because of all of the 
>harms to registrants that have been previously expressed in letters 
>we have helped co-author as well as the damaging effect on ensuring 
>a level-competitive playing field amongst registries, registrars, back-end
> operators, etc.  

The missing link from your argument is a concept of market power. In other 
words a certain market structure is presumed to be abusive or to lead to 
abusive behavior, REGARDLESS of how much market power the suppliers have or how 
competitive the market is. So you put .com and .completelynewTLD in the same 
boat. This equation simply makes no sense, and competent regulatory economists 
would laugh at it. For new TLDs with no market power, and in cases where the 
suppliers of the new TLDs have no market power, it is difficult to conceive of 
how these abuses would take place. No one has to register in these tlds and 
since we are contemplating hundreds of them coming into being it seems clear 
that abusive practices would be punished in the marketplace.

>...we have never supported the notion that a registry or back-end registry 
>operator could not distribute domain names in a TLD for which it was not 
>the registry or back-end operator.  This is not necessarily because Neustar 
>wants to be a registrar, reseller or distributor for .com, .net or any new 
>TLDs, but rather that we do not see any justification or any potential harms 
>that would occur cross TLDs.  

Our position is closer here, but you repeat the same mistake you made above. It 
may in fact be possible for cross-ownership arrangements to pose problems even 
when a new TLD does not distribute its own TLD. It depends on the amount of 
market power held by the companies involved. Thus, a CO arrangement with 
GoDaddy or some other leading company might lead to some problems, even if they 
did not distribute their own TLD. 

The only intelligent and rational way to deal with these issues is to run 
proposals through the kind of market power/ competition policy check 
contemplated by the CAM proposal. 

>In fact, we believe that Afilias’ proposal would have the effect of 
>preventing any existing registrar or reseller from becoming a registry 
>or back-end operator in any TLD even if they agree not to distribute 
>names in that TLD.

Here was agree. What you fail to see apaprently is that your own proposal also 
eliminates many viable business models on an a priori basis without any 
grounding in competition policy or consumer welfare. 

--MM