RE: [gnso-vi-feb10] Proposed Addendum to Proposals

["Hammock, Statton" <shammock@xxxxxxxxxxxxxxxxxxxx>]

I would also like to echo Antony's concern and add that "the imposition
of significant costs and regulatory burden would be injurious if not
fatal to smaller registries" AND to back-end registry service providers
(RSPs) who might be even smaller still and yet are also subject to
onerous audits under some of the proposals which are making restrictions
apply to RSPs without exception. 

 

Statton 

 

 

________________________________

From: owner-gnso-vi-feb10@xxxxxxxxx
[mailto:owner-gnso-vi-feb10@xxxxxxxxx] On Behalf Of Antony Van Couvering
Sent: Tuesday, June 15, 2010 11:48 AM
To: Jeff Eckhaus
Cc: 'Gnso-vi-feb10@xxxxxxxxx'
Subject: Re: [gnso-vi-feb10] Proposed Addendum to Proposals

 

Jeff,

 

Thanks for the constructive attempt.  I think it's a useful way into the
problem I see with many proposals.  Unfortunately, the imposition of
significant costs and regulatory burden would be injurious if not fatal
to smaller registries.  I've tried to add more color to that assertion
below.   If this issue were addressed properly, I would be much readier
to sign on to a compromise proposal.

 

I note that one of your thoughts is that a registry-registrar bundle
would never be able to sell names in its own TLD.  I do not believe that
"exceptions" for orphaned TLDs make any sense, especially if they are
combined with a cap that would essentially discourage the registry from
succeeding and would entail a very expensive migration/transition
process, not to mention customer confusion) when the cap was reached.
The people from .coop graphically described the pain they went through
in this case, in one of our earlier VI meetings, I forget which one.
Furthermore, there is the horrible case where the registry is not
"orphaned" but might as well be -- only one or two subpar registries are
carrying the TLD, not marketing it, not answering their phone, etc. --
and the registry impotent to do anything about it. 

 

Suppose however that the "same TLD" restriction were not in place, and
that a small registry could act as a registrar for its own TLD under
your proposed rules. For a small registry, the restrictions would seems
so bizarre, punitive, and anti-competitive that the "Eckhaus Rule" would
shortly be as well received as the imposition of shariah in Cancun. 

 

Consider what I believe will be a common case: a small registry with
about 6 - 10 employees, registry/registrar tech functions outsourced.
One person in charge, two sales and marketing people, an
accounting/financial person, possibly a technical person to manage the
registry tech functions, and someone to deal with ICANN, who may also be
a lawyer.  Even if someone were to argue that a registry needs twice as
many people -- evidence among the ccTLDs notwithstanding -- the case is
the same.     

 

This small registry may be a cultural/linguistic "community" applicant,
or it may simply be a small registry that for some reason doesn't reach
the high "community" bar, for example .indigi, which will fail as a
"community" because it is not a community, but a community of
communities (don't blame me, I didn't write the rules).   This registry
may also be a small entrepreneurial venture, such as (among those
announced) .cal, or .board.  This registry may also be a
government-supported geographical TLD, such as the registry for a small
city.   What these registries have in common is that they need to or
want to be able to market and sell directly to the public, through their
wholly-owned ICANN-accredited registrar.

 

The proposed audits will cost between $50,000 and $100,000.  There are
certain auditing costs that don't depend on the size of the enterprise.
At a gross profit of (say) $10 per name, that's an extra 5,000 to 10,000
names that need to be sold to be pay for those audits.  To put this in
perspective, this range of sales is approximately the entire annual
sales of .cat.

 

Now consider the issue of separating the registry and registrar -- this
is an even bigger cost.   Basically you would have to double your staff,
and possibly -- in order to maintain real separation -- pay a separate
rent as well.  I won't attempt to estimate the cost, but it's large and
very possibly would make operation impossible.

 

All of this in order to prevent hypothetical harms to existing
registrars/registries.  Your suggestion may solve one problem, dear to
members of this Working Group, but it would create another much larger
one. 

 

Antony

 

 

 

 

 

On Jun 14, 2010, at 4:54 PM, Jeff Eckhaus wrote:





All,

After today's discussions with this group and reading the emails on the
list, I have noticed a consistent concern coming from many group
members, that they are worried about ICANN's ability to enforce any
rules that are put in place. It is one of the main concerns opponents of
the JN2 proposal have expressed with the issue of co-ownership.
Specifically being able to police the following issue: "Registry
Operator or its Affiliate may 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" .

Those opposed to JN2 and other proposals seem to agree that
cross-ownership is appropriate, but that ICANN will not be able to
police any restrictions on data sharing between a registry and
registrar. They believe that we cannot simply rely on Registrars to
adhere to a signed agreement. Thus, because compliance will be too
difficult to enforce, we must limit cross-ownership.

While I disagree with this viewpoint, my opinion does not matter at this
point. What does matter is assuring the people who are concerned with
the above, attempting to bridge the gap and reach consensus. To that
end, I am proposing an unsolicited addendum to the JN2 proposal (maybe
JN3 now??) and to any other proposals that allow a Registry to own up to
100% of a Registrar (vice-versa) but not distribute the owned TLD.

This will only apply to co-owned entities that have an ownership level
above the 2% threshold as discussed in the DAGv4:

*         The Registry/Registrar must agree to an annual audit for the
first 2 years. Every 18 months for next 3 years, and every 2 years
thereafter. (timing can be negotiated)

*         The audit will focus on ensuring that Registry data is not
shared with the co-owned Registrar, co-owned Resellers, and any related
Affiliates

o   Details of what data would need to be audited would be supplied by a
working group/committee led by current Registries

*         Stiff penalties would be levied if there is an audit failure
(amounts TBD)

*         All costs of the audit would be borne by the co-owned entity

o   The co-owned entity would pay fees into a pool, not directly to
auditors. This avoids any thoughts of impropriety

*         This audit would be in addition to the audit and compliance
requirements already agreed to in ICANN Registry and Registrar
agreements

*         Auditors would be independent of ICANN but would work with
ICANN Compliance on fees and remedies

*         Auditors would be rotated among assignments to avoid capture

This is the framework of my proposal that I believe would cover
Registrant rights and concerns and bring comfort to those who believe
there will be enhanced harms if there is any type of co-ownership. Most
important it would cover the policing/enforcement issues that seems to
be the roadblock to consensus. I welcome feedback on this idea and look
forward to hearing more and seeing everyone in Brussels.

 

Regards,

 

Jeff Eckhaus