RE: [gnso-vi-feb10] vertical relationships in the domain name mkt

[Milton L Mueller <mueller@xxxxxxx>]

Jeff,
I am puzzled by this comment. You say "we would also have to ask whether there 
should ever be a requirement to use ICANN-accredited registrars." That is 
precisely the question I am asking. The answer I and other CAM supporters have 
provided to that question is pretty simple and clear: there should be no such 
requirement for new TLDs unless there is a compelling competition policy/market 
power or consumer protection justification.

As for other real-world cases, there are examples where vertical separation is 
required. Unbundled local loop for facilities based telecom providers in Europe 
and Canada comes to mind. But this is based - as it should be - on the presence 
of monopoly power over the first mile facility. There is no such constraint for 
new TLDs, therefore it's hard to justify a vertical separation requirement.

I have cited this example many times, so I am not using the real world 
selectively. I happen to have been involved in regulatory economics in telecoms 
for 25 years and can supply many real world examples if you like.

--MM

From: Neuman, Jeff [mailto:Jeff.Neuman@xxxxxxxxxx]
Sent: Thursday, July 08, 2010 8:54 AM
To: Hammock, Statton; Milton L Mueller; Jothan Frakes; vgreimann@xxxxxxxxxxxxxxx
Cc: Gnso-vi-feb10@xxxxxxxxx
Subject: RE: [gnso-vi-feb10] vertical relationships in the domain name mkt

Statton & Milton,

If we were to consider the "real world", then we would also have to ask the 
question as to whether there should ever be a requirement to use 
ICANN-Accredited Registrars in the first place.  In the real world an entity 
can choose whether or not to have resellers, and if it does choose to have 
resellers, it can treat them all differently as it sees fit.  There is no 
concept of equal access among resellers.  In fact, how many of the registrars 
on this list either choose to have resellers (or not) and if you do choose to 
have them, how many of them choose to treat all of their resellers equally.

So while I like looking to the real world for some examples, if we are using 
the "real world" as our guide, we cannot pick and choose which parts of the 
real world we like and which we do not and choose to only apply the ones we 
like.  By definition, that takes us back out of the real world and back into 
ICANN land.



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 Hammock, Statton
Sent: Thursday, July 08, 2010 8:21 AM
To: Milton L Mueller; Jothan Frakes; vgreimann@xxxxxxxxxxxxxxx
Cc: Gnso-vi-feb10@xxxxxxxxx
Subject: RE: [gnso-vi-feb10] vertical relationships in the domain name mkt

Thank you Milton for using the cereal analogy. I think it's a good one and we 
all should stop and consider what usually happens in "real life" or ("business 
life," whatever) when we think about and discuss aspects of selling and 
distributing new gTLDs.

Statton

 Statton Hammock
 Sr. Director, Law, Policy & Business Affairs
[http://www.networksolutionsretail.com/signature/netsollogo09.gif]

P 703-668-5515  M 703-624-5031 
www.networksolutions.com<http://www.networksolutions.com>


From: owner-gnso-vi-feb10@xxxxxxxxx [mailto:owner-gnso-vi-feb10@xxxxxxxxx] On 
Behalf Of Milton L Mueller
Sent: Thursday, July 08, 2010 12:28 AM
To: Jothan Frakes; vgreimann@xxxxxxxxxxxxxxx
Cc: Gnso-vi-feb10@xxxxxxxxx
Subject: [gnso-vi-feb10] vertical relationships in the domain name mkt

Response to Jothan:

OK, now to focus on the response.
**** 1]  What I am saying is that this 'not in your own TLD'  exception is 
essentially the same as 100%.

I am beginning to find this argument persuasive. But you can also see, do you 
not, that this argument applies just as strongly to arbitrary ownership 
limitations, doesn't it? In other words if you can't enforce "not in your own 
TLD" you also can't enforce some specific ownership limitation such as 15%. 
Q.E.D.

**** 3] What I am saying it is *not* in the public interest if GoDaddy (or 
Key-Systems or swap in any other respected registrar) is *not* able to sell 
.WEB names.    It would be, however, in the interest of the .COM operator if 
.WEB is competitively restrained in that way.  Of course, VeriSign hasn't 
officially taken any stance on VI yet --  but as they know big registrars want 
TLDs my hunch is they'll come out in favor of JN2.    No criticism of them 
there - it would be in VeriSign's corporate interest to see new TLDs 
competitively restrained in that manner.

We keep talking as if this were a unique problem to the domain name industry. 
It isn't. Think of grocery stores (let's say, Wegmans). A major grocery chain 
such as Wegmans will sell numerous branded food products (e.g., breakfast 
cereals) such as Cheerios and Chex. It may also sell its own in-house brand 
(say, the Wegman's version of Cheerios).

General Mills may choose to withhold Cheerios from Wegman's because Wegman's 
sells its own, competing version of breakfast cereal. Or it may not. 
Conversely, Wegman's may choose not to carry Cheerios because they "undermine" 
the market for its own in-house cereal. Or it may not.

What we find in reality is that in most cases a big grocery chain will carry a 
lot of brands and its own brands both. It profits more from serving a larger 
market. But many, many smaller ones don't have their own brands and serve as 
pure retail intermediaries. And in a very few specialized cases, a purely 
vertically integrated food suppliers may carry nothing but their own brands.

These are business choices. As long as the market for breakfast cereals and 
grocery stores is reasonably competitive, no centralized regulator needs to 
dictate which of these choices market players make, nor do consumers need them 
to make those choices for them. Same is true of the DNS market.

So you haven't made a public interest case for your position. You are not 
thinking about what leads to the most competitive, robust and open domain name 
industry. You are, instead, still thinking: "how can I as a prospective 
registry operator use ICANN regulations to ensure that my product is guaranteed 
shelf space in every grocery store."

I suggest you stop thinking about how to use ICANN to "guarantee" your product 
this or that. I suggest that you, and everyone else, start thinking about how 
to compete and produce value to consumers.

Let's not complicate the issue with two choices that are so similar as to be 
the same thing.     Let's just call this 'not in your own TLD' exception what 
it really is --- Free Trade -- and one can continue to eloquently argue for the 
Free Trade choice.

That's pretty much the direction I'm headed
--MM