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Re: [gnso-vi-feb10] Board resolution on Vertical Integration

  • To: Richard Tindal <richardtindal@xxxxxx>
  • Subject: Re: [gnso-vi-feb10] Board resolution on Vertical Integration
  • From: Eric Brunner-Williams <ebw@xxxxxxxxxxxxxxxxxxxx>
  • Date: Mon, 27 Sep 2010 12:03:35 -0400

On 9/27/10 10:21 AM, Richard Tindal wrote:
It's hard to determine the specific position advocated by GAC.

When you read specific sentences in isolation they seem to support
certain positions. But when the thing is read in totality
it can be contradictory. For example, this in the 2nd para --
"/Governments generally support restrictions on vertical integration /
/and cross- ownership as important devices for promoting competition,
preventing market dominance and averting market distortions". /

Overall (to me) they seem to me to be advocating exceptions only for
smaller, Community TLDs. If they had meant full integration
except with market power, in any situation, it would have been an easy
thing for them to say.

The GAC communique starts with this: "The GAC looks forward to further discussion of this important issue." That suggests to me that the GAC is not finished with the issue, independent of what the current Board sets for a deadline.

In the language of para 2, which note the strict separation, market power, Salop and Wright, and para 3, which considers the "if market power is not an issue", the value that registrars offer is valuable technical, commercial and relevant local expertise. The first two can be read as generic qualities a mature registrar offers as a prospective registry operator, epp client -> epp server, registrant CRM -> registrar CRM, but the third value is _local_.

A registrar active in location X is unlikely to being local expertise as an vertically integrated applicant for a registry active in location Y.

So far the benefits the GAC mention are the location independent enhancing competition and promoting innovation benefits. Applie pie.

The next para describes what the GAC characterize as "an important additional benefit". The ability of community-based applicants to find technical service providers "in the local market", and the reference to registry size expectations.

The final para (page 4) limits the eligibility through "some form of regulatory probity" because "certain registrars [are] potentially valuable newcomers to the registry market."

We don't know what the "regulatory probity" is, it could be casting lots, or IRTP Audit numbers or ... There are lots of choices.

What we do know is the value of registrars as registry operators is not unconditional, and location matters a lot. It is _important_.

From this it seems reasonable to conclude that a registrar in North America or Europe has less value (to the GAC) in the registry market than a registrar in any of {Latin America, Africa, Asia}.

Relevant to this too is at pages 6/7, the section entitled "Addressing the needs of developing countries", which reads in part:

"... to set technical and other requirements, including cost
considerations, at a reasonable and proportionate level in order not to exclude stakeholders from developing countries from ..."

The vertical separation requirement, assuming there is one, falls within the "other requirements".

IDNs are only mentioned in the Market and Economic Impacts (M&EI) section, and "languages" only in the final paragraph as a document translation barrier to applicants. However, the context in the M&EI section is community applications and the suggested process is that of the IDN ccTLD FT, so I think the best reading is that the GAC considers expertise in scripts other than Latin, and languages other than English, to be a part of the "relevant local expertise" and present "in the local market".

So if we were to start with "What The GAC Wrote", even if only as a hypo to see where it leads, I think it is best read as Richard has suggested, as allowing community-based applications to exercise a registrar function where the market is local, and restricted by local expertise, whether in scripts or language or ... and that such applicants may exercise access to _some_ registrars as providers, and through their registrar function, where those registrars provide local value.

Restated, conditional only upon size and locality, where language and other local forms of "expertise" are included in "locality",

(a) an applicant may operate a registrar function independently, and
(b) an applicant may select a registrar as a technical service provider (registry function) and may, implicit in that registry function, under (a), above, exercise its registrar function through the registrar it selected as a technical service provider.


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