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

["Tim Ruiz" <tim@xxxxxxxxxxx>]

I think this thread is getting dangerously close to crossing the line.
This is one of the problems with trying to resolve this particular issue
through a PDP. 


Tim

> -------- Original Message --------
> Subject: RE: [gnso-vi-feb10] Board resolution on Vertical Integration
> From: "Drazek, Keith" <kdrazek@xxxxxxxxxxxx>
> Date: Wed, September 29, 2010 12:49 pm
> To: "vertical integration wg" <Gnso-vi-feb10@xxxxxxxxx>
> 
> Eric, 
> 
> How did you arrive at your conclusions related to incumbent
> participation? I may have misunderstood your point, but the VIWG is (and
> should be) focused only on policies surrounding vertical integration of
> registry and registrar functionality within a single entity, and/or
> levels of cross-ownership between registry and registrar entities. Well
> before the VIWG was formed, the GNSO new gTLD PDP process discussed
> ideas relating to incumbent involvement, but there was never any
> measurable support for limiting their involvement or eligibility.
> Moreover, the ICANN General Council ruled years ago that policy
> development could not focus on one player or one subset of players in
> the industry. I think I follow your logic to a point, but I'm not sure
> how you arrived at the conclusion that existing registry operators
> couldn't compete for new TLDs or potentially gain market share in the
> first round...unless you're referring to market share at the
> retail/registrar level? Thanks in advance.
> 
> Regards, Keith
> 
> -----Original Message-----
> From: owner-gnso-vi-feb10@xxxxxxxxx
> [mailto:owner-gnso-vi-feb10@xxxxxxxxx] On Behalf Of Eric
> Brunner-Williams
> Sent: Wednesday, September 29, 2010 10:16 AM
> To: vertical integration wg
> Subject: Re: [gnso-vi-feb10] Board resolution on Vertical Integration
> 
> 
> Following up on the "We Failed" "No we didn't" thread ...
> 
> 
> We advised Counsel that we understood 0% to mean that no current 
> contracted party, registrar _or_ registry, could apply without risk of 
> loosing its application fee.
> 
> Staff responded by raising the limit from 0% to a de minimus value, 
> and I think we made it clear that this allowed all but at least one 
> current contracted party, a registry, to apply without risk of loosing 
> its application fee.
> 
> All of the proposals offered subsequent to Nairobi were of the form 
> that would allow all contracted parties currently registries, to apply 
> without risk of loosing their application fees.
> 
> However, there was no consensus on that proposition in isolation.
> 
> Restated, there was consensus that no proposal that allowed some 
> contracted parties, but not all contracted parties, to apply without 
> risk of loosing their application fees could be adopted.
> 
> Similarly, there was consensus that no proposal that allowed only 
> brand managers to exercise a registrar function while operating a 
> registry to apply without risk of loosing their application fees could 
> be adopted.
> 
> These appear to be broad areas of consensus that:
> 
> a) no existing operator will, through its access to a existing 
> registry's cash flow (registry margin), unfairly compete with new 
> operators establishing new markets,
> 
> b) no existing (or future) registrar will, through its access to a 
> existing registry's cash flow (registrar margin), unfairly compete 
> with new operators establishing new markets,
> 
> and
> 
> c) no brand manager, and possibly no other applicants (this is the 
> point of the GAC's recommendation), will, through its access to 
> private revenues, unfairly compete with registrars establishing new 
> markets.
> 
> As an applicant, this looks pretty good. VGRS won't define the new 
> market. Neither will any accidental or intentional common business 
> model of Afilias and NeuStar and GoDaddy and eNom and TuCows and 
> NetSol. Registrars with the overwhelming bulk of their revenue in the 
> CNOBI market won't be re-marketing the same business model as new 
> markets. What happens in Vegas, stays in Vegas, where "Vegas" means 
> the market as it is, at present, less the .coop, .cat, .museum, bits, 
> that are distinct gTLD markets.
> 
> Since I've worn a registry's hat, and a registrar's hat, and a 
> registry back-end operator's hat, the first two contracted parties, 
> the third only incidentally a contracted party, I'm going to offer my 
> opinion as if I were representing a contracted party on this as an 
> outcome.
> 
> This isn't an especially adverse outcome. No existing competing 
> contracted party will gain market share through the first round. The 
> risk of new market creation will be born by new entrants. All new 
> market entrants are prospective investment opportunities at some point 
> in the future, after the winners and losers have been shaken out. 
> There is adequate time to reach a consensus position that will inform 
> the Board prior to the second round.
> 
> This also allows brand and walled garden managers time to reconcile or 
> revise their various value claims -- that .brand will end the risk of 
> dilution, or that consumers prefer subscriber relationships with 
> vendors for whom name spaces are an after-market activity.
> 
> I think 0% works out pretty good for new entrants.
> 
> Eric