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Cost Considerations new gTLDs
- To: gtld-intro@xxxxxxxxx
- Subject: Cost Considerations new gTLDs
- From: Dan Schindler <dan@xxxxxx>
- Date: Sat, 13 Dec 2008 12:15:40 -0800
<html><body style="word-wrap: break-word; -webkit-nbsp-mode: space;
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style="word-wrap: break-word; -webkit-nbsp-mode: space; -webkit-line-break:
after-white-space; "><div style="word-wrap: break-word; -webkit-nbsp-mode:
space; -webkit-line-break: after-white-space; "><p class="MsoNormal">Dear
ICANN,</p><p class="MsoNormal" style="text-align: justify; text-indent: 36pt;
">CentralNic Ltd. submits these comments in response to ICANN’s call for public
comments on its Draft Applicant Guidebook for new generic Top-Level Domains
(gTLDs).<span> </span></p><p class="MsoNormal" style="text-align: justify;
text-indent: 36pt; "><o:p> We wholeheartedly support the introduction of
new gTLDs.<span> </span>They will provide much needed innovation and
diversity in the product offerings.<span> </span>We appreciate
ICANN’s efforts to date in its implementation work for this crucial
process.<span> </span>While much good work has been done so far, we
believe that the documents still need further refinement and respectfully offer
the following suggestions.</o:p></p><p class="MsoNormal" style="text-align:
justify; "><o:p> </o:p></p><p class="MsoNormal" style="text-align:
justify; "><b>Annual Registry-Level
Fees<span> </span><o:p></o:p></b></p><p class="MsoNormal"
style="text-align: justify; text-indent: 36pt; "><o:p> </o:p></p><p
class="MsoNormal" style="text-align: justify; text-indent: 36pt; ">New gTLD
fees should not be so high that they prohibit new registry operators from
entering the market.<span> </span>ICANN’s proposal to assess annual
fees of the greater of $75,000 or 5% of the registry operator’s revenues is
hard to reconcile with ICANN’s commitment to promoting competition in the
registry space.<span> </span>It might be very difficult for a new
gTLD registry operator – especially one trying to serve a specific community --
to thrive under such a cost structure.</p><p class="MsoNormal"
style="text-align: justify; text-indent: 36pt; "><o:p> </o:p></p><p
class="MsoNormal" style="text-align: justify; text-indent: 36pt; ">These
proposed fees are all the more difficult to justify when one considers the
rates that the incumbent gTLD registry operators have
paid.<span> </span>Why should the new gTLDs pay $75,000 during their
start up periods when the following existing TLDs all pay $10,000 or less --
.cat, .jobs, .coop. aero, .museum, and .travel?</p><p class="MsoNormal"
style="text-align: justify; text-indent: 36pt; "><o:p> </o:p></p><p
class="MsoNormal" style="text-align: justify; text-indent: 36pt; ">Even
VeriSign only paid ICANN $100,000 in .com fees in FY2002 when it already had
over 21 million .com domain names under management.<span> </span>Its
.com fees to ICANN only rose to $151,000 in FY2005 when VeriSign managed more
than 38 million domains in this namespace.<span> </span>Even after
higher .com registry fees were imposed in FY2008, VeriSign still paid less than
2 percent of its gross revenue on the over 68 million .com names then under
management.<span> </span>Similarly, the incumbent registry operators
for .org, .info, and .biz each currently only pay a little more than 2 percent
of the revenues for their respective gTLDs.<span> </span>Why should
new TLDs be strapped with having to pay the greater of 5% or $75,000?</p><p
class="MsoNormal" style="text-align: justify; text-indent: 36pt;
"><o:p> </o:p></p><p class="MsoNormal" style="text-align: justify;
text-indent: 36pt; ">Moreover, in determining the 5%, ICANN proposes to include
“all bundled products or services that may be offered by Registry Operator and
include or are offered in conjunction with a domain name
registration.”<span> </span>This expansive definition goes well
beyond any contractual terms with existing registries, and would create an
unequal playing field among registry operators and would, in our opionion,
hamper innovation.<span> </span>A new gTLD operator that expects to
bundle a domain name with expensive security products and web hosting would be
at a competitive disadvantage to those operators that sell such products
separately.<span> </span>Therefore, ICANN should assess its fee only
on the domain portion of a bundled product set.<span> </span></p><p
class="MsoNormal" style="text-align: justify; text-indent: 36pt; ">If ICANN’s
motivation for this proposed change was a concern that some new gTLD registry
operator might try to game the system by assigning little or no value to the
domain name component of its proposed bundled service, then it seems reasonable
to pre-determine a market value for the domain component instead of assessing
the fee on the entire bundle.<span> </span>Perhaps ICANN could
determine a value of the domains by taking an average of the 5 largest gTLD
registries’ rates in effect at that time.<span> </span>This would
help to promote competition and ensure fairness in the assessment of fees as no
operator would be forced to pay significantly more for its innovative
ideas.<span> </span>It also would help ICANN with its budget and
operational planning efforts.<span> </span></p><p class="MsoNormal"
style="text-align: justify; "><o:p> </o:p></p><p class="MsoNormal"
style="text-align: justify; "><b>Application Fee Refunds/Joint
Ventures</b></p><p class="MsoNormal" style="text-align: justify;
"><o:p> </o:p></p><p class="MsoNormal" style="text-align: justify;
text-indent: 36pt; ">ICANN obviously wants the application process to be
conducted in a fair and orderly manner.<span> </span>In the face of
contention for the same or similar strings, ICANN should encourage the parties
to try to work it the issue themselves before moving to an
auction.<span> </span>ICANN could help foster these efforts in two
ways.<span> </span>First, in Section 1.5 of the proposed RFP, ICANN
suggests that refunds “may be available to applicants who choose to withdraw at
certain stages of the process.”<span> </span>Consequently, refunds
to applicants that withdraw due to string contention or in the face of an
objection should be high.<span> </span>ICANN would save a great deal
by not having to pursue objections and contentions in such situations, and
would be a great benefit to the community and to the
process.<span> </span>Importantly, ICANN should provide specifics of
the refund policy in the next round of RFPs.<span> </span>This is
very important to potential applicants and their financial backers – all of
whom need to know the risks of applying well before the final RFP is
published.<span> </span></p><p class="MsoNormal" style="text-align:
justify; text-indent: 36pt; "><o:p> </o:p></p><p class="MsoNormal"
style="text-align: justify; text-indent: 36pt; ">Second, ICANN should encourage
joint ventures as a means of resolving string contention, as opposed to
prohibiting them.<span> </span>As long as the original applicant is
part of the joint venture, the application shouldn’t change in substance
sufficiently to prohibit an important means to resolve string
contention.<span> </span>If ICANN really wants to use auctions as a
contention resolution method of last resort, it should adopt a high refund
policy, announce it soon, and permit joint ventures to be formed by two or more
parties that are contending for the same or similar
string.<span> </span></p><p class="MsoNormal" style="text-align: justify;
text-indent: 36pt; "><b><o:p> </o:p></b></p><p class="MsoNormal"
style="text-align: justify; "><b>Registry/Registrar Relationships</b></p><p
class="MsoNormal" style="text-align: justify; "><o:p> </o:p></p><p
class="MsoNormal" style="text-align: justify; "><span></span>We support the
ability of a registry to also operate a registrar to distribute the registry’s
domain names.<span> </span>We understand that protections need to be
in place to foster competition in a fair manner, but a rule prohibiting a
registry from selling names through an affiliated registrar would hamper
competition.<span> </span>Indeed, some niche registries would be
unable to survive without an affiliated registrar to sell its domain
names.<span> </span>This is especially true during a start-up
period.<span> </span></p><p class="MsoNormal"
style="text-align: justify; "><o:p> </o:p></p><p class="MsoNormal"
style="text-align: justify; "><b>Agreement and Terms and
Conditions<o:p></o:p></b></p><p class="MsoNormal" style="text-align: justify;
"><o:p> </o:p></p><p class="MsoNormal" style="text-align: justify;
text-indent: 36pt; ">Overall, as pointed out by the Registry Constituency and
others, ICANN should revise the draft registry agreement in a number of
ways.<span> </span>It could be construed to be strikingly one sided
and unfair.<span> </span>Most importantly, ICANN should strike its
ability to change the contract terms
unilaterally.<span> </span>Essentially, ICANN could propose a
ten-fold registry fee increase that is universally opposed by the registries,
but could still be binding on them.<span> </span>Such a result would
not only be unfair, but also would undermine ICANN’s core values, throughout
the World.</p><p class="MsoNormal" style="text-align: justify;
"><o:p> </o:p></p><p class="MsoNormal" style="text-align: justify;
text-indent: 36pt; ">Similarly, we believe the terms and conditions in Module 6
should be changed to add more balance to the rights of the
applicants.<span> </span>For example, why should a successful
applicant have to pay for ICANN’s legal fees if an unsuccessful applicant
decides to file a claim against ICANN?</p><p class="MsoNormal"
style="text-align: justify; "><o:p> </o:p></p><p class="MsoNormal"
style="text-align: justify; text-indent: 36pt; ">Thank you for the opportunity
to provide these comments and for moving forward with the new gTLD process as
expeditiously as possible.</p><p class="MsoNormal" style="text-align: justify;
text-indent: 36pt; "><o:p> </o:p></p><p class="MsoNormal"
style="text-align: justify; text-indent: 36pt; ">Assuring you of our best
intentions at all times,</p><p class="MsoNormal" style="text-align: justify;
text-indent: 36pt; "><o:p> </o:p></p><p class="MsoNormal"
style="text-align: justify; text-indent: 36pt; ">Kind regards,</p><p
class="MsoNormal" style="text-align: justify; text-indent: 36pt; ">Daniel
Schindler</p><p class="MsoNormal" style="text-align: justify; text-indent:
36pt; "><img height="280" width="864"
src="cid:D8114011-8A57-4E13-A5A4-1FE6408FA890"></p><p class="MsoNormal"
style="text-align: justify; text-indent: 36pt; "><br></p><p
class="MsoNormal"><o:p> </o:p></p><br></div></div></div></body></html> 
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