Comment Regarding Recommendation #19

["Michael D. Palage" <Michael@xxxxxxxxxx>]

I would like to submit the following comments regarding Recommendation
#19:

Registries must use only ICANN accredited registrars in registering
domain names and may not discriminate among such accredited registrars.

I had previously submitted the following comments last year in
connection with an earlier new gTLD public comment forum, however, I
believe they are relevant given the final wording of Recommendation #19.

27.    With regard to competition, it is also important to consider
existing ICANN's requirements that registries only use ICANN accredited
registrars to provide domain name registration services to registrants. 

28.    Since 1999, the ICANN Registrar accreditation model has helped
promote competition, and lower consumer costs. Although ICANN Registrars
must continue to play a vital role in the future of gTLD domain name
registration services, an absolute requirement (sic) to use registrars
in every TLD might not be scalable.

29.    For example if there was to be a major ISP that sought to apply
for a TLD, one needs to question whether registrars are needed in this
business model, as the ISP knows each of its customers and currently has
a contractual relationship with each one. The mandated use of a
registrar distribution channel in this scenario is questionable. 

30.    The mandatory use of registrars in smaller TLDs below some agreed
upon threshold of registered names (i.e. 25,000) may also unreasonably
place a burden on a smaller registry operator.

31.    Should ICANN ever consider allowing a registry to provide any
type of direct domain name registrations services, this needs to be
closely monitored with adequate safeguards in place to ensure that the
registry operator does not improperly abuse its sole source contract.

If the ICANN Board should decide to accept this recommendation it should
seek a legal opinion as to imposing this require on all future TLD
applicants might give rise to potential competition concerns as there
are other gTLDs (.EDU & .GOV) and ccTLDs (.DE & .PR) in existence that
do not carry this requirement. While the previous referenced gTLDs are
legacy TLDs (pre-ICANN), the actions of the USG demonstrate that there
are cases in which allowing a registry to go direct to registrants is
acceptable.

This analysis should also take into account the growing evolution of the
registration authority marketplace in which the previous black and white
lines that separated registries and registrars continue to blur.
Additionally, the work of the informal working group of registries and
registrars that are evaluating removing existing restrictions on
registry ownership of registrars is also relevant. While these proposed
rule changes may make it easier for existing registries and registrars
to provide domain name services, it places an additional financial
hurdle for new registries to overcome if they would like to explore
domain name distribution models outside the current registrar market. 

While I respect that many in the ICANN community hold Recommendation #19
sacrosanct, the ICANN staff and Board have a fiduciary obligation to
make sure that this recommendation does not give rise to potential legal
concerns, as there is clearly evidence in the existing domain name
marketplace showing that other such models exist and are viable.

Sincerely,

Michael D. Palage

Disclosure: This statement is my personal opinion, and not made on
behalf of any current or former clients. That being said, I do
acknowledge serving as a consultant to registries that have advocated
for increased flexibility regarding domain name distribution models.
However, the comments that I previously submitted in 2006 where made
prior to me being retained by any client that has advocated to ICANN for
these changes.