Issue with Initial Report on new gTLDs

["Bhavin Turakhia" <bhavin.t@xxxxxxxxxxx>]

Hi all,

I just went through the "Initial Report on new gTLDs" at -

http://gnso.icann.org/drafts/newgtlds-issues-report-01-28jul06.htm
<BLOCKED::http://gnso.icann.org/drafts/newgtlds-issues-report-01-28jul06.htm
> 

There is a single glaring issue in the "Term of Reference 2. Selection
Criteria for New Top Level Domains" as it is currently stated. One of the
recommendations within this terms of references states -

"Applicants (for new gTLDs) must offer a clearly differentiated domain name
space with respect to defining the purpose of the application"

Please find implications of the above statement as below -

*       One of ICANNs mandate is to foster and create competition in such a
manner so as to benefit consumers
 
*       Competition, along with "stability" and "security" has been of of
the founding principles of ICANN. This has been mentioned repeatedly in the
Green paper, White paper, ICANN MoU and the ICANN by-laws. Few excerpts of
the same have been attached below for reference
 
*       A portion of this mandate has been achieved by creating Domain
Registrars who compete amongst themselves globally and offer Domain
Registration services to a worldwide audience. This accreditation process of
Registrars has resulted in the price of a domain name reducing from $35 to
$7
 
*       This has resulted in significant benefit to consumers in terms of
price and availability. Various different business models have emerged due
to this competition which have increased domain name proliferation,
availability and service levels
 
*       However, this aspect has only created a choice from a distribution
perspective for customers ie Customers have the choice to now buy the SAME
Domain Name from multiple different Registrars
 
*       This however has not given the Customer a choice of the TLD string
itself
 
*       The white paper states "The U.S. Government is of the view, however,
that competitive systems generally result in greater innovation, consumer
choice, and satisfaction in the long run. Moreover, the pressure of
competition is likely to be the most effective means of discouraging
registries from acting monopolistically." and "The Internet succeeds in
great measure because it is a decentralized system that encourages
innovation and maximizes individual freedom. Where possible, market
mechanisms that support competition and consumer choice should drive the
management of the Internet because they will lower costs, promote
innovation, encourage diversity, and enhance user choice and satisfaction."
 
*       It is true that competition has resulted in choice for consumers and
lowered costs for consumers. For instance, as an example since the last 2
years .INFO Domain names have been sold at very low prices since the
Registry is offering them at $0.49 to $0.99. This has resulted in a LARGE
number of potential customers worldwide opting for .INFO domain names
instead of .com domain names. We are a large ICANN Accredited Domain
Registrar, and we have seen .INFO domain names registered by our Customers
in the last few months is equal to the number of .COM domain names
registered by our Customers.
 
*       The fact that .INFO offers a similar proposition to some consumers
has also resulted in the .INFO space growing rapidly to 3 million domain
names, and the .BIZ space growing to 1.5 million.
 
*       .INFO and .BIZ are gTLDs which DO NOT offer a "clearly
differentiated domain space" as compared to existing incumbents. Infact most
Registrars market them as a TLD equivalent of .com, .net, .org etc. This
blur allows a Customer the ability to register domain names at a cheaper
cost, or register a particular string that is not available in the .COM
space
 
*       This also results in competition for the Registry operator of .COM.
While we are still aware that nothing can truly compete with .COM, atleast
the existence of other overlapping gTLD options such as ,BIZ, .INFO etc
provide some basic level of choice to a Customer and thus create a certain
level of competition for incumbent Registries
 
*       Other TLDs such as .travel, .aero, .jobs do not directly compete
with .com and hence cannot bring in competition amongst registries.
 
*       The only way to allow competition in the gTLD space is to allow
other gTLDs which do not have a restrictive or differentiated space
 
*       This is even more imperative now than before. Earlier gTLD contracts
did not stipulate "almost-perpetual" renewal and did not create
circumstances which allowed a Registry operator to arbitrarily modify
prices. The recent trend has however demonstrated that gTLD Registry
contracts may have more latitude in creating a monopolistic position. It
seems like gTLD contracts may not be rebid and may have the discretionary
ability to change prices. This position allows Registries to increase prices
without cost justifications and will have a detrimental effect on consumers
and registrants and Registrars
 
*       The past history demonstrates that competition within gTLD
Registries can only be created in two ways -
  


1.      By rebid of a Registry (and hence not have a perpetual contract).
This was clearly observed in case of .NET where the open bid reduced the
pricing for Domain Registrations in the TLD thus benefiting consumers. It is
another matter that due to skillful negotiations this benefit turned out to
be short lived

2.      In the absence of open bidding for Registries the only other way to
create a basic level of competition is to allow other TLD string options and
choices to consumers. This cannot be achieved if each TLD space created is
non-overlapping and clearly demarcated separately. In that case each TLD
will become a monopoly and there will be no competition amongst TLD
Registries
 

*       The recommendations by the GNSO already cover technical competence
as a criterion for selecting a new TLD Registry. Therefore any Registry
applicant must pass certain technical criteria to ensure that they would not
pose a threat to the stability and security
 
*       However other than that there should be no reason to discourage
someone from applying a generic string which may overlap with existing TLD
Registries such as com/net/org/biz/info
 
*       Such a stipulation would be similar to a stipulation that may say
that a Registrar can ONLY sell domain names within a specific Country.
Imagine if that stipulation were to be created when the Registrar
accreditation process was opened up. That would not create competition and
benefit the customers
 
*       Similarly restricting the reach and audience of a TLD Registry will
not create competition amongst TLD Registries
 
*       I think that the notion of strong support for this criteria may be a
misnomer inasmuch as for someone like me, this criteria in the GNSO terms of
reference has slipped by unnoticed amongst the bigger things. I may be
incorrect, but I would like to take this opportunity to ensure that the
above implications and ramifications of this particular term of reference
are considered by the GNSO before any final reccommendations are made in
this regards.

Thanks
Best Regards
Bhavin Turakhia
CEO
Directi

--------------------------------------------------------------

SOME Excerpts from the White paper, MOU and by-laws of ICANN

 From the ICANN White Paper


"Principles for a New System. The Green Paper set out four principles to
guide the evolution of the domain name system: stability, competition,
private bottom-up coordination, and representation."


"Further, in response to the comments received, the U.S. government believes
that new corporation should establish and implement appropriate criteria for
gTLD registries."


ICANN MOU

"On July 1, 1997, as part of the Administration's Framework for Global
Electronic Commerce, the President directed the Secretary of Commerce to
privatize the management of the domain name system (DNS) in a manner that
increases competition and facilitates international participation in its
management."


"This Agreement promotes the management of the DNS in a manner that will
permit market mechanisms to support competition and consumer choice in the
technical management of the DNS. This competition will lower costs, promote
innovation, and enhance user choice and satisfaction."


"Collaborate on the design, development and testing of a plan for creating a
process that will consider the possible expansion of the number of gTLDs.
The designed process should consider and take into account the following:

a. The potential impact of new gTLDs on the Internet root server system and
Internet stability.

b. The creation and implementation of minimum criteria for new and existing
gTLD registries.

c. Potential consumer benefits/costs associated with establishing a
competitive environment for gTLD registries"
 

ICANN By-laws

"Introducing and promoting competition in the registration of domain names
where practicable and beneficial in the public interest."