Telepathy Inc comments

[Nat Cohen <ncohen@xxxxxxxxxxxxx>]

Dear Members of the ICANN Board,

The following comments were originally submitted on August 28th. In spite of
the concerted effort by a large number of people to provide thoughtful and
reasonable feedback to the ICANN board on the serious flaws in the original
agreement, ICANN is now proposing revised agreements that retain most of
these flaws.  The comments below are unfortunately still relevant to the
revised agreements, specifically with respect to ICANN's misguided
willingness to offer presumptive renewals.


ICANN¹s Memorandum of Understanding with the Department of Commerce commits
ICANN to promoting competition in the management of the DNS.

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2. Competition
 
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.
 
http://www.ntia.doc.gov/ntiahome/domainname/icann-memorandum.htm

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The proposed .org, .biz and .info agreements are anti-competitive.  They
will result in higher costs, stifle innovation, and introduce tremendous
uncertainty into what had been a stable pricing structure. For these reasons
alone, the proposed agreements must be rejected.  The renewal agreements
need to be revised to be consistent with ICANN¹s stated objective of
fostering competition, consistent pricing, and lower costs.
  
ICANN has abdicated its responsibility to act in the public interest.
Instead it is acting like a regulator that has been captured by the
interests of industry it is supposed to be overseeing for the public
benefit.  The only interests advanced by these agreements are the
registries.
 
A properly managed DNS would result in vigorous competition to provide
registry services, predictable pricing, and falling rates for domain prices
that reflect the rapidly falling costs of providing registry services.
 
ICANN, having learned nothing from the criticism of the Verisign.com renewal
debacle, is once again proposing a regulatory environment that stifles
competition and results in unjustified price increases.  This time, however,
ICANN has gone even further in the wrong direction by allowing registries to
appropriate for themselves value in domain names and associated web sites
created by others, permitting those who control the registry to plunder the
value and goodwill of domains that were generated by others.
 
Although the expense of providing registry services is falling rapidly,
ICANN is permitting unjustified price increases.
 
Although competitive bidding for the registries would allow market forces to
express themselves through reduced renewal rates and better delivery of
services, ICANN prevents competitive bidding.
 
Although presumptive renewals insulate registries from competition and
remove incentives for them to operate in an efficient way that is responsive
to their customers, ICANN prefers presumptive renewals to reopening the
registries to competitive bidding.
 
The Internet has produced an unprecedented explosion of innovation,
competition, and creativity.  It is ironic that ICANN, the organization
charged with fostering the Internet, should operate on principles
fundamentally contrary to the essence of the Internet.
 
Nowhere is this contradiction more blatant that in the presumptive renewal
provisions of these agreements.  Companies such as MySpace, YouTube, and
Zillow shoot up from nowhere to become industry leaders in a few short
months.  It is impossible to pick next year¹s leaders on the Internet.  Yet
ICANN wants to cement the current registries in perpetuity through
presumptive renewals.  ICANN believes it can predict five
years in advance that the companies currently running the registries will
still be the best suited to run them in the future.  Without justification
or need it forecloses the possibility of allowing these registries to be
re-opened to bid in a future none of us can foresee.
 
The presumptive renewal provisions are consistent with ICANN¹s assumption
that its judgment is superior to an open competitive marketplace.  ICANN is
managing the Internet with the same planned economy approach that history
has repeatedly shown results in inefficient allocation of resources,
provides the foundation for graft and corruption, and stifles the innovation
that is the essence of the Internet.
 
ICANN now proposes language that permits an exploitative tiered domain
pricing scheme.  Although from the registry perspective each domain is just
like another and the costs to process each domain is identical, ICANN
proposes permitting tiered-pricing that would transfer value in already
registered domains to the registry who played no part in creating this
value.  As others have suggested, this is a regulatory taking that
legitimizes the theft of value created by others.  It could turn the
registries into the largest cyber-squatters of all.
 
If ICANN could be seen as simply a misguided oversight body, violating its
founding charter, ignorant of basic economic principles, and captured by the
registries it purports to oversee, that would be bad enough.  Yet ICANN
profits alongside the registries by taking an ever growing amount from
domain name fees. Each time a new registry agreement is proposed that
includes terms such as monopoly pricing and presumptive renewals, ICANN fees
increase as well.  It is a cozy arrangement between the incumbent registry
and ICANN for mutual self-enrichment.
 
In the interests of the Internet community as a whole, I hope ICANN members
engage in some soul-searching as to what their role should be, and bring to
the Internet community agreements that reflect ICANN's founding principles
including ³market mechanisms to support competition and consumer choice².

Nat Cohen
President, Telepathy, Inc.