Regarding transition to market forces

["Jay Westerdal" <jwesterdal@xxxxxxxxxxxxx>]

John thanks for pointing out section 1.4 in the Q&A, I was more shocked by
1.2. I remember reading it a few days ago and only thinking to myself rather
then commenting. I was so floored by the lies at the time. Now I have an
opportunity to comment, first off I am glad others had the same reaction
when reading it. The statement was not only factually wrong, it was actually
crafted to miss-lead people. That is almost criminal, well perhaps it is
actually criminal had this been subject to truth in advertising laws. I am
no lawyer, so I will leave this point unfinished. The author knew about the
merits of market forces driving price down. Yet instead he/she crafted
answers to questions that concluded the inverse of sound logic. How can
raising prices be appropriate for market forces considering we all see
prices go down and everything getting cheaper when there is a re-bid.

Quoted from the Q&A:
"Q1.2 Why is it appropriate for Verisign to be allowed to raise its prices
by up to 7% per year?"

"A1.2 In order to provide for a transition to allowing market forces to
determine prices, ICANN and Verisign agreed to relax the current price cap,
which has remained unchanged since ICANN came into existence, on a graduated
basis. The proposed agreement clarifies ICANN's role and recognizes that
determination of whether a registry's action raises competition issues is an
appropriate function of existing governmental competition authorities. ICANN
consulted with the U.S. Department of Commerce and its views were taken into
account by ICANN and Verisign in agreeing to the pricing provisions in the
proposed new .COM agreement."

The first sentence should read, "In order to provide a transition AWAY from
market forces we have allowed Verisign to determine pricing. By granting
Verisign a monopoly on .COM there is no market forces other then Verisign's
executives and their stock holders. We have excluded other Registry
Operators from being allowed to bid on the .COM contract."

I am a strong supporter that IF there is a presumptive right to renew (which
by the way I am not, but for the sake of argument) that the contract stays
the same. That means prices stay the same. If you renew, you keep everything
the same, hence the term renew. If Verisign feels they need to raise prices
by adding NEW language to the contract then let them re-bid a NEW contract.
It smells like corruption that we continue to see a corporation that
controls contracts over the Internet continue to make decisions that violate
its core values time and time again. Who has oversight over an organization
that violates its own foundation doctrine? Increasing competition is (was) a
core value, yet ICANN seems to not follow this. Why does the first line of
the section about "Purpose" in the MOU say... "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."

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

If ICANN is listening at all... read your MOU before you start every day.
ICANN staff should know it by heart. Increase competition.

On to the next issue, I quote section 4.2:

"Q4.2 Why does the proposed agreement extend Verisign's .COM contract to
2012 and give it presumptive renewal?"

"A4.2 Extending Verisign's .COM registry contract to 2012, as proposed in
this agreement, maintains Internet security and stability. Uncertainty in
the registry contracts discourages investment and can be potentially
destabilizing. Contract extensions and presumptive renewal clauses provide
operators with the business certainty needed to make large-scale investments
in registry infrastructure. This incentive for long-term investment is
coupled with safeguards that allow for change if the contract is breached. 

Furthermore, the benefits of eliminating existing and future disputes with
Verisign, coupled with the security and stability benefits, is of
significant value to the community that is only achievable through
negotiations with Verisign. Absent unexpected circumstances, the Verisign
agreement for .COM will be renewed in 2012, pursuant to the terms of the new
agreement. The current .COM registry agreement was for a six-year term. The
proposed .COM registry agreement is for five additional years beyond 2007."

I love how presumptive renewal is actually a by-product of not wanting to
discourage investment in VRSN stock, which by the way could lead to Internet
destabilization! Holy Cow, did ICANN really use Verisign stock price being
effected as a means to give them a perpetual never ending contract because
they used words "Internet Stability" in the same sentence? What happened to
competition? There is always uncertainty when a contract is re-bid as to
whether that company will win it again, but that is what competition is
about. If there are other qualified companies that bid on the contract and
pass all the same tests then let the re-bidding process continue. No gTLD
should be allowed to perpetually renew just to help stock holders out. Did
Verisign write this Q&A? I do not believe Internet Destablization is tied to
the re-bidding process! I would challenge the other Registries to make such
a statement as well to show ICANN the truth that not even other registries
believe this logic.

We are going down a very bad road when we allow price increases in the
contract and give VRSN a tool to keep the contract forever. Turn back now
and restrict one or both of these before it is too late.

Jay Westerdal
Name Intelligence, Inc.
http://www.nameintelligence.com  

PS: If a senate committee ever probes ICANN, please check and see how many
ICANN staff members have VRSN stock.

-----Original Message-----
From: On Behalf Of John Berryhill
Sent: Wednesday, November 23, 2005 11:05 PM
To: registrars
Subject: Re: [registrars] Regarding transition to market forces


>I am not aware of market forces leading to an increase.  I certainly
>haven't seen that amongst registrars where market forces do apply.

...which, Bruce, is precisely what is stated in the Q&A 1.4: "Prices have
dropped from US$50 per year for a .COM domain name to as low as under US$10
since ICANN introduced registry and registrar competition in 1999"

Uhmmm, gee, so in the competitive registrar market, prices dropped by a
factor of five, but "market forces" dictate a 7% per year increase
henceforth at the registry?  And this is despite the fact that .com is a
"thin" registry.  So here our anonymous ICANNite is basically saying that
the registrars maintain more data and provide more customer service than the
registry on margins of less than four dollars.

This is not a "Q&A", this is a case study in dissociative identity disorder.
One shudders to imagine the childhood trauma responsible for this
manifestation, but the author is in need of professional help before the
apparent inner tension leads to physical problems.

These are words intended to obfuscate, not illuminate.