Response to the Initial Report on Vertical Integration between Registrars and Registries dated 23 July 2010

["Ashe-lee Jegathesan" <Ashe-lee.Jegathesan@xxxxxxxxxxxxxxxxxx>]

Melbourne IT responds as follows to the Initial Report on Vertical
Integration between Registrars and Registries dated 23 July 2010:

 

Comments on Key Principles

 

Melbourne IT supports the following principles:

 

1.       There is need for a process that would allow applicants to
request exceptions and have them considered on a case-by-case basis. The
proposed reasons for any exceptions and the conditions under which any
exceptions would be permitted would vary widely within the group. 

 

2.       The concept of Single Registrant, Single User TLDs should be
explored further.

 

3.       Enhanced compliance efforts and the need for a detailed
compliance plan in relation to the new gTLD program in general, will be
required.

 

The single registrant, single user TLD exception will need to be tightly
defined to avoid gaming.  For example, it would be reasonable to impose
an upper limit for the number of second level names (say, under 1000),
and for any second level domains to be registered for the sole use of
the registrant and not to either be licensed for use by a third party or
to be set up for pay-per-click advertising or to display advertising by
parties unrelated to the single registrant.

 

With respect to the need for enhanced compliance efforts, Melbourne IT
notes that ICANN will be charging a minimum annual fee of US$25,000 for
TLD.  In an environment of 500 new gTLDs, ICANN would have an additional
income of $12.5 million per year, which should be sufficient to
strengthen ICANN's compliance program.   The compliance program may
consist of a combination of an audit approach - where some registries
are selected for review each year, and a complaints approach where third
parties can raise concerns with compliance.

 

 

Comments on Major proposals

 

JN2 - Melbourne IT accepts that this is would be a reasonable starting
point for the first round of new gTLDs.   Melbourne IT also supports the
proposed exemption for single registrant TLDs, with protections against
gaming as described above.  Changes to this model could be considered
over time once ICANN has analyzed the market impact of the first round
of new gTLDs.

 

Free Trade Proposal - Melbourne IT does not believe that making such a
major change is warranted at the same time as adding many new gTLDs with
a wide range of new business models.  The current registry/registrar
separation model appears to be working well, and major changes should
only be considered after an economic analysis of the new market in 2012.

 

RACK+ Proposal - Melbourne IT notes that this proposal appears to be the
closest to the status quo with a 15% cross-ownership provision, and
would also be a reasonable starting point for the first round of new
gTLDs.   As noted earlier - Melbourne IT would support an exception for
Single Registrant, Single User TLDs.

 

Competition Authority Model (CAMv3) Proposal - Melbourne IT notes that
apart from this proposal supporting the current ICANN Board position on
strict separation, it outlines an exemption procedure.   The exemption
procedure is consistent with one of the principles that would allow
applicants to request exceptions and have them considered on a
case-by-case basis.  However, Melbourne IT is not convinced that
national competition authorities will have enough understanding of the
competition issues for TLDs that are operated globally.  More publicly
available economic analysis of the new market to inform national
competition authorities would be necessary before this option could be
viable.  Melbourne IT prefers the approach in the JN2 proposal where
ICANN would make a decision for an exemption against specific defined
criteria (e.g. as specified on page 36 of the annual report) that can be
updated overtime.  An appeals process that uses competition authorities
might be an appropriate enhancement to the JN2 proposal.

 

IPC Proposal - Melbourne IT accepts in principle the concept of Single
Registrant, Single User TLDs.  Melbourne IT notes that the IPC proposal
does include some exceptions to prevent gaming.  These exceptions will
need careful review.   Please note Melbourne IT's earlier comments in
relation to potential protection mechanisms which might be imposed. The
IPC proposal allows the registrant to license names to third parties
that have a pre-existing relationship with the brand owner (e.g.
suppliers), which Melbourne IT considers too broad (and which does not
define the nature of the "pre-existing relationship").

 

 

 

 

 

Ashe-lee Jegathesan | General Counsel & Company Secretary | Melbourne IT
| Melbourne, Australia | ph +61 3 8624 2489 | 

fax +61 3 8624 2435 | mob +61 419 125 793 | www.melbourneit.info
<http://www.melbourneit.info/>  

 

Melbourne IT Group (ASX: MLB) 

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