Lack of hard price caps demonstrates ICANN is not protecting consumers, not promoting true competition (Comment by: Leap of Faith Financial Services Inc., June 1, 2010)

[George Kirikos <gkirikos@xxxxxxxxx>]

Hello,

The single most important reason that ICANN alleges is the justification for 
the introduction of new TLDs is to promote competition. If competition is 
working for the benefit of consumers, this will be seen through registration 
prices lower than .com. ICANN refuses to take steps to eliminate the  abusive 
.com monopoly VeriSign has, by implementing a regular tender process. Instead, 
ICANN is implicitlysaying that new TLDs would keep consumers protected from 
that abuse by VeriSign.

However, this 4th iteration of the Draft Applicant Guidebook demonstrates once 
again that ICANN has no interests in protecting consumers, but is merely in 
cahoots with registrars and registries, acting against the interests of the 
public. In particular, section 2.10 of the "Base Agreement and Specifications" :

http://www.icann.org/en/topics/new-gtlds/draft-agreement-specs-clean-28may10-en.pdf

contains no hard price caps whatsoever. Registry operators would be open to 
charge $1000/yr per domain or $1 million/yr per domain, for example, to 
maximize their profits.

This is of critical importance because all the registry agreements (including 
.com) have an "equitable treatment" clause, see for example section 3.2(b) of:

http://www.icann.org/en/tlds/agreements/verisign/registry-agmt-com-01mar06.htm

which in a nutshell says that "if any other registry gets something, our 
registry is entitled to the same."

By not putting in hard price caps, ICANN opens the door for VeriSign (and other 
registry operators) to have unlimited price increases in the future, via 
litigation or simply asking ICANN for it. This is obviously not protecting 
consumers whatsoever. It's encouraging registries to abuse their 
ICANN-sponsored "franchises" or "mini-monopolies" to the detriment of the 
public. 

ICANN once testified before the US government that their "proof" that their 
work is in the public interest was that they had managed to lower registry 
prices from $35/yr (back when Network Solutions had the monopoly, before being 
acquired by VeriSign), to $6/yr. However, prices have since steadily gone 
higher and higher, even though technology costs (for webhosting, SSL 
certificates, computers, bandwidth, etc.) have been going down. Only .com 
prices have been going up. This should ring alarm bells with the US Department 
of Justice, NTIA, and the Department of Commerce. Why is every other technology 
going down in price, but .com costs are going higher? Even 1-800 numbers have 
been going down in costs (see sms800.com for prices), and are much cheaper than 
.com domains at the wholesale level (under $1.50/yr), even though telephony 
costs should be much higher than internet costs. The only reasonable 
explanation is that ICANN has not promoted competition, but
 instead has protected and perpetuated an abusive monopoly. This abusive 
monopoly allows ICANN staffers to have excessive salaries, and huge $60 
million/yr budgets, traveling around the world at the expense of the public. 
How else can an alleged "non-profit" company, in the midst of a deep recession, 
have at least *16* staff members earning more than $200,000 (yes, two hundred 
thousand) per year???

http://forum.icann.org/lists/op-budget-fy2011/msg00013.html
http://www.icann.org/en/financials/tax/us/fy-2009-form-990-en.pdf

with at least eight of those being paid more than $300,000/yr. It's an outrage, 
and deserves a government investigation.

If there is to be true competition, there would be tender processes for TLDs, 
so that each TLD is managed by a registry that will give consumers the lowest 
price for a set level of service (SLA). That's the "gold standard" of all 
procurement contracts around the world, whether it be school cafeteria 
management, trash disposal, or the supply of office equipment --- not the 
creation of monopolies with unlimited prices that ICANN does against the 
interests of the public.

To demonstrate that ICANN is acting to protect consumers, it is imperative that 
there be hard price caps embedded in the agreements. Indeed, if ICANN is 
suggesting that competition will lead to lower prices, there is no good reason 
that the hard price cap should be any higher than that for .com.

We will have more comments later, but wanted to get this most important issue 
on the record again at the start of the comment period.

Sincerely,

George Kirikos
President
Leap of Faith Financial Services Inc.
http://www.leap.com/

Date: June 1, 2010