Re: Opposed to changes in contracts that reduce transparency of pricing, and that provide fee waivers to registries

[George Kirikos <gkirikos@xxxxxxxxx>]

To followup on my prior comments, given the proposed changes to Section 2.9(a) 
(last sentence) also eliminate the notice requirements, those too should are 
unacceptable (as per my earlier comments re: Section 2.10), as they reduce 
transparency of pricing and price increases.

Sincerely,

George Kirikos
416-588-0269
http://www.leap.com/


--------------------------------------------
On Tue, 5/31/16, George Kirikos <gkirikos@xxxxxxxxx> wrote:

 Subject: Opposed to changes in contracts that reduce transparency of pricing, 
and that provide fee waivers to registries
 To: comments-proposed-amend-new-gtld-agreement-31may16@xxxxxxxxx
 Date: Tuesday, May 31, 2016, 6:23 PM
 
 Comments by: George Kirikos
 Company: Leap of Faith Financial Services Inc.
 Website: http://www.leap.com/
 Date: May 31, 2016
 
 ICANN has submitted for public comment proposed changes to
 the Base New gTLD Registry Agreement:
 
 
https://www.icann.org/public-comments/proposed-amend-new-gtld-agreement-2016-05-31-en
 
 Two of those changes in particular are unacceptable,
 namely:
 
 (a) Section 2.10 -- elimination of notice to ICANN of
 registry fee price increases. This proposed change (in both
 section 2.10(a) and 2.10(b) is perplexing and shocking. It
 would have the effect of registry fees being kept secret
 from the public (since agreements between registrars and
 registries typically contain confidentiality terms). This is
 unprecedented, and would be anti-competitive, and against
 ICANN's mission. Indeed, one of the ways ICANN is supposed
 to measure competitiveness is through things like wholesale
 pricing, yet now ICANN proposes to keep that valuable
 information from the public's eyes? Truly unbelievable, and
 unacceptable. TLDs are a public resource, not the private
 property of registry operators. They knew of the public
 notice requirements when they applied for new gTLDs. This is
 a one-sided change in favour of new gTLD operators, that
 does nothing for the public, and indeed will have harmful
 and anti-competitive impacts on consumers. And ICANN now
 proposes to deprive the public the ability to even measure
 that level of anti-competiveness, by removing the ability to
 see the true fees being charged to registrars (and the
 increase in those fees), which provide the baseline by which
 consumers ultimately get charged.
 
 Furthermore, nothing in the RAA requires registrars to
 provide notice to consumers (registrants) of the price
 increases that registry operators have made. Thus, the only
 protection some registrants might have would be via the
 public notice provided to ICANN (and reported on by the
 media, etc.). ICANN proposes to eliminate that protection
 entirely!
 
 Given vertical integration, registries can "game" these
 secret price changes even further, to the harm of
 consumers/registrants.
 
 Keeping the fees (and fee increases) secret from the public
 reduces the bargaining power of registrants when negotiating
 with registrars. Registrants would be kept in the dark about
 how much of a margin registrars are earning for the services
 they provide, and thus there'd be an anti-competitive impact
 on consumers.
 
 Keeping the fees (and fee increases) secret from the public
 prevents potential new registrar "entrants" from assessing
 whether they could offer a new gTLD to consumers more
 cheaply than other existing registrars. Some registrants
 might even want to *become* accredited registrars in order
 to eliminate price gouging by their current registrars, and
 this lack of transparency regarding true registry fees would
 reduce that possibility.
 
 Keeping the fees (and fee increases) secret from the public
 also affects the secondary market for domain names, as
 "insiders" with secret knowledge of fee increases could (and
 would) attempt to dupe buyers into purchasing domain names
 that have huge secret fee increases set to take place. Even
 the possibility of that would cause uncertainty, which would
 affect values to registrants and prospective registrants.
 The only solution is greater transparency, yet ICANN
 proposes even less transparency. Not only does ICANN get
 things wrong, they get things wrong in the worst ways
 possible!
 
 Lastly, it would obviously set a dangerous precedent for the
 established registries like .com/net/org, who would also
 demand such a provision in their contracts.
 
 It is mind-boggling that ICANN would even propose such a
 "negotiated" change, when it is supposed to act in the
 public interest. This change alone provides strong evidence
 that ICANN has been captured by the "contracted parties" to
 the detriment of consumers (and registrants in particular)
 and the public. It violates all of the principles in the
 Affirmation of Commitments regarding transparency,
 competition and consumer trust. 
 
 Given the "revolving door" between ICANN and its contracted
 parties, it really calls into question ICANN's independence
 and how hard it "negotiates" when it would think that such a
 change, making registry fees a secret unavailable to itself
 the public, would be acceptable to anyone but a few ICANN
 insiders. 
 
 (b) Section 6.7 (fee reduction waiver). Obviously this is a
 one-sided change that is unacceptable. New gTLD registries
 signed a contract. ICANN should not be granting any fee
 waivers whatsoever, especially ones that are at its
 discretion and on terms that it "negotiates." ICANN staff
 (see revolving door comment above) have long shown an
 inability to properly negotiate agreements in the public
 interest. Indeed, ICANN staff once negotiated contracts for
 .biz/info/org that would have eliminated *any* price
 oversight whatsoever, which would have led to
 tiered/differential pricing on a domain-by-domain basis:
 
 http://www.circleid.com/posts/icann_tiered_pricing_tld_biz_info_org_domain/
 
 (this was overturned after thousands of people supported my
 call opposing the proposed contract)
 
 The ability to negotiate a "waiver" simply invites further
 mischief and misadventures by both ICANN staff and registry
 operators. All the registry operators signed a contract, and
 knew what they were getting into when they signed it. If
 their business projections didn't turn out right, that's
 their private problem, and not the problem of ICANN or the
 public. If a particular new gTLD is not economic, it should
 be terminated, or assigned to another operator who can run
 it in a profitable manner. Doing otherwise changes new gTLDs
 into charities looking for handouts, rather than businesses.
 It would turn ICANN into a forum for Crony Capitalism:
 
 https://en.wikipedia.org/wiki/Crony_capitalism
 
 where it would be providing subsidies to losers (in the form
 of fee waivers). ICANN should not be picking the winners and
 the losers. Losers should fail naturally, with clear
 mechanisms for handling that business failure (i.e.
 termination or assignment to others). It appears that
 registry operators want to "privatize the profits, and
 socialize the losses."
 
 When a registry operators wants to get a fee waiver, ICANN
 should simply point to the existing contract which doesn't
 permit it, and that's the end of the story. That's a 30
 second conversation, i.e. "No can do." While ICANN staff
 would obviously enjoy the opportunity to be wined and dined,
 to be convinced to grant exceptions and waivers, there
 should simply be no such possibility for such mischief and
 misadventures. Eliminating the possibility for mischief and
 misadventures should become a higher priority at ICANN --
 heck, it might even lead to major cost savings, with fewer
 staff needed to listen to and respond to such inappropriate
 requests. 
 
 This proposed change is yet another sign of ICANN's
 immaturity, that it's not ready for prime-time and not ready
 to be set free from US government oversight. Why would it
 negotiate such a provision? Section 6.7 is an unambiguous
 advertisement for Crony Capitalism, values that are
 inconsistent with those of a free market with a level
 playing field.
 
 Section 6.7 should be eliminated in its entirety. 
 
 Combined, the proposed changes in Section 2.10 and Section
 6.7 reinforce the view that the new gTLD experiment has
 failed, and that ICANN and its contracted parties know it.
 They are clear attempts to hide that failure from the
 public. Given that new gTLDs were the biggest decision ICANN
 has ever made, a decision that they got wrong, they should
 not be permitted to cover up that failure at this critical
 juncture, when the US government is assessing whether its
 oversight should continue in the future. Indeed, these
 proposed changes demonstrate that ICANN has not learned
 anything from past mistakes, and that they hope to continue
 with "business as usual" in a less transparent future where
 they can cover up mistakes and make new mistakes with
 impunity.
 
 Sincerely,
 
 George Kirikos
 416-588-0269
 http://www.leap.com/