Re: [gnso-vi-feb10] Proposed Addendum to Proposals

[Volker Greimann - Key-Systems GmbH <vgreimann@xxxxxxxxxxxxxxx>]

Anthony,

you make an excellent point, so I would add another couple of thoughts:

We would be well advised to consider the question if the costs of the 
proposed solution to a problem are not disproportional to the benefit 
derived from this solution. If the "solutions" would cause a greater 
harm than the harms they are designed to prevent, we are doing the 
opposite of what we set out to do. We need to keep in mind that the 
application costs are high enough as it is, and saddling down a registry 
with further fixed and unavoidable costs may be undesirable. Why should 
we punish those operators that never even considered abuse by inflating 
their operational costs to a level where the TLD is no longer 
commercially viable?
New TLD registries should be abe to operate economically viable from the 
start and not be burdened by unnecessary costs. Full CO with guaranteed 
equal registrar access is one great way to reduce costs and allow a 
viable lively new TLD. Ownership (or control) limitations will on the 
other hand do nothing to prevent any of the harms listed so far.
I may be branded as a heretic for the following statement: No matter 
what we propose, there will be abuse. Even under the ICANN boards 0% 
control limit, there will be abuse. The question to ask therefore is not 
how can we prevent all abuse, but how to react when abuse becomes 
apparent. What penalties, what checks and controls are needed? How about 
peer review? Fellow registrars and registries and service providers will 
not sit idly by when their competitor uses their position in an abuseive 
manner. The penalties must be designed to really hurt the abuser and for 
a minimum, deprive him of everything gained through the abuse.

--

Should you have any further questions, please do not hesitate to contact us.

Best regards,

Volker A. Greimann
- legal department -

Key-Systems GmbH


> Thanks for the constructive attempt.  I think it's a useful way into 
> the problem I see with many proposals.  Unfortunately, the imposition 
> of significant costs and regulatory burden would be injurious if not 
> fatal to smaller registries.  I've tried to add more color to that 
> assertion below.   If this issue were addressed properly, I would be 
> much readier to sign on to a compromise proposal.
> I note that one of your thoughts is that a registry-registrar bundle 
> would never be able to sell names in its own TLD.  I do not believe 
> that "exceptions" for orphaned TLDs make any sense, especially if they 
> are combined with a cap that would essentially discourage the registry 
> from succeeding and would entail a very expensive migration/transition 
> process, not to mention customer confusion) when the cap was reached. 
>  The people from .coop graphically described the pain they went 
> through in this case, in one of our earlier VI meetings, I forget 
> which one.   Furthermore, there is the horrible case where the 
> registry is not "orphaned" but might as well be -- only one or two 
> subpar registries are carrying the TLD, not marketing it, not 
> answering their phone, etc. -- and the registry impotent to do 
> anything about it. 
>
> Suppose however that the "same TLD" restriction were not in place, and 
> that a small registry could act as a registrar for its own TLD under 
> your proposed rules. For a small registry, the restrictions would 
> seems so bizarre, punitive, and anti-competitive that the "Eckhaus 
> Rule" would shortly be as well received as the imposition of shariah 
> in Cancun. 
>
> Consider what I believe will be a common case: a small registry with 
> about 6 - 10 employees, registry/registrar tech functions outsourced. 
>    One person in charge, two sales and marketing people, an 
> accounting/financial person, possibly a technical person to manage the 
> registry tech functions, and someone to deal with ICANN, who may also 
> be a lawyer.  Even if someone were to argue that a registry needs 
> twice as many people -- evidence among the ccTLDs notwithstanding -- 
> the case is the same.     
>
> This small registry may be a cultural/linguistic "community" 
> applicant, or it may simply be a small registry that for some reason 
> doesn't reach the high "community" bar, for example .indigi, which 
> will fail as a "community" because it is not a community, but a 
> community of communities (don't blame me, I didn't write the rules).   
> This registry may also be a small entrepreneurial venture, such as 
> (among those announced) .cal, or .board.  This registry may also be a 
> government-supported geographical TLD, such as the registry for a 
> small city.   What these registries have in common is that they need 
> to or want to be able to market and sell directly to the public, 
> through their wholly-owned ICANN-accredited registrar.
> The proposed audits will cost between $50,000 and $100,000.  There are 
> certain auditing costs that don't depend on the size of the 
> enterprise.   At a gross profit of (say) $10 per name, that's an extra 
> 5,000 to 10,000 names that need to be sold to be pay for those audits. 
>  To put this in perspective, this range of sales is approximately the 
> entire annual sales of .cat.
> Now consider the issue of separating the registry and registrar -- 
> this is an even bigger cost.   Basically you would have to double your 
> staff, and possibly -- in order to maintain real separation -- pay a 
> separate rent as well.  I won't attempt to estimate the cost, but it's 
> large and very possibly would make operation impossible.
> All of this in order to prevent hypothetical harms to existing 
> registrars/registries.  Your suggestion may solve one problem, dear to 
> members of this Working Group, but it would create another much larger 
> one. 
>
> Antony
>
>
>
>
>
> On Jun 14, 2010, at 4:54 PM, Jeff Eckhaus wrote:
>
> > All,
> > After today’s discussions with this group and reading the emails on 
> > the list, I have noticed a consistent concern coming from many group 
> > members, that they are worried about ICANN’s ability to enforce any 
> > rules that are put in place. It is one of the main concerns opponents 
> > of the JN2 proposal have expressed with the issue of co-ownership. 
> > Specifically being able to police the following issue: “Registry 
> > Operator or its Affiliate may serve as an ICANN-Accredited Registrar 
> > in any top-level domain other than the TLD for which Registry 
> > Operator or its Affiliate serves as the Registry Operator” .
> > Those opposed to JN2 and other proposals seem to agree that 
> > cross-ownership is appropriate, but that ICANN will not be able to 
> > police any restrictions on data sharing between a registry and 
> > registrar. They believe that we cannot simply rely on Registrars to 
> > adhere to a signed agreement. Thus, because compliance will be too 
> > difficult to enforce, we must limit cross-ownership.
> > While I disagree with this viewpoint, my opinion does not matter at 
> > this point. What does matter is assuring the people who are concerned 
> > with the above, attempting to bridge the gap and reach consensus. To 
> > that end, I am proposing an unsolicited addendum to the JN2 proposal 
> > (maybe JN3 now??) and to any other proposals that allow a Registry to 
> > own up to 100% of a Registrar (vice-versa) but not distribute the 
> > owned TLD.
> > This will only apply to co-owned entities that have an ownership 
> > level above the 2% threshold as discussed in the DAGv4:
> > ·         The Registry/Registrar must agree to an annual audit for 
> > the first 2 years. Every 18 months for next 3 years, and every 2 
> > years thereafter. (timing can be negotiated)
> > ·         The audit will focus on ensuring that Registry data is not 
> > shared with the co-owned Registrar, co-owned Resellers, and any 
> > related Affiliates
> > o   Details of what data would need to be audited would be supplied 
> > by a working group/committee led by current Registries
> > ·         Stiff penalties would be levied if there is an audit 
> > failure (amounts TBD)
> > ·         All costs of the audit would be borne by the co-owned entity
> > o   The co-owned entity would pay fees into a pool, not directly to 
> > auditors. This avoids any thoughts of impropriety
> > ·         This audit would be in addition to the audit and compliance 
> > requirements already agreed to in ICANN Registry and Registrar agreements
> > ·         Auditors would be independent of ICANN but would work with 
> > ICANN Compliance on fees and remedies
> > ·         Auditors would be rotated among assignments to avoid capture
> > This is the framework of my proposal that I believe would cover 
> > Registrant rights and concerns and bring comfort to those who believe 
> > there will be enhanced harms if there is any type of co-ownership. 
> > Most important it would cover the policing/enforcement issues that 
> > seems to be the roadblock to consensus. I welcome feedback on this 
> > idea and look forward to hearing more and seeing everyone in Brussels.
> >  
> > Regards,
> >  
> > Jeff Eckhaus