GeorgeK
TheBest.com
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I've just completed my initial review of their comments, and submitted the following response to the ICANN mailing lists:
--------- my response begins -------
SUBJECT: Responses by .biz/info/org Registry Operators are Unacceptable
Hello,
ICANN has posted the responses of the .biz, .info and .org registries regarding the proposed new contracts at:
http://www.icann.org/announcements/...t-1-12oct06.htm
They are unacceptable, and the proposed contracts should continue to be rejected.
1) Tiered/Differential pricing -- Each of the registries proposes that new language be added to the contracts that would continue to leave in a big loophole to implement differential pricing. In particular, they would allow it:
"to the extent a variable pricing model for active Registered Names has been implemented in any other new or existing gTLD"
(effectively the equivalent language in all 3 proposed revisions)
This is an enormous loophole. Indeed, it's a loophole that may *ALREADY* have been triggered, or be able to be triggered due to existing contracts for newer gTLDs that don't have any theoretical restrictions on pricing (e.g. it might be allowed in .asia or .mobi, where more pricing policy discretion was given to the registry operators). All it would take is *1* new gTLD to introduce differential pricing, and these three registries would be permitted to do the same. And of course by logical progression, VeriSign would want the same for .com/net.
The big difference is that registrants in any new gTLD that permitted diffferential pricing knew this ex ante. Here, in the legacy .biz/info/org agreements, the registry operators want to change the rules for registrants ex post.
It's funny, because when this was first brought up, some registries were suggesting that differential pricing was something that they didn't even think was permitted in their first drafted contracts:
http://gnso.icann.org/mailing-lists...a/msg04293.html
"AGAIN, I AM NOT SURE WHERE YOU GET THE PERCEPTION THAT WE ARE ABLE
TO CHARGE DIFFERENT PRICES FOR DIFFERENT DOMAIN NAMES."
And argued that they couldn't get away with raising prices:
http://gnso.icann.org/mailing-lists...a/msg04292.html
"Although you insinuate that we could raise prices, do you honestly believe that we could really get away with raising prices and not suffer a huge loss in the demand for our services? We operate in a real economic market and not in a theoretical hypothetical world. In other
words, do you really think .BIZ could get away with raising prices above that for a .com domain name and survive? We do not. We believe that if we were to raise prices without a corresponding increase in .com prices, registrants would switch from .BIZ to .com or .net in a heartbeat."
In other words, the registries "played dumb". In their new comments, they continue to "play dumb". However, I believe they are much smarter than that.
What matters is not this rhetoric of the registries about "Oh, we'd never be able to raise prices", or that "we'd never do differential pricing". What matters is what's in the actual contracts. The contracts propose removing price caps. Registries do not need price caps to be removed if they plan to REDUCE prices --- they only need price caps to be removed in order to RAISE prices. And though they say they don't want differential pricing, their proposed contracts say if *ANY* other gTLD registry somehow gets it, then we want it too! Sheesh. How stupid do these registry operators think that ICANN and the public are?
Given the poorly scrutinized contracts for .mobi, .cat, .tel, .asia, .eu, etc., where differential pricing might be introduced one day, even on a limited basis, that springs the trap on .biz/info/org holders under the proposed new contract language.
It's clear even stronger language is needed than that proposed by these registry operators, that gives greater certainty to helpless registrants. If indeed these registry operators believe that they can never price higher than .com, perhaps one simple solution is to put in the identical caps as exist on .com. With identical caps to .com, nothing would prevent the registry operators from lowering the prices to registrants below those caps, if that is their noble intention. If instead it's their evil intention to raise prices, they would be thwarted.
2) PDP-FEB06 - None of the registries wants to wait until PDP-Feb06. Of course, that's unacceptable. The renegotiation of their contracts was far in advance of their expiration, and attempted to preclude competitive tenders by other prospective registry operators. Registries are simply contractors. They're in no position to dictate timelines to ICANN and to the public it represents that only benefit themselves. Limiting the debate and further scrutiny of their contracts to find other flaws is not in the public interest.
The last group that gave ICANN an ultimatum to make a decision on a proposed contract on a specific date was ICM Registry, for .xxx. These registry operators should suffer the same fate, if a decision on October 18th is demanded --- the Board should simply reject the proposed contracts, period. The registry operators can then serve out the remainder of their contracts, and then be subject to the renewal terms contained therein, including the provisions from competing bids by other prospective registry operators for .biz/info/org. Indeed, it is in the public's interest that ICANN determine whether other prospective registry operators might serve registrants of .biz/info/org more cost effectively and/or with better service. Without a public tender or "expression of interest" or similar process, ICANN is flying blindly and by the seat of its pants, without any information. To make informed decisions, one needs information, and these incumbent registries are proposing to deny ICANN the opportunity to gather that information. It would seem to me that the incumbent registry operators are scared that competitors might emerge from that process, competitors who would replace them, and thus they are trying to lock-in ICANN to long-term (indeed perpetual) bad deals for consumers.
3) Presumptive Renewal: As discussed above, presumptive renewal should not be a part of any new contracts. It's no surprise that all of the registry operators wanted it. They say they "need" it, in order to invest in their businesses.
Yet, somehow they were able to submit applications to run .biz/info/org initially that did not give them presumptive renewal. Presumptive renewal does not exist in most government contracts, or other business contracts. They were aware of this from the beginning. ICANN will have no trouble finding alternate registry operators who are willing to bid on operation of the .biz/info/org registries for fixed terms. Indeed, I imagine these same registry operators, and perhaps VeriSign, DENIC, Nominet, and others would be aggressively bidding at even lower prices than exist today for fixed term new deals. This would benefit consumers.
One only need look at the example of our friends at Neustar, who agreed to LOWER their telephone database management pricing, in exchange for a contract extension:
http://gnso.icann.org/mailing-lists...a/msg04807.html
"The contracts have been extended by 48 months to June 2015. Pricing remains unchanged at $1.05 through the rest of the year, the company said, and in 2007 transactions will cost 91 cents each regardless of volume. Beginning in 2008 until the contract expires, transaction rates will range from 95 cents to 75 cents depending on volume."
""You can't complete a telephone call in the U.S. without using NeuStar," Ganek says. "We cannot charge monopoly rents; we have to share the benefits of fast volume growth with our industry?"
As I wrote before, it is perfectly consistent to have renewals of contracts with price cuts, and allow the registry operators to have enough money to invest in infrastructure, yet share the benefits of economies of scale with consumers. ICANN's feeble negotiators seem to have ignored this economic reality, because they fall for the FUD spread by incumbent registries.
You can't fault registry operators for trying to get a price increase, and lock out competitors -- that's in the interest of their shareholders. But, ICANN should see through their smokescreen, and be negotiating price cuts. There's no "presumptive renewal" for Neustar in these telephoone deals, either.
How can Neustar, and the other registry operators, argue that they require presumptive renewal, when they are signing very similar technological deals like telephone database management that DO NOT CONTAIN PRESUMPTIVE RENEWAL? (and certainly differential pricing doesn't exist for telephone number management)
In conclusion, one must ask whether the registry operators think that ICANN, its Board, and the public are that stupid, to not see that price decreases, price caps, uniform pricing and fixed-length contracts are the norm? While one must applaud the registries for trying to take advantage of the likely inexperienced and inept ICANN staffers who think these contracts are somehow acceptable, anyone with an iota of business experience can see that these are terrible deals for the public.
In the wise words of Vint Cerf,
http://www.infoworld.com/article/06....html?BROADBAND
"What's worse than a regulated monopoly? The answer is, an unregulated monopoly."
By approving these proposed contracts, ICANN would be creating new unregulated monopolies, to the detriment of the public. ICANN's Board hopefully has the business acumen and experience to reject these proposed contracts, and ensure that any new proposed contracts reflect price decreases, price caps that protect consumers, uniform pricing, and fixed-length contracts.
Sincerely,
George Kirikos
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George Kirikos - (416) 588-0269
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09-29-2006 03:29 AM
