[ncdnhc-discuss] Names Council agenda item request: discussion of wholesale price for names

[Harold J. Feld]

This is exactly what I mean when I say that ICANN is amature hour at the 
policy corral.

Dave Crocker wrote:

> 
>> Any half-way competent economist can tell you the answer (or at least, 
>> an answer).  For some domains it will be high
> 
> 
> You are confusing market-based SALE price with what I was talking about, 
> namely actual operations COST.  Cost is not affected by public value.  
> It is affects by... costs.  This is not a task for economists.  It is a 
> task for folks experienced with putting together and operating a 
> registration service.


Do I try to write code?  Is there something so intrinsicly obvious 

looking about public policy that anyone with an opinion thinks he or she
can just do it.


I would not even begin to try to answer the question on my own. I'm just 
a lawyer and bad at math.  But I at least recognize that the problems 
associated with lock-in and regulating essential facilities, or public 
utilities or whatever we decide DNS is have been addressed in a variety 
of contexts.

What I objected to was the notion that because someone has spotted a 
potential problem (here, that switching costs may be high enough to 
create lock-in and prevent competition from effectively preventing 
abuse) that this definitively ends the matter.  Even if this turns out 
to be true (a statement of mere supposition, but reasonable enough to 
use as a guess), and even if other constraints would not prohibit the 
TLD operator from abusing its superior bargaining power, that doesn't 
make the problem insolvable.

Frankly, I think that if Verisign tried to shake down Amazon.com and 
other high value names in a discriminatory fashion they would find the 
FTC coming down on them like a ton of bricks and the nasty end of an 
anti-trust lawsuit.  And I don't think retail prices are likly to rise 
too much because Verisign relies on bulk registrations so they are 
conscious of not pricing themselves out of the market.  But that's just 
my own personal guess.  If this were an actual proceeding, we'd get some 
evidence from actually qualified people.


>> "Lock in" is not unique to DNS.  And there are various ways to try to 
>> solve it.
> 
> 
> I note your use of the word "try".  So as you blithely dismiss the 
> concern, please pay close attention not only to the historical success, 
> be sure that the historical reference is to something that actually is 
> comparable to DNS lockin.


Right, ICANN conceit #1- this is a beast that has arisen sui generis, 

the first new thing under the sun since Solomon looked around and we have 

no relevant lessons to learn from anywhere else.

>> Whether introduction of new TLDs creates sufficient competition to 
>> resolve the switching cost issue is actually subject to economic 
>> analysis.
> 
> 
> Introducing new TLDs does not affect switching cost at all.  Not one 
> little bit.
> 
> What affects switching cost, here, is not what it costs to go TO a new 
> name, but what it costs to leave the existing one behind.
> 

Dave, Oh wise public policy seer, please read my original sentence.
Slowly.  Get someone who speaks english to help you parse it.

You don't have to change the cost of switching to decide that the issue 
is resolved.  For example, suppose an expert legal analysis decided that 
fears were groundless because antitrust provided an adequate remedy.  We 
would have resolved the switching cost issue without worrying about the 
cost of switching, because we would conclude the cost didn't matter.

And no, I have no intent of debating the substance of this, because it 
is pretty pointless speculation in a vacum.  The only reason I'm 
responding at all is because this is exactly what's wrong with policy 
formation at ICANN.

At the moment, I am involved in a couple of dozen FCC proceedings.  The 
FCC has a budget of a couple 'o hundred million and employs economists, 
engineers, and attorneys with specialized training.  An important 
proceeding will have thousands of pages of evidence.  This evidence 
includes empircal data and modeling of the data to make predictions of 
the future.

No individual Commissioner has all the necessary expertise for all the 
areas under the FCC's jurisdiction, but they have expert staff.  The 
Commissioners, political appointees, then settle on policy based on 
their acknowledged political philosophies for which they were appointed.

ICANN has none of this.  It's budget is wholly inadequate to regulating 
even the modest slice of industry its got.  Take the recent WLS debate. 
  A real regulatory agency would have had a team crunching significant 
data submissions from all parties.  WLS relied on volunteers working on 
a public record which failed to address the underlying fundamentals in 
anything but high-level terms.

The people of the TF worked hard.  People submitted comments in all 
earnestness, and I have no doubt the Directors spent considerable time 
analyzing the reports and considering the inputs they had.   But we 
ultimately end up with a SWAG and no understanding of a regularized process.

And THIS is the future of ICANN.  ICANN cannot possibly morph itself 
into a regulatory agency, but it cannot avoid the regulatory regime it 
has built into itself and DNS.

If it didn't effect so many people, it would be funny, or we could just 
give up and go home.

Harold