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

[Hendrik Rood]

At 07:21 29/08/02 -0700, todd glassey wrote:

>Why??? becuase the IETF said so ??? Get a clue patner China and others are
>now, and have been, operating separate roots. All it will take is a lawsuit
>by one of these other registries/registrars against ICANN itself for
>operating and perpetuating the monopoly.  I cant see any US Federal Court
>upholding ICANN's operating the sole global root, as it is clearly a
>restraint of trade.

Again we combine here in a rash all kind of issues that is far and away 
from the original question: wholesale prices for domain names.
There are four main routes to handle such an issue:
1. Setup a price regulating system via cost studies.
2. Introduce a price regulating system by benchmarks of registry wholesale 
prices and force Verisign to charge the second or third cheapest rate.
3. Expand the number of new gTLD registries, hoping that a decline in 
market share of the ".com/.net" registry forces Verisign to lower prices as 
it seduce its Registrars into more promotional effort (they get better 
margins initially).
4. Split the former monopoly registry further e.g. speed up the rebidding 
for ".net" and the rebidding for ".com".

Fact is: the US government and ICANN chose route 4 by aggreeing with 
Verisign/NSI on the 2002 ".org" rebid, 2005 ".net" rebid and 2008 ".com rebid.
 From an operations management position this phasing is the one that makes 
sound as you take the large registry with the lowest risk for stability of 
the Internet first. About timelines in this agreement you can of course be 
of the opinion that faster than glacial speed is highly recommended.

To give you an idea on the 3 other routes:
1. Is standard practive for most Public Utility Commissions in the USA and 
National Regulatory Authorities in the EU when they are attempting to 
determine the correct "wholesale" prices for interconnection charges. 
Highly unrecommendable as it is a dramatic stimulus for more bills from 
telecommunications consultants, economists and lawyers and a cesspool of 
legal infighting, footdragging and process obstruction via technicalities 
without substantive results.
2. Is deployed by the Danish regulator Telestyrelsen when they decided to 
avoid a million dollar Long Run Incremental Cost study, by assessing that 
Denmark, due to its geographic and demografic structure has to be one of 
the three lowest countries in interconnection charges of the EU benchmark. 
If a rough consensus is reached on regulating registry wholesale prices, 
this is the one I would recommend as it is quite lightweight, while a 
substantive number of gTLD registries and some ccTLD registries with 
multi-country operations are available as a benchmark.
3. Milton's proposal: it is the indirect route via economic market forces. 
It is easily instituted with one rule with respect to a registry "price 
discrimination between names (I mean on content) is not allowed for a 
registry". With this rule every registry has a strong incentive to expand 
under its TLD into the highest number of names paid (e.g. its maximising 
limit is avoiding the risk of non-paying or bankrupt registrars/registrants 
to rise above marginal domain name registration costs).
4. ICANN's and DoC's current route: This may quite well held up in court as 
it is clear that Verisign's registry contracts do have an end, but also due 
to the fact that courts have often applied the "break-up" tool to redress a 
monopoly.


ir. Hendrik Rood
Senior Consultant
Stratix Consulting Group BV
tel: +31 20 44 66 555
fax: +31 20 44 66 560
e-mail: Hendrik.Rood at stratix.nl