Subject: GA-DIGEST V1 #288
From: [email-masked] (GA-DIGEST)
To: [email-masked]

GA-DIGEST           Saturday, March 17 2001           Volume 01 : Number 288

----------------------------------------------------------------------

Date: Fri, 16 Mar 2001 23:46:44 -0800
From: "William X. Walsh" <[email-masked]>
Subject: Re: [ga] Draft Resolution

Hello DPF,

Add my signature to this text.  I agree 100% with every word.

Friday, March 16, 2001, 9:20:07 PM, DPF wrote:

> It is obvious from both the quantitative and qualitative posts that
> there is much more support for the status quo agreement over the
> proposed changes.  The various polls being run will give us some idea
> of the numbers - I would like to focus on getting a resolution which
> as many people as possible can agree to which details why we oppose
> the proposed changes.

> My draft is below.  It is just my draft and maximum feedback is
> encouraged.  Hopefully we can sort the wording out within 3 days or so
> and then see how many people we can sign up to support it.  If we get
> a comprehensive resolution some constituency reps may even want to use
> it within their constituencies (if they agree with basic thrust).

> DRAFT RESOLUTION

> That the General Assembly of the DNSO of ICANN opposes ICANN
> rescinding the current TLD registry contract with Verisign in favour
> of the proposed new contract.

> The GA opposes the proposed changes because we believe they will not
> benefit the Internet Community as a whole, as specified in Article 4
> of the ICANN Articles of Association.

> Specifically we believe the proposed changes overall significantly
> increase the risk of monopolistic behaviour and reduce competition.
> The combination of allowing Verisign to both keep its registrar
> business and also gain a presumptive right to *.com would put in place
> considerable anti competitive incentives.  

> The proposed changes are also essentially ir-reversible.  

> We believe there is no consensus in the Internet community for these
> changes, and in fact on the contrary there is a considerable consensus
> against the proposed changes being rushed through in such a short
> time-frame.

> If the ICANN Board was to agree to such dramatic changes against the
> wishes of the DNSO Names Council and constituencies there would be
> great damage done not just to competition within the DNS but more
> fundamentally to ICANN itself.  The principle of consensus based
> decision making which so many hold dear would be shattered possibly
> ir-redeemably.

> Specific concerns the general assembly has regarding the proposed
> contract are:

> - The granting of a presumptive right to be the *.com registry to
> Verisign.  By lowering the necessary performance standard to retain
> *.com *which makes up 65% of all domain names in the world), this
> removes a huge pressure on the registry to keep prices as low as
> possible and to have the best possible relationship with Registrars
> - Allowing Verisign to retain its registrar business puts in place
> perverse anti-competitive incentives regardless of organisational
> firewalls. 
> - Verisign would be in a position where it could purchase other
> Registrars thus once again gaining over 50% or even 75% of the
> registrar market in *.com, as well as the registry.
> - The possibility of a change to the status of *.org registration
> - Granting the ability to Verisign to increase registry prices with
> only 30 days notice
> - The ambiguity over what the $200 million to be invested in registry
> development would actually be, and the lack of any clear process to
> audit this.  
> - The non-transparent process used to negotiate these agreements which
> are then presented as not negotiable to the ICANN Board and DNSO
> - The detrimental effects on registrars who have become registrars and
> invested money on the basis of the existing contract (which mandates
> the Verisign registry must divest the registrar business)
> - The unfair advantage the Verisign Registrar would gain by being able
> to sell domains with a zero wholesale cost, thus potentially forcing
> out many smaller competitors
> - The total lack of outside analysis on whether the proposed changes
> will be beneficial to the Internet community

> The General Assembly recognises that parts of the proposed new
> contracts would bring benefits to the Internet community.  However the
> GA believes that these benefits are minor compared to the
> ir-reversible and major drawbacks of the contracts, thus our strong
> recommendation is to remain with the existing contract.

> DPF
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 William                            mailto:[email-masked]

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Date: Sat, 17 Mar 2001 21:14:48 +1300
From: DPF <[email-masked]>
Subject: Re: [ga] Draft Resolution

On Sat, 17 Mar 2001 02:25:49 -0500, Kendall wrote:

>>DRAFT RESOLUTION  [ cut ]
>>
>>The GA opposes the proposed changes because we believe they will not
>>benefit the Internet Community as a whole, as specified in Article 4
>>of the ICANN Articles of Association.
>
>should this say "ARTICLES OF INCORPORATION" instead?

Yes they should be.  Used the NZ term automatically.

>>Specific concerns the general assembly has regarding the proposed
>>contract are:
>>
>>- The possibility of a change to the status of *.org registration
>
>I would stress this point more strongly. This is one of the key issues that 
>is upsetting the community as a whole. It is not just a "possibility" -- it 
>is more like an implication. Since the Board has not come out and clearly 
>stated that they would not retroactively modify the TLD, most people assume 
>it will be changed.  Maybe it would be a good idea to point out that NSI 
>has been encouraging people to by .ORG domains for years. To change the 
>rules and make a switch from an open to a restricted TLD at this point 
>would never work.

Yeah that is worth mentioning.  I don't want to make this the *main*
point because that will allow the proponents of the deal to dismiss
the concerns too easily by saying this is a separate issue and can be
worked out regardless of contract changes.  It is however clearly all
inter-connected.

>>- The non-transparent process used to negotiate these agreements which
>>are then presented as not negotiable to the ICANN Board and DNSO
>
>There are quite a few strongly-worded quotes from Board and NC members to 
>back this up. Maybe it would be a more powerful statement if we used some?

Don't want to make it too long but sounds promising.  Do you have
URLs?

Thanks for the feedback.

DPF
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Date: Sat, 17 Mar 2001 10:38:33 +0100
From: "Siegfried Langenbach" <[email-masked]>
Subject: [ga] straw poll

keep the old contract.

option 1

Siegfried Langenbach
Europe

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Date: Sat, 17 Mar 2001 12:50:05 +0100
From: Jefsey Morfin <[email-masked]>
Subject: [ga] Re: [wg-review] DNSO recommendations

The DNSO model I support is rather simple and not
so different from the existing one - once the voting
aspects have been changed.

1. The DNSO is to be a Consultant to the BoD on DN
     issues. Only DN holders should be allowed as members.

2. The DNSO is made of the GA.

3. The GA Members may create Special Interest Groups
     of different kinds (Clubs, Interest Centers, Associations,
     etc.. The existing Constituencies should stay unaffected
     as SIGs.) SIGs may chose their own rules. Every declared
     SIG (even not yet/no more acknowledged by the GA) has
     a right to a DNSO mailing list and sub-site.

4. The NC is a coordination list gathering SIG's Chairs.
     Acceptation of SIG within the NC is voted by the GA
     annually or at the demand of 10% of the GA Members.

5. The BoD Members are elected by the GA. Nominations
     must be seconded by the a certain number of NC
     Members (so candidates are serious enough and
     acknowledged by the community).  One of the
     Directors elect will have to represent a ccTLDs.

6. Chair and co-Chair of the GA are nominated by GA
     Members and elected by GA Members.

7. Reports to the BoD can be refused by the NC for poor
     quality or lack of consensus. Such refusal shall call
     on 2 vetoes by two GA accepted SIG.

8. DNSO will be informed of every DN related issue and
     commercial negotiation. No DN related decision will
     be taken by the BoD without preceding conclusions
     by the DNSO. Emergency decision will be possible,
     but for a limited period of time.

Jefsey

On 07:31 16/03/01, Sotiropoulos said:
>All,
>
>Broadly speaking, I believe it is possible to
>identify the following general Topics of Interest
>with reference to proposals/recommendations
>relating to the process/structure of the DNSO
>(please bear in mind that the list is loosely
>based on the discussions within this WG to date
>and is not to be understood as
>comprehensive/exhaustive):
>
>1) Those in favour of abolition of Constituency
>structure altogether with
>         a)a reintegration into an undefined mass GA
>electorate or,
>         b)a restructuring into a Constituency
>organization along ccTLD lines (i.e. national) or,
>         c)a reformulation into a representative,
>two-level parliamentary organization.
>2) Those in favour of the Status Quo within the
>DNSO.
>3) Those in favour of modifications to the
>existing structure (i.e. creation of additional
>Constituencies to be grafted into the current
>organization) without much change to the overall
>structure.
>4) Those in favour of a restructuring of the DNSO
>as a whole, according to a novel set of
>procedures/principles.
>
>If anyone has any comments/corrections on these
>divisions, and/or any additions to make to this
>list, please feel free to post your suggestions.
>I am merely trying to set up a structure which
>will help to identify and facilitate pertinent
>topics of discussion which may aid us in the
>formulation of as wide an array of considerations
>as possible.
>
>Regards,
>
>Sotiris Sotiropoulos
>         Hermes Network, Inc.
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Date: Sat, 17 Mar 2001 12:50:51 +0100
From: Jefsey Morfin <[email-masked]>
Subject: [ga] Re: [wg-review] Funding the Restructured DNSO

This issue is quite important. But my feeling is that the magnitude
of the amount hides the purpose of the amount.

I read it as follows:

- - $ 5 are dedicated to the OrgNIC non profit association to be created.
   Most probably an organization sharing Staff with iCANN - at least in
   part (like IANA) a providing funding to a Staff continuity and extension.
   Execpt that Staff being self-sbusidized will become the seed of a new
   NSI and will not be manageable by the BoD.

- - $ 200 R&D. This funding has no interest if it does not serve the joint
   interest of Staff and VeriSign. I see several areas there:

   -  TLD management monopoly throught DNS proprietary enhancements
      subject to licensing. One of the elements may be DNS security as
      bluntly discussed on most of the ML in august, as if it was a test of
      the community reaction.  The famous "market driven monopoly"

    - Multi-lingual DN management with the alibi of a non-profit offering
      by orgNIC to developping/foreign countries creating a defacto
      "market drivent Multi-Lingual Standard".

    Other matters of same magniture, commercial interest and political
    grip could be proposed. These two have already been advertized
    enough to be public accepted dicussion.

My suggestion would there be for the DNSO not to consider how a
change in the DNSO could result from a tiny part of the budget, but
how the DNSO will accept, discuss and manage the target and the
impact of the intended/probable projects this money is to fund.

Jefsey

On 16:49 16/03/01, Babybows.com said:
>The proposed VeriSign agreement calls for a $200 million research and
>development budget which the Registrar Constituency
>http://www.dnso.org/clubpublic/registrars/Arc01/doc00013.doc has
>recommended be redirected to a Competition Promotion Fund.  In the context
>of the restructuring of the DNSO, the issue of funding requirements has
>already been discussed in some detail in this working group (as the lack of
>funds often represents a barrier to the entry of new representative
>constituencies, and poses an ongoing challenge to certain established
>constituencies with limited resources).    It would be particularly
>appropriate for proponents of new constituencies to forward amendments to
>this proposed VeriSign agreement that would allow for some measure of
>funding to be channeled to ICANN's policy recommending body, the DNSO.
>
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Date: Sat, 17 Mar 2001 12:58:47 +0100
From: Jefsey Morfin <[email-masked]>
Subject: [ga] apologies for cross posting

I just sent to this list two posts meant to WG-Review as I believed 
WG-Review had closed shop after Melbourne and switched to GA - a mail I 
probably misread implied this. I see that WG-Review is still fully active 
and has even now a new acting [co?]Chair (Sotiris Sotiropoulos - congrats 
Sotiris).

I therefore apoligize for the cross posting.
Jefsey

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Date: Sat, 17 Mar 2001 13:22:09 +0100
From: Alexander Svensson <[email-masked]>
Subject: Re: [ga] GA Straw Poll

> 1.) Keep the current VeriSign contract.
>
> 2.) Agree to the new VeriSign contract.

I opt for 1.
Reasons:
 -- With the automatic .com renewal after 2007, ICANN deprives itself
    of a mechanism that keeps a check on the current open gTLD
    monopolist without having first experiences with the new gTLDs.
 -- The effect of not separating registry and registrar for .com
    cannot be predicted for such a long period of time and at such
    short notice. While the new registration market share has dropped,
    the overall market share (and likely re-registration market share)
    is still far higher than that any competitor.
 -- The special treatment of the .com, .net and .org TLDs compared
    to the new gTLDs (if the "old" agreement is kept) is regrettable,
    but -- seeing that nobody has pointed to important advantages
    of the new agreements in this area -- seems to be a lesser evil.
 -- It was VeriSign's choice not to leave enough time to evaluate
    the proposal by being unwilling to agree to a preliminary
    extension. Thus only a binary alternative is left.
 -- Currently, two weeks before the comments deadline, not even all
    appendices have been published for review. I hope that the
    negative reactions from almost all the DNSO constituencies make
    it clear that this kind of process is unacceptable.

Best regards,
/// Alexander
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Date: Sat, 17 Mar 2001 07:09:19 -0800
From: Kent Crispin <[email-masked]>
Subject: Re: [ga] Re: Board descisions

Roberto, you are adopting Dave Crocker's bad habit of sending HTML
messages, and, while I can read them fine, it is substantially harder to
reply to them...so please excuse the awkward editing below:

On Thu, Mar 15, 2001 at 02:43:12PM +0100, Roberto Gaetano wrote:
>   Seriously, the letter from Sclavos seems to imply that part of the  
>   agreement for .org is the change in its management (see below).
>
>     We would agree to terminate our operation of the registry for .org
>     on December 31, 2002 and to cooperate with ICANN in transitioning
>     to be determined in this transition is whether .org should be
>     limited to registrations only by non-commercial entities, and if
>     so, what transition arrangements need to be established for those
>     existing registrants that would not qualify under that limitation.
>     ICANN has agreed that, at a minimum, existing registrants would be
>     permitted to remain in the new .org registry for one renewal cycle
>     under its new management.
>     
>   What puzzles me, is that "ICANN has agreed that..." strictly means  
>   that there has been a discussion, if not a negotiation.

Mosly from what Chuck Gomes has said, my interpretation of the
background behind that sentence is as follows:

NSI approached ICANN privately with a proposal.  (Anyone who has dealt
with NSI knows that they can be quite aggressive about keeping
negotiations private.) The ICANN staff rejected the proposal, but, given
that NSI was actually willing to negotiate, the ICANN staff thought that
they would try to win some concessions from NSI.  Splitting off .org and
.net, and regularizing the contract, were apparently proposals from the
ICANN staff. 

Given that, and NSI's previous history, NSI's obvious concern would be
that there would be a rush of registrations in .org, many from
speculators, and that it would therefore be important to NSI that those
speculative registrations be maintained.  This would weigh heavily on
NSI's mind, while it would be barely on the radar as an issue for the
ICANN staff.  (I say that, because it takes only a moments thought to
realize that coming up with a new organization to run .org would be a
big deal, and the ICANN staff had just been going through exactly that
process with the new TLDs). 

>   Now, were I the Chairman of the ICANN Board, I would have immediately
>   replied to Mr. Sclavos that, even if his proposal is interesting, what
>   ICANN will decide for the future of .org is none of his business.   

With all due respect, there may be a reason why Vint is chairman, and 
you are not.  If one is trying to win concessions in a contract, 
sometimes telling your negotiating partner to "stuff it" might not be the 
best way to proceed.

>   The fact that I did not see so far neither a formal letter, nor even a
>   statement in Melbourne on the subject, makes me think that ICANN
>   agrees with this approach.

Of course.  It's a no-brainer, and is exactly what people on this list 
and elsewhere are clamoring for.

>   Joe Sims, in fact, presented this as an advantage of the solution "B"
>   (the new contract). And this makes me even more suspicious.

Are you misreading what the above letter says?  Clearly, Mr Sclavos is 
concerned that ICANN will throw a bunch of people out of .org, and he 
has been reassured that won't happen.  This is precisely what people 
have been clamoring for.  Why on earth does that make you suspicious?

>   Why should the new .org operator be forced to do what NSI was supposed
>   to do since the beginning, and never did (or at least stopped doing 
>   pretty soon) because it was too costly? There must be a reason,
>   methinks.
>
>
>   Is the reason the "pressure from the Internet community to restore the
>   original function of .org"? No way.

False.  Prior to this proposal, in fact, it was common to lament that
.org had been perverted.  I find it quite reasonable that someone would
think that the Internet community might look with favor on the idea. 

> I believe that that the only
> sensible thing to do is to let it continue as is. If we really think
> that a specific TLD has to be reserved to non-commercial
> organizations, we just have to create one for the specific purpose,   
> instead of redesigning .org.

That's fine, and if that's what the Internet community wants, that is
indeed what they will get.  As I read the contract, there is nothing at 
all that determines what the registration policies for the new registry 
would be.

Moreover, there is absolutely no doubt in my mind that the ICANN staff
was trying to get what they considered the best possible deal for the
internet community out of those discussions, and let the community
decide whether they were good enough. 

[...]

>   The fact that the Registry that will inherit .org must be a non-profit
>   is spelled out in 5.1.4.
>
>   IANAL, but I believe that if ICANN wants to change this, Verisign may
>   refuse to pay the $5M.

I believe that the phrase "ICANN, at its sole discretion...", trumps that.

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[email-masked]                           lonesome." -- Mark Twain
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Date: Sat, 17 Mar 2001 09:44:26 -0800
From: Kent Crispin <[email-masked]>
Subject: Re: [ga] Draft Resolution

On Sat, Mar 17, 2001 at 06:20:07PM +1300, DPF wrote:
> DRAFT RESOLUTION
[...]
> 
> Specific concerns the general assembly has regarding the proposed
> contract are:
> 
> 
> - The granting of a presumptive right to be the *.com registry to
> Verisign.  By lowering the necessary performance standard to retain
> *.com *which makes up 65% of all domain names in the world), this
> removes a huge pressure on the registry to keep prices as low as
> possible and to have the best possible relationship with Registrars

"huge"? I doubt that very seriously.  While people complain about the
lack of effectiveness of TLD vs TLD competition, the effectiveness of
serial competition is equally questionable, at least as things are 
currently constructed.  [+] (see note on "serial competition", below)

> - Allowing Verisign to retain its registrar business puts in place
> perverse anti-competitive incentives regardless of organisational
> firewalls. 

Whether the incentives are "perverse" is surely an extreme value
judgement.  Clearly incentives exist -- they always exist, but the
mechanism of organizational firewalls is deemed sufficient in many
anti-trust circumstances, and if you are going to claim that they are 
not sufficient in this one, you should document it.

> - Verisign would be in a position where it could purchase other
> Registrars thus once again gaining over 50% or even 75% of the
> registrar market in *.com, as well as the registry.

Big "So what".  Any large company can do this; it is independent of the 
issue of the registrar/registry split.  See the below discussion on the 
"zero wholesale cost" argument.

> - The possibility of a change to the status of *.org registration

1) There is a possibility of that, regardless.  In any case, the registry 
operator is bound to abide by "consensus policies".

2) Given the complexity of the process we have seen in getting new gTLD 
operators in place, it is inconceivable that a new operator/policy for 
.org would be put in place without a long-drawn out public process.

> - Granting the ability to Verisign to increase registry prices with
> only 30 days notice

But there are price caps, as I recall.  Price caps are the only thing
that matters, in fact, because if some other company wins the rebid,
they win a monopoly for 4 years (or whatever the term might be) in any
case, and can immediately reset the prices. (* "serial competition", below)

> - The ambiguity over what the $200 million to be invested in registry
> development would actually be, and the lack of any clear process to
> audit this.  

Reasonable point.

> - The non-transparent process used to negotiate these agreements which
> are then presented as not negotiable to the ICANN Board and DNSO

If a negotiating partner insists on secrecy, one is put in an awkward
position.  In any case, what does this have to do with the merits of the
proposals?

> - The detrimental effects on registrars who have become registrars and
> invested money on the basis of the existing contract (which mandates
> the Verisign registry must divest the registrar business)

Reasonable point.  Certainly, if I were starting a registrar, this 
would have been something I would considered.

> - The unfair advantage the Verisign Registrar would gain by being able
> to sell domains with a zero wholesale cost, thus potentially forcing
> out many smaller competitors

It pains me to say this, since some of my good friends are in the
registrar business, but the "zero wholesale cost" argument is bogus.  
See discussion [++] below.

> - The total lack of outside analysis on whether the proposed changes
> will be beneficial to the Internet community

A valid concern.  Not clear how that could have been done, though.  This
was an exploratory private negotiation, at the behest of NSI, and NSI
played the deadlines in the way it thought was most advantageous.  In 
retrospect, that may have been a mistake on their part.

William Walsh has pressed me to come up with what advantages I see with
the new proposals.  There is no mystery: The advantages have actually
all been stated: splitting off of .net and .org, cleaner contracts,
various monetary committments, and so on.  These are clear and obvious
advantages.  

The argument has actually mostly revolved around the significance of the
*disadvantages*, and they are in fact, very difficult to evaluate.  A
lot depends on things that are unknown at this time, and the primary
issue, from my perspective, is the the relative effectiveness of
competition from new gTLDs vs what I have called "serial competition". 
If new gTLDs are effective, then registrars will register in all of
them, the impact a tie between the NSI registry and a NSI registrar will
be small, and thus the new proposals will be a win for the community. 
If, on the other hand, you believe that competition between gTLDs is not
going to be effective, and that .com will forever be the only important
player, then it is very important to constrain the power of that
registry as much as possible.  Of course, it would be nice if we could
have both, but that option isn't available.

The question is: 6 years from now, will we see .com as a much reduced
player, with .org, .biz, .net, .info, and a bunch of other new domains
getting most of the new registrations, or will .com remain the elephant
in the land of mice?

If the latter, then NSI will have won, regardless, and under either
scenario will fight incredibly hard to keep .com.  Anyone who has been
involved in this for any length of time knows just how effective they
can be, and personally, I think that the threat of a rebid is a pipe
dream.  The current contract gives them *plenty* of ammunition.

In sum, I believe that the course we are on *requires* that we make 
registry competition work.  If we don't, we have lost everything.

================================================================

Notes:

[+] Note on "Serial competition": The basic problem is that, as things are
currently, a reasonable rebid cycle would be on the order of 4 years or
more (since the switching costs involved the change of registry operator
are sgnificant -- significant for the registry operator, significant for
the Internet comunity).  No matter who wins the rebid, they will be
given a monopoly for the term, and a lot of monopoly advantage can be
exploited in 4 years.  That is, there is no reason to expect that the 
winner of the bid will be any better than NSI.

The only way that serial competition can be made to work is if the
switching costs are quite low.  I described such a model in "Position
Paper D" in the report of WG C
(http://www.dnso.org/dnso/notes/19991023.NCwgc-report.html), and I
encourage everyone to read it, since it is a beautiful proposal. 
However, we are a long way from that model.  I mention this to
demonstrate that I have been a supporter of the "serial competition"
model for a very long time.  But I have sadly been forced to conclude
that it isn't going to happen like I would like it to happen. 

================

[++] The "Zero wholesale cost" argument is bogus, because it neglects
the other side of the equation: "zero wholesale profit".  To see this,
suppose that the NSI registrar, in a fit of monopolistic greed for
market share, decided to leverage it's supposed "zero wholesale cost" to
the max, and to give away registrations for free.  In such a case, every
registration by the NSI registrar would be $6 lost in fees that would
have been collected from any other registrar.  This is a real loss for
the registry. 

Indeed, Verisign can probably afford to lose the $6, but that is true
for any large company that owned a registrar: If IBM, for example, owned
a rgistrar, it could absorb the $6 cost just as easily as Verisign
could, and could give away registrations to gain market share, just as
easily. 

It is perhaps unfortunate, but the fact is that *any* large company
enjoys precisely the same advantage that Verisign does, and the
inescapable conclusion is that small registrars are not going to make it
in the long run, regardless.  This is completely independent of any
issue of registry/registrar split.  

[When I say that small registrars are not going to make it in the long
run, I mean registrars with domain registrations as a sole activity.  I
fervently hope that being a registrar as a sideline will be viable, as
in the Nominet model.  We are far from it at this point, because the
startup cost to be a registrar is too high, but that is something that
we should work toward.]

- -- 
Kent Crispin                               "Be good, and you will be
[email-masked]                           lonesome." -- Mark Twain
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Date: Sat, 17 Mar 2001 11:07:36 +0800
From: "James Seng/Personal" <[email-masked]>
Subject: Re: [ga] straw poll

I vote for (2).

Okay I am the oddball here but let me explain.

Have anyone take an a look "Guava Information Memo" distributed by Chase
on the behalf of Verisign on their proposal sales of their Registrar?

If you havent, please do so. I will try to give a simple summary here.
(For those who did read Guava, feel free to correct me.)

- - Verisign created a new group called Verisign Web Presence (VWP)

- - VWP, as read, will be the front-end providing Verisign
  registration services for domain names, digital certificate,
  dns hosting, web hosting, etc etc.

- - Acquirer of NSI Registrar will have to entered strategic alliance
  relationship (read: probably exclusive) with VWP . Acquirer will
  perform the back-end interface with Registry as according to ICANN
  accredition.

- - VWP promises at least 80% of the names they registered will go thru
  Acquirer. (Read: It is not exclusive on the part for VWP).

The implication?

- - the existing names probably remains at VWP with all fronting
   customer care, services etc.

- - Acquirer become middleman between VWP and Registry, so
   the only diff is in the margin made by Verisign.

In short, the 1999 contract screwed up and did not foresee a new
business called "reseller" which is what VWP is. There is nothing within
the 1999 contract which prevents this situation.

The new contract, while not as favourable as the principle of the 1999
contract, it is a more uniform inline with the new gTLD agreement and
hopefully will give one TLD per Registry.

No doubt Verisign is going to end up with .COM registry and .COM
registrar but that is no differences with this as compared to other new
gTLD. Sure, Verisign ends up with a very valuable asset .COM but on
the bright-side, it is getting saturated if not for ML.com.

- -James Seng

- ----- Original Message -----
From: "Sotiropoulos" <[email-masked]>
Cc: <[email-masked]>
Sent: Thursday, March 15, 2001 12:49 PM
Subject: Re: [ga] straw poll

> I don't see what the rush is all about.
>
> My vote is for 1.) Keep the current VeriSign
> contract.
>
> I happen to hold a number of .org registrations,
> and I like things just as they are for the time
> being.
>
> Sotiris Sotiropoulos
> Hermes Network, Inc.
>
>
> > Bruce James wrote:
> > --------------------------------------------------
> > >>I suggest that we have a Straw Poll. This would speed things up.
> > >>
> > >>     1.)  Keep the current VeriSign contract.
> > >>
> > >>     2.)  Agree to the new VeriSign contract.
> > >>
> > >>A simple vote for number 1 or 2. I think this would help the GA,
as a whole.
> --
> This message was passed to you via the [email-masked] list.
> Send mail to [email-masked] to unsubscribe
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>

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Date: Sat, 17 Mar 2001 19:32:11 +0100
From: Jefsey Morfin <[email-masked]>
Subject: [ga] Mime-Version: 1.0

I nominate
- -  Danny Younger e-mail: [email-masked] for Chair
- -  Patrick Corliss  e-mail: [email-masked] for co-Chair
Jefsey Morfin

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Date: Sat, 17 Mar 2001 20:49:25 +0100
From: Jefsey Morfin <[email-masked]>
Subject: [ga] Mime-Version: 1.0

I nominate:
- -  Danny Younger e-mail: [email-masked] for Chair
- -  Patrick Corliss  e-mail: [email-masked] for co-Chair
Jean-François C. (Jefsey) Morfin
[email-masked]

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Date: Sat, 17 Mar 2001 16:36:15 -0500
From: "Cade,Marilyn S - LGA" <[email-masked]>
Subject: RE: [ga] Draft Resolution

I'm interested in better understanding where the stakeholders are on
different perspectives: for instance, if the registry model  for TLDs are
based on "not for profit" models/assumptions, and the competition
essentially begins with the registrars,who are all allowed to (if
accredited) to register in all ICANN accredited registries), then the number
of registrations in a particular registry is less relevant, it seems to me.
There has to be some mechanism to prevent price gouging, etc. in this model.
Otherwise, we'd see bad practices at the registry level, such as charging
different prices for different names to the registrars, who would pass that
along to the user.  Competition among registry/TLDs doesn't seem to be quite
the full answer.

Some may disagree with me, but in fact, over time, some TLDs are likely to
be more "used" than others.  There are a lot of factors to consider in how
that evolves.  And, some TLDs may be (unfortunately) primarily/initially
filled with duplicate registrations from .com, since defensive registrations
will be necessary to avoid consumer confusion, fraud, and trademark
dilution.  I see no relief from that in some TLDS.  

We'll have to wait and see if in fact, new registrations dominate, or if the
space is largely defensive registrations.

As new services evolve, and directories become more useable/available,
perhaps we'll see a move to more "friendly" names (longer, complete words,
etc.)  That may also create new forms of expansion of the name space.

However, in the meantime, of interest, and note, in fact, the present
approach in ICANN seems to also support the concept of "niche" TLDs, that
is, those who are likely to have a limited, but important group of potential
registrants, such as in .museum, for instance.  This concept seems to serve
the stakeholders by logical expansion of the name space, for stability,
usability, and minimized confusion by users, rather than to focus on
creating a registry as a money making endeavor for itself.  

Treating a registry/TLD as a limited resource, somewhat like spectrum, seems
to be consistent with the ccTLDs' practices, (or most of them).  

I don't really see how registry "competition" can work, in short.  But if
someone can describe their vision, I'm willing to listen.

- -----Original Message-----
From: Kent Crispin [mailto:[email-masked]]
Sent: Saturday, March 17, 2001 12:44 PM
To: [email-masked]
Subject: Re: [ga] Draft Resolution

On Sat, Mar 17, 2001 at 06:20:07PM +1300, DPF wrote:
> DRAFT RESOLUTION
[...]
> 
> Specific concerns the general assembly has regarding the proposed
> contract are:
> 
> 
> - The granting of a presumptive right to be the *.com registry to
> Verisign.  By lowering the necessary performance standard to retain
> *.com *which makes up 65% of all domain names in the world), this
> removes a huge pressure on the registry to keep prices as low as
> possible and to have the best possible relationship with Registrars

"huge"? I doubt that very seriously.  While people complain about the
lack of effectiveness of TLD vs TLD competition, the effectiveness of
serial competition is equally questionable, at least as things are 
currently constructed.  [+] (see note on "serial competition", below)

> - Allowing Verisign to retain its registrar business puts in place
> perverse anti-competitive incentives regardless of organisational
> firewalls. 

Whether the incentives are "perverse" is surely an extreme value
judgement.  Clearly incentives exist -- they always exist, but the
mechanism of organizational firewalls is deemed sufficient in many
anti-trust circumstances, and if you are going to claim that they are 
not sufficient in this one, you should document it.

> - Verisign would be in a position where it could purchase other
> Registrars thus once again gaining over 50% or even 75% of the
> registrar market in *.com, as well as the registry.

Big "So what".  Any large company can do this; it is independent of the 
issue of the registrar/registry split.  See the below discussion on the 
"zero wholesale cost" argument.

> - The possibility of a change to the status of *.org registration

1) There is a possibility of that, regardless.  In any case, the registry 
operator is bound to abide by "consensus policies".

2) Given the complexity of the process we have seen in getting new gTLD 
operators in place, it is inconceivable that a new operator/policy for 
.org would be put in place without a long-drawn out public process.

> - Granting the ability to Verisign to increase registry prices with
> only 30 days notice

But there are price caps, as I recall.  Price caps are the only thing
that matters, in fact, because if some other company wins the rebid,
they win a monopoly for 4 years (or whatever the term might be) in any
case, and can immediately reset the prices. (* "serial competition", below)

> - The ambiguity over what the $200 million to be invested in registry
> development would actually be, and the lack of any clear process to
> audit this.  

Reasonable point.

> - The non-transparent process used to negotiate these agreements which
> are then presented as not negotiable to the ICANN Board and DNSO

If a negotiating partner insists on secrecy, one is put in an awkward
position.  In any case, what does this have to do with the merits of the
proposals?

> - The detrimental effects on registrars who have become registrars and
> invested money on the basis of the existing contract (which mandates
> the Verisign registry must divest the registrar business)

Reasonable point.  Certainly, if I were starting a registrar, this 
would have been something I would considered.

> - The unfair advantage the Verisign Registrar would gain by being able
> to sell domains with a zero wholesale cost, thus potentially forcing
> out many smaller competitors

It pains me to say this, since some of my good friends are in the
registrar business, but the "zero wholesale cost" argument is bogus.  
See discussion [++] below.

> - The total lack of outside analysis on whether the proposed changes
> will be beneficial to the Internet community

A valid concern.  Not clear how that could have been done, though.  This
was an exploratory private negotiation, at the behest of NSI, and NSI
played the deadlines in the way it thought was most advantageous.  In 
retrospect, that may have been a mistake on their part.

William Walsh has pressed me to come up with what advantages I see with
the new proposals.  There is no mystery: The advantages have actually
all been stated: splitting off of .net and .org, cleaner contracts,
various monetary committments, and so on.  These are clear and obvious
advantages.  

The argument has actually mostly revolved around the significance of the
*disadvantages*, and they are in fact, very difficult to evaluate.  A
lot depends on things that are unknown at this time, and the primary
issue, from my perspective, is the the relative effectiveness of
competition from new gTLDs vs what I have called "serial competition". 
If new gTLDs are effective, then registrars will register in all of
them, the impact a tie between the NSI registry and a NSI registrar will
be small, and thus the new proposals will be a win for the community. 
If, on the other hand, you believe that competition between gTLDs is not
going to be effective, and that .com will forever be the only important
player, then it is very important to constrain the power of that
registry as much as possible.  Of course, it would be nice if we could
have both, but that option isn't available.

The question is: 6 years from now, will we see .com as a much reduced
player, with .org, .biz, .net, .info, and a bunch of other new domains
getting most of the new registrations, or will .com remain the elephant
in the land of mice?

If the latter, then NSI will have won, regardless, and under either
scenario will fight incredibly hard to keep .com.  Anyone who has been
involved in this for any length of time knows just how effective they
can be, and personally, I think that the threat of a rebid is a pipe
dream.  The current contract gives them *plenty* of ammunition.

In sum, I believe that the course we are on *requires* that we make 
registry competition work.  If we don't, we have lost everything.

================================================================

Notes:

[+] Note on "Serial competition": The basic problem is that, as things are
currently, a reasonable rebid cycle would be on the order of 4 years or
more (since the switching costs involved the change of registry operator
are sgnificant -- significant for the registry operator, significant for
the Internet comunity).  No matter who wins the rebid, they will be
given a monopoly for the term, and a lot of monopoly advantage can be
exploited in 4 years.  That is, there is no reason to expect that the 
winner of the bid will be any better than NSI.

The only way that serial competition can be made to work is if the
switching costs are quite low.  I described such a model in "Position
Paper D" in the report of WG C
(http://www.dnso.org/dnso/notes/19991023.NCwgc-report.html), and I
encourage everyone to read it, since it is a beautiful proposal. 
However, we are a long way from that model.  I mention this to
demonstrate that I have been a supporter of the "serial competition"
model for a very long time.  But I have sadly been forced to conclude
that it isn't going to happen like I would like it to happen. 

================

[++] The "Zero wholesale cost" argument is bogus, because it neglects
the other side of the equation: "zero wholesale profit".  To see this,
suppose that the NSI registrar, in a fit of monopolistic greed for
market share, decided to leverage it's supposed "zero wholesale cost" to
the max, and to give away registrations for free.  In such a case, every
registration by the NSI registrar would be $6 lost in fees that would
have been collected from any other registrar.  This is a real loss for
the registry. 

Indeed, Verisign can probably afford to lose the $6, but that is true
for any large company that owned a registrar: If IBM, for example, owned
a rgistrar, it could absorb the $6 cost just as easily as Verisign
could, and could give away registrations to gain market share, just as
easily. 

It is perhaps unfortunate, but the fact is that *any* large company
enjoys precisely the same advantage that Verisign does, and the
inescapable conclusion is that small registrars are not going to make it
in the long run, regardless.  This is completely independent of any
issue of registry/registrar split.  

[When I say that small registrars are not going to make it in the long
run, I mean registrars with domain registrations as a sole activity.  I
fervently hope that being a registrar as a sideline will be viable, as
in the Nominet model.  We are far from it at this point, because the
startup cost to be a registrar is too high, but that is something that
we should work toward.]

- -- 
Kent Crispin                               "Be good, and you will be
[email-masked]                           lonesome." -- Mark Twain
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End of GA-DIGEST V1 #288
************************