[council] Fwd: Considerations on the separation of Registrars and Registries

[Michael Schneider <sastre@anwalt.de>]

FYI,
Michael

>Date: Sat, 24 Mar 2001 20:09:41 +0100
>To: touton@icann.org
>From: Michael Schneider <sastre@anwalt.de>
>Subject: Considerations on the separation of Registrars and Registries
>Cc: ajm@icann.org, lynn@icann.org, vcerf@mci.net, apisan@servidor.unam.mx,
>         Amadeu@nominalia.com, karl@cavebear.com, jcohen@shapirocohen.com,
>         mkatoh@wdc.fujitsu.com, quaynor@ghana.com, andy@ccc.de,
>         Christopher.Wilkinson@cec.eu.int, leibrandt@bmwi.bund.de
>
>Louis et.al.,
>
>I would like to make the following personal statement (i.e. in this case 
>not acting on behalf of the ISPCP nor the NC) to the Board in order to 
>address the issue of separation of Registrars and Registries.
>
>Best regards,
>Michael Schneider
>
>================================ CUT HERE ================================
>
>Considerations on the separation of Registrars and Registries
>
>The provision in section 23 C of the proposed .Com Registry Agreement 
>(sections 3.5.3. of the .Net and .Org Registry Agreements), under which 
>the agreements "shall not preclude an affiliate (including wholly-owned 
>subsidiaries) of Registry Operator from acting as a registrar with respect 
>to the Registry TLD" constitutes in my view (and here I agree with much of 
>the DNSO) a major change in policy which I do not accept.
>
>At and after Melbourne ICANN Staff and Verisign took the position that 
>there was never any such policy, and that it had rather been solely for 
>Verisign to decide if it wished to give up its registry or registrar 
>business. I explicitly reject this position for the following reasons:
>
>1. First the provision calling for the divestment in either the registry 
>or the registrar constitutes at least ­ as the ICANN staff puts it in its 
>justification of the new agreements ­ an "attractive incentive to NSI 
>(VeriSign) to complete an ownership separation", apparently so attractive 
>in fact that Verisign has never left any room for doubt that it will 
>accept this requirement in order not to lose the option to extend the 
>contract. Further, in Melbourne Verisign presented the fact that it would 
>have to divest itself of one of the two entities under "Plan A" as a key 
>argument in favour of reaching a quick decision and not allowing further 
>negotiations on "Plan B". To this extent we can take it as a given that 
>under the prevailing agreements we will see a separation of registrar and 
>registry, so that it is essentially irrelevant whether Verisign feels it 
>is legally or only practically forced to do so.
>
>2. This situation led me and others (despite very great reservations) to 
>put aside our concerns about signing the 1999 agreements at that time and 
>to abandon the idea of approaching entities outside ICANN (such as the 
>European Commission) to take action against these agreements. If these are 
>to be abandoned now, some of us might feel compelled to reconsider our 
>original position.
>
>3. ICANN staff is further arguing that the separation of the registry and 
>registrar can be dropped because it was only an "additional protection" 
>and is no longer necessary in the current market situation. To support 
>this argument market data has been published showing that Verisign only 
>has a market share of around 52% in the gTLDs it handles as registry. 
>This, it is claimed, means that the "once-dominant market position [has 
>been] severely eroded". For anyone who has been closely concerned with the 
>deregulation of monopolies ­ and this is very much an area of interest to 
>ISPs and Connectivity Providers ­ this is a remarkable conclusion. Figures 
>like these have led in the US and other countries not only to replacing 
>monopolistic structures by competitive ones but also to breaking up the 
>former monopolists into a number of independent entities ­ frequently with 
>emphasis on prohibiting or permanently impeding suppliers dominating the 
>market in one segment from operating in adjoining market segments. I am 
>unable to understand why this should not be expedient in the 
>registry/registrar business.
>
>I understand and accept, however, that Verisign does not wish to be 
>treated differently from its competitors, which ICANN also intends to 
>allow to have interests simultaneously in a registry and a registrar. To 
>satisfy these justified interests and at the same time the desire of the 
>DNSO not to promote market-dominating positions, I recommend that the 
>Board adopt the following policy:
>
>a) Registries themselves may not also be registrars, unless they split off 
>the registrar business as an independent entity. The registry shall not be 
>allowed to re-insource the registrar business de facto by performing 
>essential technical and administrative functions for the registrar on a 
>contractual basis.
>
>b) If the share of registrations for which a registry is responsible 
>(because it is administering a very important TLD or a number of smaller 
>ones) reaches or exceeds 20% of the registrations calculated for either 
>all gTLDs or all ccTLDs, the registry may not hold an interest of 50% or 
>more or otherwise exercise management control of any registrar.
>
>c) Registrars shall not be entitled to hold an interest of 50% or more in 
>registry operators or otherwise exercise management control of these if
>
>aa) the registry operator administers more than 2,500,000 SLDs or
>bb) the registrar has a market share of more than 50% in one TLD, or more 
>than 25% of all gTLDs, or more than 12.5% in all ccTLDs.