[ga] New contracts

[Kent Crispin <kent@songbird.com>]

On Tue, Mar 06, 2001 at 08:19:01PM +0100, Roberto Gaetano wrote:
> What puzzles me in this discussion is the following.
> >
> > >> So let's be very clear - NSI after 2007 has to compete against other
> > >> entities to remain the registry.  If they can not provide the best
> > >> price and/or service they have agreed that they may lose the registry.
> > >
> > >fat chance.
> >
> >That is in the agreement.  They can of course argue it in court but if
> >for example they have insisted if they have the contract renewed that
> >they can charge $8 per name and a competing bid said they can do it
> >for $3 a name then ICANN would be on fairly strong ground to go with
> >the competitor.
> 
> Do we *really* think that the domain names registration business will be 
> anything similar to what it is today in 2007?

Well, yes, I think there will be substantial similarities.  There will 
be many differences as well, but I wouldn't overstate them.

> I bet that nobody by then will try to locate a company by guessing the
> name, so the value attached to the name (and the value of the market
> thereof) will be completely different.

I don't think that guessability is what drives the current market, in 
any case.

> What looks the key point to me is what will happen to .org.
> Of course, I don't think that VeriSign will be happy to have a strong 
> competitor around, therefore I assume that they will ask that the 
> non-for-profit status of .org shall be enforced.

Whatever VSGN may ask, as I read the agreements, they have no legal
leverage whatsoever on that point.  Moreover, any new policies for .org
would necessarily go through a long public process, and we would get
whatever resulted fromt that process, independent of VSGN. 

> This will simply mean that 
> the operating cost of a registration in .org will be substancially higher 
> than .com, because the registry (or the registrars) have to check the 
> qualifications of the subscriber.

Maybe, maybe not.  At this point I think that the discussion of
potential .org policies is a red herring -- we have a year and a half to
talk about it, and there are lots of potentially highly desirable
outcomes to that -- .org could, as a result of a public process, be
completely open.  It could explicitly support individuals.  A 
registration in .com could prevent a registration of the same name by 
the same entitiy in .org.  There are lots of possibilities, and we have 
a long time to discuss it.


Here's the real choice, as I see it:

Old:

    NSI divests the registrar business, and keeps the registries for
    .com/net/org until 2007; in 2007 there will be a rebid, but NSI has
    a tremendous inside track on winning that bid *for all three
    registries* (as I read the contract, it presumes that the three are
    bid as a unit).  To simplify, this choice is that NSI keeps the 
    three registries indefinitely, but can't run a registrar.

New:

    NSI keeps registrar business, with current firewall in place; NSI
    keeps .com registry, and has even better terms for the renewal of
    that registry, but gives up, over time, .org and .net.

The .com registry is a cash cow, and they are not going to give that up,
ever.  The value of the registrar as a source of new registrations is 
dropping -- percipituously, by all accounts -- but there are still a 
huge number of renewals going through that registrar, and moreover, the 
registrar database is a huge marketing tool for them.

> Well, this all shows, IMHO, that to rush a decision is probably not
> the best thing to do.  I do expect a lively debate, and a lot of
> comments, and personally I am in favour of providing enough time for 
> it.  

If the USG, NSI, and ICANN all agree to say a 2 month extension, as has
been suggested, I agree that it would be a good thing.  But I don't
think it can be counted on.  Moreover, a delay is good for NSI, and not
so good for ICANN -- NSI has more time to find a good deal for the 
registrar business, which weakens ICANN's negotiating position.

[...]

> We have lost already so many chances to count (see, for instance, the 
> lukewarm support of some WG results without even proposing something else) 
> that we cannot avod to take a position on this.
> Otherwise people will start seriously questioning why at all we need a DNSO 
> at all.

On the contrary.  I think this discussion is exremely valuable to the 
directors, some of whom are indeed following it very closely.

At this point it seems to me that the substance of the decision 
revolves around two points:  1) the issue of registrar-registry 
separation, and 2) two different competition models:

    a) competition between TLDs.  In this model TLDs are heavily 
    marketed by the registries/registry operators, and in this model, 
    it makes sense to give the registry operators long term contracts, 
    because they are then motivated to invest the money in the 
    marketing -- with a short term contract, there is no incentive to 
    invest in a market that is going to be taken away from you in a 
    rebid. 

    b) competition between registry operators as service providers.  If
    you presume that TLD competition doesn't work, because of customer
    lockin and other effects, then the preffered model is one of
    frequent rebids of registry contracts, and competition among the
    various companies running registries.

These are old questions, and we have been debating them for literally 
years.  Personally, in an ideal world, I strongly prefer both a total 
separation of registrar/registry and competition model (b).  But NSI's 
totally dominant position in the market seriously distorts things -- it 
is going to be very hard for any competitor to put a dent in their 
position, and without a strong marketing push I don't expect .biz or 
.info or any of the others (or even .web if it had been approved) to 
have a significant impact on the dominant position of .com.  So 
marketing, unfortunately, is very important if we ever want to get real 
competition going.  

Both the status quo and the proposed changed agreements are 
disgustingly sweet deals for NSI.  I have resigned myself to that -- 
they were given a gigantic gift by the USG, and they have milked it for 
all it is worth, and now they are in a very strong position.  But we 
have to make decisions based on reality, not fantasy.

Kent

-- 
Kent Crispin                               "Be good, and you will be
kent@songbird.com                           lonesome." -- Mark Twain
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