[ga] RE: [icann-delete] Date: Wed, 9 Jan 2002 15:53:53 -0500

["Gomes, Chuck" <cgomes@verisign.com>]

Elliot,

Thanks for the thoughtful and constructive post.  It is much
appreciated.  Please note a few responses below.

Chuck

> -----Original Message-----
> From: Elliot Noss [mailto:enoss@tucows.com]
> Sent: Thursday, January 10, 2002 12:57 AM
> To: cgomes@verisign.com
> Cc: ga@dnso.org; icann-delete@total.confusion.net;
> peter_girard@yahoo.com; Ron Wiener
> Subject: [icann-delete] Date: Wed, 9 Jan 2002 15:53:53 -0500
> 
> 
> I wanted to take a bit of a "clean-sheet" approach to this 
> discussion as the
> points I wish to communicate cut across a number of different 
> threads on a
> number of different lists.
> 
> There are really four topics I wish to raise as follows:
> 
> - Who has the "right" to deal with expired/expiring names?
> - The mixing in this discussion of two seperate issues, 
> registry load and
> the allocation of expired/expiring names;
> - The inefficiency that results from any flat-price solution;
> - A way forward.
> 
> Who has the "right" to expired/expiring names?
> -----------------------------------------------
> This is an issue that creates an interesting sub-text to this entire
> discussion, yet has not been fully examined. There are three potential
> claimants for this right and three possible states for these names.
> Claimants include registrants, registry and registrars. States include
> unexpired, expired in the grace period and expired o/s the 
> grace period.
> There are two things that are clear. First, that no one party 
> is clearly
> entitled to stake a claim. Registrars are limited by the 
> terms of 3.7.5 of
> the RAA which require that names be put back in the pool if 
> not renewed. The
> registry is limited by its role as monopoly technical 
> supplier and by the
> Registry agreement which entitles it to a fee for the services it is
> contracted to perform and confers upon it no property rights 
> beyond that.
> Registrants are limited by a number of practical issues 
> including their
> limited rights in a name and their diffuse nature.
> 
> What is clear to me is that this IS NOT a function of a 
> registrars terms of
> service, nor is it an inherent right contained in the 
> registry agreement.
> 
> At the same time we must keep our eye on the fact that the role of
> registrars and registry is, most purely, to efficiently administer the
> allocation and provisioning of domain names. This means that the best
> approach is the one that puts names into the hands of those 
> who would put
> them to the most use. Names in the hands of those who most 
> desire them will
> lead to a fuller utilization of the Internet, more value for 
> users and more
> revenue for registrars and registries.
> 
> This point should not be seen as at odds with an egalitarian 
> (as opposed to
> equitable) view of domain names and first-come-first-served 
> ("FCFS"), but I
> realize this is a point that would be the subject of much 
> debate. What is
> interesting today is that we are at a unique time and place 
> in the history
> of the DNS which makes this less contentious. We have one 
> extremely mature
> namespace in .com/.net/.org. It is almost certain to be the largest
> namespace throughout the lifecycle of the current DNS. It also has a
> secondary market that is more evolved than any other will 
> ever be. We also
> have the recent introduction of new gTLDs that provide a 
> fresh supply of
> names. This means any solution effected can be tailored to the current
> circumstance.
> 
> We must also remember that there are two groups of 
> registrants that we must
> consider, current registrants and potential registrants. They 
> have distinct
> interests. Current registrants have rights around their 
> existing names, both
> in terms of security from losing a name through inadvertance 
> and in excess
> economic value. Potential registrants benefit from being able 
> to efficiently
> obtain names that are currently owned. With the introduction 
> of new gTLDs
> potential registrants have, and will continue to have more and better
> alternatives. The maximum value in the secondary market 
> exists right now,
> today.
> 
> At the end of the day the competing claims of registries and 
> registrars are
> likely subordinate to those of registrants. Accordingly, any 
> solution should
> start with this underpinning.

I certainly agree with this point.  In fact I would say that if we
(registries or registrars) do not offer services that have value to
registrants and potential registrants, our success will be extremely
limited.

> 
> Registry load and the allocation of expired/expiring names
> -----------------------------------------------------------
> It has been noted by a number of people in this debate, and 
> has been my
> position for many months, that the issues of registry load and the the
> allocation of expired/expiring names are being mixed together 
> unnecessarily.
> 
> I wish to add my voice to the chorus saying that these issues 
> are related
> only remotely, almost accidentally. There have been a number 
> of very good
> suggestions as to simple steps the registry could take to 
> lessen the load.
> There are a couple additional points worth noting here. 
> First, the current
> solution is no longer broken. While I am not a fan of the 
> status quo, the
> registry has weathered the storm and there seems to currently be no
> appreciable impact on our day-to-day business (which was not 
> the case a
> short time ago).

Whereas I think you are correct that there is no appreciable impact on
registrars day-to-day businesses now that we have implemented the batch
pool process, there has been and continues to be a growing impact on
registry operations and registry costs.  So we, like you, are in favor
of additional measures as you discuss below.

 An additional measure or two (a modified 
> check command,
> additional, transparent compliance, all names dropping in 
> real time and a
> published drop list are the easiest and most effective IMHO) 
> would make this
> a non-issue.

As you know, you, Mark Rippe and I have had some helpful discussions
with regard to these possible measures, and we plan to take the next
steps toward exploring possible implementation of some of these things.
Of course, we will involve ICANN staff and registrars before moving
forward.

> 
> It is worth noting my personal dealings with the registry on 
> the question of
> load have been positive and I was impressed with their 
> genuine desire to
> solve the issues at hand.
> 
> This last point leads me to feel comfortable that these 
> issues are not being
> presented as being directly connected and can be dealt with 
> seperately. I
> would, of course, love to hear Chuck confirm this.

I can definitely confirm this.  In my original analysis of the various
solutions put forward on the ICANN-delete list, whereas I indicated that
we would be willing to pursue what was then called a parallel-registry
option, I also said that we did not believe that that solution solved
the deleted names problem.  I do think that the WLS could still make
some positive impact in this regard, but it certainly does not solve the
whole problem, so additional actions are needed.

> 
> 
> The Inefficiency of flat pricing
> ---------------------------------
> The current market for domain names is characterized by 
> flat-priced supply
> and variable-priced demand. I do not take a politial position 
> on this, I
> merely note it as observation. This market inefficiency 
> (again observation
> not position) has lead to the existance of a robust secondary 
> market. It has
> also lead to a significant amount of the current CNO namespace sitting
> unused.
> 
> I have strong reservations about any solution geared at the 
> expiring market
> that magnifies that inefficiency. By definition it leaves 
> money on the table
> and leaves demand unfulfilled at the same time. 

Hey!  We were trying to solve this problem by not leaving money on the
table in our wait list proposal, but our initially proposed $40 price
has been the biggest point of criticism!  :)  More seriously, from an
economic point of view, I agree with you.  And I would like to think
that there is lots of room for market driven variability in price at the
registrar level regardless of what solution is tried.

The worst of 
> both worlds.
> Ideally we could find a solution that was able to create a 
> robust, efficient
> secondary market which would benefit registrars and the 
> registry, but if
> done properly would most benefit registrants.
> 
> A suggested way forward
> ------------------------
> Unfortunately, for me, the existing WLS proposal is not 
> acceptable. The
> inefficiencies are large and the economics are miles away 
> from either fair
> or realistic. With significantly re-worked economics it could be an
> acceptable interim step, but I am not sure we need an interim step,
> especially given the decoupling of the registry load issue.

We asked for feedback on the proposal.  We have received a lot, in
particular with regard to the price, and we are taking a new look at the
economics.  Regardless of whether it makes a significant dent in the
load issue or not, I personally believe it would be a valuable service
for consumers.  Rather than continuing to argue that point, it seems
like it would be really useful to give it a 12-month test where
registrars and registries and other interested parties can find out in
real time.

> 
> It seems to me there is a way forward that addresses all of the above
> issues. I would suggest two important modifications to the 
> existing Peter
> Girard proposal. An unlimited bidding period and the bulk of 
> the fees going
> to existing registrants rather than registrars.
> 
> All names should be available to "bid" on at any time. A "bid" by a
> prospective registrant would require an administrative fee 
> collected by a
> registrar, shared with registry and would be available for 
> acceptance by the
> existing registrant at any time. A sucessful transaction 
> would lead to a fee
> to both registry and registrars. An example:
> 
> - Potential registrant places a bid of $150 on abcd.com and 
> for doing so
> pays a non-refundable administrative fee to registrar x of 
> $10 and in turn
> registrar pays registry $5;
> - Original registrant is made aware of his ability to 
> "transfer" the name
> and any unexpired term to a potential registrant for $120;
> - If original registrant decides to accept he contacts the existing
> registrar of record and informs him of his desire;
> - If the registrars are different the $30 transaction fee is 
> split 1/3 each,
> if the same than the split is equal between registrar and registry;
> - The fee would be a % of bid, capped at a relatively low 
> number ($30?).
> 
> To be clear, this is described in very brief terms and would need
> significant rounding out as well as a champion so please work 
> the principals
> not the specifics.
> 
> This solution would provide significant benefits to everyone 
> involved in
> both an equitable and palatable fashion. It would also keep 
> both registrars
> and registries in their role of market makers not market 
> participants and
> would create a level of efficiency that would lead to 
> increased revenues,
> increased registrant satisfaction and, perhaps most 
> importantly, maximized
> use of the namespace.

One thing I question in your above statement is why you think registrars
and registries should not be market participants.  In my opinion of
business economics in a free market system, being a participant in the
market is what motivates businesses to take risks, make investments, be
creative, etc.  Consumers then are able to exert their influence through
their buying patterns thereby causing businesses to modify their
offerings or lose market share.

> 
> The original administrative fee would/should act so as to 
> deter nearly all
> wasteful behaviour. Technically, it need be no more 
> complicated than an
> interface between the SRS and EBay's open APIs (full credit 
> here to Joyce
> Lin in Montevideo, if only we would have listened to you 
> then!). It could be
> completely done by the registry, by the registry with 
> technical partners,
> Peter could do it, or it could be put out to a completely new tender
> process. I know we would love to build it (but to be clear we are not
> throwing our hat in the ring whatsoever). I know perhaps fifty people
> reading this message would love to build it. That kind of excites me,
> thinking of all of the extremely capable people who could nail this
> technically. Innovation would abound if we let it.
> 
> The single largest beneficiary would be the registry. Ok by 
> me. The largest
> cumulative benefit would accrue to registrants. Again, that 
> works for me. I
> think this would be an absolutely elegant outcome for everyone.
> 
> Regards
> 
> Elliot Noss
> Tucows inc.
> 416-538-5494
>

smime.p7s