[ga] Dotster WLS Statement as text

["McMeikan, Andrew" <McMeikanA@logica.com>]

Apologies for long post, but I am sure many have the same virus concerns as
Andy.

source:word doc at
http://www.dnso.org/clubpublic/nc-transfer/Arc00/msg00341.html

	cya,	Andrew...
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To:	Marilyn Cade, Chair
WLS Task Force 

From:	Clint Page

Date:	July 10, 2002

RE:	WLS Statement




Dear Marilyn,

With the ICANN Board Meeting in Bucharest now complete it is my
understanding that the Names 
Council Task Force has until approximately the end of July 2002 to finalize
its position regarding VeriSign's WLS proposal.  As President of Dotster,
Inc., I feel compelled to make one last attempt to outline our position
relative to this proposal.

Dotster's position regarding the VeriSign proposal for a Domain Name Wait
Listing Service continues to be one of total disagreement.  The WLS proposal
is Verisign's attempt to simply leverage its existing monopoly at the
registry level to capture the innovative and highly competitive secondary
domain market. VeriSign's blatant monopolistic posturing and the greed
represented in the proposal will both restrict consumer choice and raise
prices. The arguments for and against the proposal are myriad.  However, we
believe the issues distill themselves nicely into three very distinct areas:
The consumer, the registrar and the registry.

	The consumer

·	The stated WLS proposal goes against one of the foundational charter
issues that were a part of the creation of ICANN.  Namely, the privatization
of the DNS was intended to create an open market, whereby consumers would
benefit from competition and lower prices. Part of ICANN's mission is to
encourage competition and the WLS proposal is diametrically opposed to this
precept.

·	The WLS proposal will put the consumer in the position of
unknowingly purchasing a product that can never be delivered.  In many
cases, Verisign will be allowed to make money off an option that the
consumer has no ability to exercise. For example, Verisign will be more than
happy to sell a consumer a "snapback" on a domain name for $24 per year-
whether or not the name ever becomes available. The WLS concept is basically
an option or "tax" that in many cases can never be exercised, and in it's
worst form borders on consumer fraud. 
 
·	VeriSign/SnapNames neglects to mention that under many competing
systems, the consumer only pays for a name if it is successfully acquired.
For example, NameWinner charges the customer only $25 on average per domain
name, and only on those names that are acquired.  In addition other
resellers charge much less than NameWinner (e.g. $10/name at Tucows). One
does not need to pay VeriSign/SnapNames $24/year, for a "chance" at a name,
when it is much less expensive to go with a different firm and only pay for
success. 

·	Adoption of this proposal will create a monopoly for the secondary
market component of the DNS.  Monopolies, independent of industry, are
famous for their abuse of customer service. This currently is an area where
domain competitors work hard to differentiate themselves from one another.
The customer is the beneficiary of this competition as registrars attempt to
differentiate themselves by providing a broad array of tools and support
systems directed at making the customer experience as pleasant as possible.
This innovation and customer care will be lost in a monopolistic
environment.  One of the initial reasons for the breakup of the old NSI
monopoly were complaints from the DNS user community regarding poor customer
service.

·	The WLS pricing scheme is a centrally planned model, similar to what
central planners did under the old Soviet regimes. The planners set a price
based on what they thought was "fair", rather than allowing the market to
set the price through competition. The Internet domain registration business
operates most efficiently and effectively based on free-market principles.
Better we should rely on a competitive marketplace to determine prices and
valid business models, rather than a single monopolist. A competitive
marketplace will always result in better prices for the consumer. Since that
competitive market exists now, ICANN had better have a very good reason for
interfering in it. 

·	Adoption of the WLS will result in limiting the choices consumers
have in the secondary market by destroying all of the competitive business
models in this area.

·	The WLS proposal makes it more lucrative for a registrar to get a
WLS subscription than to get a renewal from an existing customer.  The
implications involved in this factor may create an anti-consumer environment
throughout the DNS. Registrars will be unwilling to allow a transfer of any
domain name with a WLS subscription attached to it because of the potential
revenue loss. 

·	The recent public media announcements by SnapNames, (the technology
provider behind the scenes) wherein they stated their annual revenues will
increase from $3 million to $20 million in year one of the WLS arrangement,
should give considerable cause for concern.  If SnapNames is going to
realize an approximate 700% revenue growth increase, what does VeriSign's
piece of the action represent?  The VeriSign Registry currently charges $6
for every CNO name registered.  This rate was a negotiation point in the
privatization process and was arrived at to ensure adequate margins for the
registry.  If VeriSign's registry can make adequate margins at $6 per
registered domain name, then obviously one has to conclude that the proposed
WLS pricing will be at the expense of the consumer.
 







The Registrar

·	Competition will be stifled. Existing registrar competitors will
receive the privilege of being resellers of Verisign services, instead of
being allowed to innovate and differentiate as they do today. Registrars
will be reduced to the role of gas stations with their sole supply of
product coming from the Verisign monopoly.

·	The idea that the WLS will only be a "test" is completely false.
Trying to suggest a "test", when your company would earn $20 million during
that test, while completely wiping out existing competitors is not a "test."
The Verisign/SnapNames proposal is simply an anti-competitive cash grab
designed to eliminate competition and recreate the monopoly in the secondary
market. None of the more than thirty existing secondary market competitors
would still be able to run their business models under the WLS.

·	The WLS will interfere with free flow of transfers from registrar to
registrar.  If approved, the WLS will eliminate any domain from ever
expiring from the Network Solutions database. The reason being that NSI will
make more money controlling these domains while collecting WLS subscription
fees. To make matters worse, there is no requirement that forces any
Registrar to ever release an expired domain. In essence, the WLS will create
a total domain lock down industry wide. 

·	VeriSign's contention that the industry requires a more "ordered
process" is another red herring.  Why do we need an "ordered process", where
Verisign/Snapnames would put existing competitors out of business and secure
100% of the market and profits for themselves? The WLS is simply Verisign's
response to competition in the secondary market. As competitors such as
eNom, NameWinner, NicGenie, IARegistry, AWRegistry, etc. have experienced
success, Verisign has proposed a new monopoly in the secondary market to
eliminate both competition and consumer choice.
 
·	Equal opportunity must be preserved to allow any registrar to
acquire a deleted name, using any business model of the registrar's
choosing, and not one forced upon them by Verisign registry. No current
business model that is in place must be forcibly required to change their
business model, unless it can be proven that they have caused the abuse
through their choice of business models. Throughout the long WLS debate,
neither VeriSign nor SnapNames have provided a single example of registrar
abuse in this area.

·	Supposedly, the main reason that Verisign put WLS forth in the first
place was to solve the "load issue."  Now trying to argue, "it would be a
valuable service for consumers" seems beyond the scope of Verisign registry.
Is the Registry to become a Registrar? Let them do what they do best, which
is to manage the database. However, innovation should take place at the
registar level where there is a healthy and competitive landscape. 

The Registry

·	There currently exists an intrinsic demand for expired names within
the competitive DNS market. How would Verisign/ICANN differentiate WLS
demand from the intrinsic demand for the expired names themselves? This
question would be particularly difficult to answer given that there would no
alternative mechanism for securing those expired domains. 

·	Verisign's initial comment that "the system load is too high" was a
red herring to position them in the secondary market. By Verisign's own
admissions "registry load is no longer an issue. The multiple pools and rate
limiting technology have solved that problem."  

·	VeriSign's price point for WLS is exorbitant.  Although the company
has clearly outlined its rationale for establishing the $24 price point, the
stated costs of development, implementation, licenses and maintenance are
all part of any new product offering.  The recent launches of the new .biz
and. info TLDs are examples of this process and both of these registries
encountered similar costs in their respective introductions. Yet they were
both able to deliver a product that cost the participating registrars less
than $6 per domain name year registered.  Dotster finds it inconceivable
that creation of these registries was any less complex and/or costly than
the establishment of the WLS service. Why the wide variation in pricing? In
fact, Dotster has gone on record stating that we would be more than happy to
operate the WLS registry for $6 per domain name.  

·	When VeriSign states "getting paid fairly" as WLS justification, it
confuses where the actual value resides.  There is a fixed amount of value
associated with the intrinsic value of the names themselves.  WLS is not
providing a valuable service; it is imposing a tax on the domain name. A
competitive environment as currently exists amongst registrars and different
business models will ensure that the consumers and registrars alike are
getting a fair price.  

·	If the courts end up determining that the WLS is indeed illegal,
will Verisign/ICANN indemnify affected consumers, resellers, registrants and
other market participants from all liability, legal costs, and
implementation costs.




Summary

Finally, I would be remiss if I did not mention the negative impact this
decision would have on our small registrar business. Dotster's Namewinner
product was the first domain name auction model for deleting domains
introduced into the DNS and is a significant part of our revenue and
profits. This product has been widely accepted and utilized by many
customers, who also use competing products. In fact, a large percentage of
our customers are also customers of our direct competitor SnapNames.

 In the past year, Namewinner has signed 5,585 customer accounts of which
1,737 customers are actively involved in the domain auctions. Additionally,
over 50,000 domains have been bid on and the total number of domain names
won by these customers is over 32,000. To say that Dotster would be
adversely impacted by the adoption of the WLS is an understatement. To allow
a direct competitor (SnapNames) to partner with Verisign and create a
monopoly in the secondary market goes against a fundamental charter of
privatization of the domain name industry. I strongly urge you to vote
against this proposal and allow open competition to continue to exist in the
secondary market.

Sincerely,



Clint Page
President
Dotster, Inc.
11807 NE 99th St., Ste. 1100
Vancouver, WA  98682 USA Tel (360) 253-2210;Fax (360) 253-4234
cpage@dotster.com


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