[ga] RE: Antitrust Violations: Fact versus Fiction

["Michael D. Palage" <michael@palage.com>]

Danny:

I have known you for a long time and it would have been much better for your
to ask me these questions privately as I could have easily clarified your
misconceptions. First I think you have been drinking some of the Business
Constituency Kool Aid. Specifically I am referring to a recent post by a
Business Constituency member that has referred to the Registrar and Registry
Constituencies as "mafia". Sorry, Philip and Marilyn but I still cannot
agree that all is well and good within the Business Constituency.

Regarding the minutes, I will talk to Tim the registrar constituency
secretariat about the minutes and ask him to clarify the minutes to remove
any confusion that might exist. For the record Tim, Ken Stubbs and I sat at
the head table on the stage in front of the meeting. During the all day
meeting which was open to the public (as usual and unlike certain other
constituencies) there were some slow points during which both Tim and I
played competing games of minesweeper, at least Bill Gates knows how to
build in entertaining features into his OS. Now I know how the ICANN Board
Directors must be able to make it through the meetings. Unfortunately we did
not have a wireless Internet connection as it was not within our budget.

Although I am an attorney I do not claim to be an anti-trust expert,
however, I have always taken seriously potential anti-trust concerns. This
was why during our Dulles meeting in February we had an anti-trust attorney
speak to us. A handy rule that she provided us to stay away from anti-trust
concerns was more stuff, better stuff and cheaper stuff. However, my
personal favorite reference can be found on
http://www.antitrust.org/aei/Guidelines.htm.

Turning to what was said. The morning session dealt with ICANN reform. The
Registrars have vehemently argued in the past that they must continue to
retain the contractual obligations to pay ICANN directly and approve ICANN's
annual budget. I have also advocated the current 50/50 voting split in the
proposed GNSO as a mechanism to protect contracting parties interests within
ICANN. Although others seek to distort this mechanism as a sword, I believe
it is merely a shield. Another positive mechanism in the GNSO proposal that
I discussed was the requirement that ICANN's general counsel approve
something as policy prior to the new GNSO body undertaken the investment of
time and resources. This is what I call the Marilyn Cade safeguard, as
Marilyn always seems to have a way of taking a round peg and making it fit
into a square hole. I believe Marilyn Cade was successful in an earlier ERC
working group incorporating a veto provision into the GNSO process whereby
they could still take up an issue even if ICANN said it was not policy.

The events of the last past year also show the fundamental flaws in your
logic. If you look at the hotly debated topics of the last year WLS and
transfers, the registrar and registry contracting parties have not been on
the same side of the fence. In fact they have generally been diametrically
opposed. The purpose of registrars retaining the current contractual
provisions in the agreements was viewed as one of the most effective ways to
ensure that ICANN continues to act (grow) in a responsible manner. Best the
increase of ICANN fees to registrars domain name registration fees continue
to drop. Although certain people like to view the registrars and registry as
mere tax collectors, the misconception ignores reality. When a registrant
obtains a multi-year registration that service is provided regardless of any
increased ICANN fees that might be imposed upon the registrar. If we were
truly tax collector we would be going back to the registrant and asking for
additional funds which does not happen. One of the things that is
interesting to note that despite the increase in ICANN's fees to registrars
prices for domain names continue to fall, and the services offered to
registrants continue to increase. In summary, more stuff, better stuff and
cheaper stuff.

The specific example that I referenced during this discussion regarded a
hypothetical policy mandate that all ICANN accredited registrars be required
to retain actual proof of payment terms by the end registrant. This question
was in part based upon certain discussions that registrars and registries
had with FTC, DOC, SEC, IRS while in Washington the day before. Certain
Registrar business models (TUCOWS, Bulk, ENom) rely on a diverse reseller
network which has this payment information residing with the reseller. These
registrars generally only have payment terms and information regarding the
reseller/channel partner, not the end registrant. The point I was trying to
make is that the current DNSO Names Council and the proposed GNSO body to a
large degree does not have the ability to understand the various nuisances
that exist within the domain name registration business, and that there is a
danger when grossly unrepresentative constituencies attempt to micromanage
or impose their viewpoints without understanding the basics.

Time to head back to bed a catch a hour of sleep. Funny I was enjoying a
nice good night sleep when my ICANN Spider Senses kicked in, and somehow
drew me to my computer. Hopefully this email will put this issue to rest,
but knowing this list I doubt it. In fact, I was not even going to response,
but I take allegations with potential criminal implications serious.
Although there will never be a shortage of ICANN nay Sayers (including
myself at times) the fact remains there does not exist a better mechanism in
place to resolve global diverse and complex issues. For the record, I
respectfully disagree with Tim's paraphrase of my discussion regarding ICANN
reform and I did not approve the minutes prior to their posting.

Best regards,

Mike

P.S. For those conspiracy theorist, Amadeau an ICANN Board director was also
in attendance. Was he using a secret Vulcan mind meld to influence the
discussion? No, but it does make for good fiction.

P.P.S. Marilyn I have saved you the trouble and forwarded a copy of this
email to NTIA :-)

-----Original Message-----
From: DannyYounger@cs.com [mailto:DannyYounger@cs.com]
Sent: Wednesday, September 25, 2002 12:24 AM
To: ga@dnso.org
Cc: michael@palage.com
Subject: Antitrust Violations


The registrar constituency recently held a meeting in Amsterdam.  By
definition such a meeting is a collaboration of competitors which per se is
not a violation of antitrust law.  However, if such a meeting results in the
collusion among parties to an agreement to reduce services below what would
likely prevail in the absence of the relevant agreement, this would
constitute a violation of the "Antitrust Guidelines for Collaborations Among
Competitors" issued by the Federal Trade Commission and the U.S. Department
of Justice, and might well be actionable.

The minutes of this meeting (posted on the registrars' website) contain the
following statement:

"Palage: Current ICANN structure allows some people to have influence over
how we conduct our business. Nothing prevents the IP or other constituency
from framing rules that make impossible a diverse reseller network. Several
slippery slopes we are looking at. Therefore it is vital that registrars be
perceived as holding the power to pay the bills. Registries and registrars
have not seen eye to eye on many issues. However, contracting parties can
agree to have certain proposals not become policy."

A collusion on the part of registrars with registries to not allow certain
proposals to become policy is assuredly an antitrust violation, as without
such collusion such proposals might well result in enhanced Community
services.  I would like to give Michael Palage an opportunity to discuss
this
matter in depth before it becomes necessary to take further action.






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