FW: [nc-transfer] RE: Proposal to Proceed

["Cade,Marilyn S - LGA" <mcade@att.com>]

posted with permission of sender.
-----Original Message-----
From: Paul Stahura [mailto:stahura@enom.com]
Sent: Sunday, June 09, 2002 8:59 PM
To: Cade,Marilyn S - LGA
Cc: 'nc-transfer@dnso.org'; 'cgomes@verisign.com'
Subject: FW: [nc-transfer] RE: Proposal to Proceed


Marilyn,

I also thank you for giving me the opportunity to provide feedback.
My comments are inserted below Chuck's.
Likewise, feel free to distribute my comments to the task force.

Paul


-----Original Message-----
From: Gomes, Chuck [mailto:cgomes@verisign.com]
Sent: Tuesday, June 04, 2002 2:08 PM
To: Cade,Marilyn S - LGA
Subject: FW: [nc-transfer] RE: Proposal to Proceed
Importance: High


Marilyn,

Thank you for providing me the opportunity to provide feedback. My comments
are inserted in the text of Grant's proposed text below.  Please feel free
to distribute my comments to the task force.

Chuck

-----Original Message-----
From: Grant Forsyth [mailto:grant.forsyth@team.telstraclear.co.nz]
Sent: Monday, June 03, 2002 5:31 PM
To: 'Cade,Marilyn S - LGA'; Transfer TF
Subject: [nc-transfer] WLS Draft TF Recommendations


[[beginning snipped by stahura]]
 
3. There exists today a range of competing services that provide the
function of seeking out specific expiring gTLD domain names for registration
by prospective registrants.

[Gomes, Chuck] As far as we can tell, most of these competing services, if
not all, cater to speculator registrants.  Even SnapNames admits that about
half of their SnapBacks are probably from speculators.  It would be very
interesting to know what percentage of customers are speculators for the
other competing business models.  It would also be very interesting to find
out how many non-speculator registrants are involved in the competing
business models.  I have never been one that believes that speculation is
necessarily wrong, but I am one who believes that an average, non-speculator
registrant should have as good a chance at getting a name as a speculator
registrant.  That definitely is not the case today.  Under the WLS, this
would be improved significantly.  If my assessment is correct, is it fair to
conclude that the members of the transfer task force are more concerned
about speculator interests than those of non-speculator registrants?  At a
bare minimum, I would think that the task force would try to validate who
the prospective registrants are for the competing services.

[Stahura]
If the goal is to root out speculators, I don't think the solution is simply
to charge more for a service that already exists today.
I don't beliee WLS will decrease speculator participation significantly,
it will just cost more for them (and anyone else) to participate.

 
4. The WLS service would essentially render the existing services
superfluous and we would expect them to exit the market. Even a 12 month
trial of the WLS (noting that a 12 month trial would have a 24 month effect
as a WLS option is for 12 months), as proposed by Verisign, could be
expected to result in the current services exiting the market.

[Gomes, Chuck] Would they exit the market because consumers now have a
better option?  If so, is that bad?  If the WLS would seriously damage these
other businesses, why wouldn't they participate in the WLS to make up the
difference?  It would be open to all registrars on equal terms.

[Stahura]
I may be able to answer these questions since my company is one
that is offering the existing service.  We would not exit the market
because WLS is a better option.  In my opinion it is a worse option,
one reason being that it removes diverisity in the models.  We would
exit the market because WLS would be the *only* option and because
that option is more expensive than the one we are purchasing today.
We would not be exiting because WLS is somehow better.
It is not available on equal terms since the registrars who are deleting
names like Verisign-the-registrar can offer WLS on them with less risk than
eNom
can.  If by "open" you mean WLS would be open to any registar to play on
an UNeven field, then I'd agree with you.
 
5. There has been no evidence provided suggesting that there are any
technical issues that would prohibit the existing services from continuing
to operate

[Gomes, Chuck] If I understand what is meant here, then this is a correct
statement.  If the WLS is implemented, there would be no technical reasons
why other competing services would be prohibited. 

[Stahura] Maybe I dont understand..
If WLS is implemented I cannot offer to re-register any deleted name
like I can now, only those names that do not have WLS on them.
I agree, I will be able to offer my competing service for names that no one
wants a WLS for, but this just means that *most* of the market
is monopolized by WLS, just not the entire thing.  If one name were
left over, I'd guess you'd say, technically, we would not be prohibited
from offering our current service to re-register that one name.

 
From the above we would note that:
1. Current consumer frustration and concern over legitimately acquiring an
expiring gTLD domain name can and should be addressed through the swift
introduction and effective enforcement of the proposed Redemptions Grace
Period for Deleted Names policy and practice.

[Gomes, Chuck] Who are you referring to when you say 'consumer?'  If
'consumer' means the average, non-speculator registrant, it is easy to see
that they would be very frustrated by the status quo because they hardly
have any chance at all when competing against the speculators who have
elaborate systems in place to capture deleted names.  As I noted earlier,
the Redemption Grace Period would provide relief for inadvertent deletions
and we would be willing to consider implementing an interim procedure within
the WLS to cover this concern until a redemption period is implemented via
the ICANN process.
  
2. There is no added legitimate consumer benefit achieved from the
introduction of the WLS.

[Gomes, Chuck] This is blatantly false unless of course 'consumer' is
defined as speculator.  Speculators are definitely better off with the
status quo.  But as already noted, under the WLS, the average,
non-speculator consumer who wants an already registered name would have a
better chance at getting it at a more reasonable price without having to buy
it from a speculator.  Of course, my argument falls apart if the WLS is
priced too low.  If it is priced too low, it will be easy for speculators to
switch their operations from the current process to the WLS.  Again, it
appears that members of the transfer task force want to incent the
speculator business.  That is their prerogative, but I think it is deceptive
to make it sound like you're concerned about the average, non-speculator
consumer.

[Stahura] 
1) Who's to say that speculators won't pay the higher WLS price
and then offer it to the "consumer" at yet an even higher price than
they consumer gets with the current system?
2)If I was not constrained by a limited number of connections
to the batch pool, I'd offer the current service for free to everyone, like
I do
now (I can only offer it to a few now  though, speculator or not).  I would
be able to reach
more consumers if I were to be able to include more customers
in the service.  I'd be able to do this if the registry implemented 
one of the other dropped-name proposals such as "deterministic round robin".
If you were really "pro-consumer", instead of "pro-higher prices for the
same
thing to discourage speculators", you'd implement one of the other
proposals, which incidentally
would be cheaper to implement than WLS (especially since you would
not have to pay intellectual property fee to anyone like you 
supposedly have to do with WLS).

 
3. Consumer interests are likely to be harmed through the reduction in
competition and possibility of discriminatory behaviour between the
vertically integrated registrar and registry businesses of Verisign as a
result of the monopolisation of the key registry function as a result of the
introduction of the WLS.

[Gomes, Chuck] I would love to see this documented with some facts.  It
cannot be and those who are using the argument undoubtedly know this.  But
it makes for a great emotional attack even if it is totally unsubstantiated.
I would suggest at a minimum that the task force ask ICANN whether it has
any evidence that this is a problem.  The bottom line is this: a back-order
service at the registry level offers consumers a 100% fulfillment if a name
is deleted; a back-order service at the registrar level cannot do that.  At
the same time, the centralized service (WLS) would be offered on a
first-come, first-served basis, thereby giving all consumers equal
opportunity.  Moreover, fully open competition would be available at the
registrar level just like with domain name registrations. 

[stahura]
Chuck, you are not correct when you said:
"a back-order service at the registry level offers consumers a 100%
fulfillment if a name
is deleted; a back-order service at the registrar level cannot do that. "
If I have a WLS on verisign.com and it gets deleted I do not necessarily get
the name.
I guess what you are saying is that I would just have a better chance at
getting it
than with the current WLS offering by SnapNames?  

Also, and this is my most important point:
you cannot deny the fact that any registrar who knows a name will be
deleted,
can then offer a WLS subscription on that name with a lower risk
(*guaranteed*
in your opinion above) that the subscriber will actually get the name, while
the
other registrar that does not know the name will be deleted cannot offer
the same WLS subscription.
This fact alone reduces competition if WLS is implemented.





 
Based on the above observations we make the following policy recommendations
that:
1. The ICANN Board move with all haste to implement and actively enforce the
proposed Redemptions Grace Period for Deleted Names policy and practice

[Gomes, Chuck] This is a good recommendation.  Even before ICANN publicly
proposed this, I worked closely with Louis to explore the possibility of
implementing for .com, net and .org.
 
2. The ICANN Board rejects Verisign's request to amend its agreement to
enable it to introduce its proposed WLS.
3. The ICANN Board rejects Verisign's request to trial the WLS for 12
months.

[Gomes, Chuck] If the above two recommendations are based on the reasoning
in this document that has absolutely no documented, objective data as its
foundation, then the transfers task force has provided the community with
live evidence that the DNSO processes are horribly flawed.  I would like to
think that ICANN staff can recognize a politically motivated action from one
that is objectively based.

[stahura]
I suspect that offering WLS is completely financially motivated and that the
ICANN staff can recognize that, if anything (like they somehow buy into your
statement).

 
Should the ICANN Board not accept the policy recommendations noted above and
grant Verisign's request for a change to its agreement and a 12 month trial
of its WLS, we would further recommend that:
4. The introduction of the WLS be dependent on the implementation and proven
(for not less than 3 months) practice envisaged in the proposed Redemptions
Grace Period for Deleted Names policy and practice

[Gomes, Chuck] As I said above, VGRS offered months ago to consider
implementing an interim procedure in the WLS to deal with this concern if
the WLS is implemented before a redemption period is in place.
 
5. The price for the WLS be set at the same amount as the current registry
fee for a registration - the cost of the WLS function being no more, and
probably less than a registration (given that the activity is less
complicated).

[Gomes, Chuck] This would play right into the hands of the speculators, so
if that is your objective, I understand it.  Speculators could easily
continue what they are doing today with little or no cost impact.  It would
be naive to conclude that speculators would not play the game at a higher
price, but today they can do so at an extremely low price.  If they had to
invest more, it would be less profitable for them and more beneficial for a
regular consumer.

[stahura]
So I guees you'd say it would be a bad idea to lower prices on regular
registrations too?
I dont think you are missing the point that with higher prices for
re-registering deleted names
everyone pays more (to you), not just the "speculators".

 
6. The WLS include a requirement that notice be provided by the registry
(through the registrar) to the existing registrant of a domain name when a
WLS option is taken out against that registrant's domain name.

[Gomes, Chuck] Why needlessly worry registrants?   Most of them would not
understand what was going on and of course could easily be needlessly
frightened.  The redemption period and/or interim redemption period would
adequately solve this problem without adding confusion to registrants.
Besides, this is primarily a registrar issue, not a registry issue.  If this
is a good recommendation and considering that the charter given to the
transfers task force has to do with deleted names in general, then this
recommendation should be extended to include all of the business models
involving the deleted names model today; they all should provide such
notice. 

[stahura] talk about needlessly worrying registrants: if WLS is implemented
it would
be in registrars interests (and yours too) to spew out FUD like 
"get the WLS on your name before someone else gets the right to your name".
geez.
 
7. The WLS include a requirement for full transparency as to who has placed
a WLS option on a domain name and the registrar that action the option.

[Gomes, Chuck]   The IP Constituency leadership actually opposes this kind
of idea. Here is an exact quote of the message I received from Steve
Metalitz, IPC President, on January 18, 2002: "Disclosure of WLS
subscribers:    If the identity of WLS subscribers is made public or is
disclosed to the registrant of the domain name in question, the potential
value of the WLS for intellectual property owners would be substantially
diminished.  For example, a bad-faith registrant would have an incentive to
continue renewing the registration if it knew that the owner of a trademark
identical to that domain name was the wait list subscriber for it and would
receive it automatically if the registration expired.  (Indeed, there is
some concern that even disclosing the fact that a wait list subscription
exists would create this perverse incentive.)    The December 30 paper is
unclear on whether registrars would be allowed or required to make such
disclosures.  Please clarify whether VGRS would prohibit such disclosures as
part of the WLS." 

[stahura] The registrar will know this information so it will get out
anyway.
If the IP Constituency leadership actually opposes disclosing this
info they should then also oppose WLS itself.

 
{Marilyn, you could add a couple more if you wanted to. Do we need to do
this or do we want to leave it at the first 3 policy recommendations?}
 
Grant Forsyth
BC Rep on the Transfers Task Force