[registrars] VRSN-NSI/Snapback Proposal

["Ross Wm. Rader" <ross@tucows.com>]

Registrars,

The Verisign-NSI/Snapback proposal has been on the table going back as far
as August of last year during the Montevideo meetings when the idea was
first presented. It was then, and continues to be, lacking in a number of
key areas that make it an inappropriate solution. A number of
counterproposals have been tabled over the last few months, but they do not
seem to have been seriously considered by Verisign-NSI or their partners.
Hopefully, Chuck Gomes' efforts to solicit our input means that project
planning and "press releasing" will shortly take a back-seat to actively
listening to valid and informed customer feedback.

The Verisign-NSI/Snapback proposal carries with it a number of negative
consequences;

- It limits the capability of Registrars to innovate and differentiate the
services that they offer their clients.
- It effectively increases the price that Registrars, and therefore
Registrants, must pay for domain names.
- It increases the scope of the monopoly that Verisign-NSI currently has to
the detriment of Registrars and consumers.

Perhaps most importantly, *it does not appropriately deal with the problem
of re-allocating domain names to new registrants post-expiration*. Remember,
that this issue was first raised by Verisign-NSI in response to increased
load and decreased performance within their registry system. This problem
was created because of the demand for expired domain names. It is still our
position that Verisign-NSI has a contractual obligation to provide a basic
level of service under their existing contracts that they are failing to
uphold. Unless new consensus policy is created that provides them with a
contractrual framework by which they can change the service offering that
registrars and registrants receive, then they must continue to satisfy the
over-riding obligations of their contracts with us and ICANN. The
Verisign-NSI proposal, however, is essentially a mechanism by which they
propose to raise the price of a re-registration to the point where demand
inversely decreases to the point where they can effectively deal with the
load on a technical basis. A reactionary implementation of this nature will
solely benefit Snapnames and Verisign-NSI leaving the most important people
out of the picture - their customers - the registrars and the domain name
consuming public, our registrants.

There have been a number of compelling statements made over the last few
days concerning this issue. One of the most commonly held views, which we
share, is that this service is priced to high. Suppose for a moment that
this service is an appropriate proposal to implement (which it clearly is
not). The wholesale price for a subscription (essentially an option to
purchase a domain name) is almost 7 times higher than the wholesale price
for the domain name in question. This is clearly out of balance by any
measure. Unless the cost of providing the service can be clearly
demonstrated to the DNSO to justify the $40 price point, then it should not
be a price point that we can easily accept. I note that because this is a
service extending from a monopoly, it need be cost-justified. Justifying it
on a "price the market will bear" basis is irrelevant except with respect to
whether the service should be provided at all.

As to public market disclosure, this forum is public and if the Verisign-NSI
lawyers felt the relevant costs were material disclosure (although in my
layman's mind I cannot imagine why projected costs for an as yet not
approved service would be material) they could easily file an 8K and comply.
I note the proposal itself, which would be significantly more material to
investors than the specific costs of provisioning, was not accompanied by an
8K. This is a red herring IMHO.

But back to reality. The real question that the Constituency must consider
is not whether the price point makes sense, but rather, whether or not the
general construct that Verisign-NSI has put forth makes sense for those most
effected by it - Registrars and Registrants.

From our perspective, and those of our customers, while this proposal has
some merit (other than the ridiculous price) it only goes part-way to
addressing the real problem. We would like to see some serious discussion
around a variable price subscription model operated by a third party that
awards the eventual re-registration to the highest bidder.

This type of model has a number of attributes that commend it.

First, it benefits existing and potential future registrants, registrars and
registry. As it is unclear at a policy level who has the "right" to deal
with an offering of the nature that Verisign-NSI proposes, it is only fair
that all relevant parties benefit from the eventual solution. This is both
equitable and politically pragmatic. It is worth noting that political
pragmatism hopefully leads to all of us increasing revenue sooner.

Second, names will end up in the hands of those that most desire them. Those
that want the name the most are far more likely to put it into active use
rather than allowing it to sit on the shelf collecting dust. Names in use
benefit registrars through the form of renewal and value-added service
revenue. And while it did not form a part of the earlier principles that
registrars adopted concerning this matter, it does constitute a market
efficiency that should be made a policy goal.

I note that in a mature namespace such as .com/.net, there is no issue of
this policy violating egalitarian ideals. It is the case presently that all
the most valuable names are already in the hands of deep pockets or only
available to same. It is not the thousand or so most valuable names that are
relevant here, but the hundreds of thousands, perhaps millions, that are
sitting on a shelf, unused.

Lastly, a proposal of this type would ensure a continued competitive
landscape within the domain registration space without unduly extending
Verisign-NSI's existing monopoly.

I would welcome any type of counter-proposal that directly contemplates a
variable-price re-registration model operated by a third-party while
upholding the principles earlier adopted by Registrars.

It is my sincere hope that the Registrar Constituency and the larger DNSO do
not further consider the Verisign-NSI/Snapnames proposal as one worthy of
implementation and instead turn our attentions to alternative models that
more appropriately benefit a wider range of stakeholders, address the core
problems that Verisign-NSI point to as the drivers behind this issue and
most importantly, sow the seeds for a more vibrant (and thus more
profitable) namespace down the road.

As always, please feel free to drop me a line if I can clarify or further
expand on these thoughts.

-rwr