[registrars] RE: WLS

[Rick H Wesson <wessorh@ar.com>]

Below are the comments we posted to VGRS regarding the WLS please review
these comments as they will the basis of our final reply to VGRS.

Many thanks to the Document(s) Editor was Elana Broitman
and the members of the drafting team who are:

   o Elana Broitman <ebroitman@register.com> [editor]
   o Paul Stahura <stahura@enom.com>
   o Ross Wm. Rader <ross@tucows.com>
   o David Wascher <dwascher@iaregistry.com>
   o George DeCarlo <gdecarlo@dotster.com>

Going forward we do need to bare in mind the anti-trust primer we
herd in DC, and we should leave the pricing issue to ICANN to handle.

Do keep in mind the test Veronica spoke of in DC -- "does this create
more stuff, better stuff, and cheaper stuff?"

We will also be voting on the next document produced by the drafting team
and will add all those voting in the affirmative on the document as
a signator.

thanks,

-rick



--------------------- our first response ------------------------


To Chuck Gomes,

 The Registrar Constituency (RC) is hereby providing its formal
 position to the VeriSign Global Registry Services (VGRS) regarding
 its proposal to manage a Wait Listing Service (WLS), the subscription
 service for deleted domain names.  VRSN sent its proposal to the
 Registrar Constituency on December 30, 2001, and allowed registrars
 to comment until January 18, 2002.


 The RC has considered the WLS, holding discussions and voting by
 email and through a conference call.  The overwhelming posi tion of
 the RC ­ in fact the unanimous vote of all those taking a position ­
 is to oppose the WLS.  Considering VRSN's obligation under its
 agreements with ICANN to vet any proposed price increases or service
 modifications for registry services with ICANN, and ICANN's bottom
 -up approach, it is the RC's understanding that the RC position will
 be considered within the Domain Name Supporting Organization (DNSO)
 before the DNSO would make a recommendation to the ICANN Board, and
 that the RC position would be a significant factor in ICANN's
 consideration of the WLS proposal.

 Prior to reviewing the RC's concerns, it would be instructive to
 recall the history of this issue.  In Spring 2001, VGRS temporarily
 shut off registrar connections, preventing new and/or s mall
 registrars from registering .com, .net and .org domain names.
 Ostensibly to address this technical load problem VGRS had
 temporarily closed the process of deleting expired names.  Rather
 than effectively solving the technical load problem, VGRS implemented
 an interim solution, relegating batch requests for deleting names to
 one of three pools to prevent this high -volume traffic from
 overloading its systems.  But according to VGRS, this solution has
 not solved the connection problems.  In fact, VGRS is once again
 announcing that it is limiting connections.

 The RC has a number of key concerns with WLS: a) price, b)
 transparency, c) benefit to the Internet, and d) lack of a solution:

   a) The proposed $40.00 price point for WLS (which is in addition to
      the $6.00 registry fee) is exorbitant.  VGRS has not justified
      this price with cost requirements.  Not only does WLS create a
      much higher price point for the end consumer, it effectively
      undermines competitive registrars' financial wherewithal.  It is
      highly unlikely that registrars would be able to increase their
      margins in proportion to the increased margin charged by VGRS.
      In fact, market data (such as the Snapames price point of $49)
      demonstrates that competitive registrars would have to
      dramatically lower , or eliminate, their current margins in
      order to compete for WLS names.  This would undermine
      competitive registrars' revenues and jeopardize their ability to
      remain profitable.

    * The one registrar that may be able to take
      effectively advantage of this price is the VeriSign registrar,
      which continues to enjoy the largest market share. It would be
      able to use the new higher margin of $46.00 to price below
      wholesale, as it has in the past with the $6.00 fee.  The result
      is to unfairly undermine competitor regi strars.

   b) There would be a lack of transparency if VGRS runs the primary
      registry, the largest registrar, and the subscription service.
      As long as the same company is operating this vertically
      powerful chain of companies, it may be possible for it to shift
      domain names from the $6.00 registry to the $46.00 WLS.  In
      fact, only the registry would know all of the WLS subscriptions
      and the timing for deleting names.  Such information could be
      abused by its registrar.  Considering that there is a history ­
      some of it still unresolved ­ of VeriSign not deleting expired
      names, the RC is doubly concerned that VGRS' operating the WLS
      provides new opportunities for domain name hoarding.

   c) The WLS provides an incentive and reward for speculators, while
      squeezing registrants seeking to build a web presence and
      registrars (as explained above).  The WLS provides a "sure
      thing" to Internet insiders who are savvy enough to get to the
      head of the line.  This primarily means speculators.  They will
      be willing to pay the added $40 fee for a guarantee of getting
      the expired name if 1) they are sure the name will be deleted
      and 2) they believe that they can resell the domain name at a
      higher price.  Insiders will be virtually the only ones able to
      ensure that a certain name will be deleted.  The end user will
      still have to pay the market price, which will be determined on
      the secondary market.  Moreover, the fact that a WLS
      subscription has been placed on any given name would prompt a
      speculator holding such domain name to renew it, rather than
      release it.


   d) In addition to creating new problems, WLS will not solve the
      problem of batch pool slamming.  In fact, there is the
      potential to create the same technical loading problems on the
      WLS as currently exist on the main registry.  For example,
      there will be competition amongst speculators to be the first to
      get the WLS on the best names about to be deleted.  There could
      also be a landrush effect to place WLS on well known popular
      names, at the moment when the new WLS service goes live.
      Registrars will still compete for the expiring names that do not
      have WLS subscriptions.  Since it costs the same "to slam" a $40
      name as to slam a name greater than $40, there is no incentive
      not to.  Finally, since WLS subscriptions are not tied to a
      name, this will create many WLS -switches immediately after the
      zone file is released daily.

 While the RC opposes the WLS in its current form, it recognizes the
 need for a permanent solution to the apparent problem of deleted
 names not being released or being released in a manner that
 undermines other registry functions.  Therefore, the RC welcomes
 other ideas for addressing these issues, and has discussed other
 alternatives.  The RC will address these proposals in a separate
 position paper.  The RC is ope n to VGRS' comments on these other
 proposals, as well as any modified VGRS proposal that modifies the
 WLS per the comments herein.

 The RC  is  clearly  very  interested  in  this  issue and   welcomes
 questions or further dialogue.


----------------------- our second comment ----------------------



   February 8, 2002


   To Chuck Gomes,


   The Registrar Constituency (RC) is hereby responding to the VeriSign
   Global Registry Services (VGRS) regarding its revised proposal to
   manage a Wait Listing Service (WLS), the subscription service for
   deleted domain names.  After issuing its original WLS proposal on
   December 30, 2001, VGRS issued a revised proposal on January 29,
   2002.  VGRS allowed ICANN constituencies and other interested parties
   to submit comments and questions regarding the revised WLS.


   Having opposed the original WLS proposal (see January 18, 2002 RC
   letter to VRSN) and considered the revised proposal, the RC remains
   significantly concerned with this proposal.  Therefore, the RC opposes
   the revised WLS proposal in its current form.  Following are the RC's
   key concerns regarding the WLS, which focus on price and transparency:



   a) We continue to view the proposed $35.00 price point for WLS
      (which is in addition to the $6.00 registry fee) as exorbitant,
      even with the potential proposed rebate program.  VGRS has never
      justified its price point with cost requirements.  The fact that
      VGRS easily lowered its original price begs the question of what
      costs actually justify the proposed WLS price.

      As we had previously stated, the WLS would significantly raise
      the price point for the end consumer, effectively undermining
      competitive registrars' financial wherewithal.  It is highly
      unlikely that registrars would be able to increase their margins
      in proportion to the increased margin charged by VGRS.  In
      contrast, competitive registrars would have to dramatically
      lower, or eliminate, their current margins in order to compete
      for WLS names.  This would undermine competitive registrars'
      revenues and jeopardize their ability to remain profitable.


      The one registrar that may be able to take effectively advantage
      of this price is the VeriSign registrar, which continues to
      enjoy the largest market share. It would be able to use the new
      higher margin to price below wholesale, as it has in the past
      with the $6.00 fee.  The result is to unfairly undermine
      competitor registrars.


   b) The additional concern that continues to exist with the revised
      WLS proposal is regarding the lack of transparency if VGRS runs
      the primary registry, the largest registrar, and the
      subscription service.  As long as the same company is operating
      this vertically powerful chain of companies, it may be possible
      for it to shift domain names from the $6.00 registry to the
      $41.00 WLS.  In fact, only the registry would know all of the
      WLS subscriptions and the timing for deleting names.  Such
      information could be abused by its registrar.  Considering that
      there is a history - some of it still unresolved - of VeriSign
      not deleting expired names, the RC is doubly concerned that
      VGRS' operating the WLS provides new opportunities for domain
      name hoarding.


   c) An additional inherent unfairness is the ability of the largest
      registrar to "game" the WLS system.  Since VeriSign's registrars
      delete over 50% of domain names, they can offer (to potential
      WLS subscribers) a WLS subscription on its customers' names that
      only VeriSign knows are to be deleted.  Other registrars'
      customers would be buying a WLS name without the benefit of
      knowing that a particular name will actually be deleted.  The
      current system does not provide registrars an advantage based
      its size.  With the WLS system what is to prevent a registrar
      extending its advantage over the other registrars by not
      deleting the names that have expired without renewal and thereby
      offering less risky WLS subscriptions on those names compared to
      the other registrars?


   In terms of the RC's questions, they are as follows:

   [
     questions removed, see http://verisign-grs.com/wls_responses.pdf
     for the questions and responses.
   ]

   While the RC continues to oppose the WLS in its current form, it
   recognizes the need for a permanent solution to the apparent
   problem of deleted names not being released or being released in a
   manner that undermines other registry functions.  Therefore, the RC
   welcomes the Names Council's consideration of alternate ideas for
   addressing these issues, many of which have been discussed by the
   RC.




On Wed, 20 Feb 2002, Elana Broitman wrote:

> Dear Rick - it would be helpful for folks not at the meeting if you would
> post the 2 RC position letters to VRSN, as well as report the results of the
> straw poll in Dulles.
>
> Best regards, Elana
>
> -----Original Message-----
> From: wessorh@ar.com
> Sent: Tuesday, February 19, 2002 6:21 PM
> To: Registrars List
> Cc: WLS-Response@registrars.dnso.org
> Subject: WLS
>
>
>
> Registrars:
>
> VeriSign has extended the period for comments for the WLS to accommodate
> a request for the constituency to vote on the WLS Response to VGRS.
>
> The voting procedure and time lines will be as follows:
>
>    o a Final Draft of our position will be posted to the constituency
>      by 27th which leaves us a day for discussion.
>    o Ballot out to the constituency by the 1st of March
>      The ballot will be if you agree with the response or not.
>
>    o 5 days (per our by-law) for voting
>    o 1 day to count the vote and respond to any voting issues.
>    o Post our response to VGRS on the 7th.
>
> It is extremely important that if you have an opinion on a response that
> you submit your comments. The response should reflect the consensus of
> this constituency; If we have a majority voting opposed to the response we
> have done a poor job of communicating our position.
>
> Please we had a vocal group in Dulles, please post your comments. Silence
> will be documented as consent.
>
> Please review the latest response by VGRS at
> http://verisign-grs.com/wls_responses.pdf
> and post your comments to this list or to the drafting team at
> WLS-Response@registrars.dnso.org
>
> thanks,
>
> -rick
>