[comments-deletes] Re: An analysis of competition under the WLS

["J. Vogel" <jvogel@moranks.net>]

After having considered the very good points made in response to my earlier
analysis, I believe that my original objection to the WLS is still valid,
even with the proposed restriction that the WLS not be available
on a name after the name has expired. Here are my thoughts as to why.

My original objection centered around a key point, which was that
the WLS would force competition for a name to happen before it
was known that the name would actually become available.

While it is true that there is an existing competition for such names
currently available through contact with the current registrant, either
directly or through third-parties such as auction sites, name brokers
and other means, and success in that arena will result in the name not
becoming publicly available for registration, none of the current methods
will prevent the name from becoming publicly available in cases where
the current registrant cannot successfully be dealt with.

There are a variety of circumstances where this may occur. The current
registrant may believe that the name is worth more than anybody else,
and nobody in the competition for that name is willing to meet the
current registrants terms. If the current registrant is unwilling to sell
the
name for what he is offered, but is also unwilling to maintain the cost
of keeping the name, he must let it expire.

Another case is where the current registrant is unavailable. This happens
quite often, and is often because the registrant has provided incomplete
or false contact information for display in WHOIS, or where the
current registrar for the name does not provide WHOIS access to the
public.

Either of the above two circumstances, along with the current registrant
not renewing his registration, should result in the name being made
available to the public on a first-come/first-served basis, at rates and
conditions mandated by the then current ICANN contracts and agreements
with the registry. While the WLS would allow competition for names
under the circumstances described above, that competition would most
likely (and under Bruce's proposed restriction, it would be required to)
occur before it was known that the name would actually become available,
and at higher wholesale cost.

Since the WLS is guaranteed to preclude the name
from becoming available as it does currently, and will not require
successful,
pre-expiry negotiation with the current registrant for the name, the
consumer
who wants the name must either purchase the WLS on it or successfully
negotiate with the current registrant, and the competition for the WLS
will, again, take place before it is even known that the registrant will not
renew
the name. (Most likely the consumer must do both, as he will not be assured
of success, even after entering into negotiations with the current
registrant)

Any way you look at it, the WLS will preclude competition for a name
after it becomes available, effectively displacing the current system while
itself being a lessor quality and higher priced product for the consumer,
as I argued in my earlier post. The WLS should not be allowed to happen.

John Vogel
jvogel@moranks.net





----- Original Message -----
From: "Bruce Tonkin" <Bruce.Tonkin@melbourneit.com.au>
To: <comments-deletes@dnso.org>
Cc: "'J. Vogel'" <jvogel@moranks.net>
Sent: Friday, July 19, 2002 5:16 AM
Subject: RE: An analysis of competition under the WLS


Hello All,

Just to follow up on John Vogel's analysis:
(note all my comments are assuming that once a domain name is known to be
about to be deleted, it is not possible to place a WLS subscription on the
name)

>
> Under the proposed WLS service, registrars would still be able
> to market the existing service as they had before, except that there
> would be another service (available only to those with access to
> the WLS system, which I presume would be primarily registrars)
> which would have the ability to "trump" the service registrars
> are now marketing on any given name, by ensuring that the name in
> question does not enter the deletion process.

Yes, but outside the delete process there are other commands that trump the
service registrars are currently offering.  For example both "renewal" and
"transfer" commands trump any chance of a name becoming available for
re-registration.  There is also the ability to change the domain name
licence holder details - at no registry charge.

Thus if a person wants to obtain a particular domain they have a range of
choices until the name is finally deleted from the registry (when there is
only one choice - the "add" command).

The choices include:
- contact the current registrant and make an offer
- search for the name on an auction site
- buy the registrant's company
- place a WLS (which unlike the others above has no guarantee)

>
> This would have several effects. One would be to de-value the
> existing service being marketed some registrars, to the point of
> it being basically a worthless service, since it could be "trumped"
> at any time by a WLS subscription.

Surely the service providers that offer a service to obtain a currently
registered name, would use WLS as one of their available methods of
obtaining the name.  You actually increase choice rather than reduce it.

>
> Another effect would be to shift the competition for names of
> value out of the registrar/registry system altogether, opening
> the market to anybody with access to valid registrant contact
> information.

But that market already exists.  Note the number of websites that offer to
sell or auction existing domain names.

This would happen because, although the WLS
> can trump the current product, it is of dubious value itself, since
> it can be trumped at any time prior to a names deletion by the
>  transfer/renewal or just renewal of the name in question.

Exactly.  Therefore WLS would be subject to market forces at that point.

>
> Since consumers (at least the ones who know how the system
> works) would understand that the service now being marketed
> by WLS providers is of lessor value than the service now being
> offered by some registrars, (and available to all registrars
> for marketing)

Don't understand this point.  They apply at different points in the cycle.
WLS is purchasing an option on a name if it is ever deleted.  There will be
competition at different points in a domain names existance for the optimum
time to place a WLS subscription.

"add" is a guarantee that you will get the name if the command is
successful, but you are competing with many registrars to obtain the name
(1/100 chance).

> I believe the focus of competition for pre-registered names will shift
> to the world of online auctions, "names for sale sites", and
> other types
> of methods currently being used for the marketing of already
> registered names, primarily by speculators.

But this market already exists.

>
> Since these types of services are already in existence and widely
> available, the net effect the WLS will have is not to create new
> markets/opportunities, but to remove a product
> which currently has some value from the market (the chance to register
> names as they become available from the registry),

WLS will compete primarily with the former offerings (auctions etc).
The service to get names that are newly "available" will remain.

The addition of the redemption grace period and improving the consistency of
the delete process will have a greater impact on the existing services, than
WLS in my opinion.


>
> Registrars will be put at a disadvantage to where they are
> now, since their
> existing product will be devalued (probably to nothing) and
> the replacement
> supplied by WLS is of lesser value and higher cost.

My view is that companies participating in the market will have a wider
choice of "tools" to obtain a domain name on behalf of a customer.

> The WLS will also
> benefit speculators, who, as it stands now, must pay cash out
> of their own
> pocket to keep a name from entering the drop cycle (by
> registering it for
> another year) and can instead benefit from some third-party's
> subscription
> on the name to tell the world "this name won't enter the drop
> cycle for
> x month's + 1 year" (WLS kicks in or the name is renewed) instead of
> in x months when the name is currently set to expire, thus
> putting pressure
> on any prospective registrants of that particular name to contact the
> speculator
> if they want the name anytime within the extended period..
>

Well the speculator gets no money from the WLS, so is in the same position -
particularly if the WLS holder information is not made public.

Regards,
Bruce Tonkin
>