Re: [wg-c] Re: IP/TM Concerns & New GTLDs

[Milton Mueller <mueller@syr.edu>]

Kent Crispin wrote:

> This matter is under dispute, of course.  If the single registry
> were run as a non-profit cooperative, as Nominet is, then the
> competition essentially gets down to the registrar level.  The
> single registry is under the watchful eye of anti-trust authorities;
> it is a non-profit; etc.

As far as I know Nominet is a successful model, and I have no objection to
people imitating it. Let there be two, three, many Nominets--IF that is the
model people making the investments and offering the service choose to
implement, and IF their customers vote with their domain names in support of
the choice. But there is a certain naivete about your assumption that Nominet
represents the *only* possible model, and there also seems to be a lack of
understanding of the business and legal context that contributed to its
success.

Nominet does, in fact "own" the .uk delegation.
That is, .uk is Nominet's to operate and there is no defined procedure for
taking it away. There is no fixed temporal limit on its right. Any attempt to
remove the delegation from it would result in major legal battles and would
probably involve the UK government intervening on its behalf, if the removal
were imposed externally to the UK. Of course, the right could be removed for
criminal behavior, but that's true of any property right--you can forfeit your
home or even your life for certain kinds of actions.

Now, the status of a property right makes a hell of a lot of difference when
capital investment is required. Investors don't put serious money into
operations that don't have secure and well-defined property rights. So your
implication below that ICANN can just casually throw out the right to run
shared registries but claim ultimate ownership and remove that right at its
whim, is simply incorrect. (you said, literally: "TLDs can be re-assigned
to new registries any time." at any time????) That's not a serious proposition.
It won't work, either technically or more importantly from a business
standpoint.

I can understand your *preference* for the nominet model and your *belief* that
it will work better than others, but I honestly have trouble understanding why
you don't see this is a *hypothesis* which must be tested in the market.

One thing you learn when you study the evolution of communication industries
with changing tech is that regulators who attempt to dictate business models
almost always restrict the market's development. They encounter hundreds of
unforseen activities and developments that undermine their assumptions about
the optimality of a given model.

Indeed, this infatuation with "one best model" is highly un-Internet. The whole
idea of the Internet is to make heterogeneous systems interoperable. The
heterogeneity, the variety is a feature, not a flaw.

> It's easy -- shared registries, many registrars.  This model is
> proven to work, in the case of Nominet, and the German registry.

We'll continue to disagree on this. I think that registry competition is more
significant than registrar competition. Your examples are unconvincing because
both Nominet and .de are in active competition with NSI. Com, net and org have
about 25% of the UK domain name market, and 10% of the German market.

> Sure.  Push toward 7.  Push toward a hundred.  That doesn't imply
> that you need to *start* with 7.

Why not? Know that I ask this question having witnessed licensing battles in
telecoms markets in several countries. The regulator says, "we'll authorize 3
new network providers and if more are needed, we'll authorize more later."
Guess what? The three incumbent network providers all run to the regulator and
say that the market is saturated and they won't survive and invest unless the
market is closed. It's happened many times. We need to err on the large side,
if we're going to be cautious.

> Nominet is doing great with one name.

It might not in an expanded name space. If I were concerned about the future of
the enterprise, I would definitely want a larger repertoire. Again, this is a
business decision, and our policy choices ought to give the businesses that
must make these decisions the flexibility to choose.

> The registry part of the registration business (as opposed to the
> registrar part) is *insignificant*, relative to the registrar
> component.  There are over a thousand Nominet registrars feeding a
> single registry.

You are *assuming* that there *must* be a registrar/registry split.There
doesn't have to be. Customers may want unified service, and registries may want
to offer it. That model may prove to be less costly, more efficient, or more
suitable to the development of advanced services.

> > Five to seven registries operating three TLDs, gives you 15-21 as the
> > baseline *minimum* that can be introduced if you want to have a
> > responsive, competitive environment. We just can't talk about any number
> > smaller than 15, and I'm not comfortable unless we're talking about at
> > least 20.
>
> You are vastly overestimating the value of competition at the
> registry level.  As has been pointed out many times, a registry is
> analogous to the small company that manages the 800 number database
> -- a complete back-office operation, using known database technology,
> with little of significance to be gained through competition.  There
> simply isn't much social utility for competition at that level.  [The
> development of shared registry software makes it somewhat more
> complicated, it is true.  But it still is not a big deal.]
>
> Even so, I think that there should be competition at that level, at
> least in the long run.  But it is not a high priority.  On the other
> hand, competition at the registrar level is very important.

Why is an ongoing service vital to connectivity on the network (registry
operation) more vital than the 10-20 minutes it takes me to register a name? I
interact with a registrar  once or twice a year. My domain name interacts with
the registry in some sense every time someone hits on my domain.

> Chartered TLDs are an interesting question, and in my opinion a
> great deal more consideration needs to be given to them.

Right. We agree. Saw your next post and will comment when time permits.

> If the TLDs are proprietary, that is.  If we fix our sights firmly on
> the notion that gTLDs are *not* proprietary, then most of these
> issues disappear.  Almost all the real divisiveness centers on the
> notion of "ownership" of TLDs.

Some kind of proprietary right of administration is inherent in the operation
of a gTLD. A TLD is by definition an exclusive domain. You cannot avoid
property rights, you can only define them in ways that suit your purposes. And
each way you define them has direct consequences for the incentives to invest,
competition, and consumer service.

> I am not in favor of monopoly privileges for *any* firm -- go back
> and read what I proposed: *three* non-profit registries to start
> with,

Where did you propose this? not in this message. Anyway, three registries is
better than one registry. I prefer at least seven registries to start with. It
has competition advantages and I don't see how you can make a case that there
is a qualitative difference between the two numbers from a regulatory
standpoint. And if each registry is allowed to administer at least 3 names,
then we are talking about a range of 9-21 new gTLDs at the outset.

--MM