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

["Kevin J. Connolly" <CONNOLLK@rspab.com>]

Milton Mueller <mueller@syr.edu> 08/02/99 01:37PM wrote:

>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 simply represents the only model that
does not require a gift of public resources to a private entity
for the purpose of enabling that entity to make a profit. I don't
believe that anyone has suggested that Nominet is the only 
"possible" approach.  It's simply the only model that will not
result in the creation of a monopoly.

>Nominet does, in fact "own" the .uk delegation.

That's not what the RFC's say.  It's not what the High Court of
Justice says.  It's not the reality.

>That is, .uk is Nominet's to operate and there is no defined procedure for
>taking it away. 

RTFM.  If there ceased to be sanction by HM Government of Nominet's
administration of the .uk namespaces, then Nominet's "property" would
vanish like the will'o'wisp that it is.

>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.

RTFM.  It's HM Government that would make the request for redelegation.
It's a cTLD, for pity's sake, and that Country has control over the administration
of the space.  Now, if there were an Act of Parliament enfeoffing Nominet of the
.uk namespace, then it might make sense to think of Nominet owning the space.
Magna carta would indicate as much.  But there is no such statute, and Nominet's 
rights could vanish tomorrow without anyone having to pay compensation to anyone.  

> 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.

Parliament could cancel Nominet's charter because Willy Black can't recite White Man's
Burden whilst balancing on his pinkytoes.

>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. 

Oh, so now we're suggesting that NSI has some secure and well-defined
property rights in com/net/org???  And where, pray tell, will we find these rights
laid out???

NSI's latest 10-Q makes no such claim. Instead, it says, 

Network Solutions currently acts as the exclusive registry and registrar of
Internet domain names within the .com, .org, .net and .edu top level domains
pursuant to the Cooperative Agreement with the Department of Commerce.

Indeed, NSI's latest 10-Q and current 10-K are replete with references to the
special risks inherent in buying NSI stock caused by the uncertainty surrounding
NSI's rights.  

More importantly, NSI defended the PGMedia case on the ground that it does NOT
own the com/net/org or root zones, but administers these purely as directed by the
National Science Foundation.  Make NSI the owner of the zones, and NSI ends up being
exposed to a great big antitrust lawsuit with easily-established liability. 

>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.

Actually, I'd be surprised if the final solution does not include conferring on ICANN
the power to redelegate any TLD at any time for any reason, while subjecting ICANN
to liability for damages if it acts capriciously.  If some bozo fouls up the operation of a
TLD, neither I nor any other internet user will be well-served by having to wait for a US
court (shudder) to arrive at a final resolution of right/wrong.  ICANN (or *someone*) has to
have the power to redelegate the zone tout de suite, and let the chips fall where they will
later.  Preventing an abuse of this redelegation power is an important measure as well,
but it's best done by giving ICANN an internal governance model that works that way
rather than restricting the power of ICANN to redelegate a TLD.

>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.

For one thing, because once the genie is out of the bottle, it's real hard to stuff him back in.
The NSI experience proves that in spades.  We should not be contemplating the creation of
more and better NSIs.

>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.

Examples, please.  The differences may just as likely lie in differing criteria of optimization.

>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.


That's one hell of a generalization.  I have a new and interesting way of formatting
mail packets, but those buggers at the IESG won't let the Internet accept my
heterogeneous methods.  Shame on them for not re-writing SMTP.  ;->

I have a new, improved HTML.  But those buggers won't implement my heterogeneous
system, so I have to kludge it into Java.  Shame on those technocrats.

I wanna be able to write directly into the usenet directories of subscribers.  Those buggers
just won't let my heterogeneous approach to the internet see the light of day.

How un-Internet of them ;->

>> 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.

In the UK, .com names are strongly identified with international organizations.

>> 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.

The questions before us pose a seamless web.  Given how strongly the TM lobby
fought against seven new gTLDs, let's be realistic enough to recognize that pushing
for an immediate rollout of *many* new gTLDs is actually tantamount to backing NSI's
wish for *no* new gTLDs.  Besides, a "big jump" approach to change is itself extremely
unInternet:  the paradigm of "deliver . . .use . . . refine" has brought the Internet to where
it is today.  How come there's this big push now to make big changes all at once?  Because
perhaps we'll see (once the Genie exits the bottle) that it is a bad idea?

>> 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 name space is *already* expanded.  What we here are considering is creating a
further expansion that will not be operated as a sinecure by friends of obscure developing
nations and/or areas of special sovereignty.  Besides which, given the way Nominet operates,
it's hard to imagine a UK company *not* grabbing the appropriate UK domain name.  It's
cheap and easy.

>> 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.

Any such "unified" service is nothing less than a vertically integrated monopoly.  And that
is the real reason why there's such a push for integration:  monopolies are profitable, especially
when you don't have to do a whole lot to get the monopoly.


>> > 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.

Only in a metaphysical sense.  DN hits have about as much effect on the registry
as they do on the lunar orbit.


>> 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.

Not every contract right is property.  I have no problem extending well-defined
contract rights.  But when contract rights (e.g., the Cooperative Agreement) gets
turned into property (NSI "owns" com/net/org and honi soit qui mal y pense)
it's time to trot out the AntiTrust laws.

Indeed, on several levels I would love for NSI to be held to have proprietary,
not contractual, rights in com/net/org.  I would be one of many, I believe,
rushing to prepare a complaint that would survive a Rule 12 Motion and get that
little gem down to Foley Square in a New York Minute :-)))

>> 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.

Nope.  I am reminded of Frederick the Great's aphorism:  who tries to defend everything
ends by defending nothing.  Simile, who tries to insert a large number of gTLDs into
the root zone ends up locking the world into the existing three for ANOTHER 30 months.

KJC

<as usual, please disregard the silly trailer>
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