Re: [wg-c] The legal status of registries

[John Charles Broomfield <jbroom@manta.outremer.com>]

(after proving my superb ability in replying to messages andsending them
without adding anything, let me try here -some will argue there's no
difference-)

Milton Mueller wrote:
> White Paper wrote:
> 
> >      Response: Both sides of this argument have considerable merit. It is possible that additional discussion and information will shed light on this issue, and therefore, as discussed below, **the U.S. Government has concluded that the issue should be left for further consideration and final action by the new corporation**.
> 
> It is probably more productive to debate what ICANN *should* do, not what it
> *could* do. We have had additional discussion and information and we have
> shed additional light on the issue. It is pretty clear that the case for
> restricting all registries to non-profit status has been effectively
> demolished.

Although it is very much favoured to ignore the facts, I think that as we've
all evolved, the true two diverse positions that are up for discussion are
not for-profit and non-profit registries , but rather "non-competitive
non-recurring bid" versus "competitive and recurring bid" gTLD registries.
Strangely enough, the entity behind the non-competitive non-recurring bid
registry would be a for-profit company, whereas the entity behind the
competitive recurring bid registry is ICANN (and they can rebid it as often
as they choose). Actually, the more I chew it over, the more I'm inclined to
believe that in both cases the company doing the backend database operations
would always be a for-profit company (just as Emergent is a for-profit
company). I honestly believe that in a competitive bid scenario, a
for-profit entity will probably be able to run more efficiently.

> Proponents of this position base their case entirely on the
> possibility of "lock-in," but cannot refute the following facts:
> 
> a) non-profits can exploit lock-in as much as for-profits. (note in this
> regard that the only independent study on this question performed by real
> economists--the FTC--concluded that there was no significant difference
> between the two.)

Your non-profit scenario, which I call competitive-recurring-bid could only
be exploited at the ICANN level. The idea of how ICANN works is that there
is enough oversight there by the general public and by world governments
(particularly by USgov through DoC and NSF) to make sure that they won't
exploit that position. Being a non-profit organisation, any such wrong doing
would immediately be pounced upon by all registrars, and they would have
some duty to actually make sure that the problem gets corrected. Their duty
is not a selfish duty to themselves. In the case of a for-profit entity, by
definition the entity *does* have a selfish duty to itself.

> b) consumers who prefer a non-profit or who believe that they can only trust
> non-profits will be adequately protected simply by having the option to
> register with one. There is no need to exclude all for-profits.

Consumers choose their TLD first, mainly based on the intrinsec (sp?)
"meaning" of the combination of letters that make up the TLD. It is later
that they want to know how a name is registered (that is, in the few cases
where they even care how it gets registered). A consumer would choose ".com"
to be its TLD, and LATER go about registering it, and certainly not enquire
about what goes on behind that particular TLD (unless at a latter stage
something goes wrong, or it takes too long to register, or it costs too
much...). A consumer does not have the choice of going through either a
non-profit registry or a for-profit registry to get a .com domain because it
is a monopoly.
Trying to bring up the argument of saying that a GM car is also a monopoly
is likening at the wrong stage. In fact,GM is the equivalent of a registrar.
The equivalent of a registry is actually "car". You choose different TLDs as
you can choose between cars, motobikes or planes.

> c) the regulation of the price of the world's largest and most popular gTLD
> registry provides yet another safety outlet. Any registry will have to be
> competitive with NSI's, and NSI's price is fixed at a reasonable level.

No, the price fix for NSI protects those under com/net/org. It means that
other registries at the beginning would be wise to follow the lead in the
price to attract new customers, though even so it's probably not too
drastic, because the actual amount of money spent to setup a business (ANY
BUSINESS) will probably be a few orders of magnitude larger than any price
difference between registries, therefore the price for the domain name won't
matter when taking the decision to register under any given TLD. However,
once there is a critical mass of customers under a particular TLD (which are
to a certain extent CAPTIVE customers, due to the fact that a name change
means a great deal of pain for that entity -pain=money-), that TLD can
decide to do whatever it wants, and the customers might complain, but will
be more or less obliged to follow like sheep UNLESS they have a meaningful
way of complaining. In the competitive-bid scenario, their means of
complaining is directly against ICANN for letting this happen, so it is a
rather delicate situation. In the non-competitive bid scenario, the answer
that proponents are always saying is to go to a different TLD. Note, that
above we said that the customer is to an extent CAPTIVE. On reflexion, I
would actually guess that if a non-competitive-bid TLD manager actually
plays up enough, then the consumer would go to ICANN (or higher) anyway. And
if the complaints are significant enough, then ICANN *would* be forced
(probably by USGov) to re-bid/re-delegate the TLD *ANYWAY*, so if we're
talking about rebidding TLDs, why not make it official from the start,
rather than forcing the issue halfway along?

> d) for profit (and non-profit) registries that abuse their customers can and
> will be regulated by national authorities. All registries exist in a defined
> jurisdiction.

Will USGov accept non-competitively bid TLDs? Ie, would they accept awarding
money-making cows on the basis of who cries louder? (I was going to write
"on the basis of FCFS", but IOD is not even FC wrt '.web'...). In other
words, won't *ALL* TLDs be initiated and continued in a
competitive-recurring bid manner?

> e) enforcing a non-profit restriction, as KJC's post revealed, will require
> detailed regulation and monitoring by ICANN of how "profits" are returned to
> various entities; in that regard the situation is not significantly different
> from the regulation and monitoring requirements that for-profits would impose.

either scenario is going to need oversight. I just can't see the
"non-competitive awarding gTLDs to anyone who screams loudly for one"
scenario holding water.

> I think we can lay this issue to rest.

You seem so assertive that some might assume that your legal services have
been taken up by one (or some) of the players who would stand to earn
millions should they receive the gift of a gTLD. Could you reveal your
connectiions if any? Just on the basis of openness of course.

> Finally, for those who do believe in reading the entrails of the White Paper,
> the following statement provides about as clear a statement as one can in
> favor of market competition:
> 
> > The U.S. Government is of the view, however, that competitive systems
> > generally result in greater innovation, consumer choice, and satisfaction
> > in the long run. Moreover, the pressure of competition is likely to be the
> > most effective means of discouraging registries from acting monopolistically.
> 
> Note that it valorizes "competition," not "non-profit status," as the most
> effective means of discouraging registries from acting monopolistically.

Yes, which would seem that a competitive recurring bid for a TLD would be
100% in line with the white paper, whereas awarding outright any given TLD to
an entity would not.

Yours, John Broomfield.