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Re: [icann-eu] Domain Name Economics
Bravo and thank you for this detailed response of Thomas' document.
His work desserved that attention. But as he mostly sees the things
externally, as an iCANN user, I fond difficult to relate what he says
with the reality as I know it. Your approach on details just does that
while rising many general points. I was unable to help here, you did.
This way you correct the hurting aspects of the response I sent him
- privately for that reason. Well done.
On 00:57 06/06/01, Marc Schneiders said:
>On Tue, 5 Jun 2001, at 14:14 [=GMT+0200], Thomas Roessler wrote:
> > I'll try to paint the "big picture" of ICANN and related topics in
> > this message. Topics addressed include competition in the root
> > market, competition in the TLD market, user and domain name holder
> > representation. Note that all this may just be silly nonsense - if
> > so, please tell me about the flaws in my thinking.
>Forgive me for adding a few notes to your large vision, for which I
>would like to thank you. I do not offer another one. I am more into
>details by nature.
> > The questions I'll be asking are mostly these: What does this or
> > that player have to sell? Why can the player sell that good? What
> > happens when multiple players try to sell the same good?
>Is my assumption right, that you do not hold that ICANN is involved in
>administering some *public* good? Which would bring up words
>like: legitimacy, representation (if not democracy), accountability?
> > The Natural Root Monopoly
> > Also, it should be noted that only such a root monopoly would enable
> > smaller players to participate in the TLD market: It protects these
> > small players from larger players who may try to squash them using
> > conflicting TLDs with - at least - a great destructive potential.
> > It also makes global visibility cheap.
>This would be true, if there was a way for small players to get in
>with ICANN. There isn't. What is happening is that ICANN sells
>licenses to run a profitable database of .INFO or whatever, similar to
>our governments selling wireless phone licenses. Pseudo-taxes??
> > Breaking the Monopoly
> > Next, we ask what could break the monopoly over the root which we
> > described as natural above.
> > First, what situation would lead rational players to the conclusion
> > that they should take the risk of buying together visibility
> > themselves, and bypassing the root supplier - just as new.net does?
> > The recent events surrounding ICANN give some indication on what
> > this may be:
> > - The monopoly could be unable to deliver its promises even to
> > strong market players - indeed, new.net is just one example.
> > Think about the Tucows representative who was talking about his
> > company being in a unique situation to launch an alternative root
> > system "as a defensive measure".
>This was very much pep talk, believe me. Tucows and similar players
>have all reason to remain within ICANN and avoid too much choice for
>customers. Too many TLDs would kill the market. Tucows just wanted to
>tell ICANN and the world that they were so close, the two of them,
>real great friends to the benefit of all.
> > - The monopoly could be too slow, too reluctant, or too expensive in
> > adding new TLDs.
>This has been the case for years, and did not have any result.
> > - The side effects of buying visibility from the monopoly could be
> > devastating.
> > Also, the monopoly could be broken or changed by external forces.
> > In particular, the following players in the game come to mind:
> > - ISPs. They could easily start to sell visibility themselves.
> > (Which is basically what new.net suggests.) This may have the net
> > effect of producing a different root zone monopoly, but mainly
> > under the control of the ISPs.
>This is what very well might happen in fact. If users become dependant
>on fewer and fewer ISPs and we end up with 5 or 7 or 9 big ones, these
>big ISPs may demand money from root services to point to their root.
>The root services then can sell TLDs to others or sell domains in them
>themselves. This process could very well be initiated by competitors
>to new.net or new.net itself. It may have started already. Who knows
>what new.net paid to their ISPs?
>Does anyone know, how many TLDs new.net has sold? Do they have a
>business? This would be an important fact to know here.
> > - Political and legal forces, which can change the rules according
> > to which the game is played - these are particularly powerful
> > since the United States Government still has a critical word to
> > say in the traditional root monopoly.
>This is very vague? Do you mean the EU and anti-trust measures?
> > - Current "clients". Just imagine Verisign and the ccTLDs team up
> > to create a root service of their own, and don't pay money to
> > ICANN any more. This is, in fact, the card the ccTLDs are
> > currently playing.
>The ccTLDs can simply stop paying ICANN (or pay something very
>symbolically, say $100 a year, which would do for keeping up root
>services). I would guess ICANN would not throw them out of their root
>zone. Why don't they try that, the ccTLDs? Some of them may already do
>so, by simply not replying to the ccTLD constituency's emails and
>Verisign has no reason whatsoever to team up with anyone else. ICANN
>is doing a great job for them! I don't think I need to elaborte on
> > It's worth noting who's missing from this list: End users and
> > domain name holders. I'll discuss these below.
> > Side effects of the Monopoly
> > What side effects does the root zone monopoly have on those at the
> > end of the food chain, end users and domain name holders?
> > First, let's note that it may indeed be quite natural for an
> > ICANN-like monopoly on the root zone market to impose certain
> > conditions on its clients - such rules of the game can even be in
> > the clients' best interests, in particular, when they help to defend
> > the clients' interests against some of the possibly destructive
> > forces listed above. They can also be economically reasonable since
> > they save clients from the costs connected with developping such
> > conditions themselves.
> > One of the best examples for such regulations is, of course, the
> > UDRP, which is being adopted by most of the new ICANN TLDs.
>To me this sounds (but I may be missing something) that it was great
>that the Telco's (the one's I know in Europe in any case) had this
>great monopoly on phones (I mean the machines). You could not buy one
>from another manufacturer, as that was illegal. It might not work too
>good anyway and interfere with the network in some dangerous way. You
>may not have liked the colour or design, but it did work this phone
>you had to buy. So why complain about the monopoly?
> > The perception of the regulatory regime as benign by the large
> > majority of domain name holders also means that they won't pay the
> > costs it would take to buy services from a monopoly-breaking
> > registrar which offers a better regulatory regime.
>You can get domains for free with me. Regulation is very benign. So is
>the regulation with .BIZ (the pre-ICANN one). No UDRP. The regulatory
>character of ICANN's monopoly is keeping out too many competitors in
>the market and avoiding costly litigation by appeasing lobbies like
>TM/IP. There is indeed no customer protection whatsoever.
> > Thus, in order to actually break the monopoly, the regulatory regime
> > would have to be extremely draconian, and in fact endanger the
> > ability of registrars to deliver on the promise of stability in the
> > perception of the domain name holders.
>And it isn't for most domain name owners, except a small percentage
>that falls victim to the UDRP or some error by a registrar. Precisely
>why users will not 'overthrow' ICANN, like they did not do anything
>against Telco monopolies. Well, maybe use an illegal phone, or now an
>alt root. All peanuts, alas.
> > Finally, note that even with a new.net-like competitive model, model
> > regulations may emerge which are adopted by players in order to save
> > costs. In particular, the kind of competition they suggest wouldn't
> > necessarily lead to regulative competition!
>True. New.net uses the same sort of dispute resolution as ICANN. Of
>course it does. ICANN introduced the UDRP to protect itself and its
>registrars and for no other reason whatsoever. IANAL and would be
>interested to know if there is a way out of this legal trap, that all
>registries/registrars must appease TradeMark lawyers, or die of legal
>In any case, I think the UDRP is not so much a problem vis-a-vis
>consumer rights as well as legitimacy. There are free speech issues
>involved (sometimes, not always, there are real cybersquatting
>cases). Where does the right to impose UDRP come
>from? Contracts... This would imply we can go elsewhere for the
>services. Can we really? Does ICANN's insistance on a single root not
>suggest otherwise, even in its own vision?
> > Representing Users' and Domain Name Holders' interests
> > From the above, we can conclude that as long as domain name holders
> > are sort of satisfied by at least some registrars' offers, it's
> > unlikely that the root monopoly of which these registrars are part
> > would break.
> > Thus, there are close to no market-driven feedback channels for
> > users or domain name holders. Users and domain name holders are, in
> > particular, normally not among the possibly destructive players I
> > listed above.
> > Thus, they can only exercise influence by allying with destructive
> > players. Now, let's go over the list of possibly destructive
> > players:
> > - ISPs. As long as supporting the monopoly doesn't mean you are
> > losing customers to competition which doesn't support the
> > monopoly, there is no incentive to attempt to break it.
>Sure, payments to switch. See above.
> > - ccTLDs. Since the more powerful ccTLDs can be assumed to be among
> > the TLDs which are unlikely to be attacked during a root split,
> > they are among those players on the market which are most probably
> > least interested in the monopoly, and possibly most interested in
> > destabilizing it.
> > Breaking the root zone monopoly and destabilizing the gTLDs would
> > in fact help the ccTLDs to squash a lot of competition.
>Users would not accept a root that did not carry com/net/org,
>really. This will only work in China, and not because users want it
> > In particular, the ccTLDs don't seem to have a natural interest in
> > helping to better adopt the monopoly's regulations to users
> > wishes. Just the opposite is, in fact, the case.
> > (A similar argument could be applied to the operators of other
> > well-recognized TLDs.)
> > - Legal/political interests. These are apparently the only ones who
> > are left. And, in fact, the business and intellectual property
> > constituencies seem to be demonstrating such an alliance,
> > frequently raising similar issues.
>There are also some people active on lists like these, in ALM studies
>etc. The issue of ICANNs legitimacy is not won yet by the
>Corporation. It is being watched.
> > Consequences
> > As a consequence, we should not expect most of the powerful players
> > in the current ICANN process to support user and domain name holder
> > participation. In fact, a private-sector organization like ICANN is
> > unlikely to be bottom-up for purely economical reasons. If such an
> > organization is expected to serve the public good, and to take end
> > user and domain name holder interests into account, pressure is
> > needed by those political parties who are in charge of "nuclear
> > options".
> > As another consequence, the ccTLDs' move to become a supporting
> > organization of their own looks extremely natural. On the other
> > hand, the bundling of TLD operators, domain name holders,
> > intellectual property interests, and individual domain name holder
> > interests in the DNSO looks extremely unnatural.
>Hopefully there are some allegiances possible on other middle
>grounds. A strong domain name owner organisation would have some
>possible impact. But who is going to set that up? Any volunteers?
>Also I missed the role of the press and related opinion makers. How
>will people feel, if they see the true situation? Certain funny
>aspects of it, like the lottery for .BIZ names: Buy as many tickets as
>you like at $2 or $3. Is this how ICANN distributes (public)
>resources? Sell TLD-licenses for lotteries for them?
>Finally, though your approach from economic consideration does clarify
>things that are happening, and how they could be changed, I really
>miss the 'public' resource character of the internet in your break
>down. Sure the Net is a cooperation of private networks. But like all
>economic activities these need regulation. Either by national
>governments, which would be rather unpractical, or some sort of
>publicly accountable worldwide body.