Re: [icann-eu] Domain Name Economics

[Thomas Roessler <roessler@does-not-exist.org>]

On 2001-06-06 00:57:50 +0200, Marc Schneiders wrote:

>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?

Maybe this isn't entirely apparent from my original message - but in 
fact I believe that I'm showing that letting ICANN run by itself 
will _not_ produce the kind of legitimate, representative body ICANN 
pretends to be.  The next step is, of course, to ask for these 
properties to be added by external third parties which can exercise 
some control over ICANN.

More precisely, I wrote this:

>>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

(OK, bad wording.  Make "parties" "players" here.)

>>"nuclear options".



>>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.

I wouldn't say that everyone who wants to get a new TLD with ICANN 
must be of the scale of Verisign.  However, look at the 
alternatives: Leah's .biz is going to be squashed precisely because 
it is too small and too invisible to pose any serious danger to the 
ICANN-sponsored one.

>>- 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?

WIPO comes to mind, too.

>>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). 

Uh, no.  I still recall this great kind of monopoly myself...

By the monopoly's clients, I meant the registries and registrars. As 
you seem to agree to below, they don't have any reason to reinvent 
well-established policies which are kind of accepted by the public 
and by end users and domain name holders.

>>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. 

But can you guarantee me that the pre-ICANN .biz is robust enough to 
survive when a large competitor (the ICANN .biz) tries to squash it? 
Can you guarantee me that domains you are selling to me have this 
kind of robustness?

No.

In order to be able to give such guarantees, you'd have to invest a 
lot of money into global visibility.  You'd have to make sure you 
have a nuclear arsenal to be used against competitors.

Now, ICANN sells (or rents, or whatever) this arsenal at retail 
prices, while you (and Leah, and new.net) have to develop the atomic 
bomb yourself, which is certainly more expensive.

Thus, in order to offer similar stability to an ICANN-blessed TLD, 
you'd have to spend more money, that is, you'd either have to be 
_extremely_ attractive to the market (so you can sell huge numbers 
of domains), or you'd have to be more expensive.

The latter seems more likely to me.

>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.

Indeed, if you mean "Internet user" by "customer".  

ICANN's primary customers are protected quite well.

>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?

First of all, the UDRP is the prime example of an ICANN policy with 
direct impact on domain name holders.  Second, as I've been arguing 
at length in my previous post, it seems unlikely that there will be 
competition on the "regulatory market".  

Thus, domain name holder interests need to be represented within 
(maybe forced upon) the ICANN framework.  But domain name holder and 
end user interests will only be extremely badly represented within 
the SO framework where various other interests can easily overrule 
them. 

You see where this argument leads to? ;-)

>>- 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
>there either.

Right.  com/net/org seem to be kind of invulnerable right now, which 
makes them the last resort for domain name holders in the case of a 
battle about some other gTLD.  (I used this in my MAD argument.)

But how about .info, .biz, .museum?

(Of course, "the gTLDs" was a bit too simple - replace it by "not 
entirely established gTLDs".)

>>    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.)

[...]

>Finally, though your approach from economic consideration does clarify
>things that are happening, 

That was the goal I had.

>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.


-- 
Thomas Roessler                        http://log.does-not-exist.org/