[Ed's note. This document is a plaintext version of a Snapnames memo to the ICANN Board that is also available online in .pdf -mf]"

To the extent the Board may nevertheless wish to review and evaluate the NC’s suggestions, we want to make clear that the conditions suggested in the NC report are neither practical, of real benefit, nor appropriate.

a. Suggestion that Registrants be Notified of WLS Subscriptions. We do not believe that requiring VeriSign to inform current owners when someone has wait-listed one of their domain names is a sensible suggestion.

• Registrants will be able to find out themselves if a WLS order has been taken on their name. If a registrant wants the service offered to him, such notification is exactly the sort of service differentiation in the WLS that registrars should be allowed voluntarily to offer their customers in a competitive environment.
• If registrars were required to notify customers of WLS subscriptions, they would need periodic lists of the relevant names from the registry. This would lead to complex issues of compliance and enforcement.
• Because WLS is not a mandatory service, there may well be registrars who choose not to offer it to their customers. How will these registrars’ customers learn about WLS subscriptions on names held at non-participating registrars? The NC is silent.
• Today, registrars are not required to provide notice to registrants that others are waiting to register their names immediately upon their deletion (the equivalent of a wait-list happens already, with no hint of concern from the Task Force).
• This suggestion would be extremely expensive to implement, and would impose additional costs on all registrars to construct notification technology.
• The Board has been presented with no evidence that the NC Task Force has investigated the costs or benefits of this suggestion.

• VeriSign Registry is a "thin registry," so it lacks information about the identity of customers (and is contractually prohibited from having it). This is "thick whois" information possessed only by registrars. For this reason alone, the suggestion simply would not work.
• This suggestion would undermine the privacy rights of the party taking the wait-list subscription.
• It might discourage people from making WLS orders (particularly where doing so could reveal important business and marketing strategies).
• Afilias’s similar attempts to directly contact registrants following the Sunrise registrations proved unworkable.
• This would be extremely expensive to implement, and impose heavy administrative and legal burdens on the registry and/or registrars.
• It would be highly game-able because, in conjunction with the Redemptions Grace Period, professionals would see that a WLS order has been placed on their names, fraudulently claim that the names’ deletions were “inadvertent,” get them back under the “grace” period, and extort money from WLS subscribers for the rights to the names. Subscribers would rarely get a name via WLS mechanism, and instead would be presented with drawn-out bargaining every time. The purpose of WLS would be defeated, to the detriment of real end-users and trademark owners.
• The Redemptions Grace Period provides adequate safeguards to owners.
• No benefit to doing this has been articulated. Rather, the benefits have been assumed. But they are non-existent. Even the trademark owners for whom this suggestion may have been put forth would find no benefit in it. The IPC has opposed it. And as registrar operator Bob Connelly explained, “[W]e serve several major Trademark owners [whose] needs should be facilitated [including] back ordering a name held by a cybersquatter without having the RegistraR or RegistrY [sic] blowing their cover.”

Based on the above two points (notice and transparency), the price for the WLS [should] be set at the same amount as the current registry fee for a registration—the cost of the WLS function being no more, an[d] probably less, than a registration—plus any additional costs [due] to "notice and transparency[”], based on Verisign's provision of such validating information on such costs to the Board/Staff.

4. Competition. The Names Council Task Force has claimed that the WLS will “eliminate” so-called “lapsed name” services that it believes are competitive with WLS. This point is without merit:

a. Competition Will Remain In Place. Bruce Tonkin has pointed out that competition over the timing and strategy for “ADD” commands will be no different under WLS than it is for domain names today, and that registrars will find creative ways to deal with “ADD” commands for placing WLS subscriptions (as they do now for domain names).

b. Introduction of a New Optional Service Cannot Reasonably Be Considered Anti-Competitive. The Task Force has, like SnapNames’ competitors eNom and Dotster, argued that the WLS is “anti-competitive”. At the same time, the Task Force and these companies have stated that the WLS provides “no consumer benefit” (TTF) or presents an inferior consumer choice (eNom, Dotster). The Board should not put itself in the position of attempting to decide in advance what customers will want. If there is no consumer benefit to buying a WLS order, people will not buy it. They will buy from the eNoms and Dotsters instead, and the so-called competition will remain unaffected. On the other hand, if consumers are allowed to decide in a market allowed to work, and consumers knowingly prefer the WLS alternative under certain circumstances, then (1) there can be no argument that the WLS is inferior and, more importantly, (2) consumers will be deciding among competing alternatives.

c. ICANN Should Allow the Market to Work. The WLS will not necessarily be the answer to all domain seekers' needs, and, particularly if the WLS is an “inferior” service in some way, then the eNoms, Dotsters, and models such as auctions and brokerage services will all remain fully in business. This is the market at work. For example, because not all deleting names will receive WLS subscriptions, any such domain name will still be available to those who query the registry. The existing laws governing the marketplace have not been suspended in the domain name system. Any party that legitimately believes itself to be illegally harmed by the WLS has ample remedy under existing consumer protection and antitrust laws.

The Board's obligation is to take steps that maximally favor competition (not protect particular competitors).

Conclusion

Any Board decision based on publicly expressed desires to protect particular competitors, by recommending steps to prevent entry into the market of a new competitor, would raise serious legal questions and could undermine ICANN by calling into direct question the legitimacy of such activities. Such a decision by the Board would set a poor precedent. Registries are and should be free to operate their services in any lawful manner, subject to explicit contractual obligations to ICANN and others. The ICANN Board cannot reasonably place itself in the position of micro-managing new service offerings. The constraints in ICANN's existing registry contracts are designed to prevent indirect evasion of the cap on mandatory registry services, or services that threaten the stability or interoperability of the DNS, circumstances that are not presented in this case. To the extent that ICANN is obligated to take actions that enhance competition, its duty is to approve any new service that the registry judges will improve the consumer experience or otherwise enhance operations of the domain for which the registry has operational responsibility.

The Board should reject the proposed conditions set forth in the Names Council Task Force report. These conditions raise a host of practical and policy problems, and are unjustified by either legal authority or legitimate practical purpose. We have shown elsewhere that ICANN’s legal authority regarding the WLS is a simple up or down vote on the WLS price alone, and that that approval may not be unreasonably delayed or withheld.

We request an expedited decision by the Board in this matter.