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OECD supports TLD auctions
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The authors of the report are working against consumer's interests, and I totally reject their position.
They should be advocating a TENDER process, whereby the prospective registry operators compete on the basis of who will deliver a FIXED set of services for the LOWEST prices (subject to minimum performance guarantees). This ensures that the "surplus" is captured by consumers, not the registry operator.
Under an auction scenario, where prospective registry operators bid against each other, with the highest bidder getting to run the registry willy-nilly, the incentives will be for the registries to jack up prices for consumers, in order to maximize the registry operator's profits. This is fundamentally against the interests of consumers (and registrars, by the way). A registry in this scheme would want to introduce "services" like Sitefinder, etc., to maximize its income. There will also be incentives for discriminatory pricing, to further maximize income -- for example, the owner of sex.com could be charged $3 million per year, whereas the owner of gskjdhglkjfhgflds.com could be charged $1 per year.
To see the effect of auction-based pricing, we need not look any further than the existing example of .tv, which is run by VeriSign. The island of Tuvalu essentially allows the highest bidder (in this case VeriSign, although there had been prior registry operators) to run the registry any way they choose. Of course, VeriSign wildcards this TLD, see www.glskgkjlhgkjhglgjhf.tv [glskgkjlhgkjhglgjhf.tv], and price discriminates (the above domain is $50/yr, whereas Games.tv is available for $100,000 per year.
The case of .net is NOT the perfect economic case for an auction, as there has already been allocations of .net domains. This would be like auctioning off the land in Manhattan, and allowing the "winners" to subsequently rent the land to anyone who already has a building on that land, and seizing the building if they didn't cough up the cash. We don't need it to be turned into another .tv, where suddenly Games.net or Music.net costs $100,000/yr. It would be a disaster for consumers.
If ICANN's Board made the mistake of going down the auction route for existing TLDs, they might as well pack their bags and head to Tuvalu, as the uproar would be even worse than that experienced over Sitefinder, with massive consensus against auctions. Breaking it down by constituency:
a) Registrars would oppose it (discriminatory pricing would eliminate registrar profits, making registrars redundant, esp. as the registry adds "services");
b) Commercial and Business Constituency would oppose it, as it would mean higher registration costs (e.g. att.net might suddenly cost $1 million/yr to renew);
c) ISPs are for lower prices, so they'd oppose it;
d) Non-commercial are for lower prices, so would also oppose it;
e) Intellectual Property folks would oppose it vehemently, as they wouldn't want IBM.net and Pepsi.net to suddenly cost more than gksjhgkjshgskjhsg.net to renew; and
f) Registries would love it, since they'd be making massive profits out of the scheme (although, they'd be splitting it with ICANN, via the tender price paid).
Thus, in conclusion, TENDERS are the optimal scheme, whoever can run the FIXED set of services at the least price for consumers (with set performance standards). AUCTIONS would eliminate the consumer surplus, and shift it instead to the Registry operator (and to the ICANN entity itself, who would squander the dough on travel junkets).
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I disagree with you on this - I prefer a system that combines lottery mechanisms (so that everybody has a chance to win something) with auctions. I won't go into details here, check my blog.
However, to my mind the real issue is that of the "qualifications" and the number of slots to be bid on. (I say slots because I believe the winner should be allowed to pick the character string it wants to use as the TLD name, i.e. the auction/lottery should be for slots not names.)
As for qualifications - basically they should be limited to promising to abide by some set of technical standards. There should be no other qualification of any kind and there should be no obligation to disclose the intended use of the slot. The imposition of non-technical qualifications is simply a way of biasing the outcome in favor of non-innovative uses.
As for the number of slots - it should be sufficiently high that we burn out the glamour that has been associated with TLDs. I believe we could do 10,000 per year but I'd be happy with one per business day.
The fee to join the acution/lottery ought to be about $5.
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Your comments seem to fundamentally confuse auction of second-level domain names with auctioning off the right to operate a TLD. The two are completely different. Your comments about having a domain name you currently own "auctioned out from under you" are complete fantasies, no one is proposing that.
Wrt to .net, ICANN can specify as a policy that the price will be fixed and auction off the right to operate .net on those terms. Or, it could hold a "lowest price to the consumer wins" auction. Or, it could simply auction off the right to operate with proviso that the winner respect current contracts.
I find your hysteria to be ill-informed and hard to understand.
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