SnapNames Response to Names Council Wait Listing Service Report
Date: Friday July 26 2002, @04:19PM
Topic: Verisign/NSI

susan writes "In considering the Names Council's (NC) report on the Wait Listing Service (WLS), we urge the Board to keep the following in mind:

1. Scope of Question. The question presented to the Board is whether to approve VeriSign's proposed amendment to App. G of its Registry Agreement with ICANN. The Board's sole role is to approve or disapprove the price ($24/subscription) VeriSign is planning to charge all registrars for the WLS. Under the relevant contracts, it is not the Board's role either to delay or condition approval of the price for the WLS on any other factors, including product development conditions suggested by, or opinions of, other bodies, or of direct competitors and retailers of VeriSign (e.g., ccTLDs, registrars) and SnapNames (e.g., some registrars and some speculators). See SnapNames, "Part I: Standard of Review," posted June 19, 2002 (link). Imposition of conditions on this straightforward contractual amendment process will set a bad precedent for the Board's ability to act quickly in the future (without protracted "negotiations" with third parties) to amend its contracts with registries, and creates legal and other risks.

[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]"

2. Modifications Already Made to the WLS. At the ICANN meetings in Bucharest, VeriSign presented three modifications to its WLS proposal that it had made in response to suggestions it had received: (1) providing a flat $24 price for the WLS; (2) implementing an interim manual redemptions grace period; and (3) not making any special provisions for names for which there are existing SnapBack orders. VeriSign has been responsive to the concerns of its customers. As explained above, we do not think it is legally appropriate for the Board to condition or delay its approval of a price for a new registry service on changes to that service that the registry has not itself proposed or that derive from efforts by competitors to limit the registry's ability to compete. Such a step would thrust the Board into a highly-discretionary, subjective, and drawn-out process for each new service offered by each registry -- a process not based in any contractually supported or legally permissible role of the Board.

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.
b. Suggestion that Identities of WLS Subscribers be Published. For several reasons, we do not think it makes sense to require that current owners of domain names be provided with contact information for WLS subscribers:
  • 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.”
3. Pricing Questions. The Task Force report states:
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.
The use of the word “probably” reveals that these most critical assertions of the Task Force were based on guesswork. The TTF report does not indicate that the Task Force had any special expertise or experience in assessing the costing and pricing of services generally or high technology domain architecture in particular. The TTF report also does not mention its basis for the assertion that WLS pricing should be based on VeriSign’s costs rather than some other measure (such as the market’s willingness to pay). Finally, the TTF report wholly ignores SnapNames’ detailed discussion about the complexity of the WLS and about pricing, including the fact that other services seeking (mostly ineffectively) to register deleting names are today priced much higher. (See SnapNames, “Part II: Merits of the WLS” (also posted on ICANN.org on June 21, 2002) section VI.B, at pp. 16-20). In any event, the proposed price is reasonable in light of the value of the service -- and, because it is an entirely optional service, the market will decide whether the pricing is appropriate. The Board should not get into the dangerous area of second-guessing pricing.

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.

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Re: SnapNames Response to Names Council Wait Listi
by GeorgeK on Friday July 26 2002, @05:17PM (#8109)
User #3191 Info | http://www.kirikos.com/
All of Susan's arguments have been made in the past, and had been responded to. It seems that they simply want to get in "the last word" (or "the last spin"), as a desperate last move to influence the ICANN board.

The fact of the matter is that there is intrinsic demand for the domain names themselves, not WLS as a mechanism to acquire them. We currently have numerous means to acquire those names, and WLS seeks to monopolize that marketplace not because it is a "better offering", but instead because it gets first dibs on all the names, leaving everyone else with names that no one else wanted. If NameWinner had done such a deal with Verisign, instead of SnapNames, we'd see the exact opposite spin by SnapNames, I'm sure, that it's anti-competitive, etc.

I found it amusing that proponents of WLS refused to take my "Cookie Challenge", posted on the DNSO GA list multiple times, to answer the questions posed at:

http://www.dnso.org/clubpublic/ga/Arc10/msg02855.html

among other places. However, Susan has taken up the "Cheese Challenge". Where shall I send the cheese, to go along with her whine? :)

Sincerely,

George Kirikos
[ Reply to This | Parent ]
Re: SnapNames Response to Names Council Wait Listi
by fnord (groy2kNO@SPAMyahoo.com) on Friday July 26 2002, @08:09PM (#8111)
User #2810 Info
If ICANN can ever get off its ass and implement the Redemption Grace Period (they've only had 8+ months so far) this all becomes academic. They haven't managed for that very reason. Ask each Board member to come clean on how much they have invested in VeriSign. Like the saying goes follow the money. -g
[ Reply to This | Parent ]
Re: SnapNames Response to Names Council Wait Listi
by tlr (reversethis-{gro.tsixe-ton-seod} {ta} {relsseor}) on Saturday July 27 2002, @12:39AM (#8113)
User #34 Info | http://log.does-not-exist.org/
Rhetorics.
[ Reply to This | Parent ]
Re: it seems to me ICANN is a brother of VErsign
by fnord (groy2kNO@SPAMyahoo.com) on Sunday July 28 2002, @08:09AM (#8131)
User #2810 Info
Other registrars don't necessarily have to delete the domain name within a short period of time. And some (register.com being one example) don't. -g
[ Reply to This | Parent ]
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