Competition: was Compliance with the Memorandum of Understanding between ICANN and DoC
Hello Bhavin,
-----Original Message----- From: Bhavin Turakhia [mailto:bhavin.t@directi.com] Sent: Wednesday, 19 May 2004 4:40 AM To: 'Registrars Constituency' Subject: [registrars] Copmliance with the Memorandum of Understanding between ICANN and DoC
Check http://www.ntia.doc.gov/ntiahome/domainname/icann-memorandum.htm
The FIRST line in the background is stated as -
"On July 1, 1997, as part of the Administration's Framework for Global Electronic Commerce, the President directed the Secretary of Commerce to privatize the management of the domain name system (DNS) in a manner that increases competition and facilitates international participation in its management. "
This budget move will REDUCE competition and REDUCE international participation, violating the principles laid out in this MoU
You need to be careful not to equate competition with number of participants, or the impact on any one participant. It needs to be viewed from the perspective of the consumer (ie do they have choice, and are they being offered a retail price close to the cost of provisioning of the service). Many participants could all offer the same price - that would not be competition. E.g in some countries the price of bread and milk is fixed. A few participants could offer a range of prices and services (e.g the airline industry) A review of the top 20 registrars that account for most of the volume will show a very wide range of retail prices (and an even wider range of reseller pricing). The cheaper prices are very close to being what the most efficient operator could possibly achieve - hence I would say that: (1) there is already strong competition (2) any reduction in registrars would have very limited affect on competition unless you dropped to one registrar - which is highly unlikely - the barriers to entry are still trivial. The cheapest prices are also most likely offered by those companies with the most scale, rather than the smaller companies. A smaller company in any market seldom survives based on offering the lowest price. The smaller companies thrive by offering superior and personalised customer service. Just look at restuarants - and compare McDonalds with your nearest top class restaurant. Most highly competitive markets (e.g food restuarants) have a wide range of companies in terms of size and price. We have this environment in the domain name registrar industry and the registrar fee structure won't change that. In fact the best consumer result would probably be achieved by simply having no transaction fee and dividing the fees by the number of registrars. I think ICANN is trying to achieve a "reasonable" balance - which allow a range of different business models. Regards, Bruce
Bruce, Some objective observer, say from Mount Olympus, or a consumer watchdog entity, should attempt to "view[ed] from the perspective of the consumer" whatever is being bandied about as "competition". Back when ICANN was in the process of deciding if there should be any new TLDs, in WG-C I posted a "what if" ... what if MicroSoft bundled a unit of registrar service in their operating system product? More generally, what will happen to the domain name profit centers, registrars and registries, when MS and AOL decide to offer domain name (provisioning or publication, or both) products and services? Is NSI, even VGRS, still in business when the dust settles? I didn't think so then. I still don't. So, even if the entire new-entity / Ira Magaziner / post-monopoly policy wasn't expressed explicitly as business competition, not "the perspective of the consumer (see above about who can form that perspective), we'd all be latent dodos (extinct species of fowl) if we put imaginary consumer concerns ahead of our own. Why shouldn't 95% of all domain buys be via a bundled "registration", and be cash-back for that matter? Why shouldn't a name in spam-free, ICANN-constrained, public-trust, pro-bono managed new gTLD or re-purposed ccTLD be via a bundled "registration", and be cash-back too for that matter? The market share of domain name users who care, let alone know to check, that a name is published by more than one nameserver, not sharing the same subnet prefix, is not large. Since you gave a milk-and-bread example, here in Portland there are two daries, Oakhurst and Hood. Oakhurst markets milk having no BGH (bovine growth hormones), which caused BGH manufacturer Monsanto to sue Oakhurst. Oakhurst and Hood both sell the same product, unit size, unit price, reseller channels, etc. The competition, the effectiveness of the marketing campaign, lies somewhere else than "choice" (non-Portland based dairys, from Vermont, as well as store-label product) and price. Do you want some BGH with your corn flakes? Incidently, milk in the US isn't priced at "what the most efficient operator could possibly achieve", there are subsidies, price floors and so on. Milk is also given away by government, as are cheese products, in fact "commodity cheese" is a staple of Indian humor, and reservation diets (inspite of the fact that most of us are lactose intolerent ;-> ) So I want to share that I think a blanket rejection of Bhavian's points, the rational points of an actor who has a business interest in selling one turn-key solution to actors entering this market, is unwise. That's the point I wanted to get across -- that we are regulated by some issue(s) other than price, and an analytic framework that defined competition as "from a consequence-indifferent acquisition-engine perspective" (rather like the "can-I-buy-1,000-names-wicked-cheap-cause-I-want-to-spam-and-I- don't-care-if-each-name-resolves-longer-than-a-couple-of-days" propositions I get from time to time) tends towards fragility and adverse consequences, and is only one claimant to the throne of "objective analysis". You have my respect, but on this point we differ. Postmodernly yours, Eric
Bruce Tonkin wrote:
Hello Bhavin,
-----Original Message----- From: Bhavin Turakhia [mailto:bhavin.t@directi.com] Sent: Wednesday, 19 May 2004 4:40 AM To: 'Registrars Constituency' Subject: [registrars] Copmliance with the Memorandum of Understanding between ICANN and DoC
This budget move will REDUCE competition and REDUCE international participation, violating the principles laid out in this MoU
Bruce, I have to start by saying that I normally really like the things that you write. So please don't take this the wrong way but your comments below show a very academic approach to this issue.
A few participants could offer a range of prices and services (e.g the airline industry) A review of the top 20 registrars that account for most of the volume will show a very wide range of retail prices (and an even wider range of reseller pricing).
The cheaper prices are very close to being what the most efficient operator could possibly achieve - hence I would say that: (1) there is already strong competition
There is strong competition now. That doesn't mean there will always be strong competition.
(2) any reduction in registrars would have very limited affect on competition unless you dropped to one registrar - which is highly unlikely - the barriers to entry are still trivial.
I don't agree. Low prices can be used to drive out competition. (Last one(s) standing.) High entry fees can make it unattractive to have more than several companies competiting. When there are a few remaining companies prices will then rise.
The cheapest prices are also most likely offered by those companies with the most scale,
Not always. It could just be deep pockets, another motive, or deceptive practices.
rather than the smaller companies. A smaller company in any market seldom survives based on offering the lowest price. The smaller companies thrive by offering superior and personalised customer service. Just look at restuarants - and compare McDonalds with your nearest top class restaurant.
A restaurant competes on a local basis. Not globally. Fine restaurants don't have as many seats to fill, they are not serving as many meals as a large restaurant. The economics are different. And a fine restaurant doesn't have to pay fixed licensing fees (although they may have to pay a one time fee for a liquor license). They may have the benefits of a good location. Etc. The point is that the fees that are being discussed are a barrier to entry. The only barriers to entry that I know about that would be similar are for other reasons (Taxi medallions in NYC or liquor license). The competion (or supply) needs to be limited for some other reason.
Most highly competitive markets (e.g food restuarants) have a wide range of companies in terms of size and price.
In a given geographic area.
We have this environment in the domain name registrar industry and the registrar fee structure won't change that.
Bruce, I think you have to understand that there are registrars that make their living from this business. They don't work for someone else like, for example, you do. (Sorry.) Having to pay $20,000 extra per year would be like you all of the sudden getting paid $20,000 less. Of course $20,000 is not where it will end. Please don't ever think that a change in costs will not have a ripple effect on the market and not end up hurting competition. In the end I think Bhavin makes excellent points (although I haven't checked the accuracy of all of them). And people like Bhavin are exactly the reason why ICANN should want to have as many registrars as possible. Larry Erlich
In fact the best consumer result would probably be achieved by simply having no transaction fee and dividing the fees by the number of registrars. I think ICANN is trying to achieve a "reasonable" balance - which allow a range of different business models.
Regards, Bruce
-- ----------------------------------------------------------------- Larry Erlich - DomainRegistry.com, Inc. 215-244-6700 - FAX:215-244-6605 - Reply: erlich@DomainRegistry.com -----------------------------------------------------------------
participants (3)
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Bruce Tonkin -
Eric Brunner-Williams -
Larry Erlich