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President of Tucows Responds to WLS Issue

I will try and take a different approach with this post. There are two elements of WLS that I think are most material and are not discussed often enough. They are i) the scope of the original NSI-ICANN contract and ii) the use of multiple accreditations.

First, with respect to the scope of the original NSI-ICANN contract, the most important issue is too often ignored. It is my view that the contract is clearly a contract for service. Nothing more, nothing less. Verisign is paid a sum of money to perform a service. They own neither the primary nor the secondary data. I will not bore you with a recitation of various sections of the agreement nor with long-winded legal arguments. They are for another forum. The implication of this conclusion as it relates to WLS is that any re-registration market service is outside the scope of the original contract and should be treated as any new service should. There should be a tender process. Verisign would have many natural advantages in that process and if they were smart they would be successful. Importantly, the economics of the outcome would be market-driven and everyone in the value chain would be better off.

Second, the current re-registration market and the whole WLS furor now taking place highlights a significant problem in the current market structure. There are many contractual rights that accrue to an accredited registrar. These include server threads to the Verisign registry and places in queues for various landrushes for new TLDs (or votes inside the registrars constituency but that is also topic for another day). This has lead to a significant number of “empty” accreditations. I call an accreditation empty where it is not used in the primary business of domain registration on either a retail or wholesale basis, but is instead used to generate additional contractual rights. This is artifice and like any artifice has significant negative secondary effects. In this case the most important is that the re-registration market has become a game for the “pros”. The vast majority of desirable names end up in the hands of folks who make a market in them or folks who run links farms. Neither of these are bad things in and of themselves (some of my best friends are in those businesses ;-)), but they are clear indications of market inefficiencies and the need to look at the fundamental structural issues.

Domain names often have value in excess of “one-price-fits-all”. It is good for the market as a whole if names migrate to their highest best use, which I define as in the hands of the party who would put the name to the greatest use, or attach the greatest number of services and users to the name. It is bad if they sit on “shelves” or are used for latent traffic in links farms. These are, of course, generalizations. I believe that failure to recognize the importance of this factor has lead to both .info and .biz not nearly impacting upon the dominance of .com to the extent they should have. We as an industry should be talking about this and trying to address it.

I do not have a horse in the WLS race. I do however feel strongly that the first factor described above was not adequately considered. In fact I am not sure it was considered at all. WLS as precedent could have severe negative impact going forward. I am also quite uncomfortable with the ignoring of consensus, but that too is for another day (#3 by my count).

The two points I raise, what is the nature of the contractual relationship between Verisign registry and ICANN and the now rampant use of multiple accreditations for other than their originally intended purpose are, IMHO, being ignored in a back-and-forth that is currently not constructive.

By Elliot Noss, President and CEO of Tucows Inc.

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Gordon Martin  –  Jul 25, 2003 9:25 PM

I agree with the contractural issue however I don’t believe a tender is necessary because I believe you are seriously misconstruing the second point.

The net is about and should be about innovation.  That registrars are using “empty” accreditations to pursue names is a sign of innovation.  Innovation is by it’s definition taking resources and using them in unexpected and unintended ways.  And they wouldn’t do it unless it was worthwhile.

Inflicting a monopolistic one price one product infrastructure on the registrars and the domains owners will kill that innovation.

Nor is it a “one year” experiment.  This will be pointed to as a further example of ICANN acting as a Verisign subsidiary and ICANN’s inability or unwillingness to stand up to it’s internal corporate conflicts of interest.

And who will invest in markets like that when a quasi regulator interfers in the free and open markets to impose a monopoly at the request of a competitor.  I’ve invested 100’s of 1000’s of dollars in building our site DropWizard.com to one of the largest drop businesses in the world today.  WHY would I or any other “thinking” investor come back to a market where we have had assets literally confiscated.  Verisign will be left in this market by itself with it’s proposed partner SnapNames, our competitor,  with a landscape cleared of any competition.  One way or another under the WLS scenario they will win.

If this WLS continues it will only engender further law suits at an ultimate cost to ICANN and the domains owners who fund it all.  We like the others are a step away from filing lawsuits in the 10’s of millions of dollars for losses.

Tucows was founded as an innovation against the entrenched registration monopoly in force at the time.  All the fights…..... all the pushing you had to do to establish your right to register domains is precisely the same fight we have today.

And if you don’t have a “horse in the race” give me a call.  We’ve got a ton of “hay” to share :-)

Gordon Martin
DropWizard Domains Inc
.(JavaScript must be enabled to view this email address)

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