Do you keep hearing about this Registry/Registrar Separation (or Vertical Integration) issue but really aren’t sure what it’s all about?

This post should help you to get a better understanding of the details of this saga which is one of the most controversial, yet still unresolved issues within the new gTLD program.

The outcome of this debate will have a large impact on the final shape of the gTLD program and there is much at stake for those involved. In simple terms, the two positions are as follows;

a) Pro-integration - argues that the currently mandated separation between Registrars and Registries is outdated and unnecessary.

As a result, for example, VeriSign is prohibited from selling domain names in .com and .net to end users as they are the Registry provider, with similar restrictions in place across other gTLDs such as .biz, .org and .info.

The background to this model was the former monopoly position enjoyed by Network Solutions as both the Registry and sole Registrar for the .com, .net and .org TLDs (VeriSign acquired Network Solutions in 2000 and subsequently sold the brand and the Registrar business in 2003).

Desired outcome: Registry operators will be able to also act as a Registrar for domain names in their own gTLD

b) Pro-separation - argues that, should Registries be able to also act as Registrars in their own TLD, the risk of them misusing data regarding consumer demand is too high. This would be data that, as a Registry and Registrar in a TLD, would only be available to that applicant and may provide competitive advantage.

Desire outcome: Maintain the status quo situation for new gTLDs. A Registry would be prevented from selling domain names in their own gTLD but could own other TLDs provided they did not retail them.

Of course, there are variations on these positions but these are the salient points being argued by the community.

There have been significant revisions of the proposed policies relating to this issue in various versions of the Draft Applicant Guidebook and the argument has effectively gone around in circles. In particular, the CRA International paper that seemed to provide options that would suit the majority of participants was accepted by ICANN staff as a path forward in Draft Guidebook version 2. However, this was removed due to public pressure in Draft Guidebook version 3 and ICANN staff have continued to leave this issue open for public comment and guidance.

At the request of the Generic Names Supporting Organisation (GNSO), ICANN staff provided an issues paper for public comment in mid-December 2009 addressing the topic of Vertical Integration. The purpose of this paper was to assist the Council in deciding whether it was acceptable to move forward with new gTLDs without a full Policy Development Process (PDP) to find a consensus-based resolution to this issue.

Note - Policy Development Processes are undertaken by the Council to make a wide range of gTLD policies and have historically taken at least six and sometimes greater than 12 months to complete. Not great news for those who have been waiting for new gTLDs for quite some time already.

This issues paper effectively said that;

a) given that any outcomes from a PDP would be unlikely to alter the contracts of the existing Registries such as .com, and

b) given that the GNSO could effectively help with the planning of the new gTLD program,

that ICANN staff recommend that a PDP be delayed until after the first round of new gTLDs is completed to allow time for more data to be gathered and to facilitate a better understanding of the potential impacts of the options to be considered.

Recently, it appears that this recommendation has been ignored by the GNSO Council and that that the issue of Registry/Registrar Separation is heading towards a PDP. This gives rise to new concerns about potential further delays in the new gTLD program and compounds existing industry perception about ICANN’s ability to work through these issues with any level of expediency.

Simultaneously and perhaps even more confusingly, the ICANN Board have suggested that this will be a topic of conversation at the Nairobi Board meeting in March and in a release yesterday stated that they would be publishing for community comment a new registry-registrar separation model for inclusion in the next draft of the gTLD agreement, due in June.

Confused? You’re not alone.

At this stage all we can do is hope for a clear process from the Expression of Interest and trust that between the Board and/or the GNSO that we remain focused on moving forward to a decision on this ongoing issue as soon as possible.