[registrars] RC WLS Response

[Rick H Wesson <wessorh@ar.com>]

all:

attached is the draft response from the WLS Drafting Team composed of
the following:

   George DeCarlo - dotster
   Bruce Tonkin - melbourneit.com.au
   E. Broitman  - register.com
   David Wascher - iaregistry.com
   Paul Stahura - enom.com

Please comment on the draft as to if this is an acceptable response.
The WLS Drafting Team used the comments from the meeting and additional
comments forwarded to them to draft this response.

If you find a general exception to the response please contact the
drafting team via WLSDraftingTeam@ar.com

A text version is included below for ease in quoting. We must finish this
response by Thursday so that we can formally deliver it to VGRS as
requested by Friday the 18th of January, 2002.

Thanks for your corporation.

-rick

Rick Wesson
CTO, Registrars Constituency

-------------------- txt version of RC-WLS-Response.pdf ---------------


To Chuck Gomes,

 The Registrar Constituency (RC) is hereby providing its formal
 position to the VeriSign Global Registry Services (VGRS) regarding
 its proposal to manage a Wait Listing Service (WLS), the subscription
 service for deleted domain names.  VRSN sent its proposal to the
 Registrar Constituency on December 30, 2001, and allowed registrars
 to comment until January 18, 2002.


 The RC has considered the WLS, holding discussions and voting by
 email and through a conference call.  The overwhelming posi tion of
 the RC ­ in fact the unanimous vote of all those taking a position ­
 is to oppose the WLS.  Considering VRSN's obligation under its
 agreements with ICANN to vet any proposed price increases or service
 modifications for registry services with ICANN, and ICANN's bottom
 -up approach, it is the RC's understanding that the RC position will
 be considered within the Domain Name Supporting Organization (DNSO)
 before the DNSO would make a recommendation to the ICANN Board, and
 that the RC position would be a significant factor in ICANN's
 consideration of the WLS proposal.

 Prior to reviewing the RC's concerns, it would be instructive to
 recall the history of this issue.  In Spring 2001, VGRS temporarily
 shut off registrar connections, preventing new and/or s mall
 registrars from registering .com, .net and .org domain names.
 Ostensibly to address this technical load problem VGRS had
 temporarily closed the process of deleting expired names.  Rather
 than effectively solving the technical load problem, VGRS implemented
 an interim solution, relegating batch requests for deleting names to
 one of three pools to prevent this high -volume traffic from
 overloading its systems.  But according to VGRS, this solution has
 not solved the connection problems.  In fact, VGRS is once again
 announcing that it is limiting connections.

 The RC has a number of key concerns with WLS: a) price, b)
 transparency, c) benefit to the Internet, and d) lack of a solution:

   a) The proposed $40.00 price point for WLS (which is in addition to
      the $6.00 registry fee) is exorbitant.  VGRS has not justified
      this price with cost requirements.  Not only does WLS create a
      much higher price point for the end consumer, it effectively
      undermines competitive registrars' financial wherewithal.  It is
      highly u nlikely that registrars would be able to increase their
      margins in proportion to the increased margin charged by VGRS.
      In fact, market data (such as the Snapames price point of $49)
      demonstrates that competitive registrars would have to
      dramatically lower , or eliminate, their current margins in
      order to compete for WLS names.  This would undermine
      competitive registrars' revenues and jeopardize their ability to
      remain profitable.  * The one registrar that may be able to take
      effectively advantage of this price is the VeriSign registrar,
      which continues to enjoy the largest market share. It would be
      able to use the new higher margin of $46.00 to price below
      wholesale, as it has in the past with the $6.00 fee.  The result
      is to unfairly undermine competitor regi strars.

   b) There would be a lack of transparency if VGRS runs the primary
      registry, the largest registrar, and the subscription service.
      As long as the same company is operating this vertically
      powerful chain of companies, it may be possible for it to shift
      domain names from the $6.00 registry to the $46.00 WLS.  In
      fact, only the registry would know all of the WLS subscriptions
      and the timing for deleting names.  Such information could be
      abused by its registrar.  Considering that there is a history ­
      some of it still unresolved ­ of VeriSign not deleting expired
      names, the RC is doubly concerned that VGRS' operating the WLS
      provides new opportunities for domain name hoarding.

   c) The WLS provides an incentive and reward for speculators, while
      squeezing registrants seeking to build a web presence and
      registrars (as explained above).  The WLS provides a "sure
      thing" to Internet insiders who are savvy enough to get to the
      head of the line.  This primarily means speculators.  They will
      be willing to pay the adde d $40 fee for a guarantee of getting
      the expired name if 1) they are sure the name will be deleted
      and 2) they believe that they can resell the domain name at a
      higher price.  Insiders will be virtually the only ones able to
      ensure that a certain name will be deleted.  The end user will
      still have to pay the market price, which will be determined on
      the secondary market.  Moreover, the fact that a WLS
      subscription has been placed on any given name would prompt a
      speculator holding such domain name to renew it, rather than
      release it.

   d) In addition to creating new problems, WLS will not solve the
      problem of batch pool slamming.  In fact, t here is the
      potential to create the same technical loading problems on the
      WLS as currently exist on the main registry.  F or example,
      there will be competition amongst speculators to be the first to
      get the WLS on the best names about to be deleted.  There could
      also be a landrush effect to place WLS on well known popular
      names, at the moment when the new WLS service goes liv e.
      Registrars will still compete for the expiring names that do not
      have WLS subscriptions.  Since it costs the same "to slam" a $40
      name as to slam a name greater than $40, there is no incentive
      not to.  Finally, since WLS subscriptions are not tied to a
      name, this will create many WLS -switches immediately after the
      zone file is released daily.

 While the RC opposes the WLS in its current form, it recognizes the
 need for a permanent solution to the apparent problem of deleted
 names not being released or b eing released in a manner that
 undermines other registry functions.  Therefore, the RC welcomes
 other ideas for addressing these issues, and has discussed other
 alternatives.  The RC will address these proposals in a separate
 position paper.  The RC is ope n to VGRS' comments on these other
 proposals, as well as any modified VGRS proposal that modifies the
 WLS per the comments herein.

 The RC  is  clearly  very  interested  in  this  issue and   welcomes
 questions or further dialogue.

RC-WLS-Response.pdf