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[council] [NCUC-DISCUSS] NCUC statement on Approval Process for Registry Services

  • To: <gnso.secretariat@xxxxxxxxxxxxxx>
  • Subject: [council] [NCUC-DISCUSS] NCUC statement on Approval Process for Registry Services
  • From: Marc Schneiders <marc@xxxxxxxxxxxxxx>
  • Date: Wed, 14 Jan 2004 00:12:49 +0100 (CET)
  • Cc: <council@xxxxxxxxxxxxxx>
  • Sender: owner-council@xxxxxxxxxxxxxx

NCUC statement on

"Procedure for use by ICANN in considering requests for consent and
related contractual amendments to allow changes in the architecture
or operation of a gTLD registry."

NCUC observes that by initiating this procedure, ICANN is assuming
that its contracts alone are not sufficient to provide a predictable and
stable basis for the industry. It is assuming that it needs an ongoing
form of oversight to supplement its contracts and contractual
modifications, because the contracts cannot deal with all possible
developments in the future. Thus, ICANN is expanding into additional
areas of industry regulation, although no one wants to admit that.

In formulating its response, NCUC begins by asking: How are
noncommercial domain name users specifically affected by this
change? The answer, NCUC believes, is that there is no
commercial/noncommercial angle to this issue. It is more a
question of:

a) consumer protection; i.e., how users/consumers relate to
suppliers and what kind of regulatory procedures are needed to
protect consumers given the high switching costs associated with
changing registry suppliers after a domain name is well-established.

b) technical coordination; i.e., what kind of technical regulation or
specifications are needed to protect third parties using domain names
on the Internet from harmful changes made in registry operation, while
preserving as much as possible the freedom of suppliers to respond
to the market and innovate.

NCUC notes that whether consumers or users are commercial or
noncommercial has little bearing on these issues.

We also note that a) and b) are distinct policy issues. a) Involves
protection of the parties buying service from a gTLD registry, who
may have options, while b) involves protection of third party users
of a domain name, who probably do not have any options if they
want to connect to the party using the affected registry. We also
note that a) involves economic forms of regulation which also
involves competition policy concerns, while b) is more a matter of
technical coordination.

NCUC strongly recommends that the PDP distinguish clearly between
a) and b) in its consideration of the new process. Is the object
of the process economic regulation or technical coordination?

The document we are asked to comment on proposes no policies,
so our comments can only suggest questions or problems for the
PDP process to consider.

1. One question the PDP should consider is whether all issues
related to a) above should be handled by national regulatory
authorities instead of ICANN. We support ICANN's need for
technical coordination related to matters under b). We are less
confident of ICANN's ability and right to engage in a). We are also not
convinced of ICANN's ability to engage in competition policy-related
forms of regulation.
We recognize, however, that it may be difficult for consumers to
obtain adequate protection in a transnational business context.
Additionally, registries and registrars can and do hide behind their
contracts with ICANN. The structure of ICANN's contracts allows a
willful registry or registrar to "hide the ball" by pointing to a
different contracting party as responsible for the conduct the
registrant complains of. Thus, registries maintain that contracts
imposed by ICANN bar them from certain courses of action, registrars
likewise claim that contract provisions imposed by ICANN prevent them
from acting, and ICANN says it is not a regulator and that any remedy
lies in the contracts which it claims are negotiated freely. At this
moment, when we discuss the introduction of new regulatory procedures,
ICANN has to make clear what its position precisely is vis-a-vis
consumer protection. The new procedures developed in this PDP should
certainly not worsen the situation described in this paragraph.

While there is a case for a global governance regime, we note that
ICANN invested most of its effort in protecting trademarks and
domain name supplier interests, and has shown very little interest
in protecting consumers and users. For ICANN to become an effective
consumer protection agency significant changes would have to be
made in its representational structure and decision making processes.

2. The PDP document refers to a "quick look" process followed by
a more involved process if a change fails the "quick look."
A question the PDP needs to face squarely is: What is a subject to
a "quick look" and what is not? What is a "new registry service"?
How is that defined? Who will make that determination initially?
What happens when the registry and ICANN disagree on that issue?
If a process is created, there should be guidelines as to when an issue
is important enough to put it before ICANN bodies, invite public comment
etc. Some issues will be too important to leave to ICANN staff.

3. The NCUC recognizes the danger that a registry can make damaging
changes, such as in the Sitefinder case. We support clear,
well-defined specifications for registry operation that make DNS a
neutral platform for Internet functions. We also recognize a threat
that innovative changes will be stifled by a central organization such
as ICANN which may have incentives to prevent useful changes in order
to maintain its control over the industry.

4. The PDP should consider whether there should be a distinction
between policies applied to sponsored and unsponsored TLDs. NCUC
believes the answer will be usually no. There have to be good reasons
to make a distinction. If the justification for regulation is
economic; i.e, that users are locked in to a supplier and cannot
switch service providers without incurring damaging costs, then the
same fundamental economic problem applies regardless of whether the
registry is sponsored or not. In some respects, switching costs are
more serious with sponsored TLDs, since they are supposed to represent
a community identity and not just an individual company/organization's
identity. If the justification for the review process is technical,
the answer is the same: there is no relevant technical distinction
between sponsored and un-sponsored registries. We do, however, believe
that sponsored TLDs could be and should be required to consult their
"community" before making changes in operation of the sort
contemplated by the PDP.

5. The PDP should consider whether there should be a distinction
between the treatment of dominant and non-dominant TLDs? In this
case NCUC believes there is a stronger case for a distinction. A major
dominant registry may have the power to move the entire industry and
technology, whereas smaller ones would not. However, the lock-in
problem of consumers applies regardless of whether the registry is
dominant or not. As the Internet and DNS grow, larger numbers of
users will be affected by TLD registries regardless of their overall
share of the market. Thus, the policy must identify carefully what
problem it is trying to solve.

6. We wish to emphasize that public consultation, and consultation
of constituencies, must be a regular part of dealing with the most
important issues. We do not want ICANN staff to handle substantive
policy issues on their own.




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