Re: [registrars] Registration and renewal price in .com registry agreement

[elliot noss <enoss@xxxxxxxxxx>]

Bruce has eloquently described exactly how we feel. So just to be  
clear, Tucows will also agree to be invoiced directly.
I would be remiss if I also didn't note the irony of registrars both  
engaged in litigation with ICANN and complaining about budget increases.
Regards

On Tuesday, October 14, 2003, at 11:00 PM, Bruce Tonkin wrote:

> Hello All,
>
> For information.  Here is the relevant clause from the .com registry
> agreement.
> From:
> http://www.icann.org/tlds/agreements/verisign/registry-agmt-com- 
> 25may01.
> htm
>
>
> "E. Adjustments to Price. The maximum pricing for initial and renewal
> registrations set forth in Appendix G shall be adjusted at the  
> beginning
> of each calendar quarter by adding, to the amount specified in that
> Appendix (after adjustment according to Section 22(a)) as the  
> applicable
> annual charge for initial or renewal registration of a domain name, an
> amount calculated according to the following three sentences. For
> calendar quarters in which the variable fee is collected at the
> registrar level, the amount shall be US$0.00. For the first two  
> calendar
> quarters during the Term of this Agreement in which the variable fee is
> collected at the registry level, the amount shall be four times the
> per-name variable accreditation fee charged to registrars for the
> quarter beginning six months earlier. For subsequent calendar quarters,
> the amount shall be four times the quarterly Variable Registry-Level  
> Fee
> reflected in the invoice to Registry Operator for such a fee for the
> quarter beginning six months earlier divided by the number of  
> Registered
> Names that the invoice shows was used to calculate that quarterly
> Variable Registry-Level Fee. The adjustments permitted by this
> Subsection 7(E) shall only apply for periods of time as to which the
> Registry Operator does not have in effect a provision in its
> Registry-Registrar Agreement permitting it to require ICANN-Accredited
> Registrars to pay to Registry Operator a portion of Registry Operator's
> payments of variable registry-level fees to ICANN."
>
> Thus the ability for the Verisign registry to increase the per domain
> name price to collect the increase from registrars is effectively
> hard-coded into the contract.
>
> In a pure market, an operator may decide not to pass on the increase to
> their customers.  But who will decide not to offer .com names because
> the price increases by say less than $1.
>
> The issue may be harder for an operator such as .name, where a price
> increase may be enough for a registrar to choose not to offer the
> service.
>
> Contrast this with our situation,.  Many of us absorb ICANN fee
> increases, because we are in a very competitive market, and our
> customers can choose from over 100 other registrars, and probably
> thousands of domain name resellers.  Some of these companies sell
> domains at below their market value, on the basis that they will pick  
> up
> business through value added products.
>
> Anyway I predict the following result if registrars decline to pay  
> ICANN
> directly:
> - Verisign will increase its leverage over ICANN (as they will pay a
> larger portion of ICANN's fee) - they could for example delay payment
> which would impact ICANN ability to pay their staff, which would impact
> the ability of ICANN to regulate services such as WLS and Sitefinder.
> - once Verisign eventually pays ICANN, they will subsequently increase
> our fees
> - other registry operators may have a harder decision based on their
> market position - although most wouldn't be able to afford to pay ICANN
> without passing on the fee
>
> What we gain is a delay in making a payment (improves short term cash
> flow), what we lose is long term leverage.
>
> Now we can always ask the registry operators what they intend to do,
> although such discussions may give rise to anti-trust implications
> amongst the registry operators (e.g discussing possible price changes).
>
> Anyway for the reasons above, given that the budget and contractual
> structure for meeting the budget is set, Melbourne IT will agree to be
> invoiced directly by ICANN.  We feel that giving more leverage to
> registries at this time would be a dangerous step.
>
> Regards,
> Bruce