[registrars] Competition: was Compliance with the Memorandum of Understanding between ICANN and DoC

["Bruce Tonkin" <Bruce.Tonkin@xxxxxxxxxxxxxxxxxx>]

Hello Bhavin,


> -----Original Message-----
> From: Bhavin Turakhia [mailto:bhavin.t@xxxxxxxxxxx] 
> Sent: Wednesday, 19 May 2004 4:40 AM
> To: 'Registrars Constituency'
> Subject: [registrars] Copmliance with the Memorandum of 
> Understanding between ICANN and DoC
> 
> 
> 
> Check http://www.ntia.doc.gov/ntiahome/domainname/icann-memorandum.htm
> 
> The FIRST line in the background is stated as -
> 
> "On July 1, 1997, as part of the Administration's Framework 
> for Global Electronic Commerce, the President directed the 
> Secretary of Commerce to privatize the management of the 
> domain name system (DNS) in a manner that increases 
> competition and facilitates international participation in 
> its management. "
> 
> This budget move will REDUCE competition and REDUCE 
> international participation, violating the principles laid 
> out in this MoU
> 


You need to be careful not to equate competition with number of
participants, or the impact on any one participant.   It needs to be
viewed from the perspective of the consumer (ie do they have choice, and
are they being offered a retail price close to the cost of provisioning
of the service).

Many participants could all offer the same price - that would not be
competition.
E.g in some countries the price of bread and milk is fixed.

A few participants could offer a range of prices and services (e.g the
airline industry)
A review of the top 20 registrars that account for most of the volume
will show a very wide range of retail prices (and an even wider range of
reseller pricing).

The cheaper prices are very close to being what the most efficient
operator could possibly achieve - hence I would say that:
(1) there is already strong competition
(2) any reduction in registrars would have very limited affect on
competition unless you dropped to one registrar - which is highly
unlikely - the barriers to entry are still trivial.

The cheapest prices are also most likely offered by those companies with
the most scale, rather than the smaller companies.  A smaller company in
any market seldom survives based on offering the lowest price.  The
smaller companies thrive by offering superior and personalised customer
service.
Just look at restuarants - and compare McDonalds with your nearest top
class restaurant.

Most highly competitive markets (e.g food restuarants) have a wide range
of companies in terms of size and price.  We have this environment in
the domain name registrar industry and the registrar fee structure won't
change that.   In fact the best consumer result would probably be
achieved by simply having no transaction fee and dividing the fees by
the number of registrars.   I think ICANN is trying to achieve a
"reasonable" balance - which allow a range of different business models.

Regards,
Bruce