ICANN Sydney, Day 2: “Vertical Separation between Registries and Registrar – Economic issues”. On its own, the title of this session did not seem that fascinating, yet it will probably be one of the most talked about session of this week’s 35 ICANN meeting.
It’s no secret that many Internet stakeholders are eagerly waiting for the new round of gTLDs to (finally) be launched [Link to article 2]. Among them are some new beasts called “Technical Operators”. The idea being that while the Policy/visible body is one thing (dotSport Registry SA, for example) the technical provider (making sure the domain names are properly registered and activated) can be another entity altogether. This scheme is nothing new in itself: .Tel is a separate company of which the technical backend is provided by Neustar while .Mobi does the same with Affilias.
What is somewhat new is that some Registrars are now convinced they have the necessary knowledge and experience to become Technical Operators themselves for new TLDs. Indeed, years of working in Domain Name Registrations and controlling the customer relationship are two key elements in such a business, that Registrars do possess.
However, while some limit themselves to niche market such as so-called “dotbrands”, many stakeholders are weary about “vertical intergration” that could see some of the biggest Registrars volume-wise become backend providers.
The issue here is quite simple and a nasty rumor has been heard several times in the last two days seeing one those Registrars telling potential TLDs “Use us for backend operator, it will cost X monthly and we want Y% on any Registration you make… Don’t use us, and our leading Registrar will not carry your TLD therefore you will not be visible by our customers”.
What could be a problem for new TLDs also may put existing Registries/Backend providers at risk since they could see potential customers going away from them because their agreement with ICANN has prevented them for years to be or to acquire Registrars.
Some would say it is a clear expression of fair competition in a free market, but others cringe at the “blatant bullying”. Regrettably, the two leading economists that had been invited by ICANN today did not seem to have a clear opinion on the topic. Instead, they argued at length that (a) they needed more facts and (b) GoDaddy’s – for example – prime position in the market did not make them a monopoly and that anyone was able to use another backend operator or Registrar.
The fact that the meeting lasted more than two hours and the number of questions clearly showed that many in the ICANN Community think otherwise… And the debate is far from over.
Chief Editor