U.S. DEPARTMENT OF COMMERCE
National Telecommunications and Information Administration
Washington, DC 20230

U.S. DEPARTMENT OF COMMERCE
National Telecommunications and Information Administration
Washington, DC 20230

The Fundació Catalana per a la Recerca (FCR; Catalan Research Foundation) is a non-profit institution whose aims consist in promoting scientific research with a wide view of science in the service of society. Among the many research centers, functions and infrastructures, created, managed, funded and/or supported by FCR there are the Catalan Supercomputation Center (CESCA) or the so-called "Scientific Ring" (Anella Científica) the high-speed telecommunications network rallying all Catalan Universities and Research Centers.

FCR's funding comes from both the public sector (the Catalan Government) and private-sector institutions and companies, from the financial, industrial and telecommunications sectors.

Consistently with its pioneering role in other Internet activities and services in Catalonia, the FCR has actively participated in the so-called "gTLD-MoU process", being one of the original signatories of the Generic Top Level Domains Memorandum of Understanding, and an active player within the Policy Advisory Body from its inception. FCR was also one of the first organizations to apply, be approved and become member of the Council of Registrars (CORE), though a newly created department, Nominalia.

In this capacity we would like expressly supporting the comments (and related suggestions) already presented by the three distinct organizations/bodies which constitute the structure of the gTLD-MoU process: the Policy Advisory Body (PAB); the Policy Oversight Committee (POC), and the Council of Registrars (CORE). In fact we are satisfied to agree one way or another with most of the comments already submitted, as it appears to be a widespread consensus on the perceived shortcomings of the GP. We feel obliged, nevertheless, to stress once again some basic issues and submit our own concerns in relation with the Proposed Rules for the Improvement of Technical Management of Internet Names and Addresses, best known as the Green Paper (GP).

II. Summary of Concerns

The GP puts forward as its declared goals to bring competition to the domain name registration business, while trying to disengage the USGov from its (funding) commitments with the Internet management functions. In doing so the GP identifies four basic principles that should guide the process: stability; competition; private, bottom-up coordination and representation. We can only applaud this program, and adhere to all of its elements. Unfortunately we don't believe that the detailed provisions set out in the GP, and even its basic assumptions and choices, are in line with none of these goals.

Our major concerns are the following:

A) USGov regulation or International private-sector bottom-up coordination?

While claiming Internet self-governance as a goal, the GP in fact provides for an unprecedented USGov micromanagement of the Internet. This is at odds with both USGov repeated previous statements and the widespread preferences of Internet users.

We don't want to discuss now and here whether the US Government has the legal authority, even under its own legal system, to regulate Internet administration issues. This would certainly be discussed before the relevant courts, if needed. Nor do we pretend to discuss if the issuing of the GP is in itself a violation of the US-EU joint statement on Electronic Commerce, as this will be undoubtedly be directly discussed by both Administrations.

The point we want to make here is much more modest: just how weak is the GP justification on this regard, and how dangerous are the consequences of such approach.

Stating that the Internet has grown out of US Government investments is a too partial point of view that not only overlooks the important contributions from other parts of the World, most specially Europe (both form its private and public sector) but also minimizes the substantial contributions from US-based private corporations. We are all indeed aware and grateful to the USGov for its generous funding of the Internet, but this should not lead us to unilateral micromanagement of the Net basic administrative functions by the USGov.

This attempt of what is perceived as excessive, unwarranted, unneeded regulation is in fact producing a visible countereffect: for the first time there is serious discussions in various Internet fora about the convenience to "export" Internet's most crucial management functions outside the US, and locate them in a more neutral country. We believe that this move is not at all necessary, at least now, but the discussions in reaction to the GP are highly symptomatic.

The GP carries a double hazard: excessive (unneeded and unenforceable) top-down governmental regulation where the only role that Governments could and should play is ensure that the self-regulatory private-sector driven processes takes place in a competitive market, and unilateral action by a single government in a field that is global by its very nature. We firmly believe that we shall let the Net take its own decisions through its processes right now, accelerating as much as possible the restructuring of IANA as a more stable institution and letting that institution, along with IAB; IETF; IESG and ISOC take the pertinent decisions.

We want to encourage the USGov to take its full responsibilities in the areas where its authority is undisputed, namely the contract with NSI and the .US TLD, and to refrain from regulating those issues that, by its very nature, can only be solved through global private-sector consensus, but never through (unilateral) governmental intervention.

B) The GP fails to promote a competitive environment for the domain-name registration system.

The GP only allows (provides) for a rachitic competition with NSI, the current monopolist in the gTLD market with weak registries and hard-to-monitor separation among NSI's functions as registry and registrar.

A recurrent concern with the GP is repeated inconsistencies. There is nevertheless a line that crosses it from the beginning to the end and with a consistent approach: and apparent need to protect NSI. The USGov should not sponsor any solution that does not amount to robust competition with viable players. Overprotecting the incumbent monopolist as a principle is a policy that should not resist any serious antitrust analysis.

On the same ground, the GP fails to acknowledge that, from the customer point of view, names do not compete perfectly. Only registrars do. And the GP proposal, reinforcing the power of registries, reduces registrars'' ability to pass the benefits of competition to its customers. The GP overemphasize competition from the supply side perspective, completely overlooking competition from the demand-side perspective. It fails to rightly identify the relevant product market, as names do not (perfectly) compete because they are not perfect substitutes, and sometimes no substitutes at all.

Also from an antitrust point of view the GP fails to identify the relevant market in a second way, as it misses the difference between two separate markets: the market for SLD registrations and the market for renewals. In the former, a weak competition might occur among TLDs representing names that are at least partial substitutes (a certain, but never very robust, competition might occur among the registries operating .com and .firm. It will almost NEVER be possible among the registries operating .shop and .org. But it is important to insist that in the market for renewals. There will simply be NO competition for most users, especially those more involved in Internet businesses.

The GP would lead to a world of parallel monopoly registries, weak registrars locked-in to registries and users treated as hostages.

It is a fact that a registry is somehow a monopoly. What is then important is to reduce its power and ability to harm consumers to the strict minimum. If we are to live with monopolies, let's have benevolent ones. This is what the gTLD-MoU has tried to achieve though its non-for-profit, shared registry system managing TLDs that are treated as public resources.

So-called competing registries (in fact parallel monopolies) in the gTLD namespace are likely to screw up the Net. This amounts to granting exclusive (monopoly) rights to for-profit entities over public resources (generic names). It leads to multiple and incompatible dispute resolution mechanisms, thus exasperating the trademark problem. To multiple registration technologies and registry interfaces, thus making registrars' life a nightmare. To multiple and incompatible policies, making registrants lives more difficult. And for this system to work properly we should increase, not decrease, the level of government oversight/involvement, quite the contrary of what is the express goal of the GP. This governmental oversight and intervention is not only at odds with the proclaimed goals of the USGov, but is also unenforceable in practice. We have a perfect proof in the lack of intervention form the USGov when NSI, though its wholly-owned subsidiary WorldNIC has started to charge more than allowed by the so-called Cooperative Agreement to registrants.

In front of that solution, CORE solves most of the above problems, while providing with self-policing mechanisms in case it would lead to undesirable situations: it is a membership association open to all those wishing to operate the registrar business, not a separate for-profit entity with its own selfish (even if legitimate goals). It has an independent oversight committee (POC). As a whole, maximizes competition without increasing the risks to the Net stability.

We believe that most of the current confusion arises from a misrepresentation of the different functions involved in the domain name registration business. This confusion comes form the fact that NSI has been historically playing all the functions.

We all agree that it is at the registrar level where real competition happens, and where users need having a fair choice. Competition at the registrar level should therefore be encouraged and anyone fulfilling a minimum set of objective criteria should be able to participate.

We should all agree that there could be many (even if not unlimited) database operators. (This is what NSI was primarily intended to do; this is what Emergent does now for CORE). Multiple db operators increase the costs and perhaps the risks of technical consistence, but on the other hand may reduce the operational risks. Competition at the db operators level makes little sense, but the existence of multiple db operators serving different TLDs under a given Registry might be desirable under some circumstances.

But basic feature of a Registry is policy setting. Here is where for-profit companies should absolutely be ruled out. Here is where governmental intervention is impossible at the gTLD level. Here is where IANA interventions is and not be sufficient. And here is where competition makes no sense.

Finally, a Registry should fix an appeal channel, a mechanism for dispute resolution; an oversight function. And this function, as the registrar one, should be separated form the registry (that should be limited to direct policy setting and director or indirect db operations). In this regard we could discuss whether CORE/POC adequately handle this process. We could further discuss POC composition (being currently revised, increased and diversified, as a matter of fact). We could discuss whether the new IANA has a role to play in this function, and to what extent.

But we cannot discuss the fact that we should separate some of these functions, and that the gTLD-MoU is the proposal that better deals with these problems.

Here should lay the focus of our discussions. Pretending that the simple addition of multiple registries will solve any of the current problems is too naive. Accepting that all registries should be run as non-profit registries only goes half the way: if we want real competition registrars should be able to operate under all TLDs. If different TLDs are run by separate Registries with different technologies, interfaces, policies and criteria for admitting registrars (as the GP implies) competition will not occur. If in the other hand we end up with different registries managing different TLDs but all of them being non-for-profit; using a standardized interface, and technology, working with the same set of registrars (all of them), with the same dispute resolution mechanism for conflicts between domain names and intellectual property rights; the same policies.... Well, we'll end up with multiple clones of a single registry.

Taking as granted the need for multiple (unlimited) registrars, the real choice is between chaos and no increase of competition at the registry level on one hand and technical stability, policy coherence and, again, no increase of competition at the registry level. Because we all knew that Registries do not compete.....

If the USGov wishes to experiment with multiple registries (multiple parallel monopolies) with exclusive rights over generic names, we strongly encourage them to run such an experiment under the .US TLD, which is indeed of its only and undisputed competence and therefore will be able to exercise the level of control, oversight, intervention and mandatory changes that might deem necessary at any given moment. But please don't extend such futile experiments to the generic DNS, when we all know that they would bring very serious problems without solving any single current problem. And, what's worst, without the ability, or very little, for the USG or any other government to solve those problems afterwards.

Finally, and as to the process to be followed, the GP somehow proposes to re-do from scratch what we have been doing during the last year and a half. Pretending that the gTLD-MoU process has failed to reach consensus, it only provides with an alternative almost universally rejected.

Many commentators have already pointed out how unrealistic the GP is as to the selection process of the "five first registries". FCR wants to underline once more that there is a process that has gone through incredible, even if not perfect, public scrutiny in order to solve this issue.

Indeed, the gTLD-MoU process has been accused of failing to build consensus. And this is true in absolute terms: not everybody agrees with our proposal (which still would not prevent it form having consensus) and many people openly oppose it. But nobody will be able to point out any other alternative plan (or even any other Internet-related process so far) with such a wide and diversified support.

Please read again the list of signatories of the gTLD-MoU (http://www3.itu.int/net-itu/gtld-mou/signat.htm). The crucial point is not that it has 200+ signatories, but the wide, and often contradictory range of interests they represents: ISPs, large, medium and small. CORE registrars but also trademark associations. ISOC chapters and user associations, but also telco and backbone operators. Non-for-profit Foundations, associations and institutes and law firms. Private sector and public sector. US-based, European-base, AP basic and truly int'l orgs and corporations. Internet historical players and latecomers. People with an economic vested interest in this process, and lots of people with the sole interest of contributing to the best solution to the gTLDs issue.

Add to this the role played by those initiating and participating the IAHC/gTLD-MoU process: IANA; FNC; ISOC; IAB; INTA; ITU; WIPO...

In front of that everybody is well aware of the absolute incoherence of the interests represented by those opposing the gTLD-MoU, and therefore the radical lack of any possible "alternative consensus", as each and every group of opponents has only one interest to defend and is unable to present a whole design or solve the multiple issues at stake: those wanting hundreds of TLDs and that part of the TM community waning zero gTLDs; those claiming that the ACPs only serve big corps and those claiming that ACPs give too much weight to domain-name owners' rights; those claiming exclusive rights on generic words as TLDs and those opposing any "commercialization" or private-sector driven management of the DNS; those wanting competing registries and those trying to keep their current monopoly; those wanting more governmental representation within POC or IANA and those even opposing the presence of ITU and WIPO as non-voting observers; those claiming that any institution related to the Internet should be US-based and US-incorporated and those claiming that all Internet functions should be performed by int'l associations; ......

No, there is no alternative consensus. What's more the GP major contribution to the current debate will be (besides fixing the general consensus on the broad goals of increasing competition and stooping governmental intervention and funding) to show that the gTLD-MoU has in fact much more support that we all have realized. The simple reading of the comments received by NTIA cannot lead to any other conclusion.

III. Conclusion

FCR strongly encourages the US Government to take into account that most companies, organizations and individuals participating in this process have asked for the following points:

* Reassert IANA's authority over DNS issues

* Encourage and help reorganizing IANA as a more stable and representative entity.

* Refrain form regulating the gTLD namespace.

* Don't perpetuate NSI's monopoly over .COM, .ORG and .NET.

Respectfully submitted,

J.A. Plana

Director

FCR