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The Facts about Vertical Integration?

Ken Stubbs

While defending British soldiers in court during the 1770 Boston massacre trials John Adams famously said:

"Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence."

Six British soldiers were found not guilty and, despite the highly unpopular role he played in defending them, Adams went on to become the second President of the United States.

In a far less dramatic event, the ICANN Board will soon decide the question of vertical integration between domain name registries and registrars in the new Top-Level Domain (newTLD) round. But Adams' statement continues to ring true today and the question the ICANN Board must ask itself is: "what facts do we have before us to justify a change in policy." After 2+ years of intense community discussion on this topic, the answer is clearly — very few.

Of those few facts, the record shows instances of registrars using registrant-generated data to game the registration system for their (not the consumer's) benefit. It also shows gaming of registration rules that were designed to protect consumers (grace period "tasting"). It shows a weak track record of ICANN compliance and enforcement against abusive behaviors and, unfortunately, an ICANN compliance program that is currently leaderless and in transition. It also shows an ICANN budget that does not provide for significant enhancements to the compliance and enforcement program at a time when the newTLD round is about to get underway.

These facts aside, when deciding whether to change a policy like vertical separation, traditional competition analysis requires a determination about whether the existing policy has failed in some way or is harmful to consumer interests so as to support a decision to change the policy. The facts show a market for domain registrations that has grown remarkably over the years with falling prices resulting from vigorous competition. The facts do not bear out that the existing policy has failed or is somehow ill-serving the public interest.

Thus the Board must decide whether to continue a policy that has produced significant growth, competition and benefits for consumers or to change the policy to one of full vertical integration despite serious questions raised by the few facts on the record. While wishes, inclinations and passion have fueled Board members' discussion on this important question, at the end of the day, facts must support the Board's decision. In fact, under the Affirmation of Commitments, ICANN is committed to undertake "fact-based policy development." The ICANN community expects no less.

By Ken Stubbs, Internet Consulting and Executive Committee Member at Afilias
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Hitting the Undo-button is not changing policy Volker Greimann  –  Nov 08, 2010 10:19 AM PDT

But the board already has changed policy:
In the Nairobi board decision that became the basis for the VI language included in DAG4 the ICANN board boldy went and changed current policy. This can and should be removed from the final DAG.

There simply never has been any policy for (or against) registrars owning registries, and there are many examples where registrars do own significant shares in current gTLD registries or registry service providers.

The possibility of gaming will exist regardless of vertical integration is allowed or strict seperation is enforced.

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