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Verisign's Anticompetitive Waiting List Service
Verisign and SnapNames are attempting to monopolize the currently competitive secondary market for internet domain name registration. It appears they have managed to confuse the media and their government representatives with inaccurate and misleading information, thereby effectively clouding the issues. The facts contained in this document expose the truth on the proposed domain name wait list system, known as the WLS. Please see the bottom of this document for people you can contact now to protect your rights as a domain consumer.
The back-end Registry is still and has always been a 100 percent monopoly of NSI/Verisign, with the governmentís blessing. Few domain registration companies like the situation, but they have no choice other than to pay their competitor (Verisign) $6 per year for every registration and renewal their own customers make.
Verisignís current modus operandi is to buy up and partner with bigger competitors and squeeze the rest out of existence by exerting monopoly control (causing higher fees and making competitor services irrelevant, etc.). Few registrants use Verisign because of good prices or service. Most registrants registered their domains when NSI had its registration monopoly and Verisign makes it as difficult as possible to transfer domain names to competitive registrars. Hence, NSI/Verisign still controls a huge part of this retail market too. As mentioned above, Verisign controls 100% of the Registry and gets $6 per year for every name registered by the customer of any registrar - even all the people that proactively have transferred away from their retail service. The supposed split between the Verisign Registry and Registrar is fiction. The same shareholders and management run both. For example, Chuck Gomes (Vice President, Policy & Compliance) who has been with NSI since the early 1990s, has undertaken substantial efforts to keep the monopoly strong, while purporting to represent the best interests of other registrars in the WLS process.
The biggest scam is that the WLS is somehow supposed to help consumers but, in actuality, it would simply create yet another huge inefficient layer of expense and bureaucracy for the entire domain industry at the expense of domain consumers. Simple economics tells the story. Economically incentivized domain registrants, working with surviving competing registrars, or Verisign themselves, will be motivated to register roughly the same domain names through the WLS process as they would without it. But they will all have to pay off the Verisign monopoly exorbitant sums in the process (more than the $6 per domain they are currently forced to pay) - all of these costs will be directly incurred by or passed on to consumers. This will squeeze additional funds from the consumers and all non-Verisign domain registrars and dealers simultaneously. This entire scheme has been devised only for the enrichment of one enormous, monopolistic, politically-connected, Wall Street mega-corporation.
If the domain market cannot absorb these excess fees, fewer overall names will be registered, thereby harming the entire economy to a degree. These increased expenses for the domain registrars and their customers will result in many currently healthy small companies failing. Such is the fate of monopolized markets.
The existing lack of the "Chinese wall" between the Verisign Registry and Registrar, as contemplated in Commerce agreements, is already alarming and hurtful to supposed competitors, and certainly the WLS would bring about massive additional conflict and harm.
Monopolies vs. Competitive Markets:
Ever since the secondary domain market began to take root two years ago, NSI, whose monopoly was supposed to be regulated and controlled, has tried to close the door on competition like they have in other market segments. Waste, inefficiency, bureaucracy and illegitimacy are overthrowing free markets and relatively efficient capitalism. Didnít we learn enough from watching how companies like Enron, WorldCom, and Adelphia manipulate markets and government processes to obtain enormous wealth? With the WLS we have a chance to stop another injustice that has yet to come to fruition.
In fact, the Verisign Registrar has been losing enormous numbers of customers and market share ever since 1999 when the registration marketplace opened up. This is clearly because customers, frustrated with the high prices and poor services from the 100% monopoly days, turned to competitors, who were cheaper, more responsive and often bundle added services with each registration. It makes no sense to unwind the progress achieved so far by permitting Verisign to extend its monopoly status, which will, no doubt, result in harm to consumers. The only purpose of the WLS is to line the pockets of Verisign and SnapNames, who will be free from all competition in the secondary market for domain names. They will be able to control what happens to every expired domain name - despite the fact that they have no way of legally establishing any rights to those names.
The only place competition in the domain space has worked and proven profitable to competitors is in the secondary market, which includes the deleted-domains market space. This piece of the market feeds about a hundred small companies and their employees. The most innovative ones get fed the most leading to lower prices and higher quality services for consumers Ė and leading to loss of money and monopoly power to Verisign. Conversely, enacting the WLS will immediately raise business costs to all small Verisign Registrar competitors (who are also customers of the Registry) forcing many of them to fail and the others to defray their increased costs by raising prices to consumers or cutting services. This is by design of Verisign in its attempt to monopolize the secondary domain market, and put it competitors out of business through unfair means, while manipulating ICANN board members and politicians in their districts.
This is simply a case of two companies, with mischievous intent, colluding to take 100 percent control of a currently competitive market space. There is one large company with a monopolistic past and one pawn to pretend the public supports the move. The only other ICANN-accredited registrars who voted in favor of the WLS were either owned or closely connected to these two companies. But the wishes of the ICANN Registrarís Constituency was thrown out the window when the ICANN board (including a SnapName board member) caused the board vote in favor of the WLS Ė ironically, only weeks after ICANN publicly stated they could not handle their mission. www.icann.org/general/lynn-reform-proposal-24feb02.htm
Verisign has signed on SnapNames so that is the biggest proponent of the service, instead of being its biggest opponent which it would otherwise be. Small registrars are not nearly as vocal or powerful, so many will just get steamrolled out of business. With the new system these other registrars who specialize in the secondary market would have little value-add to offer their clients. There is no reason to use them on the WLS since they couldn't distinguish themselves. They also would have little use for the equipment, employees, and other resources they currently utilize in the secondary market. All of their recent investment in building this area of their businesses could become worthless overnight if Verisign is handed the rights to every expiring domain.
We canít blame a small company like SnapNames for their willingness to make untold millions of dollars with the help of their mega corporate co-conspirator (other than the fact that their greed extends to blatantly misleading Congress). RealAudio link to the hearings- http://www.fednet.net/ram/2002/sco061202.ram
You can also thank Senator Warner, who doesnít know (or seem to care to know) anything about domain names but merely wants to cater to the wishes of his constituents, for allowing only pro-WLSers at the Congressional hearing.
As you can now see, Verisign and Snap are purposely overcomplicating and/or falsifying the WLS issues in order to cloud the facts from the public and the government. Are we going to allow this fraud to be committed against us by a huge monopoly and their political connections or will we stand for consumers, small companies, free markets, and open democratic processes?
Current Process vs. Proposed WLS Process:
Once it ceases to exist, according to the years long practice of being deleted, it is then available to be "re-invented" and re-registered. Any registrar is supposed to have the right to register any domain that is not currently owned by someone else including all the ones that once existed. There is absolutely no excuse for the name to revert to Verisign for them to resell to the market at massively inflated rates - and obviously it breaches current government agreements for it to be over $6 in any case.
The current drop system is very fair. Every ICANN registrar gets the exact same number of connections and has an equal chance of getting a name for any of their customers who request the purchase. There are ample resources, funds, and profits at Verisign to support the existing structure. As proposed, the current systems will still exist in parallel with the WLS, and the vast majority of names would be purchased at the former since they are less expensive. In justifying the WLS, Verisign has claimed they seek to cut the costs of the Registry systems. Are they now saying running two systems in parallel will be less expensive than one? If it is less expensive then why an increase in prices?
They already appear inept at running the current system even with about $180 Million a year in Registry revenue, most of which is likely profits. Should they now get to steal another market without the explicit approval of the Commerce Department, who originally only authorized a $6 fee and thereby attempted to control the monopoly? Did Verisign offer to let another company control the WLS in the name of the "fairness" they pretend to be concerned with?
Also the Verisign Registrar is the current registrar of record for the vast majority of names being deleted due to the 20 Million plus legacy domains inherited from their former NSI monopoly. They control and are the only ones who know when these 20 million domains are going to be deleted (if ever) and therefore have an unfair advantage in selling WLS subscriptions via their Registrar (the other side of their hollow Chinese wall).
Currently, hundreds of thousands of expired domains are many months and even years beyond their expiration dates by Verisign, some possibly in an attempt to prime the WLS pump with inventory, or merely to make competitors suffer by withholding domains that could otherwise be registered for their own customers.
Illegally Selling Options Contracts:
ICANN is in collusion on the issue as well because they folded at the pressure of their main financial benefactor (Verisign) weeks after having publicly declared they did not have the resources to fulfill their mandate.
The Registrars Constituency, that everyone thought had huge weight on this matter, was totally ignored. More than a 2/3 majority voted against the WLS yet the ICANN board was able to ignore this fact. Moreover the few registrars who voted for the WLS could almost all be linked as business partners of (or 100% owned by) Verisign and SnapNames. And the details of Verisign/Snap relationships with the other people who voted on the ICANN panel are not known and have never been clearly documented.
We firmly believe that the government, ICANN, competitors, and consumers must be assertive in preventing this illegitimate service from ever reaching market before further harm is done to domain consumers.
To receive more infomation, to provide information, or if you believe your company is being harmed and you want to join a class action suit on the matter contact:
Here are the people you should contact now in order to help protect you, the domain consumer, from illegitimate monopolistic practices:
These guys are the department within the Department of Commerce that is supposed to handle the day to day dealings regarding ICANN and domain names. Are they protecting you or letting Verisign do as it pleases?
2. Department of Justice, Antitrust Division
This division is in charged of preventing monopolistic activity, such as the WLS. Also, the DOJ enforces contracts with the Department of Commerce. To date, their position on the WLS has not been made public.
3. Write to Your Congressional Representatives: http://www.house.gov/writerep/
They should be protecting you from huge corporations like Worldcom, Enron, and Verisign taking away your money, and your rights to competitive services and prices.
They were first against the WLS and later caved. Ask why? It may be because because ICANN threw in the towel on their mission and happens to take most of their funding from Verisign. They should have killed this scam long before the government needed to step in.
Mr. Tauzin has been involved in Internet policy and needs to understand and act on this issue.
6. US Department of Commerce
It is Verisign/ICANN contracts with the Commerce Department that are being directly violated in attempting to enact the WLS. Is anyone there taking appropriate action before consumers are harmed more?
Secretary Donald L. Evans
Deputy Secretary - Samuel W. Bodman
7. Federal Trade Commission
These guys are slated with protecting consumers, including preventing monopolistic practices. They seek public input so please email them at [email protected] if you think you are being harmed by the WLS.
Dotster's response to WLS
WLS comments from Identities.com
NSI/Verisign's WLS proposal
Link to DOC Technical Management of Internet Names and Addresses
Management of Internet Names and Addresses statement of policy, 6/5/98
Cooperative Agreement Between the Department of Commerce and VeriSign (Network Solutions)
Comments by Kirikios
Approved Agreements among ICANN, the U.S. Department of Commerce, and Network Solutions, Inc.
Fact Sheet on Tentative Agreements among ICANN, the U.S. Department of Commerce, and Network Solutions, Inc.
FTC Antitrust Guide
FTC Illegal Business Practices