RCRP Meeting - 12 August 2004
Maddocks
Level 7, 140 William St
Melbourne
Present: Heidi Angove, Bruce Arnold, Simon Delzoppo, Tony Hill, Jo Lim, Bruce
Tonkin, David Thompson, Troy Trewin
Teleconference: Philip Argy, Terry Blenkinsop, Robert Sandali, Mark Suter
Apologies: Alan Davidson, Liz Williams
Actions:
- JL to draft minutes.
- Panel to draft statement of objectives of competition at the registry level.
- DT and JL to prepare first draft of public consultation report, for discussion on the Panel mail list.
Discussion:
1. Welcome and Roundtable Introductions
Panel members introduced themselves.
2. Panel Operations
The Panel noted and agreed the following operating procedures:
- Proxies: Panel members are permitted to send proxies to meetings, but the proxy should be sufficiently briefed to ensure continuity of Panel proceedings. Members cannot replace themselves by proxies on an ongoing basis; if a member cannot continue their position they should resign from the Panel.
- Confidentiality: Panel proceedings are confidential. Members are free to canvass, discuss and debate the issues outside Panel meetings (eg. on public mail lists or with their constituencies) but not to disclose the proceedings of the Panel - ie. what is actually said and by whom. To do so is likely to inhibit free discussion and work against an outcome.
- Minutes, papers and submissions: Panel minutes will be published on the auDA web site as soon as possible after each meeting. The minutes will record the Panel's discussion, but will not attribute comments to individual members unless expressly requested by the member. Panel papers are confidential until published on the auDA web site. Papers will ordinarily be published unless the Panel decides that a paper should remain confidential, in which case the minutes will record the existence of the paper. All submissions to the Panel will be published on the auDA web site unless clearly marked confidential.
- Reporting and publicity: The Panel chair will report to the auDA Board at each Board meeting. The Panel is independent of the Board in its deliberations, but the Board has the final say on what actually happens. The only official statements made on behalf of the Panel will be made by the chair. Panel members are free to speak about the work of the Panel, but should make it clear that they are not speaking on behalf of the Panel.
- Meetings: Participation in meetings should be as equitable as possible, given that some members will be attending in person and some by telephone. The majority of Panel members are located in Melbourne, therefore most meetings will be held in Melbourne in order to maximise attendance and participation. The Panel will meet as often as necessary in order to complete the Terms of Reference. Meetings of the full Panel may be supplemented by teleconferences or meetings of sub-groups if required.
- Consensus: Consensus has been defined by auDA as a 2/3 majority, although whether this means a 2/3 majority of members as a whole or 2/3 majority of members who are present at a meeting is yet to be determined. In the past, Panels have mostly been able to reach consensus without needing to call a formal vote on issues. There is an expectation that the Panel will provide a single recommendation to the auDA Board, however a significant minority opinion could also be presented to the Board as part of the Panel's final report.
- Conflict of interest: All Panel members have a conflict of interest and in most cases the nature of that conflict will be clear. However, if any members feel that they need to clarify their interests in relation to particular issues under consideration, then they should do so.
- Panel resources: auDA will provide secretariat support to the Panel. auDA will consider any reasonable request for additional resources that the Panel believes it requires in order to complete the Terms of Reference. Any such request should be made to auDA by the Panel chair.
3. Panel Terms of Reference
The Panel reviewed its Terms of Reference.
The overall industry competition model adopted by auDA has been generally successful, however market experience has shown that some of the registry aspects of the model are not as workable as first thought. In particular, problems have arisen with respect to periodic re-tendering, matching tender responses to requirements, and the introduction of new 2LDs.
4. The Economics of the Australian DNS at the Registry Level - A Primer
DT gave a brief presentation on the basic economic principles applying to the registry market in Australia. The following points were raised in discussion:
- At the time of the registry tender in 2001, com.au was the largest 2LD by a significant margin. The remaining open 2LDs were not likely to be commercially viable without com.au, and this scenario is unlikely to change in the near future with the current set of 2LDs.
- The basic model illustrated in the presentation is premised on a number of assumptions, including fixed price, set-up costs and technical standards for all 2LDs during the registry licence term.
- Reducing the registry licence term may seem a simple way of increasing economic efficiency, but it might undermine technical stability and act as a disincentive to upgrading or refining registry systems during the term.
- On the other hand, increasing the registry licence term is likely to allow a new entrant to make a higher investment in systems and equipment, but in the medium term would reduce competitive choice for both the industry and auDA.
5. Objectives of Competition at the Registry Level
The Panel discussed what auDA and the Australian Internet community are trying to achieve through competition at the .au 2LD registry level.
The most commonly cited benefits of competition are improved choice, price and service outcomes for customers. The Panel noted that a 2LD registry's customers are registrars, not registrants. Registrars exercise their collective choice of 2LD registry operator through membership and board representation on auDA at the time of the registry tender process (ie. there is no competition during the term of the registry operator). It was also noted that a change in wholesale price set by the registry will not necessarily have an immediate impact on the prices charged by registrars (as demonstrated in the Australian market when AusRegistry and auDA dropped their fees).
The Panel reviewed experience in the gTLD registry market over the past 4-5 years. Originally there was a single registry operator (VeriSign) capable of handling the scale and volume of .com, .net and .org. With the introduction of new gTLDs such as .biz and .info and the growth of some ccTLDs such as .de and .uk, there are now several experienced and viable registry operators that are competing with VeriSign.
The Panel agreed that increasing the number of competent Australian registry operators is not itself an objective of competition at the registry level, but may be a secondary benefit. Accordingly, Panel members felt it would be unnecessary and undesirable to adopt an interventionist or protectionist approach towards the domestic registry industry.
There was some discussion about the impact of registry performance on growth of the .au domain space. Although domain name policy rules play a key role, it was suggested that a registrar's choice to offer particular domain services also depends on the quality of service provided by the registry operator.
The Panel will draft a statement that encompasses the following objectives of competition at the registry level:
- stability of the Australian DNS
- integrity of the Australian DNS
- continuous improvement in registry service and performance
- efficient price outcomes for registry customers (ie. registrars)
- platform for technological innovation
- growth of the .au domain space.
6. First Public Consultation
The Terms of Reference require the Panel to undertake 2 public consultations. The first public consultation report will be a general discussion of issues and options. The first report may indicate the Panel's preference for a particular option or options. The Panel's second public consultation will seek feedback on the specific recommendations that the Panel proposes to submit to the auDA Board.
7. Discussion of Issues/Options
The Panel agreed that the multiple registry model is still relevant and desirable. The Panel noted that there are some problems with periodic re-tendering and new 2LDs caused by current market realities, but agreed that these problems do not justify constraining the model to a single registry.
It was noted that there are already multiple registry operators in the .au domain: AusRegistry (asn.au, com.au, edu.au, id.au, gov.au, net.au, org.au), CSIRO (csiro.au) and auDA (.au, conf.au, info.au).
The Panel focused its discussion on identifying policy mechanisms to address current market realities. It was agreed that the competition model should give auDA the flexibility to make decisions about the provision of 2LD registry services in a market-responsive way.
The Panel identified the following options for determing the provision of registry services for new 2LDs:
- tender process using the same specifications as the incumbent registry operator/s
- tender process using modified (simplified) specifications as the incumbent registry operator/s
- new 2LD is offered to the incumbent registry operator/s
- the incumbent registry operator(s) is/are required to incorporate a new 2LD under the terms of its/their licence agreement/s
- commercial negotiation by auDA with selected registry operator (new or incumbent)
- public EOI process with minimum specifications.
There was a preference among some Panel members for option 6 as a pre-cursor to one of the other options.
The Panel identified the following options for periodic re-tendering of all 2LDs (ie. how to accommodate new 2LDs within the overall registry market):
- no synchronisation of registry licence terms
- new 2LD registry licence term lasts until the next periodic tender (4 year maximum term)
- new 2LD registry licence term lasts until the subsequent periodic tender (8 year maximum term)
- 6 year maximum new 2LD registry licence term.
Issues tabled for discussion at the next Panel meeting:
- the contractual model between auDA and the registry operator
- the registry pricing model
- timing issues, ie. allowing sufficient time between the tender process and transition to a new registry operator
- risk managing the transition process between incumbent and new registry operators
- risks associated with multiple registry operators.
8. Next Meeting
The next Panel meeting will be held on Tuesday 24 August, 10am-1pm.
