From: Michael Paddon 
Sent: Wednesday, 13 June 2001 12:25 PM
To: jo.lim@auda.org.au
Subject: Late Submission on "Second Report for Public Consultation"
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Dear Ms Lim,

I understand that I have missed the deadline for a formal submission regarding the 
Competition Model Advisory Panel's Second Report for Public Consultation. However, 
I thought it worthwhile to put forward my comments regardless, in the hope that they 
can contribute positively to the auDA process.


Regarding 4.2 "Policy Authority":

auDA should recognise that, as the sole source of policy for the .au domain, that it 
will in all likelihood necessarily operate as the arbiter of last resort for operational 
disputes. The exercise of such powers is completely incompatible with engaging in 
operations in any way; in other words the clear separation of policy and operations 
is a worthy goal and should be sustained.

Furthermore, I would suggest that auDA establish policies and procedures regarding its 
role of final arbiter, including clear guidelines as to powers responsibilities and 
acceptable remedies. In other words, auDA should expect disputes to arise and be prepared 
to resolve them when all other avenues have been exhausted.


Regarding 4.3 "Registry":

The recommendation of a single registry for existing 2LD's appears to be precipitate 
and inconsistent with the stated policy "that auDA adopt a competition model that allows 
for multiple registries".

The Panel asserts that "efficiencies from a single operator outweigh the benefits of 
innovation and competition". I challenge the Panel to provide a more substantial 
justification of this position. Common economic theory would suggest that a competitive 
environment, as opposed to an effective monopoly, would lower costs and improve service 
levels. Just as importantly, the presence of real competition frees a registry operator 
from the quite onerous constraints of the Trade Practices Act in regarding the use of 
market power. It therefore seems to be to the benefit of all parties to ensure the 
presence of competition from inception.

I noted with interest the Panel's numerical analysis of the number of domains in each 
2LD: "there are more than 200,000 domain names under management in com.au, while the 
other 2LDs each have less than 20,000". It seems that one obvious strategy to assure 
competition is to tender out the registry function in two parcels: com.au and everything 
else.

However, I would suggest that the Panel consider simply letting the tender process decide 
how many registries are set up, while setting up the minimal conditions necessary to ensure 
that there are at least two competitors at the end (ie. if you get com.au, you can't have 
anything else).

On the other hand, if one registry captures all the existing 2LD's, it will be 
substantially more difficult for a competitor to become established in the future since 
the incumbent will have time to establish a stranglehold on the market. If 20,000 domains 
is not enough to compete effectively, what will it be like to start with zero?

To address the other points raised on this matter by the Panel:
    * The market can be tested by simply spacing the tenders in time, allowing
      the Panel opportunity to fine tune policy. It doesn't have to be a "winner
      takes all" experiment.
    * Uniform minimum SLA's and benchmarks can be created simply by including
      them as a tender requirement. Conversely, however, allowing a monopoly to
      set benchmarks seems unwise.
    * Industry and consumers will generally interact with registrars and
      resellers, not registries, so the need for time "to adjust" is minimised.
    * The public interest is probably more oriented towards cost and quality
      of service rather than "duplication of infrastructure".


I would like to take this opportunity to commend the Panel on the open and transparent 
process that it has adopted, and the results which have been achieved so far.

Michael Paddon