From: Bruce Tonkin Sent: Friday, 8 October 2004 5:39 PM To: Jo Lim Subject: Melbourne IT submission to Draft Recommendations on Domain Name Policy Rules, September 2004 To: Jo Lim Chief Policy Officer auDA Regarding Domain Name Licence Periods ===================================== Melbourne IT agrees with the Panel's view that the .au domain name space should be responsive to the needs of both registrants and registrars for different licence periods. Melbourne IT was surprised to see that the panel supported a shorter period of 1 year, which may benefit some consumers that could not afford a 2 year registration, but did not support the security and peace of mind preferred by well established companies that want to secure a domain name for the long term. The risks to the integrity of the major name spaces (.com.au, .net.au, and .org.au) seem far larger for reducing the registration period, than they are for supporting longer term registration periods. 1 year registrations ==================== ==================== The experience in the gtld market has been that while 1 year registrations have resulted in a growth in the number of domain name registrations, many of these short term registrations have been favoured by those setting up websites for the purposes of short term marketing scams, or those seeking to on-sell or otherwise trade in the use of the domain name (e.g by selling click- through traffic associated with the name, or advertising space on a website pointed to be name). The integrity of .com.au, .net.au, and .org.au for Australian organisations has been strengthened by a more restrictive registration policy aimed at legitimate commercial and non-profit organisations. The additional cost to these organisations of a 2 year licence is small compared to the overall cost of establishing a formal legal entity with an associated ACN, ABN or other identifier. Id.au has been targeted at consumer use, and it would be appropriate to support 1 year registration terms for a consumer oriented name space. Melbourne IT recommendation: ============================ Introduce 1 year terms for .id.au, retain 2 year minimum licence terms for .com.au, .net.au, and .org.au. 3 year registrations ==================== The panel has recommended that 3 year registrations be allowed on the basis that this matches the business name registration cycle. Melbourne IT supports this recommendation. Longer licence periods ====================== ====================== Melbourne IT's experience with longer licence periods is that these are favoured by larger organisations for their most valuable brands, which are typically protected via trademarks. These trademarks are for 10 years, and thus Melbourne IT believes that the same logic used to justify 3 year registrations should also be applied to 10 year registrations. Some major customers have already been affected by either losing their domain names resulting from internal staff changes within large organisations (e.g docklands.com.au), or have had their website or email fail between the expiry date and when they are able to renew the name. The panel states several reasons why longer licence periods would have disadvantages for registrars and registrants. The panel offers no evidence to support these reasons. There is already 5 years of market experience to draw on from the gtld market with longer licence periods. The following provides a response to each of the reasons given by the Panel against introducing longer registration periods based on international industry experience. (1) difficulties in keeping registrant data up-to-date; These difficulties have been addressed in the gtld market by requiring a registrar to contact the registrant each year to update their contact details. This is known as the WHOIS Data Reminder Policy (http://www.icann.org/registrars/wdrp.htm). Currently there are no requirements in the .com.au market to request a registrant to update their contact details. Typically at the time of renewal after 2 years, registrants simply pay their renewal fee, and do not update their contact details (as long as one method of contact worked). Thus the present 2 year licence period does not help keep registrant data up-to-date. A separate policy should be developed that requires registrars to remind their customers to update their data at least annually. (2) increased risk of domain name renewal scams; The evidence seems to be to the contrary. Registrants that have long licence periods safely ignore most of the renewal scams. In the gtld market, registrants on 1 and 2 year licence periods receive the most domain name renewal notices. (3) potential for registrants to hold desirable domain names without using them for a long period; Only approximately 1% of the total number of domain names registering in the gtld market have licence periods exceeding 5 years. Thus the impact is negligible on the overall market. To provide further protection, it could be made a requirement that a registrant must hold a valid trademark to be eligible for a domain name licence period beyond 5 years. Only a small proportion of businesses hold trademarks, and it is not possible to hold trademarks for generic words. If a trademark is not being actively used then it can be challenged. Cybersquatters can be challenged under the .au Dispute Resolution Framework, and if a cybersquatter attempts to sell a name then this is also a breach of policy and the name can be cancelled. The risks of 10 year licence periods with respect to cybersquatting are the same as the current risks for 2 year registrations. (4) potential for registrars and resellers to go out of business in 5 or 10 years; and This is possible, although in 5 years of operation of the gtld market there has been little evidence of this happening to the detriment of users. Usually an existing registrar purchases the business of a struggling registrar/reseller. As stated earlier, only around 1% of domain names are for periods longer than 5 years, and thus in such a transaction these names are not significant in the transaction. In any case the names will continue to operate within the registry and zonefiles. Usually organisations that have domains with greater than 5 year registrations, are also likely to regularly register additional names for shorter periods, and thus there is continued revenue from those customers. This is an area of choice for registrants, and registrants weigh the risk of a registrar or reseller failing with the risk of failing to renew their name. The market should be appropriately informed of the risk, but also we should let organisations make that decision. The risks of a registrar or reseller making an error with a name (regardless of its registration period) - e.g misconfiguring a nameserver record, are far higher than the risk of the registrar/reseller going out of business. Note that some .au resellers have been in business for well over 10 years, and some registrars have been in business for more than 5 years. Consumers will be able to make their own judgements on their level of trust in particular businesses in a competitive market. (5) possible negative impact on registrar market competition at a relatively early stage of industry development. There is no supporting evidence for this statement. Given that only approximately 1% of the market will opt for greater than 5 year registrations, and assuming that a single registrar was dominant in this market - its overall impact on competition would be negligible. It is far more likely that that such longer term registrations would be distributed amongst registrars in proportion to their market share. In a competitive market, many of the new entrants could offer attractive pricing for longer licence periods, and consumers would need to assess the risk of a long term agreement at the cheapest price. Theexperience in the gtld market is that most consumers opt for shorter licence periods to preserve cash flow, and take advantage of possible future price reductions. Again consumers should be allowed to make that choice. Competition should encourage an environment of choice, rather than limiting choice to benefit some participants in the industry. The .nz domain name space introduced 10 year licence periods when the new registry went live in December 2002, and there have been no discernable negative impacts on competition in this market either. The panel refers to an "early-stage" of competition but does not elaborate on what this means. Does that merely mean that some members of the industry want to improve their position in the industry? The competition for new names is competitive, but the top 4 registrars are likely to continue to have more than two thirds of the market for the next 5-10 years, and based on the international market and equivalent industries such as the telecommunications and internet service provider industry - it is likely this will continue for the foreseeable future. The identity of the top 4 registrars may change, but there will always be a small group of registrars that are significantly larger than most of the other registrars. The introduction of 10 year licence periods will have no impact on this industry structure. If the panel is still concerned, they could consider only allowing 10 year licence periods on new names registered after a certain date - but this would disadvantage most companies that would have an interest in such longer licence periods which already have well established websites. Melbourne IT recommendation: ============================ Allow registrants to register names for licence periods up to 10 years in the commercial namespaces .com.au, .net.au, and .org.au, matching international best practice. This will allow organisations that wantthe security of a longer licence period to make the choice. This will have minimal impact on market shares of individual registrars, but does provide an important benefit of a competitive market - choice for the consumer. Summary ======= ======= Melbourne IT recommends reducing the licence period only for .id.au names which are oriented towards consumers that are likely to benefit most from a shorter registration period, whilst protecting the integrity of the .com.au, .net.au, and .org.au spaces for legitimate commercial and non-profit organisations. Melbourne IT recommends allowing longer licence periods to correspond to the registration period of businesses (3 years) and trademarks (10 years). Allow registrants to register names for licence periods up to 10 years in the commercial namespaces .com.au, .net.au, and .org.au, matching international best practice. This will allow organisations that want the security of a longer licence period to make the choice. This will have minimal impact on market shares of individual registrars, but does provide an important benefit of a competitive market - choice for the consumer. Bruce Tonkin Chief Technology Officer Melbourne IT