Subject: Re: Tired of Waiting

From: "Richard J. Sexton" <[email-masked]>
Date: Tue, 14 Jul 1998 15:43:44 -0400 (EDT)

At 02:43 PM 7/14/98 -0400, Perry E. Metzger wrote:
>
>"Christopher Ambler" writes:
>> >In other words, it's *critical* that the *Registry* for a new TLD be
>> operated
>> >as a public trust, not as someone's way to "make money fast".
>> >
>> >(If you don't see why for-profit, but competing, Registries don't work, ask
>> >yourself how you'd feel once your snappy URL http://my_name.new_tld/foo/bar
>> >is embedded in 10,000 web pages world-wide, and your for-profit Registry
>> then
>> >ups the rate to $1,000 per month....)
>> 
>> 
>> This argument has been countered, time and again.
>
>No, it has just be denied by individuals like you who want to make
>money by getting a profitable monopoly on public resources. The bulk
>of the community has a pretty obvious interest in the other direction.
>
>Perry

Perry, Chris want's to sell names directly to the public. His prices
posetd on the webtld.com website are $35/yr with discounts for multiple
years. Chris has agreed to stipulate or contactually agree to 
a long term increase shcedule.

On the other hand, the CORE registrars that would *like* to sell
IAHC's version of .web charge, on average $75 to $100/yr as
middlemen.

So, if Chris can sell names at almost a third of the price, on
a for profit basis with a guarentee of yearly reregistration
fees, and the non-profit CORE model has the price is almost
3X as much, perhaps you can explain to me the logic that says
non-profit is better for me the consumer?

--
The most important thing in the programming language is the name.  A
language will not succeed without a good name.  I have recently invented
a very good name and now I am looking for a suitable language.
     -- D. E. Knuth, 1967

---

From: "Perry E. Metzger" <[email-masked]>
Date: Tue, 14 Jul 1998 17:21:30 -0400

> a long term increase shcedule.

The issue is not only one of price. If Chris turns into a flake, his
customers have no way to switch to another provider. Furthermore, we
would expect that with time, prices should drop, not remain stable.

> IAHC's version of .web charge, on average $75 to $100/yr as

I have no evidence that supports your claim. I also suspect that
competition in the area would drive prices down to a small rate of
return over cost.

Perry

---

From: Simon Higgs <[email-masked]>
Date: Wed, 15 Jul 1998 04:19:28 -0700

>would expect that with time, prices should drop, not remain stable.

Expectation and reality are two different things. But I've told you that
before. 

The registry industry requires stability, not a price war that kills
everyone. I guess you missed out on that part of iahc-discuss. Start low,
adjust for inflation, adjust back for the competition, and finish low.

Simple, init?

>competition in the area would drive prices down to a small rate of

Then how do you explain Jon Gilmore's push to raise CORE's end fees? Or was
the reason for the increased fees just to build a legal war-chest for the
bleedin' obvious?

And how do you explain the CORE registrars selling non-existant domain
names, or charging upwards of $500 just to be put ahead of everyone else in
the magical CORE queue? There is plenty of documented evidence.

Best Regards,

Simon

--
###

---

From: John Charles Broomfield <[email-masked]>
Date: Thu, 16 Jul 1998 12:48:03 -0400 (AST)

(A little late, but...)

Richard Sexton wrote:
> >> >In other words, it's *critical* that the *Registry* for a new TLD be operated
> >> >is embedded in 10,000 web pages world-wide, and your for-profit Registry then

Well, if that is the case, and seeing that Chris can sell at $35/yr, with
registrar AND registry integrated, why doesn't he divest from the registry
part, just stick to the registrar part, and bundle in with CORE. His
infastructure costs and needs to run the registry part would suddenly
disappear, (maybe Chris can inform us of how much that part costs him in
systems, staff and personal time, but I'd be surprised if he was managing at
less than $10 per name. I think he has around $1000 names registered, so if
he wants to argue that he has spent less than $10.000 I would be very
surprised), so from his $35/yr he has maybe $10 dedicated to the registry
business. CORE *TODAY* would charge him $15 per name, so he could "up" the
price by $5 to $40. Seeing that you're so convinced that the CORE bunch is
going to stay at ludicrously high prices, wow... he's going to make a
killing!

Yours, John Broomfield.

---

From: Simon Higgs <[email-masked]>
Date: Fri, 17 Jul 1998 05:44:54 -0700

At 12:48 PM 7/16/98 -0400, John Charles Broomfield wrote:

You've got it backwards. If IOD divested and became just the .WEB registry,
then the entire CORE cartel would be able to become .WEB registrars without
any legal challenge, or any cost or obligation to finance the registry
portion. This has been offered to the CORE leadership, and they turned it
down.

Of course, greed, stupidity, and sheer bloody-mindedness have not been
turned down.

Best Regards,

Simon

--
###

---

From: "Roeland M.J. Meyer" <[email-masked]>
Date: Thu, 16 Jul 1998 22:43:54 -0700

operated

>disappear,

MHSC is looking at the same business operations model as IOD (which Chris
is not directly involved with anymore, he works for Microsoft now). I see
no benefit in breaking out the registry. Most of the cost is in the
registrar anyway. Especially if the hardware is already sunk-cost for other
operations. In that case the registry is no cost, just a postgreSQL
table-set, occupying disk space, and CPU, which other operations are
already paying for. IOW, your argument carries no weight.

The trick is that no single-service ISP can do this. The same reason that
we can cut Verisign's price structure out from under them, it's not our
main source of revenue, it's gravy. We pay the rent from other, more
profitable, services. However, we will never operate a service at a loss,
but we don't have to. It's the incremental profits, from a full range of
services, that make the next generation ISP profitable.

> (maybe Chris can inform us of how much that part costs him in
>surprised),

Then continue to be amazed. Given sufficient volume in other services, the
TLD stuff drops below the financial "noise" level. I can run a TLD registry
on a four-year old 486. Given three year depreciation rates, the box is
zero-cost. Maint, once it is running, is not much higher than the cost of
keeping a 150 watt light-buld lit 24x7. The real cost is the development of
the registry/registrar software (about $600K) which, amortized over three
years, comes out to $1.6K per month. At $35 per month, break-even is about
45 SLD's per month for that TLD. The interesting thing is that the second
TLD uses the same software, but it's a sunk-cost. Better, the IRS will
allow the write-off as a deductible loss., which recovers $0.28, per
dollar-spent.

> so from his $35/yr he has maybe $10 dedicated to the registry

One man's killing is another man's poverty. Please define this killing.
BTW, NSI has set the expectation for SLD prices. The upper bound, at least.
Given that the minimal costs are "fixed" the amount of margin is
volume-based. How many SLD registrations, per month,  are you assuming?
___________________________________________________ 
Roeland M.J. Meyer, ISOC (InterNIC RM993) 
e-mail: <mailto:[email-masked]>[email-masked]
Internet phone: hawk.mhsc.com
Personal web pages: <http://www.mhsc.com/~rmeyer>www.mhsc.com/~rmeyer
Company web-site: <http://www.mhsc.com/>www.mhsc.com/
___________________________________________ 
SecureMail from MHSC.NET is coming soon!

---

From: John Charles Broomfield <[email-masked]>
Date: Fri, 17 Jul 1998 16:53:51 -0400 (AST)

Simon Higgs wrote:
> > [ I argued that it was in IOD's interest to drop the registry and become
> > a registrar under CORE]
>

Hi Simon, economically (as far as making a fast buck) for the CORE bunch
it would have probably made sense to accept the IOD proposition. Fortunately
there is oversight to make sure that the CORE bunch can't act selfishly to
the detriment of the registrants, and this would have been blatantly so.
Yeah, IOD offers CORE to run ".web" under a "IT'S MINE AND YOU CAN'T LEAVE
ME" agreement. How does that guarantee CORE to get the best possible service
available? Where is the fear of competition going to push service of IOD up
and price down?
If the offer is "Hey, I'll run '.web' for you but will accept a yearly
reopening of the contract so that bidders can offer to give better/cheaper
service for the same registry", then that would probably be acceptable to
POC/PAB.
Oh, I nearly forgot... that's more or less the agreement with Emergent, so
if Emergent gives lousy service, it would be dumped in favour of someone
else with no loss of service to SLD holders.
For a system of penalties to work, it has to be enforceable. If IOD says
that ownership of ".web" is not negociable, then who's stopping them from
holding registrars or registrants up for ransom no matter what contract IOD
has signed? "Yeah, I signed this saying that I would keep the price down,
but it was signed in the U.S. and now I've moved to Singapore and don't give
a damn about that bit of paper, and as nobody can take ".web" away from
me... And your renewal is now $1000 per month. So sue me".

Yours, John.

---

From: John Charles Broomfield <[email-masked]>
Date: Fri, 17 Jul 1998 17:50:02 -0400 (AST)

Hi Roeland,

> already paying for. IOW, your argument carries no weight.

Yup. You're completely right. In a scenario where you own/control the
registry and you are the only one doing registrations, outsourcing the
registry has little or no advantages. One thing that just about everyone
agrees is the prevailing vision (even Chris Ambler I think, though he says
he doesn't like it), is that registry should be separate from registrar to
allow customers to be able to registrar under a given TLD through different
companies, and not be forced to go through one companies horrible procedures
when they'd prefer another companies simple procedures (or so that they can
get a no frills service as opposed to a hand-holding process, etc...)
One thing that you seem to agree with however is that the registry part,
once operating is nect to nothing as far as operating costs... (more on this
later).

> services, that make the next generation ISP profitable.

Agreed completely. Take a look at the UK, and tell me how many companies you
find that survive solely on ".uk" registrations and do no other services
(Purely out of coincidence, in the UK is where one of the largest
"registrars" for .everything is based, but that's another story). My guess
is that you'll find none. Count how many registrars there are for ".uk"
(doing it with nominet), and look at them. Most are ISPs that interface with
the registry to update/enter records for the customers that they have that
host webs with them, or are directly connected, or need email, or...
A domain name on its own is something pretty useless. You need a link
somewhere or a web server or a mail forwarder or a bunch of hosts or...
In just the same way that GENERALLY a customer doesn't get his IP addresses
from one place and then sets up somewhere else (I'm talking about general
cases), it would make sense that in general a customer would also get his
domain names through his upstream provider. Most ISPs would eventually
become registrars.

> allow the write-off as a deductible loss., which recovers $0.28, per

I said I would be surprised if he had spent less than $10K, but you say that
the development of the software costs $600K. That's exactly what I was
talking about... So if under your calculations he has spent $600K, and he
has taken back around $35K in registration fees, then he's heavily broke...
(Maybe that's why he so badly needs the monopoly over '.web')
You put forward a good case for having just one registry. The same
hardware/software setup to deal with one TLD should be able to handle 1000
TLDs, just spreding out the initial cost until it goes so low that its
ridiculous. That was the initial philosophy of CORE. However the consensus
seems to be that there should be more than one registry (I feel it's a
political imposition by people like Ira Magaziner or others who haven't
really looked as deep as they should, but with some impositions like this
its best to work with them than ignore them). In any case, thanks anyway for
defending the choice of a single registry.
Having covered initial cost, running costs are ridiculously low, and service
is relatively simple to give, so allowing a for-profit company to have a
strangle-hold on this (ie allowing him to charge whatever he wants for
example) would be bad practice.
Chris says "hey, then put a price cap". It's actually the other way around:
The conglomerate of registrars should actually say "we're willing to pay
THIS for the business of having a company run this registry for us. Who's
taking?" All the while, the ownership of the TLD stays in the hands of the
overall structure, but not owned by any one group (if you like it's nIANA
that owns all TLDs).

> volume-based. How many SLD registrations, per month,  are you assuming?

There might be 'expectation' for SLD prices, but nothing that causes people
to go elsewhere for a question of $30 more or less (in general).
When you setup your business, buy your furniture, get your internet access,
buy your computers, etc etc etc... the average Joe *DOESN'T* think about the
price involved when registering the domain name but rather thinks in terms
of what is best suited to his business, and then gets it. He will only back
down on his initial choice and get another one if the policy/difficuly/price
of his initial choice are WAY out of sync (ie a price of $10.000 to register
a domain or...)
I'm not just making this up! I've had experience before while living in a
European country where the policies really blocked getting registrations
done, but even so the companies would really fight for their names, and now
here in Guadeloupe companies are faced with 3 possible choices:
(Guadeloupe is an overseas department of France)
They can either get a ".gp", or a ".fr" or a ".com/.net/.org".
Costs and hassles:
For ".gp" if they are local, its FREE, with no yearly renewal or changing
fees. Hassle is minimal as far as proving their identity.
For ".fr" if the registration is done through a basic registrar, then the
cost of registration is aprox $200, each modification is aprox $50, and
anual renewal is around $18. Quite a bit of hassle in having to fax legal
documents to the AFNIC (why they call themselves AFNIC instead of FRNIC is
beyond me, but its their choice).
For ".com" it's $70 for registration, and $35 for renewal. Also minimal
hassle as far as identity checks go.

So:
.gp : free & minor hassle
.com: cash & minor hassle
.fr: lots of cash and more hassle

Do our customers first ask what the policies are and then ask for a domain
name (talking with my ISP hat on) ? Well, most of them are clueless, and
accept the recomendation of a ".gp" or ".mq". However, for those customers
who are already internet aware, when they get to us they already know what
domain name they want, and if it's a ".com" or a ".fr" they usually stick to
that choice. Have they heard of NSI, AFNIC, INRIA, IANA...? No way.

Therefore, any new TLD that comes in the market can have whatever prices it
wants, and it will be used. Even if its only to get registered by that bunch
of aprox 100 names that want worldwide visibility with "name.*" at whatever
price (names like intel, microsoft, netscape, chanel, etc...).
If you could get global visibility for a TLD with whatever uninteresting
combination such as ".asdasd" and charge $10K per registration, you'd
probably STILL be able to register at least 50 names... (and then there's the
renewals!)

Yours, John Broomfield.

---

From: "Roeland M.J. Meyer" <[email-masked]>
Date: Sat, 18 Jul 1998 14:47:10 -0700

>get a no frills service as opposed to a hand-holding process, etc...)

MHSC is talking no-frills. But we have to have a customer care call-center
anyway. They need work to do. It'll be under the same roof as our NOC, in
Colorado. In any case, it's is provided our of slack-time from the other
services. Ergo, sunk-cost anyway.

>once operating is nect to nothing as far as operating costs... (more on this

Yep.

>host webs with them, or are directly connected, or need email, or...

Yep, a single-service business model doesn't work anyway.

>domain names through his upstream provider. Most ISPs would eventually

Yes, exactly the vision I see, with one caveat. I see the customer getting
his Access through thier IAP, usually the local telco, and getting their
services elsewhere becasue the telco is so bad at those. This concept is
integral to our business plans. We see a separation between IAPs and ISPs.
Access is the only place that absolutely no one can compete with the
telcos. They have scads of raw switch capacity, which is already paid-for,
therefore, no one can touch their operations cost levels. Having been in
management at both MCI and Pacific Bell, I have seen this personally.
Access is another place where initial investment cost is a serious barrier
to entry.

>has taken back around $35K in registration fees, then he's heavily broke...

Unless the base-line software was available as open-source. MHSC is
primarily an R&D house, not an ISP. Further, we're a Linux shop and heavily
invested in the open-source concept. On that note, we are looking into
opportunities to provide those services as well. Including an Enterprise
Server diistribution for Linux, but that's another story.

Consider this; SLD registration software is not much different, in
essential operation, from user registration software, which the typical ISP
*also* has to have. The only difference is the data, which are the objects
wrapping the pSQL statements. Ergo, one should be able to get close to 80%
re-use. Suddenly, the cost of the SLD registration software drops to $120K,
as an add-on development. Further, if it's is bundled as part of a Linux
distribution, the development cost is now part of a product, therefore
carried on a different ledger entirely, as part of investment cost for a
software product, rather than being charged against the service. The SLD
registry, for a given TLD, now operates essentially for free and the
product only has to recover $120K against software sales.

<gotcha!><grin>

>ridiculous. 

Thousands?!?! Lets talk millions, just add sufficient RAID5 space, a half
T-byte should do it. I can get 23GB SCSI-UW drives for $1600, normal price.

>That was the initial philosophy of CORE. However the consensus

But, the other half of the argument was only just presented <grin>.

>example) would be bad practice.

Why? The customers would simply go to another TLD. BTW, we're consiidering
$35/year for a SECURE TLD list to be quite profitable and fair. As we add
value, of course, the price will go up to reflect the increased customer
support costs, plus a profit margin. In any case, we do not envision it
going over $75US/year, in 1998 dollars. It's the *other* SECURE services
where we intend to make the majority of the profits.

>that owns all TLDs).

BTW, you do realise that you've already agreed that a single-service ISP
can not make enough to stay in operations. A non-profit TLD operator would
not be allowed to field the other services that would keep them
operational. Therefore, a central TLD, a la CORE, can not remnain solvent
for long.