ICANN is trying to get an arbitration case covering the removal of price caps in .org, .biz and .info thrown out because it is registrants, not registrars, that are left shouldering the burden of higher prices.
The argument came in January filings, published this week, in the two-year-old Independent Review Process case being pursued by Namecheap, which is trying to get price caps reinstated on the three gTLDs.
ICANN’s lawyers are saying that the case should be thrown out because Namecheap lacks standing — IRP claimants have to show they are being harmed or are likely to be harmed by ICANN’s actions.
According to ICANN, Namecheap is not being harmed by uncapped domain prices, only its customers are, so the case should be dismissed.
Drawing heavily on an analysis commissioned by ICANN from economist Dennis Carlton, ICANN’s latest IRP submission (pdf) reads:
rational economic theory predicts that if wholesale registry prices increased, Namecheap would pass on any price increases to its customers. Namecheap is one of nearly 2,500 ICANN-accredited registrars that offer domain names to registrants, and one of hundreds of ICANN-accredited registrars that offer domain names specifically in .BIZ, .INFO, and .ORG. Namecheap thus competes against many other registrars that have exactly the same access to same registries, such as .BIZ, .INFO, and .ORG,as does Namecheap, which all pay the same wholesale price for these registry input…
Given the hundreds of registrar competitors (each facing the same registry prices from the .BIZ, .INFO, and .ORG registry operators), economic theory predicts that Namecheap and other such registrars do not have significant market power. Without market power, registrars like Namecheap do not earn supra-competitive margins and cannot absorb higher input costs. As a result, economic theory, as well as common sense, predicts that Namecheap and other competing registrars must pass on higher registry wholesale prices by raising prices to registrants, with little or no resulting harm to Namecheap.
The filing goes on the suggest that higher prices might actually be in the public interest, because ICANN lacks the expertise to set price caps at an appropriate level.
the likely harms of price regulation in these three gTLDs outweigh the likely benefits of price controls. ICANN lacks the expertise to set optimal prices. Without such expertise, the danger is that ICANN could set the wrong price — one that impairs efficient market outcomes — which would ultimately harm registrants rather than protect them…
In short, Namecheap cannot demonstrate that the public interest required ICANN to maintain price control provisions in the .BIZ, .INFO, and .ORG Registry Agreements, especially given that the majority of evidence they cite either pertains to a drastically different DNS or pertains to potential harm to registrants, not registrars.
Interestingly, in almost the same breath, the filing argues that the price of .com domains, which is capped per Verisign’s agreements with ICANN and the US government, acts as an effective deterrent to runaway price increases in other gTLDs.
With its popularity, and relatively-low, regulated price, .COM acts as a check on any registry, including .BIZ, .INFO, and .ORG, that seeks to increase prices above competitive levels.
So, regulating .com prices is good because it indirectly acts as a restraint on other registries’ prices, but regulating those other registries’ prices is bad because ICANN lacks the expertise to regulate prices.
And anyway, it’s only the registrants who get harmed if prices go up.
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