on 28/10/01 1:39 PM, Ian Johnston at ian.johnston§infobrokers.com.au wrote:

> - Hypothesis: Given the scale and scope of domain name registrations in the
> .au namespace, under new registry arrangements the marginal cost of issuing
> a domain name licence should approach zero.

I have been struggling for some time now to truly understand the nature of a
competitive model for domain registrations. This point you make highlights
the difficulty I have with the process.

AuDA will be charging the registry $11.30-$12.00 per domain name (per two
years?). That is on top of a $100,000 setup fee for the .com.au space and
smaller amounts for the other 2LDs. Now I can understand that this money is
needed by AuDA for administration, policy development, education, etc.

But let's assume that our market tends to similar pricing as the US and we
see fees of about $30/year to the end user. Where is that money going?
Naturally there is an IT cost to hosting something close to 300,000 .com.au,
.net.au, etc domains. But by creating a three tier system the cost of
advertising, providing accounting systems and web interfaces is being
multiplied through every competitor in the marketplace.

What I do not understand is a competitive model where the product from every
reseller and registrar is identical. They all sell domain names.
Differentiation of the product will be almost entirely on the basis of:

* advertising
* ease of use of web site and accounting systems
* price

I would suggest that ease of use and price will be reasonably uniform across
the market and so marketing will play the major role in this competitive
model.

But how then do Australian registrants (end-users) benefit from this
competitive model? To me, it seems remarkably similar to the business model
of the late OneTel: they provided almost no product or services directly but
simply resold another service. They provided the appearance of competition
without the reality. They were a company that advertising and billed the end
user (and not very well).



I know I have raised this question before, but I am still puzzled by the
economic benefit of a competitive model when the product has almost no
marginal cost and is completely identical from every reseller.

The one competitive part of the process is the current tender for a
registry. As long as the tender process sets the price which that registry
may charge there is significant possibility of better pricing. Even the
Melbourne IT IPO prospectus acknowledged the drop in profit that would
result from Melbourne IT having to compete against other registries.

But competition at the registrar and reseller level seems analogous to the
Department of Fair Trading reselling business name registrations through
private companies, or the ATO selling ABN registrations to accountants who
then resell them to their customers.


What if the registry was responsible for both authoritative name servers and
other back-end functions as well as providing a web interface and billing
systems? Melbourne IT does that now very successfully. The only problem
appears to be their pricing. High because of the difficult .com.au policy
requirements and because they are a monopoly and can charge what they like.

The first problem is being eliminated and the second is removed by forcing
them to tender competitively against other possible registries.


Cheers
Ari Maniatis

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