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Registry / Registrar: Does Separation matter?

At the dawn of the Internet age the domain registry and registrar were one and the same. The registry managed the domain space and also sold domains as a registrar to anyone that wanted one. It's a practice that disappeared in 1998 with the creation of ICANN and the break-up of the integrated Network Solutions Registry/Registrar.

While domain registrars and registries have now been separated for a decade, with a new generation of Top Level Domains (TLDs) soon to be approved, integrated registries may soon return. Opponents of the integrated registry registrar argue that they restrict competition, while advocates argue that it will increase competition.

"Network Solutions is supportive of the current ICANN requirements for existing TLDs which requires that registrars and registries maintain their legal separation," Jon Nevett, senior vice president of Policy & Ethics for Network Solutions told InternetNews.com. "With respect to new TLDs, Network Solutions has advocated a middle-ground" position between those who argue that registrars may not sell new TLDs of affiliated registries and those who argue that the separation requirement be eliminated altogether."

In Network Solutions middle-ground position, registrars would be permitted to sell new TLDs of affiliated registries up to a certain amount of perhaps up to 100,000. Nevett added that once the allocated number of names has been registered, the affiliated registrar would not be able to accept new registrations.

"This proposal would generate more competition by allowing smaller registries to get distribution through an affiliated registrar and would maintain certain safeguards," Nevett said.

Opponents of the integrated registry/registrar approach include domain infrastructure vendor Afilias. Afilias does the technical management for multiple domains including .org, .info and .mobi. While Afilias could financially benefit from being both the registry and the registrar for a TLD, Brian Cute, VP Discovery Services at Afilias told InternetNews.com, the company is not in favor of such a setup.

From Afilias' point of view, enabling a registry to act as a registrar and then sell their own domains is the equivalent of selling direct to the public. The current system doesn't allow for that and enforces a separation between the registry and registrars.

An argument against registry/registrar

According to Cute, there were solid reasons back in 1998 why ICANN divided up the Network Solutions monopoly and in his view the same reasons exist today.

"The registry gets access to a lot of data about domain names, who is looking them up, traffic and other unique and commercially sensitive data that a registrar could use to its advantage," Cute said. "So ICANN originally figured they should prohibit the registry to selling its own TLD because if it did it could discriminate against other registrars and use that data to identify high value domains and raise prices, and that's not the competitive effect that ICANN was looking for."

An ICANN spokesperson was not available for comment by press time.

For its part, Network Solutions doesn't see the same issues about changing cross ownership rules increasing bad acts by registries.

"While that may be a concern, recent history does not prove the concern," Nevett said. "For example, Hostway Corporation operates the .PRO registry and also operates a leading .PRO registrar. Even with these affiliations, there have never been any allegations of domain tasting, front running, or other improper conduct.

"Similar situations exist for .CAT, .MUSEUM, .COOP, and .ME. Certainly, if abusive practices were to occur, this would be an issue for ICANN to address from a compliance standpoint."

ICANN is currently scheduled to provide an update on its next round of TLDs at its meeting in Seoul, Korea at the end of October. The meeting will be the first major ICANN event since the new Affirmation deal with the US government that has ICANN operating without direct US oversight.

For opponents of the integrated registrar registries the meeting will be key to get their point across. At the core, they argue it's about maintaining the checks and balances that have helped the Internet for the last ten years.

"What we're saying is that by taking away a long standing policy of separation and allowing a vertically integrated registrar to sell domains, what you are doing is you are removing the checks and balances that have been in place to mitigate and minimize the abuses that already take place," Alexa Raad CEO of the .org registry told InternetNews.com.

"Without the checks and balances it will be hard to discern the abuse because you don't have anything to check the data against."