What “Technical Questions” Mean

I must say that Erwin Oliva’s coverage of the dotPH issues has been, at times, one-sided. Many of the stories he writes quote only from Ver Pena with whom it seems he has unprecedented access. Oftentimes, he doesn’t even attempt to contact dotPH for their side. I’ve given up trying to figure out why. So, I was pleasantly surprised at his recent story (that saw print) where he quotes liberally from my brother’s blog.

I am mentioned in the article as follows:
Peña asked Disini in a meeting with his brother Jesus (a lawyer) and dotPH spokesperson Emil Avanceña two weeks ago, to submit a formal letter enumerating the concerns they had about the CICT guidelines.

Disini has argued that the government guidelines do not provide enough information to allow dotPH to make a decision.

“So I told them to document [the] questions that they have about our guidelines,” Peña said.

Most of the concerns of the dotPH were “technical” in nature, but generally they wanted some assurances from government that they would not be short-changed, he added. While the above encapsulates some of the points raised during that meeting, I believe Erwin has missed out on the most pertinent point in the discussion: that neither the CICT, NTC, or AdBoard had any idea how to proceed with implementing the Guidelines. Maybe for them, these are mere “technical questions” but for me, it’s a question of governance.

Good governance requires reliable information and careful study before regulating. It means that the consequences of policy choices must be determined and those choices must be based on evidence rather than conjecture. Policy choices must be carefully calibrated to acheive the greatest good at the least cost.

The meeting Emil and I had with the CICT, AdBoard and NTC revealed that the Guidelines raises serious questions about the type of governance we can expect from the CICT.

dotPH as Registry

First, we asked what would happen if dotPH were to choose to become a registry. That would mean dotPH will have to sell off its registrar business as well as spin-off its existing registrars to become independent. We asked them if they will set pre-requisities (such as nationalization requirements) for registrars. This is relevant because some of the existing registrars of dotPH are entirely foreign (including NSI and Register.com) and they would want to know if they can continue competing in the market. No one from the CICT/NTC/AdBoard could give an answer.

Next, we asked them to consider that if dotPH were to spin-off its registrar business, then going the market would be dominated by that registrar because it would control 100% of all registrations. Given the scenario, is it possible for smaller players to compete given that dotPH had invested in domain management and online payment systems that give it an edge in the marketplace? If the intention behind the Guidelines was to introduce competition, can these smaller players afford to take on this thousand pound gorilla? If not, we asked, will the CICT/NTC/AdBoard issue new rules to limit or restrict the activities of the dotPH registrar spin-off. This is a relevant question because dotPH can’t sell its registrar business without giving the buyer a fair opportunity to assess the market and regulatory risks. Did they have an answer? No. Honestly, I think the scenario above never occured to the AdBoard members when they drafted the Guidelines. Still, they refused to say whether or not they would take any action against dotPH or the registrar spin-off.

Obviously, they want competition but they haven’t considered that the Guidelines will not achieve that end. They simply believe that opening up the market will solve what they perceive to be a market failure. But in my view, here’s what will really happen if they Guidelines are followed. Smaller players will sell at a razor-thin profit from the wholesale price but their service will be nowhere near that offered by dotPH. They may offer on-line payment but they will have to incur greater costs because they won’t have enough traffic to justify getting their own payment gateway. They will probably not offer online domain name management systems because they won’t have the capital to invest in it. In other words, domain name owners would have to email or call them for changes in their DNS records. Maybe some of these companies will make money with the volume. Maybe. But I can’t imagine foreign registrants dealing with these companies. It would be too much of a hassle for them.

And then there are those who will invest in features comparable to dotPH’s level of service. I imagine those people will not charge a low price for these value added services but instead offer the same price as dotPH, that is, $35/year.

The net result is that a large part of the market say, 80%-90% will still pay $35/year while a small percentage will pay less but will have to live with fewer features. More importantly, it’s not likely that the dotPH domination will end. For new entrants, it will be like launching a new brand of beer in the market. If you don’t have the werewithal to stand up to SMC, you’re not likelly to succeed.

dotPH as Registrar

We then asked them what would happen if dotPH chose to be a registrar. How will the registry be chosen? As usual, they didn’t know. We then offered a guess that since the Guidelines have taken the position that the ccTLD is a public resource, that a public bidding will be required. If so, who can participate in the bidding? Who will run the bidding (CICT)? Can Joel Disini organize a new company to do that? They didn’t know.

Will the new registry develop its own Shared Registry System or will it license the existing software from dotPH? They didn’t know but Bombim Cadiz was adamant that any SRS use open standards. Fair enough but is it more economical to build a system from scratch (and defray the costs by charging domain registrants) or just license a pre-existing system? This is a question they obviously have not considered.

dotPH as Both Registry and Registrar

We also floated the idea that dotPH may have already complied with the Guidelines. The rules provide that no member of the Registry’s board of directors can have any equity in a Registrar. So I said that Joel Disini no longer sits on the Board of the PH Domain Foundation. Therefore, he already complies with the Guidelines which obviously does not prohibit joint control of the Registry and Registrar but only regulates membership in the Registry’s Board of Trustees.

This was not taken well. The AdBoard members were quick to point out that this was not their intention. Okay, but it’s what they wrote and it’s in the Guidelines. Are they saying that they made a mistake?

The Bottom Line

Our main point was that the Guidelines do not provide dotPH enough information to make a decision whether to act as a registry or registrar. The meeting proved that the CICT/NTC/AdBoard people didn’t have that information either.

At this point, one of the AdBoard members said, “That’s the reason for the 3 month period — for dotPH to ask these questions?” I quickly countered that dotPH did request to meet with individual members of the AdBoard but they refused. We verbally asked Mr. Pena to convene the AdBoard but he refused. We wrote to him to ask for a meeting with the AdBoard but he instead referred the letter to the NTC. Interestingly enough, at the meeting, Dep. Comm Jorge Sarmiento denied receiving the letter indorsed by CICT sometime in November (if memory serves). But I asked Pie Maraya of CICT who confirmed the letter was indeed indorsed to the NTC. Despite these requests it was the AdBoard and NTC that failed to take advantage of the opportunity to engage in a dialogue. And here they were blaming dotPH.

An AdBoard member asked: “What has dotPH done in the past 3 months to get answers to these questions?” to which I answered “What has the AdBoard done in the past 3 months to answer these questions?”

Eventually, another AdBoard member disclosed that they wanted to get information from dotPH when they were considering the Guidelines. Well, why didn’t they call for a meeting? All throughout, dotPH had asked to meet directly with the AdBoard in an effort to engage in fruitful dialogue but dotPH was rebuffed at every turn. They can’t blame dotPH for their failure to check the facts or secure information. As I mentioned above, good governance means that regulations must be based on evidence, rather than speculation.

Good Governance?

In the end, it cannot be denied that the Guidelines seek to re-order the market for PH domain names — by lowering prices through the introduction of competition. Noble objectives that have fallen into the wayside by the irresponsible manner by which the Guidelines were crafted and released.

I wonder if this will be a CICT template. If so, it will look like this:

(a) There’s a problem — a perceived market failure — caused by a certain dominant player.
(b) The solution will be to form an Advisory Board to give recommendations but the dominant player will not be made a part of the Board and will be excluded from the discussions.
(c) Guidelines will be issued not to address any particular problem that is expressed. It will be crafted mainly to attack the dominant player.
(d) The Guidelines will not be based upon independent studies or information but upon the surmises and armchair analysis of Advisory Board members.
(e) The Guidelines will be imposed upon the dominant player.

If this is the template for handling issues like VOIP or Wi-Fi, then we’re in for some interesting times ahead.