One of ICANN's core principles is the encouragement of competition in the provision of registration services at both the registry and registrar levels. Promotion of that principle will be a criterion. As one illustration of this criterion, a major purpose of the reassignment of the .org registry is to diversify the provision of registry services by placing the .org registry under different operation than the .com and .net registries. Consideration will be given to the extent to which proposed arrangements are consistent with this purpose. As another illustration, applicants are encouraged to refrain from prohibiting
non-affiliated providers of backend services from offering their services in connection with other applications. This section of the .org Proposal concerns the effect on competition of the selection of a successor registry operator.

NeuStar was created with the goal of providing advanced registry services in a neutral and even-handed manner to promote competition, and has played a significant role in advancing competition in both the Internet and telecommunications industries. 

Promotion of competition is at the core of NeuStar’s mission—administering services in an even-handed manner to provide a level playing field for all possible participants, large or small, established entities or new entrants.  The NeuStar application for .org demonstrates how we are uniquely positioned to maximize competition at both the registry and registrar level.  The selection of NeuStar to operate the .org registry will best foster competition because of the following attributes:

• Trusted, neutral third-party model;

• Binding Code of Conduct;

• Experience promoting competition;

• Creation of a globally diverse  .org Global Policy Council representing ALL sectors of the noncommercial community;

• No affiliation with the incumbent dominant registry provider;

• Well capitalized to ensure long-term viability and competitiveness of the registry market;

• No conflicting gTLD; and

• A highly competitive price that also allows for maintaining high levels of service quality.

Trusted, neutral third-party model
There are several possible business models for the ownership/operation of a domain name registry including the following:

• Registrar ownership model—registry ownership/operating control by a single registrar.

• Consortium model—registry ownership/operating control by multiple registrars.

• Neutral third party model—Registry ownership/operating control by an independent entity that does not operate as a registrar in that domain name space.

Registrar ownership model—The Registrar ownership model in which the registry is owned and operated by a single registrar may create certain operational efficiencies.  However, this approach has the following disadvantages in terms of promoting competition:

• There is the possibility that the registry operator’s registrar division may gain unauthorized access (whether intentional or otherwise) to other registrar’s sensitive information, giving it a competitive advantage in the market place;

• There is the potential for the registry operator to tilt the competitive playing field by providing its own registrar division with superior service to that provided other registrars;

• This ownership structure may provide the registry’s own registrar division with more pricing and promotional flexibility than that of the competition since margins are realized at both the registry and registrar level;

• There may be potential conflicts of interest in terms of enforcing policies and contractual requirements against the entire registrar community in a neutral equivalent manner, including those policies designed to encourage competition; and

• The Registrar ownership model inherently limits the incentive for the registry operator to increase the number of registrars since this creates more competition for their registrar operation.

Consortium model—The Consortium model, in which a number of registrars own an entity that operates the registry, does provide a means of pooling common interests and funds for registry operations. However, this model also is not optimal in terms of fostering competition for the following reasons:

• The registrar members of the consortium enjoy incremental revenue and profits for names registered whereas non-consortium registrars do not, thereby creating a pricing advantage for consortium members in that the consortium registrars may be able to charge a lower registration fee than non-consortium registrars;

• Even if membership in the consortium is open to all registrars, smaller registrars may be competitively disadvantaged if the price for membership in the consortium is cost prohibitive; 

• Potential difficulties encountered in obtaining approval from multiple owners for capital required to address the ongoing needs of the business, particularly in volatile markets;

• Potential delays in important decisions could occur due to the need to gain consensus or input from multiple consortium owners;

• Like the Registrar ownership model there may be potential conflicts of interest in terms of enforcing policies and contractual requirements against the entire registrar community (especially against the consortium members) in a neutral, equivalent manner; and

• The consortium model inherently limits the incentive for the registry operator to increase the number of registrars since this creates more competition for the consortium registrars.   

Neutral third-party model—In the neutral, third-party model, the registry operator does not operate as a registrar and therefore it does not offer any services that compete with the registrars.  The neutral, third-party model is the optimal model for promoting competition for the following reasons:

• All registrars have equal access to registry services, technology, support, and resources;

• Competitively sensitive information is not available to a single registrar or select group of registrars;

• No registrar receives disproportionate pricing or promotional advantages by virtue of serving as both the registry and registrar in the same TLD space; and

• No conflicts of interests arise with respect to uniformly enforcing polices designed to combat anti-competitive behavior.

NeuStar’s legacy in both its telecommunications and Internet registry business, which has proven successful in competitive markets, is that of a trusted, neutral third-party.  We therefore, do not and will not accept .org registrations directly from registrants.  By maintaining NeuStar’s focus on providing registry services to registrars, rather than competing directly with them, the registrar community is effectively served in a manner that supports fair and open competition. 

Code of Conduct ensuring competitive neutrality
Offering mission-critical public infrastructure services in a competitively neutral manner is the very essence of NeuStar’s operating philosophy.  This approach, specifically designed to promote competition, is embodied in every NeuStar line of business including our existing registry operations.  A distinguishing attribute of NeuStar is our longstanding commitment to neutrality.  NeuStar operates under a neutrality code of conduct in each of our lines of business.  In fact, NeuStar was the first registry operator to propose a Code of Conduct in our Registry Operator’s Proposal for .biz (October 2000), the proposal selected by ICANN to manage the .biz gTLD.  This strict code, which includes restrictions on registrar ownership and treating all registrars in an equivalent manner, set a new industry standard and was eventually incorporated into the .biz contract, which NeuStar abides by today. 

NeuStar’s proposed Code of Conduct for  .org also includes stringent operating requirements specifically targeted at the promotion of competition.  For additional details on the Code of Conduct see Proposal Section C21.

Experience promoting competition
In all of its lines of business, NeuStar has a legacy of administering technology solutions in an even-handed manner that promotes competition. Specifically, within Registry Services, we have successfully promoted global competition in the registrar community by actively pursuing registrar channels for .biz and .us.  For this reason, NeuStar currently serves over 80 accredited registrars representing every region of the world.  NeuStar also successfully implemented the first competitive registrar model within the .us ccTLD. 

In the telecommunications industry, NeuStar played a central role in establishing competition in North America.  Our Local Number Portability business serves over 3,000 telecommunications service providers in that market, enabling users to change their provider while retaining their existing telephone number.  Number portability is considered one of the most important factors in bringing about competition, since users generally will not change providers if they have to change their telephone numbers.  In our role as the North American Numbering Plan Administrator (NANPA) and the administrator for the European Telephony Numbering Space (ETNS), NeuStar allocates numbering resources in a competitively neutral manner to service providers in both the North American and European markets. 

Diverse and inclusive .org Global Policy Council
No market can be truly competitive if one segment of the user community effectively controls or dominates decision making relative to what service is provided, under what policies and at what price.   Such an approach would stifle competition and limit growth. True competition requires that the provider of the service listen and respond to the entire market.

NeuStar’s proposed .org Global Policy Council (GPC) provides a framework for geographically diverse representation by ALL sectors of the noncommercial community. The GPC structure also includes a free membership organization with mechanisms to support feedback to the council.  NeuStar’s inclusive approach ensures that no single segment of the noncommercial community has disproportionate control of what .org is and what it becomes, thus providing a superior model for ensuring effective competition (See Proposal Section C35 for additional detail).

No conflicting gTLD
Some existing registry operators already offer gTLDs that are attractive to the global noncommercial community (e.g. .INFO has generic appeal since it is not specifically associated with business or commercial use). An optimal competitive model would not consolidate gTLDs suitable for the noncommercial community in the hands of a single registry operator, rather it would diversify the number of registry competitors serving the noncommercial community.  This would have the affect of creating healthy competition amongst the respective registry operators. 

The TLDs currently supported by the NeuStar registry (.biz and .us) are specifically focused on the global business community and the United States markets.  NeuStar does not currently operate a gTLD that would be attractive to the global noncommercial community.  In selecting NeuStar to operate the .org registry, ICANN will be diversifying the number of registries serving the noncommercial community and thus supporting robust competition at the registry level.

NeuStar’s success marketing the .biz gTLD to a specific targeted
community – global business is evidenced by the relative purity of the .biz customer base as compared to other gTLDs.  Our analysis shows that approximately 92 percent of the live websites within the .biz space are indeed of a commercial nature.  Given that NeuStar does not currently market a conflicting gTLD to the global noncommercial community, NeuStar is highly motivated to execute upon the .org focused global marketing strategy detailed in Proposal Section C38, leveraging our experience with targeted marketing to increase the purity .org space.  This focus on a single gTLD, in competition with others who may offer other gTLDs that are attractive to the noncommercial community, will not only result in improved purity of the space, but will also promote healthy competition among competing registries.

No affiliation with incumbent operator
As stated in Proposal Section C30, “a major purpose of the reassignment of the .org registry is to diversify the provision of registry services by placing the .org registry under different operation than the .com and .net registries”.  Selecting a successor registry operator that has an affiliation with the current registry operator for .org is counter to ICANN’s stated objectives and runs the risk that the current operator will continue to exercise control over the .org registry either now or in the future.  

NeuStar has no affiliation with the .com and .net registry operator – directly or indirectly with the registry, its parent, or any of its company affiliates. Thus, a selection of NeuStar as the successor registry operator of .org, mitigates this risk and supports the stated goals of ICANN.

Ensuring the long-term viability of the competitive registry market
Selection of NeuStar will also ensure the long-term viability and health of a competitive registry market.  NeuStar has demonstrated its commitment and ability to be a reliable, long-term registry services operator.  NeuStar is one of the few new proven registry operators that has raised substantial equity—over $130M in total.  However, the current market for domains is volatile and growth is well below historical levels.  It is not clear that the market can support numerous gTLD registries with the capital and volumes necessary to provide reliable and stable service.  For there to be effective competition and a viable market place, there must be strong, neutral registry operators with adequate financial strength and technical capability.  So, given NeuStar’s strong capitalization, in addition to meeting and exceeding all near-term competitive criteria, NeuStar is also the best choice to ensure the long-term viability and competitiveness of the registry market.

Competitive price
To effectively enhance competition, the new .org wholesale registry pricing must be competitive with the pricing of alternative TLDs in the market.  Although pricing is important, it is equally important that the pricing not be so low as to undermine the ability of the registry to continue to provide the noncommercial community with a highly reliable and stable service.  In addition, the pricing must be available on an equal basis to all ICANN-accredited registrars. NeuStar’s .org proposal addresses all of these elements of competitive pricing.

NeuStar has established a price and pricing structure (for more detail, please see Proposal Section C26) that represents a significant discount from the current market rate for .org.  In the interest of promoting fair competition, the proposed pricing and payment terms for all registry services will be available on an equal basis to all ICANN accredited registrars. Despite the reduction in price, NeuStar’s proposed service levels (See Proposal Section C28) represent an improvement in those currently in place with the current .org registry operator.

Conclusion
In summary, we are confident that selecting NeuStar to operate the .org registry will further ICANN’s objective to encourage competition in the provision of registration services at both the registry and registrar levels for the following reasons:

• We operate under a neutral, third-party model;

• We abide by a stringent Code of Conduct;

• We have a demonstrated ability to enable and promote competition;

• We will create an inclusive and diverse .org Global Policy Council to ensure responsiveness to the entire noncommercial marketplace—not a single segment or subset of the market;

• We will execute a focus on marketing .org, and not other gTLDs, to the global noncommercial community;

• We have complete independence from the existing registry operator for .org;

• We are well capitalized to ensure long-term viability and competitiveness of the registry market; and

• NeuStar’s competitive pricing proposal that also allows for maintaining high levels of service quality.

State whether the applicant or any entity identified in item C13 operates a DNS registry having more than 500,000 registered names and, if so, provide details.

NeuStar has a legacy of operating mission – critical public resources for over six years, recently expanding the breadth of services to the management of an Internet registry with over 800,000 domain names.

NeuStar Registry Service’s currently administers two TLDs – the .biz registry, an intended-use domain for commercial entities, and the .us country code domain. The .biz Internet registry launched in September of 2001, and has grown to over 620,000 registered names. We have utilized that same platform to seamlessly transition and operationalize the .us country code TLD in the first half of this year.  The .us registry has over 240,000 names under registration.

NeuStar was selected by ICANN to establish and operate the .biz registry in November 2000. The .biz Internet registry launched in the fall of 2001 and began its live registration of domain names in November of the same year. Like .org, the .biz TLD is not generic—it has an intended user base. For .biz, that intended use is serving global commercial needs, it does not compete in any way with .org. The fact that .biz compliments rather than conflicts with .org means that NeuStar will focus marketing to the global noncommercial community solely on the .org TLD

In October 2001, NeuStar was selected by the United States Department of Commerce to transition management of the .us country code from VeriSign, enhance the name space and implement a competitive registration model. Within a month of selection, we seamlessly transitioned the existing registry, one that was comprised of a complex, hierarchical compilation of domain names. Just three months later, a sunrise period was executed, and over 10,000 trademarks were registered. In April 2002, the .us registry went ‘live’ for the public, accepting near real-time registrations—over 100,000 in the first day without service disruption or degradation of any kind.

As previously indicated, NeuStar will perform all functions associated with registry services and is not affiliated with any registry managing over 500,000 names. There are no other dependencies or obligations that are outside of the control of NeuStar, as was the case with the smooth transition of .us from VeriSign, we will directly perform all registry services thereby mitigating the significant inherent risk associated with managing multiple partners and subcontractors and ensuring the a zero-impact transition and ongoing stability of the .org TLD.