When Mr Disini complains that regulations would restrict DotPH's activities, he is certainly correct. Rules and regulations, by their very nature, restrict the actions of those who are regulated and bound by the rules. Rules and regulations limit the ability of players to do what they want. Rules prohibiting a boxer from hitting below the belt will certainly affect boxers who hit below the belt. Rules prohibiting athletes from ingesting steroids will affect athletes who ingest steroids. Rules which dismantle monopolies will affect monopolists. Rules which ensure a fair market place will affect those who profit from an unfair market place.
The Guidelines will certainly affect the way Mr Disini runs his business. This is a fact. However, that in itself does not make the rules wrong or unfair. The Guidelines will create a competitive multiple Registrar environment for the PH ccTLD. Unfortunately, because Mr Disini thrives in a market where he controls everything, Mr Disini will be affected by the Guidelines. Fortunately, The Guidelines will also favorably affect the Registrants by giving them choices in pricing and service.
Let us now examine each and every issue raised by Mr Disini.
Instead of enhancing the service provided by DotPH, the Guidelines would diminish its quality and effectively drive people away from using the .PH ccTLD.
Because Mr Disini has been the administrator of the PH ccTLD for the past 14 years without being held accountable to the local Internet community, it is understandable for him to equate the PH ccTLD with his DotPH company. Like King Louis XIV of France who exclaimed ``L'Etat c'est Moi!''8, Mr Disini appears to now say ``La PH ccTLD c'est Moi'' when faced with The Guidelines.
Mr Disini misconstrues the purpose of The Guidelines as being designed to enhance the services provided by DotPH. On the contrary, The Guidelines is designed to enhance the services provided by the PH ccTLD Registry. Should DotPH be unable to provide services in a competitive multiple-Registrar market, Mr Disini should not blame The Guidelines but himself. Surely, there will be another company which would be able to take DotPH's place.
In a competitive environment where multiple Registrars offer different levels of services at different price points, the consumer will benefit. True, the consumers will be driven away from DotPH if it fails to provide a competitive service. However, consumers will be attracted to the PH ccTLD Registry.
Mr Disini believes that fixing the price of a PH ccTLD Domain would be detrimental to the Registry. He states:
1) Regulating pricing makes the Registry less responsive to market forces and the needs of the global Internet community. It would affect the level of service that the Registry offers. Also, pricing the domain too low will shrink margins and drive away Registrars; while pricing it too high would drive away registrants. Pricing should be set by market forces and not artificially controlled by the Government.
There are a couple of misconceptions found in the above quotation. First, Mr Disini makes it appear that he is responsive to market forces. The fact is that he controls the PH ccTLD Registry. He runs the PH ccTLD Registrar. He owns an ISP. His company is a monopoly which controls the PH ccTLD registration system. The market forces do not affect him because each and every PH ccTLD Registrant has no choice but to deal with him. As the administrator of the PH ccTLD Registry, he controls the price of the PH domain registration. He sets the policies on how and who can register PH domains. As it is now, market forces do not affect Mr Disini. It is with great duplicity that Mr Disini now claims that in a competitive environment, the PH ccTLD Registry would be less responsive to the market forces.
Second, he raises the straw man that the government will artificially control the price. For argument's sake, let us grant that this statement is true. What is the difference between this situation and the current situation? The only difference is who sets the price. In the current situation, it is Mr Disini who artificially controls the pricing. While a COM domain can now be registered for as little as $8 per year, a PH ccTLD domain is still priced at $35 per year. This was the price of COM domain in 1998! If there were real competition in the PH ccTLD market, this would not be the case. Clearly, $35 per year is a Disini-set price, not a free market-set price.
In addition, The Guidelines envisions a company that runs the PH ccTLD on a cost-recovery basis. The total cost of running the PH ccTLD Registry would be computed, inclusive of labor and capitalization for improvements, and the PH ccTLD registration price would solely be based on this computation. Absent from this price is the profit for individuals who administer the Registry. If there is profit to be made, the profit is plowed back into the PH ccTLD operations rather than poured into the pockets of the administrator of the PH ccTLD. The Registrars will pay the Registry this fixed, regulated amount. The Registrars, based on their own business models, can set their own prices for the Registrants.
Third, the pricing will not drive away Registrars. In fact, this type of pricing will attract Registrars because they are free to set their own business models and their own prices according to the service they want to provide. With the Registry price set to cost-recovery, the Registrars will now have the margin to generate profits for themselves. If the price were not set by an external body, Mr Disini would still maintain control of the market by merely setting an artificially high price to reduce the margins of other Registrars which would drive them away from the market. The only players that would be left in the market would be Mr Disini's Registrar and Mr Disini's Registry.
From the preliminary calculation of the Adboard, the price of a PH ccTLD Domain should be about $8 to $11 per year. Should the Registry price be fixed, what will be driven away is the Registrar which relies on its monopoly and its affiliation with Mr Disini - DotPH.
In the next quotation, Mr Disini paints a poor picture of his company should its monopoly be dismantled.
2) Separating the Registry and Registrar will hamper innovation and limit the speed by which new technology is deployed. Experience has shown that Registrars will not implement systems to support the Registry's innovations unless there is sufficient market demand. This may take a while in a small, underdeveloped market like the Philippines. As Registry and Registrar, DotPH can get innovations into the market more quickly - innovations which benefit the consumer and make the .PH domain more attractive.
In fewer words than above, Mr Disini could have just said that he needs to continue monopolizing the PH ccTLD to be able to profit from it. Why does Mr Disini expect Registrars to implement systems when there is insufficient market demand? Should they implement systems just to please the Registry? On one hand, Mr Disini claims that regulations will hamper his ability to respond to market demands. On the other, he decries the fact that Registrars do not act when there is no market demand! What does he want?
Let us examine what Mr Disini had actually experienced in the market9. Sometime in 2000, Mr Disini tried to entice ISPs to be ``Registrars'' by including a PH ccTLD Domain Registration form into their websites which were linked to the DotPH registration system. The deal was for the ISPs to have a commission on the PH Domains registered through their websites. Many ISPs refused to modify their websites to accommodate Mr Disini's ``innovation.''
From this experience, Mr Disini has learned that ``[r]egistrars will not implement systems to support the Registry's innovations.'' I posit that Mr Disini has learned the wrong lesson. The ISPs did not implement his ``innovation'' because in their analysis, the arrangement was too one-sided in favor of Mr Disini. For their efforts, the ``innovation'' was not worth their while because it was Mr Disini who would make the profits! The lesson to be learned is that Registrars and ISPs will not implement any system which favors only Mr Disini. For a worthy cause like the PH ccTLD perhaps the ISPs would have bothered, but not for Mr Disini's cause nor profit.
Mr Disini asserts that the separation of the Registry from the Registrar might not be successful for a small and underdeveloped market. Granting that this indeed true, even in the absence of any proof or study to support, is this statement applicable to the PH ccTLD? How ``small'' and ``underdeveloped'' a market is the PH ccTLD? Why does Mr Disini believe that the PH ccTLD market is small and underdeveloped? What are the characteristics of a small and underdeveloped market? Mr Disini and his representatives had been repeatedly asked to quantify these two adjectives they use to describe the PH ccTLD market. Mr Disini has consistently refused to do so. Mr Disini should not take it against him if the Adboard does not believe his statements. Mr Disini's word can not be simply accepted at face value.
In this next objection, Mr Disini believes that setting the criteria for Registrars restricts access to the PH ccTLD.
3) The Government seeks to define who may and may not be Registrars. This limits the Registry's ability to expand the Registrar channel and make .PH more accessible to a greater number of users.
The Registrars would have to perform specific services and interact with the Registry. This means that there would be specific criteria that companies would have to meet before they are recognized as Registrars. The Guidelines is still silent on these criteria, except for the provision that the Registry should not have any affiliation with any Registrar.
For Mr Disini, he sees the Registrars as channels which funnel profit to his company. It is understandable that from this point of view, the only criterion for a Registrar would be its ability to generate profits for Mr Disini and his companies.
The next objection shows Mr Disini's poor grasp of the Internet industry in the Philippines.
4) Forcing the Registry to locate its primary Nameservers in the Philippines prevents the use of the best available technology. For example, multicast nameservers - which today are the best for robust DNS service- are not available locally. In addition, we would be more susceptible to underwater cable outages. Websites and e-mail services will not work since secondary nameservers worldwide would not be updated while the Philippines is cut off from the rest of the world.
Without debating the merits of multicast nameservers, PHNET has had the ability to multicast its connection to the Asia Pacific Advanced Network (APAN) in 1998. The DOST PREGINET has multicasting capability too. Multicasting is therefore not a foreign concept nor experience in the Philippines.
Outages are facts of life in the Internet and the Philippines is not more susceptible to these events than other countries. The Internet has been designed to survive such events. Since PHNET has been involved in the Internet in 1996, there has had been no occasion when the entire Philippines had been completely isolated from the Internet. Assuming that such an event would indeed take place, the proper configuration of secondary name servers, acting as backups, would be able to handle such outages.
Mr Disini runs his company for his own personal profit. It is but natural for him to object to the not-for-profit provision in The Guidelines. He states:
5) By forcing the Registry to operate as a non-profit organization, the Guidelines limit the Registry's ability to seek capital necessary to expand and improve services.
The non-profit nature of the organization was placed in The Guidelines to ensure that no specific individual or company would profit from operating the community resource. The organization is non-profit in the sense that everything that the organization earns is plowed back into the operations of the company rather than taken out by the owners as dividends. It is well understood that the PH ccTLD Registry is a natural monopoly which wields enormous power in the market. So that this power would not be used to benefit an individual, his family, or his companies, the Adboard had written the provision that the Registry should be not-for-profit company.
Whether a not-for-profit company will not be able to seek capital to expand its services is debatable. For example, many funding agencies find it easier to issue grants to not-for-profit organizations. Many for-profit companies also find it easier to donate resources to not-for-profit organizations which they see as working for the common good. At any rate, the price for the registration of a PH ccTLD Domain should take into consideration the ability of the Registry to expand and improve services.
Mr Disini's ability to cite principles to support a good thesis while simultaneously practicing its anti-thesis has never ceased to amaze observers. The following quote is another example of this uncanny, well-practiced ability.
The Philippines has embraced the principle of free market competition and deregulation. The Guidelines prevent, by artificial means, free competition and are most likely contrary to Article 186 of the Revised Penal Code. Contrary to the national policy of deregulation, the Guidelines attempt to control and heavily regulate the domain name system by prescribing pricing and other technical requirements, instead of allowing the market and the industry to make the regulation.
He criticizes The Guidelines for preventing free competition when it is DotPH itself which prevents free competition. The Guidelines in fact opens up the PH ccTLD market for fair competition by breaking up the monopoly enjoyed by Mr Disini and his companies. He faults The Guidelines for prescribing the price of PH ccTLD Domain. Yet, in the current situation, it is Mr Disini alone who currently sets the price of a PH ccTLD Domain. He flogs The Guidelines for regulating the PH ccTLD. Yet, currently, it is Mr Disini alone who regulates everything related to the PH ccTLD.
The current situation where Mr Disini controls the PH ccTLD Registry, the Registrar and therefore the entire PH ccTLD market can not, in any logical sense, be called a free market. The current situation where Mr Disini sets every policy which involves the PH ccTLD Domain can not be called unregulated and free. It is already a regulated system with Mr Disini as the regulator. The only thing free is Mr Disini who is free to do what he wants with the PH ccTLD.
The public would have reason to fear if The Guidelines were designed to establish a monopoly, whether a private or government monopoly in the PH ccTLD market. No amount of distortion would support the view that this is the case. The Guidelines is not similar to the Marcos-era Presidential Decree which established the tobacco filter monopoly for the Philippine Tobacco Filters Corporation10. In fact, The Guidelines will destroy the Disini monopoly in the PH ccTLD market.