Deregulated domain system causes reseller shift

Deregulated domain system causes reseller shift

The deregulation of Australia's domain name system has ended a monopoly and forced down the prices of several domain names. Some turbulence in the domain name channel in recent weeks suggests the new system is also finally going to kick out some of the questionable practices that have plagued the industry for many years.

Since the start of the new financial year, Melbourne IT has gone from having a monopoly on the market to being one of six accredited registrars. Regulators have tried to balance the competition Melbourne IT is facing from the likes of A1 Registrar, Enetica, NetRegistry, Planet Domain (Primus) and TPP Internet against a set of looser rules on what domain names can be claimed in the Australian business community.

Last week it was revealed that Melbourne IT has used the deregulation as an opportunity to cut loose some of the resellers it has had under its wings for many years. The company has terminated agreements with between 12 and 20 resellers, some of whom have been accused of misleading customers through various domain name scams. Reports suggest Internet Names Group (ING) and Internet Registrations Australia are among them.

Before deregulation, the registrar was at a loss as to how to stop the problem. Melbourne IT spokesperson Tom Valenta claims the registrar was tied down by its dominant market position over "If we terminated a reseller, they had nowhere else to turn," he explained. "This made us vulnerable to potential litigation as we would have been taking away their livelihood."

Valenta said the new code of conduct on selling domain names set out by the Australian Domain Authority (auDA) has also assisted in shielding registrars from litigation when they dump their resellers. "The rules are there for the world to see - they are completely transparent," he said. "We can use those rules as a yardstick.

Valenta said Melbourne IT will terminate agreements with any resellers that are lying to customers about the due date of domain name renewals, the length of time of any registration, or any other misleading practices.

"I think that from now on we are going to have a better system with regard to ethics," Valenta said.

Larry Bloch, chief executive officer of competing registrar NetRegistry, also believes the code of conduct has made a considerable difference to the domain name channel. "I think deregulation will clean things up," he said. "AuDA is acting with confidence in taking action against the sort of practices that have plagued this industry for too many years."

As much as Bloch is encouraged by Melbourne IT taking action against unscrupulous resellers, he said there are motives other than promoting ethical behaviour behind the move.

Bloch said some of Melbourne IT's reseller partners have successfully lured many customers away from other legitimate domain name providers. This week, in terminating its agreement with these resellers, Melbourne IT has taken ownership of the customer bases.

He said Melbourne IT has contacted customers of groups such as ING, informing them that while the reseller has been cast off, Melbourne IT can continue to manage their domain names for them. Bloch accuses the registrar of using the banner of "ethical behaviour" to gain itself a large customer base of people that were originally lured away from other providers.

"They might be saying that they are assisting the industry, but they are actually taking the ill-gotten gains for themselves," Bloch said. "The fact that Melbourne IT has done this now just enhances suspicions that they were more than happy to have these resellers on their books prior to deregulation. Effectively they are gaining customers from people like us. I see this as Melbourne IT scamming the industry through proxy."

Bloch said that misled customers who paid inflated prices will still pay inflated prices to Melbourne IT, which remains one of the more expensive registrants in the industry. Both Valenta and Bloch said they would be very surprised if any of the five official registrars do business with unethical domian name resellers. "It is the right time in the market for responsible participants to take an ethical position," Bloch said.auDA, Melbourne IT warn consumersBoth the Australian Domain Authority (auDA) and registrar Melbourne IT have warned consumers about a mail-out from dumped reseller Internet Registry that contains inaccurate information.

The mail-out suggests to customers that they can renew existing domain names for a period longer than the maximum two years. It also suggests that Melbourne IT's role as administrator of the domain space has been "replaced" by AusRegistry, when in fact Melbourne IT continues to be a registrar while many administrative functions are now handled by AusRegistry.

In the warning notice, Melbourne IT claims Internet Registry is not an AuDA licensed registrar, nor an appointed reseller of Melbourne IT.

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