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Wholesale price reduction question still unanswered

Discussion in 'Domain News' started by snoopy, Aug 21, 2017.

  1. snoopy

    snoopy Membership: VIP

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    Another AUDA article and another non answer by Boardman on the exact same issue,

    Why is AUDA unable to give an answer on a question that has now been asked many times?
    https://www.mybusiness.com.au/growth/3210-allegations-of-web-domain-price-gauging-inaccurate

    The scandal erupted after .au Domain Administration (auDA) – the authority responsible for the .au web domain suffix – and its registry operator AusRegistry were accused of failing to pass on wholesale price cuts on web domains to business owners and consumers.
     
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  2. DomainNames

    DomainNames Membership: Community

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    I am curious if the CEO is friends with this non main stream media publication.

    auDA has a lot to answer regarding this and they keep misdirecting people to "shop around"??

    Noone can "shop around" for a lower wholesale .au price Mr Boardman so stop the political spin and misdirection B.S.

    If auDA does not act on the 2008 contract term which required the lowering of the ,au price as registration numbers increased I can see a potential CLASS ACTION taking shape.

    A refund $ PLUS INTEREST to the millions of .au registrants, Supply Registrars/ Resellers. ACCC, etc etc

    auDA & Directors should be on notice. This is a very serious matter which will not be going away.
     
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  3. snoopy

    snoopy Membership: VIP

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    Agree Sean, it is just going to keep coming up until they explain why the price has seemingly not been reduced?

    Volumes have gone from around 1.3 million to 3.1 million since that announcement in early 2009, surely an increase of that magnitude would have would have met the criteria for further drops?
     
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  4. DomainNames

    DomainNames Membership: Community

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    canvas1.png canvas2.png canvas3.png canvas4.png Relating to the way the wholesale registry contract has been handled for so many years, who has power of making decisions, why there has been no wholesale price reduction as per the 2008 contract terms and 2009 auDA and Ausregistry announcements etc The auDA CEO and numerous Directors have told me "Follow The Money" "You are on the right track"... what exactly does that mean?
     
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  5. snoopy

    snoopy Membership: VIP

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    Strange, maybe the CEO should just answer the question.
     
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  6. DomainNames

    DomainNames Membership: Community

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    Hi Erhan, auDA, Cameron,

    Please advise the update on the exact issue as it stands now… not in the future with the next wholesale registry provider and pricing when that occurs:
    1. What was the qty increase in .au registrations required before further .au wholesale price decreases?
    2. When was the last .au wholesale price decrease exactly
    3. What further decreases in .au wholesale pricing have occurred exactly after the auDA and Ausregisty media announcements nearly 9 years ago ( based on the 2008 contract renewal)

    Why is the auDA CEO Cameron refusing to respond back via email to these questions for several months now after I was advised to put it in writing and I would receive a response?

    Why did Cameron talk about retail pricing to the media and not the .au wholesale pricing? He said people could shop around for lower pricing. No one can shop around for lower .au wholesale pricing.

    This deflection to the media, to supply, .au domain name registrant consumers, members seemingly was a tactic to not answer the issues specific to the .au wholesale pricing and statements made by both auDA and Ausregistry back in 2009 about “further decreases to .au wholesale pricing as registration numbers increased”

    http://www.theage.com.au/small-busi...n-name-owners-ripped-off-20170807-gxqpzs.html

    http://www.smh.com.au/small-busines...n-name-owners-ripped-off-20170807-gxqpzs.html
     
  7. snoopy

    snoopy Membership: VIP

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    Worth noting Erhan's response on the AUDA members portal,

    To me it seems odd that this can go on for months and it is now 3 months since articles about this issue in The Age & Sydney Morning Herald. Cameron didn't answer the question in the media (he deflected as above) and we still have no answer on this now.
     
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  8. Cheyne

    Cheyne Membership: Community

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    If there was a wholesale price drop it would be cents, maybe a whole dollar at best. Then you have an assumption that this drop would be passed on in full to resellers and retail customers.

    80% of the .au market is currently held by three groups that all are publicly listed companies who answer to shareholders, meaning you've got little chance of this small reduction being passed on in any meaningful way.

    And before you go quoting what we said on here months ago about this topic, our wholesale business has substantially changed since then and we now offer 24x7 Australian support which has added significant overheads, so that answer has now changed to "we will evaluate it if or when it happens".

    Note that the cost of running the registry has increased significantly in recent years with the cost of electricity soaring (and is passed on by data centre operators), and wages/super always going up, so I will be surprised if any of the shortlisted tenders are offering cheaper rates and I hold doubts over the quality of the registry if this happens.
     
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  9. DomainNames

    DomainNames Membership: Community

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    auDA had over $12 million sitting in the bank. This year they made another $2 million profit but could have made far more had they not spent $1.8 million on consultants and many other items to excess.

    As John Swinson right pointed out the management of the wholesale pricing has been poor and has not kept pace globally, with any innovation or price competitiveness.

    the FACT is on many other extension they are used by registrars and resellers to also package with hosting and other services

    Is is true that over $10 million a year ( or how much exactly?) is being sent offshore to Neustar Inc / Golden Gate Capital?

    ANY ATTEMPTS AT MINIMUM PRICE FIXING, ANTI COMPETITIVE BEHAVIOUR ETC SHOULD BE INVESTIGATED BY THE ACCC AND GOVERNMENT

    https://www.accc.gov.au/business/anti-competitive-behaviour/misuse-of-market-power
    https://www.accc.gov.au/business/anti-competitive-behaviour/anti-competitive-conduct
    https://www.accc.gov.au/business/anti-competitive-behaviour/cartels
    https://www.accc.gov.au/business/anti-competitive-behaviour/imposing-minimum-resale-prices
    https://www.accc.gov.au/business/anti-competitive-behaviour/misuse-of-market-power


    For years people have complained. Nothing was done!

    I am against any auDA subcontractors, paid service providers, sub contract wholesale registry contract providers being on the auDA Board no matter who they are or what country they are from.
    upload_2017-11-19_14-18-29.png
     
  10. Cheyne

    Cheyne Membership: Community

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    You constantly say they spend "to excess", yet also complain that they have money in the bank? It's counter intuitive.

    Do you want them to spend the money they earn, or do you simply want them to earn less? Because if you think by auDA cutting their fee means better value for consumers then you are wrong as I have already explained above.

    What auDA should be doing is paying board members significantly more so that we attract higher quality, completely impartial candidates (absolutely no offence intended to any previous, sitting, or running members). I also think that auDA should be using some of that money to raise brand awareness throughout the country so that people are aware of the benefits of owning and using a .au domain name.

    The auDA web site should become a marketplace for registrars and registered resellers which includes a domain search followed by a link to each provider and their prices. This would actively increase engagement and awareness of auDA and hopefully attract more members.

    I've already pointed out in another post that when compared dollar for dollar .au is already cheaper than .com, so I don't think you have a problem with price. I think there needs to be a conversation around the mandatory 2 year registration BEFORE any progress is made on direct registrations because I feel that this should be in line with other global TLD's.

    You can package it with hosting now, but that doesn't mean you pay any less for it. What some registry operators do is provide rebates or other incentives for registrars to bundle or outright sell at discounted rates, but that is entirely up to the registry operators and whatever marketing budget they have been allocated for that particular TLD.

    I estimate that at least this much is going offshore and I am totally against it. I think that the registry tender process should have excluded those who are not 100% Australian companies, but I'm also a realist and in doing so I believe you would have had very little if any competition which is bad news.

    Every single potential registry operator and registrar would be able to successfully argue that the wholesale price of .au domain names has remained the same for many years, while CPI, inflation, and almost every other key indicator has risen in those years.

    And unlike physical products, it's very hard to argue the case for discounting based on volume since there is no real tangible benefit by having more domain names in the registry and DNS. In fact, you could probably argue the opposite but I don't run a registry so I'm unsure of the exact costings.

    Does this mean that you are also against registrar owners being on the board?
     
  11. findtim

    findtim Membership: VIP

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    auDA Member:
    Yes
    you can't have it both ways sean !

    2017 board:
    3 independents
    4 demand, john the butcher, susan the doctor, peter the plumber, mary the teacher
    4 supply, bob.....ahhhh just bob ! , steven....ahhhh just steven i met him at the pub last night seems like a nice guy, gerry the truck driver as he does SUPPLY things, tracey in accounts.

    seriously !

    tim
     
  12. snoopy

    snoopy Membership: VIP

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    If it is over say a $1 price reduction that should have occurred but for some unknown reason didn't, that could potentially amount $5 to $10 million over the years. AUDA needs to come clean on this issue, at the moment they are dodging it.

    Let's not confuse this issue with the registry tender because it has nothing at all to do with. AUDA seem to be trying to mix the two issues, in a bid to avoid the real issue.

    Having said that Ausregistry was sold for $118 million, they are making money hand over fist out of the contract with AUDA, it is a monopoly. Their new tld operations is unlikely to be worth much of the sale price, it is all about .com.au.

    Let's not pretend that they are only modestly profitable or doing it tough because of rising electricity costs!
     
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  13. snoopy

    snoopy Membership: VIP

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    Here is a question. Why is the CEO dodging this issue, even in The Age/SMH whilst at the same time the deputy chair says the issue is actually being looked at?

    Erhan's answer,

    "Thanks Paul. xxxxx and I have spoken about this, and it is something we are looking into. Unfortunately it was long before my time on the Board."

    The same day from Cameron,

    "The wholesale price is a contracted price which auDA has negotiated with the registry operator through various contract processes, however it has been auDA’s responsibility to initiate a contractual mechanism to review the wholesale price. It must be noted that AusRegistry has met its contractual obligations in this regard and I cannot comment on auDA’s approach to this issue before my time."

    I tend to think Erhan answer is the accurate one, "it is something we are looking into". Strange it has been going on for months though.

    I don't doubt that Ausregistry has met its obligations, the issue is with AUDA, what happened to AUDA's claim of price reductions built into the contract?
     
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  14. DomainNames

    DomainNames Membership: Community

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    Tim,

    No sub contractor should be on the auDA Board or in any position to present to the auDA Board and sway voting on policy which may benefit them personally or their company whom they represent. This is called a potential "conflict of interest".

    Should be fairly easy to understand... but not in the case of some it would seem.

    It appears auDA more recently had questions also about the probity of the sub contractor wholesale provider presenting to the auDA Board... but again we are limited to what we can read on this by the often overly censored auDA Board meeting minutes.

    Feel free to add the missing content or updates what written advice the CEO was provided by Probity Auditors the minutes refer to.

    https://www.auda.org.au/assets/pdf/2017-08-02-auDA-board-minutes-website-.pdf
    "The Board discussed AusRegistry presenting to the Board at Board meetings
    Action: CEO to obtain written advice from the Probity Auditors on appropriateness of AusRegistry presenting to the Board.
     
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  15. Cheyne

    Cheyne Membership: Community

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    Come clean on what exactly? Your problem is with the former CEO and board, not the current one. We all know when Cameron came in he cleared the decks (rightly or wrongly), so they have nothing to answer for on this question except to say "see previous tenants".

    No, auDA are moving on, and so they should. IF the previous administration did not do everything that was asked of them then we should all be glad that they're gone! I don't see how making the current CEO and board "accountable" for the actions of the former can possibly end in anything positive.

    AusRegistry was sold to Neustar at a 5-6x revenue multiplier from what I read at the time, so they were only making around $20M a year in revenue. But every registry operator is a monopoly because their can only be one for each TLD.

    And even if they were making money hand over fist, good on them, isn't that the point of being in business? Look back at previous registry tenders, it was slim pickings because it's such a niche area that nobody else in Australia really had anything to compete with it. Also note the amount of money that AusRegistry invested in the infrastructure between 2014-2016 when they completely overhauled the technical model and delivered two-site replication which from a technical standpoint is actually very difficult to do let alone do it flawlessly as they did.
     
  16. snoopy

    snoopy Membership: VIP

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    The CEO is the responsible person, not former staff. Cameron saying he has cleared the decks doesn't mean everything that anything AUDA did in the past is somehow wiped. They need to investigate and tell members what has happened just like they are investigating the AUDA Foundation and travel expenses issues. If Australian consumers have overpaid and its AUDA's fault, then AUDA is responsible for that.

    They need to explain why the claimed price reductions never happened despite volumes going up hugely. Obviously there is a reason and AUDA aren't saying. They could have stated this months ago but they keep avoiding the issue.

    You know the funny bit, $14 (wholesale price for 2 years) / 2 (convert to yearly) x 3.1million names = 21.7 million in revenue per year, so obviously almost all the value from the $118 million sale price was the contract to run .au.

    Hang on, just suggested they were struggling with electricity prices, wages and super (below)?

    Note that the cost of running the registry has increased significantly in recent years with the cost of electricity soaring (and is passed on by data centre operators), and wages/super always going up, so I will be surprised if any of the shortlisted tenders are offering cheaper rates and I hold doubts over the quality of the registry if this happens.
     
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  17. Cheyne

    Cheyne Membership: Community

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    Not wiped, but at some point a line needs to be drawn in the sand so that we can actually get on with reform and fixing what is clearly broken so that future iterations of this board cannot have the same problems.

    Once again, consumers have not overpaid - registrars have. The price consumers pay will be exactly the same because we are talking cents or possibly a whole dollar, and as I have already explained that would not have been passed on to consumers.

    I never said they were struggling? I said that the cost of running a registry operation has gone up over the years and the price has not reflected that. Most pricing models these days have CPI increases built in. What you're trying to assert is that if the registry is making profit then that profit should be eaten by rising costs and that is totally wrong. If you go with that mentality small business would be dead in this country.
     
  18. snoopy

    snoopy Membership: VIP

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    It is obviously something AUDA needs to look into and explain. "Move on" is AUDA's mantra.


    That is just a bunch of theories and guesses to try and argue why nothing should be done about it.

    I'm asserting that Ausregistry is making a tonne of money from the .au contract and that talk about high electricity prices and wage growth being justification for not reducing prices is load of nonsense.
     
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  19. DomainNames

    DomainNames Membership: Community

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    Are you saying your organisations:
    1. Would not have passed on any further .au wholesale price reductions had they occurred after 2009?
    2. That you intend to not pass any .au wholesale price reductions on in the future?
    3. That you speak for other registrars and resellers and how they do their pricing?

    I would suggest all parties really look at these links;
    1. https://www.accc.gov.au/business/anti-competitive-behaviour/cartels/price-fixing
    2. http://www.australiancompetitionlaw.org/law/agreements/pricesignalling.html
    3. https://www.accc.gov.au/publication...-price-signalling-and-information-disclosures
    4. https://www.accc.gov.au/business/anti-competitive-behaviour/cartels
    5. https://www.accc.gov.au/business/anti-competitive-behaviour/anti-competitive-conduct
    6. https://www.accc.gov.au/business/anti-competitive-behaviour/imposing-minimum-resale-prices
    7. https://www.accc.gov.au/business/anti-competitive-behaviour/misuse-of-market-power
    "What is price fixing?
    Price fixing occurs when competitors agree on pricing rather than competing against each other. In relation to price fixing, the Competition and Consumer Act refers to the ‘fixing, controlling or maintaining’ of prices. A price fixing cartel occurs when competitors make written, informal or verbal agreements or understandings on:
    • prices for selling or buying goods or services
    • minimum prices
    • a formula for pricing or discounting goods and services
    • rebates, allowances or credit terms.
    Price fixing agreements do not have to be formal; they can be a 'wink and a nod', made over a drink in the local pub, at an association meeting or at a social occasion. The important point is not how the agreement or understanding was made or even how effective it is, but that competitors are working out their prices collectively and not individually." ACCC
     
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  20. Cheyne

    Cheyne Membership: Community

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    It would depend on a number of factors as I have already explained, but keep in mind that there was a price rise in July 2014, so even if there was a price drop it would almost have a nil net affect unless it was substantial.

    It depends on how much it is reduced by, but given the fact that on a wholesale level we already have extremely thin margins on this product I would say that it would need to be a substantial decrease in order for us to move our pricing. If it's a small decrease we might go 50/50.

    I obviously do not speak on behalf of anybody else, however I can speculate what will happen given the circumstances and will be happy to be proven wrong.

    As I have said, the top three companies who hold 80% of the market are all publicly listed and answer to shareholders who want returns on their investment. You think every time they have had a price drop in bandwidth or a loaf of bread for the office that it's been passed on to the customer? Of course not. Prices on products and services fluctuate all the time, this is no exception.

    This is simply not happening. Most 'wholesale' prices for resellers are completely different as it stands, so competition already exists in the wholesale market. All it would take is for one registrar to drop their price for your entire price fixing argument to go out the window.