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PublicDiscussionDocument

REGISTRATIONOFDOMAINNAMESATSECONDLEVELOF.ZA

(“SecondLevelRegistrationsorPrivateUseSLDs)

12February2018

Deadlineforsubmissions: 17h00onMonday,16April2018

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TableofContentsDefinitions....................................................................................................................4

1. INTRODUCTIONANDPURPOSE.......................................................................6

2. PURPOSEOFDOCUMENT................................................................................8

3. RECENTSLREXPERIENCES...............................................................................93.1. Colombia(.co)............................................................................................................93.2. UnitedKingdom(.uk).................................................................................................93.3. NewZealand(.nz)....................................................................................................103.4. Kenya(.ke)...............................................................................................................103.5. Australia(.au)...........................................................................................................10

4. ARESLRSFEASIBLE?VALUEPROPOSITION.....................................................114.1. ViewsinsupportofSLRs..........................................................................................11

4.1.1. Betteronlinevisibilityandnavigation...............................................................114.1.2. Bestpracticecompliance..................................................................................114.1.3. CompetitionfromnewgTLDs............................................................................114.1.4. Changingonlinenamingconventions...............................................................11

4.2. ViewsagainstSLRs...................................................................................................114.2.1. Potentialconfusion...........................................................................................124.2.2. Unnecessaryduplication...................................................................................124.2.3. SLRsareamoney-makingscheme....................................................................124.2.4. Compromiseofintellectualpropertyrights......................................................13

5. WHATABOUT3LRSIFYOUIMPLEMENTSLRS?..............................................145.1. PreferentialTreatmentof3LRs................................................................................14

5.1.1. 3LRholdersfirst................................................................................................145.1.2. ConcurrentApproach........................................................................................155.1.3. Conflictsbetweengeneric3LRs........................................................................16

5.2. Possibilityofeligibilityrequirements.......................................................................175.2.1. SLRsheldbynon-SouthAfricans.......................................................................185.2.2. Unwarrantedcostburden.................................................................................185.2.3. Roledifficulties..................................................................................................195.2.4. Eligibilityfrustrateeaseandspeedofregistration...........................................19

6. LEGALANDPOLICYCONSIDERATIONS...........................................................216.1. ECTAct.....................................................................................................................216.2. .ZASLDGeneralPolicy.............................................................................................216.3. .ZASLDEstablishmentandDisestablishmentPolicy................................................226.3.1. AmendingZADNA'sArticlesofAssociation..........................................................24

7. HOWSHOULDSLRSBEIMPLEMENTED..........................................................257.1. SLRsshouldnotbecomeSLDregistries....................................................................257.2. ReservationofCertainNames.................................................................................25

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7.2.1. Namesfortechnicalstabilityofthestability.....................................................267.2.2. NamessimilartootherTLDs.............................................................................267.2.3. NamescompetingwithestablishedSLDs..........................................................267.2.4. Namesforspecificpublicauthorities................................................................267.2.5. Offensivenames................................................................................................26

7.3. Minimumcharacterrequirements...........................................................................267.4. StatusofSLRs...........................................................................................................277.4.1. ExemptionofSLRsfromSLDEstablishmentPolicy...............................................277.4.2. UsingastandardCharterforSLRs........................................................................277.5. SLRRegistry-RegistrarModel...................................................................................287.6. ZACRsystemandregistraraccreditation.................................................................297.7. Acaseforanotherregistryprovider........................................................................307.8. IntegratedICTPolicyWhitePaperImpact...............................................................317.9. PricingConsiderations.............................................................................................32

7.9.1. Premiumpricing................................................................................................327.9.2. Similarpricingto3LRs.......................................................................................327.9.3. Higherinitialpremiumprice.............................................................................327.9.4. Pricinglowerthan3LRs.....................................................................................32

7.10. IntellectualPropertyandOtherRights..................................................................337.10.1. .ZAAlternativeDisputeResolutionProcess....................................................33

8. CONCLUSION.................................................................................................35

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DefinitionsTerms and Definitions in italics denote terms extracted from the Electronic Communications and Transactions Act 25 of 2002 Act. Unless otherwise stated, the rest of the Terms and Definitions are extracted from the .ZA Second Level Domain General Policy. “3LR”meansaDomainNameregisteredimmediatelybelowanSLD;“ccTLD”meanscountrycodedomainatthetopleveloftheInternet'sdomainnamesystemassignedaccordingtothetwo-lettercodesintheInternationalStandardISO3166-1(CodesforRepresentationofNamesofCountriesandtheirSubdivision);“Charter”asanounmeansthe'constitution'ofaSecondLevelDomain,specifying,inter alia, the purpose and nature of the Second Level Domain, the criteria forregistrationofdomainnameswithin theSecondLevelDomain,and themannerofadministrationoftheSecondLevelDomain;asaverbmeanstheestablishmentofaCharterforaSecondLevelDomain,whichprocessiscompleteduponapprovaloftheCharterbyZADNA.“DomainName”meansanalphanumericdesignationthat isregisteredorassignedinrespectofanelectronicaddressorotherresourceontheInternet;“gTLDs”meansgenericTopLevelDomains;“Private Use SLDs” mean agric.za, grondar.za and nis.za, which were assigned tocertainpersonsforprivateusepriortoZADNAassumingresponsibilityofmanagingandregulating.ZA(inthisdocument,PrivateUseSLDsalsomeansanynewSLDsthatmaybedelegatedasSLRandforprivateuseinthefuture);“Registrant”meansaholderofaDomainName;“Registrar”meansanentitythatisauthorisedbyZADNAintermstheActorthatisaccredited by a Registry to register Domain Names and update Registry Data onbehalfofRegistrantsinanSLD;“Registry”or“RegistryOperator”meansanentityauthorisedbyZADNAtomanageand administer a specific SLD, including the provision of primary and secondarynameserversandWHOISserversinrelationtotherelevantSLDs;“SecondLevelDomain”or“SLD”meansasub-domainimmediatelyfollowingZA;

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“SLR”meansanSLDregisteredatthesecondlevelof.ZAwithorwithoutaCharter,andthatisintendedforprivateuse;“TLD”meansTopLevelDomain;and“ZADNA”meansthe.ZADomainNameAuthority.

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1. INTRODUCTIONANDPURPOSETheever-changinglandscapeoftheInternetanditsdomainnamesystemrequiredomain name value chain participants – especially domain regulators andmanagerssuchasZADNA–toregularlyassessthecompetitiveness,securityandresiliency of their namespaces.While nothing, at least in the last decade, hassignificantly challenged the security and resiliency of the .ZA namespace, thecompetitiveness of the namespace (through different registration options) hasbeenquestionedfromtimetotime.Inparticular,someofthe.ZAdomainnameregistrationvaluechainplayerspointoutthatthedelegationofhundredsofnewICANNtopleveldomains(gTLDs)intothe root zone of the Internet makes it more attractive for domain nameapplicants and holders to register domain names as close to the Top LevelDomain (TLD) as possible. That is, yourname.tld is more interesting thanyourname.co.tld.Amongst others, some registrars and domain name applicants have argued infavourofallowing registrationsdirectlyundera ccTLD (country codeTopLevelDomain). Such a registration model is prevalent in gTLDs (generic Top LevelDomains)suchas.com,.organd.netfordecades.Itisalsowell-establishedinanumberofccTLDssuchas.ca(Canada),.fr(France,.de(Deutschland/Germany),.nl(Netherlands)and.us(UnitedStates).Intherecentpast,acceptanceofDomainNameregistrationsatthesecondlevelof .ZA has been strengthened by the recent SLR (Second Level Registration)implementationsin.uk(UnitedKingdom),.nz(NewZealand)and.ke(Kenya).Inallthesecases,themainmotivationsforimplementingSLRsinclude:(a) Theincreasingneedtomeetchangesinonlinenamingconventionsresulting

from increasing interest in acquiring shorter Domain Names that supportfasternavigation.

(b) The increase in gTLDs (following ICANN accepting around 1 300 new gTLDapplicationsbetween2012and2014).gTLDsofferSLRs that supportbetterbrandvisibilityasDomainNamesappearhigherupthanatthe3rdlevel.

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(c) The fact that brands, cultures and geographies canobtain their own gTLDsfromICANNinthenearfuturefurtherjustifiestheneedforSLRsinccTLDsasameasuretocounterthisneedatthe local levelandtodiscouragedomainnameholdersfromacquiringtheirindividualTLDsfromICANN.Forexample,inSouthAfrica,Multichoicewasabletosecurerightstolaunch.multichoice, .dstv, .mnet, africamagic, .supersport and more other brandgTLDs.MTNwasalsoabletosecurerightstolaunch.mtn.HavingmorelocalbrandsacquiretheirownTLDsinthefutureislikelytostiflethegrowthof.ZADomainNameregistrations.

RequestsforSLRsorPrivate-UseSecondLevelDomains(PU-SLDs)isnothingnewfor.ZA.Infact,ZADNAhasregularlyreceivednumerousrequestsforSLRsorPU-SLDs formore than a decade. Someof the interestedparties pointedout thatPrivate-Use SLDs in .ZA pre-date the establishment of ZADNA. Some of thecurrent PU-SLDs that were delegated before ZADNA’s establishment includeagric.za,grondar.zaandnis.za.ZADNAhasdonesubstantialassessmentinthelastyeardeterminethefeasibilityofSLRsin.ZA,andisconvincedthatSLRimplementationislikelytosupportthecompetitiveness of .ZA and enable .ZA to meet the changing online namingneeds. However, ZADNA has not, to date, conducted any comprehensiveconsultationaboutSLRfeasibilityand(especially)aboutasustainablemannerofimplementingSLRsin.ZA.

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2. PURPOSEOFDOCUMENTThepurposeofthisSecondLevelRegistrationsPublicDiscussionDocumentistosolicit feedback about what should be the best possible approach/es toimplement SLRs. TheDocument seeks to solicit feedback about key areas thatarecriticaltothefeasibilityandimplementationofSLRs.Thefeedbackobtainedfrom this consultation will help ZADNA make suitable decisions that shouldsupportthesuccessofSLRsin.ZA.TheDocumentmustnotbeconstruedtobeacertainguaranteeorundertakingthat ZADNA will definitely implement SLRs in the near future. Instead, thefeedback to this Document will help ZADNA determine if the SLRs should beimplemented,andifso,determinethebestapproachinimplementingthem.Partiesgivingfeedbackareencouragedtodirectlyanswerthequestionsaskedinthis Document or to use the questions as a guide to their feedback. In eithercase,submittingpartiesarealsoencouragedtoraiseotherissuesthattheyfindworthyofconsideration,whichmaynothavebeenraisedinthisDocument.Submitting parties must email written inputs to submissions@zadna.org.za nolaterthan17h00onMonday,16April2018.AllsubmissionswillbeconsideredandutilisedinfinalizingSLRimplementationplans.

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3. RECENTSLREXPERIENCESOurpreliminaryassessmenthasso far shownthatalthoughthenewgTLDsareyet to significantly challenge the dominance of .ZA in South Africa, there is asubstantialinterestintheprovisionofshorterURLs.Theideaofallowingsecondlevelregistrations(SLRs)hasbeenreceivedasanenablingmeasuretosatisfythisinterest,andtorestrictthepotentialcompetitionthatnewgTLDsmaypresentto.ZA.TheinterestinSLRsamongstcountrycodeTopLevelDomains(ccTLDs)thatonlyoffered third level registrations (3LRs) has been gradually growing since 2010(andespeciallyafterthedelegationofnewgTLDsin2012).

3.1. Colombia(.co)The .co ccTLD launched SLRs in 2011 (prior to the new gTLDs) andexperiencedgreatsuccess,asaround1millionSLRswereregisteredwithin12monthsof their launch (in fact,more than500000SLRswere registered inthefirst30days).The.coSLRgrowthfarsurpassedthenumberof3LRsatthetime(.co3LRswerereportedtototala little lessthan30000in2011when.coSLRswerelaunched).

3.2. UnitedKingdom(.uk)United Kingdom (.uk) introduced SLRs in 2015 in addition to existing SLDssuchasco.ukandorg.za.The.ukccTLDhashadadifferentSLRgrowthrate.Inour interview (October2017)with senior leadershipofNominet (the .ukregistry operator), itwas reported that therewere around1.5million SLRssince.ukSLRswerelaunchedalmost3yearsago.This SLR growth figure amounts to around 13%of the total number of .uk3LRs (around 11million in June 2017). This shows that .uk SLR growth hasbeen as fast as that of .co SLRs. Of course, the comparison may not besufficiently sound because .co SLRs were launched before new gTLDswhereas.ukSLRswerelaunchedafternewgTLDsenteredthemarket.

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3.3. NewZealand(.nz)NewZealand(.nz)introducedSLRsin2016.The2017AnnualReportofNewZealandRegistryServices(NZRS),the.nzregistryoperator,showsthatofthetotalof6825273LRs,.nzSLRsaccountedfor17.92%(around122300SLRs).Recentcheckson theNZRSwebsite (asof8November2017) showed thatthe total number of .nz registrations stood at 700 519, and .nz SLRsaccountedfor132000(18.84%)ofthistotal.

3.4. Kenya(.ke)TheKenya(.ke)SLRinitiativewaslaunchedinJuly2017.Therewerearound.ke 68 000 3LRs at the time of the launch, and so far it is estimated thattherearearound5%.keSLRstodateasofOctober2017.

3.5. Australia(.au)The .au ccTLD is currently finalizing its consultation processes but there isfirm commitment to launch SLRs in the cause of 2018. The most recentdevelopment was the conclusion of the Request for Information phaseduringwhich localand international registrysystemproviderswere invitedtotenderfortheprovisionofSLRregistryservice.The consultation process is being finalised following feedback from anearlierroundofconsultation.Inourinteractionwiththe.auccTLDmanager(auDA) inOctober2017,auDAwasconvinced thatSLRs in .auare feasible.However,auDAappreciatedthatSLRimplementationneedstobepreparedforasthoroughlyaspossible.

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4. ARESLRSFEASIBLE?VALUEPROPOSITION

4.1. ViewsinsupportofSLRsThere are several key reasons that have been provided to justify theintroductionandimplementationofSLRsin.ZA.Thereasonsinclude:

4.1.1. BetteronlinevisibilityandnavigationSLRs support shorter web addresses: yourname.za is “better” thanyourname.co.za as the former is shorter and allows for faster webnavigationandbettermemorability.

4.1.2. BestpracticecomplianceThe trend of SLRs in ccTLDs has gained significant support andbecomebest practice because gTLDs such as .com, .net and .org allsupportSLRs(yourname.com).Furthermore,asubstantialnumberofccTLDshavebeen implementing theSLRmodel (insteadof3LRs) foryears.

4.1.3. CompetitionfromnewgTLDsICANN “new” gTLDs allow domain name users better domain nameoptions that easily identify and categorize their web presence.Allowing registrations at the .ZA second level will help discourageSouth Africans from registering outside .ZA, as SLRs will provide abetterandmoreeffectivenamingoption.

4.1.4. ChangingonlinenamingconventionsTheICANNnewgTLDprocessshowsthatnamingconventionsonlinearechanging,withdomainnameusers seeking tobeashighup theDNS tree as possible. This development potentially shows thatinterestin3LRsislikelytodecreaseovertime.

4.2. ViewsagainstSLRsNot all .ZA value chain players are “sold” to the SLR idea. Some of thereasonsprovidedagainsttheintroductionofSLRsare:

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4.2.1. PotentialconfusionSouth Africans are used to the 3LR model (yourname.co.za).Introducing SLRs will cause unnecessary confusion in a time whencyber-security and spam challenges are on the rise. Such potentialconfusion is likely to be exacerbated by the reality thatmost SouthAfricans are not much “educated” in the dynamics, challenges anddangersoftheInternet.Itmustbepointedout,however, that thecurrent .ZASLD structurehas its own inherent realities that are confusing to the people. Forexample, a number of org.za registrations are from individuals andcommercial entities – something that goes against org.za’s primarytargetcommunityoflocalnon-profitentities.Net.za,aswell,hasagraduallyincreasingnumberofregistrationsthat(on the face value) do not seem to have any relation to net.za’sprimarytargetaudienceInternetserviceandnetworkproviders.Theexistenceofac.zaparalleltoedu.zaisanotherareaofconfusionbecause some of the entities providing post-matric education feelthat they should be able to register their domain names in ac.zainsteadofedu.za.Thepointmadehere is not that SLRsmaynot cause confusion, butthateventhecurrentSLDstructurehasitsownconfusingelements.

4.2.2. UnnecessaryduplicationSLRs will not add any much value and will create unnecessaryduplicationsbecausetheholderofyourname.co.zawillbecompelledtoalsoregisteryourname.za.Suchduplicationisunlikelytobringanymaterial change save that current 3LR holderswill be compelled toregistermatchingSLRsatafee.

4.2.3. SLRsareamoney-makingschemeIntroducing SLRs is not in demand outside the Registrar (ISP)community.InfactRegistrarsareonlydrivenbyacommercialinterestin that “duplicating” the current 3LRs through matching SLRs willgenerateadditionalhostingrevenue.

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In addition, ZADNA likely stands to gain more revenue from theintroduction of SLRs, as SLRs may provide ZADNA with additionalrevenuestreamtothecurrentco.za,net.za,org.zaandweb.zafees.The argument is, of course, refutable in that current 3LRs can bereserved as matching SLRs for free for a definite period. If thathappens, neither ZADNA nor registrars will benefit financially fromthereservationofSLRsthatmatchcurrent3LRs.

4.2.4. CompromiseofintellectualpropertyrightsSLRs will provide unnecessary challenges to the protection ofintellectual property rights. For example, what if another partyregisters zadna.za ahead of ZADNA when ZADNA is an established“owner”thebrand“ZADNA”(andalreadyholdszadna.org.za)?

Notwithstanding the views against SLRs, ZADNA’s preliminary conclusion(mainly through observing SLR roll-out in .uk, .nz, .ke and .co) is that thechallenges explained above can be managed and addressed through well-thought implementation plans. However, caution should still be exercisedbecause there may still be more convincing reasons against SLRimplementationand/oragainstparticularimplementationapproaches.

FEEDBACKQUESTION1:(a) DoyousupportoropposetheintroductionofSLRs?Pleasegivereasons.

(b) If youdonot supportSLR implementation in .ZA,doyouhaveany suggestions

about other innovative means that could be implemented to enhance thecompetitiveness of .ZA while maintaining the current 3rd Level Registrationmodel?

(c) ArethereanyotherspecificbenefitsorproblemsthatSLRscanbringthatZADNAshouldbemindfulofinimplementingSLRs?

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5. WHATABOUT3LRSIFYOUIMPLEMENTSLRS?ThoseinsupportofSLRsarguethattheimplementationofSLRsin.ZAshouldbesuch that it does not “kill” the 3LR model; instead SLRs should simply be analternativeoranadditionto3LRs.Thismeansthatdomainnameapplicantsandholderswillbefreetochoosebetween3LRsandSLRs,andtoevenregisterboth.

5.1. PreferentialTreatmentof3LRsTherecent.uk,.nzand.keexperiencesshowthatcurrent3LRholderscanbegiven a first-move advantage by allowing them an opportunity to eitherregisteror reserve (for free) their3LRsasSLRsbeforeSLRapplicationsareopen to new applicants. This seems to be a convincing approach as itensuresthatdueandfairtreatmentisaffordedtothecurrentRegistrants.The challenge though remains the best way of granting such preferentialtreatment.Thereareatleast2optionsthatcanbepursued:

5.1.1. 3LRholdersfirstThisapproachusesa“Grandfathering”processthatgives3LRholdersanopportunitytosecuretheir3LRsasSLRsbeforeSLRsareavailableto new applicants. The duration of such a Grandfathering perioddiffersfromoneccTLDtoanother.Forexample:(a) .kegaveits3LRholdersa3monthGrandfatheringperiodthatran

parallel to a sunrise phase. This means that new domain nameapplicantswereable to registernewSLRs thatwerenot alreadyregistered as 3LRs, at the same time as 3LR holders wereregisteringtheirmatching3LRs.Failure by 3LR holders to register matching SLRs during the 3monthsperiodledtothematchingSLRsbecomingavailabletothepubliconafirst-come,first-servedbasis.

(b) In.uk,3LRholdersweregivenaperiodof5yearstoregistertheir3LRs as SLRs.During this period, the .uk registry operator freelyreservedthe3LRsasSLRs.

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(c) In .nz, 3LR holders were given a 2 year period to register theirmatchingSLRs.Duringtheperiod,theSLRsthatmatch3LRswerereservedforfree.

The advantage of the Grandfathering approach is to ensure thatcurrent 3LRs are given some “respect” and recognition for havingsupportedthenamespacesovertime.TheyaregiventimeandspacetoprotecttheirintellectualpropertyrightsattheSLRlevel.Anotheradvantage is thatsuchapproachmayallowforaprolongedpublicawarenessinpreparationfortheGeneralAvailabilityphase(i.e.a phase when Domain Name applications are accepted from all-comers on a first-come, first-served basis). A potential downside oftheGrandfatheringapproachisthatnewSLRapplicantsmayhavetowaitlongertoobtaintheirSLRs.

5.1.2. ConcurrentApproachThisoptionprovidessomeformofpreferentialpreferencetocurrent3LRholdersby reserving theirmatchingSLRs,whileallowingSunriseand/or General Availability to commence at the same time as theGrandfatheringperiod.Thisrequirestheregistryoperatortoreserveall SLRs thatmatch 3LRs at the time of launching SLRs. The parallelSunrise and/or General Availability is, therefore, only open to SLRsthatdonotmatchalreadyexisting3LRs.It is thenup to the3LRholders to register theirmatching SLRs at atimeoftheirchoice.However,thereservationwouldnormallybeforadefiniteperiodafterwhichduringtheGrandfatheringperiodends.During the Grandfathering period, the 3LR holders may not bechargedanyfeesforthereserved3LRs.One advantage that Concurrent Approach has is that new DomainName applicants are able to acquire SLRs from the start withoutcompromisingthe“rights”ofthecurrent3LRholders.Holdersof3LRsarealsoaffordedprotectionwithouthavingtopayforit.Oneargumentagainstthisapproach,however,isthatitmaybeunfairfor some tohave3LRholders reserving theirmatchingSLRs for freeduringthereservationperiod,whilenewSLRholdershavetopayfortheir SLRs. A counter argument, of course, is that it is likely more

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unfairtorequirecurrent3LRholderstopayfor3LRsandalsopayforSLRsatthesametime.Another challenge against the concurrent Grandfathering –Sunrise/General Availability approach is that the approachmay putaddedmarketingandawarenesspressuretotheregistryoperatorandregistrars, as they have shortermarketingwindow than in the “3LRholdersfirst”approach.

Both approaches have their pros and cons, and it is important that abestapproachintermsofsustainability,intellectualpropertyprotectionandfairaccesstodomainnameservicesisimplemented.

5.1.3. Conflictsbetweengeneric3LRsRegardlessoftheapproach,thereisanissueregardinggenericnamesregisteredas3LRsindifferentSLDs.Thesearethenamesthatarenot“trademark-able” as they are generic e.g. business.co.za,business.net.zaandbusiness.web.za.The issue is about which generic 3LR holder should be allocated amatchingSLR.Thereisaviewpointthatsupportsgivingpreferencetogeneric Domain Names in co.za in the same way as .uk gavepreferencetoco.uk3LRs.Thechallengewiththisapproachisthatthebasis on which such value judgments are made between SLDs isunclearandprobablyindefensible.The.nzSLRprocesssoughttoresolvethisconflictbygivingconflictinggeneric 3LR holders time to negotiate and agree onwho should beallocatedthematchingSLR.FailuretoagreeresultedintheconflictingSLRbeingaddedtoablockednames’list,whichmeansthematchingSLRscannotberegistered.However, the .nz approach also appears to be arbitrary because itdeniesinterestedpartiesanopportunitytoregisterthegeneric3LRasan SLR through open competition. It seemsmore feasible to simplyallowtheconcernedmatchingSLRstoberegisteredthroughauctionbetweenoramongthematching3LRholders,asthiscanresolvetheconflictthroughafair,openprocess.

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FEEDBACKQUESTION2:(a) Should3LRsbetreateddifferently?Forexample:

(i) Shouldweceaseacceptanceofnew3LRsandonlyacceptSLRs?(ii) ShouldSLRsbepriceddifferentlyto3LRs?

(b) Should 3LR holders be given a first-move in SLR launch (e.g. through sunrise

period)overnewSLRs?

(c) If matching 3LRs are reserved for current 3LR holders, how long should thereservationperiodbe?Why?

(d) Where therearecompetinggeneric3LRs (e.g.business.org.zavsbusiness.co.za

vs business.net.za), how should such conflicts be resolved when reservingmatchingSLRs?Throughanauctionprocess?Throughgrantingthefirst“right”totheoldestregistration?Throughanothermechanism?Why?

5.2. PossibilityofeligibilityrequirementsAnotherimportantdynamiciswhetherornoteligibilityrequirementsshouldbe imposedtoensureamoresustainableSLR implementation.Oneviewisthat.ZAisforSouthAfricans,andshouldalwaysprioritisetheSouthAfricanInternet community interests. Accordingly, SLRs are viewed as a uniqueopportunity to give South Africans preference to non-South Africanapplicants.Thisviewmaybesubstantiallywarrantedifoneappreciatesthefactthatofall the .ZA SLDs, only co.za and web.za are truly open to domain nameregistrationsfromSouthAfricaandoutsideSouthAfrica.TherestoftheSLDs(e.g.ac.za,edu.zaandgov.za)onlyacceptdomainnameregistrations fromspecificSouthAfricancommunities.Thismakes a case for restricting SLR eligibility to SouthAfricans. Australia(.au) is considering a similar approach as it nears the .au SLR launch.However,imposingeligibilityrequirementsisnotwithoutitschallenges:

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5.2.1. SLRsheldbynon-SouthAfricansImposingeligibilityrequirementsin.ZASLRswillbepracticallydifficultinthecaseofco.za,whichaccountsforalmost97%ofall.ZA3LRs.Inaddition, although org.za and net.za are primarily meant for SouthAfricans, they remainun-moderated. Thismeans that they arebothlikelytohaveasubstantialpercentageof3LRsthatareheldbynon-SouthAfricans.This then makes it difficult, all of a sudden, to exclude non-SouthAfrican 3LR holders from registering or reserving matching SLRs.Furthermore, it is sometimes difficult to tell with utmost certaintywhetherornotadomainnameholderisSouthAfrican.Another difficulty arises from the provision of privacy and proxyservices by registrars, which results in Registrars being listed asDomain Name holders on behalf of the Registrant for privacyprotectionpurposes. Insuchcases, it isdifficulttodeterminereadilywhetherortherealRegistrantisaSouthAfricanperson.

5.2.2. UnwarrantedcostburdenIn all likelihood, imposing eligibility requirements will require theregistry operator to moderate all SLR applications to ensure theycomply with eligibility requirements. Such responsibility is likely tosignificantly slow down the SLR process as each application will beindividuallymoderated.Inthecaseofjuristicpersons,theCompanyandIntellectualPropertyCommission’s(CIPC)databasemayhavetobeconsultedtoverifytheaccuracy of a company registration number. Additionaldocumentation may well be required from each juristic person’srepresentative to verify his or her authority to register a matchingSLR.Thiswillresultinaddedadministrativeandoperationalcostsbecauseboth human and IT resources will have to participate in themoderation process. This in turn may result in the SLR price beinghigherthanintended,whichcanslowdownthegrowthofSLRs.

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5.2.3. RoledifficultiesImposingeligibilityrequirementsmaybeproblematicbecauseitisnotclearhowfarsucha“SouthAfricansonly”SLReligibilityrequirementsshouldbeimposed.Forexample,shouldtheybeimposedindefinitelyorshouldtheybeimposedfora limitedperiod?Whatshouldbethebasis of such eligibility requirements? Who should enforce theeligibilityrequirements?TheRegistryOperator,RegistrarorZADNA?

Registrarsareunlikelytofinditappealingtobeartheresponsibilityofensuring that their SLR applicants (who typically apply online)meetSLR eligibility requirements, as such responsibility means additionalcostsandlegalrisks.OneapproachmaybetosimplystipulateSLReligibilityrequirementsasa termandconditionofregistration(aswasdone inthe2014re-launch of net.za, org.za and web.za). In this scenario, the SLRapplicant undertakes and guarantees that they are South Africanpersons and are eligible to register SLRs. This scenario means thatneithertheRegistrynortheRegistrarhasamoderationburden.The problem, however, with this “passive moderation” approach isthat it will be difficult to enforce eligibility compliance becauseZADNA,theRegistryOperatorandRegistrarwillhavetotrustthattheSLRapplicantistruthfulintheirundertaking.AnotherdifficultymayarisewhenanSLRholder(Registrant)whoisaSouthAfricanpersonlatertransferstheirSLR/stoanon-SouthAfricanperson.Practically,itwillbedifficultforZADNA,theRegistryOperatorandRegistrartopolicesuchactions.

5.2.4. EligibilityfrustrateeaseandspeedofregistrationThe expectation is that domain name registration should always beeasy, fast, secure and affordable. If eligibility requirements areimposed, the registration process will become much slower andpotentiallydiscourageapplicantsfromacquiringSLRs.

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FEEDBACKQUESTION3:(a) Is it sensible to imposeeligibility requirements that restrictsacceptanceof SLR

applicationsfromSouthAfricanpersonsonly)?(b) Arethereothereligibilityrequirementsthatshouldbeimposed?(c) Should such a South Africans only SLR eligibility requirements be imposed

definitely(i.e.foradeterminedperiod)orindefinitely(i.e.permanently)?Why?(d) How should such eligibility requirements be implemented in an automated

registrationprocess?(e) If the South Africans only SLR eligibility requirementswere imposed,will it be

feasibleand/orsensibletoprohibitSLRholdersfromlatertransferringorsellingtheirSLRstonon-SouthAfricans?

(f) If sucheligibility requirementsare imposed,whoshouldbear theresponsibility

of verifying each SLR application to ensure that the applications meets theeligibilityrequirements?ZADNA,RegistryOperatororRegistrars?

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6. LEGALANDPOLICYCONSIDERATIONS

6.1. ECTActTheActhascertainstipulationsthatmaybeconstruedtoindirectlyassumea3LR-centredbusinessmodelfor.ZA.ChapterXoftheActrequiresZADNAtolicenseregistriesandregistrarsforregistrationofnamesatthe3rdlevel(i.e.below SLDs. The Act does not suppose a scenario of SLRs in .ZA, but alsodoesnotprohibitit.Implicitly,ZADNA,initscapacityasthe.ZAccTLDmanager,ispracticallythe“root”registryoperatorof .ZA inthat itdelegatesSLDsforwhichregistriesandregistrarsmustbeappointed.OnlyZADNAcanaddnamesatthesecondlevel(currentlyasSLDs)of.ZA.TheSLDsthemselvesarenotlicensed,butaresimply delegated. The Act only requires ZADNA to license registries andregistrarstoprovide3LRservicesinthedelegatedSLDs.Thepracticaldifficulty,however,arises fromthe fact that, todate,ZADNAhas never licensed registries and registrars due to inherentweaknesses intheAct.Thedecisionnottolicensewastakenin2010afterZADNAandthethen Department of Communications received 2 separate legal opinionsfromtheStateLawAdvisorthatconcludedthattheweaknessesandgapsinthe Act warranted registry and registrar licensing not to be implementeduntiltheActwasamended.ItwasoutofthisrealitythatZADNAhadtoappointtheformerUniForumSAto serve as the ZA Central Registry (ZACR) through the .ZA SLDOperatingAgreement. The Operating Agreement serves as a stop-gapmeasure untiltheActisamended.Unfortunately,theActisonlyscheduledforamendmentinthe2018/2019financialyear.

6.2. .ZASLDGeneralPolicyThe.ZASLDGeneralPolicybecameeffectiveinApril2015anditdeterminesprinciples and practices underpinning .ZA. In relation to SLRs, the GeneralPolicystipulatesthat:

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(a) “NoregistrationofDomainNamesisallowedatthesecondlevelof.ZA”(clause1.1.1);

(b) “NoadditionalPrivateUseSLDswillbedelegated”(clause1.2.2).

(c) “…APrivateUseSLDisexemptedfromcomplyingwiththeGeneralPolicy,butZADNAmaydevelopaseparatepolicyforPrivateUseSLDs,andmayamend the General Policy to make its provisions apply to Private UseSLDs”(clause12.1)

These provisions of the General Policy make it clear that SLRs are notallowedandthatnonewPrivateSLDswillbedelegated.Atthesametime,clause 12.1 of theGeneral Policy empowers ZADNA tomake additional orseparate policy to cater for Private SLDs. Although not expressly stated intheGeneralPolicy,itseemsthattheobjectiveofclause12.1istocateronlyfor already existing PU-SLDs (i.e. grondar.za, mil.za and nis.za) instead ofnewPU-SLDs.Regardless, it isclearthatZADNAwillneedtoamendtheGeneralPolicy(ifSLRs or PU-SLDs are introduced) to eliminate the clause 1.1.1 and 1.2.2prohibitionsagainstSLRs.ZADNArecentlyobtainedalegalopinionthatalsoconcludedthatthereisanexpectation,intermsofadministrativejustice,onZADNA to adhere to its own policies. Accordingly, ZADNA may notimplement SLRs until it amends the General Policy to allow for newregistrationsatthe2ndlevelof.ZA.

6.3. .ZASLDEstablishmentandDisestablishmentPolicyZADNAdelegates SLDs in linewith the .ZA SLD Establishment (Delegation)andDisestablishmentPolicy (“SLDEstablishmentPolicy”). ThisPolicyalignstheSLDdelegationprocess to theECTAct licensingrequirements in that itrequires that each new SLDmust have a nominated registry operator andregistrar.Clause2oftheSLDEstablishmentPolicystates:

“Nodomain shallbeacceptedunlessan initialRegistry,andat leastoneinitialRegistrar,arenominated.”

Clause3states:

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“Everyapplication foradomain (i.e.SLD)shallbeaccompaniedbyaproposedcharterforthedomain.NodomainshallbecreatedunlessacharterhasbeenapprovedbytheAuthority(i.e.ZADNA).”

Clause14oftheSLDEstablishmentPolicystates:

“UponreceiptofanapplicationwhichmeetsthecriteriaabovebytheAuthority,itshallbepostedontheAuthority's(ZADNA)publicInternetsite for a period of no less than thirty (30) days to allow publiccomment.”

It is worth pointing out, however, that the SLD Establishment Policy wasdevelopedwhenZADNAwasincorporatedinearly2004.ItdidnotapplytothecurrentSLDsas theyallpre-dateZADNA’sexistence,exceptnic.zaandmy.zathatZADNAdelegatedin2017foritsprivateuse.Inpractice,however, therearecurrently3PrivateUseSLDs (PU-SLDs) thatZADNA inheritedwhen it assumed themanagement andadministrationof.ZA in 2004. These areagric.za, grondar.za,mil.za andnis.za. Prior to thedeletionof“inactive”PU-SLDsin2009,therewereatleast9otherPU-SLDsthat pre-dated ZADNA, and these were: bourse.za, cybernet.za, db.za,iaccess.za,imt.za,inca.za,landesign.za,olivetti.zaandpix.za.This shows that although the SLD Establishment Policy has long been inexistence, itdidnotdoawaywithexistingPU-SLDs.This lendscredencetotheviewthattheSLDEstablishmentPolicyshouldnotserveasaprohibitionagainstnewPU-SLDsorSLRs.Inaddition,theSLDEstablishmentPolicyissubjecttheGeneralPolicy.PriortotheGeneralPolicy,ZADNAdevelopedaseparateSLDDeletionsPolicytoguidethedeactivationofseveralhistoricalSLDsthatwereinactiveandweredeletedin2009.TheSLDDeletionsPolicywasdevelopedinspiteoftheSLDEstablishmentPolicydealing(albeitinsufficiently)withmattersre-delegationanddeletionofSLDs.TheGeneralPolicyandSLDDeletionsPolicywereintendedtocoveraspectsthat the SLD Establishment Policy does not cover at all or does not coversufficiently.ThefactthattheSLDEstablishmentPolicydoesnotprovideforthepossibilityofPU-SLDsorSLRs,whileinpracticethereareat least5PU-SLDs,maybeagroundfortheamendmentoftheSLDEstablishmentPolicy

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itselfortheGeneralPolicy,and/orforthedevelopmentofaseparatepolicythatdealsspecificallywithSLRs.SuchaseparatepolicyshouldprovidecleardifferencebetweenthestatusofSLRs and the status of the current (historical) SLDs. The separate policyshould also provide clear exceptions and conditions on which of SLRapplicationsmaybeacceptedordeclined.

6.3.1. AmendingZADNA'sArticlesofAssociation

TheSLDEstablishmentPolicyispartofZADNA’sArticlesofAssociation,and its amendmentwill amount to the amendment of the Articles ofAssociation. Amending the Articles requires, in terms of the Act, theapprovalof ZADNAmembersand theMinisterof TelecommunicationsandPostalServices.ZADNAalreadydraftedaMemorandumof Incorporation (MOI) that isintended to replace the Articles of Association and the draft MOIexcludes the SLD Establishment Policy. TheMOIwill soonbe releasedforcommentandapprovalofZADNAmembers.

FEEDBACKQUESTION4(a) Should a specific policy be developed to cater for SLRs or PU-SLDs or

should only the General Policy and the SLD Establishment Policy beamended?

(b) Arethereanyotherspecificconsiderations thatsuchaseparateSLRorPU-SLDpolicyshouldcoverthathavenotbeenaddressedabove?

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7. HOWSHOULDSLRSBEIMPLEMENTEDGenerally, the roll out of SLRs shouldbe carefullymanaged toprotect existingdomainnameandintellectualpropertyrightsandavoidpotentialconfusion.Toachievethis,thefollowingcomesintoplay:

7.1. SLRsshouldnotbecomeSLDregistriesIn the past (especially before the delegation of ICANN new gTLDs from2012),ZADNAreceivedanumberofqueriesandrequestsforbothSLRsandnewSLDs.RequestsfornewSLDsweremeanttoprovidenew3LRchannelsandcompetitiontotheexistingSLDs.Inthelast3to4years,requestshavelargely been for SLRs that are intended for private use instead of selling3LRs.This shift in the use of SLRs is understandable in view of the interest inshorterURLsandinbrand-specificgTLDs.Whatremainsanissueiswhetherornot SLRs shouldbeallowed to serveasnewSLDs, andwhat is thebestmanner inwhich ZADNA canensure that SLRs (PU-SLDs) areonlyused forprivatepurposes.Thereareseveralmeasuresthatcanbeimplementedtoachievethis.Attheleast,SLRholderscanbecompelled,astermofcontractinregisteringSLRs,toundertakethat theSLRswillnotbeusedtosellorprovide3LRsoutsidethe SLRholder.Measures can thenbeput inplace tomonitor compliancewiththeSLRcontract.ShouldanSLRbefoundtohavecontravenedthisprohibition,theSLRcanbesuspended and its holder could be fined. A harsher measure can be aterminationanddeletionofthenon-compliantSLR.AnoffendingSLRholdercanalsobelistedtoensurethattheyarenotabletoregistertheconcernedSLRforasetperiod.

7.2. ReservationofCertainNamesIt is an established practice that registry operators, when launching TLDs,reserve certain names for their exclusive use. The .ZA SLD General Policy

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allowsthedevelopmentofspecificnamereservationpoliciesandlistswhereZADNAseesitnecessary.Someofthenamesthatmaybereservedinclude:

7.2.1. NamesfortechnicalstabilityofthestabilityThese are names that are accepted in the global domain nameindustryascriticaltothestabilityoftheInternet.Suchnamesincludewww,Internet,Whois,andDNS.

7.2.2. NamessimilartootherTLDsReserved namesmay include names that are similar to other TLDs,such as ISO 2 letter country codes (e.g. bi.za, us.za and eg.za) andICANNTLDs(e.g.com.zaandbiz.za).

7.2.3. NamescompetingwithestablishedSLDsSLRsthatpresentunwarrantedcompetitiontocurrentSLDsmayalsobe reserved (and notmade available for registration at the secondlevel). These are names such as com.za and biz.za (which wouldcompete with co.za), or.za and npc.za (competing against org.za),go.za (competing with gov.za), and sch.za (competing againstschool.za).

7.2.4. NamesforspecificpublicauthoritiesSomenamesmaybereservedforexclusiveusebypublicauthorities,such as government.za, parliament.za, police.za, elections.za andtax.za.Thesenamesmaybeallocatedtorelevantauthoritiesfortheiruseatalaterstage.

7.2.5. OffensivenamesNames accepted to be offensive may also be reserved and not beavailable forSLR.Theoffenseof suchnamesmaybebasedonrace,gender,religionandculture.

7.3. MinimumcharacterrequirementsRestrictionsmayalsobesetforminimumnumberofcharactersthatanSLRshouldhave.Forexample,anumberofTLDsdonotacceptsinglecharacterand 2 character names. Other registry operators reserve such names aspremiumnamesthataresoldathigherfeesorthroughauction.

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Exceptions, of course, can bemade to accommodate intellectual propertyrightsthatmaybeundulyrestrictedbysuchprohibitions.Inparticular,thereare 2 letter domain names already registered in co.za, and their holdersshouldnotberefusedanopportunitytoregisterthemasSLRs,unlesstheymaycontraveneaZADNApolicy.

7.4. StatusofSLRsInviewoftheabovementionedlegalandpolicyconsiderations,adecisionhastobemadeaboutasuitabletreatmentofSLRstakingintoconsiderationthe“silence”ofboththeECTActandtheSLDEstablishmentPolicy.

7.4.1. ExemptionofSLRsfromSLDEstablishmentPolicyAsimpleapproachistousetheprecedentoftheexistingPU-SLDstotreat SLRs as PU-SLDs, and exempt PU-SLD holders from the SLDCharter,RegistryandRegistrarlicensing/accreditationobligations.

7.4.2. UsingastandardCharterforSLRsAn alternative approach may be for zaDNA to develop a standardCharterthatallSLRapplicantsmustacceptasatermorconditionofregistration.SuchastandardChartermaythenhaveallSLRapplicantsaccepting the Registry Operator designated for SLRs to be theirRegistryOperatorforChartercompliancepurposes.Similarly, whichever accredited Registrar an SLR applicant uses toregister SLRwill serve as their designatedRegistrar as prescribed intheSLDEstablishmentPolicy.This approach will be faster than trying to amend the SLDEstablishment Policy because such amendment may take a longerthan desirable time to finalise. This is because such an amendmentwill in itself require the amendment of the Articles of Association,whichinturnrequirestheMinister’sapproval.

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FEEDBACKQUESTION5(a) What policy and/or procedural measures should be put in place to

ensurethatSLRsarenotusedtosell3LRs?(b) ArethereadditionalnamesthatshouldbereservedagainstSLR?(c) Should minimum character requirements be imposed against single

character,2characterand3characternames?(d) Should such minimum character names be indefinitely reserved or

shouldtheybemadeavailableatalaterstage?(e) If or whenmade available, should single, 2 character and 3 character

namesbesoldathigherfees?(f) Shouldexceptionsbemadeonintellectualpropertygrounds?(g) What is the best treatment of SLRs in view of the current SLD

EstablishmentPolicybeingpartofthezaDNAArticlesofAssociation?

a. Should theArticles of Association first be amended to separatethe SLD Establishment Policy from the Articles or the newMemorandumofIncorporation?

b. Alternatively, as a means of fast-tracking SLR implementation,shouldzaDNAsimplycomplywiththecurrentSLDEstablishmentPolicybyimposingastandardCharterthatallSLRapplicantswillacceptasatermofregistration?

7.5. SLRRegistry-RegistrarModelZADNA,asthe.ZAccTLDManager,isonlyentitythatmaydelegatenamesatthe second level of .ZA. It cannot delegate this responsibility to anotherentity, as it is not empowered by the ECT Act to do so. In any case,delegating such authority to another entity would amount to ZADNAempoweringanotherentitytoserveasthe.ZAccTLDmanager–somethingthatisagainsttheletterandspiritoftheECTAct.

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Notwithstanding, the actual SLR implementation may practically requireZADNA to contract another party to provide a registry system that willsupport automated SLR process and enable registrars to acquireaccreditationtosellSLRs(PU-SLDs).Accredited registrars can ensure quick and early buy-in to the SLRs as theregistrars provide a readily available marketing and sales channel. ThisapproachallowsZADNAtocontinuetobethe.ZAregistryoperatorwithoutdelegatingitsccTLDresponsibilitytoanotherentity.It also allows zaDNA to separate itself fromhaving to serve as an “active”Registry Operator that interfaces with Registrars. Such active interfacingwith Registrars could go against the spirit of the ECT Act because the ActprimarilydesignateszaDNAtobetheregulatorofRegistriesandRegistrars.Simply put, the Act does not envisage zaDNA being involved in activeDomainNameregistrationprocesses,asthismayamounttozaDNAhavingtoregulateitself.

7.6. ZACRsystemandregistraraccreditationIt is fair to accept that SLR implementationmust be sustainable in that itmustbeaseasyaspossible.Suchease,someargue,canbestbeattainablethroughusingtheZACRsystem,asitcanprovidea“plugandplay”capacitythroughthe+500accreditedregistrars.UsingtheZACRplatformcanhelpavoidduplicationsinaccreditingregistrarsfor SLRs because the registrars are already integrated to the ZACR EPPsystem, and will not need to incur any more developmental costs. Inaddition, the accredited registrarswill be able to use thewell-establishedZACRbillinginterfaceinsteadofanother,differentbillinginterface.However, the potential downside of using the ZACR is the perceivedentrenchmentoftheZACRmonopolyover.ZA.Fromtimetotime,questionshave been asked about why ZACR is allowed to be the only “real” EPPregistry operator, and why other service providers are not afforded anopportunitytoparticipate,throughanopentenderprocess,intheprovisionof.ZAregistryservices.

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7.7. AcaseforanotherregistryproviderThecallforuseofanotherEPPregistryoperatorispremisedonmeetingtheperceived need to create alternative registry capacity, and restrict thecurrent scenario inwhich 99% of .ZA registrations are “locked” into ZACRalone.An alternative registry provider can provide much-needed competition toZACR especially if ZADNA were to terminate the current SLD OperatingAgreementithaswithZACRorshouldthecurrentagreementreachitsexpirydate.However,usinganotherregistryproviderisnotwithoutitschallenges.Someargue that using another registry provider for SLRs (instead of ZACR) willlikely slow down SLR growth. This is because registrars will need to beseparately accredited for SLRs. Furthermore, such separate accreditationmay cause registrars to incur additional costs that may discourage themfromprovisioningSLRs.Others argue that there may be no local service provider that is able toprovideanEPPregistrysystemother thanZACR.Anypursuitofappointinganother registry system provider inevitably means that a foreign registryprovider is likely to be contracted, and such a move could give rise topoliticalconcerns.The accuracy of this view, however, is disputable as several local InternetService Providers (ISPs) argue that there is sufficient alternative capacitylocally. Some ISPs have informally expressed desire to compete for theprovisionofregistryservicesshouldSLRsbeimplemented.In expressing such an interest, the affordability and fairness of the ZACRmodel are challenged on the basis that although ZACR is appointed toprovideCentralRegistryservices,therealregistryservicesareoutsourcedtoa 3rd party service provider (DNS Pty Ltd). This outsourcing leads toadditional cost that drives up wholesale fees for co.za, net.za, org.za andweb.za.Appointinganotherparty(otherthanZACR)toprovideSLRRegistryServicescan therefore helpmake SLRs wholesale fees to bemore affordable thanZACR’s.

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7.8. IntegratedICTPolicyWhitePaperImpactAnargumenthasbeenraisedagainstusingZACRoranotherpartyasregistryoperatorforSLRs,andtheargumentemanatesfromthestipulationsoftheIntegrated ICTPolicyWhitePaper.TheWhitePaperalreadystipulates thatall.ZASLDregistryfunctionswillbetransferredtothenew(Integrated)ICTRegulatorthatisyettobeestablished.TheWhite Paper also stipulates that this new Regulatorwill only accredit(and not license) registrars. This means that in any case ZACR-accreditedregistrars will have to be accredited again once the new Regulator isestablished.TheWhitePapermakesnoprovisionfortheaccreditationorlicensingofSLDregistryoperatorsbecausethenewRegulator(whichwillabsorbZADNA)willbe the registry operator of .ZA and .ZA SLDs. The new Regulatorwill alsoassume the registry functions of the current and future .ZA dotCities(.capetown,.durbanand.joburg)fromZACR.ThereisthereforenotmuchjustificationforZADNAtocontinuecontractingout SLR registry functions to another entity that will soon be required totransfersuchfunctionstothenewRegulator.

The essence of the issues and challenges explained above is that there areimportantstrategicchoicestobemadeaboutasuitableregistrybusinessmodelto make SLRs a sustainable success. All the possible choices have theiradvantagesanddisadvantages.FEEDBACKQUESTION6(a) Other than ease of registration, affordability, speed of registration and

security,arethereotherkeyprinciplesthatshouldguidetheimplementationofSLRs?

(b) WhatarethebenefitsvschallengesofusingtheZACRtoprovidetheSLR?(c) What are thebenefits vs challengesof using another registryoperator and

registrysystemprovidertoprovideSLRs?

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7.9. PricingConsiderationsPricingofSLRs isanother importantstrategicdecision inviewof the fierceprice competition between TLD operators. The pricing of .ZA 3LRs isaccepted as competitive although some of the new gTLDs (e.g. .xyz) nowchargelowerfeesthantheZACRwholesalefees.TheultimateSLRpricingdependspartiallyonwhetherSLRsareseentobemore “special” (premium) than3LRsor are seen as equal to, or less than,3LRsinvalue.Thereareseveralpricingoptionsthatcouldbeexplored:

7.9.1. PremiumpricingOneapproach is to treat SLRs aspremiumandofhigher value than3LRs,andthenchargehigherwholesalefeesforSLRs.SuchhigherSLRpricingmaybeagooddiscriminatingbarrierthatwillallowgenuinelyinterested parties to register SLRs. The downside, however,may bethat such differentiation is seen as unnecessary, unfair and simplybaseless.

7.9.2. Similarpricingto3LRsSLRs may also be priced the same as 3LRs. Such wholesale pricingmight be well-received in the registrar community as it supportsconsistent and easy-to-manage pricing regime. Similarity in pricingbetween SLRs and 3LRsmay eliminate the perception that SLRs areintendedforthosewithstrongereconomicmeans.

7.9.3. HigherinitialpremiumpriceIt is possible to launch SLRs at a higher, premium price and thenreduce them to 3LR wholesale fees or a different lower fee. Thispricingregimecangivepreferenceto“serious”SLRinterestsandlimitdefensive registrations. The duration of a premium price may be amatterofmonthsandevenofyears,butthepricingeventuallydropstoalowerwholesaleprice.

7.9.4. Pricinglowerthan3LRsOneapproachthatisnotsoprevalentamongtherecent.co,.uk.and.ke SLR launches is to actually launch SLRs, and keep them, at awholesaleprice that is lower than3LRprices.ThisapproachmaybepopularandmakeSLRstobeamoreattractiveoptionthan3LRs.

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It may also eliminate the perception that SLRs are a moneymakingscheme. However, this option may significantly reduce interests in3LRsandcausethenumberof3LRstodecreaseovertime.

The above pricing scenarios show that there are different pricing options,andeachhasitsownprosandcons.FEEDBACKQUESTION7(a) ShouldSLRsbetreatedasmorevaluablethan3LRs?Why?

(b) IfSLRsaremorevaluablethan3LRs,shouldtheybechargedatahigher

(premium)wholesalefeethanco.za,net.za,org.zaandweb.za3LRs?(c) Are there problems and/or benefits with charging SLR prices that are

similarto3LRs?Ifyes,whatarethoseproblems?(d) WillitbeproblematicorbeneficialtopriceSLRslowerthanco.za,net.za,

org.zaandweb.zaSLRs?Why?(e) ShouldahigherSLRpricebeusedtoincentivizeand/orretaininterestin

3LRsasameasureofensuring3LRviability?(f) What pricing option is the best for SLRs amongst the listed options?

Why?

7.10. IntellectualPropertyandOtherRightsThe fact that3LRholders canbegiven somepreferential treatment in theSLR launch does not wholly resolve issues of intellectual property rightsprotection.

7.10.1. .ZAAlternativeDisputeResolutionProcessThe current .ZA Alternative Dispute Resolution (ADR) Regulationsspecificallycover3LRsinco.za,net.za,org.zaandweb.za.Therestofthe .ZASLDseitherdonotenjoytheADRprotectionorenjoy itasatermofregistrationenshrinedintheSLDcharters.

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TheADRRegulationsdonot cater for SLRs, and theRegulationswillhave tobeamended so that they canalso cover SLRs. Thepracticalchallenge is that legislative amendment processes may take longerthan2years,whichmaythencausedelaysinSLRlaunch.A quick win approach may be to impose the application of ADRRegulations, in the interim, as a term of registration that all SLRholders undertake to comply with should disputes arise over SLRs.This approach was implemented successfully in the re-launch ofnet.za,org.zaandweb.zain2014,anditprovedacceptabletodomainnameholders.FEEDBACKQUESTION8(a) Should ADR Regulations be extended to cover SLRs parallel to

requesting the Minister of Telecommunications and PostalServicestoamendtheRegulations?Anyreason.

(b) Do you foresee any challenge with imposing the application ofADR Regulations over SLR disputes as a term of registrationpendingtheamendmentofADRRegulations?

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8. CONCLUSION

This Discussion Document has raised key strategic questions that should beansweredtoensureasuccessfulSLRimplementationin.ZA.Detailedcontextualinformation has been provided to guide parties responding to the questions.RespondingpartiesareencouragedtoraiseotheraspectstheyconsidertobeofimportanceintheimplementationofSLRsin.ZA.