[ga] [registrars] ICANN Letter Regarding VeriSign Settlement

[Danny Younger <dannyyounger@xxxxxxxxx>]

http://gnso.icann.org/mailing-lists/archives/registrars/msg03498.html

Colleagues,

Kurt Pritz has asked me to forward the letter below to
the Registrar
Constituency.

Tim Cole
Chief Registrar Liaison
Internet Corporation for Assigned Names and Numbers



ICANN Registrar Constituency:

Thank you for this opportunity to make the Registrar
community aware of the
proposed settlement with VeriSign. ICANN is seeking to
end all pending
litigation over this long-standing dispute. The
settlement agreement
documents have been posted for public comment on
ICANN's website
(www.icann.org) and are subject to final approval of
the ICANN Board. In
addition to comments received, there are some specific
issues we would like
to discuss with you, now that we are in a position to
do so. An important
purpose of this posting is to solicit the views of the
Registrars'
constituency on all of the settlement documents. 

The parties entered into non-public negotiations in an
effort to establish
whether it was possible to reach an agreement. The
negotiations led to a
lengthy set of discussions regarding specific
provisions of the agreement
and the conflict points and also sought consultation
with the US Department
of Commerce, as required by the present .COM
agreement. 

We understood in entering into these discussions that
it would be nearly
impossible for a public company such as VeriSign to
participate in an open
and public dialogue for the resolution of such a
dispute, without a concrete
proposal regarding how the settlement could be
constructed. Therefore, ICANN
negotiated the best possible deal that it believed
that it could negotiate
in the public's interest, and required a full 24-day
public comment period
before board approval would be sought.  

All ICANN constituencies and advisory committees are
being asked directly
for input. Following this public comment period,
ICANN's Board will evaluate
the public comments received and decide on next
actions relating to this
entire settlement proposal.  

This letter is intended to provide information
regarding the proposed
agreement and use of the comment period by providing:
.	some back ground on the conflict and detail
regarding the proposed
settlement, 
.	benefits accruing from the agreements to the
registrars,
.	identification of issues that remain to be discussed
during this
comment period,
.	a plan for how to carry the discussion forward.


Background, the settlement and agreement

>From ICANN's inception it has existed in conflict
with the principal
commercial entity in the DNS space, the .COM registry
operator, and that
conflict has continued in various forms up until this
time. NSI was acquired
by VeriSign in 2000, and since that time ICANN and
VeriSign have been
involved in a series of additional conflicts.  
 
This tension and conflict has heavily influenced the
contractual
relationships between NSI/VeriSign and ICANN from the
beginning. The first
agreement with the operator of the .COM Registry was
in 1999, and was
brokered by the United States Department of Commerce
with a reluctant NSI.
This agreement framework created the separation of
registries and registrars
and introduced the opportunity for new players in the
registrar market. 
 
That agreement was replaced with a new agreement in
2001, which split the
1999 agreement (which covered .COM, .NET and .ORG)
into three separate
agreements, one for each registry. Unlike the others,
.COM Registry
Agreement included a presumptive right of renewal to
VeriSign. The .ORG
Registry was re-bid with a presumption that it would
go to a third party and
was subsequently awarded to PIR. The .NET Registry was
re-bid during the
last year, without a presumption of renewal or a
presumption of a change of
operator and was re-awarded to VeriSign. The growing
diversity of business
models among registrars was reflected in the variety
of responses to this
new contract. 
 
The original 2001 .COM Registry Agreement containing
the presumptive right
of renewal to VeriSign did not fully resolve the
various fundamental
differences of view between ICANN and VeriSign, and
those differences have
continued to generate disputes up to and including the
issues involved in
the current litigation. 

The proposed settlement will end ICANN's dispute with
VeriSign. The
litigation focused on the introduction by VeriSign of
new "Registry
Services" and whether the current .COM agreement
(signed in 2001) provided
for oversight by ICANN over the introduction of
services (such as
"SiteFinder"). It was quickly understood that the
settlement discussions
were inextricably bound up in the contract language
and that any settlement
required a re-writing of the registry agreement. It
was necessary for the
parties to renegotiate terms within a new .COM
Registry Agreement relating
to a new clear definition of registry services and the
approach for approval
of such services. Therefore, in concert with the
settlement, ICANN and
VeriSign have entered into a new proposed registry
agreement. 

The settlement has been in negotiation for many
months, with talks extending
back to late 2004. The new agreement has been
streamlined from the old (161
pages versus 91). It provides that VeriSign will
operate the registry into
2012. 


Benefits accruing from the agreement

We see several benefits accruing from the proposed
settlement. The
settlement ends a costly, time-consuming litigation.
The end of the
litigation and the provision for binding arbitration
in the future will also
end the diversion of resources applied to this
litigation over the past two
years. Many things of importance to the ICANN mission
and to registrars have
been left undone and can now be accomplished.

Additionally the agreement, we think, will facilitate
the introduction of
new registry services by VeriSign that are intended to
increase the number
of registrations. The confrontational nature of the
VeriSign/ICANN
relationship prior to the settlement certainly slowed
the introduction of
new services. Having greater certainty and speed will
facilitate the
introduction of new business opportunities for
registries and registrars.

The new registry services process should also work to
provide certainty,
additional markets and protect registrars against
unanticipated product
introductions that may have an adverse affect.
VeriSign has agreed to a
definition of registry services that ensure that new
product introduction
will be vetted for adverse stability, security and
competition effects prior
to deployment. Also, the agreement puts into place a
standing technical
panel in order to ensure timely, unbiased opinions
regarding the potential
effects of product introductions on security and
stability of the DNS.
Competition issues will be referred to appropriate
governmental competition
authority/authorities; the proposed agreement
clarifies ICANN's role and
recognizes that determination of whether a registry's
action is competitive
or anti-competitive is an appropriate function of
existing national bodies

The agreement also provides certainty as to the price
of a domain name going
forward. Under the terms of this agreement, VeriSign
can raise the price of
a name up to 7% each year. It is understood that any
increase in price over
$6 will affect some business models. The price has
been constant for six
years. While price increases are rarely welcome, this
agreement provides a
ceiling and notice of prices for the next seven years.
During the
negotiations, a significantly wider range of price
increases was suggested
and discussed. This negotiation was not a competitive
re-bid process where
there existed leverage for reducing the per name
price. 

The price changes described in the agreement provide
notice and an
opportunity to react to increases: there must be at
least six months notice
before any price increase; there will continue to
offered registrations for
up to a ten year term, to allow those who want to
guarantee their
registration costs for ten years to do so; and there
are restrictions on
VeriSign creating tying arrangements.

Because of the presumptive right of renewal to
VeriSign for the .COM
Registry, ICANN's negotiating power relative to
pricing and other key terms
is significantly different than in the setting of
terms for the re-bid
relating to the .NET Registry. Accordingly, as ICANN
accredited registrars
and customers of VeriSign we are requesting your
review and comments
relating to this settlement and the accompanying .COM
Registry Agreement.


Issues for discussion

The comment period is intended to provide opportunity
for discussion of
areas of interest to parties not named in the
agreement so that these issues
can be taken into account. Some of these issues have
been identified by
registrars in discussions after the agreement was
posted:
.	Increases in the price VeriSign charges registrars
for domain names.
.	The combination of registrar and registry fees that
will be invoiced
and discussion of a reduced fee level for registrars
that can be approved in
a timely manner. 
.	The manner in which fees are potentially passed from
registry to
registrar and then on to registrants. This may include
a requirement for
line-itemization of all fees on the registrant
invoice. 
.	Description of long-term ICANN revenue goals that
are a prerequisite
to achieving the goals set out in the USG MoU and
gaining independent
status. 
.	The process by which registrars approve the variable
registrar fees
described in the adopted budget now and in years going
forward. 


The discussion forward 

The proposed agreement is being posted for public
comment for 24 days. This
time period should be used to discuss and determine
with clarity various
positions on the issues above. This can be done with a
series of generally
attended conference calls, individual consultations
and meetings with
registrar representatives. Many registrars
participated through the
registrar representatives in negotiation of the .NET
agreement. 

ICANN will arrange with registrars involved in the
discussion or there
representative a series of consultation through the
comment period to ensure
full discussion and consideration of the issues
raised. 

We look forward to receiving the Registrar community's
input. If you have a
comment and participate, that contribution will be
taken into account.

Thank you for the time taken to read and consider this
material.


Sincerely,

Kurt Pritz
ICANN





		
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