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Username: Susan Anthony
Date/Time: Fri, October 29, 1999 at 11:40 PM GMT (Fri, October 29, 1999 at 4:40 PM PDT)
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Subject: MCI WorldCom Comments on Tentative Agreements


MCI WorldCom appreciates the opportunity to submit these comments on the Tentative Agreements among ICANN, the U.S. Department of Commerce, and Network Solutions, Inc.  The company has a vital interest in the success of ICANN and the establishment of a competitive environment for the assignment of Internet names and numbers.  It views these agreements as an important step in the establishment of ICANN.  Notwithstanding these comments, these agreements represent a significant and important achievement among the parties in introducing competition into the domain name registration system, while maintaining the stability of the Internet and promoting international, consensus-based, management of it. 

The comments below are consistent with MCI WorldCom's overall interest in seeing a stable and accessible registration process, including registration database information, and a financially stable ICANN to oversee the assignment of Internet names and numbers and the establishment of a competitive registration system.  They should be considered in the implementation of the agreements and, as necessary, in the fine-tuning of the system as it is rolled out.  MCI WorldCom does not support any delay in ICANN's endorsement of the agreements during the ICANN Annual Board Meeting in Los Angeles, California, November 1-4, 1999.

Our comments are as follows:


ICANN, as a not-for-profit corporation, does require good financial support from its stakeholders.  As a result, the contribution by NSI, which has profited from its position as sole registrar and registry, is important to ensure a fairly distributed and not unduly burdensome financial obligation by the registrars and other stakeholders to ICANN.   The comments below are aimed to improve fair distribution and prevent unbalanced burdens on the new registrars entering into the market.

Registrar Accreditation Agreement, Transition Agreement 4, caps NSI's portion of the on-going component of the registrar accreditation fees at $2,000,000 annually for the 5-year term of the agreement.  This provision could conflict with an ICANN-adopted policy, the terms of which could result in setting NSI's portion above the $2,000,000 cap. In turn, this result would violate the Agreement's mandate that such fees must be reasonably allocated among all ICANN-accredited registrars. 

Registry Agreement 6 also effectively caps NSI's portion of the gTLD registry-level fees at $250,000 annually, at least as long as NSI is the only gTLD registry.  Even with the introduction of additional gTLD registries, NSI should be able to avoid payment of any fees above $250,000, since it likely will account for two-thirds of all gTLD registry fees for some time.  Again, this provision could conflict with any policy adopted by ICANN, and could result in inequitable treatment of any new gTLD registries that may become operational during the 4- or 8-year agreement term.  Moreover, if NSI were to spin off its registrar business, the term of its registry agreement would be extended to a total of 8 years.  Yet, for most of those years, NSI would be required to contribute only $250,000 toward ICANN's funding.

Amendment 19, II.7., should be conformed to Registry Agreement 20.  The latter provision provides that NSI can increase its price for registry services only to the extent that increases exceed any reductions in costs arising from new ICANN policies or specifically applicable legislation.  Also, NSI should be required to account for and pass on any cost savings resulting from new policies or legislation or from any economies of scale that could be expected to occur in operating a registry over the 4- or 8-year term contemplated by the agreements.

Registry Agreement 21.B. provides that NSI will ensure that the revenues and assets of the registry are not utilized to advantage NSI's registrar activities to the detriment of the other registrars.  Amendment 19 to the Cooperative Agreement III.4. conflicts:  "All income generated by user fees charged [by NSI] for Registry or Registrar Services shall be considered Program Income under the terms of this Agreement and will be available to NSI as consideration for the services provided and may be used for any purpose in NSI's sole discretion."  This provision could be modified to conform to the Registry Agreement by simply adding, "except that any such use shall not violate NSI's obligations under Paragraph 21(B) of the Registry Agreement."


Access to the registration database is critical to the operations of electronic commerce and, therefore, it is important that access is not unfairly limited and that it does not create unfair burdens on its users. 

Registry Agreement 10 implies that NSI can claim intellectual property rights in its registry database. Similarly, the Registrar Accreditation Agreement II.H. and the Registrar License and Agreement 2.6 and 6.14 suggest that the Registrars have a comparable claim in the SLD registrations that each processes.  These databases are public property in which neither NSI nor any other party can assert any cognizable intellectual property right.  Disagreement over ownership rights in the database should not preclude the parties from entering into these agreements provided that public access to these databases continues to be freely available.  However, the DOC should clarify that, in endorsing this package of agreements, the U.S. Government is not thereby agreeing that NSI (or any other registry or registrar) owns intellectual property rights in the registry/registrar databases.

The agreements appear to contemplate that each Registrar will implement its own WHOIS service, unless and until an ICANN-adopted policy mandates the development of a centralized WHOIS searchable database.  How this will work in actual practice is unclear.  Under the terms of the agreements, NSI is required to provide bulk access to the .com, .net and .org zone files to third parties and, under the proposed Zone File Access Agreement, will do so at no charge. NSI reserves the right to adjust this fee on 30 days' prior notice "to reflect a change in the cost of providing access to the files", although any such changes must be approved in advance by ICANN under Registry Agreement 19.  Other registrars also are required to provide third-party bulk access, but may charge up to $10,000 annually for doing so under Registrar Accreditation Agreement II.F.6.b., apparently notwithstanding the actual cost of providing access.

The lack of a centralized database is problematic for trademark owners, which have a legitimate need to use the zone files to identify patterns of cybersquatting conduct, i.e., bad-faith registration of their trademarks in domain names.  This effectively cannot be done using NSI's WHOIS service, which "aborts" at 50 records and is limited in its search fields.  This use will now require not only full access to NSI's zone file, but also to the zone file of every other Registrar (now 87 in number) in order to obtain full text data.  Licenses with each of the Registrars for bulk access also will be required in order for businesses to search domain name records to determine the availability of a trademark.  While the introduction of competition into the registrar system is essential, the maintenance of separate WHOIS databases is not required in order to effectively compete.  In fact, the Green Paper and the White Paper appear to have contemplated a centralized registry database.

Registrar Accreditation Agreement F.6.f. references a Registrar's "Opt-Out" policy, the ultimate effect of which appears to enable SLD holders to limit public access to registration data. Continued public availability of this data is essential and anonymity is undesirable, at least within the existing undifferentiated gTLDs.  At the very least, the ability of registrars to implement an opt-out policy would appear to require the adoption of a Consensus Policy, as suggested by F.8 of the agreement.

In Registrar Accreditation Agreement II.F.1.e., the Registrar is required to include the "original creation date of the registration" in its database.  Within the past year, NSI initiated a practice of changing the domain name registration record creation date to the date on which a domain name is transferred from one party to another.  Since knowledge of the original creation date can be important in evaluating trademark-related disputes involving domain names, NSI's practice must be brought into compliance with the terms of the new agreement.  However, the date on which a domain name is transferred, if any, constitutes important historical chain-of-registration information that also should be included in the database, as contemplated in the White Paper.

A minor correction is required to the Registrar Accreditation Agreement II.G. regarding required registration information for the billing contact.  The term "(where available)" should modify the fax number.  As the paragraph now reads, only the name of the billing contact is required.  A minor correction also is required in II.P. to specifically include "(3) any dispute over whether a policy adopted by the Board is a Consensus Policy" as one of the disputes arising under or in connection with the agreement.


Under the Transition Agreement attached to the Registrar Accreditation Agreement, NSI is excused from complying with II.J.4 requiring prepayment of domain name registrations for a period of 4 months from the agreement date.  The reason for this extension is altogether unclear, especially since NSI announced in July 1999 that it was introducing a prepayment requirement effective on September 1, ostensibly to curtail cybersquatting.  There is no such extension period for any other registrar.


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