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Username: William H. Bode
Date/Time: Sat, October 30, 1999 at 12:06 AM GMT (Fri, October 29, 1999 at 5:06 PM PDT)
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Subject: AIRA Response to Proposals

Message:
 

 
On behalf of the American Internet Registrants Association (AIRA), I am writing in response to certain draft documents which were released for public comment on September 29, 1999, by the U.S. Department of Commerce (DOC), the Internet Corporation for Assigned Names and Numbers (ICANN) and Network Solutions, Inc. (NSI).  These draft documents include a Registry Agreement, a revised Registrar Accreditation Agreement, a revised Registrar License and Agreement, Amendment No. 19 to the Cooperative Agreement between DOC and NSI, and Amendment No. 1 to the Memorandum of Understanding between DOC and ICANN (collectively, the “Proposals”).

The Proposals are an affront to sound public policy.  The various Agreements, none of which have been reviewed or approved by the ICANN Supporting Organizations or Advisory or other Board Committee, repudiate the Administration's commitment to the Internet Public, and to Congress, that NSI's monopoly would end, and that Internet Domain Name registrations would be subject to competition.  The Registry Agreement provides NSI with nothing less than windfall monopoly profits at the expense of all Internet registrants.  It also ensures the continuation of unacceptable service. 

If NSI's monopoly tenure were to continue, the Internet community can expect that NSI will not: update zone files more than twice daily; update the WhoIs database more than once per year; implement real-time processing; install mechanisms for refunds; or grant volume discounts.  These are but some of the bitter fruits that would result from  the Department of Commerce's refusal to end NSI's monopoly.

If implemented, the Proposals will have deleterious long-term effects on the relationships among NSI, the gTLD registry, each registrar, and the community of registrants. The negative consequences likely to result from the Proposals include the following:

 Excessive cost to registrars and registrants.  Amendment 11 to the contract between the Department of Commerce and NSI limited the fees which NSI may charge competing registrars (for registry access) to "no more than a dollar amount per registration/year to be specified in a further amendment reflecting NSI's costs and a reasonable return on its investment."  The $6 fee that registrars must pay NSI for each registration was the result of protracted "11th hour" negotiations, and had nothing to do with NSI's costs.  (It is inconceivable that the actual cost of providing registry access exceeds $.05 per registration.)  The Agreement providing for this fee patently violates the Independent Offices Appropriation Act, 31 U.S.C. Sec. 9701, which delimits the fees which may be charged for government services (Domain Name  Registrations) to the cost of providing that service.  Moreover, the Agreement incorporating this fee was never raised or addressed at a public hearing, as DOC's own regulations require. The $6-per-registration fee awarded to NSI is, in short, a breathtaking violation of public trust at the expense of the Internet community.  ICANN should suspend this Agreement, conduct public hearings on NSI's costs of providing registry access services, and approve only a fee consistent with law.  In the interim, ICANN should set a fee for registry services no higher than $.05 per registration, with a proviso that the fee may be adjusted upward or downward after a lawful rate is formally determined.

 No customer service improvements.  NSI is not obligated to meet customer satisfaction standards or requirements.  Rather, it is obligated merely to comply with ICANN-established standards to the extent practicable. The Registry Agreement does not provide any standards for quality, performance or functionality. In fact, the draft agreement provides that under no circumstances will NSI be obligated to implement any performance or functional changes for the first three years of the term of the Registry Agreement, or until November 2002 at the earliest. NSI’s ability to scale beyond the testbed registrars must be addressed prior to the consummation of a long-term commitment.

 Limited access to the database.  NSI and its registry successor will have access to data submitted by each registrar.  NSI is required only to make certain limited information available in response to queries, though the nature and maximum number of such queries are not defined adequately in the Registry Agreement. Under the current language, NSI will make the WhoIs database inaccessible or unreasonably inconvenient to other registrars.

 No competitive procurement alternative available.  An open and competitive procurement process would provide registrars with better terms regarding price and service.  Indeed, under the Competition in Contracting Act, the Department of Congress was obligated to open the registry function to public competitive bids.  No companies other than NSI, however, were given the opportunity to submit competitive proposals  in direct violation of Competition in Contracting Act.  Apart from this contravention of federal law, the Registry Agreement trashes one of ICANN’s basic objectives: to introduce competition to the DNS.

AIRA recommends that ICANN adopt the following changes to ensure the stability of the Internet and to facilitate the introduction of an open and competitive procurement process to select a gTLD registry by May 2001.  No lesser amendments will be acceptable to AIRA registrants.  ICANN, its Board of Directors and the entire industry are likely to benefit from such a process.  In particular, all registrars and registrants will benefit from lower prices, higher standards of service, improved access rights, and rational terms of service.

Recommended Amendments:

Registry Agreement

1. Modify Paragraph 22 (A) as follows:

(A)  ICANN shall, in accordance with Section 4, adopt an open, transparent procedure for designating a Successor Registry.

2. Modify Paragraph 23 as follows:

23. Expiration of this Agreement. The Expiration Date shall be eighteen months after the Effective Date, unless extended as provided below. In the event that NSI completes the legal separation of ownership of its Registry Services business from its registrar business by divesting all the assets and operations of one of those businesses within 18 months after Effective Date to an unaffiliated third party that enters an agreement enforceable by ICANN and the Department of Commerce (i) not to be both a registry and a registrar in the Registry TLDs, and (ii) not to control, own or have as an affiliate any individual(s) or entity(ies) that, collectively, act as both a registry and a registrar in the Registry TLDs, the Expiration Date shall be extended for an additional four years.  For the purposes of this Section, "unaffiliated third party" means any entity in which NSI (including its successors and assigns, subsidiaries and divisions, and their respective directors, officers, employees, agents and representatives) does not have any equity ownership or the ability to exercise any control, either directly or indirectly through one or more intermediaries. "Control," as used in this Section 23, means any of the following: (1) ownership, directly or indirectly, or other interest entitling NSI to exercise any of the voting power of an entity; (2) the power, directly or indirectly, to elect any of the board of directors (or equivalent governing body) of an entity; or (3) the ability, directly or indirectly, to direct or cause the direction of any management, operations, or policies of an entity.

Amendment No. 19 to the Cooperative Agreement

Modify Paragraph 10 as follows:

10. Expiration Date.

The Expiration Date of this Agreement shall be eighteen months after the date this Amendment is signed, unless extended as provided below. In the event that NSI completes the legal separation of the ownership of its Registry Services business from its registrar business by divesting all the assets and operations of one of those businesses, within 18 months after the date of this Amendment to an unaffiliated third party that enters an agreement enforceable by the Department of Commerce (i) not to be both a registry and a registrar in the Registry TLDs, and (ii) not to control, own or have as an affiliate any individual(s) or entity(ies) that, collectively, act as both a registry and a registrar in the Registry TLDs, the Expiration Date shall be extended for an additional four years. For the purposes of this Section, “unaffiliated third party” means an entity in which NSI (including its assigns, subdivisions, and divisions, and their respective directors, officers, employees, agents and representatives), does not have any equity ownership or the ability to exercise any managerial or operational control, either directly or indirectly through one or more intermediaries. “Control,” as used in this Section I.B.10, means any of the following: (1) ownership, directly or indirectly, or other interest entitling NSI to exercise any of the voting power of an entity; (2) the power, directly or indirectly, to elect any of the board of directors (or equivalent governing body) of an entity; or (3) the ability, directly or indirectly, to direct or cause the direction of any management, operations, or policies of an entity.

Thank you for your consideration.

Sincerely,

William H. Bode
General Counsel



 


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