Return to agreements Forum - Message Thread - FAQ

Username: Marilyn S. Cade
Date/Time: Wed, November 3, 1999 at 5:29 PM GMT (Wed, November 3, 1999 at 10:29 AM PDT)
Browser: Microsoft Internet Explorer V4.01 using Windows NT
Score: 5



                        *  *  *  C O R R E C T E D   C O P Y   *  *  *

October 26, 1999

Ms. Becky Burr
National Telecommunications and Information Administration
U. S. Department of Commerce
1401 Constitution Ave., N. W.
Washington, D.C.   20230

Ms. Esther Dyson
Interim Chairperson
Internet Corporation for Assigned Names and Numbers (ICANN)
4676 Admiralty Way, Suite 330
Marina del Rey, CA  90292

Dear Ms. Burr and Ms. Dyson:

AT&T has reviewed the proposed agreements between the Department of Commerce ("DOC"), Network Solutions, Inc. ("NSI"), and ICANN and we offer the following comments regarding the proposed agreements. Our review and comments are based on our present uses of the WHOIS database and zone files, and our understanding of the services which will be available via competitive registrars. 

We are concerned that the proposed conditions within these agreements will seriously limit the capability of competitive registrars to compete with NSI, thus limiting the benefits to the end users of domain names. 

We realize that the agreements have been endorsed as a package, but in fact, the complexity of trying to sort out overlapping and intertwined conditions raises serious concerns on our part about the time frame which has been allowed for review and comment.  We urge that the Department of Commerce (DOC) extend the comment period, and in fact, engage in a two step comment period.  First, the comment period should extend past the upcoming ICANN board meeting so that the community of stakeholders can provide comments until the Board meeting itself, and the Board can take comments at the actual open meeting prior to the ICANN board meeting.  It is likely that some of the comments submitted by the stakeholders may call for modifications or adjustments.  Should that be the case, it is important to allow adequate time for fair consideration by all parties.

Separation of the Registry and Registrar functions:

Key to creating competition is the separation of the registry and registrar functions.  In order to ensure that NSI does not leverage its position as the exclusive registry unfairly, complete divestiture is necessary.  Otherwise, NSI will continue to have  an unfair advantage as a  competing  registrar.   We  have not seen clear descriptions of how this  separation will work. Nor have we seen a description of the  proposed safeguards necessary to ensure separation. 

We are also concerned that the possible sale of the registry business will result in revenue which will go to the registrar; if that is the intent, that would seem to provide a very large subsidy to the registrar, rather than ensuring a benefit to the NSI shareholders.   If the estimate of over $1 billion of value for the registry business is correct,  the sale of the registry  will unfairly benefit NSI with the financial resources to expand, develop and maintain its registrar business well beyond its  competitors.    We need to remember that NSI is in essence a “franchise government-supported monopoly” without competition, and therefore, the DOC and ICANN must make competition its foremost priority and establish a sound framework for competitive environment.    Although we  understand that the goal  is to encourage  NSI to sell the registry business, the sale of the registry business should benefit the NSI shareholders and not NSI as a registrar.  The NSI registrar should not receive an unfair  "windfall" subsidy which will undermine the competitive environment.

We strongly believe that restrictions are needed in the use of funds in the situation described above.   Although there is an incentive for NSI to sell the registry business, there is no requirement or mandate to do so.    Therefore,   effective  safeguards must be established immediately to protect the other registrars from the potential misuse of NSI's role as registry and registrar.   Moreover, procedures must be instituted which will monitor and enforce  these safeguards.

Exclusive Agreements

Amendment 11 to the Cooperative Agreement prohibited NSI from entering into exclusive agreements with its "customers" (effectively, domain name resellers) for a period of 18 months from the Phase I deployment of the SRS. The proposed Amendment 19 to the Cooperative Agreement eliminates this limitation of exclusivity.

It appears that Section 2  could be interpreted to read that the exclusivity prohibition no longer applies.  If this is the case, we object and urge that the DOC and ICANN modify Amendment 19 to maintain the limitation on NSI's ability to enter into exclusive contracts.   Exclusive contracts lock in customers for an extended period of time, and therefore could significantly impair the ability of competition to develop.


Under its proposed Registrar Accreditation Agreement,  NSI is required to abide by the same terms requiring prepayment as the competitive registrars.  However, we note in the contract that NSI is given a grace period of four (4) months.  As a result, NSI would be treated differently than any other  new registrar, and would once again gain an unfair competitive advantage.  Given the existing resources of NSI, we believe NSI can either solve this problem immediately or find a workable solution for the interim period.  No such four (4) month grace period is being extended to the new registrars. NSI should not be treated differently from  new registrars.  The solution is not to extend a similar grace period to the new registrars, but rather require NSI to comply with prepayment.  The other registrars have been willing to accept the requirement of prepayment, recognizing the value of such practices to the  stakeholder community.  In the spirit of fair competition,  NSI should likewise be immediately required to implement prepayment.

Registrar Accreditation Fees

As previously discussed  at a  public meeting, , NSI will account for at least two thirds of all registrar level fees  in the foreseeable future.  Reading Section II.L.2 of the Registrar Accreditation Agreement, this is the level of funding which is needed before approval of any changes.  In essence, NSI is put in sole charge of approving fee changes, with no safeguards or participation by other registrars who are also affected by these changes.

We are unaware of any other situation where movement from monopoly to competition is underway where the responsible governmental entity would accept such direct control by the affected entity who is being required to accept competition.  We urge DOC and ICANN to modify this provision to ensure participation by a reasonable and representative number of registrars in the decision making process. It might be reasonable to have NSI, three to four large registrars, and perhaps three to five smaller registrars, for a total number of seven to nine, provide recommendations in this particular area.   Once competition ensures that a number to exceed 6 or 7 registrars make up two-thirds of registrar-level fees, this can be modified.
Performance and Quality of Service Requirements

Our review of the Registry Agreement did not identify standards for quality, performance or functionality for the registry in serving the registrars.  We have consulted briefly with representatives of the testbed registrars and understand that there were situations where performance was not optimal.  We are also experienced in dealing in other settings involving monopoly entities, with similar situations and requirements and we are well aware that, even with good intentions, failure to adequately provide recovery, trouble shooting, and prompt reinstatement can occur.  We are even aware in those other situations, of documented instances where the “incumbent’s like service” was treated in a preferential manner to the new entrant.   We understand that some of the registrars are providing you with a proposed list of performance requirements that should be incorporated into the Agreement (see Attachment A). 

We support the need for performance metrics for NSI, as the registry, in its agreements with the registrars. DOC and ICANN should ensure that the process also provides a process for appeals, escalations for failure to meet the performance requirements, and effective penalties that will be imposed upon NSI for non-performance. We are aware that during the testbed period, information was in essence considered confidential  and could not be disclosed.  However, information about non performance needs to be  made public.    Our own experience in dealing with the transition from monopolies in other settings is that availability of this information is a significant incentive to improved performance.

The registrars should have an administrative process to follow, and should not have to resort to legal action in court to ensure compliance with reasonable performance standards by NSI.   Further, NSI should not be able to provide better conditions and service to their own registrar, and should be required to provide the same level of performance and services which they provide to preferred customers.  

There are a number of examples where it appears that treatment of NSI is preferential: for instance,  in 6.16 of the Registrar  License and Agreement,  we note that  the registrars are required to give extensive indemnification to NSI in a variety of situations and circumstances.     No similar, nor reciprocal relief is available to the registrars, in the event of failure of NSI to fulfill it’s obligations.  

Further, Section 5.4, Non–Payment of Registration Fees allows NSI to stop accepting new registrations and/or delete the domain names associated with invoices not paid in full from the Registry database.  We assume this reference is to accredited registrars who are otherwise in compliance with the accreditation procedures.   Certainly, situations do develop where payments are delayed within administrative processes, or even by late delivery by postal service.   There is no reference to notice before such actions may be taken. This remedy seems unduly harsh and arbitrary.   At a minimum, NSI should be required to give notice that payment has not been received.  Further, we urge DOC and ICANN to consult with the registrars further about a more reasonable time frame, such as notice, followed by a slightly longer time period; something like a time frame of 5-7 days seems more reasonable, after notice.

Although NSI as a registrar  has existing preferred customer contracts, NSI  should not be allowed to gain a competitive  advantage over new entrants by nature of their “size”.  Caution must be exercised to ensure that new entrants are given the kind of fair and equitable treatment which will ensure that competition can develop and survive.   Even if the playing field is equal where everyone is subject to the same rules, during the transition period, NSI will still have a competitive advantage.  This should be  acknowledged and its effects minimized. 

Ownership and control of essential resources, such as WHOIS and zone files

          The agreements seem to provide continued control by NSI over the WHOIS database and the zone files.  Access to the WHOIS database is described as query based, or bulk file. It is not clear to us that the needs of trademark owners  such as ourselves, are addressed in the two methods.   We saw no definition of what “query based access” encompasses, and seek clarification of that.   We also note that the provision of  bulk access for a fee not to exceed $10,000 could be interpreted to encompass access of a few dozen, a hundred, or a few thousand inquiries.

Famous trademark holders require complex access to search the WHOIS database for trademark violations.  We suggest that DOC and ICANN should further clarify these areas to ensure that the needs of these stakeholders are understood and addressed.    For third parties building searchable databases, we are assuming that the effort to provide a ceiling of a $10,000 fee is reasonable for NSI.  There seems to be no requirement that new start up registrars would have to make their WHOIS databases available at a fee less than $10,000.   We suggest that DOC and ICANN give further consideration to guidelines for bulk access fees which are more reasonable for the start up competitive Registrars/WHOIS providers. 

          It also appears that registrants are able to “opt out” of making contact information available when the bulk file transfer occurs. We raise significant concern about this. For the most part, the registrants are commercially oriented, or are holding themselves out to engage in communications with the public. Under no circumstances should they be allowed to withhold contact information.  Complete identifying contact information must be provided.

        We object to the apparent assumption that the registry owns the zone files and that registrars own the WHOIS data.  This data has been publicly available since its inception, and we urge that it continue as a public resource.   

In Amendment 19 to the Cooperative Agreement, 3, it is not clear that NSI has any restrictions on how they can use the personally identifiable data.    NSI has  to provide notice about what they will use the data for, but there is  no indication that they are restricted in their uses. For instance, given the database of several million names, they could market other ancillary services to the entities identified in the database. This would present a unfair competitive model to the other new entrants.  NSI should not be allowed to market other services.   It may be that at some time in the future, bundling of additional services by NSI might be acceptable, but we are cautious about the lack of competition and the ability of the incumbent provider of services, with significant brand recognition, to trade on that recognition to the detriment of new entrants.

AT&T supports the requirement of an interactive and reintegrated WHOIS service.   We note that there is a commitment that should such a reintegrated WHOIS not emerge from other competitive sources, the NSI registry is committed to such reintegration and provision of an interactive and reintegrated WHOIS service, under this agreement.   Our comments address the functionality proposed, regardless of who provides it.  While the functions described  seem to be responsive to some types of inquiries by individual users,  it does not seem fully useful to copyright and trademark owners.   As described, it is limited to inquiries based on SLD name, and does not include date of creation nor searches based on owner name.   It also does not include technical contact, administrative contact, or billing contact information—all part of today’s WHOIS database information

In subsection B, “to ensure operational stability of the registry,” NSI is allowed to temporarily limit access provided that they immediately notify the Department of Commerce in writing or electronically of the nature and reason for the limitation.   The Department of Commerce can require NSI to limit this “outage” to no longer than three business days, by objecting in writing or electronically, if their objection is not unreasonable.   We are concerned that there seems to be  no incentive for NSI to maintain a stable, always up access, since there are no identified penalties for multiple events or occurrences of “ outages.   We operate “always on” databases and services ourselves, and understand heavy traffic requirements such as those which NSI cites; however, “outages” of three days are unacceptable in any competitive environment. Such “outages” would  severely and negatively impact competitive registrars, and  the Internet community who use and rely on the WHOIS database.

A reintegrated WHOIS database is an essential and necessary service to the Internet stakeholder community, including but not limited to the public at large.   The concepts described in section C appear to be largely acceptable, however, we urge that ICANN and DOC should make it clear how they will support the development of reintegration of the WHOIS database and commit to consult closely with the trademark owners, copyright owners, and business users. 

Artificial and arbitrary deadlines:

We do not understand, nor support the proposed deadlines, and the rush to meet the artificial deadline of the ICANN board meeting.  As noted above, these contracts are complex and overlapping.  The time frame for evaluation of the comments received is far too short.  We urge DOC and ICANN to extend the comment evaluation period to enable full and thorough consideration.   We do not recommend a long extension, but do suggest that it is very important to ensure that the Board has heard from the affected stakeholders on their questions and concerns.

If the issue is allowing the ICANN Board the time to fully consider the implications of the agreement, then the open meeting just prior to the Board meeting itself should allow for further input from the stakeholder community.    The Board can meet in executive session during November at a later date to consider the comments and review the recommendations of the community of stakeholders, and make a final determination at that later time.  This allows a slightly expanded time frame for consideration and comment, which seems useful to us, given the complexity of the contracts, the extensive nature of their impact, and the scope of the implications of these considerations.

When market dominance exists, and competition does not, it takes time and commitment to move into a competitive environment.  In short, competition isn’t built in a day; and we urge DOC and ICANN to extend the comment period to enable full and thorough consideration, and due process of law. 

Marilyn S. Cade, Director
Internet and E-Commerce Advocacy, AT&T

cc: Andrew Pincus, Department of Commerce
Mike Roberts, ICANN


Message Thread:

Privacy Policy | Terms of Service | Cookies Policy