[bc-gnso] Assessing the "Domain Name Exchange" service proposed by VeriSign

[Steve DelBianco <sdelbianco@xxxxxxxxxxxxx>]

BC Members:

On April 5, VeriSign (operator of .com, .net, and .name) proposed a new
registry service called "Domain Name Exchange."  VeriSign¹s proposal and QA&
is posted at 
http://www.icann.org/en/registries/rsep/verisign-dnex-05apr10-en.pdf
Here¹s how VeriSign describes the service:

> Based on ongoing discussions with registrars who represent diverse business
> models and market segments, VeriSign has developed the concept for the Domain
> Name Exchange Service to allow a registrar to repurpose a domain name
> registration that has significant time remaining until expiration.   Today
> when a registrant terminates a package of services from a registrar after, for
> example, an introductory 1 or 3 month period, the registrar is forced to
> recoup the investment in the associated domain via monetization or the
> secondary market. The domain exchange will allow a registrar to offer another
> registrant a package that sits on top of that same registration using a new
> domain.
> The Domain Name Exchange Service is an optional service that is designed to
> provide registrars and registrants with an effective and efficient way to
> manage domain name registration terms for domain names that are no longer
> needed.
> 
For many website hosting service providers, the registration of a domain
name is a secondary service.  For example, the European registrar
1and1 offers web hosting with ³free domains included² ( http://1and1.eu ) in
order to attract new clients to establish their online presence.  Domain
Exchange lets 1&1 re-use the registration if a client wants to drop the
website and domain after just a few months.   Registrars would pay around
1.5x the cost of a regular annual registration in order to get the Exchange
option, and they could exchange once per month.  Perhaps there will be
significant demand for this service from registrars who have lots of
turnover with hosting clients.

Domain Exchange is being proposed only for .net domains, but VeriSign may
propose it for .com at some point.  And that¹s where several BC officers are
already raising concerns that Domain Exchange could be a new form of ³domain
tasting² that would lead to even more cyber-squatting and typo-squatting.

³Domain tasting² is a loaded term in ICANN circles.  ³Tasting² is how
domainers test a domain name to learn whether type-in traffic generates
enough advertising revenue to cover costs of registering the domain.    The
names typically tasted were generic words and phrases (like
SpringCleaning.com or SpringFashions.com) that some users might guess at by
entering the URL ( instead of going thru a page-ranked search engine).
Domainers make money on these domain names by ³parking² a page with ads for
related products and services.

The parked pages that result from tasted names are objectionable in the way
that highway billboards are objectionable, but there¹s nothing illegal about
monetizing domain traffic with advertising.  Moreover, several BC members
are domainers who monetize traffic this way, and other BC members providing
online advertising services to support the trade.

But nothing infuriates BC members and Internet users more than tasting or
parking domains that involve trademarked terms or typographical variants
designed to deceive users.  Cybersquatting and typosquatting could increase
if a new service makes it easier to discover domain names that mislead users
into thinking they have landed on a page belonging to a known business or
organization they intended to reach.

Domainers discovered they could taste traffic for 5 days for zero cost by
using the Add Grace Period (AGP) that has always been offered by registrars
and registries.   That led to rampant tasting in domains like .com.   The
ICANN community, incl many in the BC, pushed ICANN to end the practice of
free tasting thru abuse of the AGP privilege.  Using the policy development
process, ICANN effectively eliminated free AGP tasting in 2009
(http://www.icann.org/en/tlds/agp-policy-17dec08-en.htm )

Question is, will a new Domain Exchange service increase the incidence of
trademark and typographical squatting?  I asked my friends at VeriSign (a
NetChoice member) about this concern, and here¹s what I learned:

Domain Exchange is not going to replace the free and unchecked tasting that
was done with AGP before 2009.  First, a domain 'taster' has to actually buy
a 1-year registration to be able to use domain exchange at 11 monthly
intervals. That¹s cheaper than buying a dozen registrations, but its not
free.  Second, it would take a year just to 'taste' a dozen names for ad
traffic.   

Still, VeriSign acknowledges that some parties may see Domain Exchange as a
way to ³taste² and then register names that infringe on trademarks.  So
VeriSign is offering additional IP protection tools described in their
proposal, such as limitations on exchanges, free reporting on exchanged
names,  and the WhoWas service (a permanent record of historical Whois).

VeriSign is open to suggestions from the BC (and IPC) about other tools that
would minimize use of Domain Exchange for TM infringement or other illegal
purposes.  They¹re also prepared to answer questions in a direct dialogue
with our members if that¹s easier and quicker than using the public comment
process described below.

So let¹s begin internal discussions on BC List, with an intent to send
concerns and questions to staff, to VeriSign, and eventually in ICANN public
comments.


Finally, a word about the ICANN process for review and approval of new
registry services: 
> 
> ICANN evaluates new registry services thru its Registry Service Evaluation
> Process (RSEP).  ICANN staff has 15-days to make a "preliminary determination"
> whether this Registry Service requires further consideration by ICANN because
> it could raise significant issues with Security & Stability or competition.
> There¹s no official comment period during these 15 days, but BC members can
> always explain concerns to staff.  See RSEP at
> http://www.icann.org/en/registries/rsep/rsep.html
> 
> If ICANN determines that the service might raise significant Stability or
> Security issues, it goes to the Registry Services Technical Evaluation Panel
> and simultaneously invites public comment on the proposal (2nd chance to
> comment).  This panel has 45 days to do a written report regarding the
> proposed service effect on Security or Stability.
> 
> ICANN¹s Board then posts the report for public comment (3rd chance to
> comment), and the Board has 30 days to reach a decision. ³In the event the
> ICANN Board reasonably determines that the proposed Registry Service creates a
> reasonable risk of a meaningful adverse effect on Stability or Security,
> Registry Operator will not offer the proposed Registry Service.²
> 
> So there are 2 or 3 chances to comment over a period of 45 days (or 90 days if
> the panel raises S&S concerns).