Internet Commerce Association Comments on the Draft Final Task Force Report

["Phil Corwin" <pcorwin@xxxxxxxxxxxxxxxxxx>]

Note: This comment letter was filed yesterday in advance of the comment 
deadline from Lisbon while attending the ICANN meeting. However, for some 
reason no e-mail confirmation was received nor has it been posted at the ICANN 
website. We are therefore re-submitting it. Thank you.

 

 

BUTERA & ANDREWS

Attorneys at Law

1301 Pennsylvania Avenue, N.W.

Washington, D.C. 20004-1701

202-347-6875

Philip S. Corwin, Partner

pcorwin@xxxxxxxxxxxxxxxxxx <mailto:pcorwin@xxxxxxxxxxxxxxxxxx> 

 

 

By E-Mail       

 

March 28, 2007

 

Board of Directors

Internet Corporation for Assigned Names and Numbers (ICANN)

4676 Admiralty Way, Suite 330 
Marina del Rey, CA 90292-6601

 

Re: ICANN Opens Public Comment Period on Policy Development Process on Policies 
for Contractual Conditions: Existing Registries 
<http://gnso.icann.org/announcements/announcement-08mar07.htm> 

 

Dear Members of the ICANN Board:

 

This comment letter is submitted by the Internet Commerce Association (ICA) in 
regard to the March 8, 2007 ICANN Notice, "ICANN Opens Public Comment Period on 
Policy Development Process on Policies for Contractual Conditions: Existing 
Registries <http://gnso.icann.org/announcements/announcement-08mar07.htm>  ". 
ICA is a not-for-profit trade association. Its membership is composed of 
individuals and companies that invest in domain names and develop and monetize 
the associated websites. ICA's mission is to promote the benefits of the 
activities of professional domain name investors and developers to the press, 
advertisers, and governmental authorities on a global basis. ICA stands for 
Internet prosperity and entrepreneurship and for fairness among regulators and 
in the dispute resolution process, taxation, and treatment under other relevant 
laws, regulations, and agreements in the U.S. and other nations. ICA provides a 
unified voice for a membership with common interests and a diverse collection 
of experience in the professional domain name ownership community. This 
community represented by ICA has risked large amounts of capital in order to 
develop domain names as the first new form of property of the virtual age. 
Professional domain name registrants are a major source of the fees that 
support registrars, registries, and ICANN itself.

 

The ICA commends ICANN for soliciting public comment on this draft Final Task 
Force Report ("Report") prepared for the Generic Names Supporting Organization 
(GNSO) in furtherance of its PDPFeb06 project. It is unfortunate that the ICANN 
Board ignored the many requests from a broad range of community members that it 
defer final action on the proposed new registry contracts for .Biz, .Org and 
.Info until this Report could be completed and considered. The premature 
approval of those contracts at the December 2006 Sao Paulo meeting, far in 
advance of their renewal dates, was a grave disservice to the many  registrants 
who had expressed outrage over their presumptive renewal and pricing increase 
provisions. The Board's explanation that it would be unfair to these registries 
to deny them the same unjustifiable concessions that were made to VeriSign in 
the .Com settlement displayed a great insensitivity to what constitutes 
fairness to millions of domain name (DN) registrants. Nonetheless, we presume 
that your solicitation of comments on the Report is an indication that it may 
have some beneficial impact on all registry contracts in the future.

 

The general views of the ICA as regards the key recommendations of the Report 
are as follows:

*       Registry Agreement Renewal - We concur that there should be a general 
policy guiding renewals and that registry agreements should be a commercially 
reasonable length; we do however have concerns hat the suggested standard term 
of ten years may be too long a term, especially for dominant registries or 
newly introduced registries, and that a shorter period would allow recouping of 
investment in combination with market testing at intervals that prevent a drift 
into monopolistic conduct. While we have no objections to a reasonable 
presumption of renewal where a registry operator has not materially breached 
its existing agreement we cannot support presumptive renewal as written into 
the current .Com and similar registry agreements, as they permit the 
presumption to stand despite multiple material breaches triggering corrective 
arbitration or litigation by ICANN. Such presumptive renewal is an effective 
grant of perpetual renewal and is blatantly anti-competitive. In any event, we 
support mandatory re-bid, with a modest but not insurmountable advantage to the 
incumbent operator who has not been in material breach, as the only practical 
means to provide periodic market testing of service quality and pricing. Absent 
such market testing the only viable alternative would be pervasive price and 
service quality regulation, an approach that we do not favor.  
*       Relationship to Consensus Policies - We support the view that Consensus 
Policies should apply to all generic top level domain (gTLD) registries. We 
also support the recommendation that it is appropriate to delegate certain 
policy making responsibilities to operators of sponsored top level domain 
(sTLD) registries.
*       Pricing Policies - As an association of free market entrepreneurs our 
general preference is for marketplace determination of pricing. However, given 
that each registry operator is an effective natural monopolist, that certain 
gTLD operators have substantial market dominance (especially .Com), and that DN 
registrants face high switching costs, some effective controls on registry 
pricing must be in place. Periodic market testing can have a salutary effect in 
this regard, as was demonstrated in the re-bid process for the .Net gTLD. 
Registry agreements should contain reasonable limits on annual price increases 
and in all cases should require that any proposed increase be justified by 
verifiable cost data accompanied by a demonstration that the registry operator 
would not reap an excessive return on investment from the proposed increase. 
Differential pricing within any TLD should be prohibited, as the cost of 
providing registry services to any particular DN is identical and differential 
pricing therefore constitutes an unjustified tax on the value of a particular 
DN or on the commerce taking place at the associated website. In determining 
the relative dominance of particular TLDs we would suggest that ICANN utilize 
the auction and other pricing data that is now readily available from the 
robust and highly competitive marketplace for secondary DNs, as high valuations 
for particular TLDs are indicative of such dominance.
*       ICANN Fees - We support the view that ICANN should implement a system 
of fees from registries that avoids individual negotiation and provides 
consistency and predictability. Separate negotiations may tend to prolong 
ICANN's reliance on particular TLDs for its own funding as well as leverage the 
negotiation process to support new staff-driven projects.
*       Use of Registry Data - We support the development of a general policy 
on the permissible registry use of registry data, including traffic data, for 
purposes other than that for which it was collected, as well as the development 
of a policy to ensure non-discriminatory access to registry data by third 
parties. Such basic statistical data on the operation of the DNS should be 
available, subject to appropriate privacy protections, to all parties seeking 
it. Further, the availability of such data is the only way to ensure that 
competing bids submitted in a re-bid process are based on sound and accurate 
TLD data. Finally, any policy addressing this area should ensure that 
registries do not use such data to unfairly leverage their monopoly operator 
position into one of competitive advantage for the offering of services against 
registrants and registrars who must rely upon the TLD operators.
*       Investment in Development and Infrastructure - We support the 
development of baseline requirements for the security and stability of 
registries by ICANN in consultation with the Security and Stability Advisory 
Committee (SSAC). In fact, we are quite surprised that such requirements have 
not yet been established given the critical and ever expanding role of the 
Internet in facilitating global commerce and communications.

 

In all of the above areas, maximum utilization of open competition combined 
with greater process transparency and ICANN accountability will yield results 
that best assure the continued secure and stable operation of the DNS in a 
manner that is beneficial and fair to all constituencies including registrants.

 

We appreciate the opportunity to comment upon this matter and look forward to 
participating in ICANN's future internal processes devoted to implementing this 
Report.

 

Sincerely,

Philip S. Corwin

Counsel, Internet Commerce Association 

 

 
Philip S. Corwin 
Partner 
Butera & Andrews 
1301 Pennsylvania Ave., NW 
Suite 500 
Washington, DC 20004 
202-347-6875 (voice)/-6876 (fax) /202-255-6172 (mobile)
"Luck is the residue of design." -- Branch Rickey