Network Solutions Comments Opposing the Revised Proposal

["Mitchell, Champ" <Cmitchell@xxxxxxxxxxxxxxxxxxxx>]

On behalf of Network Solutions, LLC, I am writing to express our concern
about the impending - and potentially far-reaching - renewal of the
agreement between the Internet Corporation for Assigned Names and
Numbers (ICANN) and VeriSign, Inc. to operate the .com registry.  We do
not believe that the revised version meets the fundamental concerns that
the Internet community has raised over the past months.  We urge the
ICANN Board of Directors to decide on the future of its most prized
asset - the .com registry - in a way that preserves competition,
protects consumers and advances recent diplomatic victories on Internet
policy.  The .com registry is the jewel of the Internet and one cannot
imagine that this Board wishes its legacy to be one of damaging that
jewel by making an irreversible decision that will harm generations of
Internet users.

 

The ICANN Board is poised to make a historic decision on whether to
accept a proposed agreement as part of the settlement of pending
litigation with VeriSign and extend VeriSign's contract - in perpetuity
- as the sole registry operator for the .com domain.  We recognize
ICANN's staff has submitted revised proposals on the VeriSign-ICANN
settlement and the .com registry agreement.  Unfortunately, the changes
do not go nearly far enough in the most important areas of the proposed
new agreement.  In its present form, the proposed agreement still puts
the entire Internet community at needless risk by eliminating
competition for the .com registry, and allowing VeriSign to raise
registration fees without cost justification in four of six years and
without competition or oversight.  The proposed agreement is most
problematic due to the anti-competitive impact on consumers and the
industry, and the potential harm to good global Internet governance
policy.

 


Consumer Impact


 

VeriSign is the ICANN-authorized registry of .net and .com domain names.
In this capacity, it controls 85 percent of the U.S. domain names, as
.com alone accounts for 75 percent of registered domain names.  Aside
from not allowing for future competitive rebidding to any operator other
than VeriSign, the proposed agreement also would allow VeriSign to raise
.com registration fees without any cost justification in four out of six
years.  Unless the proposed agreement is amended to guarantee future
competition in the operation of the .com registry and to require that
any fee increases be cost-based every year, as is currently required in
the existing .com agreement and every registry agreement not with
VeriSign, the Board should reject the revised settlement.  

 

Internet users must be protected from the unreasonable price increases
that would be possible under the proposed agreement.  Experience
suggests that registry fees for .com should be decreasing, rather than
rising.  VeriSign, for example, last year agreed to drop registry fees
by more than 40 percent for .net in order to win an extension of that
registry agreement with ICANN. Further, VeriSign has announced that its
ATLAS platform is so imminently scalable that it defies common sense to
suggest that the increased volume leads to anything other than decreased
cost per domain for the .com registry.  As consumer prices in the
industry are driven by the costs of .com - the preeminent top level
domain in terms of size and desirability - customers absolutely would be
adversely impacted by the price increases provided for in the proposed
.com amendment.   

 


International Integrity and the Internet


 

At the World Summit on the Information Society (WSIS) in November 2005,
diplomatic efforts derailed an attempt to shift Internet management into
controversial multinational oversight and away from neutral ICANN
control.  These results were predicated on successful arguments that a
hands-off, market-based approach to ICANN is working.  

 

The world is waiting to see if ICANN is ready to act on its own.  A
renegotiation of the proposed agreement that avoids placing control of
the .com registry into the hands of an unregulated monopoly would be
critical to ensure that this approach continues to lead the way for
international Internet public policy.  Changes to the staff-drawn
revised agreement for .com must ensure that the current ICANN management
structure upheld at WSIS is not called into question in the future by an
agreement that would cede control of the .com registry operation to one
U.S. operator essentially forever, and without any competition or
regulation. 

 

The Agreement and the Litigation

 

ICANN's hands are not tied.  Under the existing renewal provision in the
current agreement (Section 25.B), ICANN easily can send the .com
contract out for bid ensuring competition in the space on two grounds.
First, the existing .com agreement provides that ICANN should not
presumptively renew the contract with VeriSign if VeriSign is in
material breach of the agreement.  Indeed, ICANN has claimed just that
in the litigation between the parties.  Second, ICANN should rebid the
contract if VeriSign seeks a fee increase for the renewal period, which
VeriSign has in the proposed agreement.   Apparently, there is a
difference of interpretation over whether ICANN must rebid the contract
or may rebid the contract if VeriSign seeks a fee increase.  Regardless
of the interpretation, the intent of the provision is clear.  In order
to protect the Internet community, VeriSign should not be able to abuse
its monopoly power by raising fees without a competitive rebid of the
contract.  Importantly, this protection of the community is not even
included in the proposed agreement.

 

VeriSign's statement that this is its "last and best offer" is the type
of in terrorem negotiating that ICANN must not appear to yield to in
front of the world community.  ICANN should not let VeriSign hold it -
and the interests of the entire Internet community - hostage via the
lawsuit VeriSign brought against it.  Capitulating to this type of
behavior due to the fear of litigation and legal discovery will set a
very bad precedent for ICANN.  If fact, it is virtually guaranteed that
if ICANN approves the proposed settlement and .com amendment, it only
will be trading one lawsuit for a far larger series of lawsuits, and
ones with much greater risk of loss by ICANN.  The Board should show the
strength to reject the proposal as currently proposed thereby protecting
the public interest and guaranteeing competition.  While no one likes
litigation, it is better than capitulation.

 

This is a matter of great importance to the Internet community.  We urge
the Board to approve only a final agreement that preserves competition
and promotes market-based pricing.  Thank you for your attention and
diligent efforts on these critical issues.  We look forward to an
outcome that maintains competition and sound public policy.

 

Sincerely,

 

Champ Mitchell

 

W. G. Champion Mitchell
Chairman & CEO
 

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