Comments on proposed ICANN-Verisign settlement

[Karl Auerbach <karl@xxxxxxxxxxxx>]

I am mystified by some of ICANN's statements in the document
"Information on Proposed VeriSign Settlement and New .COM Agreement"
(http://icann.org/announcements/announcement-21nov05.htm).

Let's look at item #1, the prices that ICANN is allowing Verisign to 
charge to registrars.

Comment 1: ICANN seems to have forgotten that those millions of us who 
have built our internet names in .com have no real opportunity to move out 
of .com.

We are locked into .com.

From our point of view the only competition that exists is the 
intra-registrar competition.

From our point of view inter-registry competition is a fantasy.

We who have built our names in .com simply do not find the possibility of 
switching to another TLD within the realm of rational economic choice; 
such a switch would require us to rebuild our network identities anew.

Consequently we who are in .com are locked into the registry fee that 
ICANN allows Versign to charge to the registrars.

Comment 2: The price that ICANN is allowing Verisign to charge registrars 
for the basic service of registering domain names (and implicitly of 
running a suite of .com servers) is not connected to the actual cost of 
providing that service.  ICANN has granted to Verisign a monopoly position 
over .com, a position that potentially lasts in perpetuity.

Because of the lock-in described in my first comment, we users of .com are 
indirectly affected by that registry fee via because that fee represents a 
cost component that must be recognized by the registrars from whom we 
acquire our names in .com.

It is unreasonable to expect that registrars will long absorb any 
increases in the registry fee they have to pay in order to privide their 
product, domain name registrations, to us, the users of the internet. 
Ultimately we, the community of internet users who acquire names in .com, 
will end up paying the registry fee that ICANN establishes for Verisign.

ICANN ought to require that the registry fee charged by Verisign be tied 
to the actual cost of providing the registry service itself.  If that cost 
goes down than the registry fee should go down, if that cost rises than 
the registry fee should go up.

ICANN's 7% solution (pun intended) is a pricing scheme that has no basis 
in reality; it is merely arbitrary and capricious.

Estimates have indicated that the actual cost of the .com registry service 
should have dropped substantially over the years and as .com has grown to 
the degree that vast economies of scale are now applicable.  It has been 
estimated that the actual cost of providing the .com registry service is 
well below $1 per name per year and continues to decrease.

ICANN should A) require an immediate public audit of the auctual cost of 
providing .com registry services, B) tie the registry fee to that cost 
(plus a margin for registry profit) and C) introduce incentives to drive 
that cost down further.

Comment 3: ICANN proposes to protect we users of the .com TLD through a 10 
year lock-in.

Given that we users obtain domain names in .com from registrars rather 
than from the .com registry, I do not see how this 10 year lock-in system 
can possibly work.

ICANN should provide clear, precise, and concrete details of how such a 
system would work and demonstrate how it would not provide means for 
gamesmanship on the part of registrars or require users to lock themselves 
into a particular registrar for a decade.

        --karl--
        Karl Auerbach
        Former (and only) Elected member
        of the ICANN Board of Directors for North America

        Santa Cruz California

        Resident of the .com TLD since the early 1990's