The Go Daddy Group, Inc. Statement Regarding Proposed Settlement Agreement
The Go Daddy Group, Inc. Statement Regarding Proposed Settlement Agreement November 28, 2005 ICANN recently announced that it has reached a proposed agreement to end all pending litigation with VeriSign. We understand the ICANN Staff?s desire to find an amicable resolution to this long-standing dispute. The Go Daddy Group has supported and will continue to support the principles under which the ICANN was formed. However, we believe that the proposed new .COM Registry Agreement indicates that the Staff has lost touch with those principles and the proposed agreement should not be approved without the following changes: The proposed new .COM Registry Agreement permanently assigns the .COM namespace to VeriSign. Under the current .COM agreement VeriSign is granted a one-time presumptive renewal of four years. The conditions for renewal are carried forward from one renewal to the next. In the proposed new agreement, VeriSign is granted this presumptive renewal on a perpetual basis. The difference is subtle, but as a result there will be no future opportunity to re-bid .COM unless VeriSign breaches the agreement AND fails to cure the breach within the allotted timeframe, regardless of how often or how many breaches should occur. The result is that this would effectively establish VeriSign as the Owner of the .COM namespace. ICANN?s Mission, according to its existing bylaws, includes coordinating the allocation and assignment of Domain names. In performing this mission its bylaws lay out eleven core values to guide ICANN?s decisions and actions. Two of those core values are: ?4. Seeking and supporting broad, informed participation reflecting the functional, geographic, and cultural diversity of the Internet at all levels of policy development and decision-making.? ?7. Employing open and transparent policy development mechanisms that (i) promote well-informed decisions based on expert advice, and (ii) ensure that those entities most affected can assist in the policy development process.? We believe that ICANN?s decision to permanently assign gTLD namespaces to Registry Operators is a change in existing policy that should invoke the application of these core values. Creating namespace ownership is also contrary to principles that have been in place since before ICANN, such as those stated in RFC 1591 (emphasis ours): "The major concern in selecting a *designated manager* for a domain is that it be able to carry out the necessary responsibilities, and have the ability to do a equitable, just, honest, and competent job." "The key requirement is that for each domain there be a designated manager *for supervising* that domain's name space." "These designated authorities are *trustees for the delegated domain*, and have a duty to serve the community." We believe that any change in these principles, such as assigning ownership of any gTLD namespace, should be fully vetted through broad, informed participation by those entities most affected, as called for in the guiding core values. Therefore, if ICANN wishes to move forward with the settlement we request that the proposed new .COM agreement: 1) be limited to a presumptive renewal for a single four year term by including Section 25 of the existing agreement; and 2) include the language from Sections 16 (B)(C)(D) and (E) of the existing .COM agreement with section 16(E) modified to apply to the damages awarded pursuant to section 4.3 of the proposed agreement. The proposed new .COM Registry Agreement allows for an unfettered 7% annual increase in the pricing for registrations, renewals, and transfers. However, there is no clear justification for any increase in pricing, now or in the future. Prior to the recent .NET agreement, price increases had to be approved by ICANN and were limited: ?to reflect demonstrated increases in the net costs of providing Registry Services arising from (A) new or revised ICANN specifications or policies adopted after the Effective Date, or (B) legislation specifically applicable to the provision of Registry Services adopted after the Effective Date, to ensure that Registry Operator recovers such costs and a reasonable profit thereon; provided that such increases exceed any reductions in costs arising from (A) or (B) above.? We believe removing these limitations on pricing is a fundamental change in the policy and principles that those most affected by price increases have come to expect. Again, any change in such policy should be vetted through broad, informed participation by those entities most affected, as called for in ICANN?s guiding core values. Two other facts illustrate that any price increase is inappropriate: 1) the re-bid of .NET demonstrated that any re-bid of .COM would likely have resulted in lower prices; and 2) .COM continues to hold significant market power. According to the monthly registry reports posted on ICANN?s website the number of .COM domain names as a percentage of total gTLD registered names remained at over 71% from year?s end 2004 through June 2005 (in fact it increased by a little over 1%). Further, .COM names accounted for over 80% of the overall increase in the gTLD namespace for the same period. Clearly, there is more to do in truly creating competition in the gTLD namespace. We believe it is inappropriate to grant unfettered increases in .COM pricing while it continues to hold such market power. Therefore, if ICANN wishes to move forward with the settlement we request that the proposed new .COM agreement be modified by replacing any provision for price increases with Section 22 from the current .COM agreement. The proposed new .COM Registry Agreement further centralizes ICANN funding with the Registry Operators. The proposed .COM registry transaction fee alone would bring in approximately $15MM annually at the $0.37 level, and over $20MM annually at the $0.50 level. Even higher transaction fees have been agreed to in the new .NET and new un-sponsored gTLD agreements. These new fees are not paid by the Registries with whom they are negotiated, but are passed directly through to Registrars and Registrants. It is fully expected that similar fees will find their way into all future gTLD agreements and agreement renewals. We believe that the net affect of this funding-centralization will be less fiscal accountability to the community on the part of ICANN. There will be little incentive for the Registry Operators to call for such accountability given that they are simply collecting the fees from Registrars, and ultimately Registrants. This also removes an important incentive for ICANN to ensure that those entities most affected can assist in its budget process. We recognize that the current process last established in 2001, which calls for Registrar approval of fees, needs to be reviewed in light of the current environment. We for one are willing to engage in a dialog with ICANN and the community to find a workable alternative. However, until such dialog can take place we believe it would be shortsighted to forge ahead with further centralization of funding. Therefore, if ICANN wishes to move forward with the settlement we request that the proposed new .COM agreement be modified by removing the Registry transaction fee, reconsidering the concept only after the initial term. In this event, the Registrar transaction fee remains at current levels and the fees approval process resumes. We would agree and encourage other Registrars and stakeholders to agree to engage in a dialogue with the ICANN Board and Staff to modify and improve the efficiency of the fees approval process. The proposed new .COM Registry Agreement defines a Registry Services approval process. While we, along with others in the community, welcome a well defined and predictable Registry Services approval process we believe it is inappropriate to define such a process through contract terms. The GNSO recommended, and the Board recently resolved to adopt as a consensus policy, the "Procedure for use by ICANN in considering requests for consent and related contractual amendments to allow changes in the architecture or operation of a gTLD registry." However, the proposed new .COM agreement would exempt VeriSign from considering it a consensus policy in favor of the contractually defined process and further prohibits any changes to the latter for at least three years. The procedure proposed by the GNSO and adopted by the Board was developed through the GNSO Policy Development Process (PDP), which involved the broad participation of the entities most affected (including VeriSign and other Registry Operators). We see no reason why the resultant consensus policy should not fully apply to the .COM Registry Operator. Anything less demonstrates a disregard for the GNSO PDP provided for in ICANN?s bylaws. Therefore, if ICANN wishes to move forward with the settlement we request that the proposed new .COM agreement be modified to fully recognize the "Procedure for use by ICANN in considering requests for consent and related contractual amendments to allow changes in the architecture or operation of a gTLD registry" as a consensus policy, including any subsequent modifications to that policy through GNSO policy development processes. And we further request that the ICANN Board and Staff ensure that a robust implementation phase for that policy begins as soon as reasonably possible involving a broad representation of those most affected by any resultant services. We are encouraged by the fact that the Board and Staff have given the community this opportunity to review the settlement, and in particular the proposed new .COM Registry Agreement. This is certainly a step in the right direction in restoring the trust lost as a result of the un-vetted .NET agreement terms. We encourage the Board and Staff to continue working with the community to address its concerns with the proposed .COM agreement, ensuring that the principles under which the ICANN was formed are properly reflected in it and any future Registry Operator agreements. Tim Ruiz VP, Domain Services The Go Daddy Group, Inc. Office: 319-294-3940 Fax: 480-247-4516 tim@xxxxxxxxxxx Attachment:
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