Why ICANN must reject the proposed Verisign settlement

[Matt Hooker <matthooker@xxxxxxxxxxxxxx>]

December 7, 2005


To the ICANN Board of Directors


Re: The Proposed Verisign Settlement and .COM
Agreement


On behalf of myself, and on behalf of several
corporate entities in 
which I am involved, and on behalf of other individual
and 
organizational domain owners (what you still call
domain registrants)
and businesses doing business with domains and web
sites and the 
Internet; we demand that you NOT approve the proposed
settlement and 
.COM agreement with Verisign. We would probably have
to join in a 
lawsuit against both you and Verisign should you
approve it. We list 
our reasons, below.

1. The proposed settlement and agreement unfairly and
illegally grants 
a monopoly on the .COM registry to Verisign. This is
in violation of
RFC 1591; it is also anti-democratic,
anti-competitive, 
anti-transparent. ICANN is required to support
competitiveness and to be
open and transparent and democratic in its actions.

2. It unfairly grants a perpetual and unlimited fee
increase to Verisign 
and the .COM registry - such a fee increase is
unethical, a breach of
trust and fiduciary duty on the part of ICANN towards
domain owners,
anti-competitive, anti-transparent, and unwarranted.
The costs of 
maintaining a registry operation are DECREASING each
year, as the costs
of hardware and transactional throughput decrease.
There are even open
source registry softwares available for free these
days. The cost to 
operate a registry, especially the .COM registry with
its large volume,
is well below the current $6.00 per domain-year. A
number of companies
equally proficient as Verisign at running a registry
bid between $5.00
and $6.00 per domain-year for the rights to operate
the .COM registry, 
and there was probably some (direct or indirect)
price-fixing in the
bids; since one of the companies I operate could
operate the .COM 
registry just as well as Verisign for $4.00 per
domain-year. There is
a vast amount of profit in the operation of the .COM
registry, and this
is profit that is recurring, year after year. Verisign
is collecting 
about a quarter of a billion dollars per year to
operate the registry,
and that is a great deal of money. No increase at all
over the already 
generous $6.00 per domain-year is necessary or
warranted. It should be 
noted that a 7% annual fee increase would make the
registry fee for the
registration or renewal of a .COM domain $9.00 in year
6, $12.00 in year
10, and over $15.00 in year 14, at which time it will
be increasing at
a rate that is greater than $1.00 per year. This is
absurd and 
unwarranted, and it should not be allowed. It is also
a breach of 
contract to all registrants or domain owners, who
expect the price they 
pay for their domain name year after year to never
increase. There is 
no need for the price to increase, as long as the
bidding on all
registry agreements is kept competitive, and that
means no presumptive
right of renewal, and no tying together lawsuits with
registry agreements.

2. There should be no presumptive right of renewal on
any contracts that 
ICANN makes. This is in violation of the requirement
that ICANN 
operate in a transparent and open way and in a way
which allows for
and increases competitiveness. No monopolies should be
granted, ever.
The inane analogy to the presumptive right of renwal
given to telephone 
companies is a bad and erronious one, as: (1)
telephone companies invest
tens of billions of dollars buying and installing
cables in the ground 
or above the ground and have a huge investment which
is not portable
and which will take decades to recoup; whereas a
registry has only a
multi-million dollar investment in hardware, which is
portable, and 
whose cost is recouped in only one year of operation;
and (2) telephone
companies were viewed as anti-competitive monopolies
by the US courts
who have moved to split them up and change their
anti-competitive 
business practices. 

No presumptive right of renewal is needed for a 
registry agreement - Verisign will still want the
$250,000,000 in fees
from the .COM registry each year, it will still be
VERY VERY profitable,
and other registries and prospective registries, will
still want the
fantastic right to operate the .COM (and others)
registry for $5.00 a 
domain-year, $6.00 a domain-year or even less. It is
still a very
profitable business. The contract should be a 10 year
contract, which
is opened to competitive bidding once every 10 years.
The current 
contract should be re-bid, as a sealed-bid, as
intended by the current 
contract, in 2006. There should, perhaps, be a clause
which allows the 
current registry to retain its operation of the
registry if it matches
and then beats by 5% any lower bids received during
the bidding process,
which is as close to a presumptive right of renewal
that we should allow.
Additionally, perhaps there should be a clause in each
registry 
agreement which states that no current registry shall
lose its right
to act as registry unless there is a valid bid from a
capable proposed
registry operator which is at least 10% lower than the
current 
registries' bid.

3. The lawsuit should be separated from the .COM
registry agreement. AS
it is, they are tied together, and this can be viewed
as a kind of
extortion on the part of Verisign to make things very
expensive for
ICANN legally unless ICANN signs off on the .COM
registry agreement that
it desires. Whatever legal advice ICANN has had
regarding this
settlement and proposed .COM agreement is so bad that
it can be seen
as fraudulent - giving away everything to Verisign,
and failing to
demand that Verisign honor the terms of the agreement
they signed 
previously, the agreement currently in force. ICANN
should take 
seriously their ability to call Verisign on a breach
of contract, and
to seize the registry and operate it itself in an
emergency or
should it become necessary. ICANN should never give in
to threats.

4. The settlement provides a great loss of oversight
and accountability
of both ICANN over the registry and of the greater
Internet community 
over ICANN; and both of these are not to be allowed.
We do not want any
single registry to become an autonomous monopoly, and
we do not want 
ICANN to become another United Nations which is far
too costly and
which accomplishes far too little, and takes far too
long to do even 
that. We need to discuss and come to a consensus on
new methods for 
funding ICANN, and not assume that we want or need
ICANN to grow, and 
not assume that domain owners also called registrants
are able and
willing to increase the annual price they pay for
their domains to fund
an ever-expanding ICANN.

5. We are against the increase in the cents-per-domain
fee imposed on
the registry and paid directly to ICANN in the
proposed settlement and 
.COM agreement.

6. We are against any registry agreement which does
not make specific
a general registry agreement and process to be used by
all registries
now and in the future.

7. This proposed settlement and .COM registry
agreement was not arrived 
at in a transparent and open manner, and the proposal
did not take into
account the opinions of the other stakeholders, all of
whom are opposed
to this proposed settlement and .COM registry
agreement. [With the
exception of the other registry operators, who are all
looking to increase
their profits any way they can.] ICANN needs to send a
clear statement
to all of the registries by rejecting the proposed
settlement and .COM
registry agreement, that the registries are not
"unlimited growth
for-profit entreprises" but rather are
"administrators...who perform a 
public service on behalf of the Internet community"
[RFC 1591]. Their
profit will increase as the number of domain
registered in that registry 
increases and as their efficiency increases, and that
is all.

For all of these reasons, and many others not listed
here, we demand
that ICANN: reject the proposed settlemetn and .COM
registry agreement
in its entirety; hold Verisign to its current
contract; open up the 
bidding for the .COM registry agreement in 2006 to
everyone, and, prior
to that, come up with a plan along the lines of a 10
year standard 
registry agreement with clauses such as those we
propose, above; 
include all stakeholders opinions and interests in all
such registry
agreements; and think seriously about replacing the
obviously biased
board members and legal counsul who drew up the
proposed settlement
and .com agreement.

Sincerely,

Matt Hooker

Matt Hooker
President
Artists In Motion Inc.

Matt Hooker
President
LowestPriceDomain.com

Matt Hooker on behalf of domain name owners everywhere.

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