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Username: ISOC
Date/Time: Tue, August 6, 2002 at 11:41 PM GMT
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Subject: ISOC response to Shelton Johnson's questions


        Dear Shelton,

The Internet Society is pleased to respond to your questions about the financial implications of its bid to manage the .ORG domain:

Question A: I'd like each bidder to identify the funds that they are relying on for the transition. Do you have money in the bank set aside or are you relying on the third party partners or money from capital markets for the transition?

Answer A: ISOC has entered into a letter of intent with Afilias to be the back-end service provider, and ISOC's designee, PIR will contract with Afilias as described in our response to item C.14, which also details the financial capacity of Afilias.  (For our bid, please see )  The agreement between Afilias and PIR ensures that adequate funds are available to support the transition.  Under the terms of our agreement, Afilias will cover the transition costs and will be compensated by PIR for these expenses over the course of our agreement.  Audited financial statements for Afilias are shown in Appendix A2.

Question B: To what extent does your financing for the transition depend on timely receipt of all or part of the VeriSign endowment? What are your plans for alternative financing if a dispute or a delay arises in the transfer of those funds?

Answer B: ISOC's bid is not conditioned on receipt of the VeriSign endowment to ensure the functionality and stability of the transition and operation of the .ORG TLD.  Section 9 of the bid (item C.41) addresses this question and states, in part: "In summary, the endowment is not required to effect a successful transition to PIR management.  However, it will enable PIR to more quickly make the kind of impact we all expect of the next .ORG operator."

Question C. Are you financially prepared to deal with unforeseen costs that might arise in the transition, particularly those related to the technical operation of the registry?

Answer C: Yes.  Please see the response to item C.14 of the bid.

Question D: Are you financially prepared to deal with lower than expected numbers of new names being purchased/registrants renewing. What tolerances do you have in your cash projections before being forced to seek further funding?

Answer D: Yes.   PIR has developed a very conservative set of forecasts, making allowances for a reduced number of registrations as well as changes to other key variables and we have no plans to seek outside funding.   Also, Afilias has significant standing capacity available.  As shown in the Appendix A2 financial statements of Afilias, there is sufficient capital for start-up expenses with adequate tolerances for variations in the number of registrations, upward or downward.

Question E: I'm also concerned about the stability of the .org registry if it goes to a bidder that is relying in substantial part on the VeriSign endowment for funding. How solid is the commitment from VeriSign to turn over the money?

Answer: As stated above in answer to question B., ISOC's bid is not conditioned on receipt of the VeriSign endowment. 

Question F: I understand that there is a signed agreement between VeriSign and ICANN with respect to the endowment, but what are the remedies if VeriSign delays or receives a waiver on the agreement?

Answer F: ISOC believes that ICANN and VeriSign will honor their commitments.

Question G: And most important, do the bidders relying on the endowment have the resources to function in the meantime as well as to engage in a legal dispute and perhaps protracted litigation?

Answer G: In the unlikely event that there is litigation over a clear and unambiguous commitment, it still would not affect the ISOC bid because our bid is not dependent on the endowment.

I hope that you find this information helpful.  I appreciate your questions, as these are critically important questions for all bidders to have considered.


Lynn St.Amour
The Internet Society



Link: ISOC bid

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