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Comments on proposed ICANN-Verisign settlement

  • To: settlement-comments@xxxxxxxxx
  • Subject: Comments on proposed ICANN-Verisign settlement
  • From: Karl Auerbach <karl@xxxxxxxxxxxx>
  • Date: Wed, 23 Nov 2005 13:42:37 -0800 (PST)

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 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

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