Monday, November 28, 2005

ICANN Registrars Statement

We, the undersigned registrars, recommend against ICANN signing the proposed.com Registry Agreement. The following reflects those issues that are of foremost concern to registrars:

1. New Registry Services -- The proposed .com contract locks ICANN and VeriSign in for three years on aversion of the consensus policy covering the standards and process forconsideration of new registry services. The new registry services consensus policy process that recently was approved by the ICANN board is untested, and it is likely that the ICANN community will need to refine and improve it after it is implemented. A three year lock will unnecessarily handcuff ICANN and the ICANN community. We recommend the deletion of Sections 3.1(b)(v)(B) and 3.1(b)(v)(C), and allowing the existing ICANN policy development and refinement process to be used during the term of the agreement.

2. Registry Agreement Renewal -- According to its own Bylaws and the Memorandum of Understanding betweenICANN and the United States Department of Commerce, one of ICANN's core missions is to promote competition. We understand that the current .com contract contains a "presumptive renewal" provision, which by its nature hinders competition. The proposed .com contract, however, goes much farther than the existing contract by strengthening the presumptive renewal and termination provisions on behalf of VeriSign, thereby making it virtually impossible for VeriSign to lose the .com registry and impossible to reap the benefits of competition. VeriSign should be appointed as the administrator of the .com registry, not its owner. We recommend reverting from Section 4.2 of the proposed .com agreement to the renewal terms of Section 25 of the current .com agreement, which requires a six month review of a "Renewal Proposal" provided by VeriSign and only under terms that are in "substantial conformity with the terms of registry agreements between ICANN and operators of other open TLDs. . ."ICANN also should strengthen the termination provisions currently contained in Section 6.1 of the proposed agreement by using the relevant text from Sections 16(B-E) of the current agreement.

3. Registry Fees -- The proposed .com contract would permit VeriSign to unilaterally raise registration fees by 7% per year. The existing .com contract and all gTLD registry agreements (other than the .net agreement with VeriSign, which was entered into without community input in violation of ICANN's Bylaws) require the registries to cost-justify any price increases. In an industry where the economics suggest that fees should be going down when there is competition, it is particularly troublesome and anti-competitive to grant a monopolist or a single source provider the unilateral right to increase costs without justification. Unfortunately, these fee increases would result in cost increases to individual registrants. We note that in the recent competitive process for .net, VeriSign significantly lowered its registry fees. There is no reason for unilateral cost increases for the larger .com registry. We recommend that the Board delete the current text of Section 7.3(d)(ii) and replace it with Section 22(A) of the current .com agreement requiring VeriSign to justify and ICANN to approve any proposed fee increase. If there is a dispute between ICANN and VeriSign over a cost increase, ICANN should have the right to seek competitive price proposals from other registry operators to ensure that the ICANN community receives the benefits of competition.

4. New ICANN Fees -- ICANN and VeriSign propose a new ICANN fee that would be assessed onVeriSign and passed on to the registrars. This fee would result in excess of approximately $150 million dollars to ICANN, and would be an end run around the existing ICANN budget approval process. As proposed, ICANN staff has removed an important check on the ICANN budget process. All ICANN fees that impact registrants should be subject to the ICANN budget approval process and should not only be the subject of negotiations between VeriSign and ICANN. In addition to the changes suggested in number 3 above, we recommend the removal of Sections 7.3(g-h) in the proposed contract. Any transaction fees that ICANN needs to collect from registrars (and hence registrants) should be assessed through the current transaction fees charged by ICANN to registrars and be subject to the existing budget approval process. While we understand the desire to finalize the litigation, it should not be done so without a sufficient review process nor at the expense of major tenets of ICANN's mission. In its current form, it is a bad settlement for ICANN, the ICANN community, and the public-at-large. We, therefore, urge the ICANN Board to take advantage of the six month review of a "Renewal Proposal" contemplated in the existing .com agreement, which doesn't expire until November 2007. The Board should use this time to review the complicated contracts in their entirety, have a public comment period commensurate with the importance of the issue, and make the changes necessary to improve the agreement.

Signatories to this Statement --AAAQ Inc, Ace of Domains, Active 24, Ascio, AvidDomains, Blue Razor, Bulkregister, CoolHandle Hosting, CORE, CSIRegistry, Directi, Domain Bank, Domain Contender, Domain Name Sales Inc, DomainClip, DomainHip, DomainPeople Inc, Domains Only, DomainSystems, Inc., DotRegister, Dotster, Easy DNS, Encirca, Enom, EPAG, GMO, GoDaddy, Hosting.com, Intercosmos, Joker.com, Key-Systems, Melbourne IT, Misk.com, Moniker Online Services, Name Intelligence Inc, Name.com, Namebay, Namesecure, NameScout Corp, NameShare, NameStream.com Inc, Network Solutions, Nominalia, PSI-USA Inc, PSi-Japan, RallyDomains, Register.com, Register.it, SpA, SaveMoreNames.com, Schlund+Partner, Spot Domain LLC, SRSPlus, Total Registrations, Tucows, Vivid domains, Wild West Domains!, #1 Host Kuwait Inc!, #1 Host Malaysia, Inc.!, #1 Host United Kingdom, Inc!!!, $0 CostDomains

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