ICANN
NEXT STEPS ON PROPOSED .COM SETTLEMENT On 21 October 2005, ICANN announced proposed settlement terms between ICANN and VeriSign, including a proposed new .COM agreement. Since then, ICANN has been conducting extensive public consultations on the proposed settlement. At its 24th International Public Meeting in Vancouver this week, the ICANN Board has been engaged in consultations with the ICANN community on this topic, among others.

Today at its Board meeting, ICANN Chairman, Vint Cerf, announced:

"The Board has listened long and hard this week to all constituencies with regard to the .COM agreements

"We are deeply grateful to the efforts made by all constituencies to respond to the Board’s invitation to organize comments on the proposals and to provide, where possible, concrete suggestions for improving them.

"We are also very grateful for the time each constituency spent going over with the Board their ideas and reactions.

"We ask the staff to accept any further written comments until December 7 and to produce for the community a public report summarizing, analyzing and organizing the feedback provided on the .com and settlement agreements by December 11.

"We recommend that staff approach VeriSign with the results of the report on the proposed contract and settlement. We remind all parties that the Board has not yet agreed to the terms of the contract and settlement.

"We also note the existence of a policy development process on new gTLDs and strongly believe that this policy development process should be informed by the results of the comments received on the proposed contract for .com and settlement with VeriSign."

I realize there is still a lot of work to do, but as Vint is quoted in saying above, I really want to thank the community for a constructive and intense week of discussions. I hope that VeriSign and staff have fruitful discussions and that we can come up with something that reflects the issues raised this week. I was sincerely moved by the ability for the rather complex process to function in such a productive way and am proud to be part of this ever-improving "experiment" in bottom-up consensus.

7 Comments

Vint also mentioned on Dec. 4th, but it's still not published at http://www.icann.org/meetings/vancouver/ the contribution of the Internet users, not only of the constituencies.
I also believe he specially thanked to the positive contributions during the meeting.

That's how it should be - when people contribute, then they make a difference.

Here's the original statement from the scripts:

FIRST OF ALL, YOU'RE ALL AWARE, I'M SURE, THAT WE SPENT A CONSIDERABLE AMOUNT
OF TIME THIS WEEK IN DISCUSSIONS WITH MANY PEOPLE ON THE SUBJECT OF THE DOT
COM AGREEMENTS AND THE SETTLEMENT WITH VERISIGN.

AND I'D LIKE TO OFFER FOR THE RECORD A SUMMARY OF WHAT WE HAVE -- NOT THE
DETAILS OF WHAT WE'VE HEARD, BUT WHAT HAS TRANSPIRED, AND WHAT I ANTICIPATE
WILL HAPPEN IN THE NEAR TERM.

WE'VE LISTENED LONG AND HARD THIS WEEK TO ALL OF THE CONSTITUENCIES AND
INTERNET USERS WHO PARTICIPATED WITH REGARD TO THE DOT COM AGREEMENTS AND THE
SETTLEMENT PROPOSALS, AND WE'RE DEEPLY GRATEFUL TO THE EFFORTS MADE BY ALL OF
THOSE WHO CONTRIBUTED POSITIVELY TO RESPOND TO THE BOARD'S INVITATION TO
ORGANIZE COMMENTS ON THE PROPOSALS AND TO PROVIDE, WHERE POSSIBLE, CONCRETE
SUGGESTIONS FOR IMPROVING THEM.

WE'RE ALSO VERY GRATEFUL FOR THE TIME EACH CONSTITUENCY SPENT GOING OVER WITH
THE BOARD THEIR IDEAS AND REACTIONS.

I MUST TELL YOU PERSONALLY THAT THE INTERACTIONS THAT WE HAD WITH THE VARIOUS
SUPPORTING ORGANIZE COUNCILS IN ONE-ON-ONE MEETINGS WITH THE BOARD WERE, IN
MY VIEW, EXTRAORDINARILY PRODUCTIVE, AND, IN FACT, I HOPE THAT WE CAN REPEAT
THAT PROCESS ON OTHER MATTERS OF COMMON THERE AS WE SCHEDULE MEETINGS IN THE
FUTURE.

WE ASKED THE STAFF ON BEHALF OF THE BOARD, AND I AM ASKING THE STAFF, TO
ACCEPT ANY FURTHER WRITTEN COMMENTS UNTIL DECEMBER 7TH.

AFTER THAT, I WOULD ASK THE STAFF TO PRODUCE FOR THE COMMUNITY A PUBLIC
REPORT SUMMARIZING, ORGANIZING, AND, TO THE DEGREE POSSIBLE, ANALYZING THE
FEEDBACK THAT HAS BEEN PROVIDED ON DOT COM AND THE SETTLEMENT AGREEMENTS.

I WOULD LIKE THAT REPORT TO BE AVAILABLE BY DECEMBER 11TH.

WE RECOMMEND THAT THE STAFF APPROACH VERISIGN WITH THE RESULTS OF THE REPORT
ON THE PROPOSED CONTRACT AND SETTLEMENT.

WE REMIND ALL PARTIES THAT THE BOARD HAS NOT YET AGREED TO THE TERMS OF THE
CONTRACT AND THE TERMS OF THE SETTLEMENT.

THESE MATTERS ARE STILL OPEN AND STILL PENDING WITH REGARD TO BOARD APPROVAL.

I'D ALSO LIKE TO NOTE THE EXISTENCE OF A POLICY DEVELOPMENT PROCESS ON NEW
GTLDS.

I STRONGLY BELIEVE THAT THIS PDP SHOULD BE, AND I TRUST WILL BE, INFORMED BY
THE RESULTS OF THE COMMENTS RECEIVED ON THE PROPOSED CONTRACT FOR DOT COM AND
THE SETTLEMENT WITH VERISIGN.

SO AS THAT PDP MOVES FORWARD, I HOPE IT IS TAKING INTO ACCOUNT THE GREAT DEAL
THAT WE HAVE LEARNED ABOUT CONCERNS AND ISSUES EXPRESSED BY THE COMMUNITY
WITH REGARD TO TLD CONTRACTS, TERMS, AND CONDITIONS.

SO THAT'S A SUMMARY OF WHAT IS GOING TO HAPPEN IN THE NEAR TERM.

I CAN MAKE NO PROJECTIONS, OF COURSE, ABOUT THE CONSEQUENCES OF STAFF
APPROACH TO VERISIGN WITH THE RESULTS OF ALL OF THIS WEEK'S DISCUSSIONS, BUT
I SINCERELY HOPE THAT IT WILL BE FRUITFUL ENCOUNTER.

Joi, I wanted to thank you for the assistance you offered during the Vancouver session, and I would like to pose a question:

Will it ever be possible to know the views of individual Board members so that the community is in a position to effectively lobby/inform/persuade? If, for example, I don't know the current Board position on the introduction of new gTLDs, how will I know how much energy to devote to arguing an issue such as "whether there should be new gTLDs"? It's really hard working in the dark this way and trying to guess at what the Board collectively thinks. At least with my governmental representatives I get to read an ongoing public record of their views as they debate each other -- very transparent -- but I can't ever tell what the Board is thinking... How can we improve Board-level transparency?

Danny. That's a very reasonable request. When I was on the reconsideration commmittee I pushed for and was involved in a resolution, that a the face of it, didn't seem like much but was an effort to do what you are saying. We have changed the process on the board calls to allow board members to express the reason that they vote any particular way in the minutes. It's always been allowed by the bylaws, but was not procedurally integrated into the board call system. I do think that it is a good idea for board members to express WHY they vote different ways.

I think that on the issue of whether there should be new gTLD... I think it's a complicated issue that involves many constituents and experts and I for one do not have a strong view until I hear the opinions and recommendations of the many people working on this question now. The difficulty is that there are so many good arguments for just about every theory... Sorry about my lack of opinion on this issue. It is one that I am trying desperately to become more educated in.

Joi, thank you for the reply. As a relatively new Board member you may be unaware of the existence of the DNSO/GNSO General Assembly Discussion List (as the Board during the prior "Reform" structurally eliminated the GA). Unlike most of the current GNSO constituencies, we choose to vigorously discuss DNS issues. The current thread on the introduction of new gTLDs starts at http://gnso.icann.org/mailing-lists/archives/ga/msg03229.html


Over 40 contributions have been posted in just the last three days and we expect to be able to present the ICANN Staff Manager with a thorough analysis of the issues by the 9 January deadline for comments.


It is our hope that sometime soon the Board will recognize the need to revitalize the GNSO by formally creating a GNSO Constituency for Individual Users that we can join. We are the only major group within ICANN that does not enjoy the benefits of representation. We no longer have at-large directors; we no longer have a General Assembly with elected representatives; we have nothing other than a stubborn commitment to the ICANN process and a need for the Board to act on our behalf to secure the same representational rights that everyone else within ICANN enjoys.


... a heads up... if we hear nothing from the Board in the next few months with regard to our representation in the context of the GNSO Review process, a formal Petition to establish a Users Constituency together with a Charter and Statement of Procedures will be presented in Wellington -- the documents have already been drafted.

Best wishes,
Danny




We are all aware of the huge pressure ICANN and its directors must be facing from all sides as the renewal of VeriSign's .COM registry contract looms closer. We also understand that awarding this contract again to VeriSign would be a quite reasonable decision, as the security and stability of the .COM TLD is of paramount importance for the Internet.

Let us, however, consider for a moment not what exists as a reasonable option, but rather what should exist.

If the total number of .COM and .NET domains continues to grow by about 30% per year, and if VeriSign periodically increases — as the proposed .COM registry agreement allows — by a few percent its registry fees, this might result in a cumulative revenue stream for VeriSign of about US$ 2 billion over the registry agreements' five-year duration.

VeriSign is a publicly traded commercial, for-profit entity, and the objectives it pursues are essentially intended to maximize its shareholders' financial returns. We know that this orientation has already led VeriSign to disagreements and several legal tussles with ICANN, which represents the interests of a much wider range of stakeholders. Most people would agree that continuing to allow such an entity to exact a monopoly tax on Internet users is generally undesirable.

Let us thus always keep in mind that an alternative is possible. The emergence of for-profit, de facto monopolies providing a fundamental resource is by no means a historic necessity. In the IT and telecoms sector, there are examples of important and successful non-profit cooperatives like SITA — founded by air tranport companies — or SWIFT — founded by banks. The fact that it's a co-op owned by its users certainly doesn't affect the accountability and reliability of SWIFT's operations; its infrastructure is — unbeknownst to most people — estimated to carry about US$ 7 trillion in payment messages per day. To give some perspective, the USA's GDP is about US$ 12 trillion.

SITA and SWIFT came about because their members, once they recognized the need to create a shared infrastructure from scratch, had the foresight to structure it as a co-op. One of Internet's great misfortunes is that the historic opportunity to create a co-op .COM registry hasn't arisen (yet), and that the awareness or opinion that such a structure is possible or desirable doesn't seem to be widely spread among its natural members — the registrars.

What kind of operational characteristics could such a co-op registry have ?

• As it would be owned by its members (the registrars), there wouldn't exist any divergence between the registry's and the members' economic interests. Governance by the registrars would ensure that registry fees would track the actual cost for efficiently implementing a secure and stable registry function. Budget surpluses, if any, could be rebated to the members.

• An opportunity for a wide community of stakeholders — e.g. governments, the civil society — to participate in the formulation of the registry's policies, channelled e.g. through a representation of ICANN on the registry's board of directors. Such direct involvement would be more productive than the conflictual and litigation-prone relationship that might exist between ICANN and a for-profit registry operator.

• The provision of registry and DNS services would of course be engineered for resilience and availability, with a stable and secure, globally distributed infrastructure of DNS servers.

How could such a co-op registry be actually created ? The difficulties are mainly political and commercial, as VeriSign is a formidable, established, reliable and politically competent incumbent. To establish its operational credibility, a co-op registry would first need to create a DNS infrastructure parallel to VeriSign's. Such an endeavor would be extremely expensive for the co-op, as few, if any, registrars would be willing to pay both VeriSign for the inclusion of their clients' domain names in the official VeriSign-operated .COM registry, and the co-op to help it bootstrap its alternate infrastructure. This, despite the fact that financially supporting the emergence of a non-profit co-op would be in the registrars' benefit if it eventually achieves elimination of a monopolist.

To establish a critical mass, a co-op would thus have to sell domain name registrations to registrars — not to end-users — at a cost equivalent to the registry fees VeriSign charges to registrars. The co-op would then register its clients' domain names with VeriSign, so that they are included in the VeriSign-operated official .COM registry. As the co-op would have to channel its entire registration revenue to VeriSign, it would have to depend solely on its own funds to finance the operation of its parallel global .COM DNS infrastructure.
I estimate that the cumulative operational cost — i.e. loss — until 2012 of a parallel co-op registry could amount to US$ 200 million. That amount would make economic sense for "seed" investor(s) with very deep pockets only if:

• There was a high probability that ICANN would award the registry contract for .COM and .NET to the non-profit co-op in 2012, eliminating the need for the co-op to channel its entire revenue to VeriSign

• if the co-op's board agreed to put aside, from 2012, sufficient cashflow to buy out the seed investor(s) while providing them with a reasonable return.

Given the very long timeframe (about a decade) until the payback of such a risky investment could be achieved by the seed investor(s), it's obvious that such a scheme has little chance of happening in today's world :-P

Nonetheless, one tiny step ICANN could take towards making such a scheme possible, and impressing upon VeriSign that their monopoly is not secure, would be to increase the frequency of the daily escrow of incremental registry data changes, mandated in the TLD agreement, from the current once per day to once every 8 hours. People expect rapid implementation of their domain name registrations, and it is thus desirable to have a (potentially competing) parallel registry updated at least twice per day. Mandating VeriSign to provide to the data escrow service an update three times per day would ensure that a parallel registry could be updated with the latest data well within a day.

We are all aware of the huge pressure ICANN and its directors must be facing from all sides as the renewal of VeriSign's .COM registry contract looms closer. We also understand that awarding this contract again to VeriSign would be a quite reasonable decision, as the security and stability of the .COM TLD is of paramount importance for the Internet.

Let us, however, consider for a moment not what exists as a reasonable option, but rather what should exist.

If the total number of .COM and .NET domains continues to grow by about 30% per year, and if VeriSign periodically increases — as the proposed .COM registry agreement allows — by a few percent its registry fees, this might result in a cumulative revenue stream for VeriSign of about US$ 2 billion over the registry agreements' five-year duration.

VeriSign is a publicly traded commercial, for-profit entity, and the objectives it pursues are essentially intended to maximize its shareholders' financial returns. We know that this orientation has already led VeriSign to disagreements and several legal tussles with ICANN, which represents the interests of a much wider range of stakeholders. Most people would agree that continuing to allow such an entity to exact a monopoly tax on Internet users is generally undesirable.

Let us thus always keep in mind that an alternative is possible. The emergence of for-profit, de facto monopolies providing a fundamental resource is by no means a historic necessity. In the IT and telecoms sector, there are examples of important and successful non-profit cooperatives like SITA — founded by air tranport companies — or SWIFT — founded by banks. The fact that it's a co-op owned by its users certainly doesn't affect the accountability and reliability of SWIFT's operations; its infrastructure is — unbeknownst to most people — estimated to carry about US$ 7 trillion in payment messages per day. To give some perspective, the USA's GDP is about US$ 12 trillion.

SITA and SWIFT came about because their members, once they recognized the need to create a shared infrastructure from scratch, had the foresight to structure it as a co-op. One of Internet's great misfortunes is that the historic opportunity to create a co-op .COM registry hasn't arisen (yet), and that the awareness or opinion that such a structure is possible or desirable doesn't seem to be widely spread among its natural members — the registrars.

What kind of operational characteristics could such a co-op registry have ?

• As it would be owned by its members (the registrars), there wouldn't exist any divergence between the registry's and the members' economic interests. Governance by the registrars would ensure that registry fees would track the actual cost for efficiently implementing a secure and stable registry function. Budget surpluses, if any, could be rebated to the members.

• An opportunity for a wide community of stakeholders — e.g. governments, the civil society — to participate in the formulation of the registry's policies, channelled e.g. through a representation of ICANN on the registry's board of directors. Such direct involvement would be more productive than the conflictual and litigation-prone relationship that might exist between ICANN and a for-profit registry operator.

• The provision of registry and DNS services would of course be engineered for resilience and availability, with a stable and secure, globally distributed infrastructure of DNS servers.

How could such a co-op registry be actually created ? The difficulties are mainly political and commercial, as VeriSign is a formidable, established, reliable and politically competent incumbent. To establish its operational credibility, a co-op registry would first need to create a DNS infrastructure parallel to VeriSign's. Such an endeavor would be extremely expensive for the co-op, as few, if any, registrars would be willing to pay both VeriSign for the inclusion of their clients' domain names in the official VeriSign-operated .COM registry, and the co-op to help it bootstrap its alternate infrastructure. This, despite the fact that financially supporting the emergence of a non-profit co-op would be in the registrars' benefit if it eventually achieves elimination of a monopolist.

To establish a critical mass, a co-op would thus have to sell domain name registrations to registrars — not to end-users — at a cost equivalent to the registry fees VeriSign charges to registrars. The co-op would then register its clients' domain names with VeriSign, so that they are included in the VeriSign-operated official .COM registry. As the co-op would have to channel its entire registration revenue to VeriSign, it would have to depend solely on its own funds to finance the operation of its parallel global .COM DNS infrastructure.
I estimate that the cumulative operational cost — i.e. loss — until 2012 of a parallel co-op registry could amount to US$ 200 million. That amount would make economic sense for "seed" investor(s) with very deep pockets only if:

• There was a high probability that ICANN would award the registry contract for .COM and .NET to the non-profit co-op in 2012, eliminating the need for the co-op to channel its entire revenue to VeriSign

• if the co-op's board agreed to put aside, from 2012, sufficient cashflow to buy out the seed investor(s) while providing them with a reasonable return.

Given the very long timeframe (about a decade) until the payback of such a risky investment could be achieved by the seed investor(s), it's obvious that such a scheme has little chance of happening in today's world :-P

Nonetheless, one tiny step ICANN could take towards making such a scheme possible, and impressing upon VeriSign that their monopoly is not secure, would be to increase the frequency of the daily escrow of incremental registry data changes, mandated in the TLD agreement, from the current once per day to once every 8 hours. People expect rapid implementation of their domain name registrations, and it is thus desirable to have a (potentially competing) parallel registry updated at least twice per day. Mandating VeriSign to provide to the data escrow service an update three times per day would ensure that a parallel registry could be updated with the latest data well within a day.

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