[Comments-biz-renewal-03apr19] Comments of Leap of Faith Financial Services Inc. opposing proposed .org, .info, .biz and .asia contract renewals

George Kirikos icann at leap.com
Mon Apr 29 20:51:31 UTC 2019


Submitted by: George Kirikos
Company: Leap of Faith Financial Services Inc.
Website: http://www.leap.com/
Date: April 29, 2019

We write to oppose the proposed contract renewals posted by ICANN for
the .org, .info, .biz and .asia contracts, as posted for public
comments at:

https://www.icann.org/public-comments/org-renewal-2019-03-18-en
https://www.icann.org/public-comments/info-renewal-2019-03-18-en
https://www.icann.org/public-comments/biz-renewal-2019-04-03-en
https://www.icann.org/public-comments/asia-renewal-2019-03-27-en

While our arguments are focused on the .org TLD, to the extent that
the contractual terms are similar for the other TLDs, we repeat the
same comments for .info, .biz and .org. Indeed, while the majority of
the thousands of public comments to date have focused on .org, ICANN
should read those comments as also applying to .info, .biz and .org,
even if the submitters did not explicitly submit their comments to all
4 email addresses.

1. We support and endorse the great groundswell of opposition as
expressed in the thousands of thoughtful public comments opposed to
these proposed agreements. It is shocking that ICANN did not learn its
lesson from 2006, when similar massive opposition existed for
comparable contracts which would have allowed for unlimited fee
increases:

https://forum.icann.org/lists/org-tld-agreement/

The proposed contracts are simply unconscionable, and ICANN should
instead simply extend the existing contracts by another 6 or 10 years,
rather than make any other changes.

2. Within the At-Large, we had a video discussion/debate, archived at:

https://freespeech.com/2019/04/10/impact-of-the-urs-and-unlimited-fee-increases-for-registrants-in-org-info-biz-and-asia/

https://youtu.be/KW3I1oFGbv0

where many of the points below are discussed, and I include them here
by reference.

3. We particularly agree with the comments and/or blogs submitted/posted by:

a) Nat Cohen / Telepathy:

https://mm.icann.org/pipermail/comments-org-renewal-18mar19/2019q2/003067.html
http://www.circleid.com/posts/20190423_spurious_justifications_for_eliminating_caps_on_legacy_domains/

b) NameCheap:

https://www.namecheap.com/blog/keep-domain-prices-in-check/

c) Zak Muscovitch / Internet Commerce Association:

https://mm.icann.org/pipermail/comments-org-renewal-18mar19/2019q2/000006.html

d) Jay Chapman / Digimedia:

https://mm.icann.org/pipermail/comments-org-renewal-18mar19/2019q2/002967.html

e) Andrew Allemann:

https://mm.icann.org/pipermail/comments-org-renewal-18mar19/2019q2/003091.html

4. It should be noted that in the past ICANN trumpeted lower fees as
one of its main achievements. For example, the testimony of ICANN
General Counsel and Secretary John Jeffrey at:

https://www.govinfo.gov/content/pkg/CHRG-109hhrg30233/html/CHRG-109hhrg30233.htm

"STATEMENT OF JOHN JEFFREY, INTERNET CORPORATION FOR ASSIGNED NAMES
AND NUMBERS (ICANN)
...
 Among ICANN's main achievements are the following:
...
    Market competition. Market competition for generic top-level
domain registrations established by ICANN has ****lowered
domain name cost in some instances as much as 80 percent with savings
for both consumers and businesses.****" (emphasis added)

It is not consistent with those past statements for ICANN to abrogate
its responsibilities, and permit unlimited fee increases by registry
operators. Unlimited fee increases are not in the public interest, and
do not even attempt to balance the needs of registrants against those
of registry operators. ICANN was handed a responsibility to balance
the interest of affected stakeholders when it achieved (against our
wishes) independence from US government oversight, and it's now clear
that it is not living up to those commitments given such one-sided
contracts that have been presented here for public comment. Unlimited
fee increases are not balanced, and do not promote stability of the
internet or competition. ICANN is engaging in corporate welfare and/or
crony capitalism through such anti-competitive proposals as are here
before us.

5. As has been pointed out by others, under competition the cost of
providing registry services (really just the management of a central
database plus the operation of various nameservers) would be under USD
$1.00 per domain name per year. This is evidenced by the .IN (India)
tender, where Neustar beat Afilias with a winning bid of USD $0.70 per
domain name per year (70 cents/domain/yr):

http://domainincite.com/23364-afilias-sues-india-to-block-12-million-neustar-back-end-deal

A similar competitive tender process happened in France:

https://www.thedomains.com/2012/08/07/afnic-awarded-new-contract-to-run-fr-registry-but-only-after-open-bidding-results-in-reduced-prices/

where AFNIC had to lower the wholesale fees for .FR domain names, and
the contract was for 5 years.

Similar competitions are held for the .US ccTLD:

https://www.ntia.doc.gov/legacy/ntiahome/press/2007/Neustar_101907.html

You'll note that registry operators do not have presumptive renewal in
those ccTLD contracts, yet are more than willing and able to compete
effectively and make investments. It was a major policy blunder of
ICANN to have agreed in the past to presumptive renewal, a decision
that has had a multi-billion dollar negative impact upon registrants,
compared to a situation where there are regular competitive tenders.
Even the US government has argued for those competitive tenders for
both initial agreements and for renewals of agreements:

https://www.ntia.doc.gov/files/ntia/publications/icann_081218.pdf

(Ms. Garza's analysis begins on the 3rd page of the PDF, after the
covering letter by Ms. Baker of the NTIA)

The absence of such competitive tenders can only be rectified through
the protective fee caps which have been long established, and which
the registry operators themselves have agreed to since the times they
entered into their respective agreements. If current registry
operators are not prepared to renew the existing contracts (which have
fee caps in place), then there would be no shortage of other
prospective registry operators who would be prepared to step in and
replace them (and at a much lower cost, with fee caps in place).

Indeed, ICANN themselves have argued (in court) that such caps are
*pro-competitive*, see:

https://www.icann.org/en/system/files/files/icann-reply-on-cfit-26may06-en.pdf

"....in a single supplier market, price caps are, if anything,
procompetitive (Mot. at 13-14);"

(line 13, page 6 of 15)

6. We would like to openly make ICANN the following offer: We will run
the .org registry for USD $5 per domain name per year, and keep all
other existing terms the same. [We would then simply subcontract it to
one of the many registry operators who would bid for the job at USD $1
per domain per year or less, and pocket the difference!] This is lower
than the $9.93 per domain name per year that PIR currently charges.
ICANN cannot of course accept this improved deal, even if it wanted
to, because its hands are tied by the foolish decision to agree to
presumptive renewal in the past.

Looking forward, an agreement to permit unlimited fee increases in the
future (far beyond the already generous 10% per year permitted
increases) would similarly hamper ICANN's ability to negotiate future
"win-win" deals, giving it no negotiating leverage in the future, as
it would have already given away the farm if it entered into this
proposed agreement.

Agreeing to permit unlimited fee increases is like letting the genie
out of the bottle, as there's no way that registry operators will ever
agree to voluntarily undo such a change in the future. Presumptive
renewal means that registry operators can safely ignore any future
attempts by ICANN to renegotiate. This is why these contractual
changes are so important, because they'll be impossible to fix in the
future (without giving up even more to registry operators, e.g. via a
buyout or something). This alone should be reason for caution. Given
there's no urgency to making a change (i.e. registry operators have
*falling* costs, not increasing costs), then the status quo should
prevail.

6. Some have suggested that the Internet Society and/or PIR would
never raise fees by a large amount. However, "hope is not a strategy."
Past performance is no guarantee of the future. Leadership can change,
as can priorities/missions. It's clear from section 7.5 of the the
draft contract itself:

https://www.icann.org/sites/default/files/tlds/org/org-proposed-renewal-18mar19-en.pdf

that ISOC/PIR could simply sell or assign the registry contract to
another entity (e.g. Private Equity, just as registry operator Donuts
was sold by its founders), and that new owner/entity could take the
heat for future egregious fee increases. ICANN would not be able to
stop such a deal. Such a sale would allow ISOC to create a huge
endowment for itself worth billions of dollars, given that .org is
arguably the second most desirable gTLD, after only .com.

7. The ability to renew a domain name for 10 years is not sufficient
protection for registrants. Eventually the bill will come due, and
nothing can offset the enormous switching costs. Any
goodwill/links/etc. built up will be reduced to zero, totally
destroying one's investment in one's web identity that may have been
built up over 20+ years (even longer than ICANN has existed, in many
cases). URLs that have been printed in offline media such as books,
DVDs, etc. can't be updated, thus it's impossible for many to simply
stop renewing after 10 years and switch, as some people will still see
the old URL. E-mails aren't forwarded by the new registrants to those
of past registrants, meaning that all existing email addresses can't
easily transition to a new domain name without risk. Business cards
would need to be reprinted (and can't be "recalled" from past
recipients). Registrants expect URLs to be permanent, not transitory.
Registrants of legacy gTLDs like com/net/org own their domain names,
and are not temporary tenants (like those in the failed new gTLDs).

8. One of the reasons prospective registrants rationally avoid new
gTLDs is the lack of certainty over potential future fee increases. As
one submission pointed out, they are "leery" of such one-sided
contracts, and for good reason. Those failures of the new gTLDs
experiment should not be allowed to contaminate the successful and
proven legacy gTLDs like .com/net/org. Indeed, if there is to be any
harmonization of contracts, the "base agreement" should be that of the
successful .com/net/org TLDs which included fee caps, rather than have
the future be modeled on the the failed new gTLDs program. Registrants
of new gTLDs knew the problems with the lack of price caps, and
foolishly agreed to them before registration. Changing the rules for
existing registrants of legacy gTLDs is unacceptable, as this amounts
to changing the rules in the middle of the game, rules which would
never have been acceptable to most prior to registration.

One submission suggested that as each new gTLD matures, or reaches a
critical mass, it should then transition to the legacy contracts. That
was a wise suggestion, to bridge the failed new gTLD program with the
successful legacy gTLDs.

9. Even ISOC/PIR doesn't enter into such one-sided agreements, given
that its own supplier/subcontractor (Afilias) had to win a competitive
tender to retain the contract for managing the back-end of the
registry (presumably at an even lower fee than it agreed to years ago
-- fees would be able to be estimated once the relevant IRS Form 990
forms become public).

https://domainnamewire.com/2016/02/16/32-million-org-contract-up-for-bids/
https://domainnamewire.com/2016/11/14/org-sticks-afilias-backend/

It's entirely inconsistent that Internet Society doesn't give
presumptive renewal and/or permits unlimited fee increases for its own
suppliers, yet wants such things for themselves.

10. We oppose the ability for the registry operators to unilaterally
create and impose their own mandatory RPMs upon registrants. See, for
example:

https://www.icann.org/sites/default/files/tlds/org/org-proposed-addendum-18mar19-en.pdf

"Specification 7, § 1 The terms of Section 1 of Specification 7 are
hereby amended and restated in their entirety as follows: “Rights
Protection Mechanisms. Registry Operator shall implement and adhere to
the rights protection mechanisms (“RPMs”) specified in this
Specification. In addition to such RPMs, Registry Operator ******may
develop and implement RPMs that discourage or prevent registration of
domain names that violate or abuse another party’s legal rights.******
Registry Operator will include all RPMs required by this Specification
7 and any additional RPMs developed and implemented by Registry
Operator in the Registry-Registrar Agreement entered into by
ICANN-accredited registrars authorized to register names in the TLD.”
(page 6, emphasis added)

This should be left to the GNSO, to develop only policies that have
consensus, and which balance the needs of both rights holders and
registrants. For example, suppose PIR (or another registry operator)
was allowed to unilaterally create a RPM on their own which allowed
for complaints to be filed for a fee of $100, but which required
registrants post a $1 million bond if they wish to file any response
to the complaint. Such a one-sided policy could be created by a
registry operator under the proposed terms, and would ignore the
requirement that ICANN policies need to balance the concerns of all
affected stakeholders (including registrants).

11. We also oppose the searchable WHOIS, which ignores the ongoing
EPDP on WHOIS:

https://www.icann.org/sites/default/files/tlds/org/org-proposed-renewal-18mar19-en.pdf
(page 37)

"Notwithstanding anything else in this Agreement, Registry Operator
must offer a searchable Whois service compliant with the requirements
described in Section 1.10 of Specification 4 of this Agreement."

as it doesn't properly balance the privacy rights of registrants
against those who would go on fishing expeditions. A searchable WHOIS
system should only ever be adopted, if and only if the Trademark
Clearinghouse (TMCH) equally becomes public and searchable, in return.
If the TMCH is kept secret and non-searchable, then the WHOIS should
not be searchable either.

12. Additional RPMs that were developed for new gTLDs were the result
of bad predictions that were made of massive cybersquatting prior to
the adoption of the program. For example, in testimony before the US
government:

https://www.govinfo.gov/content/pkg/CHRG-112shrg74251/html/CHRG-112shrg74251.htm

"First, the immediate costs imposed on business is likely to be in the
multi billions of dollars."

"This Program in aggregate has multi-billion dollar implications for
all marketers, both in the commercial and the nonprofit sectors, and
their brands. It would cause irreparable harm and damage to the entire
online business community. It would throw the domain name universe
into substantial confusion for both marketers and consumers."

"So there are billions of dollars that are going to be spent and it's
not going to be providing a use for the economy."

"And when we're talking about billions of dollars here, when we're
talking about companies with 3,000 or more brands, even big companies
will be facing really large expenses. So this is a very, very
significant economic issue for this country and for the world."

"An unlimited expansion of the TLDs will cost the business community
billions of dollars."

"The unlimited expansion of TLDs would dramatically increase the cost
and complexity for trademark holders to protect their rights. The
immediate cost imposed on businesses is likely to be in the billions
of dollars."

"We believe ICANN's gTLD program would impose billions of dollars in
unnecessary costs on the restaurant industry at a time when restaurant
operators are looking forward to investing in their businesses and
hiring employees after the worst recession in decades."

These predictions exaggerated and overestimated the actual risk that
was realized by the launch of new gTLDs. Thus, the justification for
the adoption of the URS and other RPMs turned out to be false
predictions, and should now be undone. They were never intended for,
nor should be imposed upon, registrants of legacy gTLDs.

Prospective registry operators at the time were willing to accept such
terms, as the trademark lobby threatened to thwart and delay the
release of new gTLDs unless their demands were met. Registry operators
were blinded by dollar signs in their eyes, for example, predictions
by Name.Space:

"Name.Space, whose business has a potential value of over 1 billion
dollars, has been deprived the opportunity to fully launch and operate
its portfolio of gTLD properties under what we believe is the most
responsible, fair, and ethical practices yet to be employed in the
commercial domain name industry." (same link as above for testimony)

13. Given that the RPM PDP of the GNSO is actively reviewing the URS,
including determining whether or not it should be a consensus policy,
no steps should be taken by ICANN staff and/or the registry operators
to unilaterally impose it upon registrants. Indeed, there are numerous
proposals to actively change the URS (including a proposal to
explicitly eliminate it), see:

https://community.icann.org/display/RARPMRIAGPWG/URS+Proposals

(click the "Individual URS Proposal" tab to see the 33 individual
proposals, 14 of them from us)

The current URS is deeply flawed. For example of just one of the
defects, currently complaints are required to be in English (unlike
the language rules for the UDRP, where complaints must be in the
language of the registration agreement, which varies by registrar).
Thus, many registrants defending a URS dispute have no idea what the
actual URS complaint is about, if they do not understand English. This
is particularly egregious, given that new gTLDs are most popular in
China.

Such flawed RPMs whose creation was rushed before the launch of new
gTLDs, and which are tilted in favour of large multinational
companies, need to be reviewed and corrected before they are ever
adopted for legacy gTLDs like .com/net/org.

14. In conclusion, ICANN's proposed contracts represent a failure of
the multi-stakeholder model, and are instead evidence that ICANN has
been captured by registry operators. ICANN claims these contracts are
the result of a negotiation, yet what did registrants receive in
return for these contractual changes? We received absolutely nothing
in return, except for higher fees and higher regulatory burdens (via
the imposition of the URS), with all the gains being received by the
registry operators at the expense of registrants. That's not a
negotiation -- that's a giveaway.

We expect and demand that ICANN and the registry will simply extend
the current contracts, rather than enter into these one-sided
arrangements.

Sincerely,

George Kirikos
416-588-0269
http://www.leap.com/



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