[registrars] Statement of Tucows Inc. re: Verisign/ICANN Settlement Proposal

[Ross Rader]

Statement of Tucows Inc.
Verisign/ICANN Settlement Proposal - Position & Backgrounder
November 26, 2005

Comments and Inquiries may be directed to:
Ross Rader
Director, Research & Innovation
ross at tucows.com
t. 416.538.5492
c. 416.828.8783


“Examine each question in terms of what is ethically and aesthetically 
right, as well as what is economically expedient. A thing is right when 
it tends to preserve the integrity, stability, and beauty of the biotic 
community. It is wrong when it tends otherwise.”
      - Aldo Leopold, 1886 - 1946

Statement
Tucows Inc. wholly rejects, without limitation, the Verisign/ICANN 
Settlement Proposal on the basis that;

1. The outcome does not provide sufficient benefits to the internet 
community that both ICANN and Verisign, in its role as administrator of 
.com, were intended to serve. While the ICANN staff likely intends to do 
“good works” with the new funds that this proposal will make available, 
the overall cost of the settlement far outweigh any anticipated benefits.

2. This agreement permanently delegates .com to Verisign. ICANN has been 
assigned oversight responsibility of the namespace as a public trust. 
Until such time as effective competition has been introduced into gTLD 
namespace all gTLD registry administration contracts, including those 
stemming from any settlement with Verisign must be constructed as 
management contracts with a finite term and meaningful termination 
clauses. The proposal lacks all of these safeguards and ignores existing 
policy concerning management rights.

3. In addition to this permanent delegation, the ICANN staff proposes to 
provide Verisign with the capability to increase their prices, without 
qualification, up to 7% annually. These additional rights are granted in 
an environment that would otherwise see decreasing prices if 
competitively managed.

4. The proposal implements a centralized budget funding model solely 
enacted between the gTLD administrator and ICANN. Acting solely as a 
collector of the ICANN imposed fees, Verisign has no incentive to 
provide a check on unbounded growth of the ICANN’s corporate budget. The 
balance embodied in the current Registrar budget portion approval 
process must be preserved.

Any arrangement with Verisign needs to preserve the principles of RFC 
1591 by explicitly recognizing the limits of the Registry Operator as an 
administrator acting in the interests of the internet community. 
Further, the arrangements must include provisions for cancelable 
administrative contracts of a finite term with the registry operator. 
The arrangements must also preserve the checks and balance of the 
existing decentralized funding model, including provisions for the 
continuance of the Registrar budget portion approval process.

This enumerates only the most important points. The proposal contains an 
excessive number of problematic concessions including giving Verisign 
commercial rights in all registry meta-data and releasing Verisign from 
$200mm in R&D spending. The list is virtually endless, and wholly 
unacceptable.

Tucows encourages like-minded parties to make their views known to the 
ICANN Board of Directors, The United States Department of Commerce, and 
The United States National Telecommunications Infrastructure 
Administration, in addition to their own government agencies and 
representatives.

Submissions may be sent via email to;

ICANN
settlement-comments at icann.org

Carlos Gutierrez, Secretary
United States Department of Commerce
cgutierrez at doc.gov

Michael Gallagher, Assistant Secretary,
United States National Telecommunications Infrastructure Administration 
mgallagher at ntia.doc.gov


Background
In announcing their proposed settlement to the various lawsuits between 
Verisign and ICANN, the ICANN staff claim to be clearing the way for a 
“...new and productive public/private partnership” between Verisign and 
ICANN “...for the benefit of the internet community.”

The notion that this settlement proposal will benefit anyone but the 
ICANN staff and Verisign Inc. should be rejected.

ICANN's primary responsibility is technical coordination and oversight 
of the DNS. This includes delegation of management responsibility for 
generic top level domains (TLDs) to contractors like Verisign (.com and 
.net), Afilias (.info) and Neulevel (.biz). According to RFC 1591, 
“These administrators are performing a public service on behalf of the 
internet community.”

The relationship between the internet community and the TLD 
administrators has evolved over the years. For instance, under Network 
Solutions and the National Science Foundation, the management of .com 
was initially undertaken under a cost recovery contract. Verisign later 
assumed administration under a for-profit management contract with 
ICANN. The evolution has been beneficial for everyone. The internet 
community enjoys the benefits of a stable infrastructure that has 
supported the needs of a vibrant internet; ICANN benefits from a 
steady-stream of revenue from the surcharges it receives on registration 
revenue from domain registrars; and Verisign receives $6 every time 
someone registers, renews or transfers a .com domain name - hundreds of 
millions of dollars per year.

Despite the apparent "win-win-win", Verisign has historically been 
unhappy with their role as a gTLD administrator. Stratton Sclavos, 
Verisign's CEO, has taken the position that Verisign can and should be 
able to cash in on the DNS, “...DNS (domain name system) response is an 
obligation we took on when we inherited [the .com administration 
contract]. But it would be commercially unreasonable for anyone to 
suggest that we shouldn't be allowed to build incremental services on 
top of that.”

Verisign's view of .com as a commercial asset puts them directly at odds 
with the internet’s users, ICANN’s stakeholders, the principles of the 
Green and White Papers, RFC 1591 and therefore ICANN the Corporation and 
the global public interest - which leads us directly to the heart of the 
litigation in question.

Unfortunately, in attempting to resolve this issue, Verisign's role as a 
gTLD administrator acting to the benefit of the community seems to have 
been forgotten. The proposed settlement agreement does not reinforce 
existing relationships and agreements – it redefines them. The proposal 
outlines the terms by which Verisign will essentially assume ownership 
of .com. Verisign will not be required to periodically renew their 
agreement, they will gain unprecedented control over pricing increases, 
the services offered to the community and the manner in which the TLD is 
operated. Verisign has levered the litigation into a complete 
renegotiation of their contract and ICANN staff have capitulated.

In exchange for mutual release of the pending lawsuits and guaranteed 
funding from a single source subject to no checks or balances, ICANN 
staff intend to give Verisign;

- permanent delegation of the .com gTLD

- a free hand to deploy new services built on the exclusive resource 
this delegation affords

- almost complete shelter from consensus policies implemented via 
community-driven processes

- release from a $200 million Research and Development commitment

- the ability to continuously increase prices in an environment that 
would otherwise benefit from decreasing prices if run in a competitive 
market.

- unfettered commercial rights to all metadata generated in association 
with the operation of the registry.

This proposal amounts to a $1.5 billion giveaway that proposes to 
permanently transfer publicly controlled infrastructure to Verisign in 
order to stabilize ICANN's corporate budget requirements. Where is the 
benefit to the internet community in all of this?

In the interests of moving past the litigation Tucows could support an 
extension of the term of Verisign's contract – but not irrevocably and 
only on an explicit agreement that Verisign is designated only as an 
administrator of this public resource. It need be made explicit that 
Verisign doesn't own .com. Further, the community needs to ensure that 
this agreement is offset against the creation more competition for 
Verisign. Fixed terms for the administration contracts and predictable 
pricing structures should be extended to all registry administrators, 
not just Verisign. Further, ICANN has to clear the path for new 
administrators that can compete with Verisign for registrations in other 
TLDs and at regular intervals for the TLD administration contract itself.

While we continue to support ICANN’s founding principles, its current 
structure and the oversight model employed, we in no way support the 
proposal presented by the ICANN staff. The proposal indicates that the 
ICANN staff has lost touch with the needs of the community and the value 
of this extremely important asset. Trading .com to secure ICANN's 
funding base is not appropriate.

Of substantial concern to Tucows is the clear message that this proposal 
sends to the global community. By rewarding Verisign in this matter, the 
ICANN staff is clearly signaling that the United States legal system is 
now the preferred mechanism for effecting ICANN policy changes. The 
outcome will be two-fold; ICANN will have traded one lawsuit for many – 
there is no shortage of actions being prepared in anticipation of this 
settlement being implemented – and; the global community will be further 
alienated by the actions of ICANN’s staff.

There has always been a level of concern outside of the United States 
related to ICANN. These proposed arrangements will no doubt encourage 
those that seek to replace the ICANN function with an inter-governmental 
treaty, and discourage those that have historically supported ICANN.

The net result is clear; by attempting to clear up outstanding 
litigation and gain access to virtually unbounded funding under the 
cover of bringing stability and predictability to the operation of this 
critical infrastructure and ICANN’s future, the ICANN staff will have 
irreparably destabilized everything that has been so carefully put in 
place over the last seven years.

ICANN staff must take greater care in ensuring that the entirety of 
ICANN’s needs is taken into account when crafting agreements and plans 
of this nature. ICANN is not just a non-profit California corporation 
with revenue, a budget, a strategic plan, staff, costs, a Board of 
Directors and a deal with the United States government to oversee the 
function of the DNS. ICANN is also a philosophy, a set of ideals, a 
community of users and an institution intended to promote a stable and 
effective internet that fosters innovation and competition. To date, it 
has been successful.

In its attempt to secure long-term access to a significantly larger and 
more stable single source of funds, the ICANN staff proposes to betray 
the philosophy, ideals and community that make ICANN a global 
institution with the support necessary to achieve these goals.

Any attempt to implement this proposal will be met with determined 
resistance. We strongly urge The ICANN Board to take the time to bring a 
fourth party, ICANN the community, into the negotiations. Additional 
dialogue must be undertaken to ensure that the arrangements with 
Verisign, through settlement or litigation, are entered into with the 
support of the community.

Tucows recommends that all stakeholders make themselves aware of the 
details of this proposed settlement beyond the very narrow presentation 
offered by the ICANN staff on the ICANN web site. We encourage you to 
make your views known to each of the organizations that can stop this 
decision: ICANN, the United States Department of Commerce, the United 
States National Telecommunications Infrastructure Administration, in 
addition to your own government representatives and agencies.

Submissions may be sent via email to;

ICANN
settlement-comments at icann.org

Carlos Gutierrez, Secretary
United States Department of Commerce
cgutierrez at doc.gov

Michael Gallagher, Assistant Secretary,
United States National Telecommunications Infrastructure Administration 
mgallagher at ntia.doc.gov

About Tucows
Tucows Inc. provides internet services and downloadable software through 
a global distribution network of more than 6,000 service providers. 
These service providers primarily consist of web hosting companies, 
internet service providers and providers of other services over the 
internet. Tucows' services include domain registration services, digital 
certificates, billing, provisioning and customer care software 
solutions, email and anti-spam services, Blogware and website building 
tools. Tucows is an accredited registrar with the Internet Corporation 
for Assigned names and Numbers, or ICANN. For more information, please 
visit: www.tucowsinc.com
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