Information on Proposed VeriSign Agreement Revisions

At its meeting on 13 March 2001, the ICANN Board scheduled for 2 April 2001 its decision on whether to approve the proposed revisions to the agreements between ICANN and VeriSign. The Board requested "all members of the Internet community, including the Names Council and any of the constituencies and other participants in the Domain Name Supporting Organization, to provide comments on the substantive merits of the proposal no later than 31 March 2001."

Since that time, there have been extensive discussions throughout the ICANN community regarding the advantages and drawbacks of the proposed revisions to the agreements. Many participants in these discussions have noted the need for additional information concerning the provisions and the effect of the present agreements and the agreements as they are proposed to be revised. Many have posed various questions on these issues to ICANN management.

Although we have sought to respond on an individual basis to these questions as time permits, it has become clear that the community discussion would benefit from a more formal, authoritative source for this information. We have therefore prepared this page to bring together in one place the key information regarding the present and proposed agreements. In addition to providing links to source materials, we will post on this page responses to frequently asked questions as we prepare them. A few of the FAQs appear below; we expect to complete others and post them on this page in the next few days.

Current and Proposed Agreements

ICANN and Network Solutions, Inc. (now VeriSign) entered a series of agreements on 10 November 1999. These agreements included a Registry Agreement for the .com, .net, and .org top-level domains. The text of that registry agreement may be viewed here:

Existing .com/.net/.org Registry Agreement (10 November 1999)

On 1 March 2001, a proposal to revise the November 1999 ICANN-Network Solutions Registry Agreement was posted. The proposal would replace the existing unified registry agreement with three separate registry agreements, one for each of the three top-level domains involved. There would also be an additional agreement that covered obligations of VeriSign that are not specific to any one of the three top-level domains. The three proposed registry agreements may be viewed by clicking on the links below:

Proposed .com Registry Agreement

Proposed .net Registry Agreement

Proposed .org Registry Agreement

Many of the terms of the additional agreement are summarized in a letter dated 28 February 2001 from Stratton Sclavos, VeriSign's President and CEO, to Vint Cerf, ICANN's Chairman. Some of the terms appear elsewhere in the materials; in the near future we will post a term sheet listing the proposed terms of agreement not embodied in the three proposed registry agreements.

Analyses of Agreements

A brief introduction to and summary of the proposed revisions was posted on 1 March 2001:

ICANN Melbourne Meeting Topic: Proposed Revisions to VeriSign Agreements

On 6 March 2001, ICANN posted some market-share data for accredited registrars in the .com, .net, and .org top-level domains:

.com/.net/.org Registrar Market Shares

We will post additional analyses as we complete them.

Additional Materials

DNSO Comments. On 30 March 2001, the Names Council forwarded these DNSO comments to the Board.

Correspondence Between VeriSign and ICANN:

Letter from Roger J. Cochetti to Vint Cerf. On 29 March 2001, VeriSign submitted this letter to the ICANN Board responding to various matters raised at the Melbourne meeting.

Letter from Stuart Lynn to Stratton Sclavos. On 31 March 2001, ICANN CEO Stuart Lynn wrote this letter to VeriSign CEO Stratton Sclavos regarding additional text changes and related undertakings between ICANN and VeriSign.

Response from Stratton Sclavos to Stuart Lynn (1 April 2001).

Reply from Stuart Lynn to Stratton Sclavos (1 April 2001).

Frequently Asked Questions (FAQs)

We are preparing responses to FAQs on the proposed revisions of the ICANN-VeriSign agreements. To provide this information to the community as quickly as possible, we are posting the FAQ responses in stages as we complete them. Please check back here (and refresh your browser) to obtain the most current FAQ responses.

FAQ #1: I've heard and seen references to "Plan A" and "Plan B." What do these terms refer to?

In the ongoing discussions, "Plan A" has often been used to refer to the situation presented by VeriSign's announced intention under the current agreements (i.e. those signed by ICANN and Network Solutions in November 1999) to sell its registrar business by 10 May 2001, and thereby to extend its right to be the sole operator of the .com, .net, and .org registries until 10 November 2007. "Plan B" refers to the proposal made on 1 March 2001 to revise the existing agreements so that VeriSign would not sell its registry business but would instead spin off the .org registry at the end of 2002 and would agree to have the .net registry competitively rebid at the end of 2005. The above is just a brief summary of Plan A and Plan B; each has many more features that will become clearer in the responses to FAQs that appear (or will be posted shortly) below.

FAQ #2: Under the current registry agreement (Plan A), how long does VeriSign have the right to operate the .com, .net, and .org registries and what are the procedures to select the company that will operate these registries after that term is completed?

Under the existing agreement, VeriSign is the registry operator for all three registries (.com/.net/.org) until at least November 2003. If it sells its registrar business by 10 May 2001 (as it is actively pursuing) the term for all three registries is automatically extended to November 2007.

The existing agreement provides that at the end of its term (either 2003 or 2007), ICANN will establish an "open, transparent procedure" to select a new registry operator. The existing agreement requires that this process not disadvantage VeriSign in any way, including by virtue of the fact that it is the incumbent operator. Thus, the process under the current agreement could not give any weight to the value some might see in picking a different registry operator from the existing one (VeriSign). Nor could the selection process take account of the historical facts surrounding VeriSign’s original selection. Similarly, it could not account for the fact that VeriSign has profited greatly from the right to operate these registries. The existing agreement requires that the selection process focus on the merits at the time the selection is made. Thus, if VeriSign is the most qualified applicant (in 2003 or 2007), ICANN could not fail to select VeriSign based on these historical factors.

The standard under Plan A for selection of a new registry operator at the end of the agreements' term is set forth in Section 22(D) of the current registry agreement. It states:

(D) ICANN shall select as the Successor Registry the eligible party that it reasonably determines is best qualified to perform the registry function under terms and conditions developed as a Consensus Policy, taking into account all factors relevant to the stability of the Internet, promotion of competition, and maximization of consumer choice, including without limitation:  functional capabilities and performance specifications proposed by the eligible party for its operation of the registry, the price at which registry services are proposed to be provided by the party, relevant experience of the party, and demonstrated ability of the party to handle operations at the required scale. ICANN shall not charge any additional fee to the Successor Registry.

Readers can judge for themselves to what extent these criteria, which pursuant to the existing agreement are the only criteria that can be taken into consideration in the selection process, favor VeriSign. Given that the existing agreement appears to require that the selection process be for all three registries combined, it is likely that VeriSign (whether in 2003 or 2007) would be able to argue that it is the only registry operator with the "demonstrated ability . . . to handle operations at the required scale." In addition, because it will have already built the infrastructure in the course of operating the three top-level domains, it seems likely that VeriSign will not need to make significant additional investments in order to demonstrate its capacity to operate these important registries in a stable and effective manner; other applicants will likely be in the position of having to make significant investments to demonstrate their capacity. It is questionable whether they would be willing to make these investments simply to demonstrate their capacity in the selection process. Thus, it seems clear that some significant aspects of the renewal standard required by the existing agreement will favor VeriSign in the selection process.

Finally, the existing agreements (Plan A) explicitly authorize VeriSign to bring litigation against ICANN in any "court of competent jurisdiction" to challenge the "reasonableness" of any decision by ICANN not to select VeriSign as the new registry operator. While anyone can sue at any time, the fact that litigation is specifically contemplated in the existing agreement would likely make it impossible for ICANN to assert that a court did not have jurisdiction over the dispute. A "reasonableness" standard, moreover, offers a court a fair amount of room to evaluate the process and the decision. This gives VeriSign a right that no other applicant would have to challenge the outcome of the selection process. It also means that, as a practical matter, if ICANN selected a party to replace VeriSign as the registry operator under the existing agreements, VeriSign could choose to tie the decision up in court proceedings, which may result in a significant delay in implementing the replacement decision.

In summary, under the current agreements there would be a significant practical and legal burden for ICANN to replace VeriSign as the operator of the .com, .net, and .org registries at the end of the term of the agreement, whether that occurs in 2003 or 2007.

FAQ #3: How would the proposed revised agreements (Plan B) change the renewal provisions?

The proposed revisions (Plan B) would replace the existing single registry agreement with three agreements covering each of .com, .net, and .org. As a result of this split, the renewal provisions for the three top-level domains would vary.

As to .org, the proposed new registry agreement does not allow VeriSign the possibility of extending its operation of the .org registry operator past 2002 at all.

On .net, the proposed new registry agreement permits VeriSign to compete under a slightly modified standard:  the words "or similar databases" are added to the criteria relating to demonstrated experience, and the right to litigate is replaced by a right to arbitrate a decision by ICANN to select some other registry operator. While this still likely provides some some advantage to VeriSign, the loss of the right to litigate in court (with the significant delays that such litigation could cause), as a practical matter, is a significant disadvantage to VeriSign compared to the existing agreement. ICANN management believes that, with these changes, ICANN would have the ability to make the appropriate selection for a new .net registry operator to begin at the end of 2005, as scheduled under the proposed agreements (Plan B).

With respect to .com under that top-level domain's proposed registry agreement (Plan B), Section 25(B) provides as follows:

B. ICANN shall consider the Renewal Proposal for a period of no more than six months before deciding whether to call for competing proposals from potential successor registry operators for the Registry TLD. During this six month period, ICANN may request Registry Operator to provide, and Registry Operator shall provide, additional information concerning the Renewal Proposal that ICANN determines to be reasonably necessary to make its decision. Following consideration of the Renewal Proposal, Registry Operator shall be awarded a four-year renewal term unless ICANN demonstrates that: (a) Registry Operator is in material breach of this Registry Agreement, (b) Registry Operator has not provided and will not provide a substantial service to the Internet community in its performance under this Registry Agreement, (c) Registry Operator is not qualified to operate the Registry TLD during the renewal term, or (d) the maximum price for initial and renewal registrations proposed in the Renewal Proposal exceeds the price permitted under Section 22 of this Registry Agreement. The terms of the registry agreement for the renewal term shall be in substantial conformity with the terms of registry agreements between ICANN and operators of other open TLDs then in effect, provided that this Section 25 shall be included in any renewed Registry Agreement unless Registry Operator and ICANN mutually agree to alternative language.

Under this language, VeriSign would be awarded a new 4-year term to operate .com unless one of the following four events occurs:

• VeriSign does not comply with the terms of the new agreement, or
• ICANN determines that VeriSign did not and will not operate the registry to the benefit of the Internet community, or
• VeriSign is not qualified for some other reason (such as those noted in Section 16 concerning termination), or
• VeriSign has proposed a price increase.

Section 25 (B) also provides that the terms of any new contract shall be the same as other registry operators' agreements that ICANN has entered, so that all terms of the .com agreement (with the sole exception of the renewal provisions) would conform to standard ICANN contracts at the time of renewal, if that occurs. This would mean, for example, that if ICANN in the interim adopts some pricing formula or policy—such as a requirement that registry prices not exceed costs by more than a certain amount, or any other policy that could be imagined—the new .com agreement would have to reflect that policy. This is not the case with the existing agreements. ICANN management also does not believe that the renewal language quoted above prevents ICANN or the community from insisting on a different price or pricing structure at the time of renewal, if that has precedent in other registry agreements and is deemed necessary to make a finding that renewal would serve the community interest.

FAQ #4: Under the current agreement (Plan A), what does VeriSign have to do to extend its contract to operate the .com, .net, and .org registries until 10 November 2007?

The existing agreement expires on 10 November 2003, but VeriSign has the right to extend it for four more years, until 10 November 2007. This right to extend was granted to VeriSign in section 23 of the existing registry agreement. That section provides that to obtain the extension VeriSign must separate the legal ownership of its registry and registrar businesses by 10 May 2001. The full language of section 23 of the existing agreement is as follows:

23. Expiration of this Agreement. The Expiration Date shall be four years after the Effective Date, unless extended as provided below. In the event that NSI completes the legal separation of ownership of its Registry Services business from its registrar business by divesting all the assets and operations of one of those businesses within 18 months after Effective Date to an unaffiliated third party that enters an agreement enforceable by ICANN and the Department of Commerce (i) not to be both a registry and a registrar in the Registry TLDs, and (ii) not to control, own or have as an affiliate any individual(s) or entity(ies) that, collectively, act as both a registry and a registrar in the Registry TLDs, the Expiration Date shall be extended for an additional four years, resulting in a total term of eight years. For the purposes of this Section, "unaffiliated third party" means any entity in which NSI (including its successors and assigns, subsidiaries and divisions, and their respective directors, officers, employees, agents and representatives) does not have majority equity ownership or the ability to exercise managerial or operational control, either directly or indirectly through one or more intermediaries. "Control," as used in this Section 23, means any of the following: (1) ownership, directly or indirectly, or other interest entitling NSI to exercise in the aggregate 25% or more of the voting power of an entity; (2) the power, directly or indirectly, to elect 25% or more of the board of directors (or equivalent governing body) of an entity; or (3) the ability, directly or indirectly, to direct or cause the direction of the management, operations, or policies of an entity.

Thus, to exercise its right to the extension, VeriSign must "divest[] all the assets and operations" of either its registry services business or its registrar business to "an unaffiliated third party" that then enters into "an agreement enforceable by ICANN and the Department of Commerce." The purchaser must agree not to be both the registry operator and a registrar in the .com, .net, and .org top-level domains. VeriSign has stated that, unless the current proposal to revise the agreements is accepted, it will exercise its right to an extension under Plan A by keeping its registry business and selling its registrar business. Under section 23, this means that to obtain the extension VeriSign must divest all the assets and operations of NSI Registrar by 10 May 2001.

Obviously, there is a significant potential for disagreement between VeriSign and either ICANN or the US Department of Commerce about whether a particular divestiture made by VeriSign meets the standard set forth in section 23. VeriSign and ICANN management have held a number of discussions about VeriSign’s announced plans to divest its registrar business, and ICANN management has raised questions and concerns during those discussions about the sufficiency of those plans. If the existing agreement is retained (Plan A), and VeriSign continues on with its plans to divest its registrar business, there is certainly no assurance that such divestiture would, in the view of ICANN or the US Department of Commerce, meet the requirements of section 23 to obtain the extension. VeriSign has stated, however, that if the proposed new agreements are not approved, it will do whatever is required under section 23 to exercise its right to obtain the four-year extension.

FAQ #5: Are there any limitations under the current agreement on the potential buyer of the VeriSign's registrar business?

There are no such limitations. If VeriSign sells its registrar business, and retains its registry business, the buyer of the registrar business would have to agree not to also operate the .com/.net/.org registry. Since VeriSign would continue to operate that registry, making this agreement should not be a problem for the buyer of the registrar business. Neither section 23 nor any other provisions of the existing agreement place any other limits on the sale. As a result, VeriSign’s existing registrar business could be sold to a competing registrar, thus increasing concentration in the registrar market (subject, of course, to any applicable antitrust or competition statutes or regulations). Or the registrar business could be sold to a large software company, a large telecom company, a significant ISP, or any other entity in the world.

FAQ #6: What exactly does VeriSign have to sell in order to obtain the automatic four-year extension?

Section 23 of the current agreement says that VeriSign must sell "all the assets and operations" of the business it chooses to divest (in this case, the registrar business). It is possible that VeriSign and ICANN would have different views of the meaning of this term. For example, if the VeriSign registrar business shares services with other VeriSign businesses, such as engineering, customer support, or human resources or the like, VeriSign might argue that those are not the "assets and operations" of the registrar business, and ICANN might dispute this argument. A controversy might also arise because the buyer may not want to acquire all the "assets and operations" of VeriSign's registrar business; there could be arguments over what VeriSign must do with registrar assets and operations that the buyer does not wish to acquire. For example, a buyer might not interested in acquiring those assets and operations of NSI Registrar that are focused on direct retail sales of name registrations to the public, preferring instead to acquire only the operations associated with VeriSign's reseller (wholesale) relationships. In these circumstances, there could be controversy about whether section 23 requires that the buyer acquire the unwanted retail-sales operations, or whether VeriSign may simply discontinue them. If the buyer must acquire them, is it required to actually continue those operations? These are examples of questions that are not specifically answered by the existing agreement and on which it is possible to imagine there might be different views by ICANN and the US Department of Commerce, on the one hand, and VeriSign on the other.

FAQ #7: Does the existing agreement limit in any way VeriSign’s ability to act as a registrar or a reseller following a divestiture of its existing registrar business?

There are no specific limitations in section 23 or any other provision of the existing agreement that expressly prevent VeriSign from seeking to be accredited as an ICANN registrar following the sale of its existing registrar business. Although the purchaser must expressly agree not to be both the registry and a registrar for .com, .net, and .org, the agreement does not specifically prohibit VeriSign from re-entering the registrar business in .com, .net, and .org after it has sold its present registrar business. Of course, there might be terms of VeriSign's agreement with the buyer of its registrar business that limited this ability, at least for some time, and if ICANN or the US Department of Commerce concluded that the divestiture was a sham—not a true divestiture—they would certainly have the ability to take the position that any extension was no longer valid. But apart from those possibilities, nothing in the existing agreement prevents VeriSign from seeking to become an accredited registrar following the sale of its existing registrar business.

Today, most name registrations in .com, .net, and .org are initiated by resellers—businesses that are not accredited as registrars but act as intermediaries between registrars and the registrants. In fact, most of the larger registrars (not including VeriSign) operate mainly through resellers, and either take few or no name registrations directly from registrants. This phenomenon has become more prevalent since November 1999 when the existing agreement was signed. The existing agreement contains no restrictions on VeriSign operating as a reseller following the divestiture of its existing registrar business. In fact, the materials circulated by VeriSign’s investment bankers to encourage potential buyers of its existing registrar business assumed that VeriSign would continue as a reseller, or as what the material described as a "partner" of the company buying VeriSign's registrar business. While this is another area where there could be significant disagreements between VeriSign and either ICANN and/or the US Department of Commerce about the terms of any such agreement between VeriSign and the buyer of its registrar business, there are circumstances in which VeriSign could immediately begin functioning as a reseller on behalf of one or more accredited registrars following the sale of its existing registrar business.

Finally, it should be noted that the existing agreement places no limitations on VeriSign's ability to act as a registrar in other top-level domains while it operates the registry for .com, .net, and .org.

FAQ #8: What will happen to .org under the proposed new agreements with VeriSign (Plan B)?

Under the proposed revision to the agreements (Plan B), VeriSign would relinquish its right to operate .org as of 31 December 2002. In addition, under section 5.1.2 of the proposed .org registry agreement, VeriSign would not be eligible to continue as registry operator for .org after that date:

5.1.2 Registry Operator acknowledges and agrees that upon the earlier of (i) the Expiration Date or (ii) termination of this Agreement by ICANN pursuant to Subsection 5.4, it will cease to be the operator of the Registry TLD and neither it nor any affiliated entity will be eligible to seek to continue to operate the Registry TLD.

Thus, a new registry operator would be chosen. Plan B provides that the new registry operator will be a non-profit organization and that VeriSign must provide US$ 5 million as an endowment to fund operating costs of the new registry operator after it assumes responsibility for .org's operation.

FAQ #9: Under Plan B, would ICANN become the registry operator for .org?

No. Article IV, Section 1(b), of ICANN's bylaws provides that ICANN will not act as a domain-name registry in competition with entities affected by ICANN's policies, except in the event of financial failure of a registry or other emergency.

FAQ #10: How would the new .org registry operator be chosen under Plan B?

Section 5.1.3 of the proposed .org registry agreement provides that ICANN would designate a successor registry operator. The successor (which could be an existing organization or one set up for the purpose of operating .org) would be designated according to policies developed through the ICANN process. Under the ICANN bylaws, these policies are within the scope of the Domain Name Supporting Organization, which would be responsible for making policy recommendations to the ICANN Board in time for the operator to be designated and ready to begin operations by 31 December 2002.

As noted in FAQ #8, neither VeriSign nor any affiliate of it would be eligible to be designated as the successor registry.

FAQ #11: Why does Plan B provide that the new .org registry operator would be non-profit?

As stated in RFC 1591, the .org domain "is intended as the miscellaneous TLD for organizations that didn't fit anywhere else. Some non-government organizations may fit here." Since .com is defined as "intended for commercial entities, that is companies," this means that .org was set up as a home for non-commercial organizations (other than organizations, such as certain educational institutions, for which another TLD has been established).

Until 1996, Network Solutions enforced the restrictions on .org registrations, but due to NSI's resource limitations active enforcement of the restrictions was suspended early in that year. Since then, the restrictions have been enforced only through self-selection.

Most non-commercial organizations have preferred to register in .org (or a ccTLD) rather than .com or .net, and there are many non-commercial organizations that view .org as their home. In these circumstances, it seems appropriate for the registry operator of this TLD to be an organization that is likely to be sensitive to the needs of non-commercial organizations.

FAQ #12: Does Plan B require that only non-commercial organizations would be permitted to register new .org names in the future?

No. The future registration rules would be determined by an open, transparent process, beginning with a referral to the Domain Name Supporting Organization asking it to develop a consensus on the future registration policies for .org. For example, a consensus could form around the opinion that the registration policies for .org should be set by the non-commercial community through a policy-development process under the auspices of a designated registry operator that is operated by that community. In the alternative, a consensus could emerge supporting specific registration policies regardless of the identity of the operator. All decisions on the future registration policies for .org would be made through the ICANN consensus policy development process.

FAQ #13: Will I lose my existing .org domain name under Plan B?

Although this question would be determined by the consensus policy development process described in FAQ #12, it seems highly likely that existing registrations would be grandfathered (i.e. not subject to cancellation) no matter what registration policies were adopted. Grandfathering has been the general practice in similar situations in the past, based on fairness and practical considerations.

FAQ #14: Wouldn't having registration restrictions in .org be too expensive?

That's an issue to be resolved in the policy-development process described in FAQ #12. The new TLD proposals discussed in the ICANN community in October/November 2000 suggested several interesting approaches to handling restrictions that appear much cheaper to implement than the ones NSI was using before 1996. As the new TLDs are rolled out (six of the seven selected TLDs are restricted in some way), it should be possible to get data on whether some of these approaches work well. On the other hand, the ICANN community may conclude that enforcement of restrictions is too expensive, so that all types of entities (and individuals, too) should be able to register. Other policies, such as reduced registration prices, could be developed to assist non-commercial organizations to obtain useful and affordable domain names in .org.

FAQ #15: Under Plan B, what role would VeriSign have in the .org domain after the end of 2002?

Under Plan B, VeriSign's involvement with .org would be limited to the following:

• It would provide a US$ 5 million endowment for the non-profit operator of .org.
• It would make its constellation of nameservers available to the .org operator free for one year, and afterward at a price to be determined.
• Its registrar business could act as a registrar for the .org domain (i.e. a customer of the new registry operator) along with other ICANN-accredited registrars, for a period of at least three years.

FAQ #16: The form of the proposed .net and .org agreements looks very different than that of the proposed .com agreement. What is the reason for this?

One of the goals of ICANN management in negotiating the proposed revisions was to reduce the differences between the legal agreements with VeriSign and those that have been developed for other registry operators. The current agreements (Plan A) give VeriSign special, favorable treatment in many respects, and correspondingly limit VeriSign's obligations to operate the .com, .net, and .org registries according to policies developed by the Internet community through ICANN. They also have some ambiguous provisions. In some cases, VeriSign has interpreted these provisions in different (and more favorable to it) ways than ICANN, leading to disputes over interpretation that are still ongoing.

To reduce this special, favorable treatment of VeriSign as well as to make the agreements clearer, ICANN management proposed to VeriSign to revise all three registry agreements (for .com, .net, and .org) to use the form developed for the new unsponsored TLDs. VeriSign agreed to do this for .net and .org, but was unwilling to agree to this for .com. Although the proposed .com agreement is in the format of the existing agreement, in negotiations VeriSign did agree to revise much of the proposed language of that agreement to make it clearer and more in line with the agreements that other TLD registry operators have agreed to enter.

FAQ #17: If the 1999 agreements had so many unfavorable and unclear terms, why did ICANN enter into them?

At the time the 1999 agreements were negotiated, they were widely recognized to have undesirable features, but after deliberations it was concluded that their benefits to ICANN and the Internet community outweighed those drawbacks.

Prior to those agreements, NSI had refused to recognize the Internet community's ability to establish DNS policy through ICANN. NSI's position was that, when its Cooperative Agreement with the US Government terminated, whether prematurely or upon its expiration on 30 September 2000, NSI would be free to operate not only .com, .net, and .org, but also the authoritative root server, in any way it chose. ICANN and the US Government vigorously contested this proposition, leading to a highly contentious situation that threatened to destabilize the DNS. Although ICANN and the US Government believed that their position would ultimately prevail, this would likely have happened only after long- and hard-fought litigation, during which such ICANN policies as the introduction of competitive registrars would have been halted.

In August and September 1999, NSI, the US Government, and ICANN engaged in lengthy negotiations to reach an accommodation. Ultimately, NSI agreed to give up its claims to perpetual, unsupervised operation of the .com, .net, and .org TLDs and the authoritative root server (sometimes referred to as the "A" root server). It also agreed to recognize the Internet community's right to establish consensus policies through ICANN, and that it would observe these policies. These fundamental concessions, however, came at the price of a set of agreements that had various terms that were clearly commercially favorable to NSI. In other cases, ambiguous provisions were included because agreement on more clearly stated obligations simply could not be reached.

Prior to and at the November 1999 ICANN meetings in Los Angeles, the agreements with ICANN were intensively discussed by the Internet community. The ICANN Board members, ICANN management, and nearly all the rest of the community recognized that the agreements were far from perfect. But the conclusion of those discussions was that entering the agreements was better than the potentially destabilizing consequences of not entering them.

FAQ #18: Specifically what revisions have been made in the language of the proposed .com agreement to make it clearer and more in line with the standard agreement for unsponsored TLD operators?

The revisions to the existing agreement in the proposed .com agreement are in fact quite substantial. Several of the more noteworthy areas:

• Clarification of the types of services that are covered by the agreement
• Clarification, updating, and conforming of the Whois and zone-file access requirements
• Conforming changes for consensus-policy requirements
• Elimination of special limitations on VeriSign's obligation to contribute to ICANN's costs of operation
• Reinstatement of registry service level agreement
• Requirement for provision of registry monthly reports
• Clarification of registry data escrow obligations
• Provision for downward pricing freedom
• Damages limitations revised to be more favorable to ICANN
• Additional grounds for premature termination of agreement by ICANN
• Requirement for registry and registrar operations to be conducted by separate subsidiaries
• Revisions to the procedures for subsequent registry agreement

Detailed discussion of these revisions is given in the following FAQs. A redline showing the specific changes in language can be viewed here.

FAQ #19: Why is it important to revise the agreements to clarify the types of services that they cover?

Since the 1999 agreements were entered, the ambiguity of the existing agreement has generated disagreements between ICANN and VeriSign in several areas concerning the scope of services covered by the agreements. Two prominent examples of the difficulties involve the VeriSign Multilingual "Testbed" and its ENUM World initiative (a joint project with Telcordia Technologies).

In the case of the multilingual testbed, VeriSign announced in its 24 August 2000 "Network Solutions Registry Multilingual Domain Name Position Paper" that "NSI Registry will implement the testbed consistent with the existing agreements between it, ICANN, and the U.S. Department of Commerce." Unfortunately, the ambiguous language of the existing agreements has meant that VeriSign and ICANN have sometimes had differing views of VeriSign's contractual obligations. For example, VeriSign has taken the position that the existing Registry Agreement only requires VeriSign to offer to provide registry services to registrars according to the specifications of the agreement, but that it in no way limits VeriSign from also providing domain-name registration services on whatever basis it chooses independent of the specifications in the Registry Agreement. If this interpretation were adopted, VeriSign could provide "extra-contractual" services (which it claims covers multilingual registrations) without any requirement that those services comply with any ICANN policies, including those intended to protect against risks to technical stability.

Taken to its logical conclusion, this interpretation would mean that VeriSign could, without violating the Registry Agreement,

• provide whatever registry services it wants without regard to the technical specifications of the Registry Agreement, unless the services are specifically prohibited by a Consensus Policy;
• establish an alternative to its "Shared Registration System," perhaps providing more convenient access or higher performance than the existing SRS, and to make that alternative available only to the registrars it selects;
• offer registry services, such as updates to registrations and other services it can offer only because it is the registry operator, to persons other than accredited registrars, including directly to consumers; and
• charge whatever fee it likes for these extra-contractual registry services.

ICANN's management and legal advisors believe that this interpretation is contrary to a fair reading of the Registry Agreement. Nonetheless, the presence of less-than-totally-clear provisions allows this argument to be advanced, complicating the implementation of community-developed technical standards and other policies.

In the case of the VeriSign/Telcordia ENUM World initiative, VeriSign is offering registration services within .com at a lower-than-second level. The current NSI Registry Agreement is mostly limited to registration activities at the second level. VeriSign has used this feature to initiate a "trial" that it notes "operat[es] on the DNS infrastructure, owned and managed by VeriSign," that "will enable rapid resolution of number-to-address mapping" and that "uniquely position[s]" VeriSign to "play a critical role in future ENUM-based services." ICANN management believes that, when a registry operator seeks to provide services by leveraging the "DNS infrastructure" that it exclusively operates under its registry agreement with ICANN, those services should be subject to technical requirements and other policies developed through the ICANN process. Concerns have been voiced that the ENUM World initiative, depending on how it develops, may impair a sound technical enum implementation based on open and non-proprietary standards. To address concerns of this type, the new unsponsored TLD Registry Agreement covers registry services provided by the registry operator concerning "Registered Names," whether they are at the second or a lower level.

In the proposed .net and .org registry agreements, VeriSign has agreed to follow the form of the new standard unsponsored TLD Registry Agreement, which defines the agreements' scope more clearly and appropriately than the existing NSI-ICANN Registry Agreement. VeriSign has insisted that the basic form of the existing agreement be continued for the proposed .com registry agreement. However, VeriSign has agreed to various revisions of particular language that largely address the concerns described above regarding the agreement's scope.

FAQ #20: What revisions were made in the proposed .com registry agreement that clarify the types of services that are covered by the agreement?

The language of the proposed .com registry agreement incorporates several revisions from the existing agreement that are intended to provide a clearer and more appropriate statement of the scope of services covered by the agreement. They include:

• More explicit definition of "Registry Services." Section II(9) of the proposed .com agreement has been revised to reflect the standard definition of "Registry Services," which is more explicit, and more carefully tailored than the definition in the existing agreement.
• Application of Performance and Technical Specifications. The agreement's specification of functional and performance specifications applies to all "Registry Services" as defined. In the prior agreement, it was not clear that the defined term was employed in the specifications section.
• Extension of fair-treatment requirement to all Registry Services. The provision requiring equivalent access to all registrars has been extended to cover all Registry Services. In the existing agreement, the requirement states only that VeriSign must accord equivalent access to its "Shared Registration System" (an undefined term).
• Access by ICANN-Accredited Registrars. The proposed .com agreement makes clear that (with limited exceptions for infrastructure-related registrations on its own behalf or for ICANN), VeriSign Registry may not make registrations directly, but only through ICANN-Accredited Registrars. In the existing agreements, this limitation is present only in Section I(B)(2)(E) of Amendment 19 to the Cooperative Agreement between NSI and the US Department of Commerce, which requires US Government involvement to enforce.
• Pricing of Registry Services. A provision has been added limiting any revised prices charged by VeriSign to registrars under their Registrar License and Agreement to the current pricing (with the possibility, as is the case under the existing agreement, of adjustments for increased costs due to ICANN requirements), which will be reflected in Appendix G.
• Registered Names as subjects of Consensus Policies. The permissible scope of "Consensus Policies" has been revised to embrace activities concerning "Registered Names" at the second or a lower level, rather than being limited to second-level domains, as in the existing agreement.
• Whois requirements for lower-level registrations. The Whois requirement has been extended to cover all domain name and nameserver registrations at any level within .com. It is currently limited to second-level domain-name registrations.
• Price limitations on lower-level registrations. The price limitations in the proposed .com agreement apply to all domain-name registrations made in a "Registry Database", which includes names registered at lower levels. The price specification in the existing agreement covers only registrations at the second level. This extension addresses the situation, illustrated by VeriSign's ENUM World initiative, where a registry operator leverages the exclusive position it enjoys under its registry agreement to introduce a potentially dominant lower-level registration service.

The above measures in the proposed .com agreement do not completely address the ambiguities and undesirable limitations in the current agreement, they do represent tangible improvements in this area.

FAQ #21: What changes are proposed in the .com registry agreement with respect to Whois and zone-file access requirements?

The requirements for registry-level Whois service have been revised to more closely resemble those in the standard registry agreements negotiated with the registry operators for the new unsponsored TLDs. In general, the present web-based and port 43 registry-level Whois service would continue (this will be described in Appendix O), with a clear provision for revision based on consensus policies. As noted in response to FAQ #20, the Whois requirement would be extended to apply to lower-than-second-level names that VeriSign includes in its Registry Database. It should be noted that the provision requiring proper handling of any Personal Data has been retained. (It should be noted that this provision is largely precautionary; VeriSign's registry-level Whois does not provide personally identifiable information about domain-name registrations.)

In the .com, .net, and .org TLDs, Whois service about registrants is provided principally at the registrar level. The current proposal to revise the VeriSign registry agreements does not involve a change in the requirements for registrar-level Whois service in these TLDs.

The proposed .com registry agreement includes a new subsection concerning use limitations on registry-level Whois information. This subsection, which is taken from the standard unsponsored TLD agreement, addresses the measures VeriSign may take to deal with a few technically abusive data-mining activities that have been directed against registry- and registrar-level Whois, and also permits restrictions on use of the registry-level Whois data for marketing techniques such as spam. Although provisions of this type already apply to registrar-level Whois and zone-file access, there is no similar provision in the existing VeriSign registry agreement.

The existing VeriSign registry agreement contains a provision requiring VeriSign to comply with Consensus Policies that may be developed concerning a coordinated Whois service for .com, .net, and .org. With the introduction of new top-level domains, the technical challenge of providing a convenient Whois service has been magnified. Accordingly, the new .com agreement includes a provision, modeled on the standard unsponsored TLD registry agreement, that requires VeriSign to provide bulk Whois data to a multi-TLD Whois service provider that may be designated by ICANN in the future. This provision does not change the fundamental nature of the existing coordinated-Whois requirement, other than to eliminate the need under the current agreement for a distributed Whois mechanism to be tried and to fail before a community decision to go forward with a centralized Whois solution is implemented.

FAQ #22: What are the proposals to revise the .com registry agreement to conform its "consensus policy" procedures to the standard unsponsored TLD registry agreement?

The proposed .com agreement changes the "Consensus Policy" provisions only in minor respects. Two time periods have been lengthened based on experience that the consensus-development process takes longer than envisioned in the existing agreement. A more explicit provision has been included concerning the time allowed for VeriSign to implement consensus policies. An alternative has been added to address the situation where a Consensus Policy creates potential legal liabilities for VeriSign. All of these revisions are modeled on the standard registry agreement that has been agreed with the unsponsored new TLD operators.

FAQ #23: What changes are proposed to VeriSign's obligations to contribute to ICANN's costs of operation?

Under the current agreement, VeriSign Registry's responsibility to help defray ICANN's costs of operation is subject to a special limitation. Under the proposed agreement, this special limitation would be eliminated and VeriSign would become subject to the same ICANN-support obligations that have been negotiated with the new unsponsored TLD registry operators. (It should be noted that this provision may require some technical adjustments to accommodate the "Campos funding formula" that emerged from the budget group's discussions in Melbourne.)

FAQ #24: What does the proposed agreement say about registry service levels?

The 1999 agreement had a provision for a registry service-level agreement to be agreed by registrars and NSI (now VeriSign). Although a temporary service-level agreement was negotiated and in place for six months in 2000, it expired and has not been renewed. The proposed agreement re-institutes performance standards and a service-level agreement.

FAQ #25: What new reporting obligations would VeriSign agree to under the proposed .com agreement?

The existing agreement does not include any requirement for VeriSign to provide reports on the registry's performance, although VeriSign has periodically provided reports. The proposed agreement includes a provision from the standard unsponsored TLD agreements formalizing the reporting.

FAQ #26: How are VeriSign's data escrow obligations clarified under the proposed .com agreement?

The 1999 agreement has a general escrow provision, but ICANN and VeriSign have since negotiated a more detailed escrow agreement. The proposed agreement would use the more detailed agreement.

FAQ #27: What changes are proposed in VeriSign's registry pricing?

Under the current agreement, VeriSign must charge exactly US$ 6.00 per year for new and renewed domain-name registrations, subject to increase if newly adopted ICANN policies increase VeriSign's costs. The proposed agreement would give VeriSign the ability to reduce its prices, although pricing would continue to have an upper limit of US$ 6.00 per year, subject to adjustments for increased costs due to ICANN requirements.

FAQ #28: What additional grounds does the proposed .com registry agreement provide for ICANN to prematurely terminate the agreement?

The proposed agreement would provide additional grounds for termination, as reflected in the standard agreement negotiated with the new unsponsored TLD operators. These include insolvency and criminal conviction of financial misdeeds.

FAQ #29: How would the proposed .com registry agreement change the registrar-registry separation provisions?

The proposed agreement includes all of the provisions of the existing agreement requiring that the VeriSign's registry and registrar businesses be operated separately. These "firewall" provisions would be augmented by a requirement that the two businesses be operated as separate companies. This additional requirement tends to enhance, to some degree, the ability to detect breaches of the firewall provisions.

FAQ #30: What assurances are there that VeriSign will adhere to the firewall provisions in the future?

Violations of the firewall provisions are breaches of contract. If they are persistent, they could lead to early termination of the proposed agreement under Subsection 16(A). In addition, breaches of the firewall provisions, which are clearly material matters under the agreement, can entitle ICANN to refuse to renew the .com registry agreement at the end of its term.

FAQ #31: What changes are made to the provisions for a subsequent registry agreement?

See FAQs #2 to #4.