Internet Corporation for Assigned Names and Numbers

Message from Kevin Brannon to Louis Touton

From: Kevin Brannon <kbrannon@prestongates.com>
To: <touton@icann.org>, <general-counsel@icann.org>
Date: 25 June 2003
Subject: FW: VeriSign Wait-Listing Service

Mr. Touton --

The short response to your message is that Dotster -- and numerous other registrars, resellers and others involved in the market for expiring domain names -- does indeed have a different view of ICANN's conduct with respect to the WLS proposal.

It is our client's position that ICANN has breached and/or ignored its own procedural requirements in numerous respects in reaching the pre-determined result of approving the WLS proposal, which is, without question, a new scheme for allocating both domain names and the revenues associated with the allocation of expiring domain names. While ICANN invoked the consensus process with respect to WLS, it then ignored the results of that process; failed to make any serious attempt to analyze the anti-competitive effects of WLS; accepted an untimely and improperly submitted request for reconsideration from VeriSign, then acted favorably on that request; and delayed responding to requests for reconsideration until new bylaws could be adopted and retroactively applied in deciding the requests -- all with the result of creating a monopoly that will crush numerous small businesses, reallocate millions of dollars in revenues from these small businesses to the monopolist, strand many millions of dollars of investment and destroy jobs, not just in the Untied States but in numerous countries around the world.

Dotster filed both requests for reconsideration and for an Independent Review Panel because ICANN took steps to invoke the consensus policy, as we believe it was required to do, then said that no consensus was sought or required when the board did not approve of the results of the consensus process. Thus, we were unclear whether the consensus policy had been violated or whether ICANN had violated its obligation to follow that policy. We submitted the two requests in the alternative to protect Dotster's rights under both interpretations of ICANN's conduct. If one accepts your premise that the consensus policy is simply an elective procedure that the ICANN board can invoke, abrogate or ignore in its sole discretion, your conclusion that no Independent Review Panel is required appears to follow. Be advised that we and our clients do not accept your premise. Our position is that WLS involves a change in the system for allocating domain names requiring consensus for adoption and that ICANN did, in fact, invoke the consensus policy, only to violate, then disclaim, it when the results were unfavorable to the board's pre-determined conclusion.

Your repeated comments to the effect that Dotster "believes [WLS] will be viewed by consumers as a more convenient and effective alternative to its own service" are offensive to common sense, in that WLS will not be an alternative to Dotster's service but will make it impossible to operate that service. Your comments bring to mind the "good old days" in the domestic telephone industry. This was a time when consumers could "conveniently" utilize one (but only one) vendor to supply their telephones, maintain their internal phone wiring, supply their local and long distance service, operate their directory assistance services and publish their yellow pages. The trade-offs for such "convenience" were high prices, poor service and lack of selection and innovation.

ICANN's cavalier dismissal of the registrar's contractual rights is similarly offensive. These companies cannot do business without ICANN's accreditation. They have expended large amounts of money and human resources to obtain and retain their accreditation. They have spent more money and human resources to build and market their companies and to create and offer services that differentiate them from one another in the market. They pay ICANN regular fees as a condition of staying in business. Their only defense against the arbitrary and capricious use of ICANN's power is that offered by the Registrar Accreditation Agreement and the policies and procedures incorporated into that contract. These registrars relied on these contractual and procedural protections when they sought accreditation and invested in their businesses. ICANN's apparent belief that its self-appointed board and staff can change the rules governing the industry in any way it chooses, without being held accountable to its own rules, the registrars or any other constituency group, brings into question ICANN's commitment to the core values it claims to espouse.

Finally, we would appreciate a specific response to our previous request for information concerning communications and negotiations between VeriSign, SnapNames and the ICANN staff and board about WLS during the pendency of our requests for reconsideration and for a review by an independent panel. You previously indicated only that "informal" discussions took place during that period, while VeriSign representatives stated that no discussions took place. Negotiations have apparently progressed quite far already, given that VeriSign announced this week in Montreal that WLS will be tested in September and "go live" on October 11 and that pricing has been established.

Given that ICANN is uninterested in carrying on any sort of dialog with Dotster or the other groups whose businesses will be devastated by this proposal and has apparently already reached an agreement with VeriSign to proceed with WLS, I expect our client, and others similarly situated, to authorize us to commence litigation to enforce its rights under the Registrar Accreditation Agreement and require ICANN to fully reconsider the WLS proposal, this time respecting its own procedures. Regretfully, this seems to be the only way to obtain the full and fair independent review that you and ICANN have denied us.

cc: "'cpage@dotster.com'" <cpage@dotster.com>, "Brown, Stuart M. (PTL)" <sbrown@prestongates.com>, "Boge, Melissa, (PTL)" <mboge@prestongates.com>

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