[DRAFT] Summary of Public Comments on Proposed .BIZ, .INFO, and .ORG Agreements

The following is a summary of the public comments submitted in response to the posting on 28 July 2006¹ of the Proposed .BIZ, .INFO AND .ORG gTLD Registry Agreements <http://www.icann.org/announcements/announcement-2-28jul06.htm>.

These proposed registry agreements would move NeuLevel (.BIZ), Afilias (.INFO) and PIR (.ORG) to the new form of registry agreement used for all ICANN registry agreements <http://www.icann.org/registries/agreements.htm> entered during the past two years: e.g. .CAT, .JOBS, .MOBI, .NET², .TEL and .TRAVEL. Through these recent agreements ICANN has sought to strengthen its ability to fulfill its mission to ensure the stable and secure operation of the Internet's unique identifier systems, while reducing any unnecessary entanglement in the economic regulation of the competitive market for domain registration services.

As indicated in the announcement inviting public comment, a feature of the proposed new agreements was the proposed lifting of provisions imposing price caps on the .BIZ, .INFO, and .ORG registry operators. All ccTLDs and many gTLDs (e.g. .AERO, .CAT, .COOP, .JOBS, .MOBI, .MUSEUM, .TEL, and .TRAVEL) operate without any ICANN-mandated price controls. Concern about the lifting of price controls was the focus of the majority of the more than two-thousand messages³ submitted in response to the request for public comments.

A primary concern voiced within those comments opposing the lack of price controls was that renewal rates could become prohibitively expensive, forcing small businesses to face the choice of either paying exorbitant fees for the renewal of their domain names, or be forced to give them up due to lack of capital.

The majority of the comments (in number) posted in the comment forums were in opposition to the proposed agreements. The specific provisions and/or issues which were commonly objected to were (i) the possibility of discriminatory pricing (ii) the economic effects of variable pricing, (iii) the use of data traffic information for commercial purposes, (iv) presumptive renewal, and (v) the timing of the posting and proposed entry into these new agreements.

THE POSSIBILITY OF DISCRIMINATORY PRICING

One commonly raised concern with regard to the registries' ability to implement variable pricing is that the registries might apply such pricing in a discriminatory manner. For example, if the .org registry operator favored a certain political party or politician, then that registry could implement a policy of purposefully charging one political party or candidate a great deal more for its domain name than it charged the opposing party or candidate. This concern is not only limited to political party affiliations, but to any business or group which expresses views different than those supported by the registry¡¦s management.

THE POTENTIAL ECONOMIC EFFECTS OF VARIABLE PRICING

Related to the concern about potential discriminatory pricing was a general and widespread concern that without price controls (i) renewal rates could become prohibitively expensive, and (ii) the barrier to entry for small businesses could be significantly raised.

Possibility of Exorbitant Renewal Rates

The most common concern voiced on the forums was that registrants could be extorted by the registries when it came time for their domain names to be renewed. Commentators were concerned that domain registration services entail relatively high switching costs, and that due to this lock-in effect registries would be able to charge high renewal prices without fear of losing customers.

The specific concern is that after a business uses its best efforts to gain name recognition (in this case, domain name recognition), any success would create an incentive for the registries to charge a high renewal fee, as the business would then have a strong vested interest in keeping the domain name. In other words, businesses would be punished for their success by being charged high renewal fees. If the registrant would refuse to pay a higher renewal fee, the registry would then be able to sell the rights to the domain name to a competitor, who would gain all of the benefit of the original registrant¡¦s work.

There was some stated concern that increased renewal rates would also affect larger companies (e.g., Yahoo, Google, etc. could be charged millions to renew their .BIZ, .INFO or .ORG domain names), however the majority of the comments were focused on the potential risk incurred by small business who might arguably not be profitable enough to pay the value put on their domain names (which they themselves worked to advertise) by the registries when it came time to renew.

A minority of the comments on this topic did state their belief that there was some protection under the proposed agreements provided by the fact that the registries have to give six-months notice of any price increase, during which time the domain name owner could renew for ten years under the old prices. However, these comments, on the most part, went on to suggest that such protections were not adequate given that small business owners may not be able to afford to pay for such renewals all at once, and also because there was no protection at the expiration of ten years.

Views on Greater Barrier to Entry

While the majority of the concerns voiced were focused on the ability of the registries to raise renewal rates, many commentators also stated their objections to a registry being able to charge any amount for new domain names. Commentators worried that this would create an uneven playing field, where big, established corporations would be the only ones able to purchase lucrative domain names. Additionally, some worried that this would give the registries an incentive to engage in domain-tasting (whereby they gauge the popularity of yet unsold domain names based on traffic data to the unused sites, and then price them accordingly).

COMMERCIAL USE OF TRAFFIC DATA

Many commentators worried that there were inadequate protections placed on the use of traffic data by the registries. Specifically, the concerns were centered around the idea that the registries could use the traffic data for any commercial purpose, as long as no personal identifying information was released.

The most common concern expressed here is that this, when combined with the registrar¡¦s ability to implement variable pricing, would create the opportunity for registries to engage in domain-tasting, as described above. Additionally, the commentators in general express distrust of the registries and are concerned that the data will be used in ways that hamper competition and create a greater barrier to entry for small businesses.

PRESUMPTIVE RENEWAL

Some commentators also based their objections to the proposed agreements on the belief that the presumptive renewal provisions are too lenient. Specifically, the concern raised was that it would be difficult for ICANN to opt to not renew an agreement with a registry operator, thus making it more difficult to restrain the behavior of the registry operators.

Some commentators specifically objected to the fact that the registry could have breached its agreement with ICANN several times and yet still have the agreement be renewed as long as such breaches were fixed during the cure period provided.

PROCESS CONCERNS

Another reason many commentators put forth for their objection to the agreements was that they believed that ICANN had not made public sufficient information regarding the reasoning in support of some of the proposed provisions. These commentators believe that no decision should be made until such information has been provided. Some commentators also indicated that public comments should again be solicited after more background information and reasoning is provided, in order to ensure a thorough discussion of the issues.

Also, many commentators stated that the public comment period was too short, and that ICANN did not do enough to make the public aware of the existence of the proposed agreements and solicit or encourage comments. (As indicated in the note above, ICANN posted the proposed agreements for public information on 27 June 2006, and then opened a 30+ day public comment period on the agreements beginning on 28 July 2006.)

Commentators also suggested that these proposed agreements seemed to have been rushed, and that ICANN had not adequately explained why these agreements had been renegotiated when they were not due to expire for a year or more. A related concern expressed by some commentators was that the timing of the negotiations made it so that the recommendations reached by PDP 06 (policy development process 06) will not arrive soon enough to be incorporated into the agreements. These commentators suggested that ICANN wait for the PDP 06 policy recommendations to be made before it enters into any new agreements with the registries.

CONCLUSION

The above is intended to provide a brief summary of the most common concerns expressed by commentators regarding the proposed agreements. The complete archive of comments is available at <http://www.icann.org/announcements/announcement-2-28jul06.htm>.

¹The proposed agreements had already been posted on 27 June 2006 for public information <http://www.icann.org/announcements/announcement-1-27jun06.htm>.

²An amendment to the 1 July 2005 .NET agreement <http://www.icann.org/tlds/agreements/net/> was approved on 12 October 2005 that implemented a price cap of US$4.25 per registration-year subject to an increase of no more than 10% per year. Also the proposed new .COM registry agreement <http://www.icann.org/topics/verisign-settlement.htm> follows the new form of registry agreement and includes a price cap that can increase up to 7% in four out of six years

³Three separate comment forums received a combined total of 2689 separate messages from 28 July 2006 through 6 September 2006. At the close of the formal announced comment period a total of 2,195 messages had been received. A significant number of messages were cross-posted or copied to each of the three mailboxes. There were 1014 unique senders. The most prolific individual sender was Jeff Williams who submitted 32 comments, followed by George Kirikos with 24 comments.