General Counsel's Analysis of VGRS's Request
for Amendment to Registry Agreement
General Counsel's Analysis of VeriSign Global Registry Services' Request for Amendment to Registry Agreement
On 21 March 2002, I received the following request from VeriSign Global Registry Services (VGRS), the division of VeriSign, Inc., that operates the registry for the .com and .net top-level domains:
This memorandum summarizes my initial analysis of VGRS's request for an amendment to Appendix G to the .com and .net registry agreements and recommends a process for considering the request.
Background: The VGRS Wait Listing Service Proposal
VGRS's request grows out of a proposal for a Wait Listing Service (WLS) that it sent to the DNSO Registrars Constituency on 30 December 2001. After comments from that constituency and others, VGRS revised its proposal on 28 January. After additional discussions with registrars and others, VGRS revised the proposal a second time and submitted it with the 21 March 2002 request for amendment to Appendix G.
The proposed WLS would be offered at the registry level by VeriSign using technology supplied by SnapNames, a company that currently has arrangements with registrars to provide a roughly similar service at the registrar level. In summary, the WLS currently proposed by VGRS would operate as follows:
VGRS has proposed to implement the WLS for a one-year trial. At the end of the year, ICANN and VGRS would evaluate whether the service should be continued. In the event the WLS is not continued, reservations extending beyond the trial would be honored.
As noted above, several registrars are providing wait-listing services of various kinds at the registrar level. Some of these services are being provided by arrangements between registrars and SnapNames; others are being provided by competitive offerings. In essence, under all of these services the registrars watch for a desired name to be deleted and immediately seek to register it. With respect to registrars currently offering this type of service through SnapNames' "SnapBack" service, VGRS proposes a special transitional arrangement:
VeriSign GRS Responses to Domain Name Wait Listing Service Questions (15 Feb. 2001), response 18.
VGRS has not proposed to exclude names presently involved in non-SnapNames services from the WLS.
VGRS first made its WLS proposal by sending it to the Registrar Constituency. The reaction from the members of the Registrar Constituency was overwhelmingly negative. Although not initially consulted by VGRS, on 18 January 2002 the Intellectual Property Constituency sent VGRS various questions about the proposal. There also was some discussion on the DNSO general assembly mailing list.
On 28 January 2002, VGRS issued a revised WLS proposal. Significant revised features included:
The 28 January revised proposal also included procedural guidelines and a schedule for continued discussion of the proposal, including a question-and-answer period. VGRS received many questions from various persons and groups, and on 15 February VGRS posted responses.
Discussion continued, primarily within the Registrars Constituency and on the general assembly mailing list. Various registrars and others posted position papers in connection with the Registrars Constituency's consideration of its position on the proposal. On 10 March 2002, the Registrars Constituency adopted a resolution opposing implementation of the WLS and urging ICANN to withhold permission for its implementation. A minority of the registrars submitted a statement supporting implementation of WLS (18 registrars were listed as signatories of this statement, but the support of some of these registrars has been disputed).
At the Accra meeting, the DNSO General Assembly and Names Council Transfer Task Force conducted a meeting on a variety of issues concerning deletes, including the WLS. The Names Council Transfer Task Force is scheduled to submit its final report for public comment in May, so that the Names Council can provide a final report to the Board in June.
New Registry Services Under uTLD Registry Agreements
VGRS has requested that Appendix G to the .com and .net Registry Agreements be amended. That appendix specifies the maximum price that VGRS may charge for "Registry Services." Registry Services are defined as those that are "provided as an integral part of the operation of the Registry TLD". In essence, "Registry Services" are those that a registry operator is enabled to provide on a sole-source basis by virtue of its appointment as such by ICANN, rather than services that are provided on a freely competitive basis. The proposed WLS is a registry service because, unlike the wait-listing services provided competitively by registrars, it is implemented by bypassing the normal return of deleted names to the available pool and by instead assigning them to the registrar and customer holding the reservation. In this way, the proposed WLS would become integrated into the operation of the .com and .net registries.
Special Role of U.S. Commerce Department in the VeriSign Agreements
Under Amendment 3 to its Memorandum of Understanding with the U.S. Department of Commerce, ICANN must obtain approval of changes to its registry agreements with VeriSign:
(This approval requirement does not apply to ICANN's agreements with the new TLDs.)
Considerations in Evaluating Proposed New Registry Services
ICANN has not yet developed a well-defined procedure for considering requests by registry operators to amend Appendix G to allow charging for an additional registry service. Because action on VGRS's proposal may serve as a model for future actions, it is important to carefully consider the process that should be followed.
On one hand, the registry operator is in a sole-source position in providing registry services; this position carries with it the potential for various types of harm to the legitimate interests of others.
On the other hand, requiring a consensus-development process for every new registry service could stifle innovation. Registry operators should be encouraged to introduce new services to the marketplace where no legitimate interests of others are being materially harmed.
To accommodate these countervailing considerations, in considering requests to amend a registry agreement to authorize charging for additional registry services, my judgment is that a preliminary "quick-look" evaluation should be made to determine whether it is plausible that the legitimate interests of others could be harmed by the proposed amendment. If no legitimate interest appears in danger of being harmed, then a streamlined procedure for approval should be followed. If, however, there are specific reasons to conclude that the legitimate interests of others are likely to be harmed, then ICANN's existing obligation to seek consensus whenever possible before acting suggests that it should invoke the formal consensus development mechanisms that currently exist prior to any decision by the ICANN Board.
Recommended Process for Consideration
In the case of VGRS's request for an amendment allowing charging for WLS on a one-year trial basis, several concerns have been raised by the Registrar Constituency and others. Some of these concerns are:
Under these circumstances, and given the existing conceptual approach of ICANN to seek consensus where possible, it is my judgment that the Board should not seek to decide how to deal with this request without invoking the formal consensus development processes currently established within ICANN.
This judgment is reinforced by the Registrars Constituency vote opposing implementation of WLS and the fact that the Names Council Transfer Task Force is currently considering the WLS issue, with a report to the Board expected in June.
Thus, I recommend that the Board establish the following procedure for obtaining public comment to illuminate its consideration of the VGRS WLS proposal:
The Board could then act on the merits of the WLS proposal at Bucharest (or after, if additional issues requiring more time arise). If ultimately the Board's decision is that the amendment should be made, then a suitable request can be made to the U.S. Department of Commerce for approval.
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