Philip L. Sbarbaro
Deputy General Counsel
October 16, 2002
Joseph Sims, Esq.
Jones, Day, Reavis & Pogue
51 Louisiana Avenue NW
Washington, DC 20001-2113
Re: ICANN Resolution 02.100
I write to you, as outside counsel for the Internet Corporation for Assigned
Names and Numbers ("ICANN"), in response to Resolution 02.100,
passed by ICANN's Board of Directors on August 23, 2002, regarding the
revision of the .com and .net registry agreements to provide for a registry-based
wait-listing service (WLS). Although the Board has voted in favor of the
WLS service, as you are well aware, VeriSign respectfully disagrees with
ICANN's position that ICANN (1) has the authority to so regulate the business
affairs of any registry, and (2) has any legitimate basis for appending
"conditions" on to the service which substantially impair its
viability and economic success. Pursuant to the terms of the registry
agreements for .com and .net, VeriSign recognizes the need to add a WLS
price to Appendix G of those agreements, which is all that VeriSign originally
As you are aware, in an effort to move this new service to the marketplace,
we reluctantly have cooperated with a process established by ICANN which
we strongly oppose as inappropriate and ineffective. This process began
months before the formal presentation of our WLS proposal, including discussions
with ICANN's General Counsel and various members of the Internet community.
The process has continued through the last seven months of presentations,
comments, and Board meetings, but is no closer to the marketplace.
With the imposition of "conditions" on August 23, 2002, the
situation has become commercially impossible. We spent the next 40 days
trying to make these latest conditions work, simply in an effort to avoid
conflict and to move this endless process to an end. We then sent a draft
of this letter to you on October 1, 2002. In response to that draft, you
replied two weeks later in an e-mail to the effect that "it was unlikely
to be possible to focus on this until after Shanghai." The Shanghai
meeting of ICANN, however, does not occur until October 27-31, 2002, another
two weeks away. The total delay, from conditions to Shanghai meeting,
adds another 66 days to this unfortunate and unnecessary process. The
six "conditions" imposed by the Board severely delay and nearly
ruin the proposed service and we formally request that the Board reconsider
three of them at the Shanghai meeting.
Taking the conditions in sequence as "resolved," we offer the
1. Six-month delay. Under condition "1", ICANN would require
VGRS to delay implementation of the WLS for a six-month period. That
six-month period, however, would not even begin to run until the redemption
grace period (RGP) has been implemented for .com and .net. We can find
no technical or business justification for imposing this condition.
VGRS publicly modified its WLS proposal to include an interim RGP for
WLS subscriptions, thereby protecting current registrants from problems
that might occur with regard to inadvertent deletions in the same way
that the RGP would do once it is in place. To delay implementation of
a new service for a six-month period for the entire market when the
benefits of the RGP are fully realized with the interim solution has
no technical basis, defies common business sense and harms the consumer
through needless delay of the service. The effect of the delay would
mean that it would take 15 months from the time VGRS sent the formal
request to ICANN until the service could be introduced and over 21 months
from the time discussions started in ICANN forums about such a service;
that is clearly unrelated to any technical coordination function, and
is neither commercially reasonable nor responsive to the marketplace.
2. Current SnapNames subscribers. ICANN has chosen not to acknowledge
the contractual rights of current SnapNames subscribers. Because liability
may exist for interference with present contractual relations, we earlier
suggested at least two alternatives (grand-fathering and exclusion).
In the spirit of working cooperatively with ICANN, however, we have
approached our partner SnapNames and together we are prepared to accept
this liability in order to bring this service to the marketplace.
3. Registrar blackout. We understand condition "3" to preclude
a registrar from accepting a WLS subscription at any time after "60
days before . . . deletion." This blackout period only affects
the registrar sponsoring the current registration and would clearly
disadvantage the customers of the blacked out registrar. Further, it
would be impossible for the registry (as contrasted with registrars)
to police this condition, given, (1) that the registry's expiration
dates may or may not correspond with the registrar's expiration dates
and (2) that varying grace periods among registrars exist which also
do not directly correlate to the expiration dates. Correspondingly,
from the registrar's level, it would be impossible for the blacked out
registrar to enforce this condition. This condition is virtually unworkable
in a real-world environment and also highly game-able. Here are some
a. Because it is not possible to predict when a registrant will renew
a domain name registration, the outcome is only obvious when observed.
Registrars would have to predict if and when a domain name will be
deleted in order to comply, or black out all domain name registrations
within 60 days of any possible "delete event."
b. There are also cases that do not involve the domain names' anniversary
date. For example, suppose a domain name has been registered for 5
years. In year two, a UDRP case or court order causes the current
registrant to surrender and to delete the domain name. What would
happen if the rightful trademark owner had taken a WLS subscription
from the same registrar days before this deletion occurred, knowing
the domain name was going to be deleted? Would the trademark owner-WLS
subscriber lose it to someone else? This creates a paradox that can
only be solved by blacking out all domain names from WLS subscription,
because it is impossible to predict when a deletion will occur.
c. If, on the other hand, registrars delayed their deletion commands
regardless of customer actions, they could get around the blackout
condition and be able to sell WLS subscriptions at any time, so long
as they were willing to possibly pay the $6 renewal. In this way,
the system could easily be gamed.
d. In addition, companies with multiple accreditations could easily
pass domain names from one accredited registrar to another. Would
this blackout requirement be expanded to prohibit this? If so, what
about companies with partial ownership in other registrars? Regardless,
registrars will work together to game the system.
e. Also, would it be correct to assume that every time a WLS subscription
is transferred, the registrar would have to check these conditions
again? This would create additional work and be almost impossible
to explain to customers.
f. Finally, but most importantly, this would create an extremely
poor user experience. Registrars will be faced with having to explain
to customers why a particular WLS is not available with them, but
is available at their competitor's site. The more domain name registrations
a registrar has, the worse the problem.
4. Registrant notification. Today, domain names are available for immediate
registration by third parties upon deletion, without any transparency
or equal access to that registration capability, so it is unclear why
the Board has decided it is appropriate to disclose the existence of
a WLS subscription to the current registrant. Where speculators are
the current registrants and IP owners have the WLS subscription, such
notice will eliminate the value of the WLS subscription. Legitimate
consumers, therefore, will have alerted the current registrant to simply
renew his or her registration and then seek to sell it, now knowing
a market exists. Further, inaccuracy of the current registrant's contact
information may make such notice ineffective. In addition, it is unclear
who (the registry, the registrar that accepted the WLS subscription,
or the registrar sponsoring the existing registration) should be required
to assume the obligation, liability and cost of sending such notices.
Clearly, no mechanism exists for enforcement. From a customer perspective,
it is likely that most registrants are unaware of the wait-listing concept,
and therefore will be confused by the notification. Currently, there
are people waiting to register domain names at the moment of expiration
and there is therefore no reason to impose this extra condition only
5. Trial period. We suggested a one-year trial period with the thought
that, subject to market acceptance of the service, the WLS would be
allowed to continue unless it proves to harm the stability of the Internet.
6. Evaluation program. As we suggested in our proposal, we believe
that an evaluation of the market success of the WLS offering is appropriate.
We would conduct such a review without the "condition" being
imposed by ICANN's Board.
The problems noted in certain of the conditions set forth above demonstrate
the inappropriateness of the process used by ICANN toward the "authorization"
and introduction of a new service and ICANN's involvement of itself in
the business affairs of registries and registrars. The Department of Commerce
(DOC), in its Statement Regarding Extension of the MOU with ICANN, issued
on September 20, 2002, has stressed that:
ICANN should give special consideration to improvements in its decision
making processes that would expedite the introduction of new products
and services for the benefit of the global Internet community, taking
into account the limited, technically-oriented mission of ICANN as set
forth in its mission statement.
We suggest that the imposition of the Board's purported "conditions"
is in conflict with the DOC's position. The conditions have little to
do with expediting the introduction of new services for the benefit of
the global Internet community, while taking into account the limited,
technically oriented mission of ICANN.
In conclusion, ICANN has imposed three commercially impractical "conditions":
Six-month delay: A delay of six months beyond the implementation
of the Redemption Grace Period (RGP) adds absolutely no value to the proposed
WLS nor does it limit any risks for current registrants because VeriSign
already committed to implement an interim RGP with WLS;
Registrar blackout: The blackout of the existing registrar from
submitting WLS subscriptions for its customers 60 days prior to domain
name deletion is unmanageable, unenforceable, subject to gaming and results
in a very poor customer experience; and
Registrant notification: The requirement to notify existing registrants
that a WLS subscription has been placed on a current domain name registration
works to the disadvantage of trademark owners and consumers and plays
into the hand of speculators.
We again request modification to Appendix G, as requested in March, to
add the WLS at an initial service offering price of $24 for the trial
period. As you know, our revised proposal, presented on March 20, 2002,
reduced the wholesale price between VeriSign and registrars to $35. Since
that time, registrars have debated the wholesale price of the proposed
service among themselves at various meetings and with ICANN's management.
We acceded to those requests and have reduced the initial service offering
price to $24 for the trial period. Again, as you know, a similar but inferior
service is currently offered by SnapNames at the retail level for $69.
As the Department of Commerce has stressed, "
be set by a competitive marketplace." ICANN has neither the authority
nor the expertise to replace the marketplace. As the Department of Commerce
has stated, "ICANN should not be 'the government of the Internet.'
. . . [M]arket forces should play a greater role and (that)
ICANN's involvement in policy-making in this area should be correspondingly
narrow." At this point, we suggest that the marketplace should be
allowed to perform its own functions. Let's see how the service performs
during the trial period.
We have worked diligently with members of the Internet community and
ICANN to address all reasonable concerns related to the WLS. In the spirit
of cooperation, we are further prepared to accommodate some of the added
conditions which ICANN has suggested. We respectfully ask that the remaining
non-technical conditions, which are commercially unworkable, be reconsidered
so that the service may be brought to the marketplace. Our sector of the
economy and the domain name registration business, in particular, could
Philip L. Sbarbaro
Deputy General Counsel
cc: S. Sclavos
J. Ulam, Esq.
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