15 January 2003
By E-mail and Postal Mail
Mr. Chuck Gomes
Vice President, Internet Relations
and Compliance, Registry
21355 Ridgetop Circle
Dulles, Virginia 20166 USA
Dear Mr. Gomes:
On 25 January 2003, VeriSign is scheduled to deploy a new release of
SRS software, which will allow implementation of two new Registry Services:
- Redemption Grace Period, phase 1
These new Registry Services will involve a charge of fees to registrars,
and are therefore subject to approval under the .com and .net Registry
Agreements, including Appendix G to those agreements.
Although work is underway on various contractual amendments to reflect
the introduction of these services, it appears that those amendments will
not be formally approved by the ICANN Board until its February 2003 meeting.
To allow these services to be offered to registrars before full Board
consideration, it is appropriate to temporarily authorize VeriSign to
charge for these services as described below. Accordingly, ICANN is at
this time agreeing under Appendix G, third sentence, that VeriSign may
charge fees as described below, subject to revision if the Board ultimately
approves different fee arrangements. Please note that these arrangements
are upper limitations on fees and that VeriSign, by complying with notice
and equivalent-access provisions, has discretion to charge lower fees,
including not charging for these services.
A. Redemption Grace Period, Phase 1. VeriSign is temporarily authorized
to charge for each restore command completed on behalf of a registrar
As Registry Operator for .com and .net, VeriSign may charge registrars
a maximum price of US$ 85.00 or US$ 40.00 for each Registered
Name that is restored pursuant to the Redemption Grace Period Policy as
described in the descriptions that we have exchanged (text to be finalized
in the near future). The applicable price depends on the cumulative total
of Registered Names restored:
|Until the end of the second calendar month after the
calendar month in which the cumulative total of Registered Names (for
all TLDs as to which Registry Operator operates the registry) restored
pursuant to the Redemption Grace Period Policy reaches 2000
Registry Operator will waive the fee for restoring any Registered Name
that was deleted, contrary to the wishes of the Registered Name Holder,
as the result of a mistake of the Registry Operator.
Note: this "Restore Fee" fee for restoring deleted names is
separate from, and in addition to, any Renewal Fees that may be charged.
The above maximums are based on a cost-based analysis, taking into consideration
of the following factors:
a. VeriSign has chosen to implement the service in a manner allowing
restore operations to be accomplished by either (at registrar's option)
an RRP command, the CSR tool, or the Registrar tool. VeriSign has submitted
an estimate that the one-time cost of implementing these alternatives
will be approximately US$ 150,000. Thus, most of the initial investment
would be recovered by charges for the first 2,000 names at the higher
US$ 85 price (see (c) below).
b. VeriSign has estimated the recurring customer service marginal support
cost for this service to be US$ 16.50 per restore. (As noted below,
a review of the specification shows that there is a high degree of uncertainty
in this estimate as well, with the distinct likelihood that the average
recurring cost of handling restore operations could be somewhat higher.
Thus, at least until more experience is obtained, it is reasonable to
charge a fee that is considerably higher than this marginal cost.)
c. The level of demand for the restore command is highly speculative.
Estimates of demand levels range from as low as a few dozen restores
per week to many times that number. It is feasible and reasonable that
in the initial stages VeriSign be permitted to charge a relatively high
fee that allows the one-time cost to be largely recovered over the first
2000 restores. The above maximum pricing accomplishes this goal.
d. This service is being implemented at ICANN's initiative. Speedy
implementation of this request requires that the pricing be sufficiently
attractive so that Registry Operators will voluntarily accept it. VeriSign
has indicated that it is willing to accept the above two-tier maximum
pricing structure because that structure requires it to assume less
risk of not recovering its one-time implementation cost due to low demand.
e. By establishing a two-tier maximum pricing structure (and partly
mitigating VeriSign's risk of not recovering its one-time cost), a lower
ultimate price is achieved, assuming the restore command is used over
2000 times in .com and .net.
f. It is desirable for maximum prices for different Registry Operators
to be comparable. It is likely that Registry Operators for smaller TLDs
will adopt a more manual approach (not having the economies of scale
inherent in .com and .net), meaning that they will likely require an
ongoing price that defrays the cost of such an approach.
g. Customers with the need to restore their registrations will likely
find the Redemption Grace Period at the proposed maximum price levels
to provide extremely good value for what they receive. The loss of a
web address that often follows the loss of a Registered Name can be
catastrophic for many business and highly inconvenient for individuals.
Many of those seeking to reclaim an inadvertently deleted Registered
Names are now required to pay several thousand dollars to re-acquire
the name, or incur the high costs of moving a website often with potentially
considerable loss of business if they are unable to re-acquire the name.
The proposed maximum costs are roughly similar to analogous types of
charges, such as re-connection charges for telephone services (at least
in the United States.).
h. It is important that Registry Operators view this service as one
for which they are fully compensated, and which it is worth their while
to implement efficiently. It is likely, even with automated approaches,
that this service will require manual handling, often on an expedited
or emergency basis. Indeed, it seems likely that Registry Operators
will experience recurring costs in addition to the customer service
support costs estimated in item (b) above. To instill confidence in
the registration system, Registry Operators should deliver this service
in an environment where they are adequately compensated to cover unexpected
costs that incidentally arise.
i. It should be noted that there will be no charges for restoring Registered
Names that were deleted, contrary to the wishes of the Registered Name
Holder, as the result of mistakes of the Registry Operator. Although
the economic arrangements between registrars and their customers are
matters decided between those parties, it is likely that registrars
will take responsibility for the cost of restoring Registered Names
deleted through registrar error.
B. ConsoliDate. VeriSign is temporarily authorized to charge for
the ConsoliDate service on the basis it proposes, namely: (a) a maximum
fixed service fee of US$ 2.00 per registration that undergoes extension
of its expiration under ConsoliDate plus (b) a maximum variable fee of
US$ 1.00 per month of extension. (Thus, a registration extended forward
into the third subsequent month could be charged as much as US$ 5.00.)
The above maximums are temporarily authorized in view of the fact that
maximum annual registration fees will remain at US$ 6.00. To the extent
that a ConsoliDate extension is offered at a price above US$ 6.00,
customers are free to choose simply to extend their registrations for
a full year for the standard US$ 6.00 fee. Thus, market mechanisms
provide effective protections for consumers.
C. Duration of Authorization. As noted above, the above authorizations
are subject to revision by the ICANN Board upon its full consideration
of these matters, which is expected to occur in February 2003.
Vice President and General Counsel
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