ICANN, VeriSign Unveil Reworked .Com Proposal

The draft would have VeriSign pay ICANN a fixed registry level fee starting at $6 million a year and rising over 2 years to about $12 million -- eliminating a burden registrars. In earlier proposals, ICANN fees of 45 cents and then 50 cents would have been passed through to registrars. This likely would reduce ICANN income from fees compared with the previous per-transaction plan, but ICANN could meet revenue targets by combining the increased fixed fee and continuing a variable registrar level fee of 25 cents a transaction, the document said.

VeriSign’s discretion in raising prices would shrink under the new proposal, in response to criticism that a 7% annual price cap would be too high. Under the proposal, VeriSign could impose a fee increase in only 4 of the 6 years of the contract. Additional raises would have to be based on unforeseen expenses from attacks or threats against DNS security or stability, officials said. The Coalition for ICANN Transparency (CFIT) and others said a 7% cap would impose costs on consumers beyond what the market demands. The period during which ICANN couldn’t change the process for consideration of proposed registry services would fall from 3 years to 2 years. Other registry agreements would be renegotiated to provide a level playing field, according to the document.

VeriSign’s “presumptive renewal” right remains despite vehement opposition. ICANN Gen. Counsel John Jeffrey told us “there wouldn’t be a settlement agreement without it.” That was “never something that was negotiable for VeriSign,” he said. The company’s ability to increase prices also would carry into subsequent agreements. CFIT claimed the renewal language essentially gave VeriSign permanent control over the .com registry. But the new proposal says that nothing prevents competition regulators, like DoJ, from reviewing price hikes any time, including in advance of future renewals.

CFIT moved to make its antitrust claims heard, including by meeting with DoJ officials in Jan. and making a Dec. Freedom of Information Act (FOIA) request for contract materials. The group also asked the U.S. Dist. Court, San Jose to issue a temporary restraining order (TRO) against ICANN. The court rejected the TRO but said it would consider a preliminary injunction. A hearing set Feb. 10 (WID Dec 1 p5) was taken off the calendar, but the suit is active and discovery continues, Jeffrey said.

The proposal’s “traffic data” portion was reworked so it better guards personal data, ensure nondiscriminatory access and make clear that the language doesn’t constitute consent for any SiteFinder-like service. But the deal wouldn’t keep VeriSign from commercializing the data collected or collecting traffic data to pinpoint site failures, characterize attacks and misconfigurations, identify compromised networks and hosts and promote domain name sales. The draft sidesteps a VeriSign obligation to put $200 million into Internet infrastructure that was stricken from the first draft. The new language says the firm has provided “confidential reports to ICANN describing substantial investments in infrastructure and development.”

The proposal includes lengthy performance specifications absent from prior .com deals relating to end-user latency and DNS name server availability. Critics said the old proposal didn’t have service level agreement (SLA) type specifications for .com common in other types of Top Level Domains. Another issue raised in talks concerned elimination of a VeriSign obligation to operate a centralized Whois service, if ICANN demands it. The new version reprises that language but says its effectiveness hinges on 3rd-party cooperation. And the Root Server Management Transition Agreement has been modified to clarify the Internet Architecture Board’s continuing role.

The proposal marks both camps’ best efforts to resolve disputes that have festered for years, a VeriSign spokesman said, voicing hope the agreement would be approved swiftly so ICANN, VeriSign and the Internet community “can focus on strengthening the Internet infrastructure and expanding the Internet globally.” The board will comment on the proposal after collecting public input 21 days. Negotiating time is shrinking as the court date for the ICANN-VeriSign dispute nears, Jeffrey said. The trial is set for June in Cal. Superior Court.

The board has set a private teleconference for early March at which some ICANN watchers expect a decision on the new deal. Suspicion that the board would consider voting on “such an important and scrutinized deal in private on the phone” when 3 weeks later they have a public meeting in Wellington, New Zealand, underscores the operation’s covertness, CFIT’s John Berard told us: “Where’s the transparency in this organization? It never seems to have a chance to exist.”

The group, which VeriSign has called a front for Canada’s Momentous.ca, owner of registrar Pool.com, pooh- poohed the new draft. “I'll give ICANN and VeriSign credit for admitting that they've heard the complaints of the community but I'll give them no credit for making progress on the key issues,” Berard said. The main reasons to oppose the deal persist, he said. There’s no justification for restricting VeriSign to 4 years of potential price caps, and presumptive renewal language still exists, he said.

Network Solutions, once owned by VeriSign, also panned the revised proposal. Vp Jonathon Nevett called the document “insufficient to address core problems,” citing complaints similar to CFIT’s. Although the company said it welcomes changes that would keep ICANN registry fees from being passed directly to registrars, there’s not enough relief for the presumptive renewal provision and registration fee increases that wouldn’t have to be cost-based in most years, he said. “Allowing VeriSign to raise registry fees for the .com domain by 7% in 4 out of 6 years without cost-justification, and without any reasonable opportunity ever for the contract to be rebid elsewhere, would put the Internet community at risk by eliminating competition for the .com registry,” he said.

Tucows CEO Elliott Noss is “cautiously optimistic,” he said. He said he is glad to see the registry taking on “a more appropriate level of funding directly” but said he hast to study the sections on price hikes and rights to metadata before he'll be comfortable with the deal. “This does appear to be a good-faith effort,” he said.