FC: Snapnames.com: ICANN must approve "wait list" for expired domains

From: Declan McCullagh (declanat_private)
Date: Tue Jun 18 2002 - 07:33:28 PDT

  • Next message: Declan McCullagh: "FC: Euroconf: Does technology help or hinder freedom?"

    From: Cameron Powell <CameronPat_private>
    To: "'declanat_private'" <declanat_private>
    Cc: Mason Cole <MasonCat_private>
    Subject: Posting Requested
    Date: Mon, 17 Jun 2002 16:33:14 -0700
    MIME-Version: 1.0
    Dear Declan,
    Would it be possible for you to post on your Politech list a document we
    have written regarding ICANN's role in approving new registry services?  It
    is topical with respect to the WLS, but it is also broader than that.  I'm
    not sure whether you prefer the document embedded in an email or as an
    attachment, so I'll do both.
    Please let me know if you need anything else.
      <<Part I  ICANN Standard of Review  6.17.02.doc>>
    Cameron Powell
    VP of Business Development and General Counsel
    115 NW First Avenue
    Suite 300
    Portland, OR  97209
    (503) 219-9990 x229    (503) 502-5030 cell    (503) 274-9749 fax
    The ICANN Board Should Promptly Approve the WLS Proposal
    Since the early fall of 2001, VeriSign and ICANN have been participating in
    discussions about deleted names and a "parallel registry" -- the original
    name of the WLS concept -- along with the larger ICANN community.  These
    first discussions originated at ICANN meetings in Montevideo on September 9,
    2001.  For nearly two months afterward, in September and October,
    registrars, resellers, speculators, and attorneys amassed hundreds of
    e-mails in an intense online debate, which was monitored by ICANN staff.
    Afterwards, VeriSign again communicated to registrars that it would be
    willing to consider offering the "parallel registry" technology while
    continuing to offer the three-pool system that had solved the technical, if
    not equitable, aspects of customer access to deleted names.  At the November
    ICANN meetings in Marina del Rey, the registrars asked VeriSign for a more
    detailed proposal.  The detailed proposal was submitted in late December
    2001 after review and suggestions by ICANN staff (for example, even at this
    early date, ICANN negotiated with VeriSign the 12-month trial period, and
    insisted on omission of .ORG from the proposal).  That proposal for the
    first time termed the technology the Wait-Listing Service (WLS).
    Based on a second round of discussions during January, VeriSign, with
    ICANN's input, distributed a revised WLS proposal to stakeholders in the
    DNSO on January 28, 2002.  That second proposal included specific procedures
    and a timeline for a third round of community input.  After the ensuing
    third round of discussions during February and March, and after the Names
    Council and the General Assembly meetings in Accra in March 2002, VeriSign
    requested that ICANN amend Appendix G to VeriSign's contract to add a price
    for a new service that VeriSign, using SnapNames-developed and -provided
    technology, would offer to the marketplace.  ICANN's staff then requested
    still a fourth round of public comment.
    The service, called the "Wait-Listing Service," will allow subscribers (who
    are waiting for a particular existing domain name registration to expire) an
    equal opportunity to buy through a registrar a subscription to be first in
    line for that particular name.  Because the WLS will involve making a record
    that will be consulted by the registry in deciding who may be the next
    registrant of an expired name, it is certain to be effective, fair, and
    transparent.  By contrast, registrar-offered services today can only "ping"
    the registry database continually and inefficiently (up to 500,000 times per
    name) to find out whether a particular name is available, and most do so
    only on behalf of a handful of customers.  And a registrar on its own can
    provide no guarantee that a desired name will actually go to someone paying
    for its service.
    We know the WLS will be good for registrants, because it will provide
    certainty and will save registrants time, effort, cost, and anxiety.  But
    that's not the point of this paper.  (We discuss the merits of the WLS in a
    companion paper prepared for the Board.)  We are submitting this paper to
    explain why the Board should carefully limit the scope of its review of the
    ICANN's Review of a New Registry Service is Narrowly Limited
    Based on our review of the agreements ICANN has with registries, ICANN has
    three questions to ask in connection with new services to be offered by
    registries:  effect on interoperability; whether there is an avoidance of
    the price cap on basic registration services; and whether a consensus policy
    exists prohibiting the new service.
    WLS Raises No Operational Issues.  To make sure that the registration system
    remains stable and interoperable, ICANN has the power to approve changes to
    the protocols that allow registrars' and registries' machines to talk to
    each other (e.g., .net Registry Agreement, Section 3.2).  There has been no
    suggestion that WLS will have any adverse effect on interoperability, and
    indeed it will not, so interoperability is not an issue here.
    WLS Cannot Be An Evasion of The Price Cap for Basic Registration Services.
    To make sure that registrants who have made an initial investment in a
    domain name won't be "locked-in" to paying high prices later for mandatory
    services that are inextricably intertwined with their registrations, ICANN
    is permitted to make sure that the registry may not charge an unreasonably
    high price for a new mandatory service in order to avoid the protections
    provided by the contractual price cap on basic registration services.
    (e.g., .com Registry Agreement, Appendix G and Section 22(B)).  This price
    approval mechanism was intended to avoid, for example, a registry selling
    Yahoo! the domain name yahoo.com for $35 in 1995, and then charging a
    "hold-up" price on renewal of that name in 2003.
    In the case of WLS, which is both reasonably- and market-priced and
    optional, concerns about the "lock-in" effect caused by fees charged for
    mandatory services are non-issues as well.
    WLS is not a mandatory service.  No registrant has to buy a subscription to
    WLS.  To protect their existing registrations, registrants merely have to
    remember to renew their names on time, or to continue to purchase multi-year
    registrations.  Registrars properly bear the burden of providing ample
    notice to their customers of the need to renew; indeed, only registrars (not
    the registry which would be offering WLS) have the customer's contact
    information, and registrars have every financial incentive to use it.  (And
    if they do not, the existence of the WLS will not change the status quo
    today, where someone other than the original owner will still get the name
    -- albeit through back-room, non-transparent arrangements with registrars
    for privileged VGRS access.)
    WLS is an optional service for would-be registrants who don't know (and
    don't have the time or want to know) the timing of every batch-delete file,
    and who don't want to have to check a name's availability every day or even
    every few hours, but who do want the convenience of knowing they will be
    first in line for a name registration.  These potential registrants want to
    know that if that particular name becomes available (as up to 800,000 have
    per month), it will be reliably theirs.  Because WLS is not a mandatory
    service (and is offered at a price reasonably related to its value), there
    will be no end-run around the protections provided by the basic registration
    services price cap.
    No Consensus Policy Exists Prohibiting the WLS.  ICANN may consider whether
    a new service is prohibited by an existing (and binding) consensus policy.
    (e.g., .com Registry Agreement, Section II(3)(A)(ii)).  With regard to the
    WLS, there is no such policy.
    While some have suggested that ICANN's decision on the requested amendment
    should itself be subject to the "consensus process," the consensus process
    does not apply to this type of decision.  The consensus policy clause in the
    contracts that registries have signed with ICANN concerns mandatory policies
    that (a) all registries must follow and that (b) deal with generally
    applicable future rules -- not with a question whether a particular new
    service may be priced at a certain level by a particular registry.  The
    whole purpose of the consensus policy process outlined in these registry
    agreements was to make clear that registries are free to innovate unless and
    until a consensus policy is created to prohibit some particular practice -
    not, as has been stated, that a registry requires a consensus in order to
    Moreover, because there is no Independent Review Panel, as required for
    consensus policymaking, registries are not even contractually bound to
    follow consensus policies arising out of such non-compliant consensus
    processes.  (.com Registry Agreement, Section I(1)(F).)  In any event, there
    is clearly no consensus here that services like WLS may not be offered by
    ICANN's Review Is Limited to Considering Whether the Proposed Price for the
    WLS Is Unreasonable.  ICANN's obligation under its agreements with
    registries is to consider only questions bearing on the reasonableness of
    the proposed price.  ICANN is not entitled, under these contracts, to
    consider whether or not it (or possible competitors) considers the service
    to be valuable or desirable -- that is for the market to decide.  Nor does
    ICANN have any role in deciding questions of legal or economic policy,
    market demand or innovation.  Indeed, ICANN is not allowed to disapprove any
    new registry services (even "mandatory services") that are provided for
    free.  (The contract provides only that a registry may not charge a price
    exceeding one set forth in Appendix G.)  The fact that ICANN cannot
    disapprove free services demonstrates that the purpose of the review sought
    here is solely to prevent unreasonable prices, and that ICANN may not
    withhold approval for any ulterior or extraneous purposes.  Of course, some
    Board members have indicated in the past that they should have no role at
    all in price-setting, including because no other private company has ever
    attempted to exercise such power in an industry, and of course such Board
    members may elect to apply a more deferential standard, including the
    traditional standard of permitting the market to set prices.
    The Proposed Price for the WLS Is Reasonable.  Although there might
    theoretically be cases where a price being charged for a new registry
    service is so out of line with the value of that new service that ICANN
    should disapprove the price, that is not the case here.  WLS is reasonably
    priced in relationship to its value.  At a wholesale price of $24-$28
    (following a planned rebate to registrars from VeriSign), WLS will clearly
    provide benefits, for those who choose to use it, that far exceed the
    proposed cost.
    For higher prices, registrars are currently offering to a few exclusive
    customers their own services to access the registry for deleting names, and
    those services are inescapably inferior.  As just a few examples, there is
    an American registrar who charges ten speculators each $2500 per month for
    preferential access to VGRS, plus registration fees; a Russian registrar and
    partner who charge $669 for enhanced-access "membership," plus $100
    registration fees; and a Korean registrar who charges $237 per name
    registered through privileged access -- all of these charges far exceed the
    proposed price for WLS, but the services provided in exchange for these
    prices are far less effective and reliable than the WLS, in addition to
    being only selectively available.  ("Part II:  The Merits of the WLS" sets
    forth pricing information in even greater detail at around page 17.)
    ICANN Is Required To Foster Competition and Innovation, Not Prevent It.
    It is not clear that ICANN has contractual or other authority (absent an
    existing and properly documented consensus policy, which does not exist
    here) to prevent new services from being offered by registries; its only
    authority relates to adding the price of those services to the registry
    agreement(s).  ICANN is required by its bylaws and contracts to foster
    competition, not to favor or disfavor particular competitors or services.
    (See, e.g., .com Registry Agreement, Section II(4)).  Indeed, denying the
    proposed amendment to Appendix G on the basis of considerations advanced by
    competitors (who make up the bulk of the very vocal minority critical of
    WLS) who are arguing for prohibition of a new service would raise very
    serious antitrust issues, violate the implied duty of good faith and fair
    dealing that accompanies every contract, and raise other questions regarding
    ICANN's authority and legitimacy.
    In contrast, carefully limiting the Board's actions in compliance with the
    contractual interpretation set forth above would avoid such questions.  And,
    of course, contracts should be interpreted so as to avoid the implication
    that the parties agreed to any unlawful course of action.
    Thus, any decision by the Board to prevent introduction of WLS -- whether
    based on a claimed consensus or otherwise -- would raise substantial legal
    questions.  ICANN should not put itself in the position of protecting
    particular competing parties from new competition.  The antitrust laws
    protect only competition, not individual competitors.
    WLS will be a lawful and voluntary new service.  The market should and will
    decide whether WLS is a valuable service.  Because the proposed price for
    WLS is demonstrably reasonable, and no contrary evidence exists or could be
    supplied, ICANN should not, consistently with its contracts and authorized
    role, decline to approve the proposed amendment on the basis of the
    circumstances present in this case.
    Endnotes:  Verbatim Excerpts from the .net and .com Registry Agreements
    i  3.2 Functional Specifications for Registry Services. All Registry
    Services provided by Registry Operator shall be provided under this
    Agreement and shall meet the functional specifications established by ICANN.
    The initial functional specifications are set forth in Appendix C
    m>. Non-material changes and additions to the functional specifications may
    be made by Registry Operator with prior written notice to ICANN and any
    affected ICANN-Accredited Registrars. All other changes and additions to the
    functional specifications may be made only with the mutual written consent
    of ICANN and Registry Operator (which neither party shall withhold without
    reason) or in the manner provided in Subsections 4.3 through 4.6.
    ii Section 22(B).  Registry Operator may, at its option and with thirty days
    written notice to ICANN and to all ICANN-accredited registrars, revise the
    prices charged to registrars under the Registry-Registrar Agreement,
    provided that (i) the same price shall be charged for services charged to
    all ICANN-accredited registrars (provided that volume adjustments may be
    made if the same opportunities to qualify for those adjustments is available
    to all ICANN-accredited registrars) and (ii) the prices shall not exceed
    those set forth in Appendix G
    iii Section II(3)(A)(ii).  Registry Operator shall comply, in its operation
    of the registry, with all Consensus Policies insofar as they:
    		(a) are adopted by ICANN in compliance with Section 4 below,
    		(b) relate to one or more of the following: (1) issues for
    which uniform or coordinated resolution is reasonably necessary to
    facilitate interoperability, technical reliability and/or stable operation
    of the Internet or DNS, (2) registry policies reasonably necessary to
    implement Consensus Policies relating to registrars, or (3) resolution of
    disputes regarding the registration of domain names (as opposed to the use
    of such domain names), and
    		(c) do not unreasonably restrain competition.
    iv  Section I(1)(F).  In the event that, at the time the ICANN Board
    establishes a specification or policy under the first paragraph of
    Definition 1 above during the term of this Agreement, ICANN does not have in
    place an Independent Review Panel established under ICANN's bylaws, the
    fifteen working day period allowed under Subsection (A) above to seek review
    shall be extended until fifteen working days after ICANN does have such an
    Independent Review Panel in place and Registry Operator shall not be
    obligated to comply with the specifications or policy in the interim.
    v  Section II(4).  General Obligations of ICANN. With respect to all matters
    that impact the rights, obligations, or role of Registry Operator, ICANN
    shall during the Term of this Agreement
    		A. exercise its responsibilities in an open and transparent
    		B. not unreasonably restrain competition and, to the extent
    feasible, promote and encourage robust competition;
    		C. not apply standards, policies, procedures or practices
    arbitrarily, unjustifiably, or inequitably and not single out Registry
    Operator for disparate treatment unless justified by substantial and
    reasonable cause; and
    		D. ensure, through its reconsideration and independent
    review policies, adequate appeal procedures for Registry Operator , to the
    extent it is adversely affected by ICANN standards, policies, procedures or
    POLITECH -- Declan McCullagh's politics and technology mailing list
    You may redistribute this message freely if you include this notice.
    To subscribe to Politech: http://www.politechbot.com/info/subscribe.html
    This message is archived at http://www.politechbot.com/
    Declan McCullagh's photographs are at http://www.mccullagh.org/
    Like Politech? Make a donation here: http://www.politechbot.com/donate/

    This archive was generated by hypermail 2b30 : Tue Jun 18 2002 - 13:59:48 PDT