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10/27/05

Verisign Bullies ICANN

Kurt Pritz is a qualified and practicing attorney with an impressive 20-year Corporate career in Executive Operational roles.

As Vice President, Production at Walt Disney Imagineering, Mr. Pritz directed the engineering and manufacture of theme park shows worldwide. Prior to that, he worked as Plant Manager supervising over 200 employees for Eaton Corporation, the manufacture of electronic assemblies and avionics sub-systems. He holds a B.S. and M.S. in Physics, an M.B.A. and a J.D.


Currently, he is on the ICANN staff. ICANN (Internet Corporation for Assigned Names and Numbers) is the governing body of the Internet under the US Dept. of Commerce. They oversee Registries and Registrars of Domain Names as one of their functions.

The following email reprinted here from a public list is on the subject of the contract with Verisign to handle the .com domain name registry. Basically no matter where you register a .com domain name, the name comes from Verisign. My comments below are those in italics.

ICANN Registrar Constituency:

Thank you for this opportunity to make the Registrar community aware of the proposed settlement with VeriSign. ICANN is seeking to end all pending litigation over this long-standing dispute. The settlement agreement documents have been posted for public comment on ICANN's website (www.icann.org) and are subject to final approval of the ICANN Board. In addition to comments received, there are some specific issues we would like to discuss with you, now that we are in a position to do so. An important purpose of this posting is to solicit the views of the Registrars' constituency on all of the settlement documents.

The public comment period whenever ICANN does anything is a joke. They never respond to comments and as is obvious by their past decisions either ignore the comments they read or do not even bother to read them.

The parties entered into non-public negotiations in an effort to establish whether it was possible to reach an agreement. The negotiations led to a lengthy set of discussions regarding specific provisions of the agreement and the conflict points and also sought consultation with the US Department of Commerce, as required by the present .COM agreement.

Non-Public negotiations = Non-transparency, another feature brought to us by ICANN.

We understood in entering into these discussions that it would be nearly impossible for a public company such as VeriSign to participate in an open and public dialogue for the resolution of such a dispute, without a concrete proposal regarding how the settlement could be constructed. Therefore, ICANN negotiated the best possible deal that it believed that it could negotiate in the public's interest, and required a full 24-day public comment period before board approval would be sought.

Of course Verisign wanted the talks to be private. They were after a sweet deal. Again the comment period meant nothing whatsoever. The agreement that resulted did not take those comments into account. If they had the agreement would have been much different.

All ICANN constituencies and advisory committees are being asked directly for input. Following this public comment period, ICANN's Board will evaluate the public comments received and decide on next actions relating to this entire settlement proposal.

unh hunh.

This letter is intended to provide information regarding the proposed agreement and use of the comment period by providing: some background on the conflict and detail regarding the proposed settlement, benefits accruing from the agreements to the registrars, identification of issues that remain to be discussed during this comment period, a plan for how to carry the discussion forward.

Background; the settlement and agreement From ICANN's inception it has existed in conflict with the principal commercial entity in the DNS space, the .COM registry operator, and that conflict has continued in various forms up until this time. NSI was acquired by VeriSign in 2000, and since that time ICANN and VeriSign have been involved in a series of additional conflicts.

Like the fact that Verisign/Network Solutions started as a monopoly and still are since .com domain names are the ones people really want.

This tension and conflict has heavily influenced the contractual relationships between NSI/VeriSign and ICANN from the beginning. The first agreement with the operator of the .COM Registry was in 1999, and was brokered by the United States Department of Commerce
with a reluctant NSI. This agreement framework created the separation of registries and registrars and introduced the opportunity for new players in the registrar market.

Breaking up the monopoly, only in that there would be resellers and that they might not control .net and .org.

That agreement was replaced with a new agreement in 2001, which split the 1999 agreement (which covered .COM, .NET and .ORG) into three separate agreements, one for each registry. Unlike the others, .COM Registry Agreement included a presumptive right of renewal to VeriSign. The .ORG Registry was re-bid with a presumption that it would go to a third party and was subsequently awarded to PIR. The .NET Registry was re-bid during the last year, without a presumption of renewal or a presumption of a change of operator and was re-awarded to VeriSign. The growing diversity of business models among registrars was reflected in the variety of responses to this new contract.

Re-awarding it to Verisign is basically approving the monopoly. There were qualified companies the contract could have gone to, increasing competition, but instead of representing the best interest of Internet Users, they chose to represent the best interest of Verisign.

The original 2001 .COM Registry Agreement containing the presumptive right of renewal to VeriSign did not fully resolve the various fundamental differences of view between ICANN and VeriSign, and those differences have continued to generate disputes up to and including the issues involved in the current litigation.

The proposed settlement will end ICANN's dispute with VeriSign. The litigation focused on the introduction by VeriSign of new "Registry
Services" and whether the current .COM agreement (signed in 2001) provided for oversight by ICANN over the introduction of services (such as "SiteFinder"). It was quickly understood that the settlement discussions were inextricably bound up in the contract language and that any settlement required a re-writing of the registry agreement. It was necessary for the parties to renegotiate terms within a new .COM Registry Agreement relating to a new clear definition of registry services and the approach for approval of such services.

Therefore, in concert with the settlement, ICANN and VeriSign have entered into a new proposed registry agreement. The settlement has been in negotiation for many months, with talks extending back to late 2004. The new agreement has been streamlined from the old (161 pages versus 91). It provides that VeriSign will operate the registry into 2012.

Basically eliminating 71 pages of requirements Verisign will no longer have to adhere to. Such as the money they were supposed to reinvest into Internet improvements like infrastructure.

Benefits accruing from the agreement

We see several benefits accruing from the proposed settlement. The settlement ends a costly, time-consuming litigation. The end of the
litigation and the provision for binding arbitration in the future will also end the diversion of resources applied to this litigation over the past two years. Many things of importance to the ICANN mission and to registrars have been left undone and can now be accomplished.

In other words, Verisign won the battle of my lawyer can beat up your lawyer and ICANN caved in, impervious to the best interests of fair competition and individual users.

Additionally the agreement, we think, will facilitate the introduction of new registry services by VeriSign that are intended to increase the number of registrations. The confrontational nature of the VeriSign/ICANN relationship prior to the settlement certainly slowed the introduction of new services. Having greater certainty and speed will facilitate the introduction of new business opportunities for registries and registrars.

Yeah, right. Basically allowing them to do what they want would create new opportunities to make more money. I'm not against them making money, but ICANN was created with one of their functions being to oversee the activities of Verisign and other companies involved with registration of domain names. Now that oversight is becoming a joke.

The new registry services process should also work to provide certainty, additional markets and protect registrars against unanticipated product introductions that may have an adverse affect. VeriSign has agreed to a definition of registry services that ensure that new
product introduction will be vetted for adverse stability, security and competition effects prior to deployment.

Vetted by whom? Verisign?

Also, the agreement puts into place a standing technical panel in order to ensure timely, unbiased opinions regarding the potential effects of product introductions on security and stability of the DNS. Competition issues will be referred to appropriate governmental competition authority/authorities; the proposed agreement clarifies ICANN's role and recognizes that determination of whether a registry's action is competitive or anti-competitive is an appropriate function of existing national bodies.

In other words, Verisign said what they plan to do and that ICANN can't do anything about it. They no longer recognize ICANN as the authority on these issues.

The agreement also provides certainty as to the price of a domain name going forward. Under the terms of this agreement, VeriSign can raise the price of a name up to 7% each year. It is understood that any increase in price over $6 will affect some business models. The price has been constant for six years. While price increases are rarely welcome, this agreement provides a ceiling and notice of prices for the next seven years. During the negotiations, a significantly wider range of price increases was suggested and discussed. This negotiation was not a competitive re-bid process where there existed leverage for reducing the per name price.

Even greedy IdeaLabs that operate the .TV domain name registrations only raises their price by 5% per year. Obviously again, Verisign said what they will do and that ICANN has no control over it.

The price changes described in the agreement provide notice and an opportunity to react to increases: there must be at least six months notice before any price increase; there will continue to offered registrations for up to a ten year term, to allow those who want to guarantee their registration costs for ten years to do so; and there are restrictions on VeriSign creating tying arrangements.

Because of the presumptive right of renewal to VeriSign for the .COM Registry, ICANN's negotiating power relative to pricing and other key terms is significantly different than in the setting of terms for the re-bid relating to the .NET Registry. Accordingly, as ICANN
accredited registrars and customers of VeriSign we are requesting your review and comments relating to this settlement and the accompanying .COM Registry Agreement.

Issues for discussion

The comment period is intended to provide opportunity for discussion of areas of interest to parties not named in the agreement so that these issues can be taken into account. Some of these issues have been identified by registrars in discussions after the agreement was
posted:

Increases in the price VeriSign charges registrars for domain names. Not listened to.
The combination of registrar and registry fees that will be invoiced and discussion of a reduced fee level for registrars that can be approved in a timely manner.
The manner in which fees are potentially passed from registry to registrar and then on to registrants. Approved since the end user is the one that gets screwed anyway.
This may include a requirement for line-itemization of all fees on the registrant invoice. which matters how?
Description of long-term ICANN revenue goals that are a prerequisite to achieving the goals set out in the USG MoU and gaining independent status. thats the money ICANN gets off each domain name registration, which I assume will also rise by 7% each year.
The process by which registrars approve the variable registrar fees described in the adopted budget now and in years going forward.

The discussion forward

The proposed agreement is being posted for public comment for 24 days. for all the good that will do.
This time period should be used to discuss and determine with clarity various positions on the issues above. positions that don't matter since the agreement with Verisign is basically done except for the rubber stamp approval by the Board.
This can be done with a series of generally attended conference calls, individual consultations and meetings with registrar representatives.
Many registrars participated through the registrar representatives in negotiation of the .NET agreement. As proof of the fact the public comment periods are worthless since .net was re-awarded to Verisign anyway.

ICANN will arrange with registrars involved in the discussion or there representative a series of consultation through the comment period to ensure full discussion and consideration of the issues raised. sure thing.

We look forward to receiving the Registrar community's input. If you have a comment and participate, that contribution will be taken into account. blah blah blah.

Thank you for the time taken to read and consider this material.

Sincerely,

Kurt Pritz
ICANN

For those of you who don't know it, there are groups of individual users and small business owners who are trying to assure fair competition on the Internet and are trying to avoid having the entire Internet hijacked by a handful of corporations. If you would like to join in that effort, read the information below;

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Hope to see some of you get involved!

More things that just piss me off










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