Against Proposed Renewal of the six-year .NET registry agreement between ICANN and Verisign Expected monopoly collection of revenues: One Billion US Dollars approx. ($1,000,000,000.00) Regarding proposed .NET registry renewal posted by ICANN at: https://www.icann.org/public-comments/net-renewal-2017-04-20-en Summary Position of this Comment: STRONG OPPOSITION It is irregular to award a huge monopoly contract with no open tender. Presumptive renewal of a contract this size is outside standard business practices, and reflects inadequate / substandard oversight, disregarding public interest. Opening this contract to competition will help lower user costs, largely eliminate unjustified windfall profits, and greatly reduce the appearance of potential corruption. The reasoning for many changes in this contract is said to be "Updated for consistency with registry agreements for other gTLDs." But we understand the .NET Registry Monopoly is fundamentally unlike other registry agreements with the major exception of the .COM Registry Monopoly (also peremptorily arrogated to Verisign). Other commercial gTLDs passed through a competitive proposal & tendering process that both Verisign and ICANN would hereby dodge, giving the appearance of inappropriate collusion. This proposed renewal and its terms promise to harm consumers. As of today (late May, 2017), the domain name base for .net is approximately 15,000,000 domains. Considering approximately 15 million annual .NET registrations, and a contract term of six years, with Registry Operator service fee of US$8.20 and authorized increases of 10% at start of each calendar year from July 2017: $8.20/yr (assuming half year, 7.5m domains) Revenues: US$61,500,000 from Jan 2018: $9.02/yr (15m domains) Revenues: US$135,300,000 from Jan 2019: $9.92/yr (15m domains) Revenues: US$148,800,000 from Jan 2020: $10.91/yr (15m domains) Revenues: US$163,650,000 from Jan 2021: $12.00/yr (15m domains) Revenues: US$180,000,000 from Jan 2022: $13.20/yr (15m domains) Revenues: US$198,000,000 from Jan 2023: $14.52/yr through June 30, 2023 (assuming half year, 7.5m domains) Revenues: US$108,900,000 So this non-competitive ("sweetheart") agreement will generate total expected revenues of about One Billion US Dollars (US$996,150,000 without market growth). This situation demands competitive tendering. The reasoning detailed above does not reflect immoderate or bad behavior by Verisign, a corporation richly rewarded with repeat non-bid contracts as the "authoritative directory" and "exclusive registry" of all .NET and .COM domain names. During the six-year period of this agreement however, in my opinion, Verisign damaged the .NET and .COM brands, eroding ownership rights with poorly managed operations regarding transliterations of .NET and .COM into multiple languages. ICANN was involved in this process. In 2012 Verisign applied to ICANN, the Internet Corporation for Assigned Names and Numbers, for so-called gTLD internationalized domain name transliterations of .com and .net in assorted major languages. There's been many billions of dollars invested in existing .com and .net domains, so Verisign and ICANN needed to avoid controversy and the threat this process would erode ownership rights or seriously confuse the market. International domain names (IDN) can be convenient for end-users typically operating in non-English scripts such as Cyrillic, Chinese, Arabic or Hindi, relieving the need to toggle between different text-input keyboards. ICANN oversaw expansion of the gTLD system. ICANN accepted Verisign's applications for transliterations of .com and .net in assorted major languages although Verisign had only temporary time-limited contracts as the "authoritative directory" and "exclusive registry" of all .NET and .COM domain names. Verisign's policy on IDN.IDN implementation, and the rights protection format they proposed to follow, was very explicit, with a key objective: "Avoid costs to consumers and businesses from purely defensive registrations in the new gTLDs." They asserted: "A registrant in one of the IDN TLDs, or a registrant of an IDN.com or IDN.net, will have the sole right, but not be required to register the exact same second level name across all or any of our IDN TLDs, including the .com or .net TLDs as applicable." With this widely publicized explanation, Verisign avoided opposition by .net and .com owners against Verisign's planned offerings. Some of us registered IDN.net and IDN.com domains expecting our positions would be securely protected by Verisign. Instead, Verisign launched the first of the transliterations (also termed "aliasing"), largely unconnected to existing .com ownership, although a Priority Access Program allowed existing registrants early purchase of Verisign's transliteration, typically at premium pricing. It is unclear if changes in plan were initiated by Verisign or ICANN, but both now squeeze added revenues from resulting format changes. Ultimately, if I owned lawyer.com -- another person might buy lawyer.コム (or lawyer .ком with Japanese or Russian ".com" and pronounced nearly identically). Defensive registrations are costly, with both Verisign & ICANN reaping benefits from what now appears a collusive relationship undercutting ownership rights in .NET and .COM domain names. This was wholly different from Verisign's long-time presentation: (Verisign quoted below until 'end quote' mention) "In 2012, Verisign applied to operate registries for eight transliterations of .COM and three of .NET (to the right of the dot) as part of ICANN’s new generic top-level domain (gTLD) which will allow Verisign to bring businesses full domain names in local language characters. Verisign’s proposed approach for these new IDN gTLDs will help ensure a ubiquitous end-user experience and helps to protect consumers and business from having to register purely defensive domain names in our TLDs. In practice, Verisign’s proposed approach means that the registrant for a second-level domain name in our IDN.IDN, IDN.com or IDN.net will have the sole right (subject to applicable rights protection mechanisms), but not be required to register that identical second-level domain in any of the top-level IDNs, .COM or .NET as applicable. In order to illustrate our approach, we have identified two use cases below: Use Case No. 1: Bob Smith already has a registration for an IDN.net second level domain name. That second level domain name will be unavailable in all of the new .NET TLDs except to Bob Smith. Bob Smith may choose not to register that second level domain name in any of the new transliterations of the .NET TLDs. Use Case No. 2: John Doe does not have a registration for an IDN.com second level domain name. John Doe registers a second level domain name in our Thai transliteration of .COM but in no other TLD. That second level domain name will be unavailable in all other transliterations of .COM IDN TLDs and in the .COM registry unless and until John Doe (and only John Doe) registers it in another .COM IDN TLD or in the .COM registry" (end quote) Verisign effectively precluded much opposition to their applications. Such outcry would have been certain, because using similar-sounding and identical-meaning tlds seriously dilutes domain-owner rights, and can lead to confusion. Verisign & ICANN's new approach harms existing .com & .net domain owners. Now we are forced to try to protect our position with defensive registrations of their new .IDN domains. With Verisign's premium pricing, a single gTLD registration may cost hundreds or even thousands of dollars. Those defensive-registration revenues mostly benefit Verisign, but ICANN also receives a fixed component of each registration's revenues. We understand that over many years, conditions and strategies and markets may change. We can assume the expansive proprietary assertions of Verisign were always well-meant, and later changes were always legal. In the interest of all parties, standard business practices today avoid monopoly contracts without open tender. Both the .NET & .COM Registry Monopolies should be open to competitive tender. A billion reasons shout why this contract should be open to bid. Dr. Bruce Henry Lambert Helpnet Stockholm, Sweden lambert@ieee.org