To; ICANN public comment process on existing contracts The personal views expressed below by Marilyn Cade are congruent with those expressed within the ISPCP Constituency, in particular the following recommendation; Recommendation: ICANN should put the negotiations with various registries that are now underway -- .biz; .info, and .org on hold until the completion of the PDP 06 and the Council's submission to the Board of any policies that are the outcome of PDP 06. On that basis the ISPCP would like to express support for the above Recommendation and urge the Board to give this serious consideration during their deliberations. Tony Holmes Chairman ISPCP Constituency _____ From: Marilyn Cade [mailto:marilynscade@hotmail.com] Sent: Monday, August 28, 2006 5:23 PM To: 'biz-tld-agreement@icann.org' Cc: 'Marilyn Cade' Subject: comments on biz,info and org To: ICANN public comment process on existing contracts These comments are submitted as an individual member of the ICANN community, and in my individual capacity as a business user constituency member. However, I draw on my expertise as an Councilor who has studied these issues, read the public record as submitted by all parties, have followed the Board and senior staff public discussions in the various ICANN face to face meetings, monitored the various lists, including the U.S. Department of Commerce public comments on the Memorandum of Understanding. I am familiar with the Terms of Reference of PDP 06, and of the work underway to address the development of policy related to existing contracts in the Task Force. I have also reviewed the three contracts and their appendixes that are posted for public comment in some detail. Recommendation: ICANN should put the negotiations with various registries that are now underway -- .biz; .info, and .org on hold until the completion of the PDP 06 and the Council's submission to the Board of any policies that are the outcome of PDP 06. According to the timeline of the Task Force, this PDP is scheduled for completion at the end of the year, 2006. Background: There is a PDP underway; supporting it to its conclusion and applying the outcome to the existing contracts should be the logical outcome to this process. The agreements as posted include several elements that are now the subject of a policy development process, known as PDP 06. This PDP has a Terms of Reference that include as an example, the terms related to renewal conditions; whether there should be a policy concerning price controls; whether there should be a policy guiding payment of fees to ICANN by registries/what that policy should be; what rights the registry has in the commercial uses of traffic data; and the relationship between consensus policy and registry agreements. This Policy Development process grew out of widespread agreement within the GNSO Council that there are broader policy issues that relate to the contractual conditions of existing gTLD agreements, after the community's experience with how ICANN dealt with the .net and .com negotiations. The GNSO Council and the community are taking the policy development process and their responsibilities quite seriously and are devoting extensive resources to addressing the Terms of Reference. The PDP is scheduled for completion at the end of the year, 2006. Examples of some of the area of concern that has been raised within the community regarding the proposed posted contracts and which I support as areas of concern: Pricing Policy: One of the provisions in the proposed contracts gives the Registry, which in all cases is a sole monopoly within their own TLD space, complete flexibility at the registry level, to set prices, including, it appears, on a per name basis. This is a seriously flawed provision, if indeed the contracts do provide for this. This is an area that was of significant concern to famous and well known brand holders at the launch of ICANN, where companies who spend millions on brand development, were concerned that registries could decide to individually price domain names. For example, a company who holds the world's best known brand might find itself asked to pay several hundred thousand dollars for their domain name upon renewal. Given the lack of 'substitutability' in a trademarked brand, used as a domain name, the corporation is essentially 'hostage' to any registry with the flexibility of 'one off' pricing. Building brand recognition has been done by the companies who offer the e-commerce services, not by the registry. Registration of domain names has to remain a matter of structural separation between registries and registrars; registries should not be allowed to individually price domain names at the wholesale level, which is where the registry is. Competition at the registrar level provides protection to the cost of registration itself - because registration services are in competitive environments, unlike registry services. Certain registries may believe that they should be able to speculate in individual names, since there is now a robust secondary market in the domain name marketplace. A secondary market in domain names does not justify giving a sole source provider of a gTLD this capability. There would be no controls over how registries might treat domain names, and neither registrants nor registrars would have any protection from individual registry decisions. I have a number of additional concerns about the importance of maintaining price caps, and of having a policy related to price caps. Given that this is one of the terms of reference issues, I will look to that process to further elaborate on those concerns. Recommendation: Price 'caps' which are presently in the existing contracts, should remain in place; in fact, I would go further to note that price platforms and ceilings should be established by ICANN for registries. It is feasible that a sponsored gTLD may provide additional services to the registrant, such as verification of eligibility, etc., and thus that platform/ceiling may be different from the open/unrestricted registry fees. It is also possible that a dominant registry could decide to charge nothing for registration, engaging in cross subsidy, and thus completely undercutting new entrants in newer gTLD registries. The Task Force is discussing identification and consultation with independent resources with expertise in anti trust and competition and economic policies that are relevant to decisions and treatment of registry agreements. I strongly recommend that ICANN support this consultation and make the consultations available publicly, so that the full community can be informed. Registries will be able to participate fully in the consultation and offer clarifying input, in those areas where they are not in agreement. However the proposed agreements should not be concluded while this consultation is underway. Perpetual/automatic/presumptive renewal: The policy issues under examination in the PDP of high visibility and broad community concern include a form of presumptive renewal. For example, the Business Constituency and other constituencies and members of the community have expressed their opposition to the form of perpetual renewal that is in com agreement that is yet to be accepted by the US Department of Commerce, with legal counsel by the US DoJ. Yet a form of that assumptive renewal is included in the three draft agreements that is the subject of this post, with no stated intent to acknowledge, nor to take into account the policy development role and functions of the GNSO, nor to reflect the guidance that will be forthcoming in a matter of several weeks. Recommendation: The contracts should not be completed at this time. These contract agreements should be put on hold while the PDP 06 is concluded, and the consensus policy, whatever it is, that is the outcome, should be used to negotiate existing registry agreements. Policy should not be made by developing contractual terms and then extending them into other contracts - instead the staff must become accustomed to the fact that the GNSO is their policy partner - and it is the GNSO that must provide policy guidelines and policy guidance. The board itself needs to provide strong leadership and guidance to the Staff that the policy development process must be fully supported, and embraced, which may mean additional resources and support for independent experts, as is now being discussed by the PDP 06 Task Force. Extending flawed conditions to some Registries but not all: Of even more interest is that ICANN is offering these terms to three large registries -- .biz; info; and .org, but not to the sponsored gTLDs. While I strongly object to ICANN undertaking the contract negotiations until the PDP is concluded, I question why ICANN would approach .org; which isn't lapsing until 2009, but appears not to have offered the terms to the remaining gTLDs, such as .museum; aero, name, etc. etc. It makes no sense to single out .org, which is over 2 + years away and draw them forward, but not make similar offers to the other gTLDS. I object to the extension of these flawed conditions to any of the registries, but note the differential treatment by staff, without explanation. Treatment of Traffic Data: The agreements give far too much openness to allow the registries to potentially control or use traffic data for undefined commercial uses. This potentially puts others who may be dependent upon access to traffic data to assess networking needs, or build competitive products. The registries are essential monopolies; when site finder was introduced by a registry, the community was gravely concerned. The terms related to traffic data need to be more clearly documented, and the impact on competition, and on adjacent markets examined before the terms are agreed to in these proposed agreements. Historically, the community has opposed the string being 'owned' by the registry, who is to work as a contracted party to ICANN. ICANN must take care not to be establishing a situation where a registry could be seeking to establish ownership or control outside of, or in addition to the terms of the contract they have with ICANN, through establishing exclusive rights in such things as traffic data. Treating the GNSO as a partner: ICANN staff must become more broadly supportive to the policy development role of the GNSO, and should assess what legal resources should be provided routinely, to the PDP process. It is not in ICANN's best interests, nor in the interest of ICANN stability to create parallel processes where the legal staff negotiate contracts, but are not integral and supportive of the policy development process. The GNSO and the ccNSO are partners to the ICANN staff in the development of policies to their respective areas of responsibility. . It is in fact harmful to ICANN's international legitimacy when its broad community so clearly is calling for one process to be followed, and there is a completely separate set of actions that are staff driven, but not inclusive of/nor recognizing the ongoing PDP process. Consensus policy must be applicable to existing contracts. If there are true justifications to why it must be modified, or delayed in its application, that must be identified, and posted for the community to examine and determine whether such a concept is in the best interest of the broader community. Of course, registries will prefer not to have any application of consensus policy, however, there could be a mechanism for registries to show cause why a consensus policy will directly harm their ability to serve their registrant base, or harm the interoperability or stability of the Internet. A comment process will allow for the registry to make such a case and in rare circumstances, gain a waiver of consensus policy. We must all take great care not to even unintentionally circumnavigate and ignore the bottom up multistakeholder participatory model that is key to ICANN's legitimacy and to its international support. Recommendation: ICANN should modify the draft agreements now posted to reflect the applicability of consensus policy, with the clear understanding that if a consensus policy also has to undergo an implementation assessment and during that phase, if a registry presents justification for how consensus policy will harm the registry, result in anti-competitive situation for one registry over another, or that the costs of said consensus policy is unreasonable, a proposal can be given to the relevant Task Force/GNSO Council during the final public comment period about what the justification for any change might be. By making this a part of a public process, and allowing review and comment by the Advisory Councils and the public in an open and transparent way. Conclusion: ICANN should put the negotiations with various registries that are now underway -- .biz; .info, and .org on hold until the completion of the PDP 06 and the Council's submission to the Board of any policies that are the outcome of PDP 06. And ICANN should fully resource the PDP 06 work, both with legal staff and support, and with support to independent experts in competition and economic theory. By fulfilling the bottom up consensus policy process, ICANN will built its credibility and, regardless of the outcomes of the policy recommendations, will improve the community's trust in its processes. Submitted by Marilyn Cade 28-August 06