In Extending .Com RA, ICANN Board also Extended Price Freeze Through 2024

We have previously reported that, at is September 15th meeting, ICANN’s Board approved the proposed extension of the .Com registry Agreement (RA). What we did not know at the time was that the Board simultaneously approved an extension of the existing $7.85 ceiling on .Com wholesale prices through 2024.

 

That additional information recently became available when ICANN published its Preliminary Report | Regular Meeting of the ICANN Board for the September 15th meeting. The full text regarding the Board’s approval of the .Com RA extension is reproduced at the end of this blog, with key provisions related to wholesale pricing highlighted.

 

The key passage in that meeting narrative is:

The Vice Chair informed that Board that staff worked with Verisign to address this comment by proposing to revise the version of the amendment posted for public comment by adding additional language to extend the maximum price provision through 30 November 2024. The Board continued its discussion of the proposed amendment with the understanding that the amendment would be revised to reflect the noted change.

 

A revised version of the adopted RA extension language has also been published. The relevant language change reads as follows:

(b) Section 7.3(d)(i) of the Agreement is hereby deleted and replaced in its entirety by the following new Section 7.3(d)(i): “(i) from the Effective Date through November 30, 2024, US $7.85;”

 

There are two important caveats to keep in mind in understanding the import of this ICANN Board action:

  1. While the revised .Com RA now extends the price freeze through 2024, the issue could be raised again in negotiations between ICANN and Verisign if the US decides not extend the Cooperative Agreement (CA) in 2018, or does extend it but alters the pricing terms. That’s because the RA extension amendment also contains this provision—

Future Amendments. The parties shall cooperate and negotiate in good faith to amend the terms of the Agreement (a) by the second anniversary of the Amendment Effective Date, to preserve and enhance the security and stability of the Internet or the TLD, and (b) as may be necessary for consistency with changes to, or the termination or expiration of, the Cooperative Agreement between Registry Operator and the Department of Commerce.

 

Under that provision, if the CA is terminated or revised in 2018 that would lead to discussion of amendments to the RA necessary for consistency with the CA. The Department of Justice recently advised Senator Cruz that the RA extension has no effect on the .Com price freeze, and that NTIA has the authority to extend the price freeze through 2024.

 

So what ICANN’s Board has done with this action is, in effect, pre-approve an extension of the existing .Com price freeze in anticipation that the NTIA may extend it through 2024. But what NTIA will actually do in the next two years cannot be predicted at this time, and if that agency takes a different course of action then ICANN and Verisign will enter into new discussions to reconcile the RA and CA (or reconcile the RA with the expiration of the CA).

 

  1. By extending the RA now, rather than having it come up for renewal in 2018, the possibility of ICANN staff pushing Verisign to adopt URS or other new gTLD RPMs in .Com contract renewal negotiations – as they did last year for .cat, .pro, and .travel — has been eliminated. That was one of the principal considerations underlying ICA’s non-objection to the RA extension, along with an understanding that it would have no effect on the price freeze.

 

However, adoption of those RPMs by .Com was advocated by trademark and other interests who commented on the proposed RA extension, and could come up in the talks between ICANN and Verisign that the amended RA requires “to preserve and enhance the security and stability of the Internet or the TLD”.

 

But the question of whether and in what form URS should become an ICANN Consensus Policy applicable to legacy gTLDs like .Com will likely be addressed by the RPM Review Working Group when it issues its phase one preliminary report and recommendations in 2017, and its decision should have substantial impact on any subsequent security and stability discussions between ICANN and Verisign.

 

 

Here’s the relevant language of the Preliminary Report —

 

 

.COM Registry Agreement Amendment

Ram Mohan abstained noting potential conflicts of interest. The Vice Chair presented the agenda item. He gave the Board an overview of the proposed amendment to the .COM registry agreement to extend the term of the agreement to 2024. The original term of the registry agreement was set to expire in 2018. He reported that there were some concerns raised during the public comment period about clarifying whether the maximum price provision in the .COM registry agreement would continue. The Vice Chair informed that Board that staff worked with Verisign to address this comment by proposing to revise the version of the amendment posted for public comment by adding additional language to extend the maximum price provision through 30 November 2024. The Board continued its discussion of the proposed amendment with the understanding that the amendment would be revised to reflect the noted change.

The Vice Chair stated that another topic of concern raised during the public comment period was about moving the existing.COM registry agreement to the form of the New gTLD Registry Agreement. The Board considered this concern, and took note of the provision in the proposed amendment obligating Verisign to ICANN to negotiate in good faith in two years potential changes to the registry agreement in order to preserve and enhance the security of the Internet or the TLD.

The Board also discussed the extension of the term of the .COM registry agreement as it relates to other provisions in the existing .COM registry agreement that might allow for future changes of the agreement. As part of this discussion, the Board considered the provisions in the .COM registry agreement concerning renewals being upon similar terms of the largest five gTLDs, and provisions addressing the implementation of consensus policies developed through the GNSO policy development process.

As part of its deliberations, the Board also considered comments raised by some members of the community about whether approving the proposed amendment raised concerns about fairness and whether similarly situated parties were unjustifiably receiving different treatment.

The Board discussed the interplay between the proposed amendment to the .COM registry agreement and the Root Zone Maintainer Services Agreement (RZMA) approved by the Board on 9 August 2016. The Board considered whether the proposed resolutions needed to be revised to make sure the dates of the two agreements would be aligned as anticipated. After discussion, the Board took the following action:

Resolved (2016.09.15.09a), the text of the proposed resolution to amend the .COM registry agreement is modified to make approval of the amendment subject to the execution of the RZMA.

The Board adopted the following amended resolution regarding the proposed .COM amendment2:

Whereas, ICANN and Verisign engaged in discussions on a proposed amendment to the 1 December 2012 .COM Registry Agreement (“Amendment”) and agreed to extend the term of the Agreement to 30 November 2024 to coincide with the term of the Root Zone Maintainer Services Agreement in order to enhance the security, stability and resiliency of root zone operations.

Whereas, the proposed Amendment also requires Verisign and ICANN to cooperate and negotiate in good faith to: (1) amend the .COM Registry Agreement by the second anniversary date of the proposed Amendment in order to preserve and enhance the security of the Internet or the TLD; and (2) as may be necessary for consistency with changes to the Cooperative Agreement between Verisign and the U.S. Department of Commerce. All other terms and conditions in the existing Registry Agreement remain unchanged.

Whereas, ICANN commenced a public comment period from 30 June 2016 to 12 August 2016 <https://www.icann.org/public-comments/com-amendment-2016-06-30-en> on the proposed Amendment. Ninety-nine (99) comment submissions were posted by both individuals and organizations/groups.

Whereas, the Board carefully considered the comments and the staff summary and analysis of comments.

Whereas, ICANN conducted a review of Verisign’s recent performance under the current .COM Registry Agreement and found that Verisign substantially met its contractual requirements.

Resolved (2016.09.15.09b), the proposed amendment to the .COM Registry Agreement <https://www.icann.org/sites/default/files/tlds/com/com-amend-1-pdf-30jun16-en.pdf> is approved, subject to the RZMA being executed, and the President and CEO, or his designee(s), is authorized to take such actions as appropriate to finalize and execute the Amendment.

All members of the Board present voted in favor of Resolutions 2016.09.15.09a – 2016.09.15.09b. One member of the Board was unavailable to vote on the Resolutions. The Resolutions carried.

Rationale for Resolutions 2016.09.15.09a – 2016.09.15.09b

Why the Board is addressing the issue now?

On 1 December 2012, ICANN and Verisign, entered into a Registry Agreement under which Verisign operates the .COM top-level domain. The agreement is set to expire on 30 November 2018. ICANN and Verisign have negotiated a proposed Amendment, which was posted for a 42-day ICANN public comment period between 30 June 2016 and 12 August 2016. At this time, the Board is approving the proposed Amendment for the continued operation of .COM TLD by Verisign.

What is the proposal being considered?

The proposed Amendment: (1) extends the term of the .COM Registry Agreement to 30 November 2024 to coincide with the term of the Root Zone Maintainer Services Agreement (RZMA) between ICANN and Verisign; (2) commits Verisign and ICANN to cooperate and negotiate in good faith to amend the .COM Registry Agreement by the second anniversary date of the proposed Amendment in order to preserve and enhance the security of the Internet or the TLD; (3) commits Verisign and ICANN to cooperate and negotiate in good faith to amend the terms of the .COM Registry Agreement as may be necessary for consistency with changes to the Cooperative Agreement between Verisign and the U.S. Department of Commerce. All other terms and conditions of the existing Registry Agreement remain unchanged.

Which stakeholders or others were consulted?

ICANN engaged in bilateral negotiations with Verisign to agree to the terms of the proposed Amendment. The proposed Amendment was then published for public comment from 30 June 2016 to 12 August 2016. Following the public comment period, the comments were summarized and analyzed.

What concerns or issues were raised by the community?

There were 99 comment submissions from individuals and groups/organizations during the 42-day public comment period. Some commenters were generally supportive of the proposed Amendment while others raised concerns. A summary and analysis of the comments is provided below and also posted at <https://www.icann.org/en/system/files/files/report-comments-com-amendment-09sep16-en.pdf>.

What significant materials did the Board review?

As part of its deliberations, the Board reviewed various materials, including, but not limited to, the following materials and documents:

What factors has the Board found to be significant?

The Board carefully considered the public comments received for the proposed Amendment, along with the summary and analysis of those comments.

The Board acknowledges that some commenters were generally supportive of the proposed Amendment, and some expressed general support but also asked ICANN and/or Verisign to clarify the relationship of the Cooperative Agreement and proposed Amendment, particularly around pricing, and the provisions or topics that would be the subject of good faith negotiations by the second anniversary of the effective date of the proposed Amendment.

While the Board acknowledges the suggested changes to the proposed Amendment to specify what provisions will be discussed by the two-year anniversary of the proposed Amendment, the Board notes that the language as drafted in the proposed Amendment balances providing a commitment to engage in negotiations, while providing leeway to consider future topics related to preserving and enhancing the security and stability of the Internet or the TLD in this changing landscape.

With respect to revising the proposed Amendment to account for potential changes to, or cancelation of the Cooperative Agreement between Verisign and the Department of Commerce, the Board notes that the proposed Amendment already takes into account the Cooperative Agreement. The proposed Amendment includes language, requiring ICANN and Verisign to engage in good faith negotiations to make changes to the .COM Registry Agreement as may be necessary for consistency with changes to, or the termination or expiration of, the Cooperative Agreement.

The Board also acknowledges that there were several comments submitted relating to prices for .COM domain names. Some commenters suggested that the current price cap in the Registry Agreement must remain in place, while others recommended that prices must be reduced. The Board notes that Section 7.3(d) of the .COM Registry Agreement specifies the maximum price that Verisign can charge for registry services. The proposed Amendment does not change this provision.

The Board also acknowledges the comments submitted opposing the presumptive renewal right provision in the .COM Registry Agreement and suggestions that the presumptive renewal right should be taken away if certain events occur, such as an uncured material breach of the Registry Agreement. Others suggested that instead of extending the .COM Registry Agreement, it should be put out for a competitive public tender to ensure that the registrants are charged lower prices. The Board notes that the presumptive right of renewal in Section 4.2 of the .COM Registry Agreement is a provision that is in all of ICANN’s registry agreements. The provision allows a registry operator the right to renew the agreement at its expiration, provided that the registry operator is in good standing at the time of renewal as set forth under the terms of the presumptive renewal provision. This presumptive renewal provision is in place to ensure stability, security, and reliability in the operation of the TLD, i.e., to encourage long-term investment in robust TLD operations. This has served public interest by encouraging investment in the TLD registry infrastructure and improvements in reliability of the TLD operations. ICANN has previously described the rationale for presumptive renewal for registries: “Absent countervailing reasons, there is little public benefit, and some significant potential for disruption, in regular changes of a registry operator. In addition, a significant chance of losing the right to operate the registry after a short period creates adverse incentives to favor short-term gain over long-term investment. On the other hand, the community, acting through ICANN, must have the ability to replace a registry operator that is not adequately serving the community in the operation of a registry.”

The Board acknowledges the comments that the .COM Registry Agreement should be brought in line with new safeguards and intellectual property protections found in the New gTLD Registry Agreement. Some of the commenters noted that certain legacy gTLD Registry Operators have adopted the general form of the New gTLD Registry Agreement (e.g. .PRO, .CAT, .TRAVEL) including the additional enhancements and safeguards, and .COM should be required to do the same. Some suggested that not requiring .COM to be subject to the new enhancements, safeguards, and intellectual property protections in the New gTLD Registry Agreement raises concerns about whether ICANN is adhering to its core values related to non-discriminatory or preferential treatment, serving the public interest, transparency, and competition. The Board notes that the proposed Amendment posted for public comment is a simple extension of the current term of the agreement, and moving to the form of the new gTLD Registry Agreement would require longer discussion and community consultation. Proposing a simple Amendment at this time to extend the term of the .COM registry agreement is intended to maintain the stable, secure, and reliable operations of the .COM TLD.

The Board also notes that the proposed Amendment provides a provision that commits ICANN and Verisign to cooperate and negotiate in good faith to amend the .COM Registry Agreement by the second anniversary date of the proposed amendment in order to preserve and enhance the security of the Internet or the TLD. This language was negotiated to provide an opportunity for future discussions that may be needed to discuss potential changes to preserve and enhance the security of the Internet or the .COM TLD.

The Board acknowledges comments asking for confirmation that Verisign will be required to implement future developed consensus policies that may provide for additional safeguards and enhancements. The Board notes that Section 3.1 (b) of the .COM Registry Agreement states that, “At all times during the term of this Agreement and subject to the terms hereof, Registry Operator will fully comply with and implement all Consensus Policies found at http://www.icann.org/en/general/consensus-policies.htm, as of the Effective Date and as may in the future be developed and adopted in accordance with ICANN’s Bylaws and as set forth below.”

The Board acknowledges the comments that opposed the early renewal of the .COM Registry Agreement and the linkage to the Root Zone Maintainer Agreement (RZMA). These comments noted that the root zone maintainer infrastructure should never have become “inextricably intertwined” with Verisign’s .COM operations. Some questioned how linking the two agreements would enhance the security, stability and resiliency of root operations and argued that the linkage represents a single source of failure. These commenters urged ICANN technical staff to begin exploring how some practical separation between root zone and .COM technical operations might be achieved if that eventuality ever arises, and to assure that such action does not pose a threat to the security and stability of the DNS.

The Board notes that Verisign has been providing “registration services” under its Cooperative Agreement with NTIA for many years, which was broadly defined to include root zone maintainer function and .COM Top Level Domain registry services. Given the unified nature of these two functions under the Cooperative Agreement, much of the infrastructure supporting the root zone maintainer function is “intertwined” with Verisign’s TLD operations for .COM. A key component of ensuring security of the root operations was making sure that those operations continued to benefit from its historic association with the .COM operations. This was achieved by the proposed simple extension of the .COM Registry Agreement to coincide with the term of the new RZMA. While the terms of the agreements are linked together in the sense that they would expire at the same time, the agreements do not contain any provisions linking the performance of the obligations under the .COM Registry Agreement with the obligations under the RZMA. In fact, the Root Zone Maintainer Services Agreement (“RZMA”), approved by the ICANN Board on 9 August 2016, includes provisions that provide the community the ability – through a consensus-based, community-driven process – to require ICANN to transition the root zone maintainer function to another service provider three years after the effective date of the agreement.

The Board acknowledges the comments suggesting that not requiring .COM to be subject to the new enhancements, safeguards, and intellectual property protections in the New gTLD Registry Agreement raises concerns about whether ICANN is adhering to its core values related to non-discriminatory or preferential treatment, serving the public interest, transparency, and competition.

The Board notes that the Bylaws enumerate core values that should guide the decisions and actions of ICANN in performing its mission, and ICANN takes seriously its commitment to those values. As provided in the Bylaws, the “core values are deliberately expressed in very general terms, so that they may provide useful and relevant guidance in the broadest possible range of circumstances. Because they are not narrowly prescriptive, the specific way in which they apply, individually and collectively, to each new situation will necessarily depend on many factors that cannot be fully anticipated or enumerated; and because they are statements of principle rather than practice, situations will inevitably arise in which perfect fidelity to all eleven core values simultaneously is not possible. Any ICANN body making a recommendation or decision shall exercise its judgment to determine which core values are most relevant and how they apply to the specific circumstances of the case at hand, and to determine, if necessary, an appropriate and defensible balance among competing values.” When considering the comments and approval of the proposed Amendment, the Board has taken into consideration the relevant core values in order to balance the competing priorities.

The Board further acknowledges comments concerning competitive issues and providing a level playing field. Article II, Section 3 of ICANN’s Bylaws state, “ICANN shall not apply its standards, policies, procedures, or practices inequitably or single out any particular party for disparate treatment unless justified by substantial and reasonable cause, such as the promotion of effective competition.” The Board notes the .COM Registry Agreement contains many different terms that are not present in other registry agreements. These unique terms might be considered either favorable or unfavorable depending on one’s point of view. For example, the price control provision in Section 7.3 of the .COM registry agreement tightly controls the ability of the registry operator to raise prices in a manner that is not present in any other registry agreement.

Are there positive or negative community impacts?

ICANN conducted a review of Verisign’s recent performance under the current .COM Registry Agreement and found that Verisign substantially met its contractual requirements.

The Board’s approval of the proposed Amendment is intended to ensure the continued stable, secure, and reliable operations of the .COM TLD.

Are there fiscal impacts or ramifications on ICANN (strategic plan, operating plan, budget); the community; and/or the public?

There is no significant fiscal impact expected if the Board approves the proposed Amendment.

Are there any security, stability or resiliency issues relating to the DNS?

There are no expected security, stability, or resiliency issues related to the DNS if the Board approves the proposed Amendment

 

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