The Policy Oversight Committee submits the following comments. The text is set forth below in ASCII and a Word file is attached. POLICY OVERSIGHT COMMITTEE RESPONSES TO THE QUESTIONS CONCERNING GUIDLINES FOR ACCREDITATION The Policy Oversight Committee respectfully submits its responses to the questions raised by the Internet Corporation for Assigned Names and Numbers in its draft of Guidelines for Accreditation of Internet Domain Name Registrars and for the Selection of Registrars for the Shared Registry System Testbed for .com, .net and .org domains, dated February 8, 1999 Q1. Is the segmented model for the provision of domain name registration services described above appropriate? How could or should it evolve over time? The Policy Oversight Committee (POC), and its predecessor, the International Ad Hoc Committee (IAHC) have consistently taken the position that the segmented model is the preferable approach to maintaining the stability and reliability of operations of the Internet, and overall best serves the public interest. Q2. Are there any reasons why resellers should be accredited? The POC does not see any reason for accrediting resellers. At the reseller level, the interest in maximizing competition would favor minimizing regulation. Q3. In the context of accrediting registrars for the DNS system, is preservation of universal and durable resolution of domain names an important requirement for preservation of the Internet's stability? Are there other stability issues that are particularly relevant in that context? Preservation of universal and durable resolution of domain names is clearly the most important requirement for preservation of the Internet's stability, and all other stability issues are subsumed within this goal. Q4. What conditions, other than the availability worldwide of a reasonable number of alternative registrars and easy portability of domain names, are important to the introduction and maintenance of robust competition in the provision of registrar services? There are no other conditions that are as significant as those mentioned. However, POC believes that all registrars using a registry service should in the future jointly contract for the provision of technical registry services linked to specific gTLDs to avoid becoming economically captive to a registry operator who could raise wholesale registry prices. Q5. Are there significant principles in addition to those stated above that domain name registrar accreditation should seek to promote? No. Q6. At what stage should requirements for accreditation of registry administrators be introduced? Within the generic TLD system, ICANN should undertake the accreditation of registry administrators, including the authorization of new generic TLDs, as soon as possible. Such accreditation process should be conducted in accordance with the principles stated in the Statement of the Policy Oversight Committee, dated 21 July 1998, "The Economic Structure of Internet Domain Name Registries: For-Profit or Not-For-Profit?" ( the "POC Economic Structure Statement"), which recommends that ICANN choose a not-for-profit, cost-recovery structure for all gTLD names registries. Q7. Should the requirement (Section III.A.1) that applicants demonstrate general present or future business capabilities be revised to incorporate more specifically stated thresholds or characteristics (e.g., levels of employment or backup procedures)? For which aspects of Section III.A.1? What should the more specific requirements be? If more specific thresholds or characteristics should be incorporated for some aspects, should those thresholds or characteristics be absolute minimum requirements, or should they be "safe-harbors" that would automatically satisfy certain aspects of Section III.A.1? (As an example of a "safe harbor," a showing that the applicant has the equivalent of five full-time employees could be deemed to satisfy the employee requirement stated in Section III.A.1.j.) These requirements appear to be appropriate for the commencement of the accreditation process. The POC faced the same issues in connection with the creation of the Council of Registrars (CORE) and adopted similar requirements, taking into account differing economic conditions throughout the world while at the same time ensuring reasonable stability in operational aspects of registrar functions. Q8. Is it appropriate to have a specified threshold of required commercial general liability insurance coverage? A requirement of US$500,000 is being considered. Is that level about right, too high, or too low? Should the required level vary by the location of the registrar to account for different liability risks in different parts of the world? POC and CORE adopted the requirement of such insurance, in an amount equivalent to US$500,000, and found that it was reasonable for registrar applicants throughout the world. Q9. Is it appropriate to require that a specified level of liquid capital be available to the applicant, or is it sufficient to have a more general requirement such as that in Section III.A.1.i? A specified level of US$100,000 in liquid capital is being considered. Is that level about right, too high, or too low? What effect would a requirement at that level have on the degree of competition? Should the required level vary based on the country in which the applicant is located? By the type of business model the applicant follows or proposes? POC and CORE adopted the requirement of capital in an amount equivalent to US$300,000, and found that it was reasonable for registrar applicants throughout the world. Q10. Are the grounds for ineligibility set forth in Section III.B adequate to protect consumers and the registry administrator from unscrupulous registrars? Within practical limits of oversight, in widely differing legal jurisdictions world-wide, these grounds are adequate. Ultimately, local law must be the basis for protection of consumers, and registry administrators must be delegated sufficient power, by ICANN, to protect themselves. Q11. Are any of the grounds for ineligibility set forth in Section III.B likely to significantly diminish the number of applicants eligible for accreditation? Given the experience of CORE, it seems unlikely. Q12. ICANN presently has not concluded whether its accreditation responsibilities will be performed by its own staff or by a qualified outside agency. Does a decision on this issue have a potentially significant impact on the proposed accreditation process? CORE was fortunately able to secure the services of Arthur Andersen and Co, on a pro-bono cost recovery basis. The process of qualifying CORE registrars went smoothly in large part because of their generous cooperation and professional skills. The use of a qualified outside agency should be seriously considered. Q13. Where the registry administrator is also a registrar, is direct accreditation of registrars an appropriate role for ICANN, or should accreditation flow through the registry administrator? ICANN must exercise accreditation power over all registrars for generic TLDs in order to assure robust competition among the registrars. If registry administrators were allowed to accredit registrars, there would be no way to prevent more favorable treatment being afforded to those accredited registrars, with accompanying anti-competitive results. The function of the registry administrators must be separated from the functions of the registrars and should be dealt with separately. Q14. If direct accreditation is necessary to address competitive concerns raised by the registry administrator also acting as a registrar, do the draft guidelines provide adequate protection? POC believes that it is not in the public interest to have the same company acting as both a registry operator and a registrar. As noted above in our response to Question 4, POC believes that the most appropriate and stable competitive model is where no single entity has absolute control over the registry operation of a generic TLD. The most obvious solution is for registrars to jointly contract for registry services where they have a direct and joint economic interest in driving down the wholesale registry price for registrations and can be more responsive to customer requirements. In this scenario, the additional advantage is that a registry operator cannot make an claims of ownership of intellectual property rights in a top level domain, since it would be simply a contractor to a group of registrars. Q15. If the draft guidelines do not provide adequate protection, what additional measures could be taken to implement the equal access provisions of Amendment 11? The answer largely depends on the U.S. government fulfilling its responsibilities. Q16. What special measures, if any, should be taken to monitor the registry administrator's activities to ensure that all registrars get equal access to the registry? There should be continuing oversight by ICANN, and appropriate measures, including, if necessary, withdrawal of registry functions from a registry that abuses its powers. Q17. Are the data elements to be submitted by registrars to the registry administrator appropriately specified? They are appropriate. The applicable national laws relating to privacy issues will, of course, have to be taken into account as the process is developed further. Q18. Is monthly an appropriate period for data escrow by accredited registrars? Should more frequent or incremental escrows be required? The POC recommends a per-volume related period instead of time periods (for example, every 500 registrations), and further recommends making use of third-party escrow services such as are used for escrowing computer source code. Q19. Should all registrar electronic records concerning dealings with customers be subject to a data escrow requirement? This appears to be an appropriate requirement to protect the public and to provide adequate assurances of stability of the DNS. Q20. Should registrars be prohibited from claiming rights in the registration data they generate? To the extent necessary to assure portability of registrations and a competitive system, registrars should not have any proprietary rights in the registration data. The proposed Section IV.5 deals with this appropriately. Q21. Should registrars' claims to rights in registration data be subject to a Whois license for ICANN-designated Whois servers only, or should registration data be freely available to all operators of Whois servers? What other restrictions, if any, should be placed on the data? Subject to applicable law relating to privacy, registration data should be freely available to all operators of Whois servers. Q22. Are the proposed requirements in Section IV.7 appropriate to promote fair access to the registry? Should other similar implementing requirements be set forth? The proposed requirements of Section IV.7 are appropriate, but should also include economic provisions to insure that all registrars are able to compete on a level playing field. Section IV.7 should prevent a registry from giving or receiving any financial advantage stemming from a relationship with a particular registrar (or registrars). See the POC Economic Structure Statement. Q23. Does the uniform application of the fair information practices concerning personal data impose undue burdens or restrictions on registrars or the registry administrator? Should greater protections be required for personal data provided by domain name holders? The answer to this question depends largely on applicable laws relating to privacy, but the uniform application of the fair information practices does not itself impose undue burdens. Q24. Does the proposed mechanism for anonymous holding of SLDs adequately ensure that accurate contact information is available as required for proper operation of the Internet? This appears to be an adequate mechanism. Q25. Does the proposed mechanism for anonymous holding of SLDs adequately accommodate the legitimate interests of law enforcement authorities and those seeking to enforce trademark and other rights? This appears to be an adequate mechanism. Q26. Is it advisable to have a Code of Conduct that establishes basic standards of fair business practices to which accredited registrars must adhere? While a Code of Conduct is an appealing concept, the administration of such a Code is likely to impose an enormous administrative burden that ICANN is not equipped to handle. Local law is the preferable source of regulation of registrars' business practices, other than practices that directly impinge on operation or security of the Internet. Q27. Should a registrar/registry administrator organization have the principal responsibility for formulation of the Code of Conduct? Should that responsibility instead be assigned to ICANN or some other body? See the answer to Q27. Q28. What standards of conduct should be in the Code of Conduct? A proposed Interim Code of Conduct for DNS Registrars, to be used until the organization of registrars and registry administrators becomes operational, is currently being prepared and will be posted before the Singapore meeting. Early written comment on this issue would be especially appreciated. See the answer to Q27. Q29. How, and by what entity, should the Code of Conduct be enforced? Should enforcement decisions be subject to review and, if so, by what mechanism? See the answer to Q27. Q30. Should the guidelines limit the duration (e.g., two years) for which SLDs can be registered? In order to avoid problems stemming from unused SLDs, a two year registration duration appears to be appropriate at this time. Experience may dictate a change later. Q31. Would the prepayment requirement hinder any otherwise realistic and desirable registrar business models? The prepayment requirement is highly desirable to avoid problems that have arisen in registries that do not require prepayment, in particular, the "cybersquatter" problem. Q32. Should the durable connectivity assurance (against insolvency of registrars) be limited to a specified length of registration? The assurance should be limited to the specified length of registration plus a reasonable grace period, e.g. 30 days. Q33. Should other WIPO recommendations be implemented in these proposed guidelines? At this time, pending finalization of the WIPO recommendations, no other recommendations should be implemented. Q34. Because there has not yet been any experience in processing applications, the proposed application fee levels are necessarily rough estimates. Comments on the appropriate fee level to defray processing costs are invited. Since there is no experience, the proposed fee levels for SLDs in the generic TLDs appear to be appropriate. ICANN should closely monitor this situation and make necessary changes when required. Q35. Are there any practical problems presented by collection of per-registration fees at the registrar level? The collection of per-registration fees at the generic TLD registrar level appears to be the best means of assuring adequate financial support for the administration of the generic TLD system. Q36. Is it appropriate to have both fixed and variable components of the accreditation fee? The answer to this question will depend on experience. The question should be reviewed periodically. Q37. At what level should the fixed component be set? Should the level vary based on the country in which the registrar is located? Initially the proposed fixed component appears to be an appropriate amount. As stated above, the amount should be reviewed periodically based on experience. Variation of the level dependent on location is probably a bad idea, because it would simply lead to "flag of convenience" tactics that would defeat the purpose, which presumably is to allow registrars in less-developed countries to develop. Q38. Is there some measure other than registration-years on which the variable component should be based? This is also a matter in which only time and experience can provide an answer. Q39. Is it beneficial to state a cap on the rate at which the variable component is computed, to allow registrars to better assess their prospects in the business? Initially, a cap is a good idea to allow the preparation of business plans by registrars. Q40. Are the stated grounds of termination appropriate? Can they be made more specific while still preserving their utility? Initially, the stated grounds appear appropriate. Q41. Should additional grounds of termination be added? Not at this time. The question should be revisited after experience with operations. Q42. Is fifteen days notice sufficient to allow a registrar to initiate arbitration? This appears to be an appropriate period at this time. Q43. Is there any type of dispute arising from a registrar's accreditation agreement that should not be subject to arbitration? Disputes arising from the registrar accreditation agreement should all be subject to arbitration. Q44. What arbitral body should be selected, and what rules of arbitration should be used? The following provision is part of the CORE Memorandum of Understanding. Although it has never been invoked, it was selected on the basis that it maximized the neutrality of the proceeding. "Each Registrar agrees that any claim arising out of or relating to this CORE- MoU, or the breach, termination or invalidity hereof, shall be settled by arbitration in accordance with the UNCITRAL Arbitration Rules as are at present in force. The appointing authority shall be the Secretary General of the Permanent Court of Arbitration. There shall be a sole arbitrator. The place of arbitration shall be Geneva. The language used in the arbitral process shall be English. The claim shall be decided in accordance with Swiss law." Q45. Should registrars seeking renewal of their accreditation be specially protected from the effects of raised accreditation standards or changes to the terms of the accreditation agreement? In order to assure the level playing field and to maximize the benefits of a competitive business environment, it is not appropriate to offer such protection. The ICANN proposal is intended to provide experience, based on the Shared Registry System test, which will enable final accreditation guidelines to be prepared. The final guidelines should be applied to all registrars across the board. Q46. Should disputes arising from actions on initial or renewal applications for accreditation be subject to arbitration? If so, on what grounds should such actions be reviewable? In view of the global nature of the system, and the problems inherent with parties in different jurisdictions, arbitration in a neutral forum is clearly the desirable way to handle such disputes. Q47. Should the guidelines prohibit accredited registrars from charging different prices to different categories of customers? No. This appears to be an area where the benefits of open competition among registrars will be realized, and a minimum of price regulation is called for. This answer is predicated on the assumption that no registrar will have a financial advantage relative to other registrars based on a relationship with a registry. Q48. Should the guidelines require accredited registrars to offer unbundled domain name registration services? As stated in answer to Q47, assuming the level playing field for registrars, there is no apparent economic basis for such a requirement, and competitive market place forces should prevail. Q49. Are the additional requirements for participation in phase 1 too burdensome? At this time, there appear to be good reasons for the requirements to assure the success of the Shared Registry System test. Q50. Is the primary selection criterion appropriate? The primary selection criterion is appropriate. Q51. In the event that more that five registrars meet the criteria equally, what mechanism should be used to select among them? As an absolute last resort, assuming that there is true "equality" among candidates, which seems unlikely, a selection by lot could be used. The criteria appear to be adequately detailed to preclude the absolute equality of candidates.
POC responses to ICANN Questions re Guidelines for Accreditation.doc