Kevin E. Brannon
September 12, 2002
VIA ELECTRONIC MAIL & CERTIFIED MAIL - RETURN RECEIPT REOUESTED
Dear Reconsideration Committee:
Pursuant to the Reconsideration Policy adopted on March 4, 1999, Dotster, Inc. ("Dotster") formally requests reconsideration of the ICANN Board of Director's (the "Board") decision of August 23, 2002 to adopt the WLS proposal. As required by the terms of the Reconsideration Policy, Dotster submits the following information:
1. Contact information for requesting party.
2. Action to be reconsidered.
Dotster requests reconsideration of the Board's adoption of the WLS proposal, as the decision is in contravention of established ICANN procedures and contrary to ICANN's obligations in the Registrar Accreditation Agreement (the "Accreditation Agreement") between ICANN and Dotster.
3. Date of the action.
The Board adopted the WLS proposal at a special meeting of the Board held on August 23, 2002.
4. Effect of the action.
The effect of the adoption of the WLS proposal is to implement the WLS proposal by VeriSign, which will destroy competition between a number of Registrars that currently provide services in the secondary market that are similar to the WLS proposal (including Dotster). In addition, implementation of the WLS proposal will put Dotster's NameWinner business out of business, restrict consumer choice and competitive pricing of similar services, and stifle innovation.
5. Request for temporary stay.
A temporary stay is hereby requested, as implementation of the WLS proposal, even for the one-year "trial period" allowed by the Board, will destroy the thriving competition between Registrars with businesses similar to the WLS proposal, restrict consumer choice and competitive pricing of similar services, and stifle innovation. If the WLS proposal is implemented prior to the resolution of reconsideration by ICANN, it will disrupt Dotster's business and operations and harm Dotster's reputation with its customers and potential customers.
6. Specific action sought.
Dotster requests (i) that a temporary stay be implemented until such time as issues surrounding the approval of the WLS proposal are resolved; and (ii) that the Board reverse its decision to authorize the President and General Counsel of ICANN with authority to conduct negotiations toward revisions to the .com and .net registry agreements between ICANN and VeriSign to provide a wait-list service.
7. Grounds for reversal.
ICANN's actions in approving the WLS proposal violates its contractual obligations under Sections 2.3.2 and 4 of the Accreditation Agreement.
As background, the WLS was proposed by VeriSign on December 30, 2001, as a way to manage the registration of expiring domain names. VeriSign proposed to offer the WLS at the Registrar level by using technology supplied by SnapNames, a company that currently has arrangements with some Registrars to provide a roughly similar service.
The WLS proposal would operate by allowing accredited Registrars, acting on behalf of customers, to place reservations for currently registered domain names in the .com and .net top-level domains. Only one reservation would be accepted for each registered domain name and each reservation would be for a one-year period. Registrations for names would be accepted on a first-come/first-served basis, with the opportunity for renewal. VeriSign would charge the Registrar a fee, which would be at a set amount for the one-year reservation, but there would be potential rebates to qualifying Registrars. The Registrar's fee for customer subscriptions would be established according to competitive market conditions. In the event that a registered domain name is deleted from the registry (after all grace periods expire), VeriSign would first check to determine whether a reservation for the name is in effect. If there was a reservation, VeriSign would assign the name to the Registrar, charging the US$6.00 annual registration fee to the Registrar. The Registrar would register the name to the customer, charging a fee determined by agreement of the Registrar and customer. If there is no reservation, VeriSign would delete the name from the registry, so that the name is returned to the pool of names equally available for re-registration through all Registrars on a first-come/first-served basis.
VeriSign proposed to implement the WLS for a twelve-month trial. At the end of the trial, ICANN and VeriSign would evaluate whether the service should be continued. In the event the WLS is not continued, reservations extending beyond the trial would be honored (thus allowing, in effect, a two-year trial).
Dotster and other Registrars are currently providing services similar to those that VeriSign will be offering through WLS. The specific service that Dotster offers is referred to as "NameWinner." By way of explanation, Dotster's NameWinner service allows individuals interested in registering a domain name that is about to expire to place a bid on the domain name, with bids starting at $25. NameWinner will then attempt to register the domain name as it is released. If NameWinner is successful, the customer with the highest bid receives the domain name and is charged for the registration. If NameWinner is not successful in registering the domain name, then the customer is not charged. Other Registrars in the secondary domain name market have other technology with different pricing policies.
There are two primary reasons Dotster requests reversal of ICANN's decision, including the following: first, adoption of the WLS proposal violates ICANN's contractual obligations under the Accreditation Agreement; and second, the adoption of the WLS proposal contravened ICANN's processes established by the Accreditation Agreement.
Authorization of the WLS proposal by ICANN violates ICANN's contractual obligations under the Accreditation Agreement. Specifically, Section 2.3.2 of the Accreditation Agreement requires that with respect to all matters that impact the rights, obligations, or role of the Registrar (in this case, Dotster), ICANN shall "not unreasonably restrain competition and, to the extent feasible, promote and encourage robust competition." Authorization of the WLS proposal by ICANN has the effect of destroying competition between Registrars who currently offer services similar to those services that VeriSign is offering. Competition will be destroyed because all domain names that are being released will first be offered to WLS customers, before any Registrars will be able to potentially allow others to register the domain name that is being released. If the WLS proposal is implemented, Registrars will be unable to compete with VeriSign, which by design has preferential rights to register domain names.
The impact of VeriSign being allowed to operate WLS as a monopoly in the secondary domain name market will be wide-spread and immediate. Competitive pricing options will be destroyed, as the authorization by ICANN of the WLS proposal indicated that pricing will be negotiated and fixed. In addition, as currently proposed, the fees for WLS "services" will be well in excess of cost-plus reasonable profit. Currently, Registrars offering services similar to WLS provide their services at a variety of different price points and under different conditions. For example, Dotster's NameWinner service allows individuals interested in registering a domain name that is about to expire to place a bid on the domain name, with bids starting at $25, and the customer is only charged if NameWinner is successful. In contrast, other services allow customers to pay a one-time fee (for example, $19.98) to monitor domain names to attempt to register that name as soon as it is released. In addition, without competition between service providers, consumers will not have alternative service providers if they have customer service problems or would like options based on innovative services different than those offered by VeriSign.
The adoption of the WLS proposal contravenes the procedural requirements for adopting a Consensus Policy, as required in the Accreditation Agreement. That is, Section 4.2 provides the topics for specifications and policies that ICANN should establish as Consensus Policies, including specifically Section 4.2.4 ("principles for allocation of Registered Names"). The WLS proposal falls clearly within this topic for a specification and policy, as the WLS proposal governs how Registered Names will be held after expiration. Thus, the adoption of the WLS proposal should have been treated as a Consensus Policy. It was not.
Section 4.3.1 of the Accreditation Agreement indicates that Consensus Policies are those policies established based on a consensus among Internet stakeholders represented in the ICANN process, as demonstrated by (i) an action by the ICANN Board of Directors, (ii) a recommendation, adopted by at least a two-thirds vote of the council of the ICANN Supporting Organization to which the matter is delegated, that the policy should be established, and (iii) a written report. Here, no recommendation that the policy should be established was passed with the requisite vote by the council of the ICANN Supporting Organization. Quite to the contrary, in this instance, both the Transfer Task Force and the DNSO Names Council preferred recommendations that would deny the WLS proposal. Thus, implementation of the WLS proposal will be a breach of the Accreditation Agreement, as the WLS proposal was inappropriately approved.
Dotster has also requested review by an Independent Review Panel pursuant to the Accreditation Agreement. A copy of the letter requesting such review is attached for reference.
8. Documents in support of Dotster's request.
The following links are to resources that may be useful in considering this request:
In light of the foregoing, Dotster requests that ICANN reconsider and reverse its decision to allow the WLS proposal due to the negative impacts it will have to consumers, Dotster, and the Internet community.
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