Via Facsimile No. 703-886-0047 and Federal Express
Feb. 28, 2001
Dr. Vinton G. Cerf
Re: .Com, .Net and .Org Agreements
As you know, under a 1999 agreement between ICANN and Network Solutions, Inc. (NSI has since merged with VeriSign, Inc.), in order for the term of the registries for .com, .net and .org to continue at least through 2007, we are obliged to divest the assets and operations of either the NSI Registrar or the Registry (now known as VeriSign Global Registry Services). Earlier this year, VeriSign announced its intention to divest itself of the assets and operations of the NSI Registrar and to continue to operate the Registries for .com, .net, and .org through at least 2007.
I want to reiterate our willingness to see this commitment through to its completion. Under this commitment, on the part of both parties, we would expect and intend to continue to operate the Registries for .com, .net, and .org at least through 2007.
While we are fully prepared to continue under the existing agreement, we have carefully explored with ICANN management and counsel the possibility of re-structuring and updating our relationship altogether to recognize dramatically changed circumstances since that agreement was signed, and to continue the positive development of the ICANN process. These discussions were motivated by several factors, including some very significant changes in the environment since 1999:
As a result of these and other factors, we have reached agreement with ICANN management on three new contracts which, if they are approved, would replace the 1999 registry agreement between ICANN and NSI. These agreements would become effective upon (1) approval by the ICANN Board of Directors, (2) concurrence of the U.S. Department of Commerce, by means of an appropriate amendment to the Cooperative Agreement, and (3) approval by the VeriSign Board of Directors.
These new agreements will provide substantial benefits for the entire ICANN community, further promote competition, enhance Internet stability, and help ICANN standardize its practices among registries. Among their main provisions are:
For all of these changes in the term periods and provisions in the agreements for .com, .net and .org, and the further commitments discussed below, we have mutually agreed to modify the current provision in the .com agreement concerning the procedures for any subsequent agreement.
We have accepted new and substantial obligations
on the part of all three registries to pay fees, as part of ICANN's
cost recovery program, identical to those paid by similarly situated
registries. Because there is an existing fee structure already
in place for these registries and the accredited registrars that
register names in them, there will have to be a transition plan
to move to the new fee system; that transition will be the subject
of continuing negotiations between ICANN and VeriSign, with the
objective of coming to an agreed transition before these agreements
become final that can be put in place by the end of ICANN's fiscal
year on June 30, 2001. ICANN has committed that the final agreement
will ensure that VeriSign will not pay more than its proportional
share of the overall Variable Registry-Level Fee (currently capped
at $3.5 million for all registries) as measured by its share
of registrations, and that an appropriate mechanism will be included
to ensure that any future increases in this Fee can be offset
by appropriate increases in the fees that VeriSign charges to
accredited registrars, on the same basis as that set forth in
the registry agreements for new TLDs. We believe that this regularization
of the fee structure with respect to the .com, .net, and .org
registries will further assure ICANN's financial stability and
enable it to accomplish the important tasks ahead.
Because the new agreements may call for various adjustments in VeriSign registry's operations, we would expect ICANN expressly to agree that, as to any new or revised obligations, VeriSign would be allowed a reasonable time to bring its operations into compliance. We would, for example, be required to re-engineer our Shared Registration System and adjust various contractual relationships with registrars and registrants, neither of which can be accomplished instantaneously. For our part, we would undertake to implement any required changes as promptly as possible.
As I indicated above, VeriSign has up to
now been intent on complying with Section 23 of the current Registry
Agreement, which provides for the automatic extension of the
term of that agreement for all three TLDs by May 10, 2001. I'm
sure you will understand that prompt final approval of these
new agreements is necessary. We also appreciate your commitment
to seek formal Board approval for an appropriate extension of
the time under the existing agreement should compliance with
Section 23 be necessary. But we are hopeful that by working with
you, and the Internet community, including members of the ICANN
Board, we will all see these new agreements approved and successfully
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