.org Reassignment: Evaluation of Proposals
Under Procedural Criteria (#2, #3, and #10)
Prepared by: Louis Touton
ICANN General Counsel
19 August 2002
ICANN’s current registry
agreement with VeriSign, Inc. for the operation of the .org top-level
domain (TLD) calls
for responsibility for operating the .org TLD to be reassigned as of 1
January 2003. On 20 May 2002, ICANN issued a final
Request for Proposals by organizations seeking to become the successor
operator. As of the 18 June 2002 deadline, eleven
proposals were received.
As part of the Request for Proposals, ICANN published “Criteria
for Assessing Proposals,” which set forth eleven criteria that would
be considered in evaluating and selecting from among the proposals received.
Four of these criteria (#1, #7, #8 & #9) concern technical aspects
of the proposals, such as the need to preserve a stable, well-functioning
.org registry, which the ICANN Board has indicated will be given highest
priority in the evaluation. Three other criteria (#4, #5 & #6) address
the needs of non-commercial registrants consistent with the primary purposes
of the .org registry. Yet another criterion (#11) involves the completeness
of the proposals submitted and the extent to which they demonstrate realistic
plans and sound analysis. Three teams were commissioned to evaluate the
proposals under various sets of these criteria; each team prepared a report
of its findings that has been posted.
This report concerns the three other criteria to be evaluated. Criterion
2 is largely a verification step that all bidders are expected to
meet, so that it only needs to be applied to the proposal(s) likely to
be selected based on the overall evaluation. If the selected bidder does
not meet the requirements of that criterion, its proposal would need to
be rejected and attention turned to the next highest-ranking proposal.
Criterion 3 relates to enhancement
of competition and is relevant mainly to bids involving relationships
to the incumbent registry operator, and analysis of that criterion has
been focused accordingly. Because criterion
10 is similarly relevant only to particular proposals (i.e. only those
seeking to qualify for the VeriSign endowment), evaluation under that
criterion has also been targeted.
A. Evaluation Under Criterion 2 (Compliance with ICANN-Developed
Criterion 2 of the published Criteria
2. Ability to comply with ICANN-developed policies.
As a globally open TLD, the operation of the .org registry must comply
with policies defined through ICANN processes, such as policies regarding
registrar accreditation, shared registry access, the uniform dispute
resolution policy, and access to registration contact data via Whois.
Consideration will be given to the adequacy of mechanisms proposed for
ensuring compliance with those policies.
Questions relevant to this criterion include C17,
The principal vehicles to implement policies in the operation of a TLD
registry are entry and enforcement of Registry Agreements between ICANN
and the registry operator. As part of the Request for Proposals, ICANN
published a Model .org Registry
Agreement, which details the registry operator’s obligations to implement
ICANN-developed policies. Each applicant was advised
in the instructions:
If your application is selected, you will be required to enter into
a registry agreement with ICANN concerning your operation of the .org
registry. The model form of the agreement is posted on the ICANN web
site; please note that several appendices must be prepared and agreed
between you and ICANN based on the details of your proposal. If agreement
is not reached on the registry agreement and its appendices, ICANN reserves
the right to make another selection of the organization that will become
the successor operator.
Thus, the model agreement (already drafted) and its appendices (some
already drafted and others to be prepared to reflect the terms of the
selected proposal) provide the main mechanism by which the selected registry
operator will be obligated to implement ICANN-developed policies.
In addition to the obligation to implement policies, however, it is
important that proposals demonstrate the capability and disposition to
implement them. The following proposals, which were placed in tier “A”
by at least one technical team, were reviewed to determine whether they
propose adequate mechanisms to promote voluntary compliance with ICANN
policies, and otherwise indicate the bidder’s capability and disposition
Based on the proposals (particularly items C19,
and C28), each of the bidders
propose mechanisms (such as dedicated compliance personnel) that should
afford them the capability to comply with ICANN policies and each reaffirm
their commitment to abide by ICANN policies.
Three of the five proposals (DotOrg, ISOC, and RegisterORG) listed above
involve a back-end provider that has an ownership relationship with one
or more registrars. This circumstance requires particular attention to
compliance with ICANN requirements that all registrars receive equivalent
registry access. The back-end providers involved, however, have demonstrated
their ability to address these circumstances in connection with TLDs they
In sum, I conclude that all five proposals listed above demonstrate
compliance with criterion #2.
B. Evaluation Under Criterion 3 (Enhancement of Competition)
Criterion 3 of the published Criteria
3. Enhancement of competition for registration services.
One of ICANN's core principles is the encouragement of competition
in the provision of registration services at both the registry and registrar
levels. Promotion of that principle will be a criterion. As one illustration
of this criterion, a major purpose of the reassignment of the .org registry
is to diversify the provision of registry services by placing the .org
registry under different operation than the .com and .net registries.
Consideration will be given to the extent to which proposed arrangements
are consistent with this purpose. As another illustration, applicants
are encouraged to refrain from prohibiting non-affiliated providers
of backend services from offering their services in connection with
Questions relevant to this criterion include C2,
C32, and C33.
As is apparent from the text supporting criterion 3 quoted above, the
reassignment of .org is in general a pro-competitive event, though the
pro-competitive benefits might be mitigated by various features of particular
proposals. (Note: Various competitive effects may also result from factors
such as the introduction of innovative services and reductions in pricing.
Those factors are addressed in criterion
7, which was evaluated by the technical teams.)
The text above gives two illustrations of proposal features that tend
to diminish the pro-competitive benefits of reassignment:
- Where the proposal does not diversify the provision of registry services
by placing the .org registry under different operation than the .com
and .net registries.
- Where a proposal is shown to have prohibited a back-end provider from
providing support for other proposals.
Only the first bullet above is analyzed in detail in this report. With
the possible exception of a restrictive arrangement between UIA and VeriSign
(that restriction does not affect the outcome of this analysis of criterion
3), there appears to be no evidence of lock-ups of the type stated in
the second bullet, nor do the proposals appear to present other circumstances
that significantly mitigate the pro-competitive benefits of reassignment
Of the eleven proposals received, only three appear to involve potentially
relevant relationships with the operator of the .com and .net TLDs (VeriSign,
Inc.): Global Name Registry; ISOC; and UIA. The following analyzes competitive
considerations arising from these relationships:
Global Name Registry has a
two-fold relationship with VeriSign. First, VeriSign Capital Management,
Inc. is a minority (less than 10%) investor in GNR’s parent holding
company. See GNR
Proposal, item C33(b). VeriSign does not occupy a board seat nor
is there any indication that its minority ownership gives it control
over GNR’s operations. In these circumstances, it does not appear that
this investment relationship undercuts the competitive benefits of reassignment
In addition to its minority ownership by VeriSign, GNR has entered
an arrangement under which VeriSign provides principal registry services
for .name, the TLD that GNR currently operates. This arrangement was
implemented at the time that GNR went from batch-mode to real-time shared
registry operations. In its .org proposal, GNR’s proposal pledges as
Assuming a winning bid, aside from its role in transitioning the
.org registry to Global Name Registry, Global Name Registry will not
contract its backend services to VeriSign in connection with the continued
operation and maintenance of the .org registry. Clearly, this type
of arrangement would contravene the intent and spirit of the entire
Proposal, item C33(b). This pledge appears fully satisfactory to
maintain the pro-competitive benefits of reassignment of .org and, if
GNR is selected, it should be included in the Additional Covenants (Appendix
W) of the Registry Agreement.
It should be noted, however, that an additional consequence of this
pledge is that GNR does not propose to use the technology (that introduced
through GNR’s collaboration with VeriSign’s) which has been used to
provide real-time shared registration services for the .name TLD. Instead,
to use technology it has developed and will develop without VeriSign’s
collaboration. As to this non-VeriSign technology, GNR’s proposal
discloses qualified experience, stating
that it in its .name operations it “had put into place virtually all
of the required infrastructure essential” for the .org registry
before commencing its collaboration with VeriSign. In fact, the omission
is real-time shared registry capabilities. The experience of other registries
has proven that reliably providing these capabilities can be quite demanding.
ISOC’s back-end provider, Afilias, also
has VeriSign as an investor. Afilias is organized as a consortium
of eighteen gTLD registrars. VeriSign is a minority (5.6%) shareholder
of Afilias as one of these registrars. Because the other Afilias shareholders
are VeriSign’s competitors, however, VeriSign’s ability to exercise
control over Afilias is effectively minimized and, indeed, no VeriSign
employee has ever been elected to Afilias’ Board of Trustees/Directors.
In these circumstances, it does not appear that this investment relationship
undercuts the competitive benefits of reassignment of .org, particularly
in view of the fact that the .org registry would be assigned to ISOC,
UIA proposes to subcontract
with VeriSign Global Registry Services (the current operator of
the .com, .net, and .org registries) to provide back-end registration
services for the .org TLD. UIA has entered into a teaming
agreement with VGRS under which VGRS will provide to Diversitas
(UIA’s non-profit operating subsidiary) back-end registration services
for the first three years of the Registry Agreement. At
the end of the second year, UIA will recompete the services initially
to be provided by VGRS, with a target implementation date for the recompetition
of 1 January 2006. Although this recompetition will ultimately result
in an increase in diversity over the present circumstances, that pro-competitive
increase will be delayed by three years.
In view of the review described above, it appears that criterion 3 renders
the UIA bid less attractive, but does not bear significantly on any of
the other bids.
C. Evaluation Under Criterion 10 (VeriSign Endowment)
Criterion 10 of the published
Criteria document states:
10. Ability to meet and commitment to comply with the qualification
and use requirements of the VeriSign endowment and proposed use of the
To the extent that a proposal contemplates the availability of the
VeriSign US$5 million endowment (see subsection 5.1.4 of the current
.org Registry Agreement), the proposal should demonstrate that it meets
the qualification and use requirements of that endowment. Proposals
that employ the endowment should also include detailed commitments about
the uses to which the endowment would be put, and consideration will
be given to the extent to which those uses are consistent with the smooth,
stable transition and operation of the .org TLD for the benefit of current
and future .org registrants.
In view of the above description, the following issues are relevant to
evaluation of this criterion:
- Does the proposal seek the VeriSign endowment?
- If so, does the proposal appear qualified to receive it?
- If the proposal seeks the VeriSign endowment, what effects would failure
to obtain the endowment have on the bidder’s ability to meet the requirements
of its proposal?
Questions relevant to this inquiry include C2,
The following table summarizes my review of the above issues for each
||Effect of Not Obtaining Endowment
|The DotOrg Foundation
||Possible limitation on future improvements to services
and fee reductions
|Global Name Registry
||Potential 50% reduction in funding for proposed “worthy projects”
||Somewhat slower improvements to registry stability and roll-out
of innovative services; maximum registration fee US$6.00 instead of
||Slower introduction of new services (including no-cost and low-cost
services); diminished outreach activities intended to increase brand
|The .Org Foundation
||Reduced funding for core operations, including start-up costs
||Possibly diminished support of registrar/registrant infrastructure
and differentiation activities
||Reduced funding for start-up costs and reserves; reduction in “good
works” and community outreach
Key to codes in “Appears Qualified?” column:
A=Appears likely to be qualified, with perhaps minor
modifications, to receive the endowment.
B=Some issues regarding entitlement to the endowment; non-fundamental
modifications to proposal may be necessary.
C=Raises significant concerns regarding entitlement to the endowment,
which may require substantial revision to address.
As can be seen from the above table, only two bids raise significant
issues under the VeriSign endowment. A failure of those bidders to receive
the endowment as projected would somewhat reduce the attractiveness of
their proposals, but should not significantly affect the provision or
pricing of the services currently provided in the .org registry.
Because several issues beyond ICANN’s control may affect the entitlement
of a bidder to receive the entitlement as projected, steps should be taken
to ensure that it is clear that bidders assume all risks of not receiving
endowment funds. Although in the model .org Registry Agreement ICANN makes
no warranties as to the endowment, the selected applicant should be required
to expressly assume all risks of non-receipt of the endowment.
ICANN General Counsel
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