Verio Comments

["Casey, James A." <JCasey@mofo.com>]

Morrison & Foerster, LLP
February 26, 1999
Writers' Direct Contact
(202) 887-1500
ckennedy@mofo.com
jcasey@mofo.com


By Internet Mail

Board of Directors
Internet Corporation for Assigned Names and Numbers
339 La Cuesta Drive 
Portola Valley, CA 94028 
USA

		Re:	Verio Inc. Comments on 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.
Dear Board Members:
Verio Inc. ("Verio"), through counsel, hereby submits its comments on the
Guidelines for Accreditation of Internet Domain Name Registrars and for the
Selection of Registrars for the Shared Registry System ("SRS") Testbed for
.com, .net and .org ("Guidelines") proposed by the Internet Corporation for
Assigned Names and Numbers ("ICANN").
Verio, which was incorporated in March, 1996 to meet the growing needs of
business customers for Internet access and related services, offers turnkey
business Internet solutions encompassing a wide range of Internet
connectivity and enhanced Internet services throughout the United States.
Verio is also a registrar and user of IP numbers and domain name resources,
the largest domain name based web hosting company in the world, and one of
the largest domain name registrars globally.  Accordingly, Verio has a
substantial interest in ensuring that the new Domain Name System ("DNS") and
SRS Registrar guidelines will be efficient and fair to all users and
providers of domain name resources and will ensure the stability and
functionality of the DNS into the future.

Introduction
The Guidelines state that the "qualifications for accreditation are intended
to assure that all accredited registrars have the capability to perform the
function of registrar," while, "[a]t the same time, [allowing] the greatest
possible number of qualified applicants to participate in the registrar
business."[1]  The Guidelines further note that "great care has been taken
to avoid setting needlessly high standards or pointless arbitrary
thresholds."[2]  Although these principles are well-calculated to encourage
competition in the registrar business, ICANN also must take into account the
technical and operational requirements of the registrars, including scalable
customer service systems, secure Internet connections and online transaction
processing capabilities.  Companies seeking accreditation must be fully
capable -- technically, financially, and operationally -- of running a
registrar business at the time that they submit their accreditation
applications, or the functioning of the Internet will suffer.  The following
comments address this concern as well as other issues raised in the
Guidelines.[3]
Comments
SRS Accreditation Requirements
Verio is concerned that ICANN not establish guidelines that, for the sake of
competition, impair the continued efficient and effective operation of the
DNS.  Although the proposed Guidelines ostensibly mandate that registrar
applicants demonstrate the present or future capability to perform the
functions of a registrar, they contain insufficient specific technical
requirements to ensure such capabilities.  The ICANN must establish specific
technical criteria necessary for accreditation as a registrar.  These
criteria should be specified in a technical specification or requirements
document and should define the minimum requirement for registrar
accreditation.  Applicants must be required to demonstrate present
compliance with the requirements document, rather than provide only a
business plan for future compliance.[4]
In addition to these specific technical criteria, the ICANN must also
reconsider the proposed $500,000 commercial general liability insurance
coverage requirement.  This amount would be wholly insufficient to cover
likely claims and costs in the event of a major failure of the registrar's
systems.  Given the critical importance of a stable second level domain name
SRS, each registrar must carry sufficient insurance to protect its continued
operation in the case of a catastrophic event.  The required level of
insurance coverage may vary from region to region reflecting varying
liability risks in different parts of the world.  Likewise, the specified
level of liquid capital may be too low to ensure stable operation of the
SRS.  Liability insurance levels should be at least $1,000,000 and a
registrar should have at least $200,000 in liquid capital.  Also, as
discussed below, these requirements should be much higher for the five
testbed registrars.[5]
Establishing higher standards for registrars than are currently proposed
will not impede the development of competition in the name registrar
industry.  Although the ICANN must establish minimum criteria for
registrars, it need not set any standards for resellers of domain name
registration services.  Therefore, smaller companies that cannot meet
registrar eligibility requirements are not foreclosed from participating in
the domain name business as resellers.  Permitting easy entrance into the
reseller industry while imposing more significant restrictions on registrars
will ensure a stable, efficient DNS/SRS while permitting the development of
competition to the benefit of Internet consumers.
Once necessary requirements are established, ICANN or a designated third
party accreditation agency should begin accrediting registrars.  The
accreditation process should not, however, be assigned to any registry that
also operates as a registrar.  Such an approach creates unacceptable
incentives for competitive abuse of the accreditation process.
Selections for the Testbed
The proposed requirements for the five testbed registrars are clearly
insufficient to meet the demands of their role in implementation of the SRS.
The first five registrars will create the foundation for all registrars and
must be established, stable companies with significant experience in the
industry.  Thus, the primary selection criteria for these companies must be
their technical and operational capabilities.  
The testbed registrars should each meet, at a minimum, the following
criteria:
1.	Industry Experience:  The applicant must have registered at least
10,000 domain names on behalf of customers;
2.	Time in Business:  The applicant must have a minimum of two years
experience in the business of domain name registration;
3.	Number of Employees:  The applicant must have at least 25 full time
employees;
4.	Commercial Liability Insurance:  $10 million minimum;
5.	Liquid Capital:  $ 250,000;
6.	Demonstrated Current Business Capabilities:  A business plan for
developing sufficient capabilities is unacceptable.  The following
capabilities are necessary:
				In-house or outsourced customer care and
billing systems capable of serving the projected number of customers for the
applicant and sufficiently scalable to support long-term operations;
				Redundant Internet connections or
appropriate peering relationships;
				A proven capability to process online
transactions;
				Data centers with adequate security,
redundancy, fault tolerance, and 24x7 operations.
As noted above, the initial accreditation criteria for non-testbed
registrars should be based upon the results of the Phase 1 implementation of
the SRS.  These exacting requirements will ensure a successful Phase 1 test
and can be reconsidered for other registrars once the industry has
sufficient experience with the SRS to permit refinement of the requirements.
As noted in the Guidelines, the testbed registrars will be required to
coordinate and consult closely with NSI, Inc., as well as the other
registrars.  Such consultation, necessary to ensure thorough testing and
implementation, may require the participants to divulge confidential and
proprietary business information.  The testbed phase participants must enter
into nondisclosure/confidentiality agreements to protect such information
and to preserve the competitive positions of each of the testbed registrars.
Rights in Registrar Data
The Guidelines request comment on the appropriate data elements to be
submitted to the registry administrator.  The data elements currently
specified are excessive.  The actual required data should include only that
technical information necessary to maintain the DNS and to correctly
identify the legal holder of a given second level domain name.  Although the
information must be provided to the Registry, the owner of the domain name
must be given the opportunity to request that the data not be publicly
disclosed.
The following information should be provided to the Registry:
Type of Entity (Individual, Corporation, Partnership, etc.)
Name
Contact Information  (Address, Phone Number, Fax Number, E-mail Address,
Authorized Representative);
DNS Host Names
IP Addresses
Identity of Registrar
Further information may be collected by the Registrar for customer
relations, billing and marketing purposes, but all such information must be
designated the proprietary information of the registrar.[6]
Economic Regulation
Verio is in complete agreement with ICANN's assumption that it should not
engage in economic regulation of the registrar business.  Registrars must be
permitted to develop new or modified product offerings (e.g., bundled
registration and service offerings and limited or variable time domain name
registrations) as determined by the market, rather than by unnecessary
accreditation restrictions, such as a two-year registration requirement.
With the exception of the basic technical and operational requirements
necessary to ensure the effective and efficient operation of the DNS/SRS,
ICANN should refrain from interfering with the development of market-driven
competition in the domain registration business.
Fair Competition with Other Registrars
Many companies that become registrars also will choose to become registries
for new top level domains.  The vertical integration of these two operations
provides significant opportunity for competitive abuse.  Although the
principles described in Section IV of the Guidelines may mitigate some of
these concerns, they likely cannot cover all possible instances of
anti-competitive behavior.  Access to each top level domain is controlled by
a single registry.  As a result, each registry controls an essential input
for the provision of registrar services.  To the extent that a registry also
operates as a registrar, it has the ability to impose competitive
disabilities on other registrars.  Verio submits, therefore, that ICANN
should implement structural separation requirements for companies operating
as both registrars and registries.  Only this approach will ensure fair
competition among all registrars, as well as equal access to the essential
resources governed by the registries.[7]
Conclusion
An efficient DNS is a critical part of the Internet.  As the Internet itself
grows in size and importance to the world, management of the DNS must
reflect the global nature of this important resource.  The introduction of
competition into the DNS through the development of the SRS will ultimately
serve this goal and the public.  Competition, however, cannot become an end
in itself.  The ICANN also must preserve the operation of the DNS and the
stability of the Internet itself.  The recommendations made in these
comments, if adopted, will help to ensure the continued stability of the
Internet while introducing the benefits of competition to the Internet
community.
Please contact the undersigned with any comments or questions regarding this
submission.
				Respectfully Submitted,

				/s/ Charles H. Kennedy

				Charles H. Kennedy
				James A. Casey
				Morrison & Foerster llp
				2000 Pennsylvania Avenue, N.W.
				Washington, D.C.  20006-1888

				Counsel for Verio, Inc.


	Notes:

 1.  Guidelines at Section II.C.
 2.  Id.
 3.  Verio intends with these comments to address a number of issues of
greatest concern for the SRS.  However, Verio's failure to comment
specifically on any item presented in the proposed Guidelines should not be
read as an acceptance or rejection of the proposed item.  Moreover, Verio
assumes that many of the issues and concerns affecting the day-to-day
operations of the SRS, such as trademark dispute resolution and the
portability of domain names, will be further defined and refined during the
Phase 1 testbed process and in future policy proceedings, and will be
incorporated into the Guidelines and into other guiding documents as
necessary.
 4.  The technical specification or requirements document should be
developed in conjunction with, and should be based upon, Phase I of the
Shared Registration System ("SRS") implementation.  The operations of the
testbed registrars in Phase I will provide an effective model for the system
and will help to identify all minimum technical and operational
requirements.
 5.  The minimum technical criteria and financial requirements may be
scalable.  The accreditation process could be designed to set different
criteria for different proposed levels of operation.  For example, a
registrar proposing to register 10,000 second level domain names need not
meet the same exacting standards as a company proposing to register 10
million names.
 6.  Verio supports the concept of a data escrow and submits that the escrow
should include any additional information collected by the registrar as well
as the necessary data supplied to the Registry.  The additional proprietary
information should be disclosed to another registrar only in the event of
the bankruptcy or other failure of the collecting registrar.
 7.  Many important aspects of the relationship between the registries and
the registrars remain undefined.  These details must be addressed more
thoroughly in future proceedings.
	_________________________
	James A. Casey
	Morrison & Foerster, LLP
	2000 Pennsylvania Avenue
	Washington DC 20006
	(202) 887-8787
	jcasey@mofo.com
	______________________



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