The following letter was sent on 16 October 2002 by counsel for VeriSign, Inc., to Joe Sims, ICANN's outside counsel. Inasmuch as it was not submitted by e-mail to <reconsider@icann.org>, as required by ICANN's reconsideration policy, the ICANN Board was consulted for instructions as to how it should be handled. In response, at its 31 October 2002 meeting in Shanghai, the ICANN Board adopted a resolution giving the following guidance:

Whereas, in resolution 02.100 the Board authorized the President and General Counsel to conduct negotiations with VeriSign toward appropriate revisions of the .com and .net registry agreements to permit the offering of a Wait-Listing Service under stated conditions;

Whereas, on 16 October 2002 VeriSign's Deputy General Counsel sent ICANN's outside counsel a letter "formally request[ing] that the Board reconsider three of [the conditions] at the Shanghai meeting";

Whereas, the Board's reconsideration policy states that "[r]equests for review or reconsideration must be submitted by email to reconsider@icann.org";

Whereas, the Board is of the view that, despite VeriSign's failure to comply with the published procedures for seeking reconsideration, the letter should be treated as if it were submitted to the e-mail address;

Whereas, the Reconsideration Committee currently has pending a request (No. 02-5) also seeking review of the Board's action in resolution 02.100;

Resolved [02.124] that VeriSign's 16 October 2002 letter is hereby referred to the Reconsideration Committee, with instructions to treat it as if it had been submitted on that date to the e-mail address as required by the Reconsideration Policy.

In view of this guidance, the letter has been docketed as Reconsideration Request 02-6, with a date of submission of 16 October 2002.

Philip L. Sbarbaro
Deputy General Counsel
VeriSign, Inc.

October 16, 2002

Joseph Sims, Esq.
Jones, Day, Reavis & Pogue
51 Louisiana Avenue NW
Washington, DC 20001-2113

Re: ICANN Resolution 02.100

Dear Joe:

I write to you, as outside counsel for the Internet Corporation for Assigned Names and Numbers ("ICANN"), in response to Resolution 02.100, passed by ICANN's Board of Directors on August 23, 2002, regarding the revision of the .com and .net registry agreements to provide for a registry-based wait-listing service (WLS). Although the Board has voted in favor of the WLS service, as you are well aware, VeriSign respectfully disagrees with ICANN's position that ICANN (1) has the authority to so regulate the business affairs of any registry, and (2) has any legitimate basis for appending "conditions" on to the service which substantially impair its viability and economic success. Pursuant to the terms of the registry agreements for .com and .net, VeriSign recognizes the need to add a WLS price to Appendix G of those agreements, which is all that VeriSign originally requested.

As you are aware, in an effort to move this new service to the marketplace, we reluctantly have cooperated with a process established by ICANN which we strongly oppose as inappropriate and ineffective. This process began months before the formal presentation of our WLS proposal, including discussions with ICANN's General Counsel and various members of the Internet community. The process has continued through the last seven months of presentations, comments, and Board meetings, but is no closer to the marketplace.

With the imposition of "conditions" on August 23, 2002, the situation has become commercially impossible. We spent the next 40 days trying to make these latest conditions work, simply in an effort to avoid conflict and to move this endless process to an end. We then sent a draft of this letter to you on October 1, 2002. In response to that draft, you replied two weeks later in an e-mail to the effect that "it was unlikely to be possible to focus on this until after Shanghai." The Shanghai meeting of ICANN, however, does not occur until October 27-31, 2002, another two weeks away. The total delay, from conditions to Shanghai meeting, adds another 66 days to this unfortunate and unnecessary process. The six "conditions" imposed by the Board severely delay and nearly ruin the proposed service and we formally request that the Board reconsider three of them at the Shanghai meeting.

Taking the conditions in sequence as "resolved," we offer the following comments:

1. Six-month delay. Under condition "1", ICANN would require VGRS to delay implementation of the WLS for a six-month period. That six-month period, however, would not even begin to run until the redemption grace period (RGP) has been implemented for .com and .net. We can find no technical or business justification for imposing this condition. VGRS publicly modified its WLS proposal to include an interim RGP for WLS subscriptions, thereby protecting current registrants from problems that might occur with regard to inadvertent deletions in the same way that the RGP would do once it is in place. To delay implementation of a new service for a six-month period for the entire market when the benefits of the RGP are fully realized with the interim solution has no technical basis, defies common business sense and harms the consumer through needless delay of the service. The effect of the delay would mean that it would take 15 months from the time VGRS sent the formal request to ICANN until the service could be introduced and over 21 months from the time discussions started in ICANN forums about such a service; that is clearly unrelated to any technical coordination function, and is neither commercially reasonable nor responsive to the marketplace.

2. Current SnapNames subscribers. ICANN has chosen not to acknowledge the contractual rights of current SnapNames subscribers. Because liability may exist for interference with present contractual relations, we earlier suggested at least two alternatives (grand-fathering and exclusion). In the spirit of working cooperatively with ICANN, however, we have approached our partner SnapNames and together we are prepared to accept this liability in order to bring this service to the marketplace.

3. Registrar blackout. We understand condition "3" to preclude a registrar from accepting a WLS subscription at any time after "60 days before . . . deletion." This blackout period only affects the registrar sponsoring the current registration and would clearly disadvantage the customers of the blacked out registrar. Further, it would be impossible for the registry (as contrasted with registrars) to police this condition, given, (1) that the registry's expiration dates may or may not correspond with the registrar's expiration dates and (2) that varying grace periods among registrars exist which also do not directly correlate to the expiration dates. Correspondingly, from the registrar's level, it would be impossible for the blacked out registrar to enforce this condition. This condition is virtually unworkable in a real-world environment and also highly game-able. Here are some specific issues:

a. Because it is not possible to predict when a registrant will renew a domain name registration, the outcome is only obvious when observed. Registrars would have to predict if and when a domain name will be deleted in order to comply, or black out all domain name registrations within 60 days of any possible "delete event."

b. There are also cases that do not involve the domain names' anniversary date. For example, suppose a domain name has been registered for 5 years. In year two, a UDRP case or court order causes the current registrant to surrender and to delete the domain name. What would happen if the rightful trademark owner had taken a WLS subscription from the same registrar days before this deletion occurred, knowing the domain name was going to be deleted? Would the trademark owner-WLS subscriber lose it to someone else? This creates a paradox that can only be solved by blacking out all domain names from WLS subscription, because it is impossible to predict when a deletion will occur.

c. If, on the other hand, registrars delayed their deletion commands regardless of customer actions, they could get around the blackout condition and be able to sell WLS subscriptions at any time, so long as they were willing to possibly pay the $6 renewal. In this way, the system could easily be gamed.

d. In addition, companies with multiple accreditations could easily pass domain names from one accredited registrar to another. Would this blackout requirement be expanded to prohibit this? If so, what about companies with partial ownership in other registrars? Regardless, registrars will work together to game the system.

e. Also, would it be correct to assume that every time a WLS subscription is transferred, the registrar would have to check these conditions again? This would create additional work and be almost impossible to explain to customers.

f. Finally, but most importantly, this would create an extremely poor user experience. Registrars will be faced with having to explain to customers why a particular WLS is not available with them, but is available at their competitor's site. The more domain name registrations a registrar has, the worse the problem.

4. Registrant notification. Today, domain names are available for immediate registration by third parties upon deletion, without any transparency or equal access to that registration capability, so it is unclear why the Board has decided it is appropriate to disclose the existence of a WLS subscription to the current registrant. Where speculators are the current registrants and IP owners have the WLS subscription, such notice will eliminate the value of the WLS subscription. Legitimate consumers, therefore, will have alerted the current registrant to simply renew his or her registration and then seek to sell it, now knowing a market exists. Further, inaccuracy of the current registrant's contact information may make such notice ineffective. In addition, it is unclear who (the registry, the registrar that accepted the WLS subscription, or the registrar sponsoring the existing registration) should be required to assume the obligation, liability and cost of sending such notices. Clearly, no mechanism exists for enforcement. From a customer perspective, it is likely that most registrants are unaware of the wait-listing concept, and therefore will be confused by the notification. Currently, there are people waiting to register domain names at the moment of expiration and there is therefore no reason to impose this extra condition only on WLS.

5. Trial period. We suggested a one-year trial period with the thought that, subject to market acceptance of the service, the WLS would be allowed to continue unless it proves to harm the stability of the Internet.

6. Evaluation program. As we suggested in our proposal, we believe that an evaluation of the market success of the WLS offering is appropriate. We would conduct such a review without the "condition" being imposed by ICANN's Board.

The problems noted in certain of the conditions set forth above demonstrate the inappropriateness of the process used by ICANN toward the "authorization" and introduction of a new service and ICANN's involvement of itself in the business affairs of registries and registrars. The Department of Commerce (DOC), in its Statement Regarding Extension of the MOU with ICANN, issued on September 20, 2002, has stressed that:

ICANN should give special consideration to improvements in its decision making processes that would expedite the introduction of new products and services for the benefit of the global Internet community, taking into account the limited, technically-oriented mission of ICANN as set forth in its mission statement.

We suggest that the imposition of the Board's purported "conditions" is in conflict with the DOC's position. The conditions have little to do with expediting the introduction of new services for the benefit of the global Internet community, while taking into account the limited, technically oriented mission of ICANN.

In conclusion, ICANN has imposed three commercially impractical "conditions":

Six-month delay: A delay of six months beyond the implementation of the Redemption Grace Period (RGP) adds absolutely no value to the proposed WLS nor does it limit any risks for current registrants because VeriSign already committed to implement an interim RGP with WLS;

Registrar blackout: The blackout of the existing registrar from submitting WLS subscriptions for its customers 60 days prior to domain name deletion is unmanageable, unenforceable, subject to gaming and results in a very poor customer experience; and

Registrant notification: The requirement to notify existing registrants that a WLS subscription has been placed on a current domain name registration works to the disadvantage of trademark owners and consumers and plays into the hand of speculators.

We again request modification to Appendix G, as requested in March, to add the WLS at an initial service offering price of $24 for the trial period. As you know, our revised proposal, presented on March 20, 2002, reduced the wholesale price between VeriSign and registrars to $35. Since that time, registrars have debated the wholesale price of the proposed service among themselves at various meetings and with ICANN's management. We acceded to those requests and have reduced the initial service offering price to $24 for the trial period. Again, as you know, a similar but inferior service is currently offered by SnapNames at the retail level for $69. As the Department of Commerce has stressed, "…prices should be set by a competitive marketplace." ICANN has neither the authority nor the expertise to replace the marketplace. As the Department of Commerce has stated, "ICANN should not be 'the government of the Internet.' . . . [M]arket forces should play a greater role and (that) ICANN's involvement in policy-making in this area should be correspondingly narrow." At this point, we suggest that the marketplace should be allowed to perform its own functions. Let's see how the service performs during the trial period.

We have worked diligently with members of the Internet community and ICANN to address all reasonable concerns related to the WLS. In the spirit of cooperation, we are further prepared to accommodate some of the added conditions which ICANN has suggested. We respectfully ask that the remaining non-technical conditions, which are commercially unworkable, be reconsidered so that the service may be brought to the marketplace. Our sector of the economy and the domain name registration business, in particular, could use rejuvenation.

Sincerely,

Philip L. Sbarbaro
Deputy General Counsel
VeriSign, Inc.

cc: S. Sclavos
J. Ulam, Esq.
R. Lewis
R. Cochetti
C. Gomes

Page Updated 03-Nov-2002
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