.org Reassignment: General
Counsel's Report on Proposals for Reassignment of the .Org Registry
Prepared by: Louis Touton
ICANN General Counsel
22 September 2002
On 19 August 2002, I submitted a document entitled "Evaluation
of Proposals Under Procedural Criteria (#2, #3, and #10)", as
a contribution to ICANN's evaluation of the eleven proposals that it received
from entities seeking to become the successor operator of the .org registry
when VeriSign gives up that role at the end of 2002. My evaluation was
posted in conjunction with the Preliminary
Staff Report on Evaluation of the Proposals for Reassignment of the .Org
Registry. That preliminary evaluation and supporting documents were
posted for comment by the applicants and the public; the resulting comments
of applicants and the public have also been posted.
This General Counsel's Report is a revision and supplementation of my
earlier report, which it is intended to replace. The comments received
have indicated several elaborations and adjustments that should be made
in my earlier report. They have also pointed out some additional subjects
on which my analysis and comment is appropriate.
The first three parts of this Report set forth my revised analysis of
criteria 2 (Ability to Comply with ICANN-Developed Policies),
3 (Enhancement of Competition) and 10
(VeriSign Endowment). The fourth part discusses criterion
11 (Completeness of Proposals/Realistic Plans). The fifth
part whether Board members have a conflict of interest concerning
the reassignment of .org arising from their involvement with the Internet
A. Evaluation Under Criterion 2 (Ability to Comply
with ICANN-Developed Policies)
Criterion 2 of the published
Criteria document states:
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,
This criterion is largely a verification step that all bidders are expected
to meet. Because of this, I have analyzed criterion 2 with respect to
only the proposals likely to be selected based on the overall evaluation,
including the evaluations conducted by the Gartner and Usage Evaluation
Teams. Consistent with the recommendation in the Final Staff Evaluation
Report that only proposals ranked by the Gartner evaluation in its highest
tier should be considered "Leading Proposals", I focus my analysis
on the ability of ISOC, NeuStar, GNR, DotOrg, and Register.org to comply
with ICANN-developed policies. Should an issue later arise concerning
another applicant’s ability to comply with ICANN-developed policies,
that analysis can be performed at that time.
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 the Gartner 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 to comply:
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
comments to my earlier report, NeuStar noted that the registry operator
proposed in the ISOC bid will be a yet-to-be-formed not-for-profit company
known as the "Public Interest Registry" or simply "PIR."
NeuStar argues that the fact that PIR has not yet been formed makes the
above analysis under Criterion 2 inadequate:
[T]he Report simply notes that it is sufficient that the new registry
operator operate under a TLD agreement with ICANN and that the back-end
registry provider has proven its ability to provide equal access in
the past. For those applicants with existing registry operators, this
analysis, NeuStar agrees, is likely sufficient. It is insufficient,
however, with respect to ISOC.
. . . . Unfortunately, PIR does not yet exist and ISOC
maintains that it will be run entirely separately from ISOC. Although
ISOC will not have any significant role in the registry, its proposal
relied heavily on its own credentials and qualifications for its response
to critical questions including the adequacy of its mechanisms for compliance
with policy. Since ICANN states in its proposal that PIR, and not ISOC,
will be responsible for Policy, there is no way for ICANN to accurately
assess whether the entity will have mechanisms in place to ensure compliance.
It is unclear even who the bidder is given that ISOC will have only
a limited role in .org following formation of PIR. Therefore, the ISOC
application cannot be measured against this criterion and ICANN Staff
must reconsider their evaluation.
This argument does not withstand careful analysis. The ISOC proposal
describes with significant detail the mechanisms that will be in place
to ensure PIR's compliance with ICANN-developed policies. As ISOC
notes, PIR "will enter into the registry management agreement
with ICANN, and PIR will contract with Afilias for all back-end registry
services." Thus, it is clear that the back-end provider will be Afilias,
an organization that is quite familiar (due to its operation of .info)
with the steps required to comply with ICANN policies. As the ISOC proposal
notes in Item
C19, "PIR's agreement with Afilias will call for Afilias to implement
without fail all ICANN policies and requirements of the .ORG Registry
Agreement." As explained in the ISOC proposal, Afilias will devote
the efforts of its full-time compliance officer, as well as its periodic
reporting infrastructure, to ensure that PIR will be able to comply with
Indeed, the particular policies highlighted in criterion 2 ("registrar
accreditation, shared registry access, the uniform dispute resolution
policy, and access to registration contact data via Whois") are all
ones with which Afilias currently complies. The technical plan in the
ISOC proposal describes at great length the technical mechanisms, currently
used in .info and proposed for .org, to support compliance with ICANN-developed
C17.8 describes a thick Whois system fully capable of meeting the
requirements of ICANN-developed policies. Item
C21 of the ISOC proposal provides a sound plan for ensuring equivalent
access for all ICANN-accredited registrars. Afilias has gained considerable
experience in compliance with the uniform dispute resolution policy. In
view of the detailed compliance mechanisms described in the ISOC proposal
and already tested by use with .info, there is no reason to doubt that
the PIR/Afilias combination will not be fully capable of complying as
In sum, I conclude that all five of the “Leading Proposals”
demonstrate compliance with criterion 2.
B. Evaluation Under Criterion 3 (Enhancement of Competition)
Criterion 3 of the published
Criteria document states:
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.
There appears to be no need to analyze the second bullet 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.
With regard to the first bullet, only three of the eleven proposals received
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
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
This concern was noted in my earlier report, and subsequently Supplemental
Question No. 6 was posed to GNR to obtain more information about
its use of VeriSign technology. GNR’s response to that supplemental
question, together with the
timeline it provided in response to Supplemental Question No. 10,
indicates the following:
- GNR originally intended to use technology it would develop to implement
the .name registry.
- GNR began developing all systems needed to operate the .name registry.
- GNR entered its registry agreement for .name with ICANN on 1 August
- In September 2001, GNR entered an outsourcing agreement with VeriSign
Global Registry Services.
- GNR began accepting .name registration requests in batch mode on
12 December 2001 and began providing nameservice and Whois service
on 15 January 2002.
- GNR continued taking .name registrations for over six months using
a batch process, under which each registrar would periodically (approximately
every two weeks) submit a batch file of registration requests.
- After submitting its .org proposal (by the 18 June 2002 deadline),
GNR began real-time registration services for .org on 26 June 2002
using a combination of VeriSign-outsourced services and internally
developed services. In particular, VeriSign provided key software
for, and operates, the shared-registry systems that govern registrar
interactions. These include the following real-time registration functions:
- Allowing for EPP connections by the registrars
- Serving EPP requests from registrars
- Modifying data for the registrars in the registrar-authoritative
- Replicating the registrar-authoritative database to the GNR
Thus, it appears that, when implementing real-time registration services
in .name, GNR did not employ its own technology, but used outsourced
services obtained from VeriSign. While the appropriate use of outsourced
services is not necessarily a technical concern, GNR has made it clear
that it does not plan to use a similar arrangement with VeriSign for
.org, so that its .name experience is not directly applicable for .org
with regard to the real-time registration services function.
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.
In their comments on my earlier report, several applicants argued that
the criterion 3 analysis should also consider alleged other (i.e. non-VeriSign-related)
competitive drawbacks of selecting various other applicants. For example:
commented that "Several of the bidders already manage significantly
large global registries" (apparently referring to NeuStar, ISOC/Afilias,
and perhaps GNR) and advocated selecting a .org operator "whose
selection will further diversify registry management and promote competition."
- GNR stated
"The financial problems of both ISOC and NeuStar have been documented
and need to be evaluated in consideration of their ability to operate
.org." It also argued that, since GNR currently operates (with
VeriSign’s assistance) only one TLD registry (.name), it would
promote competition to award GNR a second TLD (.org) (to operate without
VeriSign's assistance), rather than awarding .org to NeuStar (which
operates .biz and .us) or ISOC/Afilias (which operates .info and .vc).
faulted my earlier competition analysis as "too narrow",
contending that "a more comprehensive review of each applicant's
financial health should be considered" because a "registry
operator cannot be successful nor enhance competition if it does not
have the requisite financial resources."
Although many of these arguments make for interesting reading, they are
highly speculative given competitive realities. VeriSign's registry now
supports over 31,400,000 domains, and will support approximately 29,000,000
domains even after the reassignment of .org. NeuStar and Afilias are quite
small in comparison, supporting only about 1,000,000 domains each. Contrary
to RegisterOrg's claims, these are simply not "significantly large
global registries" in competitive terms. Indeed, selecting an operator
with an existing registry operation would result in economies of scale
that would likely provide that operator an enhanced capability to compete
Similarly, GNR's "one TLD we win, two TLDs they lose" argument
is not persuasive. There was nothing in the RFP that suggested that any
current operator of two TLDs should be "marked down" over one
that only operates one TLD. (Moreover, it should be noted that the .vc
TLD operated by Afilias is quite small and just started up in July 2002.)
By the same token, the fact that RegisterOrg’s selected back-end,
Registry Advantage, provides service to eight ccTLDs does not suggest
that a selection of it should be ruled out on the basis of criterion 3.
Nor would it be justified, as NeuStar urges, to rely on its claimed
superior financial resources (which are disputed by GNR and public comments)
as a ground of finding its selection to be more pro-competitive. Although
the RFP made the size of firm commitments of resources that would be devoted
to the .org project a relevant consideration in terms of assessing each
proposal, it intentionally did not make the size of an applicant's general
financial resources that it might devote to .org a factor. It is extremely
hard to reliably assess a particular applicant’s financial stability
directly. The spectacular failures of the past few years of large enterprises
indicate the difficulties in predicting the financial future of any institution.
In sum, except for the negative competitive consequences of selecting
UIA, analysis competitive considerations under criterion 3 does not meaningfully
favor any applicant over any other.
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",
including outreach activities
||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 proposals (GNR and SWITCH)
raise significant issues under the VeriSign endowment. They are considered
in more detail below.
- GNR does not itself claim to be qualified for the endowment, but instead
proposes that its two non-profit "partners," .orgcentre
and the Causeway Community Foundation, receive the endowment. This proposal
raises serious questions because the VeriSign endowment is limited
by contract "to be used to fund future operating costs of the
non-profit entity designated by ICANN as successor operator of the .org
registry." GNR does not propose that either of its two non-profit
"partners" be designated as "successor operator of the
.org registry" and GNR itself is not a "non-profit entity."
Thus, it seems unlikely that the VeriSign endowment could be obtained
under GNR's proposal. Because it is difficult to see how the proposal
could be revised to qualify, GNR is assigned a "C" on the
GNR proposes that endowment funds be paid to the Causeway Community
Foundation, as equally matching funds to those paid by GNR to Causeway.
Thus, loss of the endowment would diminish Causeway’s funding
by up to half. Causeway is envisioned by the GNR proposal also to provide
a portion of the funding for .orgcentre, a community outreach initiative
that GNR proposes. Thus, .orgcentre’s funding may also be diminished
by the failure to qualify for the endowment.
GNR's proposal portrayed the Causeway Community Foundation as a "good
works" initiative, and .orgcentre as a component of its community
outreach program. Both of these are mentioned in the Usage
Evaluation Report as contributing to GNR's responsiveness (criterion
5) score, by way of its input/governance and "good works"
sub-scores. The loss of the endowment would likely diminish GNR's score
on criterion 5 to some degree, though this is difficult to quantify.
- SWITCH proposes to use US$ 1,800,000 of the VeriSign endowment for
the following purposes:
- building-up the Community infrastructure for registrars and registrants
- differentiation of the ORG TLD
It states in its proposal that it "will have no ownership or
other rights or interests in such funds or in the manner in which
they are used or disbursed. The funds will be devoted to the ORG community."
As it is crafted, the SWITCH proposal suffers from a similar problem
to that described above for GNR. The endowment is "to be used
to fund future operating costs of the non-profit entity designated
by ICANN as successor operator of the .org registry." Since the
proposed successor operator, SWITCH, is proposed to have no ownership
in the funds, it would not appear to qualify for the endowment.
Since (unlike GNR) SWITCH is itself a non-profit organization, it
might be able to revise its proposal to receive the funds and therefore
qualify, yet still apply them to the intended purposes. In view of
this, SWITCH is assigned a "B" instead of a "C"
on the above table.
A failure to receive the endowment would diminish the infrastructure-build-up
and differentiation purposes mentioned above. It appears that this
diminution might have lowered SWITCH's differentiation (criterion
4) score in the Usage
Evaluation Report, though this is difficult to quantify.
As noted in my earlier report, 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.
D. Evaluation Under Criterion 11 (Completeness of
Criterion 11 concerns the "completeness
of the proposals submitted and the extent to which they demonstrate realistic
plans and sound analysis." The Gartner
Evaluation Report explicitly evaluated criterion 11 as it relates
to the technical aspects of the proposals; each applicant is scored on
this criterion by Gartner. It should be noted that Gartner's scoring on
criterion 11 closely tracked its cumulated scoring on the other technical
criteria, so that additional consideration of criterion 11 would have
been cumulative in effect. Criterion 11 was not explicitly scored with
respect to the usage aspects, but the Usage
Evaluation Team's report shows that completeness, realistic plans,
and sound analysis counted significantly in its evaluations. Completeness,
realistic plans, and soundness of analysis are also incorporated as significant
factors in my analysis of criteria 2, 3, and 10 above. In sum, the elements
of criterion 11 were significantly reflected in the overall analysis.
E. Conflicts-of-Interest Issues
Some comments have expressed concern that members of the ICANN Board
might have a conflict of interest concerning the Internet Society bid.
Ten of the ICANN Directors are members of the Internet Society, but none
of them would financially benefit in any way, directly or indirectly,
from the selection of the Internet Society as the successor .org operator.
policy prohibits each ICANN Director from participating in decisions
on "any matter in which he or she has a material and direct financial
interest that will be affected by the outcome of the vote." It does
not prohibit Directors from voting on matters merely because those matters
involve a philanthropic society which the Directors may philosophically
support. Conflicts-of-interest principles are intended to prevent improper
personal financial gain, not to negate the philosophies of ICANN's Directors.
Directors are not expected to discard their philosophies and past experiences
when they undertake their service at ICANN, but instead are expected to
incorporate those philosophies and experiences in formulating well-reasoned
decisions. (For similar reasons, the fact that the Usage Evaluation Team
may have included some ISOC members does not constitute a conflict of
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