ALAC | Statement on the Proposed VeriSign Settlement Agreement (December 2005)

Statement on the Proposed VeriSign Settlement Agreement (December 2005)
December 2005

Proposed ICANN/VeriSign Settlement Agreement

Background

ICANN has reached an agreement to end all pending litigation over its long-standing dispute with VeriSign. The settlement agreement documents have been posted for public comment <http://www.icann.org/announcements/announcement-24oct05.htm> and are subject to final approval of the ICANN Board. ICANN states that, under the agreement, VeriSign will: withdraw all pending litigation and arbitration relating to .COM; adopt ICANN's position on a wide range of issues concerning registry services (such as Sitefinder) and the way they are introduced; commit to binding international arbitration to prevent any future disagreements from resulting in costly and disruptive litigation; and recognize and participate in the ICANN consensus policy process. The ALAC and other constituencies have raised questions and concerns about the proposed settlement. The ALAC's statement is included below.

The ALAC sponsored a public workshop on the proposed settlement at ICANN's Vancouver meeting. A recording and summary of the workshop are available. The ALAC also met with the ICANN Board to discuss the proposed settlement and a recording of this meeting also is available. In addition, the proposed settlement was discussed in ICANN's public forum in Vancouver.

ICANN's Board has issued a public statement regarding next steps on the proposal at its Vancouver meeting: <http://www.icann.org/announcements/announcement-05dec05.htm>.

Comments

The ALAC is continuing to investigate and discuss this agreement and urges all Internet users, especially .COM registrants, to share their views on how this agreement might affect them (and on the ALAC's statement, included below). Send your emails for public posting to <forum@alac.icann.org> and <settlement-comments@icann.org> .

Statement

Concerns on the proposed ICANN / Verisign settlement from the At-Large Advisory Committee
1 December 2005

1. We believe that it would be more appropriate to separate the lawsuit settlement from the contract renegotiation. If the settlement requires changes to the contract, ICANN and Verisign can amend the current contract to reflect settlement terms.

2. We are concerned about the loss of accountability and oversight both of the community over ICANN and of ICANN over Verisign. The external oversight of ICANN's budget currently provided by the registrars will no longer exist. The settlement provides no meaningful checks on Verisign's behavior, unless they misbehave so badly that ICANN voids their contract. As the registrars have pointed out, the proposed "consensus process" is new and untested.

3. We are concerned about the use and misuse of personal data. Under the agreement, Verisign is allowed to do whatever data mining they want of COM zone usage and access. For example, they could sell DNS traffic data about pepsi.com to Coca Cola, or about greenpeace.com and other political sites to governments whose policies they oppose. As a trustee for the Internet community, ICANN should provide appropriate protections for the community's data. We are also concerned that such data mining would be illegal in countries with data privacy laws.

4. We believe that the proposed price increases for the .COM registry are inappropriate, since the registry is no longer required to offer any justification for them. We are also concerned about the tripling of ICANN's per-domain fee. Although the incremental cost to each individual user will be low, the aggregate cost to users will be in the tens of millions of dollars per year.

5. We are concerned by the lack of economic and legal analysis of the effects of the proposed settlement. To the extent that the .COM registry is a monopoly, it requires stricter regulation than if it is not. Analysis by a qualified economist of the price sensitivity and substitutability of .COM and other domains, based on the extensive historic data, should help understand the situation. Similarly, qualified legal analysis of the likelihood of success of ICANN's and Verisign's suits would help quantify the legal risks and costs the settlement would avoid. Market forces can have an effect on .COM registry prices in two ways: (a) periodic rebids, and (b) a substitute service. The current proposal does away with the rebidding, and we doubt that .BIZ or .INFO or ccTLDs are a substitute for current registrants who already have branded their .COM address.

6. The proposed settlement makes Verisign the permanent source of the majority of ICANN's revenue. By making itself dependent on an entity not accountable to the public, ICANN endangers its independence and hence endangers ICANN's public trust.

7. We share ICANN's concerns with the current budget and planning process, which depends in large part on registrar approval and quarterly financial contributions from numerous sources. We endorse a budget and funding mechanism that would provide ICANN greater certainty in the budget planning process and reduce the administrative burden on ICANN of billing and collections. Nevertheless, we believe very strongly that ICANN should consult with the registrant and At Large community before it fundamentally reshapes its funding mechanism through new contracts with the registries. Ultimately, funds paid to ICANN from registrars or registries come from us, the At Large community. We encourage ICANN to engage the community in a larger conversation about how it should be funded and how its budgets should be created and approved.

8. We are deeply concerned by the lack of transparent process. The current (2001) .COM contract had a specific renewal timeline that has been ignored, since the settlement includes a new contract that would void the current one. ICANN offered no timetable or process for consideration of the proposed settlement until forced to by the CFIT lawsuit. The community does not know whether it has a month or a year to collect its input and offer its advice, nor whether it may be possible to modify the proposed settlement or it simply has to be accepted or rejected.

9. With these considerations in mind, the ALAC advises the board to reject the proposed settlement, to seek qualified advice on the econmic and legal aspects of any proposed settlement, and to seek a settlement that addresses our concerns.

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