Approval of Amendment to Implement the Registry Service Request from Verisign to Authorize the Release for Registration of the Single-Character, Second-Level Domain, O.COM

Why is the Board addressing the issue now?

In November 2017, Verisign submitted a registry service request to conduct a trial for release of one .COM domain name with a single-character label, O.COM, through an auction and to disburse the auction proceeds toward areas of public good for the Internet community, consistent with ICANN org's Single-Character Second-Level Domain Name (SCSLD) Allocation Framework.

ICANN org conducted a review of the proposed Registry Service and did not identify significant security or stability issues. However, ICANN org did determine the proposed Registry Service might raise significant competition issues. On 7 December 2017, ICANN org referred the matter to the United States Department of Justice. On 14 December 2017, the Antitrust Division of the United States Department of Justice communicated to ICANN org that it did not intend to open an investigation on the matter.

Following a preliminary determination of approval of the proposed registry service, ICANN org posted the proposed Amendment to the .COM Registry Agreement to enable the implementation of the service for public comment from 10 May 2018 to 20 June 2018.

The proposed Amendment follows analysis and recommendations on single-character domain names from the GNSO's Reserved Names Working Group, the GNSO Council, and ICANN org, as well as the input from the community, and is consistent with the ICANN Board's approval of the release of single-characters names in other legacy generic top level domains (gTLDs). To date, the ICANN Board has approved the release of single-character names in many legacy gTLDs including .ORG, .BIZ, .INFO, .MOBI, and .PRO. Further, single-character names are not required to be reserved for gTLDs introduced as part of the New gTLD Program.

ICANN org has taken the steps to evaluate and consider the proposed Amendment and the community's feedback, each of which have been made available for the ICANN Board to review and consider before making a determination.

What is the proposal being considered?

Under the proposed Amendment, the single-character domain name, O.COM, will be allocated through an auction process and managed by a third-party service provider. Verisign will not, directly or indirectly, receive any proceeds from the sale, allocation, transfer or renewal of O.COM and will only receive the standard registry fee for the registration of O.COM, or US$7.85. Proceeds derived from the auction of O.COM will be provided to one or more nonprofit organizations, or their successors, focused on areas of public good for the Internet community. None of the auction proceeds will directly or indirectly be used to benefit Verisign, its affiliates, or its directors, officers, or employees. Any potential registrant may participate in the auction process and select any ICANN-accredited registrar for the management of the registration for O.COM if awarded the name. No restrictions will be placed on how the registrant may select a .COM ICANN-accredited registrar.

The winning registrant must: (i) submit the entire amount of the winning bid within fourteen (14) calendar days from the date on which it was determined to be the winner, and (ii) commit to submitting to the Trust five percent (5%) of the First Installment of the Winning Bid for each year that the domain name is renewed after expiration of the initial five (5) year registration period (each a "Subsequent Installment") up until, and including, the twenty-fifth (25th) year the winning registrant renews the single-character domain name. The Subsequent Installments are intended to encourage a continuous funding stream to the nonprofit organization(s) up until the expiration of the Subsequent Installment. By way of example, if the auction took place in 2020 and the winning bid was $10,000, the first installment of the winning bid for the single-character domain name would be $10,000 and be paid in 2020, and the Subsequent Installment for each year after the five (5) year initial term would be $500 and be paid in 2026 through 2045 (i.e., 5% of the first installment of the winning bid).

Which stakeholders or others were consulted?

ICANN org conducted a public comment period on the proposed amendment from 10 May 2018 to 20 June 2018. The proposal received twenty-nine (29) comments from twenty-four (24) separate entities.

What concerns or issues were raised by the community?

Comments submitted generally fall into the following categories, each of which is explained in more detail below:

Expressing support for the proposed amendment to release O.COM.
Concerns the release of O.COM may create security and stability issues.
Concerns regarding the proposed "trial" requirements for the release of O.COM may set a precedent for the release of future single character .COM domain names or for the entire .COM namespace.
Concerns that Verisign's proposed "Subsequent Installments" paid by the registrant to renew O.COM may be a vehicle for Verisign to increase renewal rates for the entire .COM namespace.
Concerns regarding the proposed transfer restriction for the O.COM domain name imposed by Verisign once the name is allocated.
Concerns over the lack of certain rights protection with the release of O.COM in the proposed Amendment.
Concerns regarding the auction process and the pre-qualification requirements to be imposed by the auction provider as proposed by Verisign for the release of O.COM and the lack of transparency regarding the process.
Suggestions regarding the proposed distribution of funds following the O.COM auction as proposed in the Amendment.
Several commenters expressed positive feedback regarding the release of single-character .COM names and the proposed direction to use the auction proceeds to support the public good of the Internet and offered additional suggestions for how the proceeds could be used. A consistent theme from commenters was the need for transparency throughout the auction process from the choice of auction provider through the proposed process to manage the release of the domain name.

Two commenters suggested that O.COM may create security and stability issues in the .COM namespace if released. Further, commenters expressed concerns with Verisign's proposed approach to auction and release of the O.COM domain name, and the proposed requirements for O.COM as inconsistent with the way current .COM domain names are registered and renewed, and the lack of certain rights protections with the release of O.COM.

The security and stability concern raised during the public comment period focused on the potential "whole script confusability" with the release of the single-character "O.COM" domain name in the Latin Script given the Greek script and Cyrillic versions of "O.COM" already exist in the .COM namespace. Following an internal evaluation, it was determined the risk is no greater than other single-character domain names already released in other TLDs.

Several comments expressed concerns that the proposed requirements for the release of O.COM may set a precedent for the release of single-character .COM domain names in the future or the entire .COM namespace. Specifically, commenters suggested Verisign's proposed "Subsequent Installment" paid by the registrant to renew O.COM is an opportunity for Verisign to introduce premium fees or premium renewal fees for other single-character domain names launched in the .COM namespace in the future or for all .COM domain names. ICANN org notes the RSEP proposed by Verisign, and the proposed Amendment to the .COM Registry Agreement, ensures that Verisign will only receive the standard registry fee for the initial registration of O.COM and all subsequent renewals, which shall be in compliance with registry fee pricing provisions under Section 7.3(d) of the .COM Registry Agreement. As of the submission date of the proposal, that registry fee, defined as the Maximum Price in the .COM Registry Agreement, is US$7.85. The only renewal fee Verisign will realize is the standard renewal fee at the time of renewal. The "subsequent installment" required of the winning registrant, is intended to "encourage a continuous funding stream to the nonprofit organization(s) up until the Expiration of the Subsequent Installment."

Commenters also conveyed concerns regarding a proposed transfer restriction for the O.COM domain name proposed by Verisign once the name is allocated and suggested that this introduces unnecessary complications into the .COM namespace. Further, if this restriction is permitted, commenters worried that Verisign might extend the restriction to future single-character .COM domain names yet to be released. Commenters noted that based on the scarcity of single-character names in the valuable .COM namespace, the winning registrant should be permitted to use the name(s) as they see fit. Following a review of the public comments, Verisign voluntarily removed the proposed registrant to registrant transfer restriction from the proposed Amendment.

Additional concerns were raised regarding the absence of certain Rights Protection Mechanisms (RPMs) to accompany the release of O.COM and possible security and stability issues once O.COM is added to the .COM namespace. However, there is no requirement to offer a sunrise period prior to the release of any reserved names according to the .COM Registry Agreement. Additionally, RSEP requests submitted and subsequently approved by the Board for .BIZ (2008), .INFO (2010), and .ORG (2011) to release single-character and two-character reserved names, did not include a sunrise period. The Uniform Domain Name Dispute Resolution Policy is available for any trademark-related disputes arising from the allocation of any name in the .COM namespace, including O.COM.

What significant materials did the Board review?

As part of its deliberations, the Board reviewed various materials, including, but not limited to, the following materials and documents:

.COM Registry Agreement
Verisign Registry Service Request
7 December 2017 Letter to Verisign
7 December 2017 Letter to U.S. Department of Justice
14 December Letter from U.S. Department of Justice
Public Comment Summary and Analysis
Proposed Amendment No. 2 to .COM Registry Agreement
Final Proposed Draft version 4.0 of IDN Guidelines
Single Letter Domains at the Second Level, including Proposed Contract Amendments for DotCoop and dotMobi
What factors has the Board found to be significant?

The Board carefully considered the public comments received for the amendment to implement the Registry Service request from Verisign to release the single-character name O.COM for registration, along with the summary and analysis of those comments. The Board also considered the terms agreed upon by the Registry Operator as part of the bilateral negotiations with ICANN org.

The Board appreciates the time invested by the community to review the proposed Amendment to implement the release of O.COM. Further, the Board based its considerations on the community's engagement and feedback providing insightful suggestions to support Verisign's proposed approach to use the proceeds from the auction of O.COM for the public good of the Internet community.

The Board also acknowledges the concerns expressed by some community members regarding the potential "whole script confusability" with the release of the single-character "O.COM" and how the release of the single-character domain name may be considered a security and stability concern. However, the Board acknowledges that other single-character domain names in both legacy and new gTLDs are available today, and work continues across the community to mitigate possible security and stability concerns for all whole-script confusables as domain names. This includes the Final Proposed Draft version 4.0 of Guidelines for the Implementation of Internationalized Domain Names (IDN Guidelines v4) published by the IDN Guidelines Working Group (IDNGWG), which recommends practices designed to minimize the risk of cybersquatting and consumer confusion. The Board notes that the draft IDN Guidelines v4, "encourage TLD registries to apply additional constraints on registrations that minimize Whole-Script Confusables…" but do not require specific mitigation, and that these IDN Guidelines v4 have not yet been adopted by the Board. It is ICANN org's practice to adhere to existing policies and procedures and to apply requirements from pending community recommendations only once they are adopted and implemented. The Board recently discussed how ICANN org should navigate incoming requests from contracted parties, when ongoing community work could result in a process change that might impact the request at the Genval workshop in September 2018.

The Board also recognizes the concerns raised by the community noting that aspects of the proposed release of O.COM through the trial auction process have different requirements than the other domain names in the .COM namespace and may impact other domain names in the .COM namespace now and in the future. The Board acknowledges the concerns raised by the community and further recognizes Verisign's approach to release O.COM via a trial process offering Verisign and potential registrants the opportunity to gain valuable insights into the process. As stated, the proposed service would not impact the existing functionality, methods, pricing, procedures or specifications for the registration of any other domain names in the .COM namespace. Further, Verisign is bound by the terms in the .COM Registry Agreement and the release of O.COM will not change those commitments. The Board further acknowledges Verisign's update to the proposed amendment to remove the transfer restrictions in response to the concerns raised by the community.

The Board also acknowledges the concerns raised regarding the overall auction and auction process in the proposed amendment and notes that the proposed auction process is similar to how most registry operators manage and have managed domain name auctions. Further, the registry operators for legacy TLDs such as .BIZ, .INFO, and .ORG used similar processes to auction their single and two-character TLDs. All registry operators, legacy or gTLD, can define and conduct auctions without oversight or restriction for their TLDs and rarely disclose the details of the auction in advance or the fees to be paid to the auction provider.

The Board further acknowledges the concerns raised regarding Verisign's proposed plan to release O.COM without the RPMs new gTLD registry operators are required to support for their TLDs. Commenters suggested that with the release of O.COM, Verisign should be under the same obligations as new gTLD operators to conduct a 90- day Sunrise period. While the Board acknowledges the concerns expressed by some community members regarding Verisign's proposed plan to release O.COM without RPMs, there is no requirement to offer a sunrise period prior to the release of any reserved names according to the .COM registry agreement. Additionally, RSEP requests submitted and that called for registry agreement amendments that subsequently were approved by the Board for .BIZ (2008), .INFO (2010), and .ORG (2011) to release single-character and two-character reserved names, did not include a sunrise period. The Uniform Domain Name Dispute Resolution Policy is available for any trademark-related disputes arising from the allocation of any name in the .COM namespace, including O.COM.

Are there positive or negative community impacts?

The Board's approval of the proposed amendment to release the single-character, O.COM, domain name for registration is anticipated to be positive. As several community members noted during the public comment period, this is a positive step forward to releasing more single-character domain names, specifically in the .COM namespace. Further, commenters support Verisign's proposed approach to use the proceeds from the auction of O.COM for the public good of the Internet community and encourage Verisign to be transparent in how the proceeds are distributed.

Are there fiscal impacts or ramifications on ICANN organization (e.g. strategic plan, operating plan, budget), the community, and/or the public?

There is no significant fiscal impact to ICANN org expected from the release of the single-character O.COM for registration.

Are there any security, stability or resiliency issues relating to the DNS?

As noted above, the question as to whether the release of O.COM may cause a security or stability issue was raised during the public comment period. The concern raised involved the possible "whole-script" confusability of the Latin script "O.COM" with the Greek and Cyrillic characters already in the .COM namespace and contends that the release of O.COM may conflict with the draft IDN Guidelines v4. ICANN org has confirmed to the Board that the draft IDN Guidelines v4, "encourage TLD registries to apply additional constraints on registrations that minimize Whole-Script Confusables…" but do not require specific mitigation and this release of O.COM would not conflict with the IDN Guidelines v4. Furthermore, the IDN Guidelines v4 are not yet adopted by the Board as ICANN org continues to define the implementation plan to ensure a smooth transition to the new guidelines. The IDN Guidelines v4 anticipate the need for treating existing domains as exceptions, "When a pre-existing domain name requires a registry to make transitional exception to any of these Guidelines, the terms of that action must also be made readily available online, including the timeline for the resolution of such transitional matters." and would expect Verisign to comply with this requirement in due course.