Below is a (slightly reformatted) version of the comments I submitted to ICANN today regarding the Proposed Amendment 3 to the .COM Registry Agreement. The deadline for comments is just a few hours away, so hopefully they inspire others to submit comments, if they’ve not already done so. [Note: I submitted a 2nd comment later in the day, which is below the first comment]
Submitted by: George Kirikos
Company: Leap of Faith Financial Services Inc.
Website: http://www.leap.com/
Date: February 14, 2020
1. As a preliminary matter, we note with approval and fully support Reconsideration Request 19-2 filed by Namecheap, Inc. regarding the
.org contract renewal, where Namecheap wrote:
“The ICANN org will decide whether to accept or reject public comment, and will unliterally (sic) make its own decisions- even if that ignores the public benefit or almost unanimous feedback to the contrary, and is based upon conclusory statements not supported by evidence. This shows that the public comment process is basically a sham, and that ICANN org will do as it pleases in this and other matters. It is a concern not only for the renewal of the .org and other legacy TLD registry agreements being renewed in 2019, but an even greater concern for the upcoming renewal of the .com registry
agreement- as well as other vital policy issues under consideration by ICANN now and in the future.” [p. 12]
These are strong but thoughtful words from a highly respected company
in the domain industry, whose views are shared by many, including
those who’ve already submitted comments in this current period and
who’ve explicitly noted ICANN’s history of ignoring the public, e.g.
“ICANN’s apparent disregard for public comments violates both its Articles of Incorporation and Bylaws.” (footnote 4, page 2)
and
b) Zak Muscovitch of the Internet Commerce Association:
“We trust that you can appreciated (sic) that your request for Public Comments must be viewed with considerable skepticism considering that the last time that you requested feedback from the public on an amendment to a registry agreement, public comment resulted in exactly zero changes to the .org Registry Agreement despite near universal opposition and condemnation from stakeholders. Your failure to pay more than lip service to the multi-stakeholder model resulted in what is now widely considered to be the “.Org Fiasco”. This has called into question whether ICANN is actually capable of representing the public interest.”
One of the synonyms for the word sham is fraud, and it’s apparent now that a fraud has been perpetrated on the public, namely ICANN deceiving the public into believing that these comment periods are legitimate opportunities for meaningful input. NameCheap’s reconsideration request wasn’t strictly limited to the .org renewal, but directly called into question the legitimacy of all of ICANN’s public comment periods for all of the policy issues now and in the future. ICANN should not take their reconsideration request lightly, but should instead call for a full public investigation with full opportunity for the ICANN community to weigh in on this procedural matter which is at the core of ICANN itself. Until such an investigation has concluded, we call on ICANN to suspend all public comments periods, in order to ensure the process integrity of all policymaking. Of course, given ICANN’s comment process is a sham, this comment itself will likely be ignored, but we place it on the public record for posterity so that a higher authority will eventually hold ICANN accountable. Our remaining comments are thus made “in protest” given that the process itself is currently a sham, but we place them again on the record so that fair-minded members of the public can later scrutinize ICANN’s processes, and hold them accountable.
2. We support and endorse the great groundswell of opposition as
expressed in the thousands of thoughtful public comments opposed to
this proposed contractual amendment.
There are over 8,700 submissions published at the time of this submission, compared with many ICANN comment periods which generate fewer than 50 submissions.
3. It should be noted that in the past ICANN trumpeted lower fees as
one of its main achievements. For example, the testimony of ICANN
General Counsel and Secretary John Jeffrey:
“STATEMENT OF JOHN JEFFREY, INTERNET CORPORATION FOR ASSIGNED NAMES AND NUMBERS (ICANN)
…
Among ICANN’s main achievements are the following:
…
Market competition. Market competition for generic top-level domain registrations established by ICANN has lowered domain name cost in some instances as much as 80 percent with savings for both consumers and businesses.”
It is not consistent with those past statements for ICANN to abrogate its responsibilities, and permit unjustified fee increases by registry operators. Unjustified fee increases are not in the public interest, and do not balance the needs of registrants against those of registry operators. ICANN was handed a responsibility to balance the interest of affected stakeholders when it achieved (against our wishes) independence from US government oversight, and it’s now clear that it is not living up to those commitments given such one-sided contracts that have been presented here for public comment. Unjustified fee increases are not balanced, and do not promote stability of the internet or competition. ICANN is engaging in corporate welfare and/or crony capitalism through such anti-competitive proposals.
4. Under competition the fees for providing registry services (really just the management of a central database plus the operation of various nameservers) would be under USD $1.00 per domain name per year. This is evidenced by the .IN (India ccTLD) tender, where Neustar beat Afilias with a winning bid of USD $0.70 per domain name per year (70 cents/domain/yr).
A similar competitive tender process happened in France, where AFNIC had to lower the wholesale fees for .FR domain names, and the contract was for 5 years.
Similar competitions are held for the .US ccTLD.
You’ll note that registry operators do not have presumptive renewal in those ccTLD contracts, yet are more than willing and able to compete effectively and make investments. It was a major policy blunder of ICANN to have agreed in the past to presumptive renewal, a decision that has had a multi-billion dollar negative impact upon registrants, compared to a situation where there are regular competitive tenders. Even the US government has argued for those competitive tenders for both initial agreements and for renewals of agreements (Ms. Garza’s analysis begins on the 3rd page of the PDF, after the covering letter by Ms. Baker of the NTIA).
Verisign is currently permitted to charge a fee of USD $7.85 per domain per year, far above what it would be under a competitive tender process. This fact should be the starting point when consideration any alteration to the status quo. A good faith negotiation must take this fact into account, but it appears that ICANN did not at all take this into account while conducting its negotiations with Verisign. ICANN conducted no RFP or other means of gauging the ability or willingness of others to take over the .COM contract. It conducted none of its own economic studies. Those would have served the public interest, but are absent.
The starting point of any good negotiation is to be aware of one’s BATNA — “best alternative to a negotiated agreement”. ICANN should disclose what its BATNA was in this negotiation. This disclosure, when compared to the current proposal, will demonstrate how poorly ICANN represented the public in this negotiation.
5. ICANN claims that it is “not a price regulator and will defer to the expertise of relevant competition authorities. As such, ICANN has long-deferred to the DOC and the United States Department of Justice (DOJ) for the regulation of pricing for .COM registry services.”
ICANN directly references Amendment 35 of the Cooperative Agreement:
However, that amendment took place without any public consultation by the Department of Commerce and without any opportunity for the public to provide their own input and research. Furthermore, the precise language of paragraph 2.a) of that amendment, with regards to pricing, says:
“Without further approval by the Department, at any time following the Effective Date of this Amendment 35, Verisign and ICANN ****may**** agree to amend Section 7.3(d)(i) (Maximum Price) of the .com Registry Agreement to……” (emphasis added)
The exact language says “may”, and not “must”. “May” has a precise and
unambiguous meaning, as per RFC 2119:
“5. MAY This word, or the adjective “OPTIONAL”, mean that an item is truly optional. One vendor may choose to include the item because a particular marketplace requires it or because the vendor feels that it enhances the product while another vendor may omit the same item. An implementation which does not include a particular option MUST be prepared to interoperate with another implementation which does include the option, though perhaps with reduced functionality. In the same vein an implementation which does include a particular option MUST be prepared to interoperate with another implementation which does not include the option (except, of course, for the feature the option provides.)”
Nothing in Amendment 35 requires ICANN to adopt that OPTIONAL
pricing scheme, but rather that’s the maximum Verisign can seek. ICANN is certainly within its powers to reject that maximum request, which it must do if it’s to balance the interests of all affected stakeholders.
In a good faith attempt at a renegotiation of that clause, ICANN’s starting position should have been a 91%+ reduction in fees, to $0.70 per domain name per year (as per the .IN ccTLD tender). Verisign would be free to ask for an increase. If the two parties were unable to agree, then the status quo would remain, with fees capped at the current $7.85 per domain name per year. If Verisign was unhappy with $7.85 per domain name per year, they could certainly terminate the contract, which would then be allowed to go to tender to a successor registry operator (there’d be many who would relish the opportunity, even at $1 or $2 per domain per year).
Furthermore, a regular tender process is entirely consistent with not being a price regulator, as it would be the competitive market itself (lowest bidder, subject to meeting a SLA) that dictates the price, rather than ICANN itself setting a price. But ICANN refuses to engage in that regular tender process, suggesting they would rather have higher fees for registrants, entirely consistent with the regulatory capture by the current registry operators who would most directly benefit financially from those higher fees.
6. It is important to note that Amendment 35 did not alter paragraph 3(a) of Amendment 32 to the Cooperative Agreement:
“(a) At any time after the Effective Date of this Amendment 32, Verisign shall be entitled to seek removal of the pricing restrictions set forth in Section 7.3 of the .com Registry Agreement attached hereto if it demonstrates to the Department that market conditions no longer warrant such restrictions. Verisign shall be deemed to have made such a showing upon demonstrating that competition from other top level domains, use of alternative Internet navigation techniques (including search engines, browsers and URL shorteners, among others), reduced demand for domain names, or other factors ****are sufficient to constrain Verisign’s pricing of Registry Services at the current Maximum Price.****” (emphasis added)
Amendments 33 and 34 similarly did not alter or affect paragraph 3(a) of Amendment 32. Indeed, paragraph 4(b)(i) of Amendment 35 explicitly recognizes the continuation of paragraph 3(a):
“4(b)The parties agree that the following terms are the sole terms in the .com Registry Agreement that require the prior written approval of the Department:
i. Removal of the Maximum Price restriction under Section 7.3(d)(i) (Maximum Price) of the .com Registry Agreement, which by way of clarification *****will continue to be subject to Section 3(a) of Amendment 32***** setting forth the standard and process for removal;” (emphasis added)
It’s clear that the intention of paragraph 3(a) of Amendment 32 is to only allow pricing caps to change if Verisign was effectively constrained by market forces to the current Maximum Price. However, we know Verisign is not constrained, but instead has market power (of a monopolist) to raise fees. Verisign is certainly not going to lower their fees (which they could do already, under the current agreement). Verisign seeks to amend the .com agreement only to raise fees.
Indeed, if the current proposal before us is adopted, which allows for guaranteed fee increases, when would Verisign rationally pursue its right under paragraph 3(a) of Amendment 32? The answer is obviously “never”, because if it did exercise that right, its future fee increases would be forever eliminated, constrained (by competition) to the then current Maximum Price.
7. ICANN staff are clearly trying to mislead the public, when they claim that “the devil made them do it”, i.e. that they had to accede to Verisign’s demands because the Department of Commerce forced their hand. That is not so. ICANN is attempting to shift the blame to others when they themselves are at fault. ICANN could have completely discharged their contractual obligations by entering into a good faith negotiation that resulted in no agreement at all, because Verisign refused to accept a $0.70/domain/yr fee (the result under a competitive tender) proposed by ICANN, and ICANN refused to accept unjustifiable price increases proposed by Verisign.
ICANN itself certainly doesn’t believe that they had to accede to Verisign’s demands, otherwise how can they justify the $20 million payment? There is absolutely nothing in Amendment 35 that says Verisign shall pay $20 million to ICANN. Where did that number come from? Why isn’t that number $2 million? Or $200 million? Or $2 billion? The presence of that $20 million is a “smoking gun”, which betrays and undermines ICANN’s false narrative that they were compelled to accede to Verisign’s pricing demands due to Amendment 35.
Instead, the $20 million is direct evidence of a “quid pro quo”, in exchange for Verisign getting a multi-billion dollar financial windfall. Antitrust authorities should be investigating this regulatory capture by Verisign, where they clearly have control over the decision-makers who are not negotiating in the public interest.
If ICANN was honest about being compelled to make these changes, they would have made the minimal amount of changes needed. We need only see that precedent via Amendment 34 to the Cooperative Agreement, which was adopted verbatim by ICANN as FIRST AMENDMENT TO .COM REGISTRY AGREEMENT.
But, ICANN is being dishonest, because nothing in Amendment 35 talks about the $20 million. ICANN is saying one thing in public (that they were forced into this deal), but another thing in private to Verisign (that they want Verisign to give them things not enumerated in Amendment 35, in exchange for the fee increases).
That dishonesty alone by ICANN should disqualify them from being involved in this contractual negotiation, or having any trusted role as a steward of the domain name system. ICANN is lying to the public, because they are trying to “sell” this bad deal, pretending that it’s in the public interest. ICANN’s interests are not aligned with that of the public, but rather ICANN is aligning themselves with Verisign, as Verisign has fully captured their regulator.
8. A good faith negotiation would have extracted far greater concessions than $20 million from Verisign, in exchange for the proposed fee increases (which are worth billions of dollars to Verisign). It’s clear that this was a bad faith negotiation, otherwise there would have been either no fee increases at all, or much greater concessions from Verisign.
9. Verisign’s own negotiating position demonstrates that they too believe that ICANN has the power to reject fee increases. Otherwise, why would they voluntarily agree to flush $20 million down the toilet? That $20 million is there for a reason — it had to be there, from their perspective, otherwise there’d be no deal. That tells us that Verisign knows that ICANN could refuse the fee increases, that the term “may” is not the same as the term “must”.
Given the choice of no deal, or this bad deal, then the best choice for the public interest is obvious — there should be no change at all to the status quo.
10. ICANN and Verisign have not even fully and properly adopted the complete terms of Amendment 35. For example, the preamble says that:
“WHEREAS, the parties agree that Verisign shall continue to operate the .com registry in a content neutral manner and will participate in ICANN processes that promote the development of content neutral policies for the operation of the Domain Name System (DNS);”
Paragraph 1 then makes it even more explicit:
“1. Content Neutral Operations. The parties agree that Verisign will operate the .com registry in a content neutral manner and that Verisign will participate in ICANN processes that promote the development of content neutral policies for the operation of the DNS.”
You’ll note the phrasing used was “will” (i.e. equivalent to “must”), not “may” for the content neutrality portion of Amendment 35.
Where is the language in the proposed .COM amendment that refers to “content neutrality” or “content neutral policies”? [the words “neutral” or “neutrality” don’t appear in the documents!]
“Content neutrality” is directly related to free speech:
“Content neutral refers to laws that apply to all expression without regard to the substance or message of the expression.
Such laws generally regulate only the time, place, and manner of speech in contrast to content-based laws, which regulate speech based on content. This distinction is important in First Amendment cases because courts hold content-based laws to strict scrutiny — the highest form of judicial review — while holding content-neutral laws only to intermediate, or mid-level, scrutiny.”
It’s clear that Verisign (and ICANN itself) has no respect whatsoever
for free speech, given that I personally have been banned from participating in all ICANN GNSO Working Groups, disregarding and in violation of my free speech rights. And it was Mr. Keith Drazek of Verisign (as chair of GNSO Council) who sent the above letter. Mr. Philip S. Corwin of Verisign also played a role in that debacle, as documented on the FreeSpeech.com website.
Under questioning by Ted Cruz, current CEO of ICANN Goran Marby did not defend free speech or the first amendment, see:
Sen. Cruz to Mr. Marby: “Is ICANN bound by the First Amendment?”
Mr. Marby: “To my understanding, no.”
(see 7:10 into video for the start of that segment)
Where is there any language in this Proposed Amendment 3 from ICANN that compels Verisign and/or ICANN to respect free speech and content neutrality, and “to participate in ICANN processes that promote the development of content neutral policies for the operation of the Domain Name System (DNS);” It’s not there. Instead, by its absence, ICANN and Verisign make a mockery of free speech by perpetuating my continued banishment from participating in ICANN GNSO and DNS policymaking working groups.
Consistent with their ongoing disrespect for free speech, ICANN and Verisign have not even attempted to implement the content neutrality provisions of Amendment 35.
11. We also object to the major changes to the .COM Registry-Registrar Agreement (starting from page 47 for those who didn’t read that far!). Without mentioning all sections (we object to all the changes, out of an abundance of caution), we point out that the new language in section 2.7 is dangerous, potentially allowing Verisign the ability to override decisions by registrars as to how to handle various situations, which can result in elimination of due process for registrants. For example, 2.7(b) refers to:
“any legal order or subpoena of ****any government*****,
administrative or governmental authority, or court of competent jurisdiction,” (emphasis added)
which is not acceptable! For example, if this language is not modified, then it says that if a government from Cuba, North Korea, Iran or other totalitarian regime tells Verisign to transfer ownership of sites owned by my company, such as Math.com or FreeSpeech.com to their control, Verisign can go along! Or, why stop there? Why not allow Verisign to shut down Google.com, if the government of Iran or Turkey or Russia asks for it? Why bother with a shutdown — suppose a government in one of those regimes orders the actual transfer of a domain name such as Google.com or Sex.com or School.com or Apple.com or Amazon.com or Microsoft.com?
Again, why stop there? A “crafty” government seeking to profit economically, say in a banana republic, can pass a law to say that they want all dictionary-word dot-coms, 2-letter and 3-letter dot-coms and other valuable domain names to be transferred to them! That’s many billions of dollars worth of digital assets, all for the taking — if those banana republics can sell passports, citizenship, their entire ccTLDs, and engage in other dubious activities, why wouldn’t they be incentivized to simply pass laws to order the transfer of an $872 million domain like Cars.com (see also here)?
This is unacceptable. Registrants have an expectation that they will be governed by the laws of the jurisdictions in which they are based (or that of the registrar), and due process considerations demand that this continues.
All of the changes to section 2.7(b) should be eliminated. For example, why single out “copyright infringement” — why not criminal activity by banks such as Barclays?
Or patent violations by Apple?
Even Google has an active case involving alleged copyright infringements with Oracle. If Google loses that case (now before the Supreme Court), why shouldn’t they lose all of their domains, under the literal interpretation of the proposed Section 2.7(b)? It’s clear to us that Section 2.7(b) is dangerous because it would only be selectively enforced. I doubt Google or Youtube has much to fear from Verisign, despite all the copyright infringement that takes place on their domains. But, by the strict language of that contract, conceivably they should be afraid. Instead, it’ll be more vulnerable entities who would lose their domains, without proper due process. No one should have that power, except proper courts (in the proper jurisdictions, not “any jurisdiction”). Contracts should be read as to what’s possible, and what’s proposed here is potentially extremely dangerous.
12. The new language in Section 2.14 reinforces 2.7(b), and also must be eliminated, for the reasons above.
13. The new language in Section 6.3 of “Force Majeure” is also highly objectionable, and must be removed. In particular, force majeure would begin to apply to “cyberattack, to protect against imminent and
substantial threats to the security and stability of the Registry TLD, System, Verisign’s name server operations or the internet”.
Verisign often attempts to justify its high fees by saying that it has to pay for defending against DDOS attacks (i.e. cyberattacks). It would incentivize Verisign to reduce its security costs and SLA standards if it can then simply rely on declaring “force majeure” for any attack that takes it down. Verisign has one main job, and one job alone, namely 100% uptime.
Verisign and ICANN are inconsistent when they say they want “to preserve and enhance the security and stability of the Internet or the TLD” but at the same time add new language in the “force majeure” section that detracts from and reduces security and stability, and which says less than 100% uptime is acceptable. SSAC should have spoken out immediately about this new language, but perhaps SSAC members are too busy drooling at the thought that $20 million might come their way in one form or another, as the LOI says:
“convene subject matter experts within ICANN, the ICANN community and Verisign to meet monthly, or more frequently as appropriate, to work to effectuate the items described in Section 1(A)(i-iii) above.”
Who are the “subject matter experts within ICANN”? Probably some will come from the SSAC, which will now be in a conflict of interest, as they are not willing to bite the hand that feeds them by speaking out against this bad deal.
14. We object to the language in the Public Interest Commitments (page 68 of the PDF) for the same reasons as discussed above in point 11 of this comment, namely the potential loss of due process rights for registrants.
15. We object to the proposed “Letter of Intent“, in its entirety.
Verisign does not have a great “history of stewardship” — remember SiteFinder and the ensuing litigation? (as noted by other commenters) They should not be equal partners with ICANN or have any superior position to any other stakeholder in deciding future binding policies. The Letter of Intent was a “quid pro quo”, as noted earlier.
16. This proposal by ICANN staff and Verisign demonstrates everything that is wrong with ICANN. A brand new negotiation is required. The starting point should be a list of the absolute minimum set of changes required by the Cooperative Agreement, if any. As noted above, the “may” language, combined with the presence of the quid pro quo, implies that the “absolute minimal changes” are different than what has been presented to us for consideration. Indeed, one alternative is to simply refuse ALL changes, and let Verisign go to court, if they so desire, to have the courts interpret what is required and what is optional. No deal is better than this deal. Any court-ordered set of the absolute minimally-required contractual changes would likely be far better for the public than what has been presented to us.
17. As there is no immediate deadline (I believe October or November 2020 is the most relevant date for completing a “negotiation”), ICANN should hold a series of public webinars with Questions and Answers
from the public and its important stakeholders. This is the most important contract, financially for ICANN, for registrars, and for registrants. It deserves the greatest scrutiny.
Sincerely,
George Kirikos
President
Leap of Faith Financial Services Inc.
http://www.leap.com/
ADDITIONAL COMMENT (submitted later in the day)
In addition to our previously submitted comments, we just noticed under “Next Steps” the following language:
“Following review of all of the public comments received, ICANN org will prepare and publish a summary and analysis report of the comments received. The report will be provided to the ICANN Board of Directors, and ******in consultation with the Board, ICANN org will make a decision**** regarding the proposed Amendment 3 to the .COM Registry Agreement and the proposed binding LOI between ICANN and Verisign.”
(emphasis added)
Thus, it appears that ICANN staff will be making a decision, and not the ICANN Board itself. The language above claims that ICANN staff will only have a “consultation with the Board”. That is unacceptable! It’s solely the ICANN Board’s duty to consider this critical contract, and ICANN staff should not be making the ultimate decision.