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02 Nov 2005
There's so many bad things in the proposed settlement and contract that it's hard to keep track, so I'll try to make a list. If you can think of things I left out, drop me a note and I'll update it.
To help categorize the issues, I'll use the code letters V and I for Verisign and ICANN, $ for financial issues, and ! for oversight and adminsitrative issues so a V$ would be about Verisign money.
The agreement sets the registry fee at $6 plus 7% per year, even though there are credible bids to run it for about half that price. The 7% escalator is far above the likely inflation rate, and services that depend on computers should get cheaper, not more expensive.
The registry agreement is self-renewing unless there's a material breach. While this is consistent with previous contracts, the whole point of the ICANN lawsuit was to establish that there had indeed been material breaches that would disqualify VRSN from automatic renewals.
The agreement triples ICANN's per-domain fee paid by registrants to a fixed 75 cents, which they can use for whatever they want. This triples ICANN's revenue.
The agreement removes the current requirement of the registrars to approve the registry fee and hence limit ICANN's budget. ICANN now has a large budget with no outside oversight,
The current 2001 agreement requires that VRSN spend $200M on infrastructure R&D by 2010, with a substantial portion by 2007. The new agreement contains no such language.
The agreement allows VRSN to collect traffic data and do whatever they want with it include selling it, so long as they don't disclose registrant or end-user information. (It's not clear whether a domain name itself is considered registrant information.) The traffic data shows inquiries about both existing and non-existent domains and is an extremely valuable source of information. Karl Auerbach has commented that they could monitor in real time the hits on names in URLs in television ads. People have commented that Google would likely run the registry for free if they could mine the traffic data.
The ICANN lawsuit alleged serious misbehavior on Verisign's part. In the skirmishes to date, ICANN had done pretty well, getting VRSN's antitrust claims dismissed, and had a strong case that VRSN was in material breach which would have voided the .COM and .NET agreements and allowed them to be relet to someone else, most likely at a much lower price. The settlement drops all charges against VRSN.
Snapnames has a similar suit related to the waitlist service (WLS) that they want to provide for Verisign. The settlement specifically permits VRSN to continue to assist Snapnames in their case. Since the case concerns a service for which Snapnames and VRSN have a contract, and ICANN has approved the WLS anyway, in a sweeping settlement like this, VRSN should be required to prevail on Snapnames to drop or settle.
Appendix Y of the current agreement is the Sanctions Program which gives ICANN a way to discipline or fine VRSN for minor misbehavior, short of a lawsuit or external arbitration. The sanctions can be significant, $10K per violation. The new agreement doesn't have them.
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