RE: [ga] Advantages to Option B

["Gomes, Chuck" <cgomes@verisign.com>]

Michael,

I have inserted a few responses below.  Thanks for the thoughtful
discussion.

Chuck  (Post # 2, 21 Mar 2001)

 -----Original Message-----
From: 	Michael Froomkin - U.Miami School of Law
[mailto:froomkin@law.miami.edu] 
Sent:	Tuesday, March 20, 2001 8:46 AM
To:	Gomes, Chuck
Cc:	'ga@dnso.org'
Subject:	Re: [ga] Advantages to Option B

Please count me as one that weighs these benefits rather differently, as
noted below.  

I think a reasonable person could say that the $5 million for .org makes
this change worth it, but I don't personally think so.

On Tue, 20 Mar 2001, Gomes, Chuck wrote:

[...]
> Option B Advantages to ICANN &/or the Internet Community:
> 
> 1. 10-year $200M investment in research and development and infrastructure
> to increase the efficiency and stability of the .com, .net and .org
> registries and the ability of ICANN accredited registrars to access those
> registries (Sclavos letter to Cerf)

I don't get this.  NSI will own the fruits, and it seems likely to me that
if it's commercially reasonable it will happen anyway.  We've seen no
data on how this is measured (is a new router counted?  rent of new
offices?  staff saleries and stock options?), and I just frankly have
trouble taking it seriously without that information.

Let me express it this way:  Under the existing agreement, there is a
commitment for $0.  Under the new agreements, there is a commitment for
$200M.

Secondly, the degree of "commercial reasonableness" is a function of the
level of certainty that our business will be ongoing in the future.  The
more certain our business status is, the more reasonable it is to invest.

Plus I don't understand how it would be enforced if NSI just didn't do it.
(But that's minor, my main point is the one above.)

> 2. $5M contribution for the creating of a new .org registry (Sclavos
letter
> to Cerf)

This seems to me to be one of the two only real benefits, and by far the
larger of the two. But, for this price .com gets a degree of insurance
that .org is less likely to be a competitor.

> 3. Terms for VeriSign financial support to ICANN in the .com, .net and
.org
> agreements are modified to be the same as that for the new gTLD
registries.

Why is this a benefit?  How am I better off with a rich independent ICANN
beholden to a small group for its financing rather than a an ICANN that is
beholden to many.  'He who pays the piper calls the tune'.

> Not only does this result in a replacement of the old fee caps but it also
> allows ICANN to greatly simplify its fee collection structure so that all
> fees are collected through registries instead of through both registries
and
> registrars.  This adds additional responsibility to the VeriSign Registry
> while at the same time reducing fee collection costs and increasing
> efficiency for ICANN.  (com-II.7; new-3.14; old-6)

> 4. In addition to continuing the 'fire-wall' requirements in the old
> agreement, the NSI Registrar must become a separate corporate subsidiary
of
> VeriSign. (com-II.23, new-23, old-21)

> 5. The .net and .org agreements become essentially the same as the new
gTLD
> agreements with the exception of the term and any clauses specifically
> related to the gTLDs themselves.  Note: In my opinion, these terms are
> definitely less favorable to VeriSign.

Since I think all these contracts are a terrible error, a regulator's
charter for ICANN, this is hardly a selling point.

> 6. VeriSign will lose the .org TLD at the end of 2002, five years earlier
> than under the existing agreement, assuming the 4-year extension after the
> separation of the Registry and Registrar.  (org-5, old-23)

Again, part of the first major benefit.

> 7. The .net TLD will be re-competed at the end of 2005, 22 months earlier
> than under the existing agreement, assuming the 4-year extension after the
> separation of the Registry and Registrar.  (net-5, old-23)

A real, but minor, benefit.

> 8. The termination clause in the .net and .org agreements is expanded to
> include several additional causes for termination.  (new-5.4, old-23)


> 9. The new .org registry will be allowed to use VeriSign Global Registry
> Services gTLD server constellation for free for one year and thereafter,
if
> the new registry so desires, at a price to be determined.  (org-5.1.5)

> 10. In the new .net and .org agreements, the list of possible topics for
> specifications and policies is expanded.  (new-4.2; old-3.C

NOT a benefit.  A detriment.
I certainly agree that it is a detriment to VeriSign.

> 
> Whereas some may want to debate whether or not some of the above are
clearly
> advantages to the Internet community at large, in my opinion, they are all
> advantages to ICANN and are all 'take-aways' for VeriSign.  In trade for

Strongly disagree.
I assume you disagree that they are 'take-aways' for VeriSign.  If that is
correct, we'll agree to disagree here (and that's okay because I understand
we are not simply dealing with black and white issues), but in each of the
10 items, VeriSign either agreed to less favorable terms from our point of
view or agreed to give up a right we already have in the current agreement
or committed to spend our funds and or resources beyond any commitments
already made.

> these 'take-aways,' which I think are very significant for VeriSign,
> VeriSign is given a clearer procedure for renewal for the .com registry
> (com-II.25) and the requirement to divest of the Registrar is removed if
the
> Registrar is made a separate corporate subsidiary (com-II.23.C).
> 
> As already stated at the beginning, the above is based on my personal
> analysis of the old and new agreements.  (That analysis was primarily done
> in route to and from Melbourne.)
> 
> P.S. - For those who are concerned about rights to data in the new
> agreements, please read the following sections: com-II.12, new-3.13,
> old-10).
> 
> --
> 

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