Follow up - Re: [registrars] $100,000 Surety Bond Waiver

["Ken Stubbs" <kstubbs@digitel.net>]

hello Bhavin...

this type of issue is exactly why the registrars need to start "organizing"
with regard to the upcoming ".org" re-delegation.

we need to insure that, whatever management organization takes over ".org",
they cannot impose any "onerous" financial " or technical requirements on
the registrars . we can only insure against this possibility by organizing
and making ourselves heard "as a body"..

frankly, I believe that the registrars need to present a "position paper" to
the community  on the ".org" transition issue. we need to make sure that we
are given due consideration in this transition process as we are the
principal parties on the "firing line" with the public.

this is why I proposed a specific "workforce" for this issue.

best wishes

ken stubbs



----- Original Message -----
From: "Bhavin Turakhia" <bhavin.t@directi.com>
To: "Registrars@Dnso. Org" <registrars@dnso.org>
Cc: <hhribar@verisign.com>; "Dan Halloran" <halloran@icann.org>; "M. Stuart
Lynn" <lynn@icann.org>; "Divyank Turakhia" <divyank.t@directi.com>; "Nicole
Dunn" <ndunn@verisign.com>; "Christine Russo" <crusso@verisign.com>;
<cgomes@verisign.com>
Sent: Thursday, November 29, 2001 10:55 PM
Subject: [registrars] $100,000 Surety Bond Waiver


> Hi,
>
> In the Verisign Conference at Marina Del Rey a point was raised and seems
to
> have been forgotten. The point was with regards to the $100,000 surety
bond
> which Verisign requires every com/net/org Registrar to have. It was
general
> consensus that this requirement should be waived off being unreasonable
and
> not required. I have the following points to note (some raised and some
not
> raised at that point in time)
>
> . The liberalisation of the Registrar process was done in order to promote
> free competition geographically. Most of you may not be aware how
difficult
> it is to obtain this bond in several countries - being the primary
deterrant
> in completing the accreditation process for most companies. We ourselves
> took about 3 months to get our ICANN accreditation, but after that it took
> us 4 whole months in India to get a local bank to issue a foreign
guarantee
> and get the appropriate permissions. This was also due to close contacts
we
> have and influence we hold over various parties here. I know 3 other
> registrars in India (and Nicole Dunn from Verisign would vouch for this)
who
> are still struggling with this requirement and dont know how to fulfill it
> (some of them having obtained their accreditation from over an year). It
is
> grossly unfair to these and other Registrars who have spent time effort
and
> investment in order to get accredited and then find this stumbling block
to
> complete their formalities and have to eventually give up (not many are as
> persistence as we were). Additionally the cost of obtaining this bond in
> various countries is FAR HIGHER than it is in the US. For instance here in
> India bankers demand anywhere from 100-125% of the guarantee amount as
CASH
> deposit. India is not a Capital intensive country like USA. Here the
> interest cost of capital is far higher than margins made on Domain Names.
> Additionally the cost of blocking that amount of capital is detrimental to
> business. Also the amount should not be seen as it is. The amount of
> $100,000 in US is high, but in India it is VERY HIGH, counting current
> conversion rates. This initself makes the proposition of becoming ICANN
> Accredited not viable. In that sense this becomes an unfair qualification
> and geographical discrimination against registrars (the very thing ICANN
> should be against).
>
> . Several banks and countries have NEVER dealt with such a bond, and fail
to
> understand the language, the implication, the risk involved and therefore
> are unwilling to negotiate on the terms and infact raise the terms.
> Considering the recent dotCOM bust - any bank guarantee with the word
dotCOM
> in it has begun to raise concerns. A Guarantee for the dotCOM Registry
> therefore is not a very comforting service for the bankers irrespective of
> what the reality is. It takes painful months to convince all the
appropriate
> authorities of the ZERO risk involved in the proposition.
>
> . NO other Registry requires any surety bond from the registrar. This
> includes gTLD Registries as well as private ccTLD Registries. This is only
a
> special requirement from Verisign.
>
> . Verisign has clearly NEVER had to invoke a guarantee for ANY Registrar
in
> their entire history
>
> . The very fact that the Registrar contractually indemnifies Verisign
should
> not require any sort of a bond.
>
> I would appreciate it if this letter should spur up some discussion and
> actually lead to abolishing this requirement thus allowing -
>
> . FREE Competition
> . Impartial standards geographically
> . Standard signup process for all Registries
>
> I speak less for myself (we have already completed all formalities) and
more
> for several registrars (many of whom have invested a large amount of time
> and effort in getting accredited) who lie in the "accredited but not yet
> operational" list, as well as various registrars who are year after year
> paying this huge interest cost for no benefit either to themselves or to
> Verisign (since verisign is not really making any money off this
guarantee).
>
> I had personally suggested several alternatives during my Accreditation
> process - such as a small recurring fee from registrars taken by Verisign
> instead of a huge bank guarantee. A $1000 per year from each registrar
would
> actually add up to $100,000 from a 100 (or $200,000 from 200 registrars).
I
> am sure at a cost lower than that Verisign can themselves buy insurance to
> cover the risk of a registrar failing to indemnify them against third
party
> claims. That way Verisign can procure one single blanket insurance
ionstead
> of Each registrar going out there and buying bank guarantees of small sums
> at different costs from around the world.
>
> The ideal situation however would be to completely abolish this system
since
> it really does not serve mush purpose and actually discourages Registrars
> and makes it impossible for some countries to participate (UNLESS THAT WAS
> THE ORIGNAL INTENT OF THIS REQUIRMENT)
>
> Being a comparatively new Registrar I do not know the process of getting
> this change made. Whether it involves discussion amongst the Registrars
> constituency, whether it involves gathering votes from people, I am
willing
> to make my contribution in whatever way required, in order to abolish this
> requirement and create a fairer Registrar accreditation process for
> everyone.
>
> Best Regards
> Bhavin Turakhia
> CEO
> Directi
> ----------------------------
> Tel: 91-22-6370256 (4 lines)
> Fax: 91-22-6370255
> http://www.directi.com
> ----------------------------
>
>