[registrars] Final Public Comment on NSOL's RLA - Resend

["Ross Wm. Rader" <ross@ebarn.com>]

Please find to follow our specific public comments regarding NSOL's
Registrar License Agreement for the public record. All of these points were
included in our preliminary memorandum, however this iteration does provide
a clearer understanding of our views as they relate to this agreement.

We fully hope that all parties involved will continue negotiation on these
and other points raised by the RC and arrive at a resolution amenable to
all.

cc: lltouton@jonesday.com, bburr@ntia.doc.gov, krose@ntia.doc.gov,
registrars@dnso.org

Ross Wm. Rader
Director, eCommerce
TUCOWS/Domain Direct
t. (416) 239-9095 x 335
f. (416) 239-8409

--

TUCOWS.COM INC.

PREPARED BY; ROSS WM. RADER (ross@domaindirect.com)
TUESDAY, JUNE 15, 1999
RELEASED: FRIDAY, JUNE 25, 1999

FINAL PUBLIC COMMENT ON NETWORK SOLUTIONS REGISTRAR LICENSE AGREEMENT

http://www.ntia.doc.gov/ntiahome/domainname/rla42199.htm

TUESDAY, JUNE 15, 1999

IN THE MATTER OF:

NETWORK SOLUTIONS INC.
REGISTRAR LICENSE AGREEMENT
as found at http://www.ntia.doc.gov/ntiahome/domainname/rla42199.htm

Comments of TUCOWS.com Inc. o/a Domain Direct
c/o
Ross Wm. Rader, Director eCommerce
TUCOWS.com Inc.
5415 Dundas Street West, Suite 106
Toronto, Ontario M9B 1B5
t. 416-239-9095 x 335
f. 416-239-8409



Table of Contents

Executive Summary 3
Specific Comments Concerning Individual Clauses 4
Appendix A - NSI RLA 9


EXECUTIVE SUMMARY
The Registration License Agreement (RLA) currently in use by the test-bed
registrars for the purpose of integrating with the Shared Registry System
(SRS) is largely inappropriate and one-sided. It does very little to protect
the interests of the Internet community and allows Network Solutions Inc.
(NSOL) to extend proprietary claim to intellectual property to which they
have no right.

In effect, the terms of the RLA as it stands would a) serve to extend NSOL's
monopoly beyond the terms of the NTIA Cooperative Agreement (CA), b) provide
unilateral and unchecked control over the SRS (and by extension, to those
who can and cannot access it) to NSOL c) provides NSOL with undue and
excessive revenue streams from unnecessary licensing fees and exorbitant per
transaction costs and d) attempts to contract with the registrars for legal
standing beyond that which is guaranteed by the CA, its successor documents
and US Civil law.

NSOL's RLA, if left unchanged, represents the single largest barrier to open
competition in the global SLD name space. The bureaucratic, operational and
technical principles implied, and stated, within the RLA are wholly at odds
with the cooperative nature of the larger Internet, the NTIA CA and the
organizational structure represented by ICANN. NSOL's RLA, if left
unchanged, represents the single largest barrier to open competition in the
global SLD name space.

Registrars that contract with NSOL under the terms of this agreement will be
effectively guaranteeing NSOL complete discretion as to the business model
employed by the Registrar, complete ownership of all intellectual property
and components interfacing with the RRP and per unit registration costs that
represent an operational profit margin of 99.334% for NSOL and their
shareholders.

TUCOWS.com Inc.'s interpretation of this document leaves us with no choice
but to decline signature until such time that NSOL provides ICANN Accredited
Registrars with a fair and equitable document that abides by, in form and
intent, the stated guidelines of ICANN and NTIA without requiring
signatories to grant NSOL legal standing not otherwise guaranteed by
applicable law.



SPECIFIC COMMENTS CONCERNING INDIVIDUAL CLAUSES
Section 2.1
"Throughout the Term of this Agreement, NSI shall operate the System and
provide Registrar with access to the System enabling Registrar to transmit
domain name registration information for the .com, .org and .net TLDs to the
System according to a protocol developed by NSI and known as the Registry
Registrar Protocol ("RRP")."

"RRP" is neither a defined term, nor a published specification. As a result,
it is impossible to consent to this agreement without prior knowledge of
what the specification is with deference to the applicable intellectual
property laws, non-disclosure and IP ownership considerations of this same
agreement.

Section 2.8
"Registrar agrees to employ in its domain name registration business NSI's
Registry domain name lookup capability to determine if a requested domain
name is available or currently unavailable for registration."

NSOL has unduly required that registrar's employ NSOL's domain name lookup
"capabilities". Network Solutions themselves have stated that the current
domain name lookup system evolved separately from domain name registration
services. As written, this clause unduly restricts open competition and
varied business models. As such, we feel that this clause be modified to
allow registrars to employ domain name lookup capabilities that are not NSOL
derived, but offer similar capabilities. This term should therefore be
modified to read;

"Registrar agrees to employ in its domain name registration business NSI's
Registry domain name lookup capability, or equivalent thereof, to determine
if a requested domain name is available or currently unavailable for
registration."

Section 2.11
"Registrar agrees to comply with all other reasonable terms or conditions
established from time to time, to assure sound operation of the System, by
NSI as Registry in a non-arbitrary manner and applicable to all registrars,
including NSI, and consistent with NSI's Cooperative Agreement with the
United States Government, upon NSI's notification to Registrar of the
establishment of those terms and conditions."

This clause unnecessarily forces registrar compliance without equal
participation from NSOL. We strongly feel that both the registrar and
registry should both agree upon the reasonable operating terms for the
benefit of the registry - with input and guidance from ICANN and/or the DOC.
As written, this clause allows for open interpretation on NSOL's behalf as
to the intent of the Cooperative Agreement and will likely lead to
misunderstanding and conflict to the detriment of the global name-space.


Section 2.12
"Registrar agrees to employ necessary employees, contractors, or agents with
sufficient technical training and experience to respond to and fix all
technical problems concerning the use of the RRP and the APIs in conjunction
with Registrar's systems. Registrar agrees that in the event of significant
degradation of the System or other emergency, Network Solutions, as
Registry, may, in its sole discretion, temporarily suspend access to the
System."

As written, this clause provides NSOL with undue and highly dangerous power
to suspend access to the registry, as they have demanded full discretion as
to the operational well being of the SRS. NSOL has demonstrated many times
in the past that significant degradation and emergency affecting the normal
operation of the registration system does not require the involvement of
multiple registrars. We are extremely wary to provide them with complete and
unilateral powers in this regard.

Section 2.13
"Prior to the Effective Date of this Agreement, Registrar shall have
procured a performance bond from a surety acceptable to NSI, in the amount
of $100,000 U.S. dollars. The terms of the performance bond shall provide
that Registrar will perform all the undertakings, covenants, terms and
conditions of this Agreement during the Initial Term, and any Renewal Terms,
and shall indemnify and hold NSI and its employees, directors, officers,
representatives, agents and affiliates harmless from all costs and damages
(including reasonable attorneys' fees) which it may suffer by reason of
Registrar's failure to so perform by making payment(s) up to the full amount
of the bond within ten (10) days of NSI's having notified the surety of its
claim(s) of damages."

While we feel that the bond requirements are unnecessary and will likely
impose substantial burdens upon some registrars, there are deeper issues
with this particular requirement. As written, this clause does not require
that the claim to assurity must be proven no less arbitrated. In other
words, NSOL management may at any time claim infringement or other issue
with registrar performance and have complete (legal) access to the surety
amount without further discussion. It would be irresponsible for any firm to
become party to this agreement with these implications present.

Section 3.2(i)
"Limitations on Use. Notwithstanding any other provisions in this Agreement,
except with the written consent of NSI, Registrar shall not: (i) sublicense
the RRP, APIs or Software or otherwise permit any use of the RRP, APIs or
Software by or for the benefit of any party other than Registrar, (ii)
publish, distribute or permit disclosure of the RRP, APIs or Software other
than to employees, contractors, and agents of Registrar for use in
Registrar's domain name registration business, (iii) decompile, reverse
engineer, copy or re-engineer the RRP, APIs or Software for any unauthorized
purpose, or (iv) use or permit use of the RRP, APIs or Software in violation
of any federal, state or local rule, regulation or law, or for any unlawful
purpose.

Registrar agrees to employ the necessary measures to prevent the System from
being used for (i) the transmission of unsolicited, commercial e-mail (spam)
to entities other than Registrar's customers; (ii) high volume, automated,
electronic processes that apply to NSI for large numbers of domain names;
(iii) high volume, automated, electronic, repetitive queries for the purpose
of extracting data to be used for Registrar's purposes; or (iv) the use of
said data to compile or infer customer identity or other demographic or
firmographic information."

This likely represents the most singularly ludicrous statement contained in
this document. One of our underlying suppositions in the design of our
registration architecture was that it should be a high volume, automated,
wholly electronic process that (given the proper marketing effort) would
allow us to apply to NSOL for large numbers of domain names. In a misguided
attempt to stifle cybersquatting, massive registration applications from
single sources and data mining of their alleged property rights over the
registry database, NSOL has effectively limited the technical capacity of
the SRS and the extent to which we can compete with NSOL's registrar
business through legal means.


Section 4.2
"Customer Service Support. During the Term of this Agreement, NSI will
provide reasonable telephone and e-mail customer service support to
Registrar, not SLD holders or prospective customers of Registrar, for
non-technical issues solely relating to the System and its operation. NSI
will provide Registrar with a telephone number and e-mail address for such
support during implementation of the RRP, APIs and Software. First-level
telephone support will be available on a 7-day/24-hour basis. NSI will
provide a web-based customer service capability in the future and such
web-based support will become the primary method of customer service support
to Registrar at such time."

Live 7x24 support from NSOL is not only a requisite during implementation,
but for the duration of the RLA. Should NSOL elect to move to web-based
support tools, it is imperative that these tools allow for real-time
interaction between their technical support staff and Registrar engineers.
If web based support is simply an email script, this will pose significant
obstacles to timely and efficient problem resolution.

Section 5.1
"License Fee. As consideration for the license of the RRP, APIs and
Software, Registrar agrees to pay NSI on the Effective Date or if Registrar
is a Testbed Registrar, at the completion of the testbed period, a
non-refundable one-time fee in the amount of $ 10,000 payable in United
States dollars (the "License Fee") and payable by check to Network
Solutions, Inc., Attention: Business Affairs Office, 505 Huntmar Park Drive,
Herndon, Virginia 20170 or by wire transfer to NationsBank, for the credit
of Network Solutions, Inc., Account #193 325 3198, ABA# 054001204. No later
than three business days after either the receipt (and final settlement if
payment by check) of such License Fee, or the execution of this Agreement
for Testbed Registrars, NSI will provide the RRP, APIs and Software to
Registrar."

As presented, NSOL's request for licensing fees is completely unacceptable.
The RRP is a completely untested platform of unknown worth. Additionally,
these fees are requested above and beyond the registration fees. It is our
position that NSOL should make an internal determination if they would like
their revenue to take the form of up front licensing fees, or with each
registration transaction. It is completely unacceptable to require both
however.

Section 5.2
"Registration Fees. During the Initial Term of this Agreement, Registrar
agrees to pay NSI the non-refundable amounts of $18 United States dollars
for each initial two-year domain name registration and $9 United States
dollars for each one-year domain name re-registration (collectively, the
"Registration Fees") registered by Registrar through the System. NSI
reserves the right to adjust the Registration Fees prospectively upon thirty
(30) days prior notice to Registrar, provided that such adjustments are
consistent with NSI's Cooperative Agreement with the United States
Government and are applicable to all registrars in the .com, .org and .net
TLDs. NSI will invoice Registrar monthly in arrears for each month's
Registration Fees. All Registration Fees are due immediately upon receipt of
NSI's invoice pursuant to a letter of credit, deposit account, or other
acceptable credit terms agreed by the Parties."

NSOL's current request to impose a $9.00 (USD) per registration, per year
fee does not accurately reflect actual cost plus reasonable profit as they
have implied.

Large scale transactive systems, resembling domain registration services,
currently complete millions of transactions per year on a per unit cost
basis for a miniscule fraction of what NSOL has requested. For example,
Sabre, a global travel booking system operated by a firm employing in excess
of 10,000 individuals completed travel transactions at a per unit cost of
$4.79 in 1998 according to recent filings with the US Securities Exchange
Commission.

NSOL themselves have made similar filings with the SEC that indicate that
their per unit transaction cost was close to $15.77. While we do not dispute
the historical per unit transaction costs, these numbers are irrelevant as
they reflect NSOL's activities as a registrar and a registry.

A registry does not require the massive operational, fiscal and
technological infrastructure that NSOL has created around their registrar
business. In fact, their recent filings with the SEC indicate that their
domain services portion of the operation accounts for only 85% of all
revenues. This implies that the $15.77 costing is likely closer to $13.40.
Now if we make the assumption that NSOL's registrar business accounts for
75% of the $13.40 (increased costs of marketing, support, billing and
management would account for the 75% - 25% skew), it quickly becomes clear
that NSOL's estimated costs of $3.35 are actually much closer to Sabre's
than they have initially let on.

In the best interests of the registrar community, NSOL's registry business
and the Internet community as a whole, we propose that NSOL submit a
detailed budget proposal to the NTIA and ICANN outlining their proposed
registry expenditures for the remainder of 1999 through October 1999.
Acquiring this level of information from NSOL is the only equitable way to
arrive at an reasonable per unit transaction cost that does not
unnecessarily include operational or capital expenditures for other portions
of NSOL's business.

On a different point, this clause also allows NSOL to adjust registration
rates at it's sole discretion assuming that the rate increase is consistent
with the Cooperative Agreement, but it does not indicate who is responsible
for determining the intent of the CA with regards to registration rate
increases. This has the effect of providing NSOL with complete discretion
over pricing as long as they feel it is consistent with the CA.

It is imperative that all registration pricing be conducted with the input
of a third party and not left to NSOL.

Section 5.3
"Registrant's Transfer of Domain Name. If a SLD holder transfers its domain
name registration to the Registrar's account from another registrar's
account, Registrar agrees to pay NSI the applicable Registration Fee as set
forth above. The losing registrar's Registration Fees will not be refunded
as a result of any such transfer. Such transfer of a SLD holder's domain
name registration from one registrar to another registrar must be
accomplished pursuant to the policy set forth in Exhibit B to this
Agreement."

NSOL has historically allowed registrants to update and modify their domain
name records for no cost. This clause represents a marked and chilling
departure from this policy and we strongly urge ICANN and all other involved
parties to negotiate to strike this clause from the agreement. In effect,
NSOL has provided themselves with an unduly guaranteed revenue stream at the
expense of domain registrants. It is our recommendation that NSOL be paid a
per transaction fee similar to the estimated cost per transaction noted in
Figure 1.1 as opposed to being paid on a per registration per year basis.

Further, it is our preliminary contention that this clause also has the
further effect of violating the terms of Amendment 11 that state "NSI will
not enter into an agreement with any other party that limits in any way that
party's ability to serve as a registrar or to operate a registry". Section
5.3 of this agreement limits our ability to serve as a registrar as it
represents a significant and undue barrier for customers wishing to switch
registrar services from NSOL to another registrar. If customers are not free
to switch registrars due because of measurable and unnecessary financial
loss, our ability to serve as a competitive registrar is significantly
impaired.



Section 5.4
"Non-Payment of Registration Fees. Timely payment of Registration Fees is a
material condition of performance under this Agreement. In the event that
Registrar fails to pay its Registration Fees, either initial or
re-registration fees, within three days of the date when due, NSI may stop
accepting new registrations and/or delete the domain names associated with
invoices not paid in full from the Registry database and terminate this
Agreement pursuant to Section 6(c) below."

The penalties imposed by section 2.13 are sufficient enough to allow NSOL to
employ realistic accounts receivable policies. As a non-US based registrar,
it will be impossible to pay NSOL on net 3 terms. We feel that NSOL's
current A/R and much more generous policy of net 30 is sufficient to ensure
timely payment to NSOL and facilitate our business requirements.

Section 6.13
"Construction. The Parties agree that any rule of construction to the effect
that ambiguities are to be resolved against the drafting Party shall not be
applied in the construction or interpretation of this Agreement."

This section should be stricken as resolutions arising from ambiguities of
construction are always construed against the drafting party in
interpretation and application of agreements and guaranteed by existing
decisions.

Section 6.14
"Intellectual Property. Subject to Section 2(f) above, each Party will
continue to independently own its intellectual property, including all
patents, trademarks, trade names, service marks, copyrights, trade secrets,
proprietary processes and all other forms of intellectual property. Any
improvements to existing intellectual property will continue to be owned by
the Party already holding such intellectual property."

The last sentence of this clause should be stricken, as the entire purpose
of this exercise is to improve upon existing infrastructure and IP. Blindly
granting NSOL rights to these improvements will only serve to stifle
innovative business methods and process while ultimately proving to be
counterproductive and detrimental to open competition and the name space
infrastructure as a whole.

Section 6.15(c)
"The RRP, APIs and Software are provided "as-is" and without any warranty of
any kind. NSI EXPRESSLY DISCLAIMS ALL WARRANTIES AND/OR CONDITIONS, EXPRESS
OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES AND
CONDITIONS OF MERCHANTABILITY OR SATISFACTORY QUALITY AND FITNESS FOR A
PARTICULAR PURPOSE AND NONINFRINGEMENT OF THIRD PARTY RIGHTS. NSI DOES NOT
WARRANT THAT THE FUNCTIONS CONTAINED IN THE RRP, APIs OR SOFTWARE WILL MEET
REGISTRAR'S REQUIREMENTS, OR THAT THE OPERATION OF THE RRP, APIs OR SOFTWARE
WILL BE UNINTERRUPTED OR ERROR-FREE, OR THAT DEFECTS IN THE RRP, APIs OR
SOFTWARE WILL BE CORRECTED. FURTHERMORE, NSI DOES NOT WARRANT NOR MAKE ANY
REPRESENTATIONS REGARDING THE USE OR THE RESULTS OF THE RRP, APIs, SOFTWARE
OR RELATED DOCUMENTATION IN TERMS OF THEIR CORRECTNESS, ACCURACY,
RELIABILITY, OR OTHERWISE. SHOULD THE RRP, APIs OR SOFTWARE PROVE DEFECTIVE,
REGISTRAR ASSUMES THE ENTIRE COST OF ALL NECESSARY SERVICING, REPAIR OR
CORRECTION."

While NSOL has repeatedly placed onerous operational and financial
requirements upon registrars throughout this agreement, they have completely
absolved themselves of all responsibility for performance with this section.
In other words, registrars are required to assume 100% of the risk for this
venture while NSOL collects their registration and license fees with
complete protection and indemnity. Both parties to this agreement must
equally assume and benefit from the risk and indemnity associated with this
contract.









APPENDIX A - RLA
REGISTRAR LICENSE AND AGREEMENT
[removed for brevities sake - can be found at
http://www.ntia.doc.gov/ntiahome/domainname/rla42199.htm]
Ross Wm. Rader
Director, eCommerce
TUCOWS/Domain Direct
t. (416) 239-9095 x 335
f. (416) 239-8409