Showing posts with label Cooperative Agreement. Show all posts
Showing posts with label Cooperative Agreement. Show all posts

2018-11-04

News Review: 1) ICANN EPDP Draft Initial Report, 2) Verisign & .COM

graphic "News Review" ©2016 DomainMondo.com
Domain Mondo's weekly internet domain news review (NR 2018-11-04 with analysis and opinion: Features • 1) ICANN WHOIS & GDPR: EPDP Draft Initial Report,  2) NTIA & Verisign Extend Cooperative Agreement on .COM, and more  3) Other ICANN news,  4) ICYMI: a. China 'Hijacking' the West's Internet Backbone, b. ITU Plenipotentiary Conference 2018, c. EU Link Tax, d. DMCA Exemptions,  5) Most Read.

Updates: EPDP Meeting Thursday Nov 8 (wiki page, agenda, docs) at 14:00UTC (9am EST). See EPDP mail list for additional items, particularly this (from Milton Mueller) and this (from Lindsay Hamilton-Reid). Adobe Connect recording, chat transcript (pdf) embed below, Meeting transcript (pdf), meeting notes & action items here.

EPDP Meeting Tuesday Nov 6 (wiki page, agenda, docs) at 14:00 UTC (9am EST). MP3, Adobe Connect recording, meeting transcript (pdf), and chat transcript (pdf) embed below. Additional discussion items on the mail list starting with "Proposed Agenda and items for input - EPDP Team Meeting #23" from Marika Konings Nov 5, 2018, here, including (but not limited to) the EPDP Chair's entry here.

Original post:
1) ICANN WHOIS & GDPR: EPDP Draft Initial Report
The EPDP Draft Initial Report (pdf) is still a "work in progress" and there will be many revisions before it is published for public comment. The initial draft (pdf link above) was prepared by ICANN staff and first shown to the EPDP working group on Thursday, Nov 1, 2018, at the EPDP meeting:
"... And then we want to share with you the first version – the proposed draft initial first version of the initial report that been working on, you know, up until – not too many minutes ago, and so while we haven't distributed yet we’ll take you through it and we’ll put a link to a wiki page so you can download if you want ..."--EPDP Chair Kurt Pritz, transcript (pdf), p. 2.
Later in that Thursday (Nov 1) EPDP meeting, ICANN staff member Marika Konings led the EPDP working group through the draft initial report (transcript, pp. 30-38) excerpt:
"... What we’ve done in the report, and I’ll slowly start walking you through it, as said, you know, executive summary has some of the background elements already there but the biggest part and the meat of course of the report will be the proposed response to the charter questions and the preliminary recommendations which will need to be updated ..." (Ibid., p. 31) (emphasis added)
Comments from EPDP members at the Nov. 1st meeting [chat transcript (pdf)]:
Thomas Rickert (ISPCP): "So we will publish the [initial] report without legal vetting and we will only have 1 public comment period? That sounds like quite a brave plan."
Milton Mueller (NCSG): "After working on the Purposes for several months as "lettered" elements (A, B,. C, etc.) in the report the purposes are numbered. Will this cause confusion in the EPDP group? Should we retain the letters?" Marika Konings: "@Milton - one reason was to move from letters to numbers was that it might be confusing for the broader community to see letters with a clear gap / letters missing."Milton Mueller (NCSG): "Hmmm, you could designate deleted purposes as deleted. e.g., H - deleted." Thomas Rickert (ISPCP): "I would even offer brief rationales as to what happened to the missing letters, why they were deleted." Stephanie Perrin (NCSG): "Agree with Thomas, we need to discuss what is not there as much as what is there."
EPDP Meetings this coming week: Tuesday Nov 6 and Thursday Nov 8. New starting times this week: 14:00 UTC (9am EST). Observers: Adobe Connect, or audio cast (browser or app). See also GNSO Council EPDP page and updates. Links to all EPDP meetings' transcripts and recordings are on the GNSO calendar. Other EPDP links: wiki, mail list, action items, Temp Spec, EPDP Charter (pdf), Data Elements Workbooks (pdf).

How far behind is the EPDP working group in getting out the Initial Report? The August version of the EPDP timeline shows an initial report should have already been produced and published for public comment. The most recent revised timeline (as of Nov 1, 2018):

Further information on last week's EPDP meetings on last week's News Review. Also note:
• Understanding RDAP (Registration Data Access Protocol) and the Role it can Play in RDDS (Registration Data Directory Services) Policy ICANN63 presentation Oct 22, 2018 (pdf) excerpts:
p.12: "With RDAP, a Registry can point the end-user to the Registrar’s RDAP in order to obtain authoritative information maintained by the Registrar." [Editor's note: no need for data transfer to registry operator?]; pp. 13, 15 below.

• geoTLD GDPR survey results (pdf) excerpt: "How does your WHOIS look like today?"

2) Names, Domains & Trademarks: NTIA, Verisign & .COM
graphic "Names, Domains & Trademarks" ©2017 DomainMondo.com
a. NTIA Statement on Amendment 35 to the Cooperative Agreement with Verisign, November 01, 2018 (emphasis and link added):
NTIA and Verisign have agreed to extend and modify the Cooperative Agreement. These modifications are in line with policy priorities of the Trump Administration. The changes create a new commitment to content neutrality in the Domain Name System (DNS), provide market-based pricing flexibility, and reduce the regulatory burden on Verisign.
Amendment 35 [pdf] confirms that Verisign will operate the .com registry in a content neutral manner with a commitment to participate in ICANN processes. To that end, NTIA looks forward to working with Verisign and other ICANN stakeholders in the coming year on trusted notifier programs to provide transparency and accountability in the .com top level domain.
The amendment repeals Obama-era price controls and provides Verisign the pricing flexibility to change its .com Registry Agreement with ICANN to increase wholesale .com prices. Specifically, the flexibility permits Verisign to pursue with ICANN an up to 7 percent increase in the prices for .com domain names, in each of the last four years of the six-year term of the .com Registry Agreement. The changes also affirm that Verisign may not vertically integrate or operate as a registrar in the .com top level domain.
Editor's note: There's a lot to like, dislike, and be concerned about, in Amendment 35.  My own position has been clear, see my submission to NTIA July 17, 2018 (pdf), particularly at p. 12 and exhibits starting on p. 13). Bottom-line: I am thankful NTIA extended the Cooperative Agreement. There is a long history in .COM, and RFC 1591 by Jon Postel is the "holy scripture" in defining this global public resource,  this top-level domain (TLD) .COM. A secondary authoritative resource in understanding .COM is the George W. Bush Administration's U.S. Department of Justice Antitrust Division letter of December 3, 2008 (see pp. 13-20, of my submission to NTIA, supra).

I expected some price increase, and while this increase is generous to Verisign, it is also obvious Verisign wanted even more, and Verisign would have already gotten more from ICANN.

There's also a lot of "noise" in the domaining blogosphere since the announcement (see, e.g., here, here and here. I suggest complaining registrants consider using the 2-year window (from now until Oct 26, 2020) to determine their core long-term .COM domain holdings and renew those domains for 10 years to avoid price increases which will likely begin in late 2020 (2020 could be a banner year for .COM revenue for registrars and Verisign with registrants renewing for multiple years ahead of the price increases).

Investors in Verisign $VRSN reacted favorably to the news--Verisign shares closed Friday, Nov 2, 2018, at $165.02 UP +$24.22, +17.20%, a $2.92 Billion Increase in Market Capitalization:
$VRSN
With ICANN now allowing Verisign to increase .NET prices by 10% per year, compounded, and no price controls whatever on new gTLDs, .COM registrants probably couldn't have hoped for a better outcome to the NTIA-Verisign Cooperative Agreement Amendment 35. The Obama administration essentially "sold out" .COM registrants by agreeing to the IANA transition (effective October 1, 2016), without any provisions for extending price controls on .COM after Nov 30, 2018. See U.S. Senator Ted Cruz's letter of August 12, 2016 (pdf).

There were also many other factors beyond just .COM pricing at play in the negotiations between Verisign and NTIA, including pressure upon NTIA from special interest groups, particularly intellectual property lobbyists.

Amendment 35 allows Verisign to increase the wholesale price of .COM from $7.85 starting Oct 26, 2020--effective date of Amendment 35 is Oct 26, 2018--up to 7% per year, which could produce a wholesale price of $10.29 the final year of the initial (six-year) extended term ending in 2024, if my calculator is right:
Most, if not all, .COM registrants (including domain investors) can live with that, and thrive. You might even want to diversify your investment portfolio by adding some Verisign shares. What the future holds after Nov 30, 2024, we really don't know. We don't even know if ICANN will still be around by then, note this language from Amendment 35:

b.  Gab.com
Andrew Torba, CEO Gab.com: "Gab has spent the past 48 hours proudly working with the DOJ and FBI to bring justice to an alleged terrorist ... In the midst of this Gab has been no-platformed by essential internet infrastructure providers at every level. We are the most censored, smeared, and no-platformed startup in history, which means we are a threat to the media and to the Silicon Valley Oligarchy. Gab isn’t going anywhere. It doesn’t matter what you write. It doesn’t matter what the sophist talking heads say on TV. It doesn’t matter what verified nobodies say on Twitter. We have plenty of options, resources, and support. We will exercise every possible avenue to keep Gab online and defend free speech and individual liberty for all people. You have all just made Gab a nationally recognized brand as the home of free speech online at a time when Silicon Valley is stifling political speech they disagree with to interfere in a US election ...." [more at Gab.com link above].

See also: Corporate Speech Police Are Not the Answer to Online Hate--EFF.org and "First it was Milo and Alex Jones, now platforms are being de-platformed"--Columbia Journalism Review | cjr.org.

c. Why New Entrepreneurs in India go online despite offline being such a huge market in India?  Setting up a website including buying a good domain name, hosting and other essentials only costs a few thousand rupees.--indianweb2.com.

d.  New gTLD .AMAZON "moves forward but work remains before ‘.amazon’ becomes a reality"--worldtrademarkreview.com.

e. Google's new gTLD .new shortcuts 
Docs: doc.new, docs.new, document.new; Forms: form.new, forms.new; Sheets: sheet.new, sheets.new, spreadsheet.new; Sites: site.new, sites.new, website.new; Slides: slides.new, deck.new, presentation.new.

f. GoDaddy $GDDY Q3 2018 Earnings LIVE Webcast, Nov. 6, 5pm ET.

g. Tucows Inc. (NASDAQ: TCX, TSX: TC), domain name registrar and technology company, will report its third quarter 2018 financial results via news release on Wednesday, November 7, 2018 at 5:05 p.m. ET, and concurrently also post management’s pre-recorded remarks discussing the quarter and outlook for the Company at http://www.tucows.com/investors/financials.

3) Other ICANN News
graphic "ICANN | Internet Corporation for Assigned Names and Numbers"
a. NTIA Administrator David Redl sent a letter (pdf) dated Oct 26, 2018, to ICANN Board of Directors Chair Cherine Chalaby raising concerns about an accountability deficit at ICANN, stating:
"[r]ecent ICANN senior staff departures have highlighted that ICANN lacks post-employment restrictions," and recommending an immediate review as well as "cooling off periods" as a potential solution "to ensure that conflicts of interest or appearances of unethical behavior are minimized." (emphasis added)
Editor's note: for more information and background see also:
  • This "revelation" about Fadi Chehade:
b. New gTLD .PHARMACY: a global public resource operated in the global public interest?

ICANN.org: "12 July 2018: ICANN Sends Notice of Breach to Registry (National Association of Boards of Pharmacy (pharmacy)) Data and Documents Under Review by ICANN; Cure Period Extended Until 1 October 2018; Data and Documents Under Review by ICANN; Breaches Cured 3 October 2018."

c. ICANN's dotBrand Extortion Racket (pdf)--Promoters' ICANN63 presentation (pdf).

4) ICYMI Internet Domain News 
graphic "ICYMI Internet Domain News" ©2017 DomainMondo.com
• China has been 'hijacking the vital internet backbone of western countries' for intelligence gathering after it signed the Obama-Xi cyber pact in late 2015, according to researchers from the US Naval War College and Tel Aviv University. The report says Chinese state-owned China Telecom has been one of the internet's most determined BGP hijackers. Editor's note: Download the report here. See also China’s Internet Of Things (IoT) A Global Cybersecurity Threat?


• PP-18, ITU Plenipotentiary Conference 2018, Dubai, UAE (continues thru Nov 16).
"I am pleased that Doreen Bogdan Martin, an NTIA alum, has been elected as the Director of the ITU Development Sector. Doreen is immensely qualified and the United States looks forward to working with her and continuing in our role on the ITU Council to support the global expansion of communications technologies. Significantly, she is the first woman to hold one of the ITU’s five elected positions, and her leadership will give the United States a voice in ITU leadership for the first time in three decades."--Assistant Secretary for Communications and Information and NTIA Administrator David Redl.

• EU: The EU's Link Tax Will Kill Open Access and Creative Commons News--EFF.org.

• US: New Exemptions to DMCA Section 1201 Are Welcome, But Don’t Go Far Enough--EFF.org.

2018-04-26

Verisign $VRSN Q1 2018 Earnings LIVE Webcast April 26 Replay


$VRSN
Verisign, Inc.
Q1 2018 Verisign Earnings Conference Call April 26, 2018 at 4:30 PM EDT Listen to Webcast

VeriSign (VRSN) Q1 2018 Results - Earnings Call Transcript | SeekingAlpha.com excerpt: "At the end of March, the domain name base in .com and .net totaled 148.3 million, consisting of 133.9 million names for .com and 14.4 million names for .net ... we believe that the renewal rate for the first quarter of 2018 will be 74.9%. This preliminary rate compares to 72.5% achieved in the first quarter of 2017. We now expect full year 2018 domain name base growth of between 2.5% and 3.25%, with an increase to the domain name base for the second quarter of 2018 of between 0.7 million to 1.2 million net registrations. I also want to report that we are engaged in the dialogue with NTIA concerning the Cooperative Agreement which is ongoing, but beyond that we don't have more to say at this time ... we're engaged in ICANN's process to move the delegation forward for [new gTLD] .WEB. That's ICANN's process, so we can't say when it'll conclude. Just as a reminder to, for all of you looking at the guidance of course, while it's possible that we'll – our operation of .web will start this year. We did not include – the 2018 revenue guidance provided does not include any revenue from .web, and we'll give you more update as available, but unfortunately that's all I can give you now..."--D. James Bidzos, Verisign Chairman, President & CEO (emphasis added).

Q1 2018 Verisign Earnings Conference Call

Earnings Results (pdf): First Quarter GAAP Financial Results 
VeriSign, Inc. and subsidiaries (“Verisign”) reported revenue of $299 million for the first quarter of 2018, up 3.7% percent from the same quarter in 2017. Verisign reported net income of $134 million and diluted earnings per share (diluted “EPS”) of $1.09 for the first quarter of 2018, compared to net income of $116 million and diluted EPS of $0.94 for the same quarter in 2017. The operating margin was 62.0 percent for the first quarter of 2018 compared to 60.7 percent for the same quarter in 2017.

Financial Highlights • On Feb. 15, 2018, Verisign called for the redemption of all its outstanding subordinated convertible debentures, with a redemption date of May 1, 2018. If holders elect to convert their debentures, Verisign will settle the principal amount, up to $1.25 billion, in cash and the remaining value through the issuance of shares of Verisign’s common stock. • Verisign ended the first quarter with cash, cash equivalents and marketable securities of $2.4 billion, a decrease of $58 million from year-end 2017. • During the first quarter, Verisign repatriated $1.15 billion of cash held by foreign subsidiaries, net of foreign withholding taxes. • Cash flow from operating activities was $90 million for the first quarter of 2018, compared with $148 million for the same quarter in 2017. The first quarter 2018 amount reflects approximately $61 million in withholding taxes paid in connection with the repatriation. • Deferred revenues on March 31, 2018, totaled $1.03 billion, an increase of $27 million from year-end 2017. • During the first quarter, Verisign repurchased 1.1 million shares of its common stock for $125 million. At March 31, 2018, $938 million remained available and authorized under the current share repurchase program which has no expiration. • For purposes of calculating diluted EPS, the first quarter diluted share count included 25.6 million shares related to the subordinated convertible debentures, compared with 21.3 million shares for the same quarter in 2017. 

Business Highlights • Verisign ended the first quarter with 148.3 million .com and .net domain name registrations in the domain name base, a 3.2 percent increase from the end of the first quarter of 2017, and a net increase of 1.91 million during the first quarter of 2018. • In the first quarter, Verisign processed 9.6 million new domain name registrations for .com and .net, compared to 9.5 million for the same quarter in 2017. • The final .com and .net renewal rate for the fourth quarter of 2017 was 72.2 percent compared with 67.6 percent for the same quarter in 2016. Renewal rates are not fully measurable until 45 days after the end of the quarter.

Earnings Presentation (pdf)

10-Q (pdf)

Quarterly VRSN Convertible Debenture Dilution Q1-2018 (pdf)

Additional resources:
Related: New gTLD .WEB: Afilias vs ICANN, Verisign $VRSN & Nu Dot Co? | DomainMondo.com

2018 Annual Meeting of Stockholders of VeriSign, Inc. to be held at the corporate offices located at 12061 Bluemont Way, Reston, Virginia 20190 on Thursday, May 24, 2018, at 10:00 a.m., EDT.

Verisign to Report First Quarter 2018 Financial Results (press release):
 Press Release

feedback & comments via twitter @DomainMondo


DISCLAIMER

2016-08-13

Comment to ICANN on Proposed Amendment to .COM Registry Agreement

UPDATE: .COM Registry Agreement Amendment approved by the ICANN Board of Directors
September 15 2016, extending Verisign's .COM Registry Agreement through November 30, 2024.
"Resolved (2016.09.15.09), the proposed amendment to the .COM Registry Agreement <https://www.icann.org/sites/default/files/tlds/com/com-amend-1-pdf-30jun16-en.pdf> [PDF, 100 KB] is approved, subject to the RZMA being executed, and the President and CEO, or his designee(s), is authorized to take such actions as appropriate to finalize and execute the Amendment."
Staff Report of Public Comment on Proposed Amendment to .COM Registry Agreement (pdf) 
__________ 

Date: August 12, 2016
To: Internet Corporation for Assigned Names and Numbers, a California corporation (hereinafter “ICANN”)
Re: Response to your request for comments re:  ProposedAmendment to .COM Registry Agreement
1. I have no objection to the proposed .COM Registry Agreement  extension as it simply provides the same additional six year contract term that Verisign would be entitled to in 2018 under its contractual right of presumptive renewal. Accordingly, I adopt and support a portion of the comments already submitted by Philip Corwin on behalf of the Internet Commerce Association (ICA) on August 11, 2016, posted on your “Comments Forum” page at https://forum.icann.org/lists/comments-com-amendment-30jun16/pdfaJOiVQsMmt.pdf, specifically:

2. I would note that based upon the comments already submitted to ICANN on this issue, there is a lot of misinformation, concern, and uncertainty, surrounding the .COM registry agreement, pricing of .COM domain names now and in the future, and Amendment32 of the Cooperative Agreement (pdf) between Verisign and NTIA which caps the price of .COM domain names at $7.85 through November 30, 2018 (subject to relief provisions). See, e.g., .Com price doubling? Here's what all that talk is about - DomainNameWire.com.

3. Had NTIA made clear what would happen to the CooperativeAgreement, particularly the price limitation on .COM domain names after November 30, 2018, in view of the IANA Stewardship Transition scheduled to occur upon lapse of the IANA functions contract on September 30, 2016, much of the fear, angst, frustration, hostility, and mistrust, as expressed in the many comments already submitted, could have been avoided.

4. Likewise, had ICANN and Verisign made clear what would happen to the pricing of .COM domain names after November 30, 2018, should NTIA not extend the Cooperative Agreement including Amendment 32, many of the concerns already expressed in the comments could have been alleviated.

5. My understanding is this simple extension of the .COM registry agreement for six years (through November 30, 2024), is meant to accommodate the new Root Zone Maintainer Agreement (RZMA) approvedby the ICANN Board of Directors on August 9, 2016.

6. .COM is the most important TLD ( Top-Level Domain) in the world. Accordingto Verisign, the .COM “domain name base” consists of 127, 763,819 domain names as of August 12, 2016. As one of the “original” gTLDs, it has a long history which predates the existence of ICANN. The domain name registrants of .COM include “every Fortune 500 company and the world’s fastest-growing companies.” With a record of “100 percent reliability for more than 15 years” it is fitting and appropriate that Verisign continue to serve as both Root Zone Maintainer and .COM registry operator. There is no provision in current ICANN policy nor the current .COM registry agreement, nor any other gTLD registry agreement ,that provides for “a competitive public tender” barring a material, continuing, breach by the registry operator (see Annex to this comment, below).

7. I follow closely the public disclosures required of Verisign Inc. by the U.S. Securities and Exchange Commission (SEC) and the rules of the NASDAQ stock exchange. I also note that Verisign is subject to the jurisdiction of the Federal Trade Commission (FTC) and the Antitrust Division of the U.S. Department of Justice (DOJ).  As a publicly traded company with a market capitalization of 8.9 billion dollars (US), it has the resources and incentives to continue providing reliable services to the global internet community as Root Zone Maintainer and .COM Registry Operator.

8. Finally, I note in passing the inappropriate comments submitted by INTA and the IPC. First, INTA, the International Trademark Association, has a conflict of interest in submitting any comment to ICANN since ICANN is a member of INTA, the worldwide lobbying organization for trademark attorneys and other trademark interests, and ICANN staff have “coached” INTA members on how to “lobby” ICANN on policy-making, see Why Did ICANN Become a Member of Trademark Lobbyist Group INTA?  Second, as both INTA and IPC know, all Rights Protection Mechanisms are currently under review as noted by Philip Corwin in the comment submitted by the ICA (see above), and the ICANN Board has made it clear it is not appropriate to extend new gTLD RPMs to legacy gTLDs such as .COM, see DomainMondo.com:ICANN Renews .CAT, .PRO, .TRAVEL, RAs with URS Included: "Accordingly, the Board's approval of the Renewal Registry Agreement is not a move to make the URS mandatory for any legacy TLDs, and it would be inappropriate to do so."--ICANN Board of Directors.  In fact, cybersquattingcomplaints against .COM domains are dropping and there is no reason to extend any of the new gTLD RPMs to .COM. Instead, INTA and IPC could better spend their time educating their own members and participants on not filing meritless UDRP cases or otherwise engaging in abuse of the UDRP and other legal processes—see this comment by attorney John Berryhill.

Respectfully submitted,
John Poole
Domain name registrant, and Editor of Domain Mondo

Annex:
Current .comRegistry Agreement - ICANN excerpts:
.com Registry Agreement
(1 December 2012)
REGISTRY AGREEMENT
This REGISTRY AGREEMENT (this "Agreement") is entered into as of 1 December 2012 by and between Internet Corporation for Assigned Names and Numbers, a California nonprofit public benefit corporation ("ICANN"), and VeriSign, Inc. a Delaware corporation.
ARTICLE I INTRODUCTION
Section 1.1 Effective Date. The Effective Date for purposes of this Agreement shall be December 1, 2012.
....
Section 4.1 Term. The initial term of this Agreement shall expire on November 30, 2018. The Expiration Date shall be November 30, 2018, as extended by any renewal terms.
Section 4.2 Renewal. This Agreement shall be renewed upon the expiration of the term set forth in Section 4.1 above and each later term, unless the following has occurred : (i) following notice of breach to Registry Operator in accordance with Section 6.1 and failure to cure such breach within the time period prescribed in Section 6.1, an arbitrator or court has determined that Registry Operator has been in fundamental and material breach of Registry Operator's obligations set forth in Sections 3.1(a), (b), (d) or (e); Section 5.2 or Section 7.3 and (ii) following the final decision of such arbitrator or court, Registry Operator has failed to comply within ten days with the decision of the arbitrator or court, or within such other time period as may be prescribed by the arbitrator or court. 
….

"Section 7.3 Pricing for Domain Name Registrations and Registry Services ... (c) Price for Registry Services. The price for all Registry Services subject to this Section 7.3 shall be the amount, not to exceed the Maximum Price, that Registry Operator charges for each annual increment of a new and renewal domain name registration and for each transfer of a domain name registration from one ICANN-accredited registrar to another. (d) Maximum Price. The Maximum Price for Registry Services subject to this Section 7.3 shall be as follows: (i) from the Effective Date through 30 November 2018, US $7.85; (ii) Registry Operator shall be entitled to increase the Maximum Price during the term of the Agreement due to the imposition of any new Consensus Policy or documented extraordinary expense resulting from an attack or threat of attack on the Security or Stability of the DNS, not to exceed the smaller of the preceding year's Maximum Price or the highest price charged during the preceding year, multiplied by 1.07."

Read all comments submitted here. Comments Close Date 12 Aug 2016 23:59 UTC.

feedback & comments via twitter @DomainMondo


DISCLAIMER

2016-07-01

ICANN Finally Publishes Verisign .COM Extension Agreement & RZMA

With the U.S. heading into a 3-4 day holiday break--Fourth of July a/k/a Independence Day--ICANN published Thursday, June 30, 2016, for review and comment, First Amendment to the .COM Registry Agreement (extension), as well as the new Root Zone Maintainer Agreement (RZMA). Verisign has been maintainer of the global internet root zone under an agreement with the U.S. government (NTIA) but that will be replaced by the new RZMA between Verisign (NASDAQ: VRSN), and ICANN, a California corporation which will be an unregulated global monopoly after September 30, 2016, in accordance with the Obama administration's IANA transition plans announced March 14, 2014.

Verisign is the registry operator of gTLD (generic top-level domain) .COM, one of the internet's original gTLDs (originally administered by the U.S. Department of Defense), and today the market dominant leader and largest TLD in the world. Verisign is also operator of two of the global internet's thirteen root name servers, and provides registry services for other TLDs (top-level domains), including the second-largest gTLD, .NET, and the U.S. government's .GOV. Under the terms of the new RZMA, Verisign, which was previously unpaid for its RZM services, will now be paid $25,000 per month (see Schedule 3, p. 36 of 47 in the RZMA embed below).

Both the .COM extension and RZMA agreement, as published June 30th by ICANN, are embedded below. Verisign is limited on what it can charge for .COM registrations and renewals by the terms of Amendment 32 (pdf) to the Cooperative Agreement between Verisign and NTIA, which expires November 30, 2018, unless extended (and NTIA has not indicated whether it will be extended and on what terms):
"The Maximum Price charged by VeriSign for registration or renewal of a .com domain name during the term of the .com Registry Agreement approved hereby shall not exceed US $7.85; provided, however, that VeriSign shall, be entitled to increases in the Maximum Price in accordance with Section 7.3( d)(ii) of the .com'Registry Agreement; provided further that VeriSign shall not exercise such right unless the Department provides prior written approval that the exercise of such right will serve the public interest, such approval not to be unreasonably withheld."
Under the current ICANN .COM Registry Agreement with Verisign (Section 7.3 Pricing for Domain Name Registrations and Registry Services):
"(d) Maximum Price. The Maximum Price for Registry Services subject to this Section 7.3 shall be as follows: (i) from the Effective Date through 30 November 2018, US $7.85; (ii) Registry Operator shall be entitled to increase the Maximum Price during the term of the Agreement due to the imposition of any new Consensus Policy or documented extraordinary expense resulting from an attack or threat of attack on the Security or Stability of the DNS, not to exceed the smaller of the preceding year's Maximum Price or the highest price charged during the preceding year, multiplied by 1.07." 
The .COM extension agreement (embed below) in substance only extends the .COM Registry Agreement through November 30, 2024. However it does contain this language:
2. Future Amendments. The parties shall cooperate and negotiate in good faith to amend the terms of the Agreement (a) by the second anniversary of the Effective Date, [2018] to preserve and enhance the security and stability of the Internet or the TLD, and (b) as may be necessary for consistency with changes to, or the termination or expiration of, the Cooperative Agreement between Registry Operator and the Department of Commerce. (emphasis added)
The term of the RZMA (embed below) is eight years, which means it will also end in 2024.

Additional Information:
• Public Comment on Proposed Amendment to .COM Registry Agreement | ICANN.org: Close Date 12 Aug 2016 23:59 UTC - Comments forum (there is already one objecting comment filed).
• Root Zone Management Transition Update | ICANN.org: blog post by Akram Atallah, ICANN Global Domains Division President, June 28, 2016.

First Amendment to .COM Registry Agreement (pdf) embed below (highlighting added):


Root Zone Maintainer Service Agreement [RZMA] (pdf) embed below (highlighting added):


feedback & comments via twitter @DomainMondo


DISCLAIMER

2016-02-21

Verisign Form 10-K for 2015, Domain Name Industry 'Must Read'

VeriSign, Inc. (verisign.com), domain name registry operator (.COM, .NET, and other TLDs), and Internet Root Zone Maintainer, has filed its 2015 annual report (Form 10-K) required by the United States Securities and Exchange Commission (SEC). It is a annual 'must read' for VeriSign investors (NASDAQ:VRSN), and the domain name industry. The entire report, including exhibits, can be accessed via the SEC's EDGAR here, or via the Verisign Investor Relations website.

Excerpts from the VeriSign, Inc., 2015 Form 10-K (emphasis added) embedded below:



Takeaways:
  • Verisign Registry Services operates the authoritative directory of all .com, .net, .cc, .tv, and .name domain names, among others and the back-end systems for all .gov , .jobs, and .edu domain names, among others... 
  • Verisign also administers and operate two of the 13 root zone servers that contain authoritative data for the very top of the DNS hierarchy. Our domain name servers provide the associated authoritative name servers and IP addresses for every .com and .net domain name on the Internet and a large number of other TLD queries, resulting in an average of over 120 billion transactions per day. These name servers are located in resolution sites which are in a controlled and monitored environment, incorporating security and system maintenance features. This network of name servers is one of the cornerstones of the Internet’s DNS infrastructure... 
  • Verisign faces competition in the domain name registry space from other gTLD and ccTLD registries that are competing for the business of entities and individuals that are seeking to obtain a domain name registration and/or establish a Web presence .... there are over 840 other operational gTLD registries, over 250 Latin script ccTLD registries and more than 40 IDN ccTLD registries ...
  • Under Verisign's agreements with ICANN, Verisign is subject to certain restrictions in the operation of .com , .net and .name on pricing, bundling, marketing, methods of distribution, the introduction of new registry services and use of registrars that do not apply to ccTLDs and other gTLDs and therefore may create a competitive disadvantage ...
  • We also face competition from service providers that offer outsourced domain name registration, resolution and other DNS services to organizations that require a reliable and scalable infrastructure. Among the competitors are Neustar, Inc., Afilias plc, Donuts Inc., RightSide Group, Ltd., and CentralNic Ltd... 
  • In addition, to the extent end-users navigate using search engines or social media, as opposed to direct navigation, we may face competition from search engine operators such as Google, Microsoft, and Yahoo!, operators of social networks such as Facebook, and operators of microblogging tools such as Twitter. In addition, we may face competition from these social media businesses to the extent they are used to establish an online presence by end users instead of through the use of a domain name. Furthermore, to the extent end-users increase the use of web and phone applications to locate and access content, we may face competition from providers of such web and mobile applications ... 
  • .com Registry Agreement: On November 29, 2012, we renewed our Registry Agreement with ICANN for the .com gTLD (the “ .com Registry Agreement”). The .com Registry Agreement provides that we will continue to be the sole registry operator for domain names in the .com gTLD through November 30, 2018. The .com Registry Agreement includes pricing restrictions for .com domain name registrations consistent with the terms of the Cooperative Agreement [with the US government which ends November 30, 2018, unless sooner terminated or extended]... Verisign pays $0.25 to ICANN for each annual increment of a domain name registered or renewed during such quarter. 
  • ICANN and Verisign are in the final stages of drafting the new Root Zone Maintainer agreement ... to ensure that root operations continue to perform at the same high level during the expected 10-year term of the Root Zone Maintainer agreement, ICANN and Verisign are in discussions to extend the term of the .com Registry Agreement to coincide with the expected 10-year term of the Root Zone.
  • One customer [GoDaddy?] accounted for approximately 31% of revenues in 2015 and 2014, and 30% in 2013. VeriSign does not believe that the loss of this customer would have a material adverse effect on VeriSign's business because, in that event, end-users of this customer would transfer to Verisign's other existing customers. 
Risk Factors:
  1. Risks arising from our agreements governing our Registry Services business could limit our ability to maintain or grow our business.
  2. Governmental regulation and the application of new and existing laws in the U.S. and overseas may slow business growth, increase our costs of doing business, create potential liability and have an adverse effect on our business.
  3. Undetected or unknown defects in our service, security breaches, and large-scale DDoS attacks could expose us to liability and harm our business and reputation.
  4. Changes to the present multi-stakeholder model of Internet governance could materially and adversely impact our business.
  5. We operate two root zone servers and are contracted to perform the Root Zone Maintainer function. Under ICANN’s new gTLD program, we face increased risk from these operations.
  6. The evolution of Internet practices and behaviors and the adoption of substitute technologies may impact the demand for domain names.
  7. Many of our target markets are evolving, and if these markets fail to develop or if our products and services are not widely accepted in these markets, our business could be harmed.
  8. We may face operational and other risks from the introduction of new gTLDs by ICANN and our provision of back-end registry services.
  9. The business environment is highly competitive and, if we do not compete effectively, we may suffer lower demand for our products, price reductions, reduced gross margins and loss of market share.
  10. We must establish and maintain strong relationships with registrars and their resellers to maintain their focus on marketing our products and services otherwise our Registry Service business could be harmed.
  11. If we encounter system interruptions or failures, we could be exposed to liability and our reputation and business could suffer.
  12. Our operating results may be adversely affected as a result of unfavorable market, economic, social and political conditions.
  13. Our international operations subject our business to additional economic and political risks that could have an adverse impact on our revenues and business.
  14. We rely on our intellectual property rights to protect our proprietary assets, and any failure by us to protect or enforce, or any misappropriation of, our intellectual property could harm our business.
  15. We could become subject to claims of infringement of intellectual property of others, which could be costly to defend and could harm our business.
  16. We could become involved in claims, lawsuits or investigations that may result in adverse outcomes.
  17. We continue to explore new strategic initiatives, the pursuit of any of which may pose significant risks and could have a material adverse effect on our business, financial condition and results of operations.
  18. We depend on key employees to manage our business effectively, and we may face difficulty attracting and retaining qualified leaders.
  19. Changes in, or interpretations of, tax rules and regulations or our tax positions may adversely affect our effective tax rates.
  20. Our foreign earnings, which are indefinitely reinvested offshore, constitute a majority of our cash, cash equivalents and marketable securities, and there is a high cost associated with a change in our indefinite reinvestment assertion or a repatriation of those funds to the U.S.
  21. Our marketable securities portfolio could experience a decline in market value, which could materially and adversely affect our financial results.
  22. We are subject to the risks of owning real property.
  23. We have anti-takeover protections that may discourage, delay or prevent a change in control that could benefit our stockholders.
  24. We have a considerable number of common shares subject to future issuance.
  25. Our financial condition and results of operations could be adversely affected if we do not effectively manage our indebtedness.
source: Feb 19, 2016, VeriSign, Inc. 2015 Form 10-K / Annual Report

See also on Domain Mondo:



DISCLAIMER

2015-08-18

NTIA Will Extend ICANN IANA Contract to September 30, 2016

Assistant Secretary for Communications and Information and NTIA Administrator, Lawrence E. Strickling, has announced plans to "extend our IANA contract with ICANN for one year to September 30, 2016. Beyond 2016, we have options to extend the contract for up to three additional years if needed. This one-year extension will provide the community with the time it needs to finish its work. The groups are already far along in planning the IANA transition and are currently taking comments on their IANA transition proposals. As we indicated in a recent Federal Register notice, we encourage all interested stakeholders to engage and weigh in on the proposals. The Internet’s global multistakeholder community has made tremendous progress in its work to develop a proposal to transition the historic stewardship role NTIA has played related to Internet’s domain name system (DNS)." 

Strickling also announced:

"In preparation for the implementation phase of the IANA stewardship transition, NTIA also asked Verisign and ICANN to submit a proposal detailing how best to remove NTIA’s administrative role associated with root zone management, which the groups working on the transition were not asked to address. We asked Verisign and ICANN to submit a proposal detailing how best to do this in a manner that maintains the security, stability and resiliency of the DNS. Under the current root zone management system, Verisign edits and distributes the root zone file after it has received authorization to do so from NTIA. Verisign and ICANN have developed a proposal that outlines a technical plan and testing regime for phasing out the largely clerical role NTIA currently plays in this process. The testing will occur in a parallel environment that will not disrupt the current operation of the root zone management system. These developments will help ensure that the IANA transition will be done in a manner that preserves the security and stability of the DNS."

Verisign/ICANN Proposal in Response to NTIA Request (pdf): The Root Zone Management System (RZMS) is a set of tools, which currently allows ICANN as the IANA Functions Operator (IFO), Verisign, as the Root Zone Maintainer (RZM), and the National Telecommunications and Information Administration (NTIA) at the U.S. Department of Commerce (DoC), as the Root Zone Administrator (RZA), to collaboratively manage the changes to the Internet’s single authoritative root zone ... There are three key components of the DNS that are managed by the RZM in conjunction with the IFO and are required for proper function of the DNS root. Those key components are 1) the root zone, 2) the root-servers.net zone, and 3) the root hints file. All three of these work products are produced utilizing the same process and procedures and currently require NTIA authorization for changes. In addition, there are supplemental items that require NTIA authorization related to DNSSEC specifically, the Signed Key Response (SKR).

Q. Will there be a new agreement to perform the RZM function post the IANA stewardship transition?
A. Verisign performs the RZM function today, including multiple daily publications of the root zone file, under the Cooperative Agreement with the Department of Commerce. It is anticipated that performance of the RZM function would be conducted by Verisign under a new RZM agreement with ICANN once the RZM function obligations under the Cooperative Agreement are completed.
Q. Has a final new RZM agreement between Verisign and ICANN been completed?
A. No.
Q. Does this proposal or the anticipated new RZA agreement impact Verisign’s .com or .net registry agreements?
A. No. This proposal and the IANA stewardship transition do not impact the .com and net registry agreements. RZM is a separate function performed at no cost as a public service by Verisign spanning three decades.
Q. How will this impact the Cooperative Agreement between NTIA and Verisign?
A. The Cooperative Agreement between NTIA and Verisign will continue. Once the parallel testing for root zone management has proven capable of performance in the absence of the RZA / NTIA role and the IANA Stewardship transition implemented, NTIA and Verisign will amend the Cooperative Agreement as appropriate.

See also on Domain Mondo: ICANN Accountability, IANA Transition, Proposals, Comments, Webinars

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