Verisign’s share price is down around 8% in early trading today, after analysts speculated that the US government’s planned move away from control of the DNS root put .com at risk.
The analyst firm Cowan & Co cut its rating on VRSN and reportedly told investors:
With less US control and without knowledge of what entity or entities will ultimately have power, we believe there is increased risk that VRSN may not be able to renew its .com and .net contracts in their current form.
It’s complete nonsense, of course.
The US announced on Friday it’s intention to step away from the trilateral agreements that govern control of the root between itself, ICANN and Verisign. But that deal has no dollar value to anyone.
What’s not affected, as ICANN CEO Fadi Chehade laboriously explained during his press conference Friday, are the contracts under which Verisign operates .com and .net.
The .com contract, through which Verisign derives most of its revenue, is slightly different to regular gTLD contracts in that the US has the right to veto terms if they’re considered anti-competitive.
The current contract, which runs through 2018, was originally going to retain Verisign’s right to increase its prices in most years, but it was vetoed by the US, freezing Verisign’s registry fee.
So not only has the US not said it will step away from .com oversight, but if it did it would be excellent news for Verisign, which would only have to strong-arm ICANN into letting it raise prices again.
Renewal of the .com and .net contracts shouldn’t be an issue either. The main rationale for putting .com up for rebid was to improve competition, but the new gTLD program is supposed to be doing that.
If new gTLDs, as a whole, are considered successful, I can’t see Verisign ever losing .com.
Verisign issued a statement before the markets opened today, saying:
The announcement by NTIA on Friday, March 14, 2014, does not affect Verisign’s operation of the .com and .net registries. The announcement does not impact Verisign’s .com or .net domain name business nor impact its .com or .net revenue or those agreements, which have presumptive rights of renewal.
Members of the domain name industry and ICANN community reacted generally positively to the news Friday night that the US will step aside from its central role in ICANN oversight.
Several companies, organizations and individuals issued early statements in response. We present a summary of those to hit the wires so far here.
First, the so-called I* organizations (IETF, IAB, RIRs, ccTLD ROs, ISOC, and W3C), which manage the internet’s various technical functions and standards, issued a joint statement via ICANN:
Our organizations are committed to open and transparent multi-stakeholder processes. We are also committed to further strengthening our processes and agreements related to the IANA functions, and to building on the existing organizations and their roles. The Internet technical community is strong enough to continue its role, while assuming the stewardship function as it transitions from the US Government.
The Domain Name Association’s executive director Kurt Pritz said this:
The DNA welcomes a deliberate, thoughtful process, inclusive of all stakeholder views to determine the future of the IANA function. As our members are some of the most widely recognized customers of IANA, we will be playing an active role in the process moving forward. The US government performs admirably in this role and it is important that any new oversight mechanism perform as reliably and consistently, and in a manner that prevents the Internet from onerous regulations and/or content controls.
New gTLD portfolio applicant Donuts said:
The IANA function is very important to Internet stability, and Donuts supports the multistakeholder approach to managing this vital resource. As the largest applicant for new top-level domains, we look forward to providing a constructive contribution in this multi-stakeholder discussion. It’s critical that any new mechanisms for IANA oversight ensure not only stability and accountability but also uphold the vital public sector role in promoting Internet innovation and openness.
Lisa Hook, CEO of back-end registry provider Neustar, said in a press release:
We share the US government’s view that the time has come for ICANN to convene global stakeholders to develop the policies, procedures, and accountability framework needed to transition ultimate responsibility for the IANA functions, and we look forward to participating in that process.
Back-end and portfolio applicant Afilias said in its own press release:
We endorse the statements of the NTIA and the organizations noted above [the I*s] with respect to the maturation of these organizations and processes, and we are committed to continuing to contribute to the stewardship of the Internet as part of a globally inclusive, open and transparent multi-stakeholder community.
Michele Neylon, CEO of domain name registrar Blacknight Solutions said:
This is an incredibly historic and important day for Internet governance. As a member of the International governance and infrastructure communities I applaud this move away from a single government to a regulating body that represents the interests of the global community. However, the real challenge now lies ahead in identifying and implementing a strong, diverse community to oversee these crucial organizations.
Milton Mueller, the principal academic behind the Internet Governance Project blogged:
IGP has been leading the call for the US government to be consistent about its non-governmental approach to Internet governance since 2005. Naturally, we were gratified to see the Commerce Department finally come around to that position. Far from “giving up” something or “losing control,” the U.S. is sure to find that its policy has gained strength. We have just made it a lot harder for opponents of a free and open Internet to pretend that what they are really against is an Internet dominated by one hegemonic state.
The news broke rather late on a Friday night, with an NTIA press release and hastily convened ICANN press conference, after the story was leaked to the Washington Post.
There hasn’t been much time for formal written reactions yet, but I’m sure more will be forthcoming as people get into work on Monday morning.
In what can only be described as an historic announcement, the United States government tonight said that it will walk away from its control of the DNS root zone.
ICANN CEO Fadi Chehade said during a press conference tonight that the organization has begun a consultation to figure out “accountability mechanisms” that will replace the US role as ICANN’s master.
The news comes in the wake of Edward Snowden’s revelations about US spying, but Chehade and ICANN chair Steve Crocker said that the changes would have been made sooner or later anyway.
So what just happened?
Earlier this evening, the US National Telecommunications and Information Administration announced its “intent to transition key Internet domain name functions to the global multistakeholder community.”
That’s basically referring to the IANA contract, the US government procurement contract under which ICANN has the ability to make changes — essentially by recommendation — to the DNS root zone.
The current version of the contract is due to expire next year, and the hope is that when it does there won’t be any need for a renewal.
Between now and then, the ICANN community (that’s you) is tasked with coming up with something to replace it.
It’s going to be the hottest topic at the ICANN 49 meeting in Singapore, which kicks off a week from now, but it’s expected to be under discussion for much longer than that.
Chehade said during the press conference tonight that the idea is not to create a new oversight body to replace the NTIA. We seem to be talking about “mechanisms” rather than “organizations”.
He also said that the US government has made it plain that any attempt to replace the US with an intergovernmental body (ie, the International Telecommunications Union) will not be considered acceptable.
Whatever oversight mechanism replaces NTIA, it’s going to have to be “multistakeholder” — not just governments.
The root zone is currently controlled under a trilateral relationship between the NTIA, ICANN and Verisign.
Essentially, ICANN says “add this TLD” or “change the name servers for this TLD” and, after the NTIA has approved the change, Verisign implements it on its root zone servers. The other root zone operators take copies and the DNS remains a unique, reliable namespace.
The NTIA has said that it’s going to withdraw from this relationship.
One question that remains is whether Verisign will retain its important role in root zone management.
Chehade appeared slightly (only slightly) evasive on this question tonight, spending some time clarifying that Verisign’s root zone management contract is not the same as its .com contract.
I assume this prevarication was in order to not wipe billions off Verisign’s market cap on Monday, but I didn’t really get a good sense of whether Verisign’s position as a root zone manager was in jeopardy.
My guess is that it is not.
A second question is whether the US stepping away from the IANA function means that the Affirmation of Commitments between the US government and ICANN also has its days numbered.
Apparently it does.
Chehade and ICANN chair Steve Crocker pointed to the ICANN board’s decision a few weeks ago to create a new board committee tasked with exploring ways to rewrite the AoC.
And they said tonight that there’s no plan to retire the AoC. Rather, the idea is to increase the number of parties that are signatories to it.
The AoC, it seems, will be ICANN’s affirmation to the world, not just to the US government.
ICANN’s board of directors has given the clearest indication yet that the organization wants to set up an HQ overseas, further loosening ties with the US government.
The board has formed six new “President’s Globalization Advisory Groups”, made up of half a dozen directors each, one of which has been tasked with advising ICANN on ways to:
Establish complimentary [sic] parallel international structure to enhance ICANN’s global legitimacy. Consider complementary parallel international structure within scope of ICANN’s mandate.
This indicates that ICANN’s reported plan to base itself in Geneva may not be so far-fetched after all, but it also indicates that ICANN currently does not anticipate doing away with its original HQ in Los Angeles.
ICANN already has several offices around the world, but recently there’s been talk of it embedding itself in Switzerland, as an “international organization”, more deeply.
As we’ve previously reported, ICANN may not relocate outside of the US due to its Affirmation of Commitments with the US Department of Commerce, which requires it to remain a US non-profit.
But another of the three panels set up by the board this week will advise ICANN on how to create an “enhanced Affirmation of Commitments.”
Other panels will explore the globalization of the IANA function — currently operated under a procurement contract with Commerce — and the root server system, which is independent operated but heavily US-based.
The ICANN board said in its resolution:
the continued globalization of ICANN must evolve in several ways, including: partnerships in the broader Internet eco-system to strengthen multistakeholder Internet governance frameworks; strengthening ICANN itself, including affirmations of commitments and relationships among the stakeholders; evolving the policy structures to serve and scale to the needs of the global community, and identify opportunities for the future legal structures and IANA globalization.
The plan is for these panels talk to the community at the Singapore meeting next month, before reporting back to the board before ICANN meets for its 50th public meeting in London this coming June.
This week’s move is the latest in a series of decisions made by the ICANN board following the spying revelations of former NSA contractor Edward Snowden and the subsequent consternation they caused in capitals around the world.
Brazil is set to host a meeting to discuss these kinds of internet governance matters with ICANN and its coalition of the willing in Sao Paulo this April.
The European Union has made ICANN’s close relationship with the US one of the targets of a new platform on internet governance.
In a new communication on internet governance (pdf), the European Commission said it will “work with all stakeholders” to:
- identify how to globalise the IANA functions, whilst safeguarding the continued stability and security of the domain-name system;
– establish a clear timeline for the globalisation of ICANN, including its Affirmation of Commitments.
The policy is being characterized as being prompted by former NSA contractor Edward Snowden’s revelations about widespread US spying on internet users.
EC vice president Neelie Kroes issued a press release announcing the policy, saying:
Recent revelations of large-scale surveillance have called into question the stewardship of the US when it comes to Internet Governance. So given the US-centric model of Internet Governance currently in place, it is necessary to broker a smooth transition to a more global model while at the same time protecting the underlying values of open multi-stakeholder governance of the Internet.
Despite this, the document does not contain any allegations that link ICANN to spying, or indeed any justification for the logical leap from Snowden to domain names.
The EU position is not dissimilar to ICANN’s own. Last October CEO Fadi Chehade used Snowden as an excuse to talk about putting ICANN’s relationship with the US back in the spotlight.
As I noted at the time, it all looks very opportunistic.
Internationalizing ICANN is of course a noble objective — and one that has been envisaged since ICANN’s very creation 15 years ago — but what would it look like it practice?
I’d be very surprised if what the Commission has in mind isn’t a scenario in which the Commission always gets what it wants, even if other stakeholders disagree with it.
Right now, the Commission is demanding that ICANN rejects applications for .wine and .vin new gTLDs unless applicants agree to new rights protection mechanisms for geographic indicators such as “Champagne”.
That’s something that ICANN’s Governmental Advisory Committee could not reach consensus on, yet the EU wants ICANN to act based on its unilateral (insofar as the EU could be seen as a single entity) advice.
The new EC policy document makes lots of noise about its support for the “multi-stakeholder process”, but with hints that it might not be the “multi-equal-stakeholder process” championed by Chehade.
For example, it states on the one hand:
Those responsible for an inclusive process must make a reasonable effort to reach out to all parties impacted by a given topic, and offer fair and affordable opportunities to participate and contribute to all key stages of decision making, while avoiding capture of the process by any dominant stakeholder or vested interests.
That sounds fair enough, but the document immediately goes on to state:
the fact that a process is claimed to be multistakeholder does not per se guarantee outcomes that are widely seen to be legitimate
it should be recognised that different stages of decision making processes each have their own requirements and may involve different sets of stakeholders.
Sound multistakeholder processes remain essential for the future governance of the Internet. At the same time, they should not affect the ability of public authorities, deriving their powers and legitimacy from democratic processes, to fulfil their public policy responsibilities where those are compatible with universal human rights. This includes their right to intervene with regulation where required.
With that in mind, what would an “internationalized” IANA look like, if the European Commission gets its way?
Right now, IANA may be contractually tethered to the US Department of Commerce, but in practice Commerce has never refused to delegate a TLD (even when Kroes asked it to delay .xxx).
Compare that to Kroes statement last September that “under no circumstance can we agree having .wine and .vin on the internet, without sufficient safeguards”.
Today’s policy news from the EC looks fine at a high level, but in light of what the EC actually seems to want to achieve in practical terms, it looks more like an attempt at a power grab.