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Why ICANN dropped registrar ownership rules

Kevin Murphy, February 13, 2011, Domain Registries

ICANN has quietly published a list of 10 reasons explaining why it decided to start allowing domain name registrars and registries to buy each other.

Last November, ICANN’s board of directors voted to drop so-called “vertical integration” rules that previously prevented registries owning more than a small percentage of registrars.

Now, under the forthcoming new top-level domains program, the likes of eNom and Go Daddy will be able to apply to become gTLD registries, and registries like VeriSign and Neustar will be able to apply to run their own registrar businesses.

The decision was unexpected, appeared to be a U-turn, and ICANN’s explanation was not articulated sufficiently to sate critics such as the US Department of Commerce.

So now ICANN has published a “Draft Rationale” (pdf), a 17-page document that outlines some of the thinking that went into the decision.

In a nutshell, ICANN dropped the VI rules to increase competition, to avoid antitrust lawsuits, and because the harms that could arise due to cross-ownership are best addressed by other means.

Here are the rationale’s 10 major bullet points in full:

  • None of the proposals submitted by the GNSO reflect a consensus opinion; as a result, the Board supported a model based on its own factual investigation, expert analysis, and concerns expressed by stakeholders and the community.
  • ICANN’s position and mission must be focused on creating more competition as opposed to having rules that restrict competition and innovation.
  • Rules permitting cross-ownership foster greater diversity in business models and enhance opportunities offered by new TLDs.
  • Rules prohibiting cross-ownership require more enforcement and can easily be circumvented.
  • Rules permitting cross-ownership enhance efficiencies and almost certainly will result in benefits to consumers in the form of lower prices and enhanced services.
  • Preventing cross-ownership would create more exposure to ICANN of lawsuits, including antitrust lawsuits, which are costly to defend even if ICANN believes (as it does) that it has no proper exposure in such litigation.
  • The new Code of Conduct, which is to be part of the base agreement for all new gTLDs, includes adequate protections designed to address behavior the Board wants to discourage, including abuses of data and market power. Data protection is best accomplished by data protection tools, including audits, contractual penalties such as contract termination, punitive damages, and costs of enforcement, as well as strong enforcement of rules. By contrast, market construction rules can be circumvented and cause other harms.
  • Case-by-case re-negotiation of existing contracts to reflect the new crossownership rules will permit ICANN to address the risk of abuse of market power contractually.
  • In the event ICANN has competition concerns, ICANN will have the ability to refer those concerns to relevant antitrust authorities.
  • ICANN can amend contracts to address harms that may arise as a direct or indirect result of the new cross-ownership rules.

The document still needs to be approved by the ICANN board of directors before it can be considered official.

It appeared without fanfare on the ICANN web site a little over a week ago.

Beckstrom: ICANN accountable to world, not just US

Kevin Murphy, December 6, 2010, Domain Policy

ICANN chief Rod Beckstrom opened the organization’s 39th public meeting in Cartagena, Colombia, with a speech that touched on many of the organization’s recent controversies and appeared to take a strong stance against US government interference.

Everything from its political tangles with the International Telecommunications Union, to the recent calls for high-security top-level domains for financial services, to Beckstrom’s own controversial pet project, the proposed DNS-CERT, got a mention.

But probably Beckstrom’s strongest statement was the one which indirectly addressed recent moves by the US government to slam the brakes on ICANN’s new top-level domains program:

We are accountable to the world, not to any one country, and everything we do must reflect that.

Beckstrom acknowledged the controversies in the new TLDs policy, given last week’s strongly worded letter from the US Department of Commerce, which was highly critical of the program.

Commerce assistant secretary Lawrence Strickling has called on ICANN to delay the program until it has justified its decision under the Affirmation of Commitments.

But this morning, Beckstrom echoed sentiments expressed on the ICANN blog last week (my emphasis):

As is often the case with policy decisions in that multi-stakeholder model, not everyone is pleased, and this diversity of opinion contributes to the policy process. For example, last week we received a critical letter from the US Department of Commerce. As with all contributions, ICANN will give these comments careful consideration as part of the implementation of the GNSO policy. We welcome the transparent way that Commerce provided their comments through the public comment process.

How ICANN chooses to deal with the demands of its former master, the US government, is one of the Cartagena meeting’s Big Questions.

Another such question is how ICANN plans to deal with ongoing threats to its legitimacy from international bodies such as the International Telecommunications Union.

Addressing ITU secretary general Hamadoun Toure directly, Beckstrom said:

We have always sought to build our relationships based on mutual respect and integrity, taking into account the unique and distinct mandates entrusted to our organizations. The strengthening of communication between us is a personal priority for me.

Security

Security is one of ICANN’s watchwords, and Beckstrom is a security guy by trade. His speeches typically address the topic to a greater or lesser extent and Cartagena was no exception.

Security policies inherently create tensions. Take, for example, controversies about the strength and enforceability of of Whois policies, or Beckstrom’s own call for a DNS-CERT to oversee DNS risk.

This morning, he said:

The staff under my leadership is willing to go as far on security as the community is willing. And whatever security effort this community decides, we will do our utmost to implement and support, given sufficient resources. Because when it comes to security, how can we ever say we’ve done enough?

And now you need to tell us: where do you want us to go?

Of course, I am sure we can agree that when it comes to security, the question is not what do we want to do? Or what is popular or easy? It’s what do we owe the world? Because all of us care about the global public interest.

He took, in my view, a subtle swing at the Governmental Advisory Committee for putting security at the heart of its ongoing policy demands, while largely failing to cooperate with ICANN’s requests for information on security issues in their own jurisdictions. Beckstrom said:

We have asked GAC members to provide information about security activities in their countries. We appreciate the information some have shared but there have been few responses. As governments urge us to remain committed to security efforts, we in turn request that they help us by responding and working with the ICANN community on this vital mission.

I know there are some European ccTLD registries a bit miffed that ICANN has in recent months gone over their heads, direct to their governments, for this information, highlighting what a tricky political situation it is.

The speech also touched on internationalized domain names, with a shout-out to the recent launch of Russia’s Cyrillic ccTLD, and general global inclusion activities. I expect the text and audio to be published on the ICANN web site to be published shortly.

US government requests root DNSSEC go-ahead

Kevin Murphy, June 7, 2010, Domain Tech

The National Telecommunications and Information Administration, part of the US Department of Commerce, has formally announced its intent to allow the domain name system’s root servers to be digitally signed with DNSSEC.

Largely, I expect, a formality, a public comment period has been opened (pdf) that will run for two weeks, concluding on the first day of ICANN’s Brussels meeting.

NTIA said:

NTIA and NIST have reviewed the testing and evaluation report and conclude that DNSSEC is ready for the final stages of deployment at the authoritative root zone.

DNSSEC is a standard for signing DNS traffic using cryptographic keys, making it much more difficult to spoof domain names.

ICANN is expected to get the next stage of DNSSEC deployment underway next week, when it generates the first set of keys during a six-hour “ceremony” at a secure facility in Culpeper, Virginia.

The signed, validatable root zone is expected to go live July 15.