ICANN trying to water down its transparency obligations

ICANN? Trying to be less transparent? Surely not!

The Org has been accused by some of its community members of trying to shirk its transparency obligations with proposed changes to its Documentary Information Disclosure Policy.

The changes would give ICANN “superpowers” to deny DIDP requests, and to deny them without explanation, according to inputs to a recently closed public comment period.

The DIDP is ICANN’s equivalent of a Freedom of Information Act, allowing community members to request documentation that would not be published during the normal course of business.

It’s often used, though certainly not exclusively so, by lawyers as a form of discovery before they escalate their beefs to ICANN accountability mechanisms or litigation.

It already contains broad carve-outs that enable ICANN to refuse disclosure if it considers the requested info too sensitive for the public’s eyes. These are the Defined Conditions for Nondisclosure, and they are used frequently enough that most DIDPs don’t reveal any new information.

The proposed new DIDP broadens these nondisclosure conditions further, to the extent that some commentators believe it would allow ICANN to deny basically any request for information. New text allows ICANN to refuse a request for:

Materials, including but not limited to, trade secrets, commercial and financial information, confidential business information, and internal policies and procedures, the disclosure of which could materially harm ICANN’s financial or business interests or the commercial interests of its stakeholders who have those interests.

The Registries Stakeholder Group noted that this is “broader” than the current DIDP, while the At-Large Advisory Committee said (pdf) it “essentially grants ICANN the right to refuse any and all requests”.

ALAC wrote that “rejecting a request because it includes commercial or financial information or documents an internal policy makes a mockery of this DIDP policy”.

Jeff Reberry of drop-catch registrar TurnCommerce concurred (pdf), accusing ICANN of trying to grant itself “superpowers” and stating:

Extremely generic terms such as “confidential business information” and “commercial information” were added. Frankly, this could mean anything and everything! Thus, ICANN has now inserted a catch-all provision allowing it to disclose nothing.

Other comments noted that the proposed changes dilute ICANN’s responsibility to explain itself when it refuses to release information.

Text requiring ICANN to “provide a written statement to the requestor identifying the reasons for the denial” has been deleted from the proposed new policy.

A collection of six lawyers, all prolific DIDP users, put their names to a comment (pdf) stating that “the change results in less transparency than the current DIDP”.

The lawyers point out that requests that are denied without explanation would likely lead to confusion and consequently increased use of ICANN’s accountability mechanisms, such as Requests for Reconsideration. They wrote:

Simply stated, the Revised Policy allows ICANN to obscure its decision-making and will ultimately cause disputes between ICANN and the Internet community — the complete opposite of the “accountable and transparent” and “open and transparent processes” required by ICANN’s Bylaws.

One change that didn’t get much attention in the public comments, but which certainly leapt out to me, concerns the turnaround time for DIDP responses.

Currently, the DIDP states that ICANN “will provide a response to the DIDP request within 30 calendar days from receipt of the request.”

In practice, ICANN treats this obligation like one might treat a tax return or a college essay — it almost provides its response exactly 30 days after it receives a request, at the last possible moment.

The revised DIDP gives ICANN the new ability to extend this deadline for another 30 days, and I don’t think it’s unreasonable to assume, given past behavior, that ICANN will try to exploit this power whenever it’s advantageous to do so:

In the event that ICANN org cannot complete its response within that 30-calendar-day time frame, ICANN org will inform the requestor by email as to when a response will be provided, which shall not be longer than an additional 30 calendar days, and explain the reasons necessary for the extension of time to respond.

The predictably Orwellian irony of all of the above proposed changes is that they come in response to a community review called the Cross-Community Working Group on Enhancing ICANN Accountability Work Stream 2 (WS2), which produced recommendations designed to enhance accountability and transparency.

Whether they are adopted as-is or further revised to address community concerns is up to the ICANN board of directors, which is of course advised by the staff lawyers who drafted the proposed revisions.

ICANN staff’s summary of the seven comments submitted during the public comment period is due next week.

Donuts shuts down 14 registrars, but it’s “not related to DropZone”

Donut has let 14 of its shell registrar accreditations expire, but told DI it’s not related to its recently approve drop-catching service, DropZone.

ICANN records show that the companies, with names such as Name118 Inc and Name104 Inc, all basically mini-clones of Name.com, recently had their registrar contracts terminated.

This kind of thing happens fairly regularly with companies resizing the networks they use for catching dropping domains. Donuts still has at least half a dozen active accreditations, records show.

But the move comes just weeks after ICANN approved a controversial new Donuts service called DropZone, which would see dropping domains across Donuts’ portfolio of 250+ gTLDs being handled by a dedicated parallel registry.

DropZone would reduce the need for owning vast numbers of shell accreditations in order to effectively drop-catch, but has faced criticism from rival DropCatch because a) Donuts may charge registrars for access and b) claims that Donuts-owned registrars would have an advantage.

But Donuts says the two things are unrelated. Name.com senior product marketing manager Ethan Conley said in an email:

We did recently let 14 ICANN registrar accreditations expire. These accreditations had become an administrative headache and a point of confusion for customers. This decision was not related to DropZone, and the domain drop business has not been a core focus of Name.com for quite some time.

It’s worth noting that cancelling registrar accreditations would also have an affect on the ability to catch names in other, unaffiliated gTLDs, including .com.

Donuts’ DropZone approved despite competition fears

ICANN has approved Donuts’ proposed drop-catching service, DropZone, despite concerns it could add cost to the dropping domains market.

The Org and Donuts subsidiaries representing over 200 gTLDs signed amendments September 29 that incorporate DropZone into their Registry Agreements, according to ICANN records.

The full new text in the amendments, which does a pretty good job of describing the service, is:

Dropzone Service

Registry Operator may offer the Dropzone service, which is a Registry Service that will manage the release of domain names that have reached the end of their life cycle.

The Dropzone is a separate system, parallel to the main EPP system, that will manage on a daily basis the release of domain names that have been purged for a short period of time, called the Dropzone. Any TLD-accredited registrars may use the Dropzone to register a recently-purged domain name.

On a daily basis, at the end of the Dropzone period, the Registry will execute an awarding process, which will select, per domain name, the first domain creation request submitted (first come, first serve).

What the amendment doesn’t mention are fees. The original Donuts Registry Service Evaluation Request stated in August:

In addition to the standard or premium registration prices of a given domain name, The Dropzone service can support additional application fees to be configured on a per TLD basis. Applications fees where applicable will be charged in addition to the standard registration price of a domain name.

This caused concern at TurnCommerce, the company that runs the DropCatch.com network of registrars, which told ICANN last month that DropZone was anti-competitive and could raise the price of dropping domains.

But ICANN responded that DropZone passed its competition sniff test, and would not be referred to government authorities.

Donuts has not yet publicly announced plans to launch DropZone.

A virtually identical service, that did not mention added fees in its RSEP, was previous approved for Afilias, the registry operator Donuts acquired at the start of the year.

Donuts’ drop-catching service not anti-competitive, ICANN says

Donuts’ proposed DropZone service, which could see the registry start charging drop-catchers additional fees, is not anti-competitive, according to ICANN.

The service “does not raise any competition concerns”, ICANN VP Russ Weinstein said in a letter to registrar TurnCommerce, the company behind DropCatch.com.

He was responding to TurnCommerce’s concern that DropZone would allow Donuts to charge unlimited extra fees to register expiring names, while giving an advantage to its in-house registrars.

But Weinstein wrote (pdf):

The information received in the Dropzone RSEP request was thoroughly evaluated pursuant to our process, which included consideration of the matters raised in your letter. ICANN org determined that the Dropzone service as submitted by Donuts Inc. on behalf of [Donuts subsidiaries] Binky Moon, LLC and Dog Beach, LLC does not raise any competition concerns requiring ICANN org to refer either RSEP to a relevant competition authority.

DropZone would see Donuts handle its dropping names on a parallel registry system that registrars would have to obtain separate access to. Its Registry Service Evaluation Process request raises the prospect of new fees for such access.

DropCatch raises antitrust concerns about Donuts’ Dropzone proposal

TurnCommerce, the company behind DropCatch.com and hundreds of accredited domain name registrars, reckons Donuts’ proposed Dropzone service would be anticompetitive.

Company co-founder Jeff Reberry has written to ICANN to complain that Dropzone would introduce new fees to the dropping domains market, raising the costs involved in the aftermarket.

He also writes that Donuts’ ownership of Name.com, a registrar that DropCatch competes with in the drop market, would have an “unfair competitive advantage” if Dropzone is allowed to go ahead:

Donuts is effectively asking every entity in the ICANN ecosystem to bear the costs of introducing a new service with no benefit outside of a financial benefit to itself, while forcing all registrars to spend more money and resources to register available domain names.

Donuts is proposing Dropzone across its whole portfolio of 200+ gTLDs. It’s a parallel registry infrastructure that would exist just to handle dropping domains in more orderly fashion.

Today, companies such as TurnCommerce own huge collections of shell registrars that are used to ping registries with EPP Create commands around the time valuable domains are going to delete.

Under Dropzone, they’d instead submit create requests with the Dropzone service, and Donuts would give out the rights to register the domains in question on a first-come, first-served basis.

While ICANN had approved a similar request from Afilias before it was acquired by Donuts, the Dropzone proposed by Donuts has one major difference — it proposes a new fee for accessing the system.

No details about this fee have been revealed, which has TurnCommerce nervous.

Donuts is asking for Dropzone via the Registry Services Evaluation Process and ICANN has not yet approved it.

Reberry says ICANN should consult with the relevant governmental competition authorities before it approves the proposal.

You can read Reberry’s letter here (pdf) and our original article about Dropzone here.

ICANN expects to lose 750 registrars in the next year

ICANN is predicting that about 750 accredited registrars will close over the next 12 months due to the over-saturation of the drop-catching market.
ICANN VP Cyrus Namazi made the estimate while explaining ICANN’s fiscal 2018 budget, which is where the projection originated, at the organization’s public meeting in South Africa last week.
He said that ICANN ended its fiscal 2017 last week with 2,989 accredited registrars, but that ICANN expects to lose about 250 per quarter starting from October until this time next year.
These almost 3,000 registrars belong to about 400 registrar families, he said.
By my estimate, roughly two thirds of the registrars are shell accreditations under the ownership of just three companies — Web.com (Namejet and SnapNames), Pheenix, and TurnCommerce (DropCatch.com).
These companies lay out millions of dollars on accreditation fees in order to game ICANN rules and get more connections to registries — mainly Verisign’s .com.
More connections gives them a greater chance of quickly registering potentially valuable domains milliseconds after they are deleted. Drop-catching, in other words.
But Namazi indicated that ICANN’s cautious “best estimate” is that there’s not enough good stuff dropping to justify the number of accreditations these three companies own.
“With the model we have, I believe at the moment the total available market for these sought-after domains that these multifamily registrars are after is not able to withstand the thousands of accreditations that are there,” he said. “Each accreditation costs quite a bit of money.”
Having a registrar accreditation costs $4,000 a year, not including ICANN’s variable and transaction fees.
“We think the market has probably gone beyond what the available market is,” he said.
He cautioned that the situation was “fluid” and that ICANN was keeping an eye on it because these accreditations fees have become material to its budget in the last few years.
If the three drop-catchers do start dumping registrars, it would reveal an extremely short shelf life for their accreditations.
Pheenix upped its registrar count by 300 and DropCatch added 500 to its already huge stable as recently as December 2016.

DropCatch spends millions to buy FIVE HUNDRED more registrars

Domain drop-catching service DropCatch.com has added five hundred new registrar accreditations to its stable over the last few days.
The additions give the company a total accreditation count of at least 1,252, according to DI data.
That means about 43% of all ICANN-accredited registrars are now controlled by just one company.
DropCatch is owned by TurnCommerce, which is also parent of registrar NameBright and premium sales site HugeDomains.
Because gTLD registries rate-limit attempts to register names, drop-catchers such as DropCatch find a good way to increase their chances of registering expiring names is to own as many registrars as possible.
DropCatch is in an arms race here with Web.com, owner of SnapNames and half-owner of NameJet, which has about 500 registrars.
The new accreditations would have cost DropCatch $1.75 million in ICANN application fees alone. They will add $2 million a year to its running costs in terms of extra fixed fees.
That’s not counting the cost of creating 500 brand new LLC companies — named in the new batch DropCatch.com [number] LLC where the number ranges from 1046 to 1545 — each of which is there purely for the purpose of owning the accreditation.
In total, the company is now paying ICANN fixed annual fees in excess of $5 million, not counting its variable fees and per-transaction fees.
Because the ICANN variable fee is split evenly between all registrars (with some exceptions I don’t think apply to DropCatch), I believe the addition of 500 new registrars means all the other registrars will be paying less in variable fees.
There’s clearly money to be made in expiring names.

One company now owns almost a third of all registrars

TurnCommerce acquired another 299 registrar accreditations from ICANN over Christmas week.
The company, which is behind domain properties including DropCatch.com, now has at least 452 registrars in its stable. That’s over 31% of the 1,456 total currently reported by Internic.
Each of the new accreditations is named “DropCatch”, followed by a number from 446 to 751. Each has a matching .com domain as its nominal base of operations and an associated LLC shell company.
At $4,000 a year for the base accreditation fee, TurnCommerce must be spending close to $2 million a year in ICANN fees alone.
Companies in the drop-catching business acquire large numbers of registrars in order to control more batches of connections with which to spam gTLD registries with “add” requests when potentially valuable domains expire and are deleted.
With almost a third of all accredited registrars now operating under the same control, one imagines TurnCommerce’s chances of securing the names it wants have been significantly improved.
As well as DropCatch, TurnCommerce runs retail registrar NameBright and premium sales site HugeDomains. It has plans to launch additional services at Expire.com and PremiumDomains.com shortly.
Its latest crop of registrars means ICANN has accredited over 2,200 companies since the gTLD registrar market was opened for competition 15 year ago, though many have allowed their contracts to lapse or, less frequently, have been terminated by ICANN compliance efforts.