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Root hits 1,500 live TLDs as US oversight ends

Kevin Murphy, October 4, 2016, Domain Registries

The DNS root saw its 1,500th concurrent live TLD come into existence on Friday, just hours before the US relinquished its oversight powers.

Amazon received its delegation for .通販 (.xn--gk3at1e, Japanese for “online shopping”) and satellite TV company Hughes got .dvr, meaning “digital video recorder”.

That took the number of TLDs in the root to exactly 1,500, which is where it still stands today.

Both went live September 30, which was the final day of ICANN’s IANA contract with the US National Telecommunications and Information Administration, which expired that night.

An ICANN spokesperson confirmed that the two new gTLDs “were the last ones requiring NTIA’s approval.”

From now on, the small clerical role NTIA had when ICANN wanted to make changes to the root is no more.

The fact that it hit a nice round number the same day as ICANN oversight switched to a community-led approach is probably just a coincidence.

Amazon’s .通販 was almost banned for being too confusingly similar to “.shop”, but that ludicrous decision was later overturned.

Hughes’ .dvr was originally intended as a single-registrant “closed generic”, but is now expected to operate as a restricted but multi-registrant space.

Could ICANN reject Verisign’s $135m .web bid?

Kevin Murphy, September 21, 2016, Domain Registries

ICANN is looking into demands for it to throw out Verisign’s covert $135 million winning bid for the highly prized .web gTLD.

ICANN last week told the judge hearing Donuts’ .web-related lawsuit that it is “currently in the process of investigating certain of the issues raised” by Donuts through its “internal accountability mechanisms”.

Donuts is suing for $22.5 million, claiming ICANN should have forced Nu Dot Co to disclose that its .web bid was being secretly bankrolled by Verisign and alleging that the .com heavyweight used NDC as cover to avoid regulatory scrutiny.

ICANN’s latest filing (pdf), made jointly with Donuts, asked for an extension to October 26 of ICANN’s deadline to file a response to Donuts’ complaint.

It was granted, the second time the deadline has been extended, but the judge warned it was also the final time.

The referenced “internal accountability mechanism” would seem to mean the Cooperative Engagement Process — a low-formality bilateral negotiation — that Donuts and fellow .web bidder Radix initiated against ICANN August 2.

The filing states that the “resolution of certain issues in controversy may be aided by allowing [ICANN] to complete its investigation of [Donuts’] allegations prior to the filing of its responsive pleading.”

In other words, Donuts is either hopeful that ICANN may be able to resolve some of its complaints in the next month, or it’s not particularly impatient about the case progressing.

Meanwhile, fellow .web applicant Afilias has demanded for the second time that ICANN hand over .web to it, as the second-highest bidder, throwing out the NDC/Verisign application.

In a September 9 letter, published last night, Afilias told ICANN to “disqualify and reject” NDC’s application, alleging at least three breaches of ICANN rules.

Afilias says that by refusing to disclose Verisign’s support for its bid, NDC broke the rules and should have its application thrown out.

The company also confirmed on the public record for what I believe is the first time that it was the second-highest bidder in the July 27 auction.

Afilias would pay somewhere between $57.5 million and $71.9 million for the gTLD, depending on what the high bid of the third-placed applicant was.

In its new letter, Afilias says NDC broke the rule from the Applicant Guidebook that does not allow applicants to “resell, assign or transfer any of applicant’s rights or obligations in connection with the application”.

It also says that NDC was obliged by the AGB to notify ICANN of “changes in financial position and changes in ownership or control”, which it did not.

It finally says that Verisign used NDC as a front during the auction, in violation of auction rules.

“In these circumstances, we submit that ICANN should disqualify NDC’s bid and offer to accept the application of Afilias, which placed the second highest exit bid,” Afilias general counsel Scott Hemphill wrote (pdf).

Hemphill told ICANN to defer from signing a Registry Agreement with NDC or Verisign, strongly implying that Afilias intends to invoke ICANN accountability mechanisms (presumably meaning the Request for Reconsideration process and/or Independent Review Process).

While Afilias and Donuts are both taking issue with the secretive nature of Verisign’s acquisition of .web, they’re not necessarily fighting the same corner.

Donuts is looking for $22.5 million because that’s roughly what it would have received if the .web contention set had been resolved via private auction and $135 million had been the winning bid.

But Afilias wants the ICANN auction outcome to stand, albeit with NDC’s top bid rejected. That would mean Donuts, Radix, and the other applicants would still receive nothing.

There’s also the question of other new gTLD applications that have prevailed at auction and been immediately transferred to third-party non-applicants.

The most notable example of this was .blog, which was won by shell company Primer Nivel with secretive backing from WordPress maker Automattic.

Donuts itself regularly wins gTLD auctions and immediately transfers its contracts to Rightside under a pre-existing agreement.

In both of those cases, the reassignment deals predated, but were not disclosed in, the respective applications.

There’s the recipe here for a messy, protracted bun fight over .web, which should come as no surprise to anyone.

Verisign data shows new gTLDs drive almost three quarters of Q2 growth

Kevin Murphy, September 19, 2016, Domain Registries

New gTLDs were responsible for the large majority of domain name industry volume growth in the second quarter, but you’d never know it reading Verisign’s latest Domain Name Industry Brief.

The domain universe increased to 334.6 million names at the end of June, according to the latest DNIB, which was published (pdf) last week.

That’s a 8.2 million increase on the 326.4 million it reported in its Q1 DNIB report (pdf).

Verisign reports the increase as 7.9 million, possibly due to new data that emerged after the Q1 report was published.

Whether it was 7.9 million or 8.2 million, most of the growth was due to new gTLDs.

In the DNIB, data on new gTLDs is always presented on page three of the three-page report in such a way to make apples-to-apples comparisons with .com and ccTLDs not straightforward.

While the reports highlight the growth of ccTLDs and Verisign’s own .com and .net registries in absolute and percentage terms, they do not do so for new gTLDs.

(They’ve also been calling ccTLDs “geographic gTLDs” for years and nobody seems to have noticed.)

But comparing Q1 and Q2 DNIB reports shows that new gTLDs contributed 5.9 million of the 8.2/7.9 million quarterly increase, in other words just shy of 72% of the industry’s total volume growth.

That’s the biggest contribution new gTLDs have made to growth in any quarter to date.

The growth can be attributed to .xyz’s penny deals in June, which saw domainers acquire millions of names for essentially nothing.

Meanwhile, .com and .net combined contributed just 700,000 domains to growth and .net actually shrunk by 100,000 names, its first dip since Q1 2015.

The ccTLD market data presented in the DNIBs is probably not entirely reliable. Verisign is still using the December 2014 number for free ccTLD .tk, which I think is about six million names lower than its current level.

Correction: what NTIA said about .com pricing

Kevin Murphy, September 5, 2016, Domain Registries

The US government has not confirmed that it expects to keep Verisign’s .com registry fee capped at the current level until at least 2024, despite what DI reported on Monday.

At this URL we published an article reporting that the US government had confirmed that it was going to keep .com prices frozen at $7.85 for the next eight years.

That was based on a misreading of a letter from the Department of Commerce to Senator Ted Cruz and others, which merely explained how the price cap could be maintained without expressing a commitment to do so.

The letter actually said very little, and nothing of news value, so I thought it best to simply delete the original piece and replace it with this correction.

I regret the error.

Thanks to those readers who got in touch to point out the mistake.

Industry lays into Verisign over .com deal renewal

Kevin Murphy, August 15, 2016, Domain Registries

Some of Verisign’s chickens have evidently come home to roost.

A number of companies that the registry giant has pissed off over the last couple of years have slammed the proposed renewal of its .com contract with ICANN.

Rivals including (sued over its .xyz advertising) and Donuts (out-maneuvered on .web) are among those to have filed comments opposing the proposed new Registry Agreement.

They’re joined by business and intellectual property interests, concerned that Verisign is being allowed to carry on without implementing any of the IP-related obligations of other gTLDs, and a dozens of domainers, spurred into action by a newsletter.

Even a child protection advocacy group has weighed in, accusing Verisign of not doing enough to prevent child abuse material being distributed.

ICANN announced last month that it plans to renew the .com contract, which is not due to expire for another two years, until 2024, to bring its term in line with Verisign’s contracts related to root zone management.

There are barely any changes in the proposed new RA — no new rights protection mechanisms, no changes to how pricing is governed, and no new anti-abuse provisions.

The ensuing public comment period, which closed on Friday, has attracted slightly more comments than your typical ICANN comment period.

That’s largely due to outrage from readers of the newsletter, who were urged to send comments in an article headlined “BREAKING: Verisign doubles .COM price overnight!”

That headline, for avoidance of doubt, is not accurate. I think the author was trying to confer the idea that the headline could, in his opinion, be accurate in future.

Still, it prompted a few dozen domainers to submit brief comments demanding “No .com price increases!!!”

The existing RA, which would be renewed, says this about 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 proposed amendment (pdf) that would extend the contract through 2024 does not directly address price.

It does, however, contain this paragraph:

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, 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.

The Cooperative Agreement is the second contract in the three-way relationship between Verisign, ICANN and the US Department of Commerce that allows Verisign to run not only .com but also the DNS root zone.

It’s important because Commerce exercised its powers under the agreement in 2012 to freeze .com prices at $7.85 a year until November 2018, unless Verisign can show it no longer has “market power”, a legal term that plays into monopoly laws.

So what the proposed .com amendments mean is that, if the Cooperative Agreement changes in 2018, ICANN and Verisign are obligated to discuss amending the .com contract at that time to take account of the new terms.

If, for example, Commerce extends the price freeze, Verisign and ICANN are pretty much duty bound to write that extension into the RA too.

There’s no credible danger of prices going up before 2018, in other words, and whether they go up after that will be primarily a matter for the US administration.

The US could decide that Verisign no longer has market power then and drop the price freeze, but would be an indication of a policy change rather than a reflection of reality.

The Internet Commerce Association, which represents high-volume domainers, does not appear particularly concerned about prices going up any time soon.

It said in its comments to ICANN that it believes the new RA “will have no effect whatsoever upon the current .Com wholesale price freeze of $7.85 imposed on Verisign”., in its comments, attacked not potential future price increases, but the current price of $7.85, which it characterized as extortionate.

If .com were put out to competitive tender, XYZ would be prepared to reduce the price to $1 per name per year, CEO Daniel Negari wrote, saving .com owners over $850 million a year — more than the GDP of Rwanda.

ICANN should not passively go along with Verisign’s selfish goal of extending its unfair monopoly over the internet’s most popular top-level domain name.

Others in the industry chose to express that the proposed contract does not even attempt to normalize the rules governing .com with the rules almost all other gTLDs must abide by.

Donuts, in its comment, said that the more laissez-faire .com regime actually harms competition, writing:

It is well known that new gTLDs and now many other legacy gTLDs are heavily vested with abuse protections that .COM is not. Thus, smaller, less resource-rich competitors must manage gTLDs laden (appropriately) with additional responsibilities, while Verisign is able to operate its domains unburdened from these safeguards. This incongruence is a precise demonstration of disparate treatment, and one that actually hinders effective competition and ultimately harms consumers.

It points to numerous statistics showing that .com is by far the most-abused TLD in terms of spam, phishing, malware and cybersquatting.

The Business Constituency and Intellectual Property Constituency had similar views about standardizing rules on abuse and such. The IPC comment says:

The continued prevalence of abusive registrations in the world’s largest TLD registry is an ongoing challenge. The terms of the .com registry agreement should reflect that reality, by incorporating the most up-to-date features that will aid in the detection, prevention and remediation of abuses.

The European NGO Alliance for Child Safety Online submitted a comment with a more narrow focus — child abuse material and pornography in general.

Enasco said that 41% of sites containing child abuse material use .com domains and that Verisign should at least have the same regulatory regime as 2012-round gTLDs. It added:

Verisign’s egregious disinterest in or indolence towards tackling these problems hitherto hardly warrants them being rewarded by being allowed to continue the same lamentable

I couldn’t find any comments that were in unqualified support of the .com contract renewal, but the lack of any comments from large sections of the ICANN community may indicate widespread indifference.

The full collection of comments can be found here.