Now PIR rubbishes .org “downtime” claims

Two of Public Interest Registry’s top geeks have come out swinging against recent claims that .org will suffer days of downtime if PIR is acquired by Ethos Capital.
Chief technology officer Joe Abley and Susanne Woolf, senior director of technology community engagement, have penned a blog post calling the recent assertions by subcontractor Packet Clearing House “baffling” and “wrong”.
PCH claimed earlier this month that should PIR fall into for-profit hands, donations made to PCH would dry up, giving Ethos no choice but to either significantly increase .org prices or risk over three days of downtime per year.
PCH is a not-for-profit provider of DNS resolution services that contracts with Afilias to support .org and a couple hundred other Afilias-managed TLDs.
But PIR’s technologists today wrote:

PCH is a contractor to Afilias and has no business relationship with PIR; consequently PCH has no access to non-public financial information. We’re more concerned with the assertions that the current costs of maintaining DNS services are only sustainable if PIR remains a non-profit, and that a for-profit PIR will need to make deep cuts to funding for operations. These inferences are at odds with our knowledge and experience regarding the costs of providing solid DNS service. To be clear – they are wrong.

They go on to say “we find that PCH’s claims about their operational costs and funding models are baffling” and to suggest that if PCH is unhappy with .org’s forthcoming for-profit status, Afilias has plenty of competitors to choose from, writing:

If PCH is unable or unwilling to continue to provide service to Afilias at current pricing, Afilias has many options to ensure that .ORG continues to function at the high levels the technical community expects.

Afilias has already rubbished PCH’s claims in a letter to ICANN.
The $1.135 billion acquisition of PIR from the Internet Society is expected to close in the first quarter, but it’s currently undergoing some scrutiny by ICANN, which has to first approve the change of control.

Comment Tagged: .org, afilias, ethos, ICANN, packet clearing house, pch, pir

DI Leaders Roundtable #4 — Big predictions for 2020

Hindsight is 2020, right? Not this time!
We’re rolling up to the end of the year, so for the fourth DI Leaders Roundtable I thought I’d task my panel of industry experts with the wholly original and unpredictable question:

What do you think will be the major trends or developments in the domain name industry in 2020?

I’m wonderfully happy to report that the panel grasped the opportunity with both hands and delivered an absolute smorgasbord (selection of open sandwiches) of informed opinion about how they reckon 2020 will play out.
From potential changes to security practices to ongoing consolidation to increased government regulation to the death of new gTLDs to the growth of new gTLDs, 2020 is certainly going to be a fun year to report on.
In no particular order, this is what they said:
Rick Schwartz, domain investor

2020 is going to be just a fabulous year.
It comes down to two words: re-branding and upgrading.
Businesses that have gotten domains that may have not been prime to begin with want prime domains now to help them grow and be taken more seriously.
Businesses, especially global businesses that made the mistake of using non-dotcom domains, have realized their mistake and want to upgrade to a dotcom domain because of their own self-interest. They don’t care what domainers think! They only care about what they think and their bottom line, and in that regard they only have one choice and they all know it.
It’s mandatory if they want to grow and become part of the largest franchise ever known to mankind. The dotcom franchise.
If you add up all the net worth of every company on earth using the dotcom brand, the number is unfathomable.
As we go into the seventh year of the new gTLD experiment, they are meaningless. They haven’t been adopted by almost anybody. Circulation is poor. So many registrations are questionable or penny-promotional. The majority are parked and not in use nor will they ever be. And 99.9% of the people on this planet could not name a single one of them! Not a one!
The poor roll-out, poor marketing, poor circulation, questionable tactics and rolling out hundreds of extensions at one time was a death wish. A demolition derby as I have described and look at the HUNDREDS that are truly dying on the vine. They are not viable!
The registries themselves wanted the same result as dotcom but they smothered their own product by holding back anything they deemed to have any value whatsoever. They wanted the same result as dotcom but they certainly didn’t use the same playbook. There was no such thing as premium domains with Network Solutions. That was what gave life to the aftermarket.
They changed the recipe and it is what it is. Instead of replacing dotcom domains they should have marketed them as an on-ramp to their main dotcom website. That was a fatal choice.
Country-code extensions with dual purposes have outperformed all the new gTLDs put together.
.org has legs. Even .net domains seem to be in better shape than any of the new extensions.
According to NTLDStats.com there are 400 extensions with less than 20,000 registrations. Not viable! Over 300 of them have less than 10,000 and more than 200 have less than 5,000 and most of those have 2,000 or less.
On the other hand, there have been a lot of gimmicks used by the top 10 to gain HOLLOW registrations. Those 10 control 63% of all new gTLD registrations. Leaving the other 37% to be divided by over 500 other extensions. It’s laughable.
And when it comes to aftermarket sales, 2019 was worse than 2018 and 2017. Wrong direction for something that is supposed to be “emerging.”
According to TheDomains.com reported sales, of new gTLD’s are in a nosedive for 2019 vs 2018 and 2017. And most were done by registries themselves and not individual domain investors. Wrong direction!
2017
1,007 Total Sales
$5.2m Dollar Volume
$5,118 Average Price
$500.3k High Price
2018
1,490 Total Sales
$5.7m Dollar Volume
$3,847 Average Price
$510k High Price
2019
865 Total Sales
$3.4m Dollar Volume
$3,940 Average Price
$335k High Price
To me, 2020 is a year of total clarity. The experiment is over.
Get on board or get run over.

Sandeep Ramchamdani, CEO, Radix Registry

Within the new domains space, we will see a clear separation between the top 10 most popular extensions, and everything else. Many new TLDs have been able to jump volumes by operating at ultra-low prices. As the reality of renewals hit next year, the top TLDs by DUMs will more closely represent the most popular strings overall. Registrars will naturally tend towards focusing on these strings at the cost of everything else.
We will continue to see the normalization of new strings, as its visibility driven by legitimate end-user usage, rises. Our hope is that more registries play an active role in driving adoption by highly visible end-users and accelerate this evolution.

Jeff Neuman, Senior VP, Com Laude

Looking into my domain name industry crystal ball for 2020, I can see the continuation of some of the same activities, the start of some new debates, and even more maturation of the industry. Here are my views on three of the policy issues likely to be center-stage in 2020 (in no particular order).
Transitioning to a new Steady State of New TLDs.
OK, so the next round of new gTLDs will not open in 2020. However, there will be some real progress made towards the next round. The Subsequent Procedures PDP will complete its policy work on its review of the 2012 round and deliver it to the Council, who in turn will approve (hopefully) the policy work and submit to the Board.
The ICANN Board will put out the report for public comment and we will see those that oppose any new more new TLDs come back out of the woodwork to file the same type of comments reminiscent of 2009/2010. They will claim that more TLDs are not needed, we should not be moving too fast (despite nearly a decade between rounds), and that we should not be adding new TLDs until we solve DNS Abuse, Name Collision, WHOIS/SSAD/GDPR/RDAP/UAM, (insert your own issue), etc.
Despite the likely negativity from some, the community will realize that there is value to additional new gTLDs and maintaining a competitive landscape. There is still value in innovation, encouraging consumer choice and competition. The community will rise above the negativity to realize that many of the issues we experience in the industry are in fact related to the artificial scarcity of TLDs and that we need to continue to push forward towards completing one of the original missions of ICANN.
Rights Protection Mechanisms move to Phase 2.
Admittedly most of the community has not been paying attention to the Rights Protection Mechanisms (RPMs) Policy Development Process PDP. Currently it is working on Phase 1: Reviewing the RPMs introduced for the 2012 Round of New gTLDs. This work includes looking at the Trademark Clearinghouse, Sunrise Processes, the URS and the Trademark Claims process.
2020 may likely see the beginning of its second phase, the first ever review of the Uniform Dispute Resolution Policy (UDRP).
The UDRP was the first of ICANN’s Consensus Policies, and one that has been in place for more than to decades. Great care must be taken in the review of this policy which most will argue has been ICANN’s most successful policy in its relatively young history. The UDRP not only protects the intellectual property community by going after the bad faith registration and use of gTLD domains, but it also has been instrumental for registries and registrars to stay out of the middle of domain name disputes.
Prior to the UDRP, the one domain name registry/registrar was constantly in court defending itself against claims of contributory infringement and hoping that courts would not impose liability on it for allowing the registration of domain names by cybersquatters and not taking back names when notified about the abuse that was occurring on those names.
The passage of the UDRP drastically changed all of that. Registries and Registrars could extricate themselves from domain name disputes by referring the parties to the UDRP and agreeing to following/implementing the decisions. Courts agreed that following the UDRP served as a shield of liability for those registries and registrars that faithfully followed the policy. The bottom line in my view is that domain name registries and registrars need the UDRP as much as the IP Community.
The DNS Abuse Debate continues.
Although some progress has been made in defining and mitigating DNS Abuse with a number of registries and registrars signing a Framework to Address DNS Abuse, more discussions by the ICANN community will continue to take place both within and outside of ICANN. In my opinion, those registries and registrars that are serious of addressing true DNS abuse, will continue to educate the community on the already positive steps that they have been taking to combat phishing, pharming, malware, botnets, etc. as well a number of other non-DNS abuse issues (illegal pharmaceuticals, child exploitation, etc.).
Other groups will continue to press registries and registrars to do more to combat all sorts of other non-DNS forms of abuse, while others will strenuously argue that the more that is done, the more we threaten the civil liberties of domain name registrants. The community will realize that there is no right side or wrong side in this debate. Each side of those complicated debate is right.
Hopefully, a true sense of “multi-stakeholderism” will arise where domain name registries and registrars continue to mitigate abuse while disassociating themselves from those that are not as serious about combating abuse, ICANN will develop tools that will constructively assist with mitigating abuse (as opposed to focusing on contractual regulations), and the rest of the community will work on how to combat the growing problem without trampling on the rights of registrants. At the end of the day, all of us have a role in protecting end users on the Internet.
Note: I know the ePDP work on Universal Access will of course be ongoing, but I am sure others will give their thoughts on that. From a non-policy perspective, the domain name industry will continue to consolidate. We may very well see more registry/registrar combinations, registries purchasing other registries and private equity investment. We will see some more innovative uses of brand TLDs and others following suit.

Christa Taylor, CMO, MMX

1. The predicted 2020 recession will reward agile organizations who embrace machine learning to enhance operational efficiencies, customer experiences and protect corporate profit margins. Naturally, organizations with high operating costs will be the hardest hit with impacts being felt in the second half of 2020.
2. The potential recession combined with mounting pressures to increase efficiency will lead to a renewed focus on reaching niche markets to expand business.
3. Protection and representation movement of identities will continue to gain strength and momentum in 2020 as more and more people recognize the importance of controlling their own personal data.
4. Horizontal and vertical consolidation along with increased synergies will continue throughout the industry.
5. The 4th industrial revolution (IoT, VR, AI, BC) will gather momentum and provide additional opportunities for the use of domain names.
6. The next round of new gTLD applications will encounter unanticipated challenges causing delays.
7. New gTLDs registrations will continue to grow in 2020.

Michele Neylon, CEO, Blacknight

I suspect we’ll see more consolidation across the domain and hosting space. Afilias will probably acquire a few more under-performing registry operators. Some will already be on their platform, while others will be using their competitors. CentralNic will continue to acquire companies that fit with their portfolio of services.
There’ll be more mergers and acquisitions across the hosting and domain registrar space with a small number of companies dominating most developed markets.
The PIR acquisition by Ethos Capital will close and the sky won’t fall. PIR will increase their wholesale price by a few percentage points which will upset domain investors. There’ll be increased calls on ICANN to take action, but these will be rebutted.
More country code operators will start using AI to combat abusive registrations. In some cases I suspect we’ll see more stringent registrant validation and verification policies being introduced, though many ccTLD operators will find it hard to balance maintaining new registration volumes while also increasing the overall “quality” of the registration base.
There’ll be an increase in internet shutdowns in less-developed democracies, while governments in Europe and elsewhere will increase pressure on social media companies to stop the spread of propaganda. Internet infrastructure companies will come under more pressure to deal with content issues.
As we enter a new decade the role of the internet in our daily lives, both business and personal will continue to grow.
The big challenges that lie ahead are going to be complex. Without increasing security there’s a tangible risk that consumers will lose trust in the system as a whole and governments will want to impose more regulations to ensure that. One of the challenges is going to be balancing those increased levels of security and consumer confidence while not stifling innovation.
It’s going to be a fun future!

Dave Piscitello, Partner, Interisle Consulting Group

Expect increased scrutiny of the domain registration business. Our study and others to follow will continue to expose enormous concentrations of abuse and criminal domain registrations at a small number of registrars.
Domains registered using bulk registration services will attract the most attention. We call these “burner domains”, because cybercriminals use these in a “register, use, and abandon” fashion that’s similar to how drug dealers use disposable or burner mobile phones.
Governments will become more insistent that ICANN does more than acknowledge their recommendations and then defer adoption. They will increase pressure to validate domain registration data and legitimate businesses will happily comply with the additional validation overhead because of the abuse mitigation benefits they’ll receive.
There’s a possibility that a government other than the EU will adopt a data protection regulation that exposes the flawed logic in the ill-conceived Temp Spec “one redaction fits all”. Having decided to “run with GDPR”, what will ICANN do when faced with a government that insists that email addresses be made public?
The governance model will also fall under scrutiny, as the “multi” in multi-stakeholder appears to be increasingly dominated by two stakeholder interests and public interest barely receives lip service.

Ben Crawford, CEO, CentralNic

• There will be more creative ways to bake identity, cyber security, crime prevention and policing, and IP protection measures into domains and registration services
• More registries will be auctioning their own deleting domains
• Large tech firms, finance players and telcos will play and increasing role in the domain industry
• Further consolidation of gTLDs as the bigger registry operators continue to acquire some of the smaller ones
• More regulations impacting the domain name industry
• Smart independents like .XYZ, Radix and .ICU (which went from zero to 4+ million DUMs in 18 months) will continue to dominate the nTLD space (without blowing $100m on the rights to their TLDs)

Jothan Frakes, Executive Director, Domain Name Association

Consolidation will continue — look for a lot of M&A activity and corporate development. Lots of moves and role changes with people changing companies as the consolidation occurs. With change comes great opportunity, and there will be a lot of change.
The industry is kicking off the year with oomph — the new location and format for NamesCon, billed as as the Domain Economic Forum in Austin. The event looks promising, as it begins refreshed and demonstrates the strengths of the team who produce Cloudfest. Austin, like Las Vegas, is a mecca for tech startups, but larger, so hopefully the convenience of the venue to the local tech companies, along with with GoDaddy demonstrating a heavier presence at the event this year will be a big lure to attract more new faces to this great industry (and event).
There will be more focus on making things easier for new customers to use and activate services on domain names. Cool technologies such as DomainConnect or other methods that enable “app store” type activation of domain names will continue to make it simpler for a domain name owner to activate, build and use their domains. This is a crucial evolutionary step in the business, as it plays a significant role in renewal rates and overall customer growth.
We’ll see further innovation in the use of domain names become more mainstream. IoT, GPS/Geo, AI, Bots, voice, AR/VR and other technologies will drive expanded use of domain names. Even Blockchain, which seems to have gotten more pragmatic about purpose, has a lot of promise with how it can interact with DNS now that the hype has scaled back and the designated drivers that remain are plowing forth with their efforts to deliver on the core purpose/benefits they set out to deliver.
Domains, as well as the cool things that you can do with them, will continue to be a growing business that enables people and organizations to build and do great things.

A very happy new year to all DI readers and supporters!

4 Comments Tagged: di leaders roundtable

Afilias denies .org will go down post-acquisition

.org domains will not suffer downtime as a result of Ethos Capital’s acquisition of Public Interest Registry, according to Afilias.
Afilias, which provides PIR’s back-end registry services, wrote to ICANN (pdf) last week to reject claims by DNS resolution subcontractor Packet Clearing House that .org could suffer more than three days a year of downtime if .org moves into commercial hands.
Chief technology officer Ram Mohan wrote:

Afilias — not PCH — is responsible for ensuring that .org names remain available 100% of the time. The Afilias global DNS network is diverse and robust; PCH is a contracted secondary DNS provider. Since Afilias began supporting .org in 2003, we have maintained an exemplary record of uptime, and will continue performing at world-standard levels.
Afilias states for the record that, for .org and PIR’s other TLDs, we will continue our exemplary performance at pricing consistent with our current contract with PIR.

Not-for-profit PCH had claimed that US tax law would see almost $30 million of annual donations dry up if .org became a for-profit enterprise again.
Ethos would be forced to increase .org prices dramatically or under-invest in DNS and see days of downtime, the organization claimed.

11 Comments Tagged: .org, acquisition, afilias, ethos, ICANN, pir

Palestine to release all one-character .ps domains, at a price

In a couple of weeks, you’ll be able to register single-character domains under the Palestinian ccTLD, .ps.
Local registry PNINA, the Palestinian Nation Internet Naming Authority, says that on January 6 at 0800 UTC it will add these names to its premium list, making them available via approved registrars.
Wholesale prices for the first year appear to be $2,000 across the board, with a $500-a-year renewal fee. Registrants can expect to pay more at the registrar check-out.
There are no local presence eligibility requirements under PNINA policy.
While investing in ccTLDs always carries some risk and uncertainty, one imagines that .ps may be riskier than most over the long term. It’s been on the ISO 3166 list of two-letter country codes for 20 years and has been in the root since 2000, but Palestine is not a full member of the United Nations.

1 Comment Tagged: .ps, one-character, palestine, premium, scdns

PIR thinks 20-year domain regs are a good idea

Want to lock in the price of a .org domain for 20 years? Public Interest Registry thinks that might be a good idea.
In a blog post, head of policy Paul Diaz wrote:

PIR supports the ICANN community conducting policy work that could extend the maximum allowable registration term to 20 years. We’d look to ICANN to support the community’s policy work and, if consensus is reached, to change the longstanding ICANN policy that currently limits registration to 10 years uniformly across all registries.

Extending the maximum permitted reg/renewal to 20 years was suggested last week by ICANN’s Non-Commercial Stakeholders Group as one of a few ideas to protect registrants following PIR’s acquisition by for-profit investor Ethos Capital.
It’s worth drawing the distinction here that PIR is only saying it would support consensus policy work to introduce the new limit across all gTLDs, not just .org.
And it might be a bit of a pipe-dream anyway, at least in the short term.
ICANN’s volunteer community still languishes under its perpetual workload/burnout problems, and I doubt there’s a massive appetite to open up yet another Policy Development Process right now, particularly one with potentially significant technical and business model implications.
If a PDP were to open, why would the output limit regs to just 20 years? Why not 100? Why not make the limit arbitrary?
Diaz was less committal on NCSG’s suggestion that the Uniform Rapid Suspension process be removed from the .org contract, saying merely that PIR would comply with (not necessarily support) a consensus policy emerge removing URS from all gTLDs.
On NCSG’s demand that PIR/Ethos commit itself to freedom of speech in .org, Diaz noted that PIR has suspended 36,000 .org domains this year, almost all of which were due to technical abuse such as malware distribution, botnets and phishing.
Ten domains were suspended based on content, he wrote. Eight of those were publishing child abuse material and two were illegally selling opioids.

5 Comments Tagged: .org, ethos, ICANN, ncsg, pir, urs

Amazon beats South America! Dot-brand contracts now signed

Amazon has prevailed in its seven-year battle to obtain the right to run .amazon as a branded top-level domain.
The company signed contracts for .amazon and the Chinese and Japanese translations on Thursday, despite years-long protests from the eight South American governments that comprise the Amazon Cooperation Treaty Organization.
This means the three gTLDs are likely to be entered into the DNS root system within a matter of weeks, after ICANN has conducted pre-delegation testing to make sure the registry’s technical systems are up to standard. The back-end is being provided by Neustar, so this is pretty much a formality.
.amazon is pretty much a done deal, in other words, and there’s pretty much nothing ACTO can do within the ICANN system to get the contract unsigned.
ACTO was of course angry about .amazon because it thinks the people of the Amazonia region have greater rights to the string than the American e-commerce giant.
It had managed to muster broad support against the gTLD applications from its Governmental Advisory Committee colleagues until the United States, represented on the GAC by the National Telecommunications Administration did a U-turn this November and withdrew its backing for the consensus.
This coincided with Amazon hiring David Redl, the most-recent former head of the NTIA, as a consultant.
The applications were originally rejected by ICANN due to a GAC objection in 2013.
But Amazon invoked ICANN’s Independent Review Process to challenge the decision and won in 2017, with the IRP panel ruling that ICANN had paid too much deference to unjustified GAC demands.
More recently, ACTO had been demanding shared control of .amazon, while Amazon had offered instead to protect cultural interests through a series of Public Interest Commitments in its registry agreements that would be enforceable by governments via the PIC Dispute Resolution Procedure.
This wasn’t enough for ACTO, and the GAC demanded that ICANN facilitate bilateral talks with Amazon to come to a mutually acceptable solution.
But these talks never really got underway, largely due to ACTO internal disputes during the political crisis in Venezuela this year, and eventually ICANN drew a line in the sand and approved the applications.
After rejecting an appeal from Colombia in September, ICANN quietly published Amazon’s proposed PICs (pdf) for public comment.
Only four comments were received during the month-long consultation.
As a personal aside, I’d been assured by ICANN several months ago that there would be a public announcement when the PICs were published, which I even promised you I would blog about.
There was no such announcement, so I feel like a bit of a gullible prick right now. It’s my own stupid fault for taking this on trust and not manually checking the .amazon application periodically for updates — I fucked up, so I apologize.
PICs commenters, including a former GAC vice-chair, also noticed this lack of transparency.
ACTO itself commented:

The proposed PIC does not attend to the Amazon Countries public policy interests and concerns. Besides not being the result of a mutually acceptable solution dully endorsed by our countries, it fails to adequately safeguard the Amazon cultural and natural heritage against the the risks of monopolization of a TLD inextricably associated with a geographic region and its populations.

Its comments were backed up, in pretty much identical language, by the Brazilian government and the Federal University of Rio de Janeiro.
Under the Amazon PICs, ACTO and its eight members each get a .amazon domain that they can use for their own web sites.
But these domains must either match the local ccTLD or “the names of indigenous peoples’ groups, and national symbols of the countries in the Amazonia region, and the specific terms OTCA, culture, heritage, forest, river, and rainforest, in English, Dutch, Portuguese, and Spanish”.
The ACTO nations also get to permanently block 1,500 domains that have the aforementioned cultural significance to the region.
The ACTO and Brazilian commenters don’t think this goes far enough.
But it’s what they’ve been given, so they’re stuck with it.

Comment Tagged: .amazon, acto, dot-brands, gac, ICANN, new gTLDs, picdrp, pics, trademarks

Q3 industry growth driven by .tk, .com and .icu

The domain name industry grew by 5.1 million names in the third quarter, according to the latest Domain Name Industry Brief from Verisign.
September ended with 359.8 million names across the board, the DNIB (pdf) shows.
Half of the growth came from Tokelau’s .tk, which is handed out for free by Freenom and is where domains never delete. It grew by 2.6 million names to 25.1 million in the quarter.
Next biggest grower was Verisign’s own .com, which grew by 1.5 million names to end September with an even 144 million. Its red-headed sibling, .net, lost 200,000 names over the same period and ended the quarter on 13.4 million.
Excluding .com and .tk leaves just one million names worth of net growth across the remainder of the industry, which comprises another 1,515 TLDs.
Taiwan’s .tw, which has been going through a bit of a spurt over the last year or so, added 300,000 domains, but .uk, which was a driver in Q2, was flat at 13.3 million.
New gTLDs grew by one million during the quarter, ending at 24 million, according to the DNIB.
That appears to have been driven almost entirely by ShortDot’s cheapo .icu, which has been flying off the shelves in China all year. Zone file records show it added over a million domains in Q3. It currently has 4.2 million names in its zone.
When these domains start to drop, it will likely be on a scale to materially affect the overall industry numbers in future DNIBs.

Comment Tagged: .com, .icu, .tk, .tw, dnib, versign

ICANN throws out second .org appeal, so URS stays

The Uniform Rapid Suspension process is to stay in .org, after the ICANN board of directors rejected an appeal from the Electronic Frontier Foundation.
The EFF had challenged the inclusion of URS in the recently renegotiated .org Registry Agreement, on the basis that the anti-cybersquatting system was designed for post-2012 new gTLDs and was never supposed to be deployed in legacy gTLDs such as .org.
In a Request for Reconsideration, the EFF had argued that ICANN had ignored the many commenters opposed to its inclusion in the contract, and that the board had shirked its duties by delegating the renegotiation to ICANN’s executive leadership.
But the board disagreed on both of these counts, saying in its resolution and accompanying 36-page analysis (pdf) that at no point had the organization broken its bylaws.
ICANN did not ignore the anti-URS comments, the board said, it simply decided that on balance the public interest was better served by having URS in the contract.

The Requestor has not demonstrated that ICANN Staff failed to seek or support broad participation, ascertain the global public interest, or act for the public benefit. To the contrary, ICANN org’s transparent processes reflect the Staff’s continuous efforts to ascertain and pursue the global public interest by migrating the legacy gTLDs to the Base RA.

Additionally, the board was well within its rights to delegate negotiation and approval of the RA to the CEO, the board decided. The fact that the EFF disagrees with that position does not amount to a basis of reconsideration, it found.
Since the EFF filed its RfR back in August, we’ve had the news of the $1.135 billion acquisition of .org manager Public Interest Registry by Ethos Capital, which will see it convert from a non-profit to a for-profit concern.
The EFF has since had the chance to put allegations to ICANN that its staff was aware of the deal before it was announced, and that the acquisition should have factored into its consideration of the RA renewal.
But ICANN flatly denies that it knew about the deal, which was announced four months after the renewal:

Since neither the Board nor ICANN Staff were aware of the PIR acquisition when the decision to renew the .ORG RA was made, there was no material information not considered, and therefore this is not a proper basis for reconsideration.
…
The Ethos Capital acquisition of PIR, which was announced more than four months after the execution of the .ORG Renewed RA, did not impact ICANN Staff’s determination that ICANN’s Mission and Core Values were best served by migrating the .ORG RA to the Base RA.

In conclusion, like almost all filers of RfRs, the EFF is SOL.
Another RfR, filed by the registrar NameCheap and related primary to .org pricing, was similarly rejected by ICANN’s board a few weeks ago.
ICANN is, however, currently quizzing Ethos and PIR seller ISOC for more details about the acquisition before it approves the change of contractor.

1 Comment Tagged: .org, cybersquatting, ethos, ICANN, isoc, pir, reconsideration, rfr, trademarks, urs

Warning (or threat?) prices must go up or .org will suffer DAYS of downtime

Public Interest Registry’s new commercial owner will have to raise domain prices significantly, or .org web sites will suffer over three days of downtime every year, one of its subcontractors has warned.
The claim came in a surprising, confusing letter (pdf) to ICANN’s top brass from Packet Clearing House, a major provider of DNS Anycast services.
PCH claims that Ethos Capital, which is in the process of buying PIR from the Internet Society for $1.135 billion, can only make a profit on the deal if it significantly ups the price of .org domains while simultaneously cutting infrastructure spending.
But its numbers don’t make a whole heck of a lot of sense to me, unless you interpret them as a threat to throw .org under a bus.
PCH is a non-profit company in the business, partly, of selling DNS Anycast services. This is the technology that allows domain names to be resolved by a server as close to the end user as possible, cutting down on internet travel time and load-balancing resolution across the world.
For 15 years, it has been providing such services to Afilias, which is the back-end registry services provider for .org and hundreds of other TLDs. Some of the money PIR makes selling .org domains therefore flows from PIR to Afilias to PCH.
While PCH is hardly a household name, even in the domain name industry (in almost 10 years, I’ve mentioned its name once), the letter, sent last week and published by ICANN last night, attempts to open the kimono a little to reveal how much it costs to reliably resolve a major gTLD.
According to PCH, “annual operational cost necessary to ensure the reliable and performant availability of .ORG” has grown from $11 million in 2004 to $30 million today.
Does that mean Afilias pays PCH $30 million a year to help resolve .org? No.
PCH says that in 2019, $1.3 million will come “indirectly from .ORG registration revenue”, with the remaining $29 million “met through tax-deductible contributions from PCH’s many donors”.
As a non-profit, PCH accepts donations from more than 30 listed sponsors, including Afilias and ICANN, as well as household names such as Amazon, Google and Netflix.
According to PCH’s letter, if .org is transferred into for-profit control, this $29 million will dry up. The letter states:

Under IRS tax law, tax-deductible donations to non-profits cannot accrue to the benefit of a for-profit. Therefore if .ORG is transferred to a for-profit entity, we cannot ask our donors to continue to subsidize its operation, 96% of .ORG’s current operational funding will disappear, and the reliability of its operation will sink from that of .COM and .NET to the least-common-denominator of commodity domains, which generally suffer several days of outage per year.

It estimates .org’s potential downtime at 3.12 days per year. It’s not saying that would happen in one big 72-hour chunk, but it still averages out at about 12 minutes per day
This amount of interruption would put PIR firmly on ICANN’s naughty step when it comes to the registry’s contractual uptime commitments — it has to provide 100% DNS service availability every month, under pain of losing its contract.
But why would those PCH contributions dry up?
Is PCH seriously saying that its donors are chucking in $29 million a year specifically to subsidize .org resolution services? Why on Earth would they do that, when .org brings in revenue of over $90 million per year and PIR only pays Afilias $18 million for registry services?
PCH provides Anycast for 243 gTLDs and 120 ccTLDs. The vast majority of these are managed by for-profit entities. There simply are not 243 non-profit gTLDs out there. Not even close.
In fact, most of the gTLDs PCH serves appear to be for-profit Afilias clients, including many dot-brands.
Goodness knows how PCH segments its income and expenditure, but it seems very likely that PCH’s donors are already financially helping to provide resolution services for commercial registries.
Could we interpret this letter as a threat to deliberately degrade .org’s performance, should the Ethos transaction go through? I’m not sure, but I think it’s a plausible read.
Regardless, we have to take PCH’s claims about the loss of sponsorship money at face value if we want to follow the rest of its calculations.

If the .ORG domain is sold for USD 1.135B, wholesale price and number of domains remain unchanged over the remaining nine years of the delegation (USD 900M gross), and operational reliability is maintained (at a cost of USD 270M), the buyer would take a net loss of USD 470M, or -6.33% CAGR. Private equity does not purposefully enter into loss-making deals. We may therefore conclude that the above scenario is not the intended outcome of the proposed sale.

That calculation seems to assume that PIR/Ethos/Afilias picks up the slack caused by the loss of the purported $29 million subsidy, rather than continuing to pay $1.3 million per year.
But PCH goes on to calculate that Ethos could make a profit on the acquisition only if it raises prices at over 10% a year AND refuses to chip in the missing $29 million.

If the .ORG domain is sold for USD 1.135B, prices are increased by 10% annually (USD 1.357B gross), and operational spending is slashed by 99%, (USD 2.7M), the buyer would make a net gain of USD 220M, or 1.99% CAGR, while increasing down-time to more than three days per year.
1.99% CAGR is not a return for which private equity would typically take this magnitude of risk. The unavoidable conclusion is that any private equity buyer who spends $1.135B to buy the .ORG domain must not only increase prices by more than 10% annually, but also cut operational costs to the minimum levels we see available at the low end of the market, with disastrous consequences for .ORG registrants and the public who depend upon them.

Again, all of these calculations appear to rely upon the notion that $29 million of voluntary donations from Amazon, Netflix, IBM, et al disappear when the acquisition is finalized.
It’s difficult to say how much PCH spends on its DNS infrastructure across the board, or how it accounts for its donations. The company does not make any financial information available on its web site.
Wikipedia reports, in an edit apparently made by PCH executive director Bill Woodcock, that the company had revenue of $251 million last year.
I assume the vast majority of that comes from and supports its primary business, which is building and maintaining internet exchange points around the world.
The only 990 tax return I could find for a “Packet Clearing House” in the San Francisco bay area shows an entity with barely $2 million of revenue in 2018.
To return to the letter, PCH concludes:

Three days per year of interrupted communications for millions of not-for-profit organizations would unacceptably damage the stability and functionality of the Internet, and more broadly of society globally.
We believe that stability and functionality should be central to any consideration by ICANN of change of control or contract modifications in relation to the .ORG TLD. As we demonstrate, the proposed transaction, or any financially-similar one, guarantees a disastrous effect on stability. Please do not approve it.

It’s a pretty shocking request, coming from an organization with a 15-year relationship with .org.
Perhaps PCH is concerned that PIR, under new management, will dump Afilias as back-end provider, leading to a loss of business for itself? Maybe, but that only appears to be a piddling $1.3 million out of a $251 million budget.
A more pressing question is arguably whether ICANN, which is currently probing ISOC and Ethos for additional information about the acquisition, finds PCH’s arguments persuasive.
ICANN has so far proved unresponsive to community concerns about pricing, but technical stability is its absolute raison d’etre. If there’s any risk at all that .org will start regularly missing its uptime targets, ICANN is duty bound to take those concerns seriously.

5 Comments Tagged: .org, acquisition, anycast, dns, ethos, ICANN, isoc, packet clearing house, pch, pir

Russian company approved as gTLD escrow provider

ICANN has approved Russian internet exchange point MSK-IX as its 10th gTLD data escrow provider.
The organization said that week that Joint Stock Company “Internet Exchange “MSK-IX” has been added to its roster of companies fighting for gTLD registries escrow business.
MSK-IX is mainly in the business of operating an internet peering hub — a location where ISPs can connect their networks to backbones and to each other — in Moscow.
It becomes the fourth escrow provider in Europe, and the only one in Europe outside of the EU.
There are also five approved providers in Asia and only one — original provider Iron Mountain — in North America.
ICANN says it is not currently looking for any more providers.
gTLD registries are contractually obliged to periodically put their domain and registrant data into escrow, on the off-chance they go out of business and domains need to be transferred to a different company.

Comment Tagged: escrow, ICANN, msk-ix, new gTLDs