Governments still split on ICANN accountability plan, but will not block it

The Governmental Advisory Committee failed to reach consensus on proposals to improve ICANN’s accountability, but has raised “no objection” to them going ahead as planned.
After burning the midnight oil in a tense series of meetings at ICANN 55 in Marrakech last night, the GAC finally agreed to the text of a letter that essentially approves the recommendations of a cross-community accountability working group.
The GAC said, in a letter (pdf) to leaders of the so-called CCWG:

While there are delegations that have expressed support for the proposal, there are other delegations that were not in a position to endorse the proposal as a whole.
In spite of this difference of opinions, the GAC has no objection to the transmission of the proposal to the ICANN Board.

This means that one of the barriers to accountability reform, which is inextricably linked to IANA’s transition away from US government oversight, has been lowered.
The GAC said it could not by consensus endorse the full suite of proposals, however.
The main sticking point was the CCWG’s recommendation 11, which essentially enshrines the GAC’s consensus-based decision-making rules in the ICANN bylaws.
A handful of governments — a bloc of South American nations, plus France and Portugal — are still not happy about this.
There is “no consensus” from the GAC on Recommendation 11, the GAC said.
There is also no consensus on the so-called “GAC carve-out” in Recommendations 1 and 2, which would limit the GAC’s ability to challenge ICANN board decisions alongside the rest of the community.
The accountability plan still needs to be formally endorsed by a couple more ICANN community groups, before it is submitted to the ICANN board for approval, which is expected to happen over the next 48 hours.

Comment Tagged: accountability, ccwg, iana, ICANN, icann 55, marrakech, transition

ICANN China “conflict” denied as Cruz looks for dirt

ICANN chair Steve Crocker has denied that outgoing CEO Fadi Chehade has a conflict of interest with the Chinese government, after US Senator Ted Cruz pressed him for more details on Chehade’s extra-curricular activities in the country.
“There’s no money involved, so there’s no conflict of interest involved at all,” Crocker said at a press conference, in response to a DI question, at ICANN 55 in Marrakech today.
I put the question because presidential hopeful Cruz, along with fellow senators James Lankford and Michael Lee, said in a letter last Thursday (pdf) that Chehade has a “confirmed personal conflict of interest” when it comes to the Chinese government.
That appears to be based on his admission, in a letter to Cruz et al last month, that his travel expenses to the World Internet Conference (aka, the Wuzhen Summit), where he’s agreed to be co-chair of an advisory committee after he leaves ICANN, would probably be picked up by the Chinese government.
According to Cruz, Chehade is in the pocket of the Chinese government because he has accepted or will accept flight-plus-hotel expenses to a Chinese conference, which could distract him from his $900,000-a-year ICANN salary.
Cruz’s most recent letter seeks further information about Chehade’s involvement with Wuzhen and the ICANN board’s response when they found out about it.
It appears to be basically an effort to get as much evidence as possible to support the ludicrous Republican claim that the IANA transition process initiated by the Obama administration risks handing control over internet censorship to the Chinese.
This, while some governments are complaining that the community-drafted IANA transition proposals actually weaken the hand of governments.
“There’s much less there than people are making an issue of, so there’s just no problem from our point of view,” Crocker said at the press conference.
“There are several degrees of separation between matters at ICANN and involvement with the Chinese government,” Crocker said. “[Wuzhen is] not controlled by the Chinese government and it’s intended to facilitate bringing in people from all over the world, it’s a matter of inclusion rather than exclusion.”
While Cruz asks quite a lot in his latest letter, one of the questions that leaped out at me claimed that ICANN does not publish the address of its Beijing office on its web site.
All the other local “Engagement Centers” have physical addresses listed, but not the Chinese one, Cruz said.
It turns out he’s correct.
I asked at the press conference why the address was not published on the ICANN web site and whether Cruz was correct to infer that ICANN is based in the same office as CNNIC, the government-controlled .cn ccTLD registry.
Chehade replied: “As I’m sure you’ve read in our press releases when we opened that office, that office was opened with a very clear press release by us and one by CNNIC indicating that our office would be collocated with CNNIC. So there’s nothing new here.”
He thanked Cruz for pointing out the omission on the ICANN web site and said it would be corrected.
He said that it’s ICANN’s habit to collocate engagement centers with local players, and that Beijing was nothing different. ICANN pays CNNIC for the collocation, he said.
Looking at the ICANN press release (pdf) announcing the Beijing office opening, back in 2013, it seems Chehade was incorrect, however. The press release makes no mention of CNNIC hosting the new ICANN engagement center. It does not mention CNNIC at all.
CNNIC did at the time state in its own press release, in a roundabout way, that ICANN Beijing would be sharing its office.
I also asked whether the outcome of the US presidential election would have a direct bearing on whether ICANN is able to execute the IANA transition. Would the transition happen if Cruz gets elected president of the USA in November?
Crocker gamely waffled for a couple of minutes but didn’t confirm what many take as a given: that Obama initiatives such as the IANA transition are likely to be at risk of a scuppering should a Republican, particularly Cruz, enters the White House.
“As an American I have to say this is one of the most interesting and unpredictable presidential election processes we’ve ever seen,” Crocker said, “but as chairman of the board of ICANN I hope it has no relationship at all to a process that was started in principle when ICANN was initiated in 1998.”

8 Comments Tagged: china, iana, ICANN, ted cruz, transition

ICANN ups new gTLD revenue forecast

ICANN has increased its new gTLD revenue projections for fiscal 2016.
The organization released its draft FY17 budget over the weekend, showing that it expects its revenue from new gTLDs for the 12 months ending June 30, 2016, to come in at $27.3 million.
That’s a 13% increase — an extra $3.1 million — on what it expected when it adopted its FY16 budget last June.
The anticipated extra money comes from registry and registrar transaction fees, spurred no doubt by the crazy speculation in the Chinese market right now.
Registry transaction fees are now expected to be $2.8 million (up from the earlier prediction of $2 million) and $3 million (up from $2.3 million).
The bulk of the new gTLD revenue — $21.5 million — still comes from fixed registry fees, which do not vary with transaction volume.
For fiscal 2017, which starts July 1 this year, ICANN is predicting new gTLD revenue of $41.5 million, a 52% annual growth rate.
The adopted FY16 budget is here. The new proposed FY17 budget is here. Both are PDF files.
The FY17 proposals are open for public comment.

Comment Tagged: budget, ICANN, new gTLDs, revenue

US judge freezes .africa gTLD

A US court has blocked ICANN from delegating the .africa gTLD for at least another month.
At the request of failed .africa applicant DotConnectAfrica, a California judge handed ICANN a temporary restraining order, enjoining it from “issuing” .africa.
The ruling came two days after the ICANN board of directors voted to allow .africa to be delegated to successful applicant ZACR.
The decision seems to be based on the fact that a delegation is essentially irreversible, so even if DCA were to win the lawsuit it would not be able to get its hands on the gTLD.
“Plaintiff has demonstrated that once the tGLD [sic] is issued, it will be unable to obtain those rights elsewhere,” the judge wrote (pdf).
DCA’s lawsuit, filed despite the that that it waived its right to sue under the new gTLD application agreement, basically makes the same arguments that its successful Independent Review Process made.
The court is due to hold a hearing on April 4 to decide whether ICANN can delegate .africa or will have to wait until the lawsuit is fully resolved.
The company, incidentally, appears to have changed lawyers since its original complaint against ICANN was filed. It’s now with Brown Neri & Smith, having briefly been with Brandon Schantz.

1 Comment Tagged: africa, dca, delegation, dotconnectafrica, ICANN, zacr

Governments split on IANA transition

ICANN’s Governmental Advisory Committee is unlikely to provide its full backing to accountability proposals supporting the IANA transition.
In meetings at ICANN 55 in Marrkech over the weekend, a handful of GAC delegates publicly stated that they would block consensus over concerns the proposals reduce government power in ICANN.
The most vocal opposition came from Brazil, but it was backed up by the countries including Peru and Russia.
The proposals currently up for debate would make it harder for the ICANN board to disagree with consensus GAC advice, but it clarifies that non-consensus advice does not carry the same weight.
Currently, the ICANN board can reject GAC advice by a simple majority vote, but doing so kick-starts a bilateral negotiation process where the board and GAC have to try to resolve their differences.
The new accountability proposals would raise the threshold to 60% of the board, and the negotiations would only have to take place if the advice carried the full consensus of the GAC.
Under the GAC’s current operating rules, consensus means no one government formally objected to the advice. The accountability proposals would enshrine that definition in the ICANN bylaws.
The proposal was drafted like this to handle what is known as “Stress Test 18” — a scenario in which the GAC switched its decision-making mechanism to a simple majority vote, enabling it to more easily issue potentially more extreme advice.
Brazil finds the whole idea of Stress Test 18 “insulting”. Its delegate told the GAC yesterday:

We consider Stress Test 18 unacceptable. We have said this from the beginning. We think this contaminates the full proposal. I think there are many positive aspects in the proposal coming forward that we could accept, that we could support… I think this compounds a very ugly picture in which it is very clear that the real intent was to circumvent the possibility of governments having meaningful participation unless there is full consensus among its members.

Brazil was one of nine governments to put its name to a letter (pdf) last month criticizing the post-transition accountability proposals.
The letter points out that the current definition of GAC consensus would allow a single government to block consensus, even in the face of overwhelming support from other governments, simply by formally objecting.
This could lead to GAC “paralysis”, the letter stated.
Indeed, we saw something like this a couple of years ago when the US blocked GAC advice against the .amazon gTLD, before eventually withdrawing its objection.
Once it became clear yesterday that the GAC might not be able to provide full consensus on the accountability proposals, some GAC delegates worried aloud about what kind of message that would send to the rest of the world.
The proposals are inextricably linked to the IANA transition, which would see ICANN management of the DNS root zone become independent from US government oversight for the first time.
Some on the hard right of US politics, such as presidential hopeful Ted Cruz, are convinced that the transition will allow China to start censoring the internet.

Comment Tagged: gac, iana, icann 55, marrakech, transition

Amazon files appeal on rejected .amazon domain

Amazon has appealed the rejection of its proposed .amazon new gTLD.
The company this week told ICANN that it has invoked the Independent Review Process, after 18 months of informal negotiations proved fruitless.
Amazon’s .amazon application was controversially rejected by ICANN in May 2014, due to advice from the Governmental Advisory Committee.
The GAC, by a consensus, had told ICANN that .amazon should be rejected.
South American nations that share the Amazonia region of the continent had said the string was “geographic” and should therefore be unavailable to the US-based company.
The word “Amazon” is not protected by ICANN’s geographic string rules, because “Amazon” is not the name of a region, and was only rejected due to governmental interference.
The GAC’s decision came only after the US, which had been preventing consensus in order to protect one of its biggest native internet companies, decided to step aside.
Amazon has been in ICANN’s Cooperative Engagement Process — an informal set of talks designed to avoid the need for too many lawyers — since July 2014.
Those talks have now ended and Amazon has told ICANN that an IRP is incoming, according to ICANN documentation published on Tuesday (pdf).
The IRP documents themselves have not yet been published by ICANN.
UPDATE: This article originally incorrectly stated that the US withdrew its objection to the GAC consensus on .amazon after the IANA transition was announced. In fact, it did so several months prior to that announcement.

7 Comments Tagged: amazon, dot-brands, ICANN, new gTLDs

Amazon plotting registrar workaround?

Amazon has given an early hint at how it may manage its new gTLD registries.
The company seems to be planning to make its own web site the place to go to for its new gTLD domains, relegating registrars to secondary players in the sales path.
It also seems to be planning to up-sell registrants with services, possibly including hosting, before they even get to the registrar’s storefront.
Amazon has filed a Registry Services Evaluation Process request with ICANN, relating to its gTLD .moi (French for “.me”) covering a “Registration Authentication Platform”.
.moi isn’t a brand, but Amazon says it plans to verify registrant “eligibility” before allowing a registration to take place.
To date, it has not revealed what the eligibility requirements for .moi are.
Its RSEP filing says that it intends to offer registrants a suite of optional add-on “technology tools or applications” at the point of verification.
Crucially, that’s before they get bounced to their registrar of choice to actually register the name.
Amazon is basically putting its up-sell pitch into the sales path before registrars get to do the same.
The RSEP explains it like this:

After the customer selects the Technology Tools of interest and/or ancillary products or services (if any), the customer will select its registrar of choice from among the complete list of .MOI-accredited registrars and be directed to that registrar’s site to permit that registrar to collect the required registrant information for the domain name registration, and to submit payment for the selected .MOI domain name. Upon completion of these steps, the registrar, through the normal EPP processes, shall transmit the required registration information to the Registry and the .MOI domain name shall be registered. A customer that first visits a .MOI-accredited registrar’s website will be directed to the Registry’s .MOI website to undergo the process noted above. After pre-registration policy verification, those customers will be transitioned back to the originating registrar’s site.

The RSEP does not explain what the “technology tools” are, but I’d be very surprised if they did not include for example web hosting, a staple higher-margin registrar product.
It’s not entirely clear what, if any, consultations Amazon has had with registrars regarding its proposals. The RSEP language is evasive:

Amazon Registry reached out to several registrars to have general discussions about their experience with pre-registration policy verification and how that experience (including customer experience) could be improved. Any consultations that may have occurred regarding the Technology Tools and the ancillary products and services would have occurred subject to a Mutual Non-Disclosure Agreement and cannot be disclosed.

Currently, the RSEP only covers .moi. Amazon would have to file additional RSEPs if it wanted the new service applied to its 32-TLD-strong portfolio, which includes the likes of .book, .song and .tunes.
ICANN has already made a preliminary determination that the RSEP “does not raise significant competition, security or stability issues”.
As usual, there’s a public comment period, which ends April 14.

1 Comment Tagged: .moi, amazon, hosting, ICANN, new gTLDs, rsep

Schilling agrees with activist Rightside investor

Uniregistry boss Frank Schilling agrees to a large extent with the fellow Rightside investor who was revealed today to be threatening a boardroom coup at Rightside.
Schilling, who is believed to have paid $8.4 million for 6.1% of Rightside, told DI tonight that he believes Rightside’s management has not done a good job over the last few years.
He said he agrees with 7.32% shareholder J Carlo Cannell, who says that Rightside should get rid of some of its weaker new gTLDs.
Cannell, of Cannell Capital, is demanding Rightside lay off one in five of its staff, dump its weakest new gTLDs, and refocus the company on its eNom registrar business.
He’s threatening to launch a proxy fight at the company in order to replace the Rightside board of directors with his own slate if management does not do what he wants.
Cannell’s letter called out .democrat, .dance, .army, .navy, and .airforce as “irrelevant” or “garbage” gTLDs in Rightside’s portfolio that should be sold or simply “abandoned” in order to focus on its better gTLDs, such as .news, and its cash-generating registrar business.
Schilling told DI tonight that he agrees with Cannell, at least partly.
He said that if Cannell’s proposal for the company is good for shareholders and the company he would support it.
It may sound counter-intuitive for Schilling, one of the most ardent proponents of new gTLDs, to support somebody encouraging Rightside to invest less in marketing its new gTLD portfolio.
After all, Uniregistry has a couple dozen new gTLDs — including .sexy, .christmas, .pics and .link — in its stable
But Schilling has form when it comes to advocating portfolio rationalization.
Today he pointed to comments he made on a DI article in December
“Operators may make the decision to give away or sunset unprofitable strings,” he said in those comments. “I don’t view that as such a bad thing.”
Schilling said that weaker strings should be “bootstrapped” rather than aggressively invested in.
One of Cannell’s beefs with Rightside is that the company is focusing too much on new gTLDs. He’s not opposed to new gTLDs in general — in fact, he likes them — but he wants Rightside to put money only into those gTLDs he considers worthwhile.
Cannell also wants Name.com rebranded to eNom and moved to Rightside’s Seattle headquarters, for two of its directors to be replaced and for 20% of Rightside’s “weakest” staff to be laid off.
I asked Schilling whether he agreed with Cannell that that 20% of Rightside’s staff should be let go.
He said: “I do not think it is healthy to name arbitrary numbers but I do think some wrong people are in the wrong seats.”
Schilling also said that he believes Rightside has been “subservient” to Donuts, and has given Donuts too much for too little.
Donuts is the portfolio gTLD registry play that uses Rightside as its back-end registry provider.
Donuts has a much better portfolio, in my irrelevant opinion.
Another notable investor in Rightside is XYZ.com CEO Daniel Negari and his COO Michael Ambrose, who collectively invested roughly $8.5 million in Rightside at around the same time as Schilling and Cannell bought their stakes.
Like Schilling, they’re an obviously pro-new-gTLD play. I’ve asked Negari for his opinion on Cannell’s letter and will update should I ever receive a response.

2 Comments Tagged: calle, cannell, donuts, new gTLDs, rightside, uniregistry

Activist investor slams Rightside over “garbage” new gTLDs, looking for blood

A hedge fund manager known for causing trouble at the companies he invests in has savaged Rightside, saying its focus on new gTLDs at the expense of its registrar business is ruining the company.
J Carlo Cannell of Cannell Capital is looking for some serious bloodletting.
He wants Rightside to cut 20% of its staff, close offices, unify its products under the eNom brand and replace two of its directors.
He’s threatening to wage a proxy war to replace the Rightside board if he doesn’t get what he wants.
He wrote a scathing letter to Rightside chair Dave Panos last month, which was published in a Securities and Exchange Commission filing today.

NAME’s registrar has become like a crazy aunt kept in the basement, one that you refuse to adequately clothe or feed, but who steadfastly spins straw into gold used to subsidize a stable of largely substandard new GTLDs such as .democrat, .dance, .army, .navy, and .airforce. Most of these new GTLDs are irrelevant and will never be sold in material volumes. NAME is holding back the growth potential of your registrar by pushing garbage extensions to a user base that quietly knows better.

NAME is Rightside’s Nasdaq ticker symbol.
Cannell revealed he owned a 7% share of Rightside last month — paying reportedly just shy of $11 million for 1,389,953 shares.
He wants Rightside to sell off “or even abandon” some of its weaker gTLDs, which “should not consume all the resources of our Company at the expense of the assets that are currently profitable”, while keeping “gems” such as .news.
His letter doesn’t pull any punches.
Cannell is perhaps best known for his widely publicized tussle with Jim Cramer, TV show host and co-founder of financial news site TheStreet.

14 Comments Tagged: activist, cannell, enom, new gTLDs, proxy battle, rightside

Registrars object to “unreasonable” .bank demands

Registrars are upset with fTLD Registry Services for trying to impose new rules on selling .bank domains that they say are “unreasonable”.
The Registrar Stakeholder Group formally relayed its concerns about a proposed revision of the .bank Registry-Registrar Agreement to ICANN at the weekend.
A key sticking point is fTLD’s demand that each registrar selling .bank domains have a dedicated .bank-branded web page.
Some registrars are not happy about this, saying it will “require extensive changes to the normal operation of the registrar.”
“Registrars should not be required to establish or maintain a “branded webpage” for any extension in order to offer said extension to its clients,” they told ICANN.
i gather that registrars without a full retail presence, such as corporate registrars that sell mainly offline, have a problem with this.
There’s also a slippery slope argument — if every gTLD required a branded web page, registrars would have hundreds of new storefronts to develop and maintain.
fTLD also wants registrars to more closely align their sales practices with its own, by submitting all registration requests from a single client in a single day via a bulk registration form, rather than live, or pay an extra $125 per-name fee.
This is to cut down on duplicate verification work at the registry, but registrars say it would put a “severe operational strain” on them.
There’s also a worry about a proposed change that would make registrars police the .bank namespace.
The new RRA says: “Registrar shall not enable, contribute to or willing aid any third party in violating Registry Operator’s standards, policies, procedures, or practices, and shall notify Registry Operator immediately upon becoming aware of any such violation.”
But registrars say this “will create a high liability risk for registrars” due to the possibility of accidentally overlooking abuse reports they receive.
The registrars’ complaints have been submitted to ICANN, which will have to decide whether fTLD is allowed to impose its new RRA or not.
The RrSG’s submission is not unanimously backed, however. One niche-specializing registrar, EnCirca, expressed strong support for the changes.
In a letter also sent to ICANN, it said that none of the proposed changes are “burdensome”, writing:

EnCirca fully supports the .BANK Registry’s efforts to ensure potential registrants are fully informed by Registrars of their obligations and limitations for .BANK.  This helps avoid confusion and mis‐use by registrants, which can cause a loss of trust in the Registry’s stated mission and commitments to the banking community.

fTLD says the proposed changes would bring the .bank RRA in line with the RRA for .insurance, which it also operates.
The .insurance contract has already been signed by several registrars, it told ICANN.

2 Comments Tagged: .bank, .insurance, ftld, ICANN, new gTLDs, rra, rrsg