Internet Governance 12/01/2006

The New .com Agreement – Implications for ICANN, E-Commerce & the Registrars

Almost nine months after ICANN and VeriSign entered into a new .com registry agreement, the Department of Commerce has announced that it has approved the deal. Commerce’s review of this agreement was the subject of intense lobbying by .com registrar companies, and even Congress entered the fray with a few hearings on ICANN and Internet governance. Now that the deal is done, what does it really mean–for ICANN, e-commerce, Internet governance and the .com registrars like GoDaddy and Network Solutions?

ICANN – The new registry contract has terms that will increase ICANN’s independence. Independence is important for ICANN because it will now have the resources it needs to complete key initiatives that have languished, like DNS Security Extensions (DNSSEC) and Internationalized Domain Names (IDNs). The source of this independence comes from the agreement’s financial terms that increase the funding for ICANN and thereby reduce its dependence upon registrars who often hold ICANN’s budget hostage to get what they want.

E-Commerce Companies and Users – All internet users benefit from this agreement, and it is particularly helpful to e-commerce customers and online business who demand high levels of availability and integrity in the domain name system. DNSSEC and IDNs are important for the future of e-commerce. DNSSEC will result in increases security and will reduce the vulnerabilities that currently allow criminals to employ phishing and pharming techniques to capture sensitive consumer data, such as credit card information. IDNs allow Internet users to type in top-level domains using non-Roman characters, which is important for e-commerce adoption by consumers in fast-growing economies like China. It also gives registry operators incentives to invest in greater capacity to handle Internet growth and withstand malicious attacks on the Internet’s DNS.
 

International Community – This agreement should also quell international criticism of the U.S for its oversight role over ICANN. Earlier this fall, the Department of Commerce and ICANN announced an agreement to transition ICANN to full independence over the next three years. Today’s announcement shows clearly that the Department of Commerce respects ICANN’s decision-making authority and is committed to ICANN’s eventual independence. While ICANN is far from a perfect manager, it does provide the needed separation between Internet technical operations and governments. ICANN’s bottom-up coordination of technical functions is the best way to preserve the democratic and decentralized character of the Internet.

 

Registrars – This agreement diminishes the registrars’ disproportionate power to pull the purse-strings on ICANN’s budget. The new agreement obligates VeriSign to pay ICANN a minimum of $26 million over the next three years. These funds will allow ICANN to rely less on the domain name fees that must be approved by the registrars (which presently provide most of ICANN’s funding). This loss of leverage is a good thing. When ICANN wants to make investments to ensure the Internet’s security and stability, it should not have to beg a “permission slip” from the registrars—many of who are more interested in their profitability as middlemen than in the security and stability of the internet.

From all appearances, this loss of leverage is why a few large registrars have pressed Congress and the Commerce Department to reject the new .com contract. GoDaddy and others didn’t wage a multi-million dollar lobbying campaign to scuttle this deal out of any concern for consumers. They waged this war to protect their profits. Nobody spends millions of dollars lobbying Capitol Hill unless it’s a bottom line money issue.  Like realtors, travel agents, and other middlemen in the Internet age, registrars are addicted to their current business models and will do anything to protect their profits.

The new .com registry agreement should also help ICANN move more aggressively with new initiatives like curbing abuses of the grace period for domain name registrations. It should also help ICANN focus on enforcing contracts that require registrars to maintain accurate information for domain name registrants in the Whois system. Whois is vital to law enforcement, trademark owners, and consumer protection efforts by e-commerce companies, but many registrars have been notoriously bad at collecting and maintaining accurate data. GoDaddy, in particular, is deliberately undermining Whois by registering customers anonymously. GoDaddy has even gone so far as to patent its method of letting spammers, phishers, identity thieves and other criminals hide their identities from the world!

ICANN is a work-in-progress on the way to a bold and optimistic vision for a multi-national, public-private partnership to manage the global internet. We should welcome this .com registry agreement as positive development in ICANN’s continuing evolution.

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