[Note: reformatted, with some links added by ICANNWatch -mf]|
August 14, 2003
VIA OVERNIGHT MAIL AND FACSIMILE
Mr. Paul Twomey
Internet Corporation for Assigned Names and Numbers (ICANN)
4676 Admiralty Way, Suite 330
Marina del Rey, CA 90292-6601
Re: WLS Marketing Restriction
Dear Mr. Twomey:
Network Solutions, Inc. writes to express its view concerning proposed Condition (c) to the .com and .net registry agreement regarding the VeriSign Global Registry Services' (VeriSign) proposed Wait List Service (WLS). Network Solutions maintains that the imposition of a blanket "blackout period" against the registrar-of-record is overly broad, creates a poor customer experience and is discriminatory as applied to certain registrars. Network Solutions proposes herein an alternative limited "blackout period" that restricts certain marketing activities of the registrar-of-record and directly targets the genuine, albeit as yet unarticulated, potential harm that might otherwise be caused by the registrar-of-record during the blackout period.
In its August 22, 2002 Second Analysis of VeriSign Global Registry Services' Request for Amendment to Registry Agreement, ICANN's General Counsel noted concerns about a "potential benefit" arising from WLS in favor of registrars who sponsor desirable names. It was suggested that some registrars might have an "unfair advantage by virtue of their knowledge of a likely deletion." To address this concern, ICANN's General Counsel suggested that registrars should not be permitted to place WLS reservations on names they sponsor at any time after a date sixty days before the deletion date.
Subsequently, in its May 20, 2003 Recommendation concerning Reconsideration Request 02-6, the Reconsideration Committee noted that arguments concerning the lack of predictability of the deletion date and the extremely poor customer service experience that could be caused by the proposed blackout period presented information not fully considered by the Board. The Reconsideration Committee recommended that "the Board give the [ICANN] staff flexibility to negotiate with VeriSign to tailor Condition (c) to result in a better customer experience, while still substantially achieving the goal of that condition."
On June 2, 2003, the ICANN Board authorized the President and General Counsel to conduct negotiations on behalf of ICANN toward appropriate revisions to the .com and .net registry agreements to provide for the offering of a WLS with, inter alia, the following condition:
. . . . .
(c) To avoid an incumbent registrar acquiring a preference in obtaining a WLS subscription through advance knowledge of or control over the deletion of a domain-name registration, there shall be appropriate limitations on that registrar's ability to obtain a WLS subscription on any domain name that it is concurrently sponsoring in the registry; (emphasis added).
I. The Blackout Period is Not an Appropriate Limitation
A blackout period prohibiting a registrar from submitting WLS subscriptions on a name it sponsors during the period preceding the deletion date is overly broad, creates a poor customer experience and imposes an unnecessary distortion in the registrar market. The potential harm cited in support of a blackout period (i.e. knowledge or control of the deletion date of a registered name) misses the point. Rather, the actual potential harm arises out of a sponsoring registrar's marketing activity given its purported knowledge and control of the deletion date. When the actual potential harm is properly identified, it becomes clear that a more targeted marketing restriction would effectively prevent sponsoring registrars from gaining a customer preference and, unlike a blanket blackout period, would not create a distortion in the registrar market for WLS service.
A. The Proposed Blackout Period is Overly Broad
The proposed blackout period is overly broad because it is based on a faulty premise - that a sponsoring registrar allegedly armed with knowledge of or control over the delete date inherently has a preference in its WLS service offerings. Knowledge or potential control of the delete date is not, of itself, sufficient to create an unfair advantage in the market for the sponsoring registrar. In fact, the only way a sponsoring registrar could potentially obtain a customer preference in its WLS service offering is if the sponsoring registrar advertised that it knows or controls the delete date of a desired domain name and that prospective customers have a better chance of obtaining their desired WLS subscription through its WLS service offerings. By advertising that it had knowledge of or the ability to control the delete date, a sponsoring registrar could actively market a "superior" WLS service for the domain name[s] in question or offer, in effect, a guaranteed registration to a prospective WLS customer. For example, should a customer choose to subscribe to WLS through the sponsoring registrar as a result of the aforementioned advertising, the sponsoring registrar could arguably be in a position to send the delete command to the registry at a time of its choosing and thereby increase the possibility of the customer obtaining the desired WLS subscription.
If a sponsoring registrar offers WLS on a domain name that it sponsors, but does not market its service as "superior" or "guaranteed" based on its status as the registrar-or record, the sponsoring registrar is on equal footing with competing registrars. Such marketing tactics would in no way provide the sponsoring registrar with a preference or advantage in the market. A blackout period that flatly prohibits this type of legitimate behavior is overly broad and would effectively eliminate a form of legitimate competition in the registrar market.
B. The Proposed Blackout Period Creates a Poor Customer Experience
If a blanket blackout period restriction were imposed against the sponsoring registrar, customers of the sponsoring registrar (and prospective customers for that matter) would be subject to confusion concerning the availability of the WLS service. For example, a registrar might provide a WLS subscription to a given customer for a name that happens to fall outside of the blackout period. Should that same customer attempt to subscribe to WLS for an additional domain name that happens to fall within the proposed blackout period, for which the registrar happens to be the registrar-of-record, the registrar would be prohibited from fulfilling its customer's order.
Such a prohibition would require the sponsoring registrar to communicate to the customer that the WLS service for the requested domain name is not available. The blackout period would effectively force a sponsoring registrar to choose to: 1) refer its customer to a competing registrar for the WLS service; 2) create messaging to the customer that is at best of little interest to a consumer who simply wants to place a WLS order on a given name; or 3) remain silent thereby compounding customer confusion. Should sponsoring registrars refuse to refer their customers to competitors for WLS service, customers and potential registrants will be ill served and potentially unable to avail themselves of an otherwise valuable service. Should a sponsoring registrar attempt to explain the restriction and then refer its customer to competing registrars, it risks a diminished perception of its reputation by its customer due to its inability to provide service upon request.
C. The Proposed Blackout Period Creates a Distortion Among Registrars Selling WLS
The blackout period creates a distortion in that it discriminates against certain registrars selling WLS since it would prevent registrars with a sizeable existing customer base from selling WLS service on a significant number of domain name registrations in both real terms and as a percentage of overall domain name registrations. The proposed blackout period would have the effect of limiting competition in the registrar market to the detriment of would be WLS customers.
Additionally, customer confusion and registrar communication problems will be compounded in reseller channels that represent the primary sales model for some registrars and a secondary sales channel for other registrars. Registrars having relationships with more than one reseller could, for example, face a situation where "Reseller A" has a customer holding a registration for a domain name that is subject to the blanket blackout period and "Reseller B" has a customer who wishes to subscribe to WLS for the domain name in question. The proposed blackout period would create significant communications problems for the registrar-of-record (to its reseller customers) and the resellers (to their end user customers). Additionally, the blackout period would produce the absurd effect of preventing resellers -- who market domain name services in their own right -- from selling WLS on domain names that are subject to an ill-defined blackout period and for reasons (i.e. knowledge of and control over the deletion date) that do not apply to them. Moreover, since the proposed blackout period imposes greater restraints on registrars having larger customer bases, it creates a disincentive for resellers to enter in to commercial agreements with such registrars.
Where registrars of all sizes can be effectively prohibited from leveraging unique knowledge or control over the deletion date of a domain name through a narrowly tailored marketing restriction, imposition of a blanket blackout period is unwarranted and creates an artificial restraint on all registrars' ability to engage in legitimate and competitive marketing. Such an effect is neither desirable nor should it be the goal of revisions to the .com and .net registry agreements.
II. An Alternative Marketing Restriction Provides an Appropriate Limitation on the Sponsoring Registrar
The Board's stated purpose of Condition (c) is to "avoid an incumbent registrar acquiring a preference in obtaining a WLS subscription through advance knowledge of or control over the deletion of a domain-name registration." As discussed above, neither factor, independent of the other or combined, provides a discernible advantage or preference for the incumbent registrar. Rather, a sponsoring registrar's active marketing of a superior WLS service, based on its knowledge of or control over the deletion date of a domain name, could provide a sponsoring registrar with a preference in obtaining WLS subscriptions. Accordingly, a restriction targeted at this type of marketing by the registrar-of-record is appropriate. Such a restriction would be narrowly tailored to the actual potential harm of unchecked marketing by the sponsoring registrar and would achieve the stated goal of Condition (c). Importantly, a targeted marketing restriction prevents marketing that unduly favors a sponsoring registrar without prohibiting legitimate marketing tactics, creating customer confusion or imposing a distortion in the registrar market for WLS.
Attached for your consideration in Appendix A is a draft marketing restriction that would effectively address existing concerns without imposing the unintended and competitively harmful effects of a blanket blackout period. Instead of prohibiting all marketing by the sponsoring registrar during the blackout period, the proposed marketing restriction would prohibit a registrar-of-record from marketing specific domain names it sponsors and asserting claims of offering a superior WLS service during the blackout period. The proposed marketing restriction is also readily enforceable since the marketing prohibitions are public activities, clearly defined and subject to the check of fiercely competitive registrars who regularly monitor each other's actions in the market.
Permitting accredited registrars to market WLS on names they sponsor promotes full and vibrant competition for WLS subscriptions. Imposing a blanket blackout period on WLS service offerings does not serve consumer interest and invariably requires ICANN to engage in an exercise of tilting the competitive playing field for or against certain registrars.
Director of Policy
Registrar agrees that during the Black Out Period for a domain name, Registrar shall not engage in Active Marketing specifically targeted to selling a Wait List Service Subscription for such domain name. For purposes of this Agreement, Active Marketing means the distribution, dissemination, posting and/or circulation by Registrar, or its agent(s), of advertising or promotional material that (i) references the domain name subject to the Black Out Period and claims to offer a superior Wait List Service, or purports to have an advantage in securing a Wait List Service Subscription for an end-user; or (ii) includes the date that Registrar will delete the domain name subject to the Black Out Period. For the avoidance of doubt, the Parties agree that Active Marketing shall NOT include computer-generated responses resulting from an end-user accessing Registrar's Web site independent of Registrar's targeted Wait List Service specific advertising and promotional efforts.
*Terms in bold would be defined in the .com and .net registry agreement.
 http://www.icann.org/minutes/report-vgrs-wls-22aug 02.htm
 http://www.icann.org/committees/reconsideration/rc 02-6.htm
 http://www.icann.org/minutes/prelim-report-02jun03 .htm
 It should be noted that the delete date of a domain name is not uniformly predictable. In fact, knowledge of the deletion date is not absolutely ascertainable even for the registrar-of-record. The deletion date is dictated primarily by the intent of the existing registrant to either renew or not renew the domain name in question. The registrant can make that intent known at any point in time without prior knowledge of the registrar-of-record. This fact undermines the premise that a sponsoring registrar's knowledge of the delete date provides an advantage that requires imposition of a blackout period. Moreover, the validity of a claim concerning knowledge of the deletion date in any registrar's marketing material designed to obtain a customer preference might itself be called into question.
 Sending the delete command to the registry at an arbitrary point in time in order to fulfill a WLS order presents a risk to the sponsoring registrar vis-à-vis its existing customer who holds the registration in question. The registrar-of-record could send renewal reminders to the customer and, based on a lack of response, could tentatively conclude that the registrant does not intend to renew the domain name[s] in question. That conclusion, however, would be tentative at best given the fact that the auto-renew grace period (AGP) and the redemption grace period (RGP) provide all registrants an opportunity to renew their respective domain name registrations well after the expiration date has passed and well after the delete command is submitted.
 http://www.icann.org/minutes/prelim-report-02jun03 .htm