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 VeriSign and the "myth" of "presumptive renewal"
posted by tbyfield on Friday October 28 2005, @07:49AM
GeorgeK writes "ICANN has argued that VeriSign had them over a barrel because VeriSign has a "presumptive right of renewal to VeriSign for the .COM Registry." This appears to be be a gross exaggeration by ICANN.
Under the existing terms of the .com registry agreement of 2001, the contract would end on November 10, 2007, however paragraph 25.A gives them a ONE-TIME renewal mechanism to extend the term of the Agreement for "an additional term of four years." This is consistent with the analysis by the US Government here.
Thus, it appears that VeriSign has no business certainty past November 10, 2011, under the EXISTING contract. ICANN could then tender the .com registry to the lowest bidder, at substantial savings to consumers, promoting competition which is part of its core mandate.
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However, under ICANN's proposed settlement with VeriSign, the new 2005 .com registry agreement, Article IV would extend the term of the agreement to November 30, 2012, and BEYOND THAT due to the language "as extended by any renewal terms". Note that the word "terms" is in plural, not singular.
If one then reads Section 4.2 of the proposed contract, renewal BECOMES presumptive on a PERPETUAL BASIS, due to the recursive nature of the renewal section. Unless VeriSign does very bad things, ICANN would be unable to re-tender the .com registry under the new contract, EVER.
Thus, it is article IV of the NEW contract that gives VeriSign "presumptive renewal" on a perpetual basis. It's a myth that VeriSign has ICANN over a barrel, because the existing contract had a definite end-date, which was November 10, 2011. Consenting to this new agreement would definitely place ICANN under a worse regime, a perpetual one, than it currently faces.
I hope this demonstrates that the proposed deal is a horrendous one for the internet community. It lacks a true termination date! That's a basic part of negotiating, which ICANN's geniuses must have missed in law school. It would lock in 7% price increases (since those could be renewed also) in perpetuity, instead of allowing ICANN to tender the operation of .com beginning November 11, 2011.
Thus, the best course of action would be to send ICANN's staff back to the negotiating table. Bring in real negotiators, instead of whoever got outfoxed by VeriSign.
By the way, after my initial comments were posted to the ICANN website, I noticed a visit from the guys at Jones Day (jd-32-22.jdrp.com) to my website (along with the multiple regular visits from VeriSign's hot secretaries, I imagine). Since the folks at Jones Day are presumably representing ICANN, and are reading comments and ICANNWatch, I'd love to ask them how many contracts they recommend to clients that have perpetual renewal built-in at the option and benefit of the OPPOSING party of the contract. If the answer is greater than zero, I'd love to be negotiating against you in some future business deal -- your client would be taken to the cleaners, as it appears ICANN would be on this deal had it not been subject to community scrutiny."
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VeriSign and the "myth" of "presumptive renewal"
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It looks like the title of the article got cut-off -- it should be "VeriSign and the "myth" of "presumptive renewal".
Normally one would have expected certain parts of the contract to be "boilerplate". The timebomb in Section 4.2 might have not been noticed by people initially for that reason, as one wouldn't expect it to have been so abominable.
The first sentence of section 4.2, that "This Agreement shall be renewed upon the expiration of the term set forth in Section 4.1 above and each later term, unless the following has occurred" is a RECURSIVE one, due to the words "and each later term", thus turning a seemingly innocuous section into a perpetual monopoly for VeriSign.
And just to make sure VeriSign's grip on .com is tightened, later in Section 4.2 it says that the terms of the renewed contract should generally be the same as other gTLDs, EXCEPT in the areas of "the price of Registry Services; the standards for the consideration of proposed Registry Services, including the definitions of Security and Stability and the standards applied by ICANN in the consideration process; the terms or conditions for the renewal or termination of this Agreement; ICANN’s obligations to Registry Operator under Section 3.2 (a), (b), and (c); the limitations on Consensus Policies or Temporary Specifications or Policies; the definition of Registry Services; or the terms of Section 7.3".
So, read that again -- future hands are tied as to price (no public tender to benefit consumers, in other words). The RENEWAL CONDITIONS can't be negotiated -- they're set in stone, to give VeriSign the perpetual monopoly. The definition of "Registry services" is set in stone too. And so on.
It's antithetical to the mission of promoting competition to be locked in to a single supplier for .com, forever. No contract should ever be signed that would allow an external supplier perpetual renewal rights.
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[ Reply to This | Parent
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I believe that you misread the year 2001 agreement - it is perpetual and was known to be when adopted.
That section 25 you cite causes the "expiration date" to be reset so that the whole cycle begins anew on each iteration. You need to read the whole section 25, including that last part about re-incoporating section 25 into subsequent agreements. And also look at the definition of "expiration date".
When the board adopted that contract (I voted against it) I remember that the board's belief was that it is perpetual - I noted this fact in my
April 2 entry to the "decision diary" [cavebear.com] that I maintained and published when I was on the board -
The real winner in all of this process is ICANN's money-consuming law firm and, presumably, the senior partner at that firm (who thus usually gets a cut at the firm's revenues from ICANN), the person who created ICANN and who also privately created the 2001 contract with verisign.
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