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What Should the ICANN Board Do About the .org Registry Sale?

Sam Lanfranco

Two and a half months ago, shortly after the ICANN66 meetings in Montreal, the ICANN stakeholder community was jolted by the announcement that the Internet Society (ISOC) had entered into an agreement to sell the wholly owned PIR non-profit that holds the .org registry contract. The sale was to be for $1.13B USD to the hastily assembled venture capital company Ethos Capital. The sale was presented as a done deal awaiting approval by the ICANN Board. Last week, after ten weeks of relative silence, the ICANN Board announced that it is delaying its decision until mid-February. The core question is “What should the ICANN Board do About the .org Registry Sale?”.

This opinion piece explores in broad terms what the ICANN board should consider and what it might do consistent with its duties and obligations as the Board of ICANN.

Elements of the ICANN stakeholder community, the non-profit world, and digital and traditional media have quickly become engaged in expressing concerns about the processes that lead to the pending sale. There are worries about the future of the .org registry under such private ownership, and about the role of ICANN in insuring that the public interest integrity of the .org registry is protected.

The ensuing discussion has not questioned ISOC’s right to sell PIR, although there has been criticism of the lack of transparency around the sale process, including the fact that the PIR Advisory Committee was kept in the dark about sale intentions and the impending sale.

However, there has been little discussion of possible strategies going forward. Ethos Capital has issued limited information which basically says, “Trust us”. ISOC has defended the proposed sale in ways that leave questions on the table. The ICANN Board has said little but is clearly feeling the heat since it has delayed a Board decision from last week to mid-February.

What is not clear is whether the ICANN Board is seeking information or advice to insure that the nature of the sale, in terms of the legal structure of the company holding the .org registry contract and in the wording of the contract, preserves some understanding of the public interest integrity of the .org registry. This is where the ICANN board will have to stand up and be held accountable for its actions, or inactions.

One additional concern is that the proposed price may be excessive compared to current revenues. If this is true, it suggests that rate increases and other revenue generating business practices are “baked into” that sale price. One of the pressures on ICANN and ISOC is to re-run the sale process in a more open and transparent form. If that were to occur, and if ICANN placed public interest protection conditions on the legal structure of the buyer and in the wording of the registry contract, the sale price might fall, possibly as well it should. The proposed sale carries a price that will likely shackle the new .org registry owner with considerable new debt that will require servicing from additional revenues extracted from the .org domain name user community.

To sum this up, the ball is in the ICANN Board’s court. Whomever holds the contract, ICANN should have conditions on the legal nature of the company holding the contract and conditions in the .org registry contract that protect the public interest integrity of the .org registry.

The ICANN Board should start with a belated wider dialogue with the non-profit stakeholder community and remember that ICANN will be held responsible for the fate of the .org registry in the years to come.

By Sam Lanfranco, Prof Emeritus & Senior Scholar, York University
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