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Report and Analysis of Public Comments Submitted to ICANN on the .COM Pricing Provisions (Part I)

Co-authored by Zak Muscovitch and Nat Cohen. Click here to read Part II of this post.

Overview of the Public Comments

ICANN's call for Public Comment on Proposed Amendment 3 to the .com Registry Agreement yielded 9,040 public comments during the six-week comment period that ran from January 3, 2020 to February 14, 2020.1 The public response was amongst the most robust if not the most robust, that ICANN has ever received.2 To put this in context, the last several Public Comment periods received under 20 comments apiece.3 This Public Comment produced nearly three times the number of comments received during the recent comment period regarding the .org registry agreement (3,332), which was itself nearly unprecedented.

The record volume of diverse comments demonstrates the substantial public interest in the proposed changes to the .com agreement and to .com's stature, as by far the dominant global TLD with over 140 million registrations. It also reflects the enormity of the proposed price increases which cumulatively amount to nearly $1 billion4 over the next four years followed by a perpetual cycle of further compounding price increases.

The ICANN Board's decision to approve or disapprove of the Proposed Amendment to the .com Registry Agreement is therefore one of the most significant decisions before the Board both because of the millions of registrants that will be affected by the decision and also because the Board will be called upon to justify how imposing price increases on registrants is in the public interest.

Background

The ICANN Board relies upon Staff reports summarizing and analyzing public comments to accurately inform the Board of the views of the public on the issues before the Board. The ICA conducted its own review and analysis of the public comments submitted regarding the pricing provisions of the proposed Amendment 3 to the .com Registry Agreement because, in the ICA's view, ICANN Staff regrettably failed to provide the ICANN Board with an accurate analysis and summary of the public comments which were recently submitted in connection with the proposed renewal of the .org Registry Agreement.5

ICANN Staff prepared a "Staff Report of Public Comment Proceeding"6 after the Public Comment period generated over 3,300 comments. 98.1% of those comments opposed the renewal terms,7 in particular the elimination of price caps on .org. The section of the Staff Report devoted to an "Analysis of Comments" on "The Removal of the Price Cap Provision" contains no mention of these views. Instead Staff used that section to restate its own original rationale in favor of eliminating the price caps.8

The Staff Report's "Analysis of Comments" section suppressed the voice of the public. It failed to convey the breadth and depth of public opposition. It failed to analyze the numerous substantive arguments made by the public in opposition to the removal of price caps. Staff, in an implicit rebuttal of the views of the public, inappropriately substituted its own position in support of eliminating the price caps in place of the public's strong opposition to that position. Staff's acknowledgement of the public's views was limited to its statement that "ICANN org will consider the feedback from the community on this issue."

This cursory dismissal of over 3,300 public comments, without a genuine effort to analyze the arguments made, renders the entire Public Comment exercise, and the efforts of thousands of people to engage with ICANN, nothing more than a charade.9 ICANN Staff was not to be dissuaded from proceeding with the decision that ICANN Staff had already made, regardless of the views of the public, nor did Staff fulfill its responsibility to provide an analysis of the public comments to the ICANN Board. This fundamentally self-serving approach to analyzing the public comments provided misleading guidance to the ICANN Board on a serious policy issue and undermined the Board's oversight function.

The ICANN Board's reliance on an unsatisfactory Staff report of the .org comments likely contributed to the ICANN Board's failure to appreciate the vehement opposition by the public to the proposed terms negotiated by Staff and led the Board to believe that it was appropriate for the Board to defer to Staff10 on the consequential decision as to whether to approve the controversial terms that Staff negotiated for the renewal of the .org agreement.

As a result, ICANN "elected to plow ahead with [its] chosen course of action"11 to remove price caps on the .org registry, in seeming disregard of the public's feedback as demonstrated by over 3,300 public comments against the new terms, and despite ICANN's Bylaws requiring it to be "responsive" to public comments.12

ICANN's decision regarding .org was made by ICANN Staff and not the ICANN Board as one would have expected for such a substantial and high-profile issue,13 particularly where the public was so overwhelmingly opposed. The Board's dereliction of its duty to safeguard the public interest arguably led in part to the current .org crisis: the uproar over Ethos Capital's announced intention to acquire the .org registry.14 Although Ethos Capital has denied that ICANN's decision to remove price caps on .org factored into its decision,15 it is undeniable that had ICANN not removed price caps the acquisition would have been less attractive financially to Ethos Capital and may have even discouraged it from happening in the first place. Moreover, Ethos Capital would not be in the position it is today of intending to unilaterally raise prices by 10% per year on average for eight years and by as much as it would like thereafter.16

ICANN's failure to heed the public interest as expressed by the public so clearly through the Public Comment forced members of the public to develop separate channels for making their voice heard outside of the Public Comment framework, resulting in over 34,000 individuals and over 800 organizations voicing their strong opposition.17 This in turn led to ICANN coming under scrutiny by the California Attorney General,18 members of Congress,19 the French Ambassador for Digital Affairs,20 and the National Association of State Charity Officials,21 amongst others.

The clear lesson here is that an accurate assessment of public comments is crucial and that ICANN's ability to fulfill its mandate to act in the public interest is undermined when ICANN ignores the public. As Michael Karanicolas stated in his article, ignoring such substantial public opposition leads to the question of "whether any level of public opposition would have been sufficient to force [ICANN] to change [its] strategy".22 If ICANN ignores the public and the public interest, its legitimacy and stewardship of the domain name system come under severe scrutiny and criticism. ICANN cannot afford to let this happen again.

The .com Public Comment period has just been completed which involved, in part, a proposal to increase the .com registry's pricing by 7% in four out of six years of the current Registry Agreement.23 As with .org, the public outcry was enormous and nearly universally opposed to the price increase. Due to ICANN's failures with .org, many observers are now understandably skeptical of ICANN's willingness to be responsive to the public as required by its Bylaws. Nevertheless, ICANN has the opportunity to do right by the millions of .com registrants on whose behalf concerns were delivered to ICANN through the Public Comment process and to avoid making a similar policy error as with .org.

Some hope exists that ICANN will take a different approach than it did with .org. ICANN President Göran Marby acknowledged that "Public Comment is an important part of ICANN's processes and is fundamental to the multistakeholder model of Internet governance" and encourage[d] all stakeholders to get involved and submit their comments".24 This is in stark contrast to comments by the ICANN Ombudsman relating to the .org decision, in which he dismissed many public comments as being "akin to spam."25 Those comments, to the contrary, were genuine expressions of the views of thousands of individuals who on their own initiative chose to participate in the Public Comment period.26

It is not enough for ICANN to go through the motions of receiving Public Comment while setting aside the substance of those comments. It ill-serves the ICANN Board, the legitimacy of ICANN as an institution, and the public for whose benefit ICANN ostensibly exists. For Public Comment to be meaningful, ICANN must have an accurate understanding of the nature of the public comments and be respectful of and responsive to them. It is equally crucial that the ICANN Board this time be directly involved and not rubber-stamp a decision by ICANN Staff which goes against the public interest and which is overwhelmingly opposed by the public.

Summarizing the Public's Sentiment

A combination of manual review and use of a tool developed to search through the public comments yielded the following results. First and foremost, nearly all public comments were against the Proposed Amendment. Only seven (7) commentators27 submitted comments which were identified as being clearly in favor of the Proposed Amendment out of a total of 9,040, as represented by the below chart wherein those public comments in favor of a price increase are so miniscule as to be imperceptible.

The vast majority of public comments came from members of the public who identified themselves as .com domain name registrants. Several registrars such as Namecheap,28 NameBright,29 Dynadot30 and GoDaddy31 contacted their customers towards the end of the Public Comment to inform them of the Public Comment opportunity and to invite them to submit comments to ICANN.32 The vast majority of all comments were submitted during the last few days of the Public Comment period, shortly after this outreach by the registrars, apparently by customers of one of the aforementioned registrars. Indeed, many commentators note in their comment that they were submitting a comment after being alerted to the issue by their respective registrar.33

The Internet Commerce Association created a web page to make it more user friendly for the public to submit a public comment34 and NameBright in particular directed its customers to this page. The web page encouraged users to identify themselves by their interest and enabled users to submit a comment either "for" or "against" the Proposal, as they wished. Indeed, all the comments, aside from Verisign's own comment, which were identified as supporting the price increase, were submitted using ICA's web page.

Approximately 1,474 public comments out of the 9,040 total were identified as being submitted through the ICA web page (about 1 in 6 or 16.3%).35

The ICA had previously created a similar web page to facilitate public engagement with the Public Comment period for the .org registry agreement renewal. Some ICANN community members dismissed all public comments submitted on the .org agreement as being the handiwork of domain investors.36 In order to clear up such misconceptions and to better enable ICANN staff to determine the interests of those who used the ICA-developed web page to submit a comment with regard to the .com agreement, the form encouraged users to self-identify according to their particular interest in the subject. The options were as follows:

A total of 51 commentators selected, "I use the Internet but I am not a .com registrant". A total of 810 indicated that they were a registrant of a .com domain name. Ten were associated with a registry. A total of 191 were domain investors and a further 31 were otherwise associated with the secondary market in domain names. The remainder of those using the ICA web page did not clearly self-identify their interest.


Though the ICA web page was promoted within the domain investor community and by NameBright - a registrar that caters to a large number of domain investors in addition to its other customers - only 15% of those who used the ICA web page indicated that they are a domain investor or otherwise have a connection with the domain aftermarket. The majority of all those using the form indicated that their interest is simply "as a .com registrant".

Arguments Made in Opposition

The public comments of the approximately 99.9% of members of the public who were against the Proposal made frequent note of the following themes in particular:

  1. Verisign's monopoly power;
  2. .com pricing is already higher than justified;
  3. The proposed price increases are higher than the rate of inflation;
  4. The terms are not in the public interest;
  5. The negative impact on entrepreneurs and small businesses;
  6. The negative impact on those in developing countries and those who are poor;
  7. Making an online presence less accessible;
  8. The appearance of corruption, often in relation to the $20 million payment;
  9. Secrecy or the lack of transparency;
  10. Greed of the parties involved; and
  11. Only Verisign wants a price increase;

Based on keyword and phrase analysis, the below chart illustrates the frequency of various arguments within the universe of near total opposition to the proposed price increases.37

Public Comments from ICANN Constituencies

Several ICANN Constituencies submitted public comments.

Intellectual Property Constituency:  38 The IPC "did not take a specific position on price increases" beyond stating that registries should not be permitted to set prices too high or too low.

Business Constituency:39 The BC "has no practical objection to price increases" however noted that "some BC members are concerned that Verisign has not provided justification for increasing .COM prices". The BC also stated that based on its previous positions and in consideration the receipt of $20 million in funding and the inclusion of Spec 11, that the BC supported the price increase limits set forth in Amendment 3 to the .COM agreement.

Registrar Stakeholder Group:40 The RrSG noted that .com has a 74% market share of all gTLD registrations and 40% of all domain name registrations including ccTLDS. It stated that before agreeing to remove any pricing restrictions for.COM, ICANN should conduct an economic study of whether competition can effectively constrain prices. It stated that performing such a study is consistent with ICANN's obligations under its Bylaws and is consistent with the September 2018 recommendations of the Competition, Consumer Choice, and Consumer Trust Review Team (CCT-RT). It stated that since the burden for an increase falls on the registrant, it is incumbent on ICANN to ensure that any decisions made are based on relevant data and that any price increases have been duly considered with the entire community's best interests in mind.

The RrSG stated that the proposed price increases are without sufficient justification or an analysis of its potentially substantial impact on the DNS. It stated that ICANN has not explained how increased domain name prices are in the public interest or how this furthers the security and stability of the DNS. It stated that the price increases appear to only to benefit one company, which has the right to operate .com in perpetuity (and without a competitive bidding process). It stated that this is inconsistent with ICANN's bottom-up multi-stakeholder model.

The RrSG stated that ICANN and Verisign agreed in 2016 to cap prices at $7.85 through 2024 and that ICANN has not provided any explanation or justification for why this arrangement must be changed now.

The RrSG stated that without sufficient transparency and community oversight, the $20 million payment to ICANN by Verisign "gives the payment a questionable appearance".

The RrSG stated that significant and substantial changes to a registry agreement that will have long term and far-reaching impact on the Internet should occur only after consultation with the ICANN community, and because ICANN did not undertake such consultation it is not clear that ICANN negotiated the Proposed Amendment with the interests of the community ahead of those of Verisign or ICANN org.

At-Large Advisory Committee:  41 The ALAC submitted a lighthearted Valentine's Day greeting to the ICANN Board and did not comment on price increases at all.

No comments were identified as being from NCUC, NPOC, Registries Stakeholder Group, or Internet Service Providers.

The below chart represents the public comments of the above-identified constituencies.42

Summary of Public Comments from Other Concerned Parties

Numerous notable concerned parties submitted public comments43. The only substantive comment identified as clearly supporting price increases came from Verisign itself, as indicated in the below chart.

The below chart identifies the commonalities between substantive comments submitted by interested parties on the issue of price increases.

Conclusions and Steps Forward

Based on this review of the public comments, there is no question that judging from both the number of comments and the arguments presented by stakeholders, severe concerns exist regarding the Proposed Amendment.

The overwhelming opposition to raising prices as proposed by ICANN Staff is clearly evident and if Public Comments are to be meaningful, they must have an impact on the direction that ICANN chooses to take. If the volume and substance of public comments has no effect on decision-making and cannot cause ICANN to reconsider its course, then it calls into question the legitimacy of the Public Comment process and causes concern as to whether ICANN is truly responsive to the public interest as it is required to be. It is hoped that the ICANN Board will give serious consideration to the submitted .com public comments in its deliberations and that it will discharge its duties faithfully in the public interest.

The authors wish to thank Michael Sumner for his work creating the online comment form and the tool for searching through the public comments.

Continue reading the Summaries of the comments submitted by the above-referenced interested parties in Part II of this article. These summaries highlight the many compelling arguments offered by commenters with deep expertise and insight into the issues at stake.

By Zak Muscovitch, General Counsel, Internet Commerce Association

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