Report, GNSO Committee Meeting, Brussels May 11-13

[Milton Mueller]

Thanks, Mawaki, for your rapid and thorough reporting. Can I ask, what is the status of the "World Bank" comments/report? Was the World Bank there, or was the report just introduced into the record by one of the constituencies or ICANN staff? If the former, which constituency?

>>> Mawaki Chango <ki_chango at YAHOO.COM> 5/13/2006 8:29:01 AM >>>
Dear all,

We had mainly three activities during the Brussels meeting:
I) tutorial on the ICANN registry contracts and agreements by Dan Holloran, ICANN
Deputy General Councel;
II) review of the constituencies' comments on the registry contractual conditions;
III) development of guidelines for the registry terms of reference.

Enjoy the reading,

Mawaki 

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II - Constituency views


Business constituency

-	transparency plus public comment processes for contractual negotiations
-	consistency amongst contracts

-	fair treatment amongst registries, equal obligations, and proportional to the
ICANN resource requirements for that particular TLD

-	not allowed to extend their sole source provider position into areas where there
is already a competitive marketplace (e.g traffic data)

-	don't support a presumptive right of renewal (except may be special considerations
e.g for sponsored), but agree that the existing licensee may be re-awarded the TLD
through a competitive process

Registries constituency

-	the base contract should be provided before the start of the process, and may be
customized at the time of award.
-	Policies to guide contractual criteria should not compromise
o	"Private sector" (ie non-Government entities) participation
o	Investment with greater certainty
o	Optimal opportunity for innovation and competition
o	E.g presumptive right of renewal encourages the above
-	Policies to guide contractual criteria should relate to Consensus Policy matters
-	(1) issues for which uniform or coordinated resolution is reasonably necessary to
facilitate interoperability, Security and/or Stability of the Internet or DNS; 

-	(2) functional and performance specifications for the provision of Registry
Services (as defined in Section 3.1(d)(iii) below); 

-	(3) Security and Stability of the registry database for the TLD; 

-	(4) registry policies reasonably necessary to implement Consensus Policies
relating to registry operations or registrars; 

-	or (5) resolution of disputes regarding the registration of domain names (as
opposed to the use of such domain names). 

-	Believe the new consensus policy for the introduction of new Registry Services
provides the necessary protections for security and stability

-	Does not believe there needs to be a Consensus Policy on contractual compliance
programs for registry services, although the staff could work with registries to
develop a compliance program that is equally applied to new gTLDs (both sponsored
and unsponsored)


ISP constituency

-	contract for .jobs OK for new sponsored TLDs
-	still undecided over presumptive right of renewal * might depend on type of TLD
-	concerned over requirement to use ICANN accredited registrars exclusively
-	may need additional contractual conditions for a non-ASCII TLD
-	security and stability covered adequately in the .jobs example


Non-commercial

-	need to have a renewal expectancy
-	non-renewal only if breach of contract, criminal activity etc
-	presumptive renewal provides long term view, encourages investment, and value
creation, stability
-	support principle of competition but at the registrar level
-	registry should policy making authority
-	registry comply with ICANN consensus policies
-	ICANN should rely on relevant national bodies that are responsible for
competition/anti-trust in the market * taking into account the difference between
the end-user interest and the intermediary interest
-	Not assume ICANN contract are the proper mechanism for price control
-	ICANN registry fees should be a uniform approach * taking into account differences
in regional, economic and business models
-	Removing price caps on existing TLDs may allow new TLDs to be more competitive
-	Oppose access by third parties to personally identifiable registry data
-	Should not dictate the investment level but focus on the performance specification

WORLD BANK
Abstract 

A major challenge facing regulators in developed and developing countries alike is
the need to strike the right balance between ensuring certainty for market players
and preserving flexibility of the regulatory process to accommodate the rapidly
changing market, technological and policy conditions. 

As much as possible, policy makers and regulators should strive to promote
investors' confidence and give incentives for long-term investment. 

They can do this by favoring the principle of 'renewal expectancy', but also by
promoting regulatory certainty and predictability through a fair, transparent and
participatory renewal process.

For example, by providing details for license renewal or reissue, clearly
establishing what is the discretion offered to the licensing body, or ensuring
sufficient lead-times and transitional arrangements in the event of non-renewal 
or changes in licensing conditions. 

Public consultation procedures and guaranteeing the right to appeal regulatory
decisions maximizes the prospects for a successful renewal process. 

As technological changes and convergence and technologically neutral 
approaches gain importance, regulators and policy makers need to be ready to adapt
and evolve licensing procedures and practices to the new environment. 

Ensure regulatory certainty and ease investors' concerns 

* Codify a clear regime of license renewal in the telecommunication legislation,
including renewal procedures, reasons for refusal to renew and appeals to regulatory
decisions 
* Provide further details in the license itself where the legislative framework is
not comprehensive 
* Adopt some varying degree of the principle of renewal expectancy 
* Strike the right balance between certainty in the renewal process and regulatory
flexibility, and engage in forward thinking and planning 
* Subject regulatory discretion to clear parameters of license renewal with
appropriate checks and balances 

Procedures for license renewal 
* Initiate renewal process well in advance of expiry 
* Perform periodic forward review of market and needs 
* Disclose and publish reasons for non renewal 
* Adopt public consultation process 
* Guarantee a right to appeal 

In the event of non-renewal 
* Provide a minimum notice period 
* Delay vacancy of spectrum to give enough time for operators to adapt strategies 
* Ensure exit strategies for operators 
* Ensure continuity of service to consumers 

License renewal fees

 * Beware that heavy license fee burdens reduce possibilities of making further
investment 
* Establish models for licensing and spectrum pricing, ensure openness, transparency
and the right to appeal from the methods applied 

Change in license conditions and obligations 

* Renewal process is a good occasion to review license conditions (e.g. those
related to the moving target of universal service.) 
* Ineffective mandatory service obligations can have anti-competitive impacts if the
burden is not kept at a manageable level for the license holders 

Spectrum implications of license renewal 

* Strike a balance between protecting ongoing investment and optimal exploitation of
the spectrum resources 
* Leveling the playing field at license renewal between operators entering the
market under different regimes (e.g., auction vs. beauty contest) to avoid windfall
gains 

Migration to technology neutral licensing

* Continuity of the service for the consumers as a leading principle for transition 
* Leveling the playing field at license renewal between operators entering the
market having followed different technology migrating paths to avoid windfall gains


Intellectual Property Constituency

-	framework needed for compliance program and system of graduated sanctions be
available
-	any deviation from consensus policies should be explicitly stated and justified in
the agreement
-	flexibility will often be needed
-	conditional (e.g based on appropriate performance) and rebuttable (violation of
terms of the registry agreement) presumption of renewal

-	not in favour of price caps * any exceptions would need to be justified

-	prevent discrimination amongst registrars

-	ensure transparency and access to information about pricing treatments amongst
registrars

-	Access to registry information

o	Require a mechanism to identify what data should be available to third parties and
under what conditions (e.g non-discriminatory, tiered access etc), and what data
should not be available. 

o	Use of registry data to create or support new registry services by the registry
should subject to consensus policy, and any deviations should be specifically
specified and justified

-	Commitments should be included to ensure the availability of a robust database of
the contact details of registrants


Registrars constituency

-	registry renewal
o	initial term of commercially reasonable length case-by-case
o	oppose "presumptive" (e.g or virtually "automatic" renewals
o	support limited "renewal expectancy" (e.g 5.2.1 in .info or RAA 5.4)
proposed .com  (contract terms similar to top five, and some terms can't be changed)
.tel  (contract terms must be similar to top 5)
.job  (allows negotiation of contract terms)
.info  (provides discretion to ICANN)
o	should justify renewal by meeting qualifications and standards
o	ICANN reserves its rights to seek a bid at its discretion

Consensus policies
-	support some limitations with respect to the new or changed policies that the
registry must comply with during the term of the agreement, otherwise must comply
with consensus policies

Complete delegation of some policy development responsibilities to the registry
operator is inappropriate (e.g clause 4.3.6 of the .aero agreement), apart from work
on the charter.   The registry operator should be required to comply with Consensus
Policies (e.g in 3.1 (b) (iv)).

Should not be price controls unless the registry has Market or Pricing power (Market
Power and Pricing power to be defined) * which may be decided at the time of
renewal. 

http://ec.europa.eu/comm/competition/general_info/m_en.html 

[Market Power definition from Strength of a firm on a particular market.   In basic
economic terms, market power is the ability of firms to price above  marginal cost
and for this to be profitable. 

In  competition analysis, market power is determined with the help of a structural
analysis of the market, notably the calculation of  market shares, which
necessitates an examination of the availability of other producers of the same or of
substitutable products (substitutability). 

An assessment of market power also needs to include an assessment of barriers to
entry or growth ( entry barriers) and of the rate of innovation. 

Furthermore, it may involve qualitative criteria, such as the financial resources,
the vertical integration or the product range of the  undertaking concerned.]

- Equitable pricing opportunities for all registrars, and 6 month notice before any
increase.

-	Registry must justify any increase if there is a price cap in the agreements,
which should be objectively evaluated by a third party.

ICANN fees: 
-	ICANN should not be able to collect the registrar proportion of the ICANN budget
via a pass-through via the registries (e.g 7.2 (d) of the .jobs agreement), or from
registries

Use of Personal Data: limit it to the purpose for which it is collected, and to the
extent it is made available to third parties * should be on a non-discriminatory
basis.

[from .jobs escrow provisions.  

Registry Data, as used in this Agreement, shall mean the following: 

(1) data for domains sponsored by all registrars, consisting of domain name, server
name for each nameserver, registrar id, updated date, creation date, expiration
date, status information, and DNSSEC-related key material; 

(2) data for nameservers sponsored by all registrars consisting of server name, each
IP address, registrar id, updated date, creation date, expiration date, and status
information; 

(3) data for registrars sponsoring registered domains and nameservers, consisting of
registrar id, registrar address, registrar telephone number, registrar e-mail
address, whois server, referral URL, updated date and the name, telephone number,
and e-mail address of all the registrar's administrative, billing, and technical
contacts; 

(4) domain name registrant data collected by the Registry Operator from registrars
as part of or following registration of a domain name; 

and (5) the DNSSEC-related material necessary to sign the TLD zone (e.g., public and
private portions of TLD zone key-signing keys and zone-signing keys).]

Investment in development and infrastructure: should not be a policy in this area *
should consider such investments in deciding whether registry should be renewed (e.g
whether registry is meeting performance standards)

ICANN needs contractual tools to deal with a bad actor  (e.g ICANN can terminate
registrar agreement for any material breach * clause 5.2 of registrar agreement is
OK, but clause 6.1 of .jobs doesn't give ICANN enough power * particularly for a
party without a track record) * taken from the registrar input to PDP-Dec05.


III - Guidelines for the registry terms of reference 

There should be a base contract to provide some level of consistency.   The contract
may be customized, with changes to the base contract subject to public comments
before approval.

The contract should strike the right balance between ensuring certainty for market
players and preserving flexibility of ICANN to accommodate the rapidly changing
market, technological and policy conditions.

The initial term of commercially reasonable length (e.g default 10 years), although
may be changed on a case-by-case basis.

[Note: could use a similar approach to domain name registration with different fee
structure depending on the length of the contract)

There should be a renewal expectancy. A contract would be renewed provided that the
registry operator is meeting the terms of the present contract, and provided the
license holder agrees to the any new base contract conditions. 

The contract should provide certainty and predictability through a fair, transparent
and participatory renewal process.

The contract should clearly establish what is the discretion offered to ICANN, and
ensuring sufficient lead-times and transitional arrangements in the event of
non-renewal or changes in the base contract. 

During the term of the agreement, the registry must comply with new or changed
consensus policies in one of the following areas:
-	(1) issues for which uniform or coordinated resolution is reasonably necessary to
facilitate interoperability, Security and/or Stability of the Internet or DNS; 

-	(2) functional and performance specifications for the provision of Registry
Services (as defined in Section 3.1(d)(iii) below); 

-	(3) Security and Stability of the registry database for the TLD; 

-	(4) registry policies reasonably necessary to implement Consensus Policies
relating to registry operations or registrars; 

-	or (5) resolution of disputes regarding the registration of domain names (as
opposed to the use of such domain names). 

Any deviation from consensus policies should be explicitly stated and justified in
the agreement

Where a registry provides IDNs, the contract should require that the registry adhere
to IDN standards, and ICANN guidelines for IDNs.

Initially rely on external competition/anti-trust Government authorities to ensure
compliance with laws relating to market power or pricing power.   This can be
reviewed after initial term.

ICANN registry fees should be a uniform approach * taking into account differences
in regional, economic and business models

ICANN should not be able to collect the registrar proportion of the ICANN budget via
a pass-through via the registries (e.g 7.2 (d) of the .jobs agreement), or from
registries

Use of Personal Data: limit it to the purpose for which it is collected, and to the
extent it is made available to third parties * should be on a non-discriminatory
basis.

ICANN needs contractual tools to deal with a registry that consistently breaches
material contract provisions.

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