.NET Registry Agreement Renewal

Why is the Board addressing the issue now?

ICANN and Verisign entered into a Registry Agreement on 01 January 1985 for operation of the .NET top-level domain. The current .NET Registry Agreement expires on 30 June 2017. The proposed Renewal Registry Agreement was posted for public comment between 20 April 2017 and 30 May 2017. At this time, the Board is approving the proposed .NET Renewal Registry Agreement for the continued operation of the .NET TLD by Verisign.

What is the proposal being considered?

The proposed .NET Renewal Registry Agreement, approved by the Board, is based on the current .NET Registry Agreement with modifications agreed upon by ICANN and Verisign, and includes certain provisions incorporated into legacy gTLD Registry Agreements (such as from the .ORG Registry Agreement, dated 22 August 2013), as well as certain provisions from the base New gTLD Registry Agreement.

Which stakeholders or others were consulted?

ICANN organization conducted a public comment period on the proposed .NET Renewal Registry Agreement package of terms from 20 April 2017 through 30 May 2017. Subsequently, ICANN summarized, analyzed and published a report of public comments. Additionally, ICANN engaged in bilateral negotiations with the Registry Operator to agree to the package of terms to be included in the proposed .NET Renewal Registry Agreement that was posted for public comment.

What concerns or issues were raised by the community?

The public comment forum on the proposed .NET Renewal Registry Agreement closed on 30 May 2017, with ICANN organization receiving twenty-three (23) comments. The comments were comprised of commentary from twenty-three (23) independent organizations summarized in the five main categories listed below.

Registry Pricing (Section 7.3) – While Section 7.3 of the Registry Agreement did not change, many comments focused on the permitted annual 10% increase in registration fees available through the term of the .NET Registry Agreement. Most oppose the available increase in fees while one commenter stated that ICANN is not in the position to be a "price regulator" and didn't object the price increases as long the annual 10% price cap remains intact and does not apply to the .COM Registry Agreement coming up for renewal in 2018.
Registry Fees to ICANN (Section 7.2) – Comments centered on the $0.75 fee Verisign pays to ICANN per .NET domain registration and why it is different from the $0.25 for other top-level domains. Concerns centered on the unfairness of having the burden of the extra cost being passed on to registrants and the value of the extra fees and how ICANN uses those fees. Requests were made to provide more insight and accountability as to how the funds are distributed to support ICANN's ongoing mission to enhance the security and stability of the DNS and Internet and to improve participation in the Internet community.
Registry Agreement – The community voiced concerns that the .NET Registry Agreement has a presumptive renewal clause and believe the agreement should be open for competitive bid. Commenters consider the presumptive renewal to be non-competitive for one registry operator to manage the two highest volume TLDs. As noted in the summary and analysis of the comments, the renewal provisions in the current .NET Registry Agreement are generally consistent with all other gTLD Registry Agreements. These renewal provisions encourage long-term investment in robust TLD operations, and this has benefitted the community in the form of reliable operation of the registry infrastructure. ICANN does not have the right under the current .NET Registry Agreement to unilaterally refuse to renew the agreement or to bifurcate registry functions.
Exclusion of Rights Protection Management – The community was split with regard to the exclusion of the new gTLD rights protection mechanisms and safeguards in legacy gTLDs: Some commenters expressed support for the exclusion of certain rights protection mechanisms, such as Uniform Rapid Suspension and Trademark Post-Delegation Dispute Resolution Procedure, and the exclusion of the Public Interest Commitments (i.e., safeguards) contained in the New gTLD Registry Agreement stating that these are not consensus policies and registries should wait until a final decision is made via the Generic Names Supporting Organization (GNSO) Policy Development Process (PDP) . Others expressed concern over the exclusion of New gTLD rights protection mechanisms arguing that the provisions should not be borne only by new gTLD Registry Operators.
Negotiation Process – Commenters noted that while the new .NET Registry Agreement incorporates important technical and operational advantages from the new gTLD Registry Agreement it does not go far enough and should adopt the new gTLD Registry Agreement. Commenters suggested that if .NET does not transition to the new gTLD Registry Agreement more should be done to harmonize the provisions for consistency among Registry Agreements. Further, commenters noted a lack of transparency in the negotiation process between ICANN and Verisign and requested more exposure to the negotiation process before a Registry Agreement is finalized.
What significant materials did the Board review?

As part of its deliberations, the Board reviewed various materials, including, but not limited to, the following materials and documents:

Proposed .NET Renewal Registry Agreement [PDF, 918 KB]
Redline showing changes compared to the current .NET Registry Agreement [PDF, 723 KB]
Redline of the new Appendices 1, 2, 3, and 5 compared to their applicable Specifications in the base New gTLD Registry Agreement [PDF, 332 KB]
Summary of changes [PDF, 156 KB]
Summary and analysis of public comments [PDF, 475 KB]
What factors has the Board found to be significant?

The Board carefully considered the public comments received for the .NET Renewal Registry Agreement, along with the summary and analysis of those comments. The Board also considered the terms agreed upon by the Registry Operator as part of the bilateral negotiations with ICANN organization. While the Board acknowledges the concerns expressed by some community members regarding the 10% annual increase, the Board recognizes that the Registry Operator is allowed to determine the charge for .NET domain registrations within the price cap provisions of the .NET Registry Agreement. Further, the Board understands that the current price cap provisions in Verisign's Registry Agreements, including in the .NET Registry Agreement, evolved historically to address various market factors in cooperation with constituencies beyond ICANN including the Department of Commerce. During the negotiations for the renewal, Verisign did not request to alter the pricing cap provisions, the parties did not negotiate these provisions and the provisions remain unchanged from the previous agreement.8 The historical 10% price cap was arguably included to allow the Registry Operator to increase prices to account for inflation and increased costs/investments and to take into account other market forces but were not dictated solely by ICANN.

The Board also acknowledges concerns expressed by community members regarding the continuation of the $0.75 registration fee paid to ICANN, which is higher than the $0.25 paid by other TLDs, and supports the utilization of those funds to support the security and stability of the DNS and the Internet. Further, the Board encourages more activities to expand the Internet community by which the funds support ICANN projects such as the Fellowship Program and supports more efforts for ICANN to be transparent in the use of those funds for the intended activities.

While the Board acknowledges the concerns expressed by some community members regarding the exclusion of the Uniform Rapid Suspension, Post-Delegation Dispute Resolution Procedure, and Public Interest Commitments in the .NET Renewal Registry Agreement, the Board notes that the inclusion of the these provisions is based on the bilateral negotiations between ICANN organization and the Registry Operator. The Uniform Rapid Suspension, Post-Delegation Dispute Resolution Procedure, and Public Interest Commitments have not been adopted as Consensus Policy. As such, ICANN organization has no ability to make these provisions mandatory for any TLDs other than new gTLD applicants who applied during the 2012 New gTLD round. However, a legacy registry operator may agree to adopt these provisions during bilateral negotiations, including as a result of moving to the New gTLD Registry Agreement. Accordingly, the Board's approval of the proposed .NET Renewal Registry Agreement does not decree the exclusion of Uniform Rapid Suspension, Post-Delegation Dispute Resolution Procedure, or Public Interest Commitments as mandatory requirements for legacy TLDs. These provisions, or lack thereof, are only adopted on a case-by-case basis as a result of bilateral negotiations.

The Board acknowledges comments questioning whether the negotiation process for renewing and amending legacy registry agreements is transparent enough and how the .NET Renewal Registry Agreement was arrived at. All registry operators have the ability to negotiate the terms of their Registry Agreement with ICANN organization, which inherently means discussions between the two contracted parties – ICANN and the applicable Registry Operator. This was the case with Verisign and the .NET Renewal Registry Agreement. The Board notes the process is straightforward and involves discussions between the two parties until agreement is reached. Once agreement is reached, ICANN organization invites community feedback through the public comment process to ensure transparency and to collect valuable input. The Board also notes that the .NET Renewal Registry Agreement contains new provisions that require the parties to commence renewal discussions at least six months prior to the expiration of the .NET Renewal Registry Agreement, which should provide the ICANN community awareness off the timing of the renewal thereof.

The Board notes that current .NET Registry Agreement calls for presumptive renewal of the agreement at its expiration so long as certain requirements are met. The .NET Renewal Registry Agreement is subject to the negotiation of renewal terms reasonably acceptable to ICANN and the Registry Operator. The renewal terms approved by the Board are the result of the bilateral negotiations called for in the current .NET Registry Agreement, and remaining on the existing form while updating provisions to be more in line with the New gTLD Registry Agreement would not violate established GNSO policy. The provisions adopted from the new form of the New gTLD Registry Agreement offers positive technical and operational advantages, in addition to benefits to registrants and the Internet community the adoption of the escrow format for data escrow deposits and BRDA (Bulk Registration Data Access) files, adoption of the API Specification for data escrow reporting, and Registration Data Directory Services (e.g. Whois) Specifications.

Are there positive or negative community impacts?

The Board's approval of the .NET Renewal Registry Agreement offers positive technical and operational benefits. The adoption of certain provisions from the New gTLD Registry Agreement will provide consistency across all registries leading to a more predictable environment for end-users. For example, the fact the .NET Renewal Registry Agreement mandates the use of accredited registrars that are subject to the Registrar Accreditation Agreement provides numerous benefits to registrars and registrants.

Are there fiscal impacts or ramifications on ICANN organization (e.g. strategic plan, operating plan, budget), the community, and/or the public?

There is no significant fiscal impact expected from the .NET Renewal Registry Agreement.

Are there any security, stability or resiliency issues relating to the DNS?

The .NET Renewal Registry Agreement is not expected to create any security, stability, or resiliency issues related to the DNS. The .NET Renewal Registry Agreement includes terms intended to allow for swifter action in the event of certain threats to the security or stability of the DNS, as well as other technical benefits expected to provide consistency across all registries leading to a more predictable environment for end-users.