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ComputerWire: IT Industry Intelligence

The Internet Corp for Assigned Names and Numbers may block a controversial proposed service from VeriSign Inc that would allow the company and its partners to offer customers chances to register expiring domain names,

Kevin Murphy writes

But VeriSign and its allies say that ICANN would be overextending its mandate if it does try to block the service.

ICANN's influential Names Council yesterday voted 6-1 to advise ICANN's board of directors to reject VeriSign's proposal to implement a potentially lucrative "Waiting List Service". The board will meet some time before October to make a decision on whether to amend its contracts with VeriSign to allow the WLS.

"There has been a great deal of input on WLS," an ICANN spokesperson said. "The NC's report is of particular interest... however, there are many other inputs that have been/will be received."

While the board does not have to follow the NC recommendation, critics say it would be unwise to allow a service to go ahead which they say will give VeriSign a monopoly on the domain name secondary market at the expense of consumers and about 30 rival registrars that already have similar services.

"It would wipe us out and it would eliminate all consumer choice," Clint Page, president of domain registrar Dotster Inc told ComputerWire. Dotster operates a WLS-like service called NameWinner, which allows people to bid for the chance to register a domain whose registration is expiring and that would become obsolete if WLS went ahead.

Under WLS, registrars would be able to offer customers first refusal on expiring domains. For an annual fee, that in many cases would be larger than the cost of actually registering a domain, a customer would be able to take over an already-registered domain, if the existing registrant chose not to renew it.

"Customers have always wanted a way to get in line for a name when it is deleted," said a VeriSign spokesperson. She added that such a service, "implemented at the registry level, improves the quality of the service." The company is not believed to have factored WLS into its revenue growth estimates, though it would doubtless help prop up its otherwise flagging domain name business.

Registrars agree this "secondary market" is big business. Speculators and entrepreneurs value memorable .com domains that have type-in traffic potential. In the last couple of years since the dot-com bubble started to deflate, many of these registrations have been elapsing, as registrants realize their real estate is not as valuable as they thought.

VeriSign wants to bring this secondary market to the wholesale or registry level, as opposed to the retail or registrar level where it currently flourishes. WLS would mean that every registrar would pay the wholesale price of $35 to VeriSign ($24 after rebates), for every WLS subscription they take.

"With NameWinner, you only pay if you get the name. Under WLS, you're going to pay $24, plus registration, just for the chance to get that name," said Page. "We probably could make more money through WLS than with NameWinner, but it's not in the best interest of consumers."

The price is subject to much controversy. Dotster's Page calls WLS it a "cash grab scheme", and the Names Council, in a separate vote yesterday, recommended that if ICANN does allow WLS, it force VeriSign to lower the wholesale price to $6. The fact that the NC got involved with such matters angered VeriSign's supporters.

Jeffrey Neuman, chair of the gTLD Constituency, which cast the dissenting NC vote, said that the NC should not use pricing as an excuse to try to block the proposal. "We believe that such issues... are more appropriate for the market place to regulate rather than the policy making body of ICANN," he wrote in a constituency position statement.

VeriSign, which is in the gTLD Constituency but which claims to have had no input on the position statement, agrees. A spokesperson told ComputerWire that ICANN making this kind of decision is "a textbook example of how far afield they have strayed" from its mandate, which is ostensibly limited to technical stability rather than market regulation.

"In general, the ICANN board strives to focus on technical issues as much as feasible," said an ICANN spokesperson. She added that the board will make a decision some time before the next quarterly ICANN meeting, scheduled to take place in Shanghai, China in late October.

The decision comes at a highly sensitive time for ICANN. The organization is currently undergoing internal reform aimed at, among other things, clarifying its mission. The US Department of Commerce, under whose authority ICANN works, is being more scrupulous about its decision whether to extend ICANN's contract than in previous years.

That decision comes in September, so it may be safest for ICANN's board to defer the WLS vote until after the DoC renews its agreement. One the one hand, a vote in favor of WLS will anger those who say it merely creates a VeriSign monopoly. On the other hand, a vote against will anger those who say ICANN is turning into a regulator.

© ComputerWire

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