Of ICANN and the registrar zombies

Vint Cerf, the "Father of the Internet" kept encouraging - this is not a joke - registrants to complain to the the equivalent of the Better Business Bureau in the country of origin of dodgy or uncooperative registrars, as if someone realistically would call the BBB halfway around the globe, to a country whose language they might not even speak, to lodge a complaint against a hometown enterprise. That's certainly a business-friendly solution, and one way to look at it, but Registerfly was an American company with mostly American customers who already understood well how worthless a complaint to such an organization is, which is why they wanted ICANN's nuts. Is that seriously a model for preventing a future Registerfly-style collapse?

In fact, in a somewhat self-serving factsheet published by ICANN on its website today, in which it tries to take credit for helping improve Registerfly's performance after an audit last summer without providing much explanation for ICANN's subsequent hands-off approach, ICANN clearly states that "ICANN's mission is to ensure the stable and secure operation of these unique identifier systems (such as domain names and numeric addresses), which are vital to the Internet's operation." Can't seem to find anything in there about the invisible hand of the market - in fact if anything it's the opposite, although that's not what Cerf's pals at the American Department of Commerce (DOC) want to hear.

ICANN's ongoing murky relationship with the DOC could well be at the root of this idealogical obstinance. However, to suggest that the invisible hand of the market will right the wrongs of Registerfly is laughable. Sure, the market has punished Registerfly - after all, the company is bankrupt - but markets are famously bad at dealing with externalities, in this case the registrants whose domains have vanished, and even ICANN is admitting that the current system is not working. Some form of regulation involving data escrow is clearly in order, and thankfully on the way.

ICANN CEO Paul Twomey was somewhat more nuanced than Cerf about the interplay between market forces and ICANN's role. Twomey also acknowledged that the real problem for ICANN is what happens in the period preceding the collapse of a registrar, when thin-margin companies teeter on the brink of collapse, and customers fall through the cracks. These so-called "zombie registrars" enter a vicious cycle in which customer service spirals downward and more customers flee, leaving mounting debts and a further erosion of service and the company's bottom line.

The use of market forces has admirably driven the cost of owning a domain name down from $50 per month to free, in some business models, and failure is as much a part of the market as success. The escrow system is an important part of the ICANN's role in maintaining its core responsibility, which is the stability of the net itself.

Property rights

The comments after the speeches and the panel revealed a continuing debate within the ICANN community about what a domain really is. The debate centered around whether or not it should be treated as a license or a property right, though from a legal perspective a license is simply a relatively narrowly drawn type of property right.

The registrars want it to be classed as a license to lessen their own potential liability - if you don't renew your license you lose it, simple as that. However, as the Security and Stability Advisory Committee (SSAC) Chair Dr. Stephen Crocker noted in the panel discussion, domain names perform a more critical role in certian business than a typical license. As he put it, it's not like having the electricity turned off. It truly is something more serious, and ICANN needs to acknowledge that.

In fact, in some ways a domain is more important to some businesses than any physical property right could ever be - although it performs some of the functionality of a physical address, for many domain holders, the domain is not just where to find them on the internet, it is very essence of their brand. Fundamentally, it is their business, in the same way that if the words "Coca Cola" somehow magically and impossibly vanished from the world's languages, and then reappeared in the hands of a rival, never to return, the original owners would be irreparably harmed.

The debate about what ICANN is for is a healthy one, but it is also one that as far as its responsibility towards registrars goes, needs to move quickly. As ICANN acknowledged publicly today, there are other sketchy registrars out there - out of over 850 registrars, 40 don't even have websites and another 27 don't maintain a Whois database for their registrants. Suggestions for a best practices statement and additional compliance tools are worthy, but ICANN needs clearly to do a better job enforcing the agreements it has now, although an overhaul of the Registrar Accreditation Agreement (RAA) needs to be done once ICANN installs the data escrow system.

The silver lining to the Registerfly fiasco is that this discussion is long overdue, and ICANN is listening. ®

Burke Hansen. attorney at large, heads a San Francisco law office