ICANN revises settlement with VeriSign

After months of legal wrangling, the Internet Corporation for Assigned Names and Numbers (ICANN) has reached a settlement with VeriSign, which manages the .com and .net domains, over the creation of new services.

VeriSign had sued ICANN, accusing the regulatory group that oversees the Internet's technical infrastructure of overstepping its contractual authority and dragging its feet on allowing VeriSign to offer new services such as a wait-list service and internationalized domain names. In the lawsuit, VeriSign claimed that ICANN stepped outside its charter by delaying the introduction of new VeriSign services, including its Site Finder service, which redirects requests for nonexistent Web addresses, and its ConsoliDate service, which manages multiple domains. VeriSign claimed that ICANN cost the company money because of its tactics.

An initial settlement was reached in October, but after taking into consideration numerous public comments about that deal, ICANN and VeriSign revised it. In addition, in November, the Coalition for ICANN Transparency (CFIT), a lobbying group formed by Momentus.ca -- one of VeriSign's competitors -- filed a lawsuit over the October deal claiming that VeriSign's unfettered ability to launch new products would destroy smaller rivals. That lawsuit is pending.

In a statement on its Web site, ICANN noted that Mountain View, Calif.-based VeriSign has advised ICANN that this proposal represents its "last, best offer to settle the pending litigation."

"This revised settlement agreement represents the best efforts of both VeriSign and ICANN to resolve differences that have been present for several years," VeriSign said in a statement to Computerworld. "We are hopeful that this agreement will be approved so ICANN, VeriSign and the entire Internet community can focus on strengthening the Internet infrastructure and expanding the Internet globally."

ICANN officials could not be reached for comment. But according to an ICANN statement, the revised settlement, which would expire in six years, allows VeriSign to renew its contract for the control of the .com registry in 2012 and sets the maximum price for domain-name registration at US$6 through the end of 2006. That money, which goes to ICANN, is passed on from VeriSign to third-party resellers, which can then charge their customers whatever they want. Beginning in 2007, VeriSign can raise that price by 7 percent, but only for four of the six years the deal is in place. Under the old deal, VeriSign would have been able to raise fees every year.

The revised settlement also requires VeriSign to pay US$625,000 to ICANN to help the agency with its operating expenses as well as a lump-sum annual payment of US$6 million -- which rises to US$12 million a year over the next two years. That money can't be passed on to any third-party registrars.

Under the previous settlement, VeriSign would have collected 50 cents from the domain-name resellers and sent that money to Marina Del Rey, Calif.-based ICANN. In addition, ICANN said the new settlement does not mean that it has agreed to allow VeriSign to reintroduce the SiteFinder service or any similar service.

In a statement on its Web site, CFIT said it was "specifically provoked by the proposed .com agreement. The deal, announced late last year and recently revised, is the latest proof that ICANN cannot operate fairly on behalf of consumers and other Internet stakeholders."

CFIT said the proposed near-perpetual assignment of the .com registry to VeriSign -- done outside an open bidding process and linked to the settlement of unrelated litigation with VeriSign -- reinforces four forces detrimental to the Internet: a lack of transparency, continued erosion of checks and balances, mandated price increases without economic justification and unchecked expansion of the .com registry's natural monopoly into competitive areas.

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