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November 23, 2005

Group forms to challenge VeriSign on .com

Momentous.ca Corp, a Canadian domain registration firm, has formed a lobby group in the US to challenge VeriSign Inc over proposals that would let it more easily introduce new services that would challenge Momentous's business.

By CBR Staff Writer

The new Coalition For ICANN Transparency, CFIT, has already scored an early success by persuading Representative Donald Manzullo, chairman of the Congressional Committee on Small Business, to publicly express concern.

VeriSign recently promised to settle its lawsuit against ICANN in exchange for a renewal of the contract that lets it run the .com domain. The proposed contract extends its term from 2007 to 2012, and lets it raise prices by 7% a year.

More concerning to Momentous are the parts of the contract that would enable VeriSign to more easily introduce new domain registry services, some of which could compete with Momentous’s own services.

CFIT, launched under the guise of a body seeking more transparency in ICANN’s processes, says that the proposed .com contract, which was negotiated in private, reinforces four forces detrimental to the internet.

These are: A lack of transparency; A continued erosion of checks-and-balances; Imposition of unilateral price increases that run counter to market logic; Unchecked expansion of the .com registry’s natural monopoly into competitive areas.

The organization managed to persuade Manzullo, a Republican from Illinois, to write to Michael Gallagher, assistant secretary at the US Department of Commerce, which oversees ICANN, to express concern over reducing competition.

If this settlement is allowed to go forward, hundreds of other much smaller companies performing the role of domain registrars will see their markets diminished because ICANN has given VeriSign permission to expand its dominant market position into what are now competitive markets, he wrote.

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While much of the public opposition to the .com deal is over the potential for pricing increases which could, if VeriSign exploits them fully, see the price of a .com double between 2007 and 2012.

CFIT spokesperson John Berard, of the Zeno Group, Momentous’s PR agency, said it is estimated that if the price increases are fully implemented and the .com namespace grows at its current rate, it would add $1.5bn to the cost of doing business online.

But Momentous is more concerned with the provisions of the deal that would enable VeriSign to more quickly and easily launch new registry-level services that could in theory result in the company monopolizing certain markets.

Berard said that VeriSign would be able to introduce new registry services that would allow it to capture the secondary market for domain name sales — such as auctions of valuable names and expiring name registrations.

VeriSign attempted to introduce such a service, the Waiting List Service, a few years ago, which prompted Pool.com, one of Momentous’s subsidiaries, to sue ICANN to prevent WLS being launched.

Secondary market players fear that, because VeriSign controls the registry, it will be able to introduce competitive services at the wholesale level, essentially killing certain retail-level business models. Critics said WLS would do precisely that.

Currently, CFIT has no members other than Momentous, but it plans to recruit at ICANNs annual meeting in Vancouver. Berard said the organization already has broad support in principle, if not in writing.

The organization has also managed to secure Platinum-level sponsorship for ICANN’s Vancouver meeting, despite ICANN’s position of reserving the right to reject sponsorship cash if the sponsor’s views conflict with ICANN policies.

CFIT’s application for sponsorship, if not CFIT itself, was endorsed by Go Daddy Software Inc and Network Solutions Inc, the two largest registrars, which made it difficult for ICANN to ignore, Berard said.

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