The Fate of ICANN

VeriSign believes that ICANN's powers should be curtailed but other registrars want to give the organization a chance to change before being condemned.

by Gretchen Hyman of siliconvalley.internet.com [August 14, 2002]

As ICANN is currently under fire from lawmakers and The Department of Commerce (DoC) for questionable public accounting, it seems that ICANN's effectiveness as a governing body for Internet policy has met with drastically different reactions. Furthermore, it is not known whether the U.S. Government will renew its agreements with ICANN when they come due in September.

ICANN oversees the Domain Name System under a series of agreements with the DOC and in doing so sets the prices for many domain names and decides what new domains can be added to the system.

In a recent gesture of unity, a group of domain registries sent a joint letter to Assistant Secretary Nancy Victory of the DoC in support of the current ICANN reform efforts and the importance of ICANN's continued existence.

The letter was signed by executives from Afilias, Global Name Registry, RegistryPro, DotCooperation LLC, Neustar, SITA, and MuseDoma, although VeriSign's name was conspicuously absent from the roster.

"We, the undersigned registry operators, are writing to express our continuing support for the ongoing efforts of the ICANN Evolution and Reform Committee. While we understand the frustrations of certain members of the Internet community in connection with the overall ICANN process to date, we believe that ICANN remains the most viable solution to ensure the ongoing stability of the Internet's naming and addressing systems."

The letter went on to mention that only less than three years ago there was one monopoly gTLD registry/registrar provider (i.e. VeriSign's Network Solutions), and that today, due in part to the work of ICANN, there are well over 100 operational registrars and seven new TLD registries.

"As the domain name market place continues to mature, we strongly believe that market forces and governmental authorities will be the principal guiding forces," stated the letter. "We believe that somewhere within those guiding forces there exists, and will continue to exist, a significant role for the private-sector ICANN that has been recognized by the Department of Commerce. We encourage you to continue to support the efforts underway to constructively reform ICANN and provide it with the necessary staff and resources to ensure that competition and stability continue to exist at the registrar and registry levels for the benefit of all Internet users."

According to VeriSign spokesperson Brian O'Shaughnessy, VeriSign was not invited to participate in the drafting of the letter to the DOC. Instead, VeriSign issued its own letter to Secretary Victory a week prior in collaboration with DENIC, which operates the .de domain, and NominetUK, which operates the .uk domain, voicing a common view that ICANN's power should be curtailed and more closely regulated.

"We reaffirm our commitment to the Internet Corporation for Assigned Names and Numbers as a private, international entity that is guided by narrowly defined functions for the technical coordination of the Internet numbering and naming systems," stated the letter to the DOC.

"Except for those carefully-defined instances described in this statement, ICANN's function is not that of a regulator, whether it be of prices, services, or business practices. Rather its function is to act as a central depository for information about, and provide coordination among those who operate, the technical infrastructure of the Internet, most notably in the domain name and IP numberings systems."

In the meantime, VeriSign has been under scrutiny from the DoC since 1998 and more recently from auditor Ernst & Young for its business practices, as well as from the Federal Trade Commission for its marketing practices.

The DoC is also looking into ICANN's 2001 decision to allow VeriSign to retain control of the .com domain. As part of the decision, VeriSign agreed to annual audits to ensure that it met ICANN's requirements and provided rival Internet-address sellers with equal access to its central database of Web domain names. VeriSign also maintains its own retail address units Register.com and Network Solutions Inc.

The first audit was supposed to have been completed by last December, but ICANN was late in assigning an auditor.

At the conclusion of its June, 2002 audit, VeriSign got a low but passing grade from auditor Ernst & Young LLP in proving that it had so far provided a level playing field for competitors.

But despite Ernst & Young confirmation that VeriSign complied "in all material respects" with the ICANN requirements for the year ending on Dec. 31, 2001, the audit found "material noncompliance" in two areas.

Ernst & Young confirmed that VeriSign was sloppy with its books and failed to keep sufficient historical records of its system on a daily basis. The audit also found that VeriSign failed to comply with certain technical requirements put in place by ICANN, such as the proper labeling of storage tapes.

Also according to the audit, VeriSign favored some retailers by giving them more Internet connections to its database than they were supposed to have.

VeriSign responded by stating that it allowed retailers to exceed the maximum number of connections only on a "temporary, infrequent" basis, and that it had properly affixed the labels before they reached the storage facility.

O'Shaughnessy said that a few peeled labels did not constitute a "non-compliance" issue and that the incident was beyond the company's control.

"We were found in compliance with the vast majority of issues the auditors were looking for," he said.

O'Shaughnessy also said that the company is working with the auditors to come up with a solution to the concerns about record keeping.

"The company stands by the facts that we were in compliance with the audit and we look forward to working with Ernst & Young in the future."

VeriSign's next audit will be due by December, 2002.

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