Yesterday Ethos Capital proposed an amendment to its Registry Agreement to address the concerns that have been expressed by registrants about its acquisition of the ORG domain. The amendment is codified in what is known as a Public Interest Commitment (PIC). As its news release states, “These legally-binding commitments cannot be unilaterally modified by PIR and will apply to .ORG regardless of who operates .ORG.”

This is good news, because it recognizes what IGP has been saying for three months now: it is the Registry Agreement – the contract between ICANN and the registry operator – that will protect .ORG registrants, not promises, and not “stopping the sale.” In another blog post we specified the changes that we would like to see. The Ethos proposal falls short of those recommendations, but it is worth examining.

The PIC proposal is also intended to respond to the questions ICANN is asking about the transition. It is obviously Ethos Capital’s hope that the proposal will satisfy ICANN and end the delay in its approval of the sale. Ethos has offered to allow ICANN until March 20 to make a decision.

Here is a summary and critique of the proposal.

ORG Stewardship Council (OSC)

A key element of the PIC is the creation of an ORG Stewardship Council (link to charter here). The Council has two key powers. It can veto certain “Designated Policies” pertaining to freedom of expression and registrant privacy. And it can advise and recommend the allocation of a US $10 million “Community Enablement” fund.

The OSC would consist of 7 members who are appointed directly or indirectly by the PIR Board. They serve staggered terms of up to three years. It doesn’t say whether there are term limits, so presumably there are not. That initial group, in cooperation with the PIR board, continues to select new members. This composition is disappointing.

While this Council plays a much stronger role than the prior PIR Advisory Council, it has no slots set aside for independent noncommercial bodies, such as the Noncommercial Stakeholders Group or the Internet Engineering Task Force. This is needed to bring external and potentially fresh perspectives into PIR. All the OSC members could just be friends and cronies of the PIR board members. Anyone suspected of being a troublemaker could easily be excluded.

As an alternative we would propose that seats be assigned to 4 distinct entities in the noncommercial space: 2 to ICANN’s Noncommercial Stakeholders Group, 1 to the IETF, and 2 more to prominent global digital rights NGOs such as EFF, the Association for Progressive Communications, or Access Now. The others can be selected on an at large basis as proposed in the current charter.

Veto of Designated Policies

One of the responsibilities of the OSC is to be able to veto policy changes that impinge on freedom of expression or the privacy rights of ORG registrants. This would apply to “any changes to PIR policies proposed by the PIR Board concerning appropriate limitations and safeguards regarding censorship of free expression in the .ORG domain name space” and “appropriate limitations and safeguards regarding use or disclosure of registration data or other personal data of .ORG domain name registrants and users.” The OSC would be able to veto such changes. This is a very good attempt to allay some of the concerns that have been expressed about the impact of the ownership change on free speech and privacy. We welcome this aspect of the proposal. Its effectiveness, however, depends entirely on the composition of the OSC. An OSC whose members are all tools of the owners would not be a meaningful check on any bad policies.

Community Enablement Fund

Ethos will allocate $10 million to support “initiatives benefitting .ORG registrants.” The .ORG Stewardship Council will play a significant role in deciding who gets these funds. The Stewardship Council recommends and advises what to fund but the PIR board decides. Subject to our concerns about the composition of the Stewardship Council, this arrangement is a significant improvement on what happened before. More money will be set aside, and the grants will be vetted by a Council. The old AC did not have any role in such matters.

Price increases in store

In the PIC, Ethos would re-impose price caps on itself for 8 years. It would agree to limit wholesale rate increases for ORG domains to 10% a year. This means that rates for Org domains could effectively double over the next 8 years. That’s a pretty generous allowance for Ethos, and is unlikely to make many of the critics of the deal happy unless it is combined with our recommendation below.

IGP, like some others, had asked for longer registration terms at the prevailing rate, such as 20 years instead of the current limit of 10. The PIC does not commit itself to that. In a blog post, PIR said it does not oppose such a change. Because 10 years is currently the limit in the base Registry Agreement, however, it does believe that such a change would require a Policy Development Process. PIR says it supports such a process. We would like to see this promise incorporated into the PIC: that PIR will support efforts to modify policy to extend (not reduce) registration terms.

Moderate Progress

On the whole, the PICS amendment proposed by Ethos constitutes an important form of progress in the ORG negotiations. The commitments in it are responsive to some of the concerns of ORG registrants, and reflect a genuine attempt by Ethos to capture the spirit of the original ORG RFP that PIR won back in 2002. But without certain improvements the PICS is unlikely to resolve the controversy. The big disappointment is the composition of the OSC. The Stewardship Council needs to be more independent of the PIR board, and this can be done by devoting specific representational slots to external bodies that are embedded within the noncommercial Internet community. There is virtually no risk to Ethos in making such an adjustment. The OSC does not have the power to spend money or insert itself into management, and it can only veto certain policies with a 2/3 majority. We fail to understand why Ethos Capital would feel it needs to have so much control over its composition. The community is unlikely to be satisfied with an OSC that could be nothing but a Ethos-selected group of puppets. We look forward to further modification of the PIC.

4 thoughts on “Ethos Capital’s Proposed PIC: An Analysis for ORG registrants

  1. Thanks Milton and the IGP crew. The key five words in this posting are: “..it is the Registry Agreement..”. I hope ICANN understands that, and understands that two things are at risk here, the future path of the .org registry, and the integrity of ICANN’s multistakeholder reputation.

  2. I’m disappointed by the summary nature of this analysis. I have posted a detailed analysis to some mailing lists, but it is too long to copy-paste here in its entirety. So here is the gist.

    The Ethos announcement does not state explicitly whether the PIC is replacing the B-Corp commitments, but, for the reasons given in section III(a) below, it appears to me that the PIC is intended to replace the B-Corp commitments. I would appreciate clarification on this point, because, as explained below, it appears to me that the PIC is walking back the B-Corp commitment regarding price increases.

    The PIC does have a stronger commitment regarding freedom of speech and use of data, but it is a process commitment, not a substantive commitment, and, for the reasons given in section III(b) below, it appears to me to be an inadequate commitment.

    All things considered, I find that the PIC does not meet my expectations: it was not consulted with the concerned communities, the price protection is insufficient, the composition of the Stewardship Council remains problematic, the powers of the Stewardship Council are inadequate, the reporting requirements for the new PIR are inadequate, and the enforcement mechanism (ICANN) is not sufficiently transparent nor strong.

    Therefore, I continue to oppose the proposal to sell PIR/.ORG to Ethos.

    The detailed analysis is structured as follows:
    I – Benefit Corporation Commitments
    II – Public Interest Commitments
    III – Comparison of the two commitments
    (a) Pricing
    (b) Stewardship Council
    (c) Reporting
    (d) Enforcement
    IV – Comments on the press release
    V – Pennsylvania Benefit Corporation reporting requirements

  3. Absent an express third party beneficiary provision only ICANN can bring legal actions to enforce these obligations. Do we really believe, after past events such as RegisterFly, that ICANN would actually step up and protect registrants? I do not.

    If Ethos want’s me to believe that these obligations are more than vacuous posturing Ethos should propose a clear third party beneficiary statement that allows registrants (and those considering to be registrants), whether individually or as a class, to bring legal actions (whether by normal legal procedures or by arbitration, at the registrant’s choice) to enforce these protective provisions.

    (In addition ten years of price protection is hardly meaningful to those of us who have been in .org since long before ICANN came into existence.)

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