The recent new that ICANN had taken measures to combat Domain Tasting came out in blogs, such as this one, based on second-hand news. ICANN had sent an e-mail to registrars announcing the policy change. But there was confusion over exactly what the policy was; most people just assumed it followed the recommendations of the GNSO council from April. The incomplete information caused some confused analysis such as this from CADNA (the Coalition Against Domain Name Abuse).

I asked ICANN and they sent me the actual e-mail that they sent out to registrars. It is published below. My analysis of it is in a column on eWEEK.

Dear Registrar,

This message is intended to explain how certain decisions that were made by the ICANN Board of Directors at its meeting in Paris last week may affect your registrar.

Specifically, the Board adopted GNSO recommendations on domain tasting that included both budget and non-budget provisions designed to restrict the applicability of the Add Grace Period (AGP). Please note that this message is a summary of changes that affect registrars. You should refer to the adopted budget document and adopted motions for further information.

Summary of Important Timing Issues

After several months of discussion and public comment on both the budget and the GNSO recommendations, the Board has approved the proposed budget containing a provision for collecting transaction fees above a threshold during the AGP. Effective 1 July 2008, the registrar-level transaction fee will be collected on transactions, including names added on or after 1 July
2008 and deleted during the Add Grace Period above a certain minimum threshold. Each "transaction" will continue to be defined as a one-year domain registration increment caused by a successful add, renewal or transfer command, but this year any domain names deleted during the AGP (if
offered)
will be included as transactions if they exceed the maximum of (i) 10% of that registrar's net new registrations in that month (defined as total new registrations less domains deleted during AGP), or (ii) fifty (50) domain names, whichever is greater. The budget assumes the transaction fee rate will remain at US ./send.20.

The second change prohibits registries from issuing refunds above a similar threshold for names registered and deleted during the AGP (although some registries have made plans to charge for such transactions independent of this motion). The implementation timing of this change has not been set, but should be expected to take place over a period of some months. ICANN staff will solicit public comments and post a registrar advisory prior to implementation of this aspect of the GNSO recommendation.

Budget - Registrar Fees Effective 1 July 2008

The Operating Plan and Budget details for 2008-2009 fiscal year can be found at:

http://www.icann.org/en/financials/proposed-opplan-budget-v3-fy09-25jun0
8-en.pdf

Relevant section from the approved budget:

* Registrar-Level Transaction Fees

In FY08 the per transaction-year rate was ./send.20 (or a 5 cent discount from the established ./send.25 rate). The draft FY09 budget assumes that the ./send.20 rate will continue for registrar transaction fees. As in past years, each transaction will be defined as one-year domain registration increment caused by a successful add renewal or transfer command. FY09 revenue is estimated to be .4 million for registrar-level transaction fees. Each "transaction"
will continue to be defined as a one-year domain registration increment caused by a successful add, renewal or transfer command, but this year any domain names deleted during the AGP (if offered) will be included as transactions if they exceed the maximum of (i) 10% of that registrar's net new registrations in that month (defined as total new registrations less domains deleted during AGP), or (ii) fifty (50) domain names, whichever is greater. Therefore per-transaction fee will continue to be charged for each one-year increment of every transaction (e.g. at a ./send.20 fee level, the fee for a three-year renewal will be US ./send.60), and registrars will continue to have the option to "defer" payment of the fees for the years beyond one for each transaction. n

Note, as in previous years, ICANN can collect such fees directly from the registrars only if they are "expressly approved by registrars who account, in the aggregate, for payment of two-thirds of all registrar-level fees collected by ICANN." ICANN will shortly undertake the process of requesting such approval for the 2008-09 fiscal year. While ICANN is grateful for consistent approval by registrars of fee levels in prior years, and is optimistic about such approval this year, if for some reason the necessary approval is not achieved, the fees will be collected by ICANN, as permitted under the registry agreements through the registries. (Note that the amount of such fees varies by registry, but in no case exceeds US ./send.25.) Registries will then be able to collect those payments from registrars to the extent permitted under the relevant contracts. It is expected that the same transaction increments (including AGP) will be covered, whether collected directly by ICANN or in! directly by the registries, so registrars should anticipate this liability under either scenario.

ICANN Board Resolution

Whereas, ICANN community stakeholders are increasingly concerned about domain tasting, which is the practice of using the add grace period (AGP) to register domain names in bulk in order to test their profitability.

Whereas, on 17 April 2008, the GNSO Council approved, by a Supermajority vote, a motion to prohibit any gTLD operator that has implemented an AGP from offering a refund for any domain name deleted during the AGP that exceeds 10% of its net new registrations in that month, or fifty domain names, whichever is greater.

Whereas, on 25 April 2008, the GNSO Council forwarded its formal "Report to the ICANN Board - Recommendation for Domain Tasting"
-gnso-council-25apr08.pdf>,
which outlines the full text of the motion and the full context and procedural history of this proceeding.

Whereas, the Board is also considering the Proposed FY 09 Operating Plan and Budget , which includes (at the encouragement of the GNSO Council) a proposal similar to the GNSO policy recommendation to expand the applicability of the ICANN transaction fee in order to limit domain tasting.

Resolved (2008.06.26.06), the Board adopts the GNSO policy recommendation on domain tasting, and directs staff to implement the policy following appropriate comment and notice periods on the implementation documents.

Domain tasting motion approved by the GNSO Council 17 April 2008

-gnso-council-25apr08.pdf>

Whereas, the GNSO Council has discussed the Issues Report on Domain Tasting and the Final Outcomes Report of the ad hoc group on Domain Tasting;

Whereas, the GNSO Council resolved on 31 October 2007 to launch a PDP on Domain Tasting;

Whereas, the GNSO Council authorized on 17 January 2008 the formation of a small design team to develop a plan for the deliberations on the Domain Tasting PDP (the "Design Team"), the principal volunteers to which had been members of the Ad Hoc Group on Domain Tasting and were well-informed of both the Final Outcomes Report of the Ad Hoc Group on Domain Tasting and the GNSO Initial Report on Domain Tasting (collectively with the Issues Report, the "Reports on Domain Tasting");

Whereas, the GNSO Council has received the Draft Final Report on Domain Tasting;

Whereas, PIR, the .org registry operator, has amended its Registry Agreement to charge an Excess Deletion Fee; and both NeuStar, the .biz registry operator, and Afilias, the .info registry operator, are seeking amendments to their respective Registry Agreements to modify the existing AGP;

The GNSO Council recommends to the ICANN Board of Directors that:

1. The applicability of the Add Grace Period shall be restricted for any gTLD which has implemented an AGP ("Applicable gTLD Operator").
Specifically, for each Applicable gTLD Operator:

a. During any given month, an Applicable gTLD Operator may not offer any
refund to a registrar for any domain names deleted during the AGP that
exceed (i) 10% of that registrar's net new registrations in that month
(defined as total new registrations less domains deleted during AGP), or
(ii) fifty (50) domain names, whichever is greater.

b. A Registrar may seek an exemption from the application of such
restriction in a specific month, upon the documented showing of
extraordinary circumstances. For any Registrar requesting such an
exemption, the Registrar must confirm in writing to the Registry Operator
how, at the time the names were deleted, these extraordinary circumstances
were not known, reasonably could not have been known, and were outside of
the Registrar's control. Acceptance of any exemption will be at the sole
reasonable discretion of the Registry Operator, however "extraordinary
circumstances" which reoccur regularly will not be deemed extraordinary.

c. In addition to all other reporting requirements to ICANN, each
Applicable gTLD Operator shall identify each Registrar that has sought an
exemption, along with a brief descriptive identification of the type of
extraordinary circumstance and the action (if any) that was taken by the
Applicable gTLD Operator.

2. Implementation and execution of these recommendations shall be monitored by the GNSO. Specifically;

a. ICANN Staff shall analyze and report to the GNSO at six month intervals
for two years after implementation, until such time as the GNSO resolves
otherwise, with the goal of determining;

i. How effectively and to what extent the policies have been implemented
and followed by Registries and Registrars, and

ii. Whether or not modifications to these policies should be considered
by the GNSO as a result of the experiences gained during the
implementation and monitoring stages,

b. The purpose of these monitoring and reporting requirements are to allow
the GNSO to determine when, if ever, these recommendations and any ensuing
policy require additional clarification or attention based on the results
of the reports prepared by ICANN Staff.