[governance] Fwd: [Internet Policy] Would ICANN itself have given .org to Ethos?

[parminder]

In the below I try to assess if Ethos had been an applying party at the
original 2002 process of re-delegation of .org by ICANN whether it stood
any chance of getting .org... It appears clear that it would not have..
.For that reason and on that basis ICANN should not clear ISOC's sale of
.org to Ethos... parminder



-------- Forwarded Message --------
Subject: 	[Internet Policy] Would ICANN itself have given .org to Ethos?
Was: on the proposed transfer of PRI
Date: 	Mon, 20 Jan 2020 09:56:31 +0530
From: 	parminder via InternetPolicy <internetpolicy at elists.isoc.org>
Reply-To: 	parminder <parminder at itforchange.net>
To: 	parminder via InternetPolicy <internetpolicy at elists.isoc.org>



 Andrew/ All,

Thanks for your response. No more questions at this stage, but following
is my summary of how the Ethos deal may be assessed in relation to ICANN
's original criteria for delegating .org.

Let me first state why meeting these original criteria of ICANN for an
.org manager are important. It is a well known and self-evident legal
maxim that 'what cannot be done directly also cannot be done
indirectly'. If Ethos would have failed to get .org originally delegated
from ICANN -- i.e. Ethos would not have met ICANN's original criteria --
it cannot obtain .org indirectly through ISOC. ISOC should have taken
care of that, but if it has not, ICANN should. It must assess Ethos's
offer as if Ethos is applying anew directly to ICANN for being given
.org. Meaning that ICANN should comprehensively assess Ethos's offer on
those original criteria it applied in 2002 (apart from any other
relevant ones), and if it does not meet them cancel the deal.

On being asked Andrew replied that ISOC did consider those criteria.
However the following discussion leaves one unsure what his affirmative
response means.

First about the process of consideration of ICANN's original criteria:

When pressed for more clarity, in responding to both Richard and me,
Andrew said things like; these criteria wereconsidered in an executive
session by trustees, and that Andrew believed that trustees had access
to all the needed documents, and that each trustee made her/his own
evaluation etc... From this I understand that while the matter of
original ICANN criteria did come up in a f2f meeting, it was all quite
informal, and likely no thorough discussion going over each criteria
took place. People were given access to all the documents and - as I
understand -- they were supposed to point out if they saw any problem.
There certainly has been no formal elaborate assessment of the deal
employing ICANN's original criteria for delegation of .org. Asking a
group of people their opinion, reservations etc in a f2f meeting, where
they are believed to have access to all documents and information, does
not come close to meeting the requirements of due diligence in transfer
a community asset as important as .org.

It is not clear why when ICANN chose to go through such an elaborate
process to delegate .org, ISOC thought it could pass off .org so easily
and summarily, with little evidence of similar evaluation, other than
financial and legal assessments. I understand ISOC did take on high
flying financial and legal advisers. But financial and legal assessments
seem oriented to protecting ISOC's own interest and not those of
outsiders, of ICANN or the community. If ISOC had also retained a
community advisor -- i.e. if its own community instincts alone could not
be relied upon -- s/he would have advised to take the latter mentioned
community criteria more seriously. But ISOC treated .org just as an
ordinary business and asset about the sale of which they basically only
needed to look at their own - narrowly organisational - side of things.

This is very disappointing, and shows an indecent haste and eagerness to
grab the deal, without, in any seriousness,going intowhy ISOC was handed
over this community asset, in trust, in the first place. ISOC simply
considering .org as its private asset for it to do whatever it wanted to
do with it is not acceptable. ISOC knew that the deal will finally have
to be cleared by ICANN, and in this regard ICANN is obviously expected
to look closely at its original criteria for delegating .org. If not as
its basic fiduciary duty to ICANN and community, even just for ensuring
the sustainability of the process that it was getting itself and other
actors into, ISOC needed to thoroughly and formally go into the original
criteria to assess Ethos's offer.

When ICANN itself went through a very transparent, multi-step drawn out
process to decide on giving .org to ISOC, why should the latter be
summarily and extremely non-transparentlyable to pass it off to Ethos?
There is a mis-carriage of due process here.

ICANN should pullupISOC for such dereliction of a basic fiduciary duty
to it and to the community, and also for, in general, a
thoroughlyinadequate due process. It should accordingly annul the Ethos
deal on this procedural flaw alone.

Next, let us examine the substance of how the Ethos deal qualifies or
not wrt to ICANN's original criteria:

We can see three kinds of criteria, technical, community and general
business plan related. They can befound in this document
<https://archive.icann.org/en/tlds/org/preliminary-evaluation-report-19aug02.htm>.


In the below email, Andrew dismisses technical criteria to be irrelevant
because PIR as a whole is being transferred. No matter that PIR is to
change so substantially, and that a newly formed investment company with
no domain industry experience will be in complete charge. I dont
consider it indirect change of control, it is quite direct, just legally
wrapped well which kind of deception one should not give in to. There
have been concerns on this list about possible corners-cutting on
technical elements by Ethos given the need to cut costs and little
public/ community accountability. Therefore assessment and guarantees
about continued technical soundness may still be required. But I will
concede that on technical operations level, the criteria as presented
and applied in 2002 would have been met by Ethos's offer, or of anyone
else buying the whole PIR, in that PIR-Afilias continue to manage
operations.

This brings the focus to other kinds of criteria, as being key to
determining whether Ethos deal can be considered acceptable or not.

Of these other criteria, the community criteria 4, 5 and 6  are most
important... As argued earlier, these community criteria primarily
contributed to ISOC's original selection, most so criterion 6 of
community support. This will be evident from reading the original
assessment documents, which like Andrew I too encourage people to go
through. They are almost all linked from this document
<https://archive.icann.org/en/tlds/org/preliminary-evaluation-report-19aug02.htm>.


Andrew earlier dismissed criteria 4 on "differentiation of .org tld from
commercial tlds " as also irrelevant because Ethos will retain PIR and
follow the same policies. To quote Andrew's email of 18th " Ethos is
taking over PIR and that they intend to continue PIR's policies. To the
extent that PIR has differentiated .org, then, this criterion is
automatically satisfied." I do not find such rushing to automatic or
'self-evident' qualification at all satisfactory because Ethos now would
have a controlling say and will fully determine what PIR does  - that is
the whole point and meaning of change of ownership. After paying up more
than a billion dollars, Ethos will need to earn a lot of money and
quickly. It would likely do whatever it takes to earn such amounts. It
therefore needs to be affirmed and established anew whether criterion 4
is fulfilled. But it is evident from Andrew's response that ISOC does
not think so and more or less did nothing to probe on this issue, taking
it for granted that PIR's exiting policies will be continued. Indeed we
hear that a big positive of the Ethos deal is that Ethos will be able to
invest in PIR to provide new and varied services. But we know nothing
whether these new services, and new orientation, would go towards better
differentiation of .org from commercial tlds or less differentiation. It
may entirely depend on what could be more profitable, and there are good
arguments both ways. And do remember, Ethos has little community
connection, much less accountability, to check its activities -- a 'very
big change' from the situation of ISOC owning org. It is really
unfortunate that ISOC itself does not think so. 

On criterion 5, see my email before this one to Joe, all indications are
that nothing in Ethos's original offer at the time it got accepted by
ISOC contained anything to satisfy this criterion. There was nothing to
meet the requirement of 'giving .org registrants a direct say in the
management of the .org registry to teaming with non-commercial entities
with broad roots in the non-commercial community' (NCUC report
<https://archive.icann.org/en/tlds/org/ncdnhc-evaluation-report-09sep02.pdf>).
After the public outcry against the deal Ethos seem to be shifting the
role of the stewardship council somewhat, but I dont see it still get
any kind of satisfactory score on criterion 5. In any case, it no way
absolves ISOC from not having applied criterion 5 when they closed the
deal. 

As for criterion 6, the most important one in my understanding, the
Ethos deal draws a complete blank. Strangely, this criterion gets
dismissed out of hand by Andrew as having always been 'problematic'. It
is quite amusing for ISOC CEO to say so when this criterion played a big
part in ISOC getting .org in the first place. Andrew says that this
criterion is problematic because it is impermissible or difficult to do
a survey of registrants. But how this criterion was employed in the
original evaluation (see NCUC report
<https://archive.icann.org/en/tlds/org/ncdnhc-evaluation-report-09sep02.pdf>)
is very precise and clear and did not involve anything like undertaking
a survey. It involved letters of support and comments on a public board.
It is a bit self serving to declare all this as problematic when eager
to see a deal through... Well of course what was really problematic was
that when a deal is secret it is simply not possible to obtain letters
of support or get comments on a public board. Anyway, criterion 6 was
also clearly not considered. Even more importantly, it is not at all met.

Meanwhile, it is quite easy now, post the deal, to make an assessment
under criterion 6  -- there is solid widespread opposition to the deal
from non commercial community and almost nil support. So the deal
clearly falls foul of the most important criterion 6, even as judged
post facto. ISOC did not have access to this information at the time of
the deal (although in my opinion the deal was insisted by Ethos to be
kept secret precisely in anticipation of such an opposition), but ICANN
does have this information, which should make its job of disallowing the
deal quite straight-forward. With such level of demonstrated community
opposition, and absence of community support, no party could have got
.org delegated to it during the original process in 2002. So it should
be now. ICANN can and should refuse delegation of .org to Ethos on this
ground alone. Unless of course anyone can prove that circumstances have
so changed as to make this criterion irrelevant today. I myself can
think of no such possible reason, but am open to hear arguments to the
contrary.

That leaves us with financial and business plan criteria, about which
Richard has been arguing so ably; with Ethos having to make a lot of
money very quickly, meaning get a pretty high RoI, it is bothersome that
we know almost nothing about how it is planning to do so... This goes
very badly vis a vis the very important criterion 11 which is about
realistic plans and sound analysis. I get this feeling - even from the
discussions here -- that apart from assessing that Ethos will quickly
pay up the promised sale proceedings, ISOC too does not know much about
Ethos's future plans in any good detail, or about the analysis these are
based on. ISOC seems to be shrugging off these matters as not greatly of
their concern, it being upto Ethos to run their business well and
successfully (if this is untrue I did not get much evidence of that in
many long discussions here but I can be corrected). But this was not so
in the original delegation by ICANN, where plans for the future being
realistic and the corresponding analysis being sound was an important
criteria for delegation. (But then a billion dollar were not being
dangled in front of the deciding party at that time!)

So, in sum, firstly ISOC has failed to undertaken the appropriate due
diligence to subject Ethos's offer adequately to the original criteria
under which it itself got, in trust, the community asset of .org. This
includes transparency about the process. Further, if one examines these
original criteria, it is evident that the Ethos deal fails badly to meet
them. It is clear that had Ethos applied for getting .org directly from
ICANN it would not have got it.

In the circumstances, ICANN should first ask ISOC for its basis of
selling .org to Ethos, and for providing the evaluation of the sale
inter alia on the 11 criteria that ICANN itself had originally applied
in 2002 to delegate .org. This should be provided in a formal manner,
with each criterion and its application to Ethos fully argued. Referring
to evaluation reports of the original delegation would be useful in this
regard. ICANN should then make its own evaluation of the Ethos deal
using these original criteria and others that it may consider relevant.

Consequently, as we are sure as per the above that such an evaluation
would not be positive, ICANN should annul the deal.

In assessing the Ethos deal, ICANN has to ask itself this simple
question: Would ICANN itself have given .org to Ethos? It has a detailed
old process to refresh its mind and help make this judgement. If it
would not have, ISOC too cant pass on .org to Ethos. That is why ICANN
comes in, and it must stop the deal.

This is the best way out. That way ISOC would bear no contractual
liability for pulling back from the deal.

parminder


On 18/01/20 10:50 PM, Andrew Sullivan via InternetPolicy wrote:
> Hi,
>
> On Sat, Jan 18, 2020 at 07:50:27PM +0530, parminder via InternetPolicy wrote:
>
>> I very much saw those documents, as well as other evaluations reports,
>> to conclude that community criteria, and especially community support,
>> was in a good part responsible for ISOC's selection.
> Ok.  The reports are available for anyone to peruse and I encourage
> those interested in this bit of history to do so.  Those who do may
> find your reference to the NCUC puzzling, but it's easily explained:
> NCUC is a successor organization.  The one that existed at the time
> was called NDNHC. 
>
>> It is entirely possible that I may have missed it in the many
>> discussions and documents, but does Ethos quality for this primary
>> technical criteria either -- of having '*actually **/operated/** a TLD
>> of significant scale for some period of time, not just shown the
>> potential for doing so...' ?*
> This question again shows the trouble with attempting to use the 2002
> criteria in a straight way, since the conditions are different.  In
> 2002, what was being planned was a new registry operator.  Verisign,
> who operated the registry before, was giving it up, and the new
> operator would take over the policy and operational responsibility for
> everything to do with the registry.  That is not what is happening
> here.  PIR is retaining the registry agreement, and the responsibility
> for operating the registry.  They are also leaving alone the agreement
> they have with Afilias for back end services.  All of that remains
> exactly the same.  If it were changing, the ICANN process would be
> different (quite correctly, because it would have operational
> implications for the registry).  That path is the "direct change of
> control" one.
>
> This path is _indirect_ change of control, when the entity that
> controls the entity with the agreement with ICANN changes.  Actually
> having operated a TLD is not relevant for that case.  And indeed, of
> course, if it had been relevant in 2002 then ISOC's bid would have
> failed utterly, because ISOC had never operated a registry.  That
> issue was overcome because of the involvement of Afilias; but if the
> objection was satisfied that way last time, it should be satisfied the
> same way this time.  Nothing is changing about the PIR-Afilias
> agreement as a result of this transaction, as PIR and Ethos have both
> said repeatedly.
>
> Best regards,
>
> A
>
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