Changes

'''Vertical Integration''' ('''VI''', or '''Cross Ownership''') is a business structure in which the various functions of the [[Registry]] Operator and the [[Registrar]] are handled by a single body. This single body is either owned or is under supervision of the same company that supports the specific [[gTLD]]; alternatively, the controlling body can be a partnered company that is given the contract of the gTLD. The Registry Operator is not required to provide equivalent access and non-discriminatory access to non-affiliated registrars to sell names under its gTLD.<ref name="link2">[https://community.icann.org/display/gnsovertint/Phase+I+Interim+Report+Vertical+Integration+Final+9+November+2010+pdf Phase I Interim Report Vertical Integration], ICANN.org. Published 9 November 2010.</ref>

'''Vertical Integration''' ('''VI''', or '''Cross Ownership''') is a business structure in which the various functions of the [[Registry]] Operator and the [[Registrar]] are handled by a single body. This single body is either owned or is under supervision of the same company that supports the specific [[gTLD]]; alternatively, the controlling body can be a partnered company that is given the contract of the gTLD. The Registry Operator is not required to provide equivalent access and non-discriminatory access to non-affiliated registrars to sell names under its gTLD.<ref name="link2">[https://community.icann.org/display/gnsovertint/Phase+I+Interim+Report+Vertical+Integration+Final+9+November+2010+pdf Phase I Interim Report Vertical Integration], ICANN.org. Published 9 November 2010.</ref>

==Background==

==Background==

===History of Vertical Separation===

===History of Vertical Separation===

The [[NSF|National Science Foundation]] signed a Cooperative Agreement with [[Network Solutions]] (NSI) to be Registry Operator and Registrar for the .com, .net and .org TLDs from 1993 to 1999. The registry agreement was renewed by ICANN in November 1999. Under the new agreement, NSI agreed to create a multiple registrar system, also known as the [[SRS|SRS]]Shared Registration System]] (SRS), which allows independent registrars to access the system. Independent registrars were to pay NSI $6.00 for every registered or renewed domain name.<ref>[http://archive.icann.org/en/topics/new-gtlds/crai-report-24oct08-en.pdf Revisiting Vertical Separation of Registries and Registrars], ICANN.org. Published 24 October 2008.</ref>

The [[NSF|National Science Foundation]] signed a Cooperative Agreement with [[Network Solutions]] (NSI) to be Registry Operator and Registrar for the .com, .net and .org TLDs from 1993 to 1999. The registry agreement was renewed by ICANN in November 1999. Under the new agreement, NSI agreed to create a multiple registrar system, also known as the [[SRS|Shared Registration System]] (SRS), which allows independent registrars to access the system. Independent registrars were to pay NSI $6.00 for every registered or renewed domain name.<ref>[http://archive.icann.org/en/topics/new-gtlds/crai-report-24oct08-en.pdf Revisiting Vertical Separation of Registries and Registrars], ICANN.org. Published 24 October 2008.</ref>

In addition, ICANN encouraged competition through registry and registrar business separation, by stipulating in the agreement that NSI will only be allowed to renew its registry agreement with ICANN for four years if it sells its registrar business.<ref>[http://archive.icann.org/en/nsi/nsi-registry-agreement-04nov99.htm ICANN-NSI Registry Agreement], ICANN.org. Published 4 November 1999.</ref> In 2000, [[Verisign]] purchased NSI and re-negotiated its registry agreement for the .com, .net and .org TLDs with ICANN. ICANN did not require ownership separation but implemented structural separation. ICANN explained, ''"there is little if any additional competitive value under today's market circumstances in forbidding the registry operator from also being a registrar, so long as it is done is such a way so as not to discriminate against other competitive registrars."''<ref>[http://www.icann.org/en/news/announcements/icann-pr-01mar01-en.htm Proposed Revision to ICANN-VeriSign Agreements], ICANN.org. Published 1 March 2001.</ref><ref>[http://www.icann.org/en/about/agreements/registries/verisign Revised VeriSign Registry Agreements], ICANN.org. Published 16 April 2011.</ref>

In addition, ICANN encouraged competition through registry and registrar business separation, by stipulating in the agreement that NSI will only be allowed to renew its registry agreement with ICANN for four years if it sells its registrar business.<ref>[http://archive.icann.org/en/nsi/nsi-registry-agreement-04nov99.htm ICANN-NSI Registry Agreement], ICANN.org. Published 4 November 1999.</ref> In 2000, [[Verisign]] purchased NSI and re-negotiated its registry agreement for the .com, .net and .org TLDs with ICANN. ICANN did not require ownership separation but implemented structural separation. ICANN explained, ''"there is little if any additional competitive value under today's market circumstances in forbidding the registry operator from also being a registrar, so long as it is done in such a way so as not to discriminate against other competitive registrars."''<ref>[http://www.icann.org/en/news/announcements/icann-pr-01mar01-en.htm Proposed Revision to ICANN-VeriSign Agreements], ICANN.org. Published 1 March 2001.</ref><ref>[http://www.icann.org/en/about/agreements/registries/verisign Revised VeriSign Registry Agreements], ICANN.org. Published 16 April 2011.</ref>

In 2000, ICANN introduced [[new gTLD|new generic top level domain names]], which included [[.biz]], [[.info]], [[.name]] and [[.pro]]. On February 26, 2001, ICANN proposed a new registry agreement stipulating the legal separation between registry and registrar under section 3.5 Fair Treatment of ICANN-Accredited Registrars, wherein Registry Operators are not allowed to act as registrars with respect to the Registry TLD.<ref>[http://www.icann.org/en/about/agreements/registries/unsponsored/registry-agmt-26feb01-en.htm Proposed Unsponsored TLD Agreement], ICANN.org. Published 26 February 2001.</ref>

In 2000, ICANN introduced [[new gTLD|new generic top level domain names]], which included [[.biz]], [[.info]], [[.name]] and [[.pro]]. On February 26, 2001, ICANN proposed a new registry agreement stipulating the legal separation between registry and registrar under section 3.5 Fair Treatment of ICANN-Accredited Registrars, wherein Registry Operators are not allowed to act as registrars with respect to the Registry TLD.<ref>[http://www.icann.org/en/about/agreements/registries/unsponsored/registry-agmt-26feb01-en.htm Proposed Unsponsored TLD Agreement], ICANN.org. Published 26 February 2001.</ref>

In March 2012, ICANN released an update on that status of vertical integration, following an inquiry from the [[GNSO]]'s [[Registry Stakeholder Group]].<ref>[http://domainnamewire.com/2012/03/13/icann-were-moving-forward-with-vertical-integration/ ICANN: We’re moving forward with vertical integration], DomainNameWire.com. Published 13 March 2012.</ref> The update stated that ICANN had pursued the topic of vertical integration with two competition authorities, the United States Department of Justice Antitrust Division and the [[European Commission]] (EC).  The United States Department of Justice Antitrust Division confirmed that it was conducting no active investigation into the topic at this time. The EC stated that although it was supportive of vertical integration in theory, it was concerned about the full removal of vertical separation, especially for existing TLD registries like for [[.com]]. ICANN stated that as a result of these correspondences, it would move forward with its previously proposed vertical separation plans, and develop a process which would allow existing registries to request an amendment to their existing contracts, permitting vertical integration and cross-ownership.<ref>[http://domainnamewire.com/wp-content/vertical-sep.pdf Response to GNSO Registries Stakeholder Group Memo Regarding Registry-Registrar Cross-Ownership], DomainNameWire.com.</ref> The full text of the reply can be read [http://domainnamewire.com/wp-content/vertical-sep.pdf here].

In March 2012, ICANN released an update on that status of vertical integration, following an inquiry from the [[GNSO]]'s [[Registry Stakeholder Group]].<ref>[http://domainnamewire.com/2012/03/13/icann-were-moving-forward-with-vertical-integration/ ICANN: We’re moving forward with vertical integration], DomainNameWire.com. Published 13 March 2012.</ref> The update stated that ICANN had pursued the topic of vertical integration with two competition authorities, the United States Department of Justice Antitrust Division and the [[European Commission]] (EC).  The United States Department of Justice Antitrust Division confirmed that it was conducting no active investigation into the topic at this time. The EC stated that although it was supportive of vertical integration in theory, it was concerned about the full removal of vertical separation, especially for existing TLD registries like for [[.com]]. ICANN stated that as a result of these correspondences, it would move forward with its previously proposed vertical separation plans, and develop a process which would allow existing registries to request an amendment to their existing contracts, permitting vertical integration and cross-ownership.<ref>[http://domainnamewire.com/wp-content/vertical-sep.pdf Response to GNSO Registries Stakeholder Group Memo Regarding Registry-Registrar Cross-Ownership], DomainNameWire.com.</ref> The full text of the reply can be read [http://domainnamewire.com/wp-content/vertical-sep.pdf here].

As a continuation of ICANN's June 2011 decision to remove cross-ownership restrictions of existing gTLDs, the ICANN Board revised in October 2012 the policies by further allowing registry operators to own and become affiliated with registrars selling domains in their own gTLDs.<ref>[http://www.icann.org/en/groups/board/documents/resolutions-18oct12-en.htm#1.a Approved Board Resolutions | Regular Meeting of the ICANN Board], ICANN.org. Published 18 October 2012.</ref>

As a continuation of ICANN's June 2011 decision to remove cross-ownership restrictions on existing gTLDs, the ICANN Board revised in October 2012 the policies by allowing registry operators to own and become affiliated with registrars selling domains in their own gTLDs.<ref>[http://www.icann.org/en/groups/board/documents/resolutions-18oct12-en.htm#1.a Approved Board Resolutions | Regular Meeting of the ICANN Board], ICANN.org. Published 18 October 2012.</ref>

Such a change in policy would allow incumbent registry operators, such as [[Verisign]], [[Neustar]], and [[Afilias]], to do so with .com, .biz, and .info, respectively.<ref name="domainincite">[http://domainincite.com/10796-soon-verisign-could-sell-com-domains-direct Soon Verisign could sell .com domains direct], DomainIncite.com. Published 22 October 2012.</ref> In order to qualify for these new policies, each company would need to either sign the standard new gTLD registry agreement, which includes [[URS|Uniform Rapid Suspension]] (URS) and [[Trademark Clearinghouse]] provisions as RPM|Rights Protection Mechanisms (RPMs), or submit a contract renegotiation which contains additional provisions to ensure fair competition and adherence to the new gTLD Registry Code of Conduct.<ref>[http://internetcommerce.org/URS@DotCom URS Could Arrive Soon at .Com & .Net], InternetCommerce.org. Published 22 October 2012.</ref> In all cases, contract changes will be shown to competition authorities for comment prior to ICANN's approval.<ref name="domainincite"></ref>

Such a change in policy would allow incumbent registry operators, such as [[Verisign]], [[Neustar]], and [[Afilias]], to do so with [[.com]], [[.biz]], and [[.info]], respectively.<ref name="domainincite">[http://domainincite.com/10796-soon-verisign-could-sell-com-domains-direct Soon Verisign could sell .com domains direct], DomainIncite.com. Published 22 October 2012.</ref> In order to qualify for these new policies, each company would need to either sign the standard new gTLD registry agreement, which includes [[URS|Uniform Rapid Suspension]] (URS) and [[Trademark Clearinghouse]] provisions as [[RPM|Rights Protection Mechanisms]] (RPMs), or submit a contract renegotiation which contains additional provisions to ensure fair competition and adherence to the new gTLD Registry Code of Conduct.<ref>[http://internetcommerce.org/URS@DotCom URS Could Arrive Soon at .Com & .Net], InternetCommerce.org. Published 22 October 2012.</ref> In all cases, contract changes will be shown to competition authorities for comment prior to ICANN's approval.<ref name="domainincite"></ref>

== References ==  

== References ==