By Vinton G. Cerf
Over the past several weeks, I have watched with disappointment the controversy surrounding Ethos Capital’s proposed acquisition of the Public Interest Registry — which runs the .org domain — from the Internet Society. I am in favor of this acquisition and would like to explain why.
First, it is worth remembering that .org was managed by several for-profit companies in the past: Network Solutions, SAIC and VeriSign. As nearly as I can tell, these operations were beneficial and, at least, not harmful, to the .org brand.
Second, when the operation of .org was transferred to the Internet Society, it created the non-profit called Public Interest Registry, or PIR. PIR’s primary objectives were, first, to operate .org and, second, to provide significant support for the Internet Society by essentially allocating any surplus from the operation of PIR to fund the Internet Society’s work in promoting a more accessible and secure Internet. This amounted to about $50 million a year, which was hugely helpful to the Internet Society but limited PIR’s ability to invest in improvements to the operation of .org or even the creation of new products and services for the non-profit community.
The consequence of PIR’s non-profit operation and its obligations to the Internet Society was that it limited PIR’s ability to invest in its own operation. Now, let’s consider the situation after the proposed transaction. First, ISOC will receive an endowment of over $1 billion, which it will need to manage. That’s a non-trivial task, but also one that is independent of the ups and downs of the domain name business. Second, PIR becomes a for-profit operation and its investors can establish a policy of investing profits back into the company in addition to distributing earnings to shareholders. Both organizations end up with new incentives for their operation that are beneficial compared to their earlier relationship of interdependence.
Third, nothing prevents Ethos from adopting — and in fact it has every incentive to adopt — community-friendly policies for the operation of PIR. Indeed, it is wise for Ethos to take steps to reassure the .org customer base, especially about costs. Even though the Internet Corporation for Assigned Names and Numbers (ICANN) has relieved registry operators from constraints on price increases, Ethos has voluntarily agreed to policies based on the earlier guidelines established by ICANN, and has said that any increase would not be more than 10% per year on average. Moreover, as a for-profit company, PIR has a clear rationale for not driving away its customer base by any excessive raising of prices. Given current .org pricing, a 10% increase in price would be less than $1. Even if an organization had registered a dozen .org domain names, it is hard to believe that such an increase would be viewed as unsustainable for most non-profits. Of course, companies that hold domain names in the tens of thousands for speculative purposes might find such increases more troubling, but I don’t have much sympathy for that business model in the context of the organizations the .org brand is intended to serve.
Fourth, it is worth pointing out that the Internet Society did not seek this transaction, but its Board of Trustees responded with due diligence and with the help of highly qualified financial advisors to conclude that this was a transaction in its interest, and that it would further the Internet Society’s fundamental purposes regarding the Internet and its beneficial operation.
From the perspective of PIR’s millions of customers, what is important is what Ethos actually chooses to do regarding the operation of .org. In addition to its commitment to limit price increases, Ethos has proposed to create a Stewardship Council to advise the Board on key decisions that could affect .org users or the Internet ecosystem. It is my understanding that Ethos intends for the Stewardship Council to have considerable authority. The Council, for example, will take on the role of ratifying strong rules protecting freedom of expression and safeguarding against censorship.
Ethos is also proposing to set up a Community Enablement Fund for the purpose of underwriting efforts beneficial to the .org community, which will be funded at a level that is substantially more than PIR can invest today. The Stewardship Council will manage the process of evaluating proposals to be supported.
All of these commitments, as well as the fundamental logic of the proposed transaction, convince me that this is the right path forward for the Internet Society, for PIR, for Ethos and for the .org community.
Vinton Cerf is Google’s chief Internet evangelist. He is widely recognized as an Internet pioneer, and served as founding president of the Internet Society from 1992–1995 and as chairman of the board of the Internet Corporation for Assigned Names and Numbers (ICANN) from 2000–2007.