Re: [ga] Option A -- "Divestiture'
Bret’s point (unsurprisingly) is worth careful attention. The FAQ
materials shed new light on the issue raised by James Seng in his post a
few days ago: Materials circulated by Verisign’s investment bankers seem
to take for granted that if Verisign does divest the registrar, it will
nonetheless continue as a *reseller* of domain names. It seems to me that
this new operation would likely differ from Verisign’s existing registrar
business in at least three ways. First, Verisign would have to give up the
Network Solutions name and trademarks to the acquirer, since the existing
contract requires Verisign to “divest all the assets” of the registrar
business to the acquirer, and the Network Solutions name and trademarks are
part of those assets. So the new Verisign reseller operation would need a
new name. Second, the NSI Registrar employees, servers, intellectual
property, and so on would also be going to the acquirer – those, too, are
part of the “assets” that must be divested. So Verisign’s reseller
business would have to be a new business, not just NSI Registrar under a
different name. Third, the Verisign reseller, having taken a registration
from a member of the public, couldn’t simply enter the name in the SRS, but
would have to buy that service from some accredited registrar.
Though James’s message can be read to suggest otherwise, I think
it’s *not* likely that any divestiture could require the acquiring
registrar to take registrations only from Verisign and nobody else. That
would tie the companies together so closely as to raise the persuasive
argument that the divestiture was a sham, and would, I think, violate the
contractual language forbidding any arrangement under which Verisign would
be able, “directly or indirectly, to direct . . . the operations or
policies” of the new registrar. Nor does it make a lot of sense to me that
Verisign would want to include such a restriction, which would reduce its
sale price with no corresponding benefit.
What should we think about such a result? It would eliminate any
existing incentive for Verisign Registry to bend the existing equal-access
rules requiring it to treat all registrars equally (since any profits
flowing from that rule-breaking would no longer flow to Verisign
itself). I suspect that it would likely increase the number of
high-visibility players in the selling-domain-names-to-consumers
market. That depends on who the acquirer is, natch, but my guess (and this
is only a guess) is that the acquirer is *not* likely to be one of the
larger existing registrars: those companies have spent too much money
building their infrastructure and trademarks to be willing to pay full
price to buy NSI’s. OTOH, this resolution won’t satisfy those who want to
see Verisign out of the registrar or reseller business entirely.
At 08:58 PM 3/21/2001 -0800, Bret Fausett wrote:
>Alexander Svensson wrote:
> > ...the threat of a pseudo divestiture should probably be
> > looked at seriously.
>Picking up on this from the "[ga] Re: Board descisions" thread...
>ICANN posted four additional FAQs this evening focusing on what Verisign
>must do to obtain the four-year extension under the original agreement and
>what limitations, if any, might be placed on Verisign or the purchaser of
>the registrar assets after any sale.
>You'll want to review FAQs 4, 5, 6 and 7 from this:
>I won't attempt to summarize the points made there, but many of the elements
>described by James Seng in an earlier post about what Verisign would do
>under Option A appear to be realistic possibilities:
> -- Bret
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