| Text of
Printed Hearing The Committee on Energy and Commerce W.J. "Billy" Tauzin, Chairman Is ICANN's New Generation of Internet Domain Name Selection Process Thwarting Competition?" <DOC>
[107th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:71484.wais]
IS ICANN'S NEW GENERATION OF INTERNET DOMAIN NAME SELECTION PROCESS
THWARTING COMPETITION?
=======================================================================
HEARING
before the
SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET
of the
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
FEBRUARY 8, 2001
__________
Serial No. 107-4
__________
Printed for the use of the Committee on Energy and Commerce
Available via the World Wide Web: http://www.access.gpo.gov/congress/
house
_______
U.S. GOVERNMENT PRINTING OFFICE
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____________________________________________________________________________
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------------------------------
COMMITTEE ON ENERGY AND COMMERCE
W.J. ``BILLY'' TAUZIN, Louisiana, Chairman
MICHAEL BILIRAKIS, Florida JOHN D. DINGELL, Michigan
JOE BARTON, Texas HENRY A. WAXMAN, California
FRED UPTON, Michigan EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida RALPH M. HALL, Texas
PAUL E. GILLMOR, Ohio RICK BOUCHER, Virginia
JAMES C. GREENWOOD, Pennsylvania EDOLPHUS TOWNS, New York
CHRISTOPHER COX, California FRANK PALLONE, Jr., New Jersey
NATHAN DEAL, Georgia SHERROD BROWN, Ohio
STEVE LARGENT, Oklahoma BART GORDON, Tennessee
RICHARD BURR, North Carolina PETER DEUTSCH, Florida
ED WHITFIELD, Kentucky BOBBY L. RUSH, Illinois
GREG GANSKE, Iowa ANNA G. ESHOO, California
CHARLIE NORWOOD, Georgia BART STUPAK, Michigan
BARBARA CUBIN, Wyoming ELIOT L. ENGEL, New York
JOHN SHIMKUS, Illinois TOM SAWYER, Ohio
HEATHER WILSON, New Mexico ALBERT R. WYNN, Maryland
JOHN B. SHADEGG, Arizona GENE GREEN, Texas
CHARLES ``CHIP'' PICKERING, KAREN McCARTHY, Missouri
Mississippi TED STRICKLAND, Ohio
VITO FOSSELLA, New York DIANA DeGETTE, Colorado
THOMAS M. DAVIS, Virginia THOMAS M. BARRETT, Wisconsin
ROY BLUNT, Missouri BILL LUTHER, Minnesota
ED BRYANT, Tennessee LOIS CAPPS, California
ROBERT L. EHRLICH, Jr., Maryland MICHAEL F. DOYLE, Pennsylvania
STEVE BUYER, Indiana CHRISTOPHER JOHN, Louisiana
GEORGE RADANOVICH, California JANE HARMAN, California
JOSEPH R. PITTS, Pennsylvania
MARY BONO, California
GREG WALDEN, Oregon
LEE TERRY, Nebraska
CHARLES F. BASS, New Hampshire
David V. Marventano, Staff Director
James D. Barnette, General Counsel
Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
______
Subcommittee on Telecommunications and the Internet
FRED UPTON, Michigan, Chairman
MICHAEL BILIRAKIS, Florida EDWARD J. MARKEY, Massachusetts
JOE BARTON, Texas BART GORDON, Tennessee
CLIFF STEARNS, Florida BOBBY L. RUSH, Illinois
Vice Chairman ANNA G. ESHOO, California
PAUL E. GILLMOR, Ohio ELIOT L. ENGEL, New York
CHRISTOPHER COX, California GENE GREEN, Texas
NATHAN DEAL, Georgia KAREN McCARTHY, Missouri
STEVE LARGENT, Oklahoma BILL LUTHER, Minnesota
BARBARA CUBIN, Wyoming BART STUPAK, Michigan
JOHN SHIMKUS, Illinois DIANA DeGETTE, Colorado
HEATHER WILSON, New Mexico JANE HARMAN, California
JOHN B. SHADEGG, Arizona RICK BOUCHER, Virginia
CHARLES ``CHIP'' PICKERING, SHERROD BROWN, Ohio
Mississippi TOM SAWYER, Ohio
VITO FOSSELLA, New York JOHN D. DINGELL, Michigan,
THOMAS M. DAVIS, Virginia (Ex Officio)
ROY BLUNT, Missouri
ROBERT L. EHRLICH, Jr., Maryland
W.J. ``BILLY'' TAUZIN, Louisiana
(Ex Officio)
(ii)
C O N T E N T S
__________
Page
Testimony of:
Broitman, Elana, Director, Policy and Public Affairs,
register.com............................................... 31
Cerf, Vinton G., Chairman of the Board, Internet Corporation
for Assigned Names and Numbers............................. 13
Davidson, Alan B., Associate Director, Center for Democracy
and Technology............................................. 78
Froomkin, A. Michael, Professor of Law, University of Miami
School of Law.............................................. 68
Gallegos, Leah, President, AtlanticRoot Network, Inc......... 45
Hansen, Kenneth M., Director, Corporate Development, NeuStar,
Inc........................................................ 42
Kerner, Lou, Chief Executive Officer, .tv.................... 26
Short, David E., Legal Director, International Air Transport
Association................................................ 36
Material submitted for the record by:
Gallegos, Leah, President, AtlanticRoot Network, Inc., letter
enclosing material for the record.......................... 107
Name.Space, Inc., prepared statement of...................... 106
(iii)
IS ICANN'S NEW GENERATION OF INTERNET DOMAIN NAME SELECTION PROCESS
THWARTING COMPETITION?
----------
THURSDAY, FEBRUARY 8, 2001
House of Representatives,
Committee on Energy and Commerce,
Subcommittee on Telecommunications
and the Internet,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:05 a.m., in
room 2123, Rayburn House Office Building, Hon. Fred Upton
(chairman) presiding.
Members present: Representatives Upton, Stearns, Gillmor,
Cox, Shimkus, Pickering, Davis, Ehrlich, Tauzin (ex officio),
Markey, Gordon, DeGette, Harman, Brown, and Dingell (ex
officio).
Staff present: Will Norwind, majority counsel; Yong Choe,
legislative clerk; Andrew Levin, minority counsel; and Brendan
Kelsay, minority professional staff.
Mr. Upton. The hearing will come to order. Today we are
holding the first hearing in the 107th Congress of the
Subcommittee on Telecommunications, where we will be discussing
the Internet. I want to welcome all the members of the
subcommittee, particularly Ed Markey, the ranking member, and
our vice chair Mr. Stearns, good friends both.
Today's hearing focuses on whether ICANN's new generation
of Internet domain name selection process is thwarting
competition. Our constituents may not know the term ICANN, top-
level domain name, or root server, but they are definitely
familiar with .com, .net, and .org. And every time they e-mail
us, .gov, our constituents use these top-level domain names
every single day, enabling them with a simple click of the
mouse to communicate almost instantaneously all over the world.
If ICANN gets its way, our constituents may also--should
become familiar with seven new top-level domain names, like
.biz, .info, .pro, .name, .museum, .aero, and .coop. These are
seven new names selected last November by ICANN for potentially
launching as early as later this year. However, 37 other
applicants were not selected by ICANN. Moreover, we know that
others could not even afford the $50,000 application fee or
chose not to apply because, on principle, they question ICANN's
authority to, in their minds, play God with respect to
approving new names. Hence there is a great deal of controversy
surrounding ICANN's selection process which has prompted us to
have this timely hearing called by myself and Chairman Tauzin
in a January letter to ICANN.
At this point I would ask unanimous consent to put that
letter into the record.
[The letter follows:]
Congress of the United States
House of Representatives
January 12, 2001
Mr. Michael M. Roberts
President and Chief Executive Officer
Internet Corporation for Assigned Names and Numbers
4674 Admiralty Way, Ste. 330
Marina del Rey, CA 90292
Dear Mr. Roberts: The Committee on Energy and Commerce is
continuing its oversight of the Internet Corporation for Assigned Names
and Numbers (ICANN). As you may recall, the Subcommittee on Oversight
and Investigations of the Committee on Commerce held a hearing on July
22, 1999, to examine the issue of domain name system privatization.
In connection with our continuing review, we have been monitoring
the process by which ICANN arrived at its decision in November to
approve seven suffixes: .aero, .coop, .info, .museum, .name, .pro, and
.biz. There have been a number of reports that ICANN's process to
create a new generation of Internet domain name suffixes may be
thwarting competition in the registration and assignment of Internet
domain names. As the Committee of jurisdiction over this issue, the
Committee wants to ensure that this process is open and fair, and most
important, successfully sparks competition. To that end, we are
gathering facts in preparation for a Subcommittee on Telecommunications
hearing in February to examine the process by which ICANN selects
Internet domain name suffixes. Accordingly, we request that you contact
Chairman Tauzin's telecommunications counsel, Jessica Wallace, to
arrange a time to jointly brief committee staff at your earliest
convenience.
Sincerely,
W.J. ``Billy'' Tauzin
Chairman, Committee on Energy and Commerce
Fred Upton
Member of Congress
Mr. Upton. The House Energy and Commerce Committee has
jurisdiction over ICANN, and this hearing is the latest in a
series of activities in which this subcommittee is engaged on
this topic. Back in July 1999, I chaired an Oversight and
Investigations Subcommittee hearing entitled, Is ICANN Out of
Control? At the heart of that hearing were broad fundamental
questions about the Commerce Department's decision to vest
responsibility for the management of the domain name system in
a private nonprofit corporation as the Federal Government moved
to privatize this critical function.
Much has transpired since July 1999, but important policy
questions still linger about ICANN. Some continue to question
its very legitimacy and the propriety of the Commerce
Department's delegation of responsibility to it. Others support
the Commerce Department's efforts to privatize management of
the DNS, but remain vigilant as this relatively fledgling
concept evolves to ensure that it operates openly and fairly.
While I anticipate more hearings on ICANN later this year
on a variety of other important substantive issues, this
hearing will focus specifically on ICANN's selection process
for new top-level domain names and whether it is, in fact,
thwarting competition. On the one hand some view ICANN's
approval of only a limited number of names as thwarting
competition. On the other hand, others argue ICANN was prudent
in selecting a number of--limited number of new names so that
they can be test-driven to best hedge against harming the
technical integrity of the Internet.
It appears these principles need to be balanced. Today we
will get a feel for how well or poorly ICANN is balancing these
principles by examining its selection process. In my mind,
legitimate questions have been raised by several of our
witnesses about the fairness of the application and selection
process, questions which must, in fact, be answered by ICANN.
As such, today we will hear from ICANN, two businesses
whose applications were selected, two businesses whose
applications were not selected, one small business which did
not apply at all, and two public interest advocates. Today's
witnesses will greatly assist our subcommittee in answering the
question of whether ICANN is thwarting competition.
In addition, I have to say that as a parent of two young
kids, I want to explore ICANN's rationale for not approving two
particular top-level domain names, .kids and .xxx as a means of
protecting our kids from the awful, awful filth which is
sometimes widespread on the Internet. We should strongly
encourage the use of technology to protect our kids, and
special top-level domain names may be just exactly the dose of
medicine that is needed. That is why many parents lie awake at
night thinking about the ways we need to respond.
These issues are too important to not have proper
oversight. If ICANN can't, who can?
[The prepared statement of Hon. Fred Upton follows:]
Prepared Statement of Hon. Fred Upton, Chairman, Subcommittee on
Telecommunications and the Internet
Good morning. Today we are holding the first hearing in the 107th
Congress of the Subcommittee on Telecommunications and the Internet. I
want to welcome all of the members of the Subcommittee and tip my hat
to our ranking member, Ed Markey, and our vice chair Cliff Stearns.
Today's hearing focuses on whether ICANN's new generation of
Internet domain name selection process is thwarting competition?
Our constituents may not know the terms: ICANN, Top Level Domain
name, or root server, but they are definitely familiar with: ``dot
com'', ``dot net'', ``dot org'', and--every time they e-mail us--``dot
gov''. Our constituents use these Top Level Domain names every day,
enabling them--with a simple click of the mouse--to communicate almost
instantaneously all over the world.
If ICANN gets its way, our constituents may become familiar with
seven new Top Level Domain names, like: ``dot biz'', ``dot info'',
``dot pro'', ``dot name'', ``dot museum'', ``dot aero'', and ``dot co-
op''. These are the seven new names selected last November by ICANN for
potential launching as early as later this year. However, thirty-seven
other applicants were not selected by ICANN. Moreover, we know that
others could not even afford the $50,000 application fee or chose not
to apply because, on principle, they question ICANN's authority to, in
their minds, ``play god'' with respect to approving new names. Hence,
there is a great deal of controversy surrounding ICANN's selection
process--which has prompted this timely hearing, called for by myself
and Chairman Tauzin in a January letter to ICANN.
I ask unanimous consent to put the Tauzin/Upton letter in the
record.
The House Energy and Commerce Committee has jurisdiction over
ICANN, and this hearing is the latest in a series of activities in
which this Committee has engaged on this subject. In fact, in July
1999, I chaired an Oversight and Investigations Subcommittee hearing
entitled: Is ICANN out of control? At the heart of that hearing were
broad, fundamental questions about the Commerce Department's decision
to vest responsibility for the management of the domain name system in
a private non-rofit corporation, as the federal government moved to
privatize this critical function.
Much has transpired since July 1999, but important policy questions
linger about ICANN. Some continue to question its very legitimacy and
the propriety of the Commerce Department's delegation of responsibility
to it. Others support the Commerce Department's efforts to privatize
management of the DNS, but remain vigilant as this relatively fledging
concept evolves to ensure that it operates openly and fairly.
While I anticipate more hearings on ICANN this year on a variety of
other important, substantive issues, this hearing will focus
specifically on ICANN's selection process for new Top Level Domain
names and whether it is thwarting competition. On the one hand, some
view ICANN's approval of only a limited number of new names as
thwarting competition. On the other hand, others argue that ICANN was
prudent to select a limited number of new names so that they can be
``test driven'' to best hedge against harming the technical integrity
of the Internet. It appears as if these are principles which need to be
balanced.
Today, we will get a feel for how well, or poorly, ICANN is
balancing these principles by examining its selection process. In my
mind, legitimate questions have been raised by several of our witnesses
about the fairness of the application and selection process--questions
which must be answered by ICANN. As such, today we will hear from:
ICANN, two businesses whose applications were selected, two businesses
whose applications were not selected, one small business which did not
apply at all, and two public interest advocates. Today's witnesses will
greatly assist our Subcommittee in answering the question of whether
ICANN is thwarting competition.
In addition, as a parent of two young children, I want to explore
ICANN's rationale for not approving two particular Top Level Domain
names: ``dot kids'' and ``dot xxx'', as a means to protect kids from
the awful smut which is so widespread on the Internet. We should
strongly encourage the use of technology to protect our kids, and
special Top Level Domain names may be just the ticket. This is what so
many parents lie awake at night thinking about, and we need to respond.
I look forward to hearing from the witnesses, and I thank them for
their participation today.
Mr. Upton. I yield to my ranking member Mr. Markey, the
gentleman from Massachusetts.
Mr. Markey. Thank you, Mr. Chairman, and welcome to the
Subcommittee on Telecommunications, Trade, and Consumer
Protection----
Mr. Upton. Welcome back. Thank you.
Mr. Markey. [continuing] in your new role as the chairman
of this prestigious panel. I think it is going to be a very
exciting 2 years. This is my 25th year on the Subcommittee on
Telecommunications, Trade, and Consumer Protection, and I think
that the issues today are more exciting than we have ever had
in the past as all of these technologies offer new public
policy challenges to the Congress as they do to the private
sector. So this is a very distinguished panel which you have
brought with us here today.
ICANN was specifically created to undertake certain
administrative and technical management aspects of the domain
name system and Internet address space. ICANN exists because
the U.S. Department of Commerce and many corporate and civic
entities believe that these functions should not be done by the
government, but, instead, by a private sector entity.
In its early stages of the Internet's development, things
were much easier. Vin Cerf could contact Jon Postel, who in
turn contacted a select group of Internet pioneers and elder
statesmen, and they were largely able to determine amongst
themselves what was best for the Net's development. Yet given
the rapid commercialization of the Internet and the ardent
desire of various public, private and civic voices to have
their say on how the Internet develops from here forward, it is
obvious that we must proceed with a different process.
As we do so, it is important to keep in mind ICANN is not
simply an international standards-setting body. Recent
decisions creating new top-level domains demonstrates that
ICANN is establishing Internet policy in its selections, not
merely advising the global community of appropriate technical
standards. This development in itself is neither good nor bad.
It is perhaps somewhat inevitable. It only becomes problematic
when ICANN starts to make policy judgments without an adequate
policy process.
There is no question in my mind that the current process is
highly flawed. ICANN has made much of the fact that all
applications and comments were posted on a Web site. That is
very useful, but it is no substitute for a comprehensive policy
process, especially for something as important to Internet
competition and diversity as selecting new top-level domains.
New top-level domains are quasipublic assets. Some of the
people making these decisions were elected; some were not.
There was a significant $50,000 fee assessed against
applicants, although not all that money was actually spent
analyzing the applications themselves. Not all technically
qualified and financially qualified applications were selected.
The winners, therefore, were chosen for other, more subjective
reasons, although it is not apparent what criteria were used
for these subjective judgments.
To hear some of the participants explain it, both winners
and losers, events at the Vatican are shrouded in less mystery
than how ICANN chooses top-level domains.
Let me be clear, however, that this does not mean that any
of the new seven top-level domains selected are bad choices or
should not have been chosen. ICANN would have done well to
prohibit in this first round of applications any applications
from the incumbent, Verisign, but at the end of the day, the
new seven domain names chosen will increase competition and
diversity somewhat.
My concern is with those that were not selected and with
the smaller, less powerful voices who feel they have no access
to this process.
We have a number of important questions to explore today.
For those applicants that were not selected, what is the
appeals process? To whom are the ICANN board members
accountable, to the Internet community, to the Department of
Commerce? Is the Department of Commerce performing adequate
oversight? Is it simply an eyewitness to history? How can we
make the subjective criteria for ICANN's policymaking more
clear? Does ICANN have adequate resources to perform these
policy functions? And how do we address ICANN's long-term
funding needs?
The future of Internet governance and Internet policymaking
raise vitally important issues. I want to commend Chairman
Upton for calling this hearing and, again, thank the witnesses
for their participation this morning. I yield back the balance
of my time.
[The prepared statement of Hon. Edward J. Markey follows:]
Prepared Statement of Hon. Edward J. Markey, a Representative in
Congress from the State of Massachusetts
Good Morning. I want to commend Chairman Upton for calling this
hearing today on the Internet Domain Name System and issues related to
Internet governance. I also want to thank all of our witnesses for
coming to share their views with us on these important topics.
Mr. Chairman, the Internet Corporation for Assigned Names and
Numbers--or ICANN--was established to perform certain limited, but
highly vital functions. It was created specifically to undertake
certain administrative and technical management aspects of the Domain
Name System and the Internet address space. ICANN exists because the
U.S. Department of Commerce, and many corporate and civic entities,
believed that these functions should not be done by the government but
instead by a private sector entity.
In its early stages of the Internet's development, things were much
easier. Vint Cerf could contact Jon Postel, who in turn contacted a
select group of Internet pioneers and elder statesmen and they were
largely able to determine among themselves what was best for the Net's
development. Yet given the rapid commercialization of the Internet and
the ardent desire of various public, private, and civic voices to have
their say on how the Internet develops from here forward, it is obvious
that we must proceed with a different process.
As we do so, it is important to keep in mind that ICANN is not
simply an international standards setting body. Recent decisions
creating new Top Level Domains demonstrate that ICANN is establishing
Internet policy in its selections, not merely advising the global
community of appropriate technical standards. This development in
itself is neither good nor bad. It is perhaps, somewhat inevitable. It
only becomes problematic when ICANN starts to make policy judgements
without an adequate policy process.
There's no question in my mind that the current process is highly
flawed. ICANN has made much of the fact that all applications and
comments were posted on a website. That's very useful, but it is no
substitute for a comprehensive policy process--especially for something
as important to Internet competition and diversity as selecting new Top
Level Domains.
New Top Level Domains are a quasi-public asset. Some of the people
making these decisions were elected, some were not. There was a
significant $50,000 fee assessed applicants although not all of that
money was actually spent analyzing the applications themselves. Not all
technically qualified and financially qualified applications were
selected. The ``winners'' therefore, were chosen for other, more
subjective reasons--although its not apparent what criteria were used
for these subjective judgements.
To hear some of the participants explain it, (both winners and
losers,) events at the Vatican are shrouded in less mystery than how
ICANN chooses new Top Level Domains.
Let me be clear however, that this does not mean that any of the
seven new Top Level Domains selected are bad choices or should not have
been chosen. ICANN would have done well to prohibit in this first round
of applications any application from the incumbent, Verisign, but at
the end of the day the new seven domain names chosen will increase
competition and diversity somewhat.
My concern is with those that were not selected and with the
smaller, less powerful voices who feel they have no access to this
process. We have a number of important questions to explore today. For
those applicants that were not selected, what is the appeals process?
To whom are the ICANN board members accountable--to the Internet
community?--to the Department of Commerce? Is the Department of
Commerce performing adequate oversight or is it simply an eyewitness to
history? How can we make the subjective criteria for ICANN's
policymaking more clear? Does ICANN have adequate resources to perform
these policy functions? How do we address ICANN's long term funding
needs?
This future of Internet governance and Internet policymaking raise
vitally important issues. I want to commend Chairman Upton for calling
this hearing and again, thank the witnesses for their participation
this morning.
Mr. Stearns [presiding]. I would also like to have a short
opening statement to congratulate the new Chairman on his
selection to this prestigious committee and his kindness in
offering me the vice chairmanship, and I look forward to
working with him shoulder to shoulder on the issues.
This, of course, marks the first hearing of this
subcommittee, and it is examining the Internet Corporation for
Assigned Names and Numbers, ICANN, selection process of new
Internet domain names.
The Internet is not the unsettled Wild West it once used to
be. Users have tamed this frontier, and both the Internet and
the World Wide Web have become a stable facet for many
Americans. Furthermore, estimates indicate the number of e-
commerce Web sites to double in the next 2 years, up from
687,000 just 2 years ago.
Of course, to ensure this continual prosperity oversight of
how the Internet infrastructure is managed should be a key
responsibility for us on this subcommittee. So I look forward
to getting a report card from today's witnesses on ICANN,
accountability and transparency throughout the process, and to
learn more about what ICANN is doing to ensure competition and
the integrity and stability of the Internet.
And Mr. Dingell, the ranking member of the full committee,
is recognized.
Mr. Dingell. Mr. Chairman, I thank you. Mr. Chairman, I
want to congratulate you on the accession to the responsibility
of the chairman of this subcommittee, and I look forward to
working with you on these matters.
I also want to commend you for today's hearings. We are
engaged in inquiring into a matter which a lot of people regard
as being arcane, but that does not mean that it is irrelevant.
To the contrary, the integrity of the process used by ICANN
recently when it selected a handful of new top domain names is
arguably one of the most critical issues affecting the Internet
today. Domain names are the key to Internet commerce, and we
must determine whether ICANN has a process which is fair and
proper, and whether the outcome will lead to a more effective
competition in the management of the global domain name system.
We must also inquire as to whether the process has resulted
in achieving a measure of public confidence by its fairness or,
by grotesque unfairness, has achieved not just distrust, but
active distaste.
The questions, important as they are, are only going to
address, however, narrow issues pertaining to domain name
assignments. The larger question we must ask is whether this
administrative process is emblematic of a larger problem with
the overall system of Internet governance. This system set up
by ICANN was initiated by the U.S. Department of Commerce and
continues to be subject to the authority of that agency. As
such, it falls squarely within this committee's oversight
responsibilities.
I hope and expect that we will be holding hearings to
evaluate whether the mission of that agency is being soundly
defined, properly executed, and whether, in fact, it is being
fair. The signs I would observe are that it has not been
behaving fairly, and that its behavior has left a lot of
unanswered questions.
I hope that we will hear from witnesses today who will be
able to describe what is going on there. I gather many of them
believe the system is broken. I have strong evidence to believe
they are correct.
Some suggest that ICANN has morphed from a nongovernmental,
technical standards-setting organization to a full-fledged
policymaking body. If that is true, there is cause for serious
concern. ICANN was not given authority to assume that function,
and it appears to be accountable to no one, except perhaps God
Almighty, for its actions.
Most important, if ICANN is making Internet policy
decisions, then the people must know that they who are affected
will have access to a reliable and transparent system to seek
redress for harm.
There is no question we are treading on uncharted
territory. Bumps in the road are, of course, unavoidable, but
while it may be desirable to keep the Internet unregulated both
from a diplomatic and economic standpoint, we must not allow
U.S. interests to be put at risk by blindly adhering to a
hands-off approach, and we must see to it that the agency which
we are constituting to act on behalf of the U.S. Government in
these matters functions fairly, well, efficiently and in a
fashion which is going to be in the broad overall public
interest.
I particularly commend you, therefore, for initiating this
hearing. I believe that our oversight efforts have to be
extremely diligent, and we have to be prepared to act quickly
should it become necessary to do so. I would observe that we
should follow this set of hearings vigorously and energetically
to require the necessary answers from ICANN and from the
Department of Commerce. I believe there is much to be justified
here, and I believe that the task of justifying these things is
going to be difficult, and I look forward to assisting those
agencies that are responsible here in achieving a correct and a
proper result. It may be painful for them. Thank you, Mr.
Chairman.
[The prepared statement of Hon. John D. Dingell follows:]
Prepared Statement of Hon. John D. Dingell, a Representative in
Congress from the State of Michigan
Mr. Chairman, thank you for recognizing me. First, I want to
congratulate and welcome you to the Subcommittee on Telecommunications
and the Internet. I know you will do a wonderful job in charting the
course of this Subcommittee, and in helping us navigate through the
many complex issues associated with telecommunications. You are to be
commended not only for your enthusiasm in scheduling the very first
hearing of the 107th Congress, but also for your courage in tackling
what may be the most arcane issue we have faced in years. I've
familiarized myself with today's testimony, Mr. Chairman, and even
reciprocal compensation is starting to look like a simple fix.
Arcane, however, does not mean irrelevant. To the contrary, the
integrity of the process used by ICANN recently when it selected a
handful of new top-level domain names is arguably one of the most
critical issues affecting the Internet today. Domain names are the key
to Internet commerce, and we must determine whether the ICANN process
was fair and proper, and whether the outcome will lead to more
effective competition in the management of the global domain name
system.
These questions, however important they may be, still only address
the narrow issue pertaining to domain name assignments. The larger
question we must ask is whether this administrative process--if found
to be deficient--is emblematic of a larger problem with the overall
system of Internet governance. This system of governance set up by
ICANN--was initiated by the U.S. Department of Commerce, and continues
to be subject to the authority of that agency. As such, it falls
squarely within the jurisdiction of this Committee's oversight
responsibilities, and I hope and expect that we will hold ongoing
hearings to evaluate whether ICANN's mission is both soundly defined
and properly executed.
We will hear from some witnesses today who believe the system is
broken. Some suggest that ICANN has morphed from a non-governmental
technical standards-setting organization to a full-fledged policymaking
body. If that is true, I believe it is cause for serious concern. ICANN
was not given authority to assume that function, and it appears to be
accountable to no specific body for its actions. Most important, if
ICANN is making Internet policy decisions, then those people directly
affected must have access to a reliable and transparent system to seek
redress from harm.
There is no question that we are treading on uncharted territory
and bumps in the road are unavoidable. But while it may be desirable to
keep the Internet unregulated, both from a diplomatic and economic
standpoint, we must not allow U.S. interests to be put at risk by
blindly adhering to a hands-off approach. I believe we should be
diligent in our oversight efforts, and quick to act should it become
necessary to do so.
Thank you again, Mr. Chairman, for holding this important hearing,
and I also want to extend my appreciation to each of the distinguished
witnesses for appearing today.
Mr. Upton. Thank you, Mr. Dingell.
I would make a motion at this point that all Members--the
House is not in session with recorded votes today, so a number
of Members I know have gone back to their districts, but I
would make a motion by unanimous consent that all members of
the subcommittee have an opportunity to put their--insert their
full statement into the record.
And with that I recognize Mr. Shimkus from Illinois.
Mr. Shimkus. Mr. Chairman, I don't have an opening
statement.
Mr. Upton. Mr. Brown.
Mr. Brown. Thank you, Mr. Chairman, brief opening
statement.
I am pleased to join the Subcommittee on Telecommunications
and the Internet with you, Mr. Chairman, with Ranking Member
Markey, and look forward to working with both of you on issues
that are so important to the new economy.
The subject of domain names is of interest to all of us.
Recently I met with the vice president of Cuyahoga Community
College in Cleveland, who stressed his frustration with his
school's Internet domain. Cuyahoga Community College in
Cleveland, Ohio, otherwise known as Tri-C, is the first and
largest community college in Ohio. It is the fourth largest
institution of higher education in the State.
Despite the fact Tri-C is a large, well-established higher
education institution, it has been locked out of obtaining the
domain .edu. Only 4-year, degree-granting colleges and
universities generally are allowed the .edu domain. Two-year
colleges are not allowed that address even though they educate
as many, if not more, students than 4-year students. www.tri-
c.cc.oh.us is not an especially memorable address for its
faculty and others.
The Department of Commerce, in partnership with ICANN,
oversees the .edu domain. While they have expressed interest in
finding a solution, action has not been taken in an expedient
manner. It is important for the Department and ICANN to move
expeditiously so community colleges and their students can have
easier access and equal access to important campus resources
and the Internet.
Mr. Chairman, I thank you.
Mr. Upton. Mr. Davis.
Mr. Davis. I ask unanimous consent my statement go in the
record in deference to our witnesses so we can hear from them.
[The prepared statement of Hon. Tom Davis follows:]
Prepared Statement of Hon. Tom Davis, a Representative in Congress from
the State of Virginia
Mr. Chairman, I am pleased to be beginning my membership on the
Subcommittee with a very timely oversight hearing on ICANN's selection
of new generic DNS suffixes. Thank you to all of the witnesses for
taking time from their work to be here today. I am particularly pleased
to see Dr. Cerf whom I have had the pleasure of meeting previously, and
Ms. Leah Gallegos who hails from my home state of Virginia.
As the Internet continues to grow, not only in terms of electronic
commerce but also with respect to global communication in general, the
number of people, businesses, and nations with a stakeholder interest
in the fair and competitive expansion of its perimeters is growing. At
the same time, there is a legitimate expectation that the Internet will
be a predictable environment that reflects the competitive marketplace.
With that growth, it becomes even more important that there is
confidence the ICANN is managing Internet functions in a manner that
promotes competition, uses an open and transparent process that
maintains the Corporation's neutrality, and does no harm to the future
growth of the Internet.
I have heard from a number of persons in Virginia who have
expressed their dismay at both the format and the process by which
ICANN selected the suffixes and the successful registry applicants in
November of last year. I look forward to hearing our witnesses's
testimonies and having the opportunity to determine whether or not
Congress needs to take action that will assist ICANN and the Department
of Commerce in improving the process for promoting competition in the
selection of next generation Internet Domain Names.
Mr. Upton. Thank you, Mr. Davis.
Mr. Gordon.
Mr. Gordon. I am ready to hear the panel.
Mr. Upton. Ms. Harman.
Ms. Harman. As the rookie on this committee who represents
what is now called the digital coast of California, I just want
to say how happy I am to be here and to be on the this
subcommittee and to make one observation, which is that I
believe we have in general a digital economy and an analogue
government, and the challenge is to create a digital government
to match the digital economy. We have to do this right, and we
have to observe fairness, but it would be a shame if we imposed
analogue procedures on this issue. And so I hope that we will
be very creative and very digital in this subcommittee as we
move forward.
I yield back, Mr. Chairman.
Mr. Upton. Thank you.
Ms. DeGette.
Ms. DeGette. Mr. Chairman, I will echo my colleague from
California's pleasure at being on this committee. You may not
be aware, but just in the past few years, the Denver
metropolitan area has become one of the fastest growing
telecommunications hubs in the country, and, as a matter of
fact, is now in the top five. So even though it is onerous, I
know, I would love to invite the chairman and the ranking
member to come out there and see our industry at some point and
to perhaps have some field hearings there. It is exciting what
is going on, and I am excited to be on the telecom committee.
Even though I am new to this committee, I am not new to the
issue. When I was in the State legislature in Colorado, we
passed one of the landmark laws that preceded the 1969 act, so
I am delighted to get back with these issues and to hear from
the witnesses today, and I yield back my time as well.
[The prepared statement of Hon. Diana DeGette follows:]
Prepared Statement of Hon. Diana DeGette, a Representative in Congress
from the State of Colorado
Good morning Mr. Chairman. A warm welcome to our witnesses.
I am thrilled to be here today as a new member of this
subcommittee. I am pleased as well, that my colleague Mr. Stupak has
joined me as a fellow refugee from the now defunct Finance and HazMat
subcommittee.
As some of you may know, the Denver metropolitan area, which I
represent, has one of the fastest growing telecommunications industries
in the country right now.
In fact, overall, I believe we are in the top five telcom hubs in
the nation at this time. The growth of this dynamic industry has
unbelievable growth in the Denver area over the past decade, and as one
who is very interested in these issues, it has been exciting to watch
the progress.
Given this fact, I would like to take the opportunity to invite my
Chairman and Ranking Member to come pay us a visit. I would be happy to
host some field hearings in the near future on some of the pressing
telecom issues that we will be dealing with in the 107th.
While I was not yet in Congress when the Telecommunications Act of
1996 passed, I did work on this issue in the Colorado State House. In
fact Colorado passed a landmark telecom reform act in 1995, which I was
very involved in, and I look forward to continuing that work here at
the federal level.
I am pleased to attend my first subcommittee first hearing on such
an interesting issue, that of new domain names and how the whole
process of selecting them has unfolded.
This issue couldn't be more timely, not only because of the where
ICANN is in the process of selecting new suffixes, but because the
Internet is still growing at an unbelievable rate and pressure
continues to build on its capabilities.
If you look at the rate at which registered domain names have grown
over the past few years, it is clear that there is a huge demand to
expand the number of domain names available for registrations by
individuals, organizations and businesses.
As the Internet has grown, the method of allocating and designating
domain names has been fairly controversial. The issues that have caused
to many headaches include transitioning to a single domain names system
(DNS) registrars to many registrars, trademark disputes, the
appropriate federal role and of course, the issues that brings us here
today, the process of creating new domain names.
Certainly, it is the responsibility of this committee to make sure
that the process is as open and fair as possible. It is also our
responsibility to make sure that ICANN is taking every step necessary
to guarantee that the overall efficacy of the Internet is not
disrupted.
I will forward to hearing the testimony of our witnesses.
Mr. Upton. Thank you very much.
[Additional statements submitted for the record follow:]
Prepared Statement of Hon. W.J. ``Billy'' Tauzin, Chairman, Committee
on Energy and Commerce
I would like to thank Chairman Upton for holding this important and
timely hearing on the Internet Corporation for Assigned Names and
Numbers (ICANN). As the Committee of jurisdiction over ICANN, it is
imperative that we continue our oversight responsibilities in this
area. The issues ICANN is grappling with will have a fundamental impact
on the future vibrancy of the Internet. While I recognize that there
are a number of important and interesting issues involving ICANN
governance issues, funding, issues, root server competition issues,
multilingual issues, dispute resolution issues, countrycode TLD issues,
and significant trademark implications--this hearing is intended to
focus on the discrete but critical issue of the process by which ICANN
recently approved seven suffixes: dot areo, dot co-op, dot info, dot
museum, dot name, dot pro, and dot biz.
That said, it is my intention to, with Chairman Upton, actively
monitor those issues I just mentioned. In that regard, I sincerely hope
that ICANN--and its outside representatives--will respect this
Committee's rules in the future and submit its testimony within 48
hours of a hearing. This rule really is for your benefit as much as it
is for ours. Providing Members and their staff with sufficient time to
review your written testimony enables us to better understand your
position, encourages Members to be more engaged and generally makes for
a more fruitful hearing experience.
For being in existence for a little over two years--ICANN has been
charged with a number of important tasks, one of which is to establish
a process for the introduction of new top level domain (TLDs) names in
a way that will not destabilize the Internet. On November 16th ICANN
announced its selection of the seven new suffixes--doubling the number
of global TLDs. There are many arguments both for and against new TLDs.
Those in favor of a limitless number (or at least significantly more
than seven) maintain that new TLDs are technically easy to create, will
help relieve the scarcity in existing name spaces that make it
difficult for companies to find catchy new website addresses, and are
consistent with increasing consumer choice and a diversity of options.
However, there are those who urge restraint and caution in the
introduction of TLDs pointing to greater possibilities for consumer
confusion, the risk of increased trademark infringement, cybersquatting
and cvberpiracy. I am eager to hear from ICANN about how it arrived at
the number seven.
Equally important, many are questioning the very process by which
the suffixes were selected. I am eager to hear ICANN's view of the
process, the views of selected and set aside applicants, and the views
of Professor Froomkin and the Center for Democracy and Technology. I
encourage all panelists to offer, in addition to specific criticism--or
praise depending on their point of view--their insights as to how to
improve the process as we move forward to future rounds of suffix
selections.
On August 3rd ICANN posted an extensive process overview to assist
those considering applying to operate a new TLD. The application
materials were subsequently posted on August 15th. October 2nd was the
deadline for submitting applications and ICANN announced it decision on
November 16th. Some validly argue that the six week application review
process seemed unacceptably short--making it extremely difficult for
each application to enjoy a thorough review. Some are complaining that
the criteria was vague and not followed: they were not provided an
opportunity to correct errors in the staff recommendation on their
applications: they were not provided with any meaningful opportunity
for face-to-face consultations and that in fact, they were only
provided with three minutes to make a ``last ditch'' pitch to the
Board. With each applicant paying a non-refundable $50,000 filing fee,
should the process have provided more?
Notwithstanding these complaints others were happy with the process
and maintain that the time has come to introduce new domain names onto
the Internet, and urge that there not be any further delay.
Our role should be to ensure that the process by which ICANN, a
private, non-profit entity with global responsibilities, selected
domain names was open and fair to all applicants. Were the procedures
clearly articulated and consistently followed? To the extent we find
shortcomings in this new process, and I already have, I hope we can
provide some guidance that will serve as a roadmap in the future given
that this is not expected to be the last round of domain name
selections. With this hearing, our review will not end, we will
continue to review this process.
I look forward to hearing from this distinguished panel of
witnesses. Thank you.
______
Prepared Statement of Hon. Eliot Engel, a Representative in Congress
from the State of New York
Thank you Mr. Chairman.
Let me also welcome you to your new position. Like all of my
Democratic colleagues I look forward to working with you and the other
Republican members on these issues to ensure consumer protection and
free and open competition.
I also want to welcome back Mr. Markey to the Ranking Position--I
have always admired your strong leadership and vocal support for
America's consumers.
Today's hearing will hopefully be illuminating to all of us here.
Many questions have been raised about the process that ICANN employed
to approve the first round of new Top Level Domains (TLDs). This
hearing will give us an opportunity to learn about this process.
I, for one, am interested in ensuring that the process was open,
fair, and clear to all the participants and those who may have wanted
to participate. This is one of my concerns--the $50,000 filing fee does
seem at first glance to be rather high.
This hearing being called is very timely as well because the
Commerce Department has not yet approved the new TLDs.
I do appreciate the difficulty ICANN had in organizing this
process. There is just no precedent for doing this. And so even if
there were fits and starts, so long as the process was open and clear
to all involved, then I am hopeful that we can work with ICANN to
improve and streamline this process for future determinations of TLDs.
Mr. Upton. Our witnesses today are Dr. Vincent Cerf,
Chairman of the Board for the Internet Corporation for Assigned
Names and Numbers, ICANN; Mr. Lou Kerner, CEO of .TV; Ms. Elana
Broitman, director of policy and public affairs, register.com;
Mr. David Short, legal director of the International Air
Transport Association; Mr. Ken Hansen, director of corporate
development of NeuStar, Inc.; Ms. Leah Gallegos, president of
AtlanticRoot Network, Inc.; Professor Michael Froomkin,
professor of law, University of Miami School of Law; and Mr.
Alan Davidson, associate director of the Center for Democracy
and Technology.
Welcome all of you to our first hearing of the year. Your
statements are made part of the record in their entirety. We
would like to limit your presentation to no more than 5
minutes. We have a relatively new timer here which will tell
you exactly how much time you have left, and I am going to be
fairly fast with the gavel.
Following that 5 minutes, members on the dais will be able
to ask questions for 5 minutes, and we will proceed that way.
Dr. Cerf, welcome.
STATEMENTS OF VINTON G. CERF, CHAIRMAN OF THE BOARD, INTERNET
CORPORATION FOR ASSIGNED NAMES AND NUMBERS; LOU KERNER, CHIEF
EXECUTIVE OFFICER, .TV; ELANA BROITMAN, DIRECTOR, POLICY AND
PUBLIC AFFAIRS, REGISTER.COM; DAVID E. SHORT, LEGAL DIRECTOR,
INTERNATIONAL AIR TRANSPORT ASSOCIATION; KENNETH M. HANSEN,
DIRECTOR, CORPORATE DEVELOPMENT, NEUSTAR, INC.; LEAH GALLEGOS,
PRESIDENT, ATLAN-
TICROOT NETWORK, INC.; A. MICHAEL FROOMKIN, PROFESSOR OF LAW,
UNIVERSITY OF MIAMI SCHOOL OF LAW; AND ALAN B. DAVIDSON,
ASSOCIATE DIRECTOR, CENTER FOR DEMOCRACY AND TECHNOLOGY
Mr. Cerf. Thank you very much, Mr. Chairman, Ranking Member
Markey, ladies and gentlemen of the committee. I appreciate the
opportunity to describe what I believe is an important
accomplishment of what is a young and still maturing entity,
the Internet Corporation for Assigned Names and Numbers.
The introduction of new competition for global domain names
at the registry or wholesale level of the domain name system is
happening for the first time in 15 years. This is the third and
the last of the significant initial goals set forth in the U.S.
Government white paper that called for the creation of ICANN.
ICANN has succeeded in opening the registrar or the retail
portion of the domain name market to new competition,
accrediting more than 180 competitive registrars of which about
half are now operating, and seeing average registrar prices
drop by more than a factor of two in the first year of this
competition.
ICANN's uniform dispute resolution procedure has
successfully provided a quick, cheap and globally available way
to resolve many domain name disputes.
This last major initial goal, the introduction of new
global top-level domains, is the most complex of these three
efforts. The seven original global TLDs were created in 1985,
and for at least most of the past decade there has been
considerable debate about whether adding new TLDs is a good
idea. The range of opinion is from zero to millions, literally,
and, as a result, a number of past efforts have not reached a
conclusion for lack of consensus. It has only been with the
creation of ICANN and the use of the consensus development
mechanisms it contains that we have finally been able to come
to a sufficient consensus to allow us to move forward with
enough TLD additions to the domain name system.
On the other hand, all the advice that we have received
from the technical and the policy bodies of ICANN have told us
to move prudently and carefully to minimize any risk of
destabilizing the domain name system. Many of us believe that
we can add new TLDs without creating instability or other
adverse effects, but the fact is it has never been done in the
context of the Internet as its exists today, and thus, while
our objective is to encourage new competition here, just as we
already have in the registrar segment of the market, we want to
do so without endangering the utility of what has become a
critical global medium for communication and commerce.
The consensus development process within ICANN has been
extensive. This issue was first referred to ICANN's Domain Name
Support Organization, an open advisory body, that recommended
the introduction of a limited number of new TLDs as a proof of
concept, with additional TLDs to be added only if it was clear
that it could be done without destabilizing or otherwise
impairing the utility of the Internet. A similar recommendation
was conveyed by ICANN's technical support organization. The
board accepted these recommendations and asked for proposals
for new TLDs to be included in this first limited proof-of-
concept phase.
Because ICANN is a consensus development body, everything
about this process was transparent. All the proposals were
posted on ICANN's Web site for public comment. Both the
proposals and roughly 4,000 public comments were reviewed by
ICANN's staff and independent consultants retained for that
specific purpose. The results of that evaluation, a 326-page
analysis, were also posted for public comment, and another
thousand comments were received. The board then held a public
forum lasting 12 hours, where the applicants and the general
public provided final input and then the next day selected a
diverse group of seven proposals to carry out this initial
proof of concept experiment in a public meeting that lasted
about 6 hours. Since that time, negotiation of appropriate
commercial agreements have been under way, and I hope we will
see those final agreements soon.
Because, as was clear from the beginning of the process,
ICANN was only going to select a limited number of proposals
for this initial proof of concept phase, a significant fraction
of the 44 applications that went through the process were
inevitably going to be disappointed at not being selected in
this first proof of concept round. And they were disappointed.
But the real news here is that finally, with the formation of
ICANN and the development of this consensus, this long debate
is actually producing new TLDs. If all those selected become
operational, we will have immediately doubled the number of
global TLDs available. This will immediately increase
competition and consumer choice.
I have a longer statement, Mr. Chairman.
Mr. Upton. I know, I read it last night.
Mr. Cerf. You are very kind to have done so, sir.
I have a longer statement, with attachments, and I would
ask these be entered into the record. I will be happy to answer
any questions you may have, and I thank you for allowing me and
ICANN to participate in this important proceeding.
[The prepared statement of Vinton G. Cerf follows:]
Prepared Statement of Vinton G. Cerf, Chairman of the Board, Internet
Corporation for Assigned Names and Numbers
My name is Vinton G. Cerf, and outside of my regular employment at
WorldCom,\1\ I am the volunteer Chairman of the Internet Corporation
for Assigned Names and Numbers (ICANN). I appreciate the opportunity to
appear before this Committee to describe the efforts of ICANN to
introduce additional competition into the Internet name space, while at
the same time prudently protecting against possible disruption of this
extremely important global resource for communications and commerce.
---------------------------------------------------------------------------
\1\ My curriculum vitae is attached.
---------------------------------------------------------------------------
The basic message I would like to leave with you today is that
ICANN is functioning well, especially for such a young organization
with such a difficult job. In fact, it has made substantial progress
toward the specific goals it was created to meet, including the
introduction of competition at both the wholesale and retail levels of
the registration of names in the Domain Name System (DNS). The recent
action to introduce seven new Top Level Domains (TLDs) into the DNS
will double the number of global TLDs and at the same time will not, we
believe, create serious risks of destabilizing the Internet--something
I know none of us wants to see. The fact that ICANN, in just over a
year, has been able to generate global consensus on this issue--which
has been fiercely debated for most of the last decade--is a testament
to ICANN's potential to effectively administer the limited but
important aspects of the DNS that are its only responsibility.\2\
---------------------------------------------------------------------------
\2\ I have attached to this testimony a time line that describes
the chronology of the debate over new Top Level Domains.
---------------------------------------------------------------------------
a. what is icann?
It is probably useful to first provide a little background about
ICANN, which is a unique entity that may not be familiar to everyone.
ICANN is a non-profit private-sector organization with a 19-member
international volunteer Board of Directors drawn from a set of
specialized technical and policy advisory groups, and through open,
worldwide online elections. ICANN was formed in 1998 through a
consensus-development process in the global Internet community, in
response to a suggestion by the United States Government that the
private sector create such a body. It was formed to undertake certain
administrative and technical management aspects of the Domain Name
System (DNS) and the Internet address space. Domain names serve as the
visible face of the name and address mechanism of the Internet--in
short, the way computers know where to send or receive information.
ICANN performs functions that, prior to ICANN's creation by the
private sector, were performed by contractors to the US Government
(National Science Foundation and DARPA). ICANN is a young, and still
maturing organization; it turns out that achieving global consensus is
not so easy. But it has made great--and many would say surprising--
progress toward the objective shared by the vast majority of
responsible voices in the international Internet community: the
creation of a stable, efficient and effective administrative management
body for specific technical and related policy aspects of the DNS and
the Internet address space that is consensus-based, internationally
representative, and non-governmental.
b. what are the guiding principles of icann?
There is nothing quite like ICANN anywhere in the world, and of
course it will be some time before we are certain that this unique
approach to consensus development can effectively carry out the limited
but quite important tasks assigned to it. I am cautiously optimistic,
but we are still at an early stage of evolution, and there is much work
to do. The organizational work has been complicated by the fact that we
have also been asked to simultaneously begin to accomplish the specific
operational goals set out by the US Government in the White Paper.\3\
The situation is analogous to building a restaurant and starting to
serve customers while the kitchen is still under construction; it is
possible, but may occasionally produce cold food.
---------------------------------------------------------------------------
\3\ The White Paper was a policy statement published by the
Department of Commerce on June 10, 1998. See Management of Internet
Names and Addresses, 63 Fed. Reg. 31741 (1998)
---------------------------------------------------------------------------
The White Paper set forth four principles that it described as
critical to the success of an entity such as ICANN: stability;
competition; private, bottom-up coordination; and representation.
1. Stability is perhaps the easiest to understand. The US
Government was seeking to extract itself from what it had concluded was
no longer a proper role for the US Government--the funding of private
contractors to manage important technical aspects of the global
Internet name and number address system--but only in a way that did not
threaten the stability of the Internet. As the White Paper said, and as
seems obvious, ``the stability of the Internet should be the first
priority of any DNS management system.'' If the DNS does not work, then
for all practical purposes for most people, the Internet does not work.
That is an unacceptable outcome, and thus everything that ICANN does is
guided by, and tested against, this primary directive.
2. Competition was also an important goal set forth in the White
Paper, which stated that ``[w]here possible, market mechanisms that
support competition and consumer choice should drive the management of
the Internet because they will lower costs, promote innovation,
encourage diversity, and enhance user choice and satisfaction.''
Competition in the DNS structure as it stands today is theoretically
possible at both the registry (or wholesale) level, and the registrar
(or retail) level. Increasing competition at the retail level involves
only adding additional sellers of names to be recorded in existing
registries; as a result, it generates relatively minor stability
concerns. For this reason, adding new competition at the retail level
was the first substantive goal that ICANN quickly accomplished after
its formation. On the other hand, adding new registry (or wholesale)
competition--which is the subject of this hearing--requires the
introduction of additional Top Level Domains into the namespace, and
thus does raise potential stability issues of various kinds. As a
result, and given its prime directive to protect stability, ICANN has
moved forward in this area in a prudent and cautious way, consistent
with recommendations from many constituencies interested in the
Internet, which I will describe in more detail later in this testimony.
3. A third principle was private sector, bottom-up consensus
development, and the entirety of ICANN's processes are controlled by
this principle. ICANN is a private-sector body, and its participants
draw from the full range of private-sector organizations, from business
entities to non-profit organizations to foundations to private
individuals. Its policies are the result of the complex, sometimes
cumbersome interaction of all these actors, in an open, transparent and
sometimes slow progression from individuals and particular entities
through the ICANN working groups and Supporting Organizations to
ICANN's Board, which by its own bylaws has the role of recognizing
consensus already developed below, not imposing it from above. Like
democracy, it is far from a perfect system, but it is an attempt, and
the best way we have yet been able to devise, to generate global
consensus without the coercive power of governments.
4. Finally, the fourth core principle on which ICANN rests is
representation. A body such as ICANN can only plausibly claim to
operate as a consensus development organization for the Internet
community if it is truly representative of that community. The White
Paper called for ICANN to ``reflect the functional and geographic
diversity of the Internet and its users,'' and to ``ensure
international participation in decision making.'' To satisfy these
objectives, all of ICANN's structures are required to be geographically
diverse, and the structures have been designed to, in the aggregate, to
provide opportunities for input from all manner of Internet
stakeholders. This is an extremely complicated task, and we are not yet
finished with the construction phase; indeed, we have just initiated a
Study Committee chaired by the former Prime Minister of Sweden, Carl
Bildt, to oversee a new effort to find a consensus solution for
obtaining input from and providing accountability to the general user
community, which might not otherwise be involved in or even
knowledgeable about ICANN and its activities. Other organizational
tasks necessary to ensure that ICANN is fully representative of the
entirety of the Internet community are also ongoing. This is hard work,
and there is more to do to get it done right.
c. what has icann accomplished so far?
Obviously, ICANN is still a work in progress. Nevertheless, it has,
in my view, already made remarkable progress in its young life. ICANN
was created in November of 1998, and did not really become fully
operational until a year later (November of 1999) with the signing of a
series of agreements with Network Solutions Inc., then the sole
operator of the largest and most significant registries--.com, .net,
and .org. So ICANN really has only about 14 months of operating
history. Still, even in that short span of time, some significant
things have happened.
1. The Introduction of Retail Competition. As one of its very first
actions, ICANN created an accreditation system for competitive
registrars and, pursuant to its NSI agreements, gave those new
competitors access to the NSI-operated registries. When ICANN was
formed, there was only a single registrar (NSI) and everyone had to pay
the single price for the single domain name product that sole registrar
offered: $70 for a two-year registration. There are now over 180
accredited registrars, with more than half of those actively operating,
and you can now register a domain name in the .com, .net, and .org
registries for a wide range of prices and terms--some will charge zero
for the name if you buy other services, while others will sell you a
ten-year registration for significantly less than the $350 it would
have cost pre-ICANN (even if it had been available, which it was not).
While there are no precise statistics, in part because the market is so
diverse, a good estimate of the average retail price today of a one-
year domain name registration in the NSI registries is probably $10-
15--or less than half the retail price just 18 months ago.
At the time of ICANN's creation, NSI had 100% of the registration
market for the .com, .net and .org TLDs. Today, we estimate that NSI is
registering less than 40% of new registrations in those TLDs--a market
share drop of more than half in that same 18-month period. There are
still issues that must be dealt with in this area; some registrars have
not lived up to their contractual commitments, and ICANN needs to
ensure that they do. And indeed, there may be too many registrars; 94%
of all registrations come from the 10 largest registrars, with the
other 80 or 90 active registrars sharing the other 6%. Name
registration is quickly becoming a commodity business, and a commodity
business, with commodity margins, will probably not support 100
vigorous competitors. We are already starting to see some companies
wishing to leave the business, and we need to make as sure as we can
that those departures do not impair the ability of consumers and
businesses to rely on names they have registered, and that departures
or even failures do not generate unreliability or other forms of
instability in the namespace itself. So while there are still issues to
be dealt with, I think it is widely recognized that ICANN has been very
successful in changing the retail name registration market from a
monopoly market to a highly competitive market.
2. Creation of a Cost-Effective, Efficient Dispute Resolution
System. A second significant accomplishment has been the creation of
the Uniform Dispute Resolution Policy, a way to quickly and cheaply
arbitrate certain domain name disputes. While domain names themselves
cannot be trademarked, it is certainly possible for domain names to be
confusingly similar to a trademarked name, or in other ways to be
inappropriately used by someone for illegitimate means. Since trademark
and other intellectual property rules differ from country to country,
enforcing those rights is complex and expensive.
One of the policies that was generated from the ICANN bottom-up
process early on was the need for a simple procedure to resolve the
clearest and most egregious violations on a global basis. The result,
after considerable work in a variety of ICANN forums, is the UDRP,
which one commentator recently noted is ``widely viewed as a model of
dispute resolution for the 21st Century.'' The UDRP is limited to
certain very specific claims, is intended to require only about $1,500
in costs and 45 days to invoke, and is required to be included in all
name registration contracts by all ICANN-accredited registrars, thus
providing the basis for global uniformity in the resolution of this
particular class of domain name disputes. Even though the UDRP is non-
binding (either party may take the dispute to court after an
unfavorable UDRP decision), it appears that has happened in only a few
dozen out of over 2,000 decisions to date.
The UDRP is, I would submit, another very positive accomplishment
of ICANN during its short existence to date. As of this writing,
parties interested in further refinement of the UDRP are already
studying its design for possible revisions.
d. the introduction of new global top level domains.
That brings me to the subject of today's hearings, which is really
the third major accomplishment of ICANN in its short existence: the
creation of additional competition at the registry (or wholesale) level
of the namespace. To understand how much of an accomplishment this was,
and how difficult it has been to get to this point, we need to start
with some history, after which I will walk through the general standard
utilized, the criteria that were applied, the application process, the
evaluation process, and the selection process. I will then bring the
story up to date with a description of what has happened since the
selections were made.
Background. The Internet as we know it today was not created with
all of its present uses clearly in mind. In fact, I can safely say
(having been very much involved in the very earliest days of the
Internet) that no one had any idea how it would develop in the hands of
the general public, nor even that it would ever reach public hands.
Certainly there was little appreciation of the increasingly critical
role it would play in everyday life.
In those days, we were designing a communications system intended
for military application and used for experimental purposes by the
research and academic community, and not a system for commerce.
Internet addresses are numeric values, usually represented by four
numbers separated by ``.'' (dots). This is sometimes called ``dotted
notation'' as in 192.136.34.07. In the earliest days, computers
(``hosts'') were known by simple names such as ``UCLA'' or ``USC-ISI''.
As the system grew, especially after 1985 as the National Science
Foundation began growing its NSFNET, it became clear that a system of
hierarchical naming and addressing conventions would be needed.
At that time, seven so-called ``Top Level Domains'' were created:
.com for commercial, .net for networks, .org for non-commercial
organizations, .gov for government users, .mil for the military, .edu
for educational institutions, and .int for international organizations.
All domain names since that time (with an important exception I will
mention momentarily) have been subdivisions of those original seven
TLDs. Thus, wcom.com, to pick an example, is part of the .com top level
domain, and all messages sent to Vinton.G.Cerf@wcom.com are routed
pursuant to the information contained ultimately in the .com registry's
distributed database. In particular, that database resolves
``wcom.com'' into a 32 bit address, such as 192.136.34.07 [note, this
is not the actual Internet address associated with the wcom.com domain
name].
The exception mentioned earlier is the set of so-called ``country
code'' (or ``cc'') TLDs. The original seven TLDs were once called
``generic'' TLDs and are now known as ``global'' TLDs, meaning that
there are theoretically no geographic boundaries that constrain entries
in those databases.\4\ In the early days of the Internet, one of the
most important values to the scientists seeking to incubate and grow
this new thing was the spreading of connectivity to as many parts of
the world as possible. To help in that, individual countries (and some
other geographic areas) were delegated their own TLDs, such as .au for
Australia, or .jp for Japan, or .fr for France. Operation of the
registries for these ccTLDs was delegated to a wide variety of people
or entities, with the primary consideration being a willingness to
agree to operate them for the benefit of the citizens of that
geography. These original delegates were frequently academics,
sometimes government agencies, and sometimes local entrepreneurs; the
common thread was that they promised to use these TLDs to provide
access to this new thing called the Internet for local constituents. In
this way, the Internet, which started as a research experiment in
American universities, slowly became truly global. It is worth noting
that the Internet research project was international in its scope
almost immediately. It started in 1973, and by early 1975, University
College London and the Norwegian Defense Research Establishment were
involved. Later, sites in Italy and Germany became a part of the
Internet research effort.
---------------------------------------------------------------------------
\4\Of course, in fact entries in .gov, .mil, and for the most part
.edu relate only to the United States, but the other global TLDs are
open to entries from all over the world.
---------------------------------------------------------------------------
The original seven gTLDs were created in the mid- to late-1980s; no
new global TLD has been added to the namespace since then. There are
now some 245 ccTLDs, but as described, these were intended to be for
localized use, not as alternatives for global TLDs. So as the Internet
grew during the 1990s, demand for domain names grew as well, but as a
practical matter the only global (i.e., non-national) TLDs in which
businesses or individuals could freely register a domain name were
.com, .net and .org--all administered by Network Solutions, Inc. under
a contract with the National Science Foundation.
There is a long history about how this came about, which I don't
have time to tell, but suffice it to say that as demand exploded, NSI
could not effectively operate the registry within the financial
framework of its agreement with the National Science Foundation and
sought to remedy this by obtaining permission to charge users for
registration of names in the .com, .net and .org databases. Over time,
there came to be dissatisfaction with the service offered by NSI. In
addition (also for reasons too complicated to relate here), NSI was
constrained by its contract with NSF to charge exactly $70 for a two-
year registration with an annual $35 charge after the second year--no
exceptions, no changes. As the number of name registrations climbed
into the millions, many felt that the charge far exceeded the cost of
accepting the registration and maintaining the database.
This unhappiness of a significant portion of the Internet community
was one of the driving forces behind a grass-roots attempt to
institutionalize the function of the original ICANN, the Information
Sciences Institute at the University of Southern California, a
government contractor that performed a set of functions known as the
Internet Assigned Numbers Authority (IANA). After almost three years of
contentious debate, the grass-roots effort failed to gel and the US
Government (after extensive public consultation) then called on the
private sector to come forward with a new kind of organization. The
private sector responded by creating ICANN, as a way to, among other
things, encourage the addition of competition at both the retail and
wholesale levels of the namespace.
Standards for Introduction of New TLDs. As described above, ICANN
was able to introduce retail competition relatively quickly after its
creation, and this has produced the expected benefits--lower prices,
more consumer choice, and innovation. But the introduction of wholesale
competition, because it involves actually expanding the structure of
the namespace, presented and continues to present more risks. While
most Internet engineers believe that some number of additional TLDs
could be added without serious risks of instability, there is
considerable uncertainty about how many could be added without adverse
side effects, and very few engineers have been willing to absolutely
guarantee that there was zero risk of instability. Given the
increasingly critical role the Internet now plays in everyday
commercial and personal life, the almost uniform consensus in the
community was to be cautious and prudent in this process.
For example, the White Paper asserted that ``expansion of gTLDs
[should] proceed at a deliberate and controlled pace to allow for
evaluation of the impact of the new gTLDs and well-reasoned evaluation
of the domain space.'' In addition to concerns about the technical
stability of the Internet, many were concerned about potential costs
that rapid expansion of the TLD space might impose on business and
consumers. The World Intellectual Property Organization, which
conducted a study of intellectual property issues in connection with
the DNS at the request of the United States Government, concluded that
new gTLDs could be introduced if done ``in a slow and controlled manner
that takes into account the efficacy of the proposed measures in
reducing existing problems.'' The Protocol Supporting Organization of
ICANN (made up of the Internet Engineering Task Force and other
Internet engineering and protocol development bodies) said it saw no
technical problems with the introduction of a ``relatively small''
number of new TLDs.
In fact, every entity or organization without an economic stake in
the answer that has examined this question has recommended the same
thing: a ``small'' or ``limited'' or ``prudent'' number of new TLDs
should be tried first, as a sort of proof of concept or experiment.
Once this ``limited'' number of new TLDs was introduced--and the
suggested numbers roughly ranged from 1 to 10--and assuming there were
no adverse side effects, then additional TLDs could be introduced if
there was consumer demand for them.
The ICANN Structure and Procedures. Because ICANN is a consensus
development body that relies on bottom-up policy development, the
issues of whether and how to introduce new gTLDs were first taken up by
the Domain Name Supporting Organization (DNSO), the ICANN constituent
body responsible for name policy issues. The DNSO organized a Working
Group, which recommended that a small number (6-10) of TLDs be
initially introduced, and that the effects of that introduction be
evaluated before proceeding further. That recommendation was forwarded
to the Names Council, the executive body of the DNSO, which reviewed
the Working Group recommendation and public comments on it, and
recommended to the ICANN Board that it establish a ``policy for the
introduction of new gTLDs in a measured and responsible way.'' The
Names Council suggested that ``a limited number of new top-level
domains be introduced initially and that the future introduction of
additional top-level domains be done only after careful evaluation of
the initial introduction.''
Consistent with the ICANN bylaws, the ICANN Board accepts the
recommendations of Supporting Organizations if the recommendations meet
certain minimal standards designed to ensure that they truly represent
consensus recommendations. Thus, the Names Council recommendation was
published for public comments, and following the receipt of numerous
public comments, the ICANN staff in June 2000 issued a Discussion Draft
seeking public comments on a series of questions intended to lead to
the adoption of principles and procedures to be followed in a
``measured and responsible introduction'' of a limited number of new
TLDs.\5\ Following several thousand additional public comments, and
considerable discussion at a public meeting in Yokohama in July 2000,
the ICANN Board adopted a series of resolutions instructing its staff
to begin the process of accepting applications for a ``proof of
concept'' for the introduction of new TLDs.\6\
---------------------------------------------------------------------------
\5\ See generally ICANN Yokohama Meeting Topic: Introduction of New
Top-Level Domains, at http://www.icann.org/yokohama/new-tld-topic.htm.
\6\ See Resolutions of the ICANN Board on New TLDs, at http://
www.icann.org/tlds/new-tld-resolutions-16jul00.htm
---------------------------------------------------------------------------
In early August, ICANN posted a detailed discussion of the new TLD
process it proposed to follow,\7\ and in mid-August a detailed set of
Criteria for Assessing TLD Proposals.\8\ These nine criteria have been
constant throughout this process, and so they bear repeating here:
---------------------------------------------------------------------------
\7\ See New TLD Application Process Overview, at http://
www.icann.org/tlds/application-process-03aug00.htm
\8\ See Criteria for Assessing TLD Proposals, at http://
www.icann.org/tlds/tld-criteria-15aug00.htm
---------------------------------------------------------------------------
1. The need to maintain the Internet's stability.
This speaks for itself. ICANN's overriding obligation is to protect
the stability of the Internet, and all other objectives are secondary.
Thus, any proposal that could be shown to threaten this stability
(other than any risk inherent in any new TLD introduction) was
obviously unacceptable.
2. The extent to which selection of the proposal would lead to an
effective ``proof of concept'' concerning the introduction of
top-level domains in the future.
This too is largely self-explanatory. The effort here was not to
find the ``best'' application, however that might be measured, but to
ask the community to offer up a set of options from which ICANN could
select a limited number that, taken in the aggregate, would satisfy the
evaluation objectives of this proof of concept. This is exactly the
same approach that ICANN had previously taken in the introduction of
competitive registrars, and which had worked so well there. The
addition of multiple registrars to the NSI registries required the
creation of new interface software, since before this time only one
registrar had been able to direct new entries in those registries.
Thus, there was some experimental effort required to make sure that the
software was ready for use by a larger number of simultaneous
registrars. ICANN first created a ``test-bed,'' asked for expressions
of interest from the community, and accredited only five new registrars
for a period of a few months, while they and NSI worked out the bugs in
the interface software. As soon as the test-bed was completed, ICANN
accredited large numbers of registrars, now exceeding 180.
Here, the concept is similar: from options offered up from the
community, create a limited number of new TLDs to ensure that the DNS
can accept, both technically and practically, these additions without
impairing stability in any way. Once that is proven, additional TLDs
can be created as appropriate.
3. The enhancement of competition for registration services.
Obviously, this is the principal reason for adding new TLDs, so one
criterion for determining which applications to accept initially is how
effective they are likely to be in creating new competition for the NSI
registries. Of course, competition takes many forms; here, one form
would be analogous to .com--a global, unrestricted registry focusing on
business. To compete in this way requires not only desire, but the
capacity to effectively compete with a competitor with high brand
awareness (.com has almost become a generic term), a very significant
marketing budget, and a large installed base of registered names which
will produce some level of renewals more or less automatically. To
compete successfully on a global basis under these circumstances
requires a significant capital investment, very significant technical
expertise (running a database of several million names that gets
hundreds of simultaneous queries every second is a complicated matter),
and a substantial marketing budget to build the kind of brand equity
that will be necessary to compete effectively with, for example, .com.
Another way to introduce competition into the wholesale part of the
market is to offer a different kind of product--not a global
unrestricted domain, but various kinds of limited or restricted
registries that might appeal to specific different sectors of the
market. To use a television analogy, narrowcasting instead of
broadcasting. Here, capital and marketing expenses may be lower, but
other kinds of service characteristics may be more important.
ICANN's purpose with this criteria was to invite a broad range of
competitive options, from which it could select a menu that, taken as a
whole, would offer a number of different competitive alternatives to
consumers of domain name services.
4. The enhancement of the utility of the DNS.
In addition to competition, one must reasonably consider the
practical effects of the introduction of new TLDs. The names registered
in the DNS are intended to be used by people, and sound engineering
requires that human factors be taken into account.
5. The extent to which the proposal would meet previously unmet types
of needs.
If it is assumed that the DNS should meet a diversity of needs, it
would be a positive value if a proposed TLD appeared to meet any
previously unmet needs of the Internet community.
6. The extent to which the proposal would enhance the diversity of the
DNS and of registration services generally.
Here, what was sought was diversity of all kinds, in the hopes of
creating the broadest possible--and thus most instructive--experiment
within the limitations recommended (i.e., a small number of new top
level domains). So, the published criteria encouraged the submission of
proposals for different kinds of TLDs (open or closed, non-commercial
or commercial, personal or business-oriented, etc.) The criteria also
sought diverse business models and proposals from different geographic
regions, for the same reasons.
7. The evaluation of delegation of policy-formulation functions for
special-purpose TLDs to appropriate organizations.
For those proposals that envisioned restricted or special-purpose
TLDs, this criterion recognized that development of policies for the
TLD would best be done by a ``sponsoring organization'' that could
demonstrate that it would include participation of the segments of the
communities that would be most affected by the TLD. Thus, with this
class of application, the representativeness of the sponsoring
organization was a very important criterion in the evaluation process.
8. Appropriate protections of rights of others in connection with the
operation of the TLD.
Any new TLD is likely to have an initial ``land rush'' when it
first starts operations as people seek the most desirable names. In
addition, every new TLD offers the potential opportunity for
cybersquatting and other inappropriate name registration practices.
This criterion sought information about how the applicant proposed to
deal with these issues, and also how it proposed to provide appropriate
mechanisms to resolve domain name disputes.
9. The completeness of the proposals submitted and the extent to which
they demonstrate realistic business, financial, technical, and
operational plans and sound analysis of market needs.
Finally, this criterion simply emphasized that, since the effort
was a ``proof of concept,'' the soundness and completeness of the
application and the business plan would be important elements of the
selection process. This was not intended to be an experiment in how
well the DNS or the Internet could survive the business failure of a
new TLD operator. Nor was it intended to be clairvoyant with regard to
the outcome of any particular proposal. Thus, to the extent possible,
those applications that appeared to have the soundest business plans,
based on the most realistic estimates of likely outcomes.
The Application Process. The application process required the
filing of a detailed proposal speaking to all the criteria outlined
above. It recommended that applicants retain professional assistance
from technical, financial and management advisers, and lawyers. And
perhaps most controversially, it required a non-refundable application
fee of $50,000. A brief explanation of this particular requirement may
be useful.
ICANN is a self-funding organization. It has no capital, and no
shareholders from which to raise capital. It must recover its costs
from the various constituent units that benefit from ICANN's processes
and procedures--today, those costs are borne by address registries,
name registries, and registrars. Its annual expenditures to date have
been in the $4-5 million range, covering employee salaries and expenses
(there are now 14 employees), and a wide range of other expenditures
associated with operating in a global setting.
Thus, there was no ready source of funds to pay for the process of
introducing new TLDs, and the ICANN Board determined that this, like
all other ICANN activities, should be a self-funded effort, with the
costs of the process borne by those seeking the new TLDs. At that
point, ICANN estimated the potential costs of this process, including
the retention of technical and financial advisers, legal advice, the
logistics of the process, and the potential cost of litigation pursued
by those unhappy with the results. While obviously all these elements
were highly uncertain, based on its best judgment of how many
applications were likely to come in and what the likely costs would be,
and incidentally only after receiving public comments, ICANN
established a $50,000 fee. As it turns out, there were more
applications than expected, and thus the absolute costs of processing
and reviewing them were higher than expected; about half the
application revenues have already been used to cover costs of the
process to date, with considerable work left to do and still with the
potential for litigation at the end of the process. To date, it appears
that the fact of more applications and higher costs of review and
evaluation than expected have cancelled each other out, and so it
appears that the fees adopted were about right in creating the funds
necessary to carry out this process.
I know there have been complaints by some that they were foreclosed
from this process because they simply could not afford the $50,000
application fee, and I am sympathetic to these concerns. But there are
three practical responses that, in my view, make it clear that this is
not a fair criticism of the process. First, the process had to be self-
funding; there simply was no other option, since ICANN has no general
source of funds. Based on costs to date and those projected, it
certainly does not seem that the fee was set too high. While there are
still application fee receipts that remain unspent, the process is not
over, and it has already consumed half of the fees collected.
Second, and as importantly, it is highly unlikely that any
individual or entity that could not afford the application fee would
have the resources to be able to operate a successful and scalable TLD
registry. The capital and operating costs of even a small registry are
thought to be considerable, and especially if the goal is to operate a
registry that charged low or no fees for name registrations (many of
the persons and entities advancing this particular complaint are non-
profit or public interest bodies), those fees would not likely cover
the costs of operation, much less the necessary start-up and capital
costs. Of course, it is possible that, if an organization that would
otherwise have difficulty managing the costs of operating a TLD
registry were in fact awarded a new TLD, it might be able to raise the
funds through subsequent contributions or grants or the like, but this
leads us directly to the third point.
This effort was not a contest to find the most qualified, or the
most worthy, or the most attractive for any reason of the various
applicants. ICANN is not and should not be in the business of making
value judgments. What ICANN is about is protecting the stability of the
Internet and, to the extent consistent with that goal, increasing
competition and competitive options for consumers of domain name
services. Thus, what ICANN was doing here was an experiment, a proof of
concept, an attempt to find a limited number of appropriate applicants
to test what happens when new TLDs of various kinds are added to the
namespace today--a namespace that is vastly different in size and in
application than that which existed more than 15 years ago when the
first seven global TLDs and the ccTLDs were created.
Because this was a proof of concept, the emphasis was on diverse
business models, technical capacity, and diversity of geography and
focus--and not on some weighing of the relative merits, however
measured, of the applicants. Indeed, a serious attempt was made to
avoid otherwise normal business risks, such as limits on capital or
other resources, so that forseeably likely business failures did not
interfere with the data collection and evaluation process of this
experiment. Thus, it would have been impossible to accept any
application which relied on the mere hope of obtaining funding if an
application was accepted, and indeed, several of the applicants not
selected in the evaluation process were thought to be deficient just on
that point.
Under these circumstances, it was not appropriate to encourage
applications by those with limited resources, since those limitations
would almost certainly result in their not being selected. Thus,
setting the fee to recover expected costs, without regard to the effect
it had on applications, seemed then (and seems today) the logical
approach. Once this experiment is over, and assuming it demonstrates
that adding new TLDs in a measured way does not threaten the stability
of the DNS or the Internet, I would hope that processes could be
developed to both expedite and significantly reduce the cost of new TLD
applications or, at a minimum, to deal with special cases of TLDs with
very limited scope, scale and cost.
The Evaluation Procedure. Forty-seven applications were submitted
by the deadline established; three of those were withdrawn for various
reasons, and the remaining 44 were then published on ICANN's website,
open to public comments, and subjected to an extensive evaluation,
applying the criteria set forth in the various materials previously
published by ICANN. More than 4,000 public comments were received. The
applications and the public comments were carefully reviewed by
technical, financial and legal experts, and the result of that
evaluation--a 326-page staff report summarizing the public comments and
the staff evaluation--was itself posted on the ICANN website for public
comment and review .by the Board of Directors of ICANN.\9\ Another
1,000 public comments were received on the staff report. The Board was
provided with regular status reports, interim results of the staff
evaluations, and of course had access to the public comments as they
were filed.
---------------------------------------------------------------------------
\9\ See Report on New TLD Applications, at http://www.icann.org/
tlds/report
---------------------------------------------------------------------------
There has been some criticism of the fact that the full staff
evaluation was not available to the public--and thus to the
applicants--until November, only days before the actual Board meeting.
Obviously, it would have been much better to produce this earlier, and
we tried to do so. But in fact the timing of the release of the staff
report was largely the product of the bottom-up process that ICANN
follows to generate consensus. An important ingredient in the staff
evaluations was the substance of the voluminous--over 5000--public
comments produced in the month after the applications were posted.
ICANN's job is to identify consensus, and thus input from the community
is a critical part of any Board decision. Getting that community input,
considering it, and completing the technical and financial evaluations
was a massive job.
It would have been preferable to have issued the staff report
earlier. But on the other hand, in the six days between the posting of
the report and the Board meeting, ICANN received more than 1,000
additional public comments on the staff report, many from the
applicants responding to the evaluation of their particular
application. The ultimate question is whether the Board got sufficient
timely information on which to base its selection decisions, bearing in
mind the objective of the exercise. I believe it did.
At its Annual Meeting in Los Angeles in November 2000, the ICANN
Board devoted most of the standard public forum day immediately
preceding the Board meeting to the new TLD issue, with presentations by
the staff of their findings, public comments, and short presentations
from the applicants. Another point of criticism by some has been the
short time--three minutes--allowed during this public forum for
presentations by each of the applicants, but oral presentations were
never intended to be the sole or primary source of information for the
Board. Voluminous applications (with many hundreds of pages) had been
filed by each applicant; many of them had received and answered
clarifying questions from the staff; and many of them had provided
additional material by filing material on the ICANN public comment page
(every one of the 5,000+ comments was read by ICANN staff). The Board
had access to the applications and to the staff evaluations well ahead
of the public Board meeting at which the applications were reviewed.
The opportunity to make a presentation at the public forum was simply
the final step in an extensive process, available so that any last-
minute questions could be asked or points made.
Since there were 44 applicants, nearly all of whom wished to speak,
and since the time available (given the other parts of the community
who also wished to be heard) was limited to about two hours, three
minutes was simply all the time available. Most used it wisely,
pointing out the particular strengths of their applications.
Some disappointed applicants have also complained that ICANN staff
refused to talk with them, or let them respond to concerns raised by
their applications. This is not accurate; what ICANN staff refused to
do is have private conversations with the applicants, and this derives
from the very nature of ICANN as an entity. ICANN is a consensus
development body, not a regulatory agency; its decisions are intended
to reflect consensus in the Internet community, not simply the policy
preferences of those who happen to sit on its Board at any given
moment. For this process to work, the vast bulk of ICANN's work must be
transparent to the public, and so with very rare exceptions (such as
matters dealing with personnel issues), everything ICANN does it does
in public. (In fact, one of the three applications that were withdrawn
resulted from the applicants' unwillingness to allow significant
material in their application to be posted on ICANN's website.) If the
public was going to have a real opportunity to comment on the
applications, the applications themselves needed to be public, and any
substantive discussion of them had to be public as well.
In an effort to help this process, and still get questions
answered, ICANN staff frequently took email or other private questions,
reformulated them to make them more generically useful, and then posted
them on the website as FAQs. In addition, staff encouraged applicants
to post any information they wished on the public comment pages, where
it would be read by ICANN staff, the ICANN Board and also by any
interested observer. What staff would not do, and what was evidently
very frustrating to many of the applicants that had not previously had
any experience with the open structure and operations of ICANN, was to
have private substantive discussions with the applicants.
It is easy to understand this frustration, especially for those
disappointed applicants who had not previously participated in the
ICANN process and, as a result, did not understand what ICANN is and
how it operates and thus were surprised at the transparency of the
entire process. Still, it is hard to see how any other process could
have been followed consistent with ICANN's consensus development
process. Without access to the entirety of the information about each
applicant and each application that was available to the Board, the
Board would not have had the benefit of public comments on some (often
significant) factors, and it would have been hard to justify its
selections as deriving from a consensus development process.
The Selection Process. To understand the selection process, we must
go back to first principles. The goal here was not to have a contest
and pick winners; it was not to decide who ``deserved'' to have a new
TLD; it was not even to attempt to predict the kind or type of TLDs
that might get public acceptance. The goal, articulated plainly from
the beginning of the process more than a year ago, was to identify from
suggestions by the community a limited number of diverse TLDs that
could be introduced into the namespace in a prudent and controlled
manner so that the world could test whether the addition of new global
TLDs was feasible without destabilizing the DNS or producing other bad
consequences.
This was not a race, with the swiftest automatically the winner. It
was a process that was intended to enable an experiment, a proof of
concept, in which private entities were invited to participate if they
chose to do so--and those who did choose to participate did so
voluntarily, knowing that the odds of being selected were not high,
that the criteria for being included in this experiment were in some
measure subjective, and that the goal was the production of
experimental information that could be evaluated. Of course, when many
more applications were received than anyone had suggested should be
prudently introduced at this stage, some evaluation was necessary to
attempt to identify those suggestions that might best fit the
experimental parameters that had been laid down. But this was never a
process in which the absolute or relative merit of the particular
application was determinative.
Many applications with likely merit were necessarily not going to
be selected, if the goal was a small number (remember, the entire range
of responsible suggestions for introducing new TLDs was from one to 10
new ones). And since one objective was diversity--of business model, of
geography, of type of registry--it was highly likely that some
qualified applications would not be selected--both because prudence
required the addition of only a small number of TLDs, and because our
proof of concept required data from a diverse set of new TLDs. This was
especially true of those applications seeking open, global TLDs; while
two were selected, about half of the 44 applications sought such a
charter. But it was also true of others; .geo received a very positive
evaluation from the staff, but the Board felt that, at this proof of
concept stage, there were in fact potential risks to the operation of
the DNS that could not be fully evaluated without consultation with the
technical support organization(s) associated with ICANN.
Thus, the Board considered every one of the 44 remaining
applications at its meeting on November 16, 2000, measuring them
against their collective judgment about how well they would serve to
carry out the test that was being considered. In a meeting that lasted
more than six hours, the Board methodically reviewed, and either set
aside or retained for further evaluation, application after
application, until it was left with approximately 10 applications that
seemed to have broad consensus support. After further, more focused
discussion, that number was pared to the seven that were ultimately
selected, and which had almost unanimous Board support: .biz, .info,
.pro, .aero, .coop, .museum, and .name.\10\ In the aggregate, the Board
concluded that this group provided enough diversity of business models
and other relevant considerations so as to form an acceptable test bed
or proof of concept.
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\10\ See http://www.icann.org/minutes/prelim-report-
16nov00.htm#00.89
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The various TLDs have very different intended purposes, and that is
the strength of the group in the aggregate. Two--.biz and .info--were
advanced as essentially alternatives to .com--global, business-oriented
registries aimed at capturing millions of registered names around the
world. In order to compete with .com--which has a recognized brand, a
large installed base that produces a regular stream of renewals, and a
very substantial marketing budget--these particular applicants assumed
they would need a significant investment in both capital equipment and
marketing. The Board felt that these applicants seemed most capable of
bringing the necessary resources to bear to test whether anyone can
effectively compete with .com after the latter's significant head
start.
Two other TLDs--.pro and .name--were aimed at individuals rather
than businesses, but in very different ways. .pro was aimed at licensed
professionals, while .name was aimed at any individual. The other
three--.aero (aerospace industry), .coop (for cooperatives), and
.museum (for museums)--were all restricted TLDs, aimed at an industry
or a business method or a type of entity, and added to the diversity of
this experimental collection of TLDs.
ICANN's objectives--and by that we mean to say the objectives of
the general Internet community, which ICANN tries to represent--were to
introduce a small number of various kinds of new TLDs into the
namespace in a prudent fashion, see what happened, and then, if
appropriate, based on those results, move forward with additional new
TLDs. It is certainly conceivable that some different subset of the
applications it had before it would have met that objective as well as
those chosen, but the real question is whether the choices were
reasonable, and likely to produce the necessary information on which
future introductions could be based. It is also possible, as some of
those not selected have complained, that those selected will have a
head start (to the extent that matters) over future TLD applicants, but
this would be an inevitable consequence of any selection of less than
all applicants. Those who were not selected, no matter who they are,
were predictably going to be unhappy, and those who were selected were
predictably going to be glad, but neither was an ICANN goal. ICANN's
goal, and its responsibility, was to find a limited collection of
diverse new TLDs that could be prudently added to the namespace while
minimizing any risk of instability. While time will tell, at this point
we believe we faithfully carried out that responsibility.
The Post-Selection Process. Since November, we have been in the
process of drafting and negotiating agreements with the selected
applicants. Since these agreements will hopefully be templates for
future agreements, we are taking great care to make sure that the
structure and terms are replicable in different environments. Since
these agreements will contain the promises and commitments under which
the applicants will have to live for some time, the applicants are
being very careful. The result is slow progress, but progress. We are
hopeful that we will be able to complete the first draft agreements
within a few weeks. The Board will then be asked to assess whether the
agreements reflect the proposals that were selected and, if so, to
approve the agreements. Shortly thereafter, this great experiment will
begin. We are all looking forward to that time.
Of course, it cannot be stressed enough that no one knows for sure
what the effects of this experiment will be. Since there have been no
new global TLDs introduced for more than a decade, the Internet is a
vastly different space than it was the last time this happened. Of
course, there have been a number of country code TLDs introduced over
that period, and since some of those have recently begun to function in
a way quite analogous to a global TLD, it may be that we will be able
to conclude that the DNS can readily absorb more new global TLDs. But
there has never been an introduction of as many as seven new global
TLDs simultaneously, with the possibility of a land rush that is
inherent in that fact. There has never been a highly visible
introduction of multiple new TLDs in the context of an Internet that
has become a principal global medium for commerce and communication. We
do not know whether the introduction of a number of new TLDs--
especially combined with the relatively new phenomenon of the use of
ccTLDs in a fashion never intended (after all, .tv stands for Tuvalu,
not television, no matter what its marketers say)--will create consumer
confusion, or will impair the functioning of various kinds of software
that has been written to assume that .com is the most likely domain for
any address.
In short, it is not absolutely clear what effects these
introductions will have on the stability of the DNS or how to introduce
new TLDs in a way that minimizes harmful side-effects, and that is
precisely why we are conducting this experiment. The results will guide
our future actions.
e. conclusion
One of ICANN's primary missions is to preserve the integrity and
stability of the Internet through prudent oversight and management of
the DNS by bottom-up, global, representative consensus development.
Like location in real estate, the three most important goals of ICANN
are stability, stability and stability. Once there is consensus that
stability is not threatened, ICANN is then charged with seeking to
increase competition and diversity, both very important but secondary
goals. A competitive Internet that does not function is not useful. An
Internet in which anyone can obtain the domain name of their choice,
but where the DNS does not function when someone seeks to find a
particular website, is also not useful.
In its short life, ICANN has some real accomplishments--made more
impressive by the inherent difficulty of developing global consensus on
anything, but especially on issues as complex and contentious as those
facing ICANN. It has achieved these accomplishments by hewing to its
first and guiding principle--to maintain a stable, functional DNS--and
within those limits by seeking to increase competitive options and
efficient dispute resolution. This same principle has guided the
careful, prudent way in which ICANN has approached the introduction of
new global TLDs, really for the first time in the history of the
Internet as we know it today.
ICANN's processes are and have been transparent. The goals and
procedures were derived from public comments, clearly laid out at the
beginning of the process, and all decisions were made in full public
view. Given the importance of care and prudence in the process, and the
potentially devastating results of a misstep, ICANN has and will
continue to err on the side of caution. This may mean slower progress
than some would like, but it will also reduce and hopefully eliminate
the potential for the catastrophic effects on business and personal use
of the Internet that malfunction or other instability of the DNS would
produce.
Mr. Upton. All right. Thank you very much.
Mr. Kerner.
STATEMENT OF LOU KERNER
Mr. Kerner. Good morning, Mr. Chairman and members of the
committee. I am Lou Kerner, CEO of The .TV Corporation. Thank
you for the opportunity to appear today and to share our
concerns about the process by which ICANN proposes a new set of
top-level domain names to the Internet.
.TV is the registry for Web addresses ending in .tv. In
1999, we entered into a partnership with the sovereign nation
of Tuvalu to commercialize its country code top-level domain,
.tv, and in just 9 months we have registered over 250,000
domain names, establishing .tv as the fasting growing TLD in
Internet history. We have invested millions of dollars to build
a globally diverse technical infrastructure that is reliable,
scalable, and secure.
We come here as supporters of ICANN, but with serious
concerns about its TLD selection process and its impact on the
Internet community. The white paper which led to the creation
of ICANN in 1998 envisioned an organization which would operate
under a, ``sound and transparent decisionmaking process and be
fair, open and procompetitive.'' Mr. Chairman, these worthy
ideals were not evident in the TLD selection process
implemented by ICANN, which can be described as unfair, closed,
and anticompetitive.
On August 15, 2000, ICANN solicited applications to
operates new TLDs. Applicants were required to submit in great
detail their technical, financial and business plan for the
proposed TLD and to pay an unrefundable $50,000 fee. After
paying the fee and spending hundreds of manhours preparing our
applications, we were thrust into a selection process that was
highly flawed. Our many concerns with the process are covered
in greater detail in our written submission, but let me briefly
outline three areas of glaring deficiency for the committee.
First, there was very vague selection criteria. ICANN's
criteria for assessing proposals were vague at best and were
not weighted in any manner to give applicants a clear idea of
the relative importance of each of the criteria. For example,
the criteria included the enhancement of competition for
registration services. Our consortium thus proposed a registry
fee of $3.50 a name, substantially lower than the average of
the winning applicant's, which was $9.68, and even the lowest
fee among the winners of $5 is still almost 50 percent above
our proposed registry fee. However, pricing never seemed to be
addressed by ICANN in the selection process.
Our second major area of concern is a lack of due diligence
in the process. ICANN had intended that the evaluation process,
``not involve only reviewing what has been submitted, but also
consulting with technical, financial, business and legal
experts and gathering additional information that may be
pertinent to the application.'' However, ICANN received 47
applications by its October 2 filing deadline, which
overwhelmed its resources. It became apparent that the 6-week
period allocated to the review process was completely
unrealistic.
ICANN fell behind its timetable, forcing it to abbreviate
the review process. Most notably ICANN abandoned plans to
conduct interviews with applicants. Due process was sacrificed
for expediency in order to meet ICANN's self-imposed deadline
of November 16.
In response to criticism from applicants concerning the
lack of opportunity to respond to the staff report, ICANN
announced on November 14 that each applicant would be permitted
to make a 3-minute presentation to the board on the following
day. As decisions by the board appeared to have largely already
been made, this was a disingenuous gesture; thus, we used our
time to express our dissatisfaction with the process, and our
message met with thunderous applause from the ICANN community
members in attendance.
Our final major concern is that the board decisions were
based upon factually inaccurate staff reports. After conducting
little financial, technical or operational due diligence, ICANN
on November 10 released its staff report which, though replete
with errors about our proposal, profoundly influenced the
decision of the ICANN board. The report was posted just 1 day
before the start of the ICANN meetings at which the new TLDs
were selected, effectively eliminating the opportunity for
public comment originally proscribed by ICANN.
The report seriously misstated the technical capabilities
of our consortium, which collectively offered a broad
geographical reach, diverse Internet and technological
expertise and the financial resources necessary. Our written
response to the staff report, posted on ICANN's Web site per
ICANN protocol, was not even read by the board. The erroneous
findings of the staff report essentially limited our
applications and many others from serious consideration by the
board.
Given the current situation, Congress must intervene to
ensure a fair and equitable method for approving new TLDs. Mr.
Chairman, the approval of new top-level domains is an important
manner warranting congressional review, and the Department of
Commerce should not implement ICANN's recommendation until such
a review takes place. We are concerned that Commerce intends to
simply rubber-stamp ICANN's implementation request, which we
believe is inappropriate given the fundamental flaws in the
selection process.
We are not advocating U.S. Government control of the
Internet. However, while Commerce maintains oversight authority
of ICANN, the U.S. Government has a responsibility to ensure
that decisions affecting the Internet are reached fairly and
that proper precedents are established.
This is the first major test of ICANN's decisionmaking
authority, and Congress has an important role to play in
establishing and enforcing the standards by which ICANN will
make future decisions. Through the urging of Congress, the
Department of Commerce should direct ICANN to reconsider all
top-level domain applications in a manner that is fair, open,
and rational.
Mr. Upton. Mr. Kerner, I must beg that we have to stay on
our schedule.
Mr. Kerner. Mr. Chairman, in that case, I will stop there.
Thank you.
[The prepared statement of Lou Kerner follows:]
Prepared Statement of Lou Kerner, Chief Executive Officer, .tv
Corporation International
Good morning, Mr. Chairman and members of the Committee. My name is
Lou Kerner. I am Chief Executive Officer of The .tv Corporation
International (``dotTV''). Thank you for allowing me the opportunity to
appear today and to share our serious concerns with respect to the
process by which the Internet Corporation for Assigned Names and
Numbers (ICANN) proposes to introduce a new set of generic top level
domains (``TLDs'') to the Internet.
I want to emphasize at the outset that ICANN, a body that is
largely unknown to the public, has enormous power over the Internet
today. How it exercises that power has great significance for consumer
choice, competition and the efficiency and viability of the Internet.
Congress has an important role to play in making sure that ICANN
carries out its responsibilities in the public interest.
In July of 1998, the Department of Commerce issued a ``White
Paper'' to create a private, non-profit corporation with broad
responsibility to manage the policy and operation of the Internet. This
entity, which subsequently became ICANN, was to be governed ``on the
basis of a sound and transparent decision-making process'' that was to
be ``fair, open, and pro-competitive.'' Mr. Chairman, this lofty ideal
in no way resembles the events of recent months, which more accurately
could be described as hurried, arbitrary and unfair. As a member of two
bidding consortiums, the dotNOM Consortium and The dotPRO Consortium,
it is our belief that the process prescribed and implemented by ICANN
is fundamentally flawed and that due process and thoughtful decision
making has been sacrificed for the sake of expediency. In reliance on
this flawed process, critical decisions with irreversible and far-
reaching consequences affecting the future of the Internet may soon be
made.
We come here as supporters of ICANN generally, but with serious
concerns about its TLD selection process which we view as fundamentally
flawed and lacking due process. We continue to recognize the enormous
task and power ICANN holds over the Internet today and in the future.
How it exercises that power has great significance for consumer choice,
competition and the efficiency and viability of the Internet. As the
U.S. Department of Commerce still has oversight authority over ICANN,
the U.S. Government has an important role to play in making sure that
ICANN carries out its responsibilities in a responsible manner.
Following some brief background information, I first will describe
the method by which ICANN selected a new set of TLDs and then identify
some of the specific flaws in the TLD selection process. Finally, I
will set forth the congressional action we believe is necessary to
remedy ICANN's actions and to ensure that the deliberate and thoughtful
process contemplated by the ICANN charter is followed in decision-
making.
1. about top level domain names:
The Internet domain name system (``DNS'') is based on a
hierarchical structure of names. At the top of this hierarchy are top
level domain names (``TLDs'') comprising ``generic'' TLDs (``gTLDs'')
such as .com, .org, .net and the two letter country code top level
domains (``ccTLDs'') such as .uk, .jp and .tv. Below the TLDs are the
many millions of second level domain names that have been registered by
individuals and organizations such as amazon.com, earthlink.net and
npr.org. For some years consideration has been given to the
introduction of new gTLDs, however, none have been added to the system
since the mid 1980s.
2. about icann:
Responsibility for the overall coordination of the DNS originally
resided with the Internet Assigned Numbers Authority (``IANA'') under
the oversight of the U.S. Department of Commerce. This responsibility
was subsequently passed to ICANN which was created in 1998, however,
ICANN |