[Senate Hearing 107-1100]
[From the U.S. Government Publishing Office]


                                                       S. Hrg. 107-1100

 
                            ICANN GOVERNANCE

=======================================================================


                                HEARING

                               BEFORE THE

                     SUBCOMMITTEE ON COMMUNICATIONS

                                 OF THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 14, 2001

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation








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           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                     JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska                  ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana                DANIEL K. INOUYE, Hawaii
TRENT LOTT, Mississippi              JOHN D. ROCKEFELLER IV, West 
KAY BAILEY HUTCHISON, Texas              Virginia
OLYMPIA J. SNOWE, Maine              JOHN F. KERRY, Massachusetts
SAM BROWNBACK, Kansas                JOHN B. BREAUX, Louisiana
GORDON SMITH, Oregon                 BYRON L. DORGAN, North Dakota
PETER G. FITZGERALD, Illinois        RON WYDEN, Oregon
JOHN ENSIGN, Nevada                  MAX CLELAND, Georgia
GEORGE ALLEN, Virginia               BARBARA BOXER, California
                                     JOHN EDWARDS, North Carolina
                                     JEAN CARNAHAN, Missouri

                  Mark Buse, Republican Staff Director
               Ann Choiniere, Republican General Counsel
               Kevin D. Kayes, Democratic Staff Director
                  Moses Boyd, Democratic Chief Counsel


                              ----------                              


                     SUBCOMMITTEE ON COMMUNICATIONS

                    CONRAD BURNS, Montana, Chairman
TED STEVENS, Alaska                  ERNEST F. HOLLINGS, South Carolina
TRENT LOTT, Mississippi              DANIEL K. INOUYE, Hawaii
KAY BAILEY HUTCHISON, Texas          JOHN F. KERRY, Massachusetts
OLYMPIA J. SNOWE, Maine              JOHN B. BREAUX, Louisiana
SAM BROWNBACK, Kansas                JOHN D. ROCKEFELLER IV, West 
GORDON SMITH, Oregon                     Virginia
PETER G. FITZGERALD, Illinois        BYRON L. DORGAN, North Dakota
JOHN ENSIGN, Nevada                  RON WYDEN, Oregon
GEORGE ALLEN, Virginia               MAX CLELAND, Georgia
                                     BARBARA BOXER, California
                                     JOHN EDWARDS, North Carolina




                            C O N T E N T S

                              ----------                              

                                                                   Page


Hearing held on February 14, 2001................................     1
Statement of Senator Boxer.......................................    10
Statement of Senator Burns.......................................     1

                               Witnesses

Auerbach, Karl, member, ICANN Board of Directors.................     2
    Prepared statement...........................................     4
Cartmell, Brian R., Chairman and CEO, eNIC Corporation...........    42
    Prepared statement...........................................    44
Cochetti, Roger J., Senior Vice President, Policy, VeriSign 
  Network Solutions..............................................    59
    Prepared statement...........................................    61
Froomkin, A. Michael, Professor of Law, University of Miami 
  School of Law..................................................    48
    Prepared statement...........................................    50
Hansen, Kenneth M., Director, Corporate Development, NeuStar, 
  Inc............................................................    63
    Prepared statement...........................................    65
Roberts, Michael M., CEO, Internet Corporation for Assigned Names 
  and Numbers....................................................    11
    Prepared statement...........................................    13

                                Appendix

Broitman, Elana, Director, Policy and Public Affairs, 
  register.com, prepared statement...............................    77
    Letter to Hon. Barbara Boxer, Feb. 16, 2001..................    80
Crispin, Kent, Computer Scientist, Livermore National Laboratory, 
  prepared statement.............................................    94
Fassett, Ray, Think Right Company, prepared statement............    95
Gallegos, Leah, President, AtlanticRoot Network, Inc., prepared 
  statement......................................................    81
Gerrin, Paul, Founder/CEO, Name.Space, Inc., prepared statement..    98
Mackay, Bart P., Vice President and General Counsel, eNIC 
  Corporation, prepared statement................................    90
Peters, Karl E., President and CEO, Bridge International 
  Holdings, Inc., letter dated February 12, 2001, to Senator 
  Burns..........................................................    92
Response to written questions submitted by ICANN to Mike Roberts.    92
Stahura, Paul, President, Group One Registry, Inc., prepared 
  statement......................................................    95
International Congress of Independent Internet Users, prepared 
  statement......................................................    99
The Domain Name Rights Coalition and Computer Professionals for 
  Social Responsibility, prepared statement......................   100


                            ICANN GOVERNANCE

                              ----------                              


                      WEDNESDAY, FEBRUARY 14, 2001

                               U.S. Senate,
                    Subcommittee on Communications,
        Committee on Commerce, Science, and Transportation,
                                                     Washington, DC
    The Subcommittee met, pursuant to notice, at 9:30 a.m. in 
room SR-253, Russell Senate Office Building, Hon. Conrad Burns, 

Chairman of the Subcommittee, presiding.

            OPENING STATEMENT OF HON. CONRAD BURNS, 
                   U.S. SENATOR FROM MONTANA

    Senator Burns. We will call this hearing to order. We have 
some other members coming, but I like to get started pretty 
close to on time, and we will hear the testimony of the ones at 
the table this morning and then try to start a dialog on this 
important situation.
    We are familiar by now with the explosive growths in the 
use of the Internet in recent years and how it has transformed 
our lives. Most of us know very little, however, about how it 
began, how it evolved, and how it operates today We have come 
to take the existence and operation of the Internet for 
granted, except for the occasional intrusion by hackers, and 
then that makes big headlines.
    The Internet has become important to our Nation's well-
being. We in Congress need to become better informed about its 
operation. We may still choose to legislate, but at least have 
the choice before us should we deem it important to this 
country. This is particularly true in the crucial area such as 
the domain named system which is highly technical in nature.
    While today's topic is one that might tend to make the eyes 
glaze over, we are, in fact, dealing with the very foundation 
of the Internet's information superstructure.
    While terms such as top-level domains and Internet protocol 
addresses might seem to be part of a foreign language, 
understanding how the Internet works and who controls it is 
critical to the economic, cultural, and educational destiny of 
this Nation.
    With that in mind, this Subcommittee takes its oversight 
capacity very seriously. I believe it is essential that the 
Subcommittee thoroughly examine ICANN and how it was created, 
the procedure it has created and followed, and the implications 
for the consumers and competition.
    Today's hearing is necessary only as a first step of 
conducting that examination. There are several issues that I 
would like the Subcommittee to consider during these hearings.
    Many of them involve the delegation of control over the 
domain name system from the Department of Commerce to the 
Internet Corporation for Assigned Names and Numbers. That is, 
ICANN.
    The formation of ICANN originated with the so-called Green 
and White Papers of the Clinton Administration in 1998 that 
proposed the privatization of the domain name system.
    The White Paper called for the creation of the new not-for-
profit corporation formed by private sector Internet 
stockholders to administer policy for the Internet name and 
address system and declared that the U.S. Government should end 
its role in the Internet number and name address system.
    Soon thereafter, ICANN was created and the Commerce 
Department began to delegate certain functions of the Internet 
domain name system to it. In the eyes of many, this delegation 
has happened far too swiftly. While ICANN is supposed to 
function by a consensus of the Internet community, its 
operations have often been controversial and shrouded in 
mystery.
    Serious questions arise about the very legitimacy of ICANN 
as an organization. Professor A. Michael Froomkin, who will 
testify before us today, makes a powerful argument that the 
entire delegation of authority from the Commerce Department to 
ICANN is either a violation of the Administration Procedures 
Act or a violation of the non-delegation doctrine of the United 
States Constitution. I look forward to hearing his testimony.
    In short, three serious and troubling questions surround 
ICANN.
    First, is the delegation of authority over the domain name 
system from the Commerce Department to ICANN legal?
    Second, is ICANN an appropriate organization to manage the 
domain name system? Are they technically competent, and have 
they built the required trust for the organization to operate?
    Third, how can ICANN perform so far, or how has ICON 
performed so far? Have their processes, for example, with the 
selection of the new generic top-level domain names been open, 
fair, and democratic?
    I'm certain that the answers we hear to these questions 
will vary, and they will raise new questions as the dialog 
continues. The issues are complicated, but the stakes are very 
high. My greatest fear is that the administration of the 
Internet will be changed in foolish, even disastrous ways while 
very few people are watching. We simply cannot afford to let 
that happen.
    I welcome our witnesses, and I look forward to hearing 
their testimony. I would like to specifically mention that a 
witness on our second panel, Brian Cartmell, represents the 
eNIC Corporation whose president, Jim Trevino, hails from 
Calispell, Montana, and we welcome all those folks today.
    So we will start with testimony this morning. We welcome 
Mr. Auerbach, and we look forward to your testimony.

              STATEMENT OF KARL AUERBACH, MEMBER, 
                    ICANN BOARD OF DIRECTORS

    Mr. Auerbach. Good morning, Mr. Chairman, distinguished 
Senators. Thank you for giving me the opportunity to appear.
    I have been involved in the Internet since 1974. I am a 
computer engineer. I work in the Advanced Internet 
Architectures Group at Cisco Systems. I neither represent nor 
speak for Cisco. My opinions are my own.
    I am a member of the ICANN Board of Directors. I am the 
only person on ICANN's Board of Directors who obtained his seat 
through an open election of the Internet community in North 
America.
    The Internet is seductive. Because the Internet is new and 
technical, there is much room to dissemble public policy as 
technology. Because the Internet recognizes few borders, it is 
easy for subtle controls to have a broad impact, and the 
Internet is unclaimed territory upon which an administrative 
agency may plant its flag and extend its regulatory powers.
    I support the continued existence of ICANN. ICANN is a 
valuable institution. Its roles as a technical coordinator are 
quite properly needed for the smooth functioning of the 
Internet. However, ICANN is ill-designed, has been ill-
operated, has brought upon itself significant ill-will within 
the Internet community, and has greatly exceeded its proper 
scope. I believe that significant restructuring of ICANN is 
needed so that the corporation can fulfill its purposes and 
fulfill its obligations toward its stated beneficiaries.
    My primary focus within ICANN is on limiting ICANN's scope 
of authority, creating well-defined procedures for fair 
decisionmaking, and establishing solid business practices.
    These are conservative and reasonable goals. ICANN is a 
secretive entity. Even as a director, I have difficulty 
discovering what ICANN is doing. There are parts of ICANN to 
which I am denied access. ICANN has a strong aversion to 
democratic principles.
    ICANN has been obligated from the outset to create an at-
large membership. ICANN assured Congress that such a membership 
would be in place, and then proceeded to back-track, pare, and 
equivocate on that assurance. The election we had last fall was 
for only a portion of the Board's seats that were promised.
    Those few of us who were elected have received seats of 
reduced duration, as compared to those of the non-elected 
directors, and now the existence of that at-large membership is 
at risk. Indeed, ICANN staff has gone so far as to declare that 
the at-large membership no longer exists.
    There are lessons to be drawn from ICANN. ICANN has shown 
us that governmental powers ought not to be delegated to 
private bodies unless there is an equal obligation for full 
public participation and public accountability. ICANN has shown 
us that a public benefit and tax-exempt corporation may be 
readily captured by those who think of the public less as 
something to be benefited than as a body of consumers from whom 
profit may be made. The role of the U.S. Department of Commerce 
in ICANN has shown us that the Internet may be used as a 
camouflage under which administrative agencies may quietly 
expand their powers without statutory authorization from 
Congress or the Executive Branch.
    Thank you very much for this opportunity to speak. I will 
be happy to answer any questions you may have at this time.
    [The prepared statement of Mr. Auerbach follows:]
             Prepared Statement of Karl Auerbach, Member, 
                        ICANN Board of Directors
    Good morning. I have been involved in the Internet since 1974 and 
have actively participated in the transition of its administration to 
the private sector for the past 5 years.
    I am a computer engineer--I do research pertaining to ways of 
making the Internet more reliable and efficient in the Advanced 
Internet Architectures Group of Cisco Systems in San Jose, California. 
I am also working on a joint Cisco-University of California research 
project on advanced control and provisioning mechanisms for the net.
    With respect to my service on the board of ICANN and for all the 
opinions I am expressing here today I neither represent nor speak for 
Cisco. My opinions are my own.
    I am also an attorney. I graduated cum laude in 1978 from Loyola of 
Los Angeles specializing in commercial, international, and 
administrative law. Although I maintain my status as the member of the 
California Bar and the Intellectual Property Section of the California 
Bar, I am not engaged in active practice.
    I have been a founder, principal, or first employee in several 
Internet related startup companies. These include Epilogue Technology 
Corporation (now part of Wind River Systems); Empirical Tools and 
Technologies Corporation; Precept Software (now part of Cisco Systems); 
and InterWorking Labs, Inc. These have provided me with a broad base of 
experience in commerce and technology. I have direct experience with 
the needs and obligations of Internet related businesses. I am 
sympathetic to the needs of Intellectual Property owners. I own 
copyrights, I have owned federally registered trademarks, and I have 
filed for patents.
    I have been active in the core design and standardization body of 
the Internet, the Internet Engineering Task Force (IETF), since the 
mid-1980s. And I have been a member of the Internet Society (ISOC) 
since its formation.
    I have been deeply involved during the last several years with the 
evolution and activities of what has become ICANN. I am a founding 
member of the Boston Working Group, one of the groups that submitted 
organizational proposals to NTIA in 1998 in response to the so-called 
``White Paper.'' I am a member of the ICANN Board of Directors. I was 
elected to represent North American Internet users. Four others were 
elected at the same time to represent other regions of the world.
    I was elected to my seat. I was not appointed.
    I was elected to represent the Internet users of North America in 
an election in which I ran against six other highly qualified 
candidates: the Chancellor of the University System of Maryland, the 
Chief Scientist of BBN Technologies, the President of the Information 
Technology Association of America, the former President of the 
Association for Computing Machinery (ACM), a Professor of Business at 
the University of Texas, and the former holder of the Berkman Chair at 
the Harvard School of Law.
    I am the only person on ICANN's Board of Directors who was elected 
by the Internet users of North America.
    I have only been on ICANN's Board of Directors for a few months--my 
term started shortly after the well-publicized and controversial 
selection of a mere seven new Top Level Domains (TLDs).
    However, despite the short time I have been a Director, I have 
already learned much to confirm my fears that ICANN is suffering from a 
lack of public process, lack of accountability, mission creep, poor 
communication, excessive delegation of policymaking to staff, and poor 
business practices. As a Director it is my job to work to correct these 
weaknesses. But I despair at the immensity of the task.
    My primary focus within ICANN is on limiting ICANN's scope of 
authority, creating well defined procedures for fair decisionmaking, 
and establishing solid business practices. These are conservative and 
reasonable goals.
    As both an engineer and an attorney with long experience in other 
Internet governance organizations I have a solid grasp of the issues 
ICANN has sought to address.
    ICANN should be based on viable real-world ideas and processes, not 
on some abstract notion that suggests that ICANN can somehow fly above 
technical, economic, and political realities.
    Those who use the Internet ought to have a voice in the running of 
the Internet. I do not subscribe to the notion that people can be 
properly represented by pre-defined, one-size-fits-all ``constituency'' 
structures such as are found in much of ICANN's present structure.
    I support the continued existence of ICANN. ICANN is a valuable 
institution; its roles as a technical coordinator are quite properly 
needed for the smooth functioning of the Internet. However, ICANN is 
ill designed, has been ill operated, has brought upon itself 
significant ill will within the Internet community, and has greatly 
exceeded its proper scope. I believe that significant restructuring of 
ICANN is needed so that the corporation can fulfill its purposes \1\ 
and fulfill its obligations toward its stated beneficiaries.\2\
    I would like to discuss the following matters:
    1. What kind of entity is ICANN?
    2. How can ICANN obtain acceptance and legitimacy?
    3. ICANN's obligation to have meaningful public participation in 
decisionmaking.
    4. Specific things Congress, the U.S. Department of Commerce, and 
ICANN ought to do.
                     what kind of entity is icann?
    ICANN is Internet governance.
    ICANN is far more than mere technical coordination.
    ICANN is about policies for the allocation of Internet resources.
    ICANN is responsible to no one other than the Attorney General of 
the State of California.
    ICANN's policies have an economic impact that is potentially 
measured in billions of dollars. The impact of decisions in the Domain 
Name System (DNS) space have been well noted elsewhere and were 
illustrated last week in hearings before the House Subcommittee on 
Telecommunications.
    There are those who say that ICANN is merely a technical body. I am 
a technologist. Yet I have a difficult time understanding how any of 
ICANN's decisions concerned with the Domain Name System have any 
technical content at all.
    One must wonder where the technical component might be in ICANN's 
Uniform Dispute Resolution Policy--a policy that expands the protection 
of trademarks to an extent not granted by any national legislature. And 
one must also wonder where the technical component might be in ICANN's 
preservation, indeed in ICANN's extension, of the hegemony of Network 
Solutions over the naming systems of the Internet.
    In other words, ICANN is very much a regulatory body. And it is a 
regulatory body that has been flung into existence with the support and 
aid of the U.S. Department of Commerce. As if to underscore that ICANN 
is a fruit that has fallen not far from the administrative agency that 
engendered it, ICANN was created with the express purpose of 
``lessening the burdens of government.'' \1\
---------------------------------------------------------------------------
    \1\ ICANN's purposes are stated in its paragraph 3 of its Articles 
of Incorporation. Emphasis has been added to highlight those parts 
mentioned in the text above: 3. This Corporation is a nonprofit public 
benefit corporation and is not organized for the private gain of any 
person. It is organized under the California Nonprofit Public Benefit 
Corporation Law for charitable and public purposes. The Corporation is 
organized, and will be operated, exclusively for charitable, 
educational, and scientific purposes within the meaning of Sec. 501 
(c)(3) of the Internal Revenue Code of 1986, as amended (the ``Code''), 
or the corresponding provision of any future United States tax code. 
Any reference in these Articles to the Code shall include the 
corresponding provisions of any further United States tax code. In 
furtherance of the foregoing purposes, and in recognition of the fact 
that the Internet is an international network of networks, owned by no 
single nation, individual or organization, the Corporation shall , 
except as limited by Article 5 hereof, pursue the charitable and public 
purposes of lessening the burdens of government and promoting the 
global public interest in the operational stability of the Internet by 
(i) coordinating the assignment of Internet technical parameters as 
needed to maintain universal connectivity on the Internet; (ii) 
performing and overseeing functions related to the coordination of the 
Internet Protocol (``IP'') address space; (iii) performing and 
overseeing functions related to the coordination of the Internet domain 
name system (``DNS''), including the development of policies for 
determining the circumstances under which new top-level domains are 
added to the DNS root system; (iv) overseeing operation of the 
authoritative Internet DNS root server system; and (v) engaging in any 
other related lawful activity in furtherance of items (i) through (iv).
---------------------------------------------------------------------------
    But unlike regulatory bodies that are part of the government, ICANN 
is a private corporation \2\ and is not obligated to undertake any of 
those troublesome constitutional Due Process burdens imposed on 
governmental administrative bodies. ICANN is not subject to the burden 
of judicial review or the Federal Administrative Procedures Act. ICANN 
is not required to make it possible for those affected by its decisions 
to participate in the making of those decisions. And there is no 
mechanism to compel a truly independent review of ICANN's actions.
---------------------------------------------------------------------------
    \2\ The beneficiaries of ICANN's operations are described in 
paragraph 4 of ICANN's Articles of Incorporation. Emphasis has been 
added: 4. The Corporation shall operate for the benefit of the Internet 
community as a whole, carrying out its activities in conformity with 
relevant principles of international law and applicable international 
conventions and local law and, to the extent appropriate and consistent 
with these Articles and its bylaws, through open and transparent 
processes that enable competition and open entry in Internet-related 
markets. To this effect, the Corporation shall cooperate as appropriate 
with relevant international organizations.
---------------------------------------------------------------------------
    ICANN's internal mechanisms for review are moribund or exist only 
as paper placeholders. I have had one request for independent review 
pending for nearly a year because ICANN has been too busy galloping off 
doing mission-expanding policy development, leaving it no time to pay 
attention to the implementation of fair procedures for review.
    And until a viable at-large mechanism is created and full rights of 
membership accorded, ICANN has no external entity to which it is 
accountable other than the Attorney General of the State of California.
    ICANN has gone so far as to assert in amicus briefs that ICANN 
believes that it, not the courts, should be the forum for resolution of 
disputes.
    ICANN is the result of a strange brew of governmental powers and 
private lack of accountability.
    ICANN, despite its claims to the contrary, is extremely secretive. 
We know more about how the College of Cardinals in Rome elects a Pope 
than we do about how ICANN makes its decisions. As a member of the 
ICANN board I have been surprised at how often I learn of ICANN actions 
from outside third parties. And I have perceived a very strong 
resistance on the part of ICANN's staff to opening its activities, even 
to members of ICANN's Board of Directors.
    ICANN has several internal committees and organizations that have 
no distinct legal existence apart from ICANN. As a Director I am 
responsible for the assets, liabilities, and actions of these bodies. 
Yet some of these bodies act as completely autonomous, independent, and 
often very secretive entities. At least one of these entities maintains 
distinct financial records that seem not to be incorporated into 
ICANN's overall financial statements. Another refuses to allow 
Directors to inspect its activities or meetings.
    I have a hard time reconciling ICANN's opaque processes and 
structures with the obligation in its bylaws that ``[t]he Corporation 
and its subordinate entities shall operate to the maximum extent 
feasible in an open and transparent manner and consistent with 
procedures designed to ensure fairness. '' (ICANN bylaws, Article III, 
Section 1.)
    ICANN has an organizational structure that is truly Byzantine. 
ICANN has so many ``committees'', ``organizations'', ``working 
groups'', ``councils'', and ``assemblies'' that one's mind goes numb 
simply looking at the fully detailed organizational chart. An older 
version of the org chart, one that lacks many of ICANN's newer 
elements, may be seen at http://www.icannwatch.org/images/orgchart.gif. 
Gilbert and Sullivan could easily write a sequel to The Mikado with 
ICANN as its subject.
    The ever-ramifying complexity of ICANN's organization makes it 
exceedingly difficult for any but the most determined, or well 
financed, to penetrate past even the outer layers. This has made ICANN 
very much the province of professional business advocates and has 
deterred the participation of the average citizen.
    It is frequently overlooked that ICANN in addition to its role over 
DNS, also regulates the allocation of Internet Protocol (IP) addresses. 
Address allocation policies will have a very significant impact on the 
future growth of the Internet and more particularly on what data 
carriers survive and dominate and which will fall by the wayside. It is 
likely that over the long term ICANN's IP address allocation policies 
will have a much greater economic impact than ICANN's Domain Name 
policies.
    The very real technical need for IP addresses to be allocated and 
then sub-allocated in accord with the present day topology of the 
Internet creates a situation that tends to create a preferential lock-
in for those who are currently at the top of the address allocation 
hierarchy and a discriminatory lock-out for those who may aspire to 
that role in the future. Address allocation is an area of substantial 
and subtle interaction between technical, economic, and social 
policies. In this area ICANN is for the moment leaving the task to the 
three worldwide regional address registries that were already doing the 
job before ICANN was formed.
            how can icann obtain acceptance and legitimacy?
    ICANN aspires to transcend national borders. ICANN conceives of 
itself as a supra-national body that may act in ways that no single 
nation can, and equally, ICANN harbors a hope that it ought to be above 
the reach of the laws of any single nation.
    And indeed it is true that ICANN has powers that supersede those of 
any single nation. For instance, ICANN's Uniform Dispute Resolution 
Policy (UDRP) amounts to a worldwide law, a law that is distinct and 
different from that enacted by any national legislature.
    ICANN's UDRP is applied via a cascading contractual scheme. But 
because of ICANN's position as the sole gatekeeper of the Domain Name 
System, those who wish to have domain names have no choice but to 
submit to ICANN's will.
    Under ICANN's UDRP trademarks are expansively interpreted at the 
expense of non-commercial uses of names and even traditionally 
acceptable nominative and free speech uses of trademarks. Suffice it to 
say, ICANN has created a new law of trademarks that as a practical 
matter overrides in many regards the trademark laws enacted by the 
Congress of the United States.
    ICANN's decisions as to who does and who does not get a Top Level 
Domain (TLD) have transformed ICANN into an intrusive worldwide zoning 
board issuing licenses that determine who gets the privilege to set up 
a lucrative name-service shop on the Internet Boulevard.
    Apart from the merits of the UDRP, this supranational scope is 
necessary--the Internet is supranational and ICANN's decisions as to 
its resources necessarily have supranational impact.
    The real question is not whether ICANN ought to have this power but 
rather how ICANN's possession of that power obtains acceptance and 
legitimacy from the nations of the world and the users of the Internet.
    My own answer is very simple: If ICANN makes good decisions using 
sound procedures, it will come to be accepted as reasonable and 
legitimate.
    As a Director I am very concerned that ICANN's rejection of public 
participation, its structural bias in favor of certain commercial 
interests, and its poorly defined and applied procedures will harm its 
long-term prospects for achieving such acceptance and legitimacy.
    ICANN was given two distinct tasks by the U.S. National 
Telecommunications and Information Administration (NTIA) when ICANN was 
formed. The first of these tasks was to deal with domain name issues. 
The second was to achieve public acceptance of this new thing under the 
sun. ICANN leapt into the first task--deciding DNS policy--while it 
slept on the second--achieving the public participatory structures that 
would provide a foundation upon which that DNS policy might be erected.
    Until ICANN reforms its procedures and until it starts allowing 
meaningful public participation in its decisionmaking, ICANN's policy 
decisions will be perceived as leaning toward special-interest concerns 
and thus undermine ICANN's long term hope of general acceptance and 
legitimacy.
     icann's obligation to have meaningful public participation in 
                             decisionmaking
    As mentioned above, ICANN's hopes for acceptance and legitimacy 
depend to a large extent on there being a perception that ICANN is 
responsive to all not just to some small set of business interests. To 
this end, a viable and believable means by which the public can 
participate in ICANN is essential.
    ICANN is obligated to have a well-formed mechanism through which 
the public may meaningfully participate in ICANN's policymaking. 
However, ICANN has a history of impeding the creation of such a public 
role. Even today the public has obtained only a partial position--it 
elects only about one half of its nominated quota of Directors--and 
that partial position is at risk of being eroded or eliminated.
    The ``Executive Committee'' of ICANN's Board of Directors appears 
to be increasingly active. The Executive Committee acts in lieu of the 
full Board, thus effectively eliminating any role for those Directors 
not on the Committee. The Executive Committee contains only one 
Director elected by the at-large membership. The impact of this is to 
dilute the role of the public by diluting the role of its elected 
representatives.
    ICANN is explicitly required by its Articles of Incorporation to  
``operate for the benefit of the Internet community as a whole.'' \3\
---------------------------------------------------------------------------
    \3\ The beneficiaries of ICANN's operations are described in 
paragraph 4 of ICANN's Articles of Incorporation. Emphasis has been 
added: 4. The Corporation shall operate for the benefit of the Internet 
community as a whole, carrying out its activities in conformity with 
relevant principles of international law and applicable international 
conventions and local law and, to the extent appropriate and consistent 
with these Articles and its bylaws, through open and transparent 
processes that enable competition and open entry in Internet-related 
markets. To this effect, the Corporation shall cooperate as appropriate 
with relevant international organizations.
---------------------------------------------------------------------------
    ICANN has made several promises to have a body in which the general 
public may fully participate in ICANN's policymaking. That promise 
remains unfulfilled.
    In 1998 during ICANN's formative period, NTIA obligated ICANN to 
discuss various matters, including public participation in ICANN, with 
groups such as the Boston Working Group.
    In 1999 ICANN formed a Membership Advisory Committee. This body 
issued its report in spring of 1999. The report was reasonably detailed 
and complete--and it favored the creation of a public ``at-large'' body 
that would elect Directors.
    In July 1999, ICANN's chairman promised a subcommittee of the U.S. 
House of Representatives that nine board seats would be filled by 
public election by the fall of the year 2000.\4\ That promise was made 
to Congress 18 months ago. Although we did in fact have an election, it 
was for a mere five of the nine seats. Furthermore ICANN is now taking 
the position that the entire at-large body, including its quota of 
Directors, may be eliminated altogether.
---------------------------------------------------------------------------
    \4\ Esther Dyson, Chairman ICANN, made the following statements on 
July 22, 1999 before the House Committee on Commerce Subcommittee on 
Oversight and Investigations. (Emphasis has been added.)
    Elected Board members. ICANN's elected Directors will join the 
Board in two waves: the first wave will consist of nine Directors 
chosen by ICANN's Supporting Organizations; the second wave will be 
elected by an At-Large membership consisting of individual Internet 
users. The Board expects the first wave to be completed by November 
1999, and the second wave as soon as possible following that. In any 
event, the process of creating a fully elected Board must be completed 
by September 2000. 
    As to the first wave of elected Board members, ICANN expects that 
the nine Directors to be elected by its three Supporting Organizations 
(the Domain Name Supporting Organization, the Address Supporting 
Organization, and the Protocol Supporting Organization) will be 
selected and seated in time for ICANN's annual meeting in November in 
Los Angeles.
    As to the second wave, it is ICANN's highest priority to complete 
the work necessary to implement a workable At-Large membership 
structure and to conduct elections for the nine At-Large Directors that 
must be chosen by the membership. ICANN has been working diligently to 
accomplish this objective as soon as possible. The Initial Board has 
received a comprehensive set of recommendations from ICANN's Membership 
Advisory Committee, and expects to begin the implementation process at 
its August meeting in Santiago. ICANN's goal is to replace each and 
every one of the current Initial Board members as soon as possible, 
consistent with creating a process that minimizes the risk of capture 
or election fraud, and that will lead to a truly representative Board.
---------------------------------------------------------------------------
    Moreover, this election was not held until 2 years after ICANN's 
formation and well after many of ICANN's fundamental and important 
decisions had been made and put into effect.
    The remaining four seats continue to be occupied by unelected 
people who were chosen, somehow, back in 1998 for 1 year terms. Those 
terms have now been extended to be at least 4 years. This extension is 
so long that my own term, and the term of all five of the Board members 
who were actually elected, will expire before then.
    ICANN has initiated a ``clean sheet'' study to reconsider even the 
existence of the ``at-large'' membership and the election of board 
members by the public. I personally consider this study to be 
unnecessary as it does little more than revisit the ground already 
covered by ICANN nearly 2 years ago. I also consider this study to be 
overbroad because it explicitly places at risk even the bare existence 
of any public participation in the selection of ICANN's Board of 
Directors. This risk is not idle conjecture--within the last few weeks, 
ICANN executives have declared that the at-large membership no longer 
exists under ICANN's bylaws.
    Even if ICANN eventually implements a full quota of seats for the 
at-large, there will not be an election until fall of 2002--four years 
after ICANN's inception. And in those 4 years, ICANN and time will have 
poured large amounts of metaphorical concrete around its prior 
decisions, making them essentially irreversible and forcing the public 
simply to accept that which was done while they were locked outside of 
ICANN's primary decisionmaking body.
    Changing the subject slightly--that election of the fall of 1999 
had some strange characteristics and failures.
    Many voters were denied the ability to register to vote, or if 
registered, were not given sufficient information and pass codes in 
order to cast their vote.
    Neither candidates nor voters were allowed access by ICANN to the 
voter lists. This made it nearly impossible for the voters to discuss 
matters except via the limited channels provided by ICANN. This 
limitation made it virtually impossible for the voters to form 
coalitions or parties, to otherwise organize their votes, or to promote 
their favored candidates. In the long term, this will damage the 
ability of ICANN's voters to evolve into a well-structured and 
principled institution. Moreover, ICANN's denial of the voter lists was 
arguably in contravention to the Corporations Code of the State of 
California under which ICANN is incorporated.
    I was elected by the at-large voters. But because of ICANN's 
restrictive controls over the voter rolls, ICANN has made it impossible 
for me to speak to my constituents or to solicit their advice.
    This denial of the voter lists is justified by ICANN on the basis 
of privacy. Yet, the California legislature has determined that in 
corporate elections, the integrity of the election process requires 
that voters and candidates have means to communicate with one another 
outside of the view and potentially manipulative control of corporate 
management. If ICANN has a problem with the enactments of the 
California legislature, ICANN ought to take it up with the legislature 
rather than unilaterally undermining the viability of public 
participation in ICANN.
    ICANN's structure, whether taken piecemeal or as a whole, seems 
designed to include selected business interests--particularly those of 
trademark owners and DNS name registry/registrars--and to exclude 
Internet users. Deployment of a fully empowered at-large membership, 
with its full quota of Directors would go a long way toward redressing 
this imbalance.
 specific things congress, the u.s. department of commerce, and icann 
                              ought to do
    It is my desire to improve ICANN. To that end let me make some 
specific suggestions.
    1. Congress should take care that the Internet does not serve as a 
means by which Federal administrative agencies slip their leash and 
assume unwarranted and undelegated powers.
    2. Congress should take care that Federal administrative agencies 
do not try to do an end-run around their limited powers by outsourcing 
jobs to private bodies such as ICANN.
    3. The Department of Commerce should exercise its independent 
judgment when dealing with recommendations coming from ICANN even if 
this may mean that the Department has to engage in hearings or other 
procedures.
    4. The Department of Commerce should make it clear to ICANN that it 
expects ICANN to remember the obligations imposed on ICANN during its 
creation and thus improve its procedures and quickly create a fully 
formed vehicle for meaningful public participation in all of ICANN's 
decisions.
    5. ICANN should be made accountable to someone more than just the 
Attorney General of the State of California.
    6. ICANN should return to its mission and focus on technical 
coordination, leaving the public policy decisions to institutions 
better designed to accommodate public policy debate.
    7. ICANN should fully adhere to the ideas of open access to all 
interested persons, transparent decisionmaking processes, and 
accountable decisionmakers. No ICANN process or body should be closed 
except when dealing with personnel, contract negotiations, litigation, 
or other expressly enumerated matters.
    8. ICANN should emphasize implementation and deployment of good, 
fair procedures, such as its internal review mechanisms, even at the 
risk of delaying substantive policy decisions.
    9. ICANN should follow the procedures written into its bylaws and 
avoid ad hoc processes. In particular, this means more delegation of 
issues to the ICANN's specialized ``supporting organizations.''
    10. ICANN should take steps to remedy the apparent capture by 
certain industry segments of ICANN's Domain Name Supporting 
Organization (DNSO).
    11. ICANN should remove policymaking discretion from ``staff'' and 
sharply reduce the discretionary powers of executive officers.
    12. ICANN should drop the ``clean sheet'' study of the at-large 
membership and simply get on with the job of filling all nine of the 
Board seats long promised to the public. At the same time ICANN should 
fully recognize the rights of at-large members as provided for under 
the California Corporations Code.
    13. ICANN should rid itself of its excessively complex 
organizational structure.
    14. ICANN should not have embedded entities that have no distinct 
legal status but which block review by members of the Board of 
Directors or the public.
    15. ICANN should adopt better procedures for internal 
decisionmaking. In particular it should mandate semi-formalized 
procedures and rules of order for use by its numerous organizational 
entities.

    Senator Burns. Thank you very much. It is nice to start off 
with a critic.
    [Laughter.]
    Senator Burns. We welcome today and we have been joined 
with the distinguished Senator from California. Do you have a 
statement? Would you like to make a statement at this time?

               STATEMENT OF HON. BARBARA BOXER, 
                  U.S. SENATOR FROM CALIFORNIA

    Senator Boxer. I would appreciate it.
    Senator Burns. Turn your microphone on there.
    Senator Boxer. I would like to keep it to 5 minutes though, 
Mr. Chairman. Please do let me know, and then I will submit it 
for the record.
    Senator Burns. I will start warning at 4, how is that?
    Senator Boxer. That sounds good.
    Senator Burns. Good.
    Senator Boxer. Mr. Chairman, you and I have worked on 
Internet issues and encryption, and I am just delighted now to 
be on the Subcommittee and to be able to participate more 
fully. This is the first hearing that I have been at before the 
Communications Subcommittee, and I am looking forward to 
working with you on many more.
    I am also very pleased, Mr. Chairman, that you are holding 
this hearing. I thank you for examining this very timely issue 
and providing us with a chance not only to learn more about how 
the ICANN selection process worked, but also to learn more 
about how ICANN plans to move forward with the seven new top-
level domain registry operators.
    I have heard from a great many businesses in California who 
are concerned, and therefore this is a very important matter. 
Although some would consider it very technical or arcane, for 
our people in California--I know that you know this, Mr. 
Chairman--it is a very important one.
    American industry has given us the incredible growth of the 
Internet. I am certainly proud of my State. It is the home of 
some of the most innovative and successful companies 
responsible for this explosion. I do see that California is 
well-represented on the panels today. I certainly want to thank 
you for that and extend a special welcome to the witnesses on 
the first panel from ICANN, which is based in California, 
Michael Roberts and Karl Auerbach, and also to Roger Cochetti 
on the second panel, who works for the California-based 
company, VeriSign.
    I would like to bring to the panel's attention that I 
myself have been a victim of identity theft in the domain name 
context. Now, I know that is not the prime focus of today's 
hearing, but I want to share with you what happened to me. I 
did not speak out about it until now, because--well, you will 
see why, but during the last election somebody took the name 
BarbaraBoxer.org. When you type in BarbaraBoxer.org, it will 
take you to an anti-Dianne Feinstein website, my friend and my 
colleague whom I work with proudly.
    When I found out about this I was stunned. I had taken 
BarbaraBoxer.com so that no one could take that, but had 
overlooked BarbaraBoxer.org. It is extremely disturbing to me 
that someone in a way can steal my identity and put up 
something like this. I mean, it would be bad enough if it was 
something I agreed with, if it was a pro-Dianne Feinstein site, 
but it is still nothing to do with me.
    So, I am hoping that the panelists might address this, if 
you can, because to me we have a problem with identity theft. 
This is a clear example of identity theft on the Internet, 
which is extremely disturbing, to say the least.
    I am interested to see where we go from here now that we 
have selected these new generic top-level domains. What actions 
need to be taken to ensure the reliability, the safety, and the 
security of the Internet? What can ICANN do to make sure that 
my constituents are able to reach their intended destinations 
in cyberspace?
    These are very important questions, and I know they are not 
easily answered. For that reason, I believe it is vital we move 
forward thoughtfully and deliberatively, and make sure that all 
actions are aimed at guaranteeing the continued growth and the 
stability of the Internet.
    Thank you, Mr. Chairman, for holding this hearing.
    Senator Burns. Thank you, Senator.
    Now we will continue with the testimony now of the CEO from 
ICANN, Michael Roberts, and welcome to the hearing this 
morning.

        STATEMENT OF MICHAEL M. ROBERTS, CEO, INTERNET 
           CORPORATION FOR ASSIGNED NAMES AND NUMBERS

    Mr. Roberts. Thank you, Mr. Chairman, and members of the 
Subcommittee. I appreciate this opportunity to appear here 
today and offer a status report on the Internet Corporation for 
Assigned Names and Numbers, ICANN, which I have served as 
president and chief executive officer since its formation in 
November 1998.
    Before I report to you on ICANN, I would like to take just 
a minute to set some context. The reason why there is a need 
for an ICANN-like organization today is directly traceable to 
the enormous worldwide success of the Internet.
    The Internet's success, in turn, is the product of a 
sustained commitment by the U.S. Government over many years to 
a public-private partnership among Federal research agencies, 
our preeminent researching universities, and the energy and 
entrepreneurial ingenuity of American high technology 
companies.
    Beginning with the Federal sponsorship of the original 
basic research, those of us involved in this process have had 
at every key point in the evolution of Internet technology, 
infrastructure, and commercial deployment, the kind of U.S. 
Government support that was needed. At the same time, however, 
we should also recognize the many contributions of our 
international partners which have been essential to the 
worldwide development and deployment of the network.
    Indeed, if the Internet was not based on a solid foundation 
of international partnership, many of the opportunities which 
it offers for trade, economic development, enhancement of 
national security, and the growth of democratic institutions, 
would not be possible.
    The important role of Congress should also be acknowledged. 
It is notable that the High Performance Computing and 
Communications Act which President Bush signed in 1991, and 
which for the first time established a Federal mandate and 
funding for advanced networking, originated in this 
Subcommittee.
    ICANN itself is a unique entity, but it follows a great 
American tradition of finding and using practical means to 
address problems that stand in the way of progress. Several 
years ago, the U.S. Government was confronted with the fact 
that its agency assignments for coordination of Internet 
activities were seriously lagging the rate at which the 
Internet was growing, especially in areas related to commercial 
use.
    To very much shorten an interesting story, the resulting 
scrutiny of the issues involved was a judgment that the most 
appropriate solution was to entrust the management of a small 
set of key technical infrastructure coordination 
responsibilities to the private sector.
    ICANN was reorganized by the U.S. Government in November 
1998 by means of a memorandum of understanding between the 
Department of Commerce and ICANN. ICANN and its stakeholders 
are required to earn the trust of the citizens and nations of 
the world and their governments by demonstrating the private 
sector consensus management of these functions works 
efficiently and serves the public interest while promoting 
opportunities for businesses to engage in the research, 
development, and delivery of network services.
    Although we have really been operational for only about 14 
months, I think it is fair to say that much has already been 
accomplished. Indeed, more than some imagined could be done, 
either in that time, or by this entity. For example, there has 
been a dramatic transformation of the domain name registration 
market from a monopoly to an extremely competitive market.
    We also now have a well-functioning global dispute 
resolution system for certain of the most common domain name 
disputes, a system that one recent commentator stated was 
widely used as a model of dispute resolution for the 21st 
Century, and we are on the verge of introducing real 
competition at the domain registry level.
    But these achievements, real and important as they are, are 
only part of the story. We have certainly not yet accomplished 
ICANN's ultimate goal, to become a truly effective consensus 
development body for the entire Internet community in the areas 
for which ICANN is responsible. All the necessary parts are not 
yet in place.
    I am frequently asked, why is there so much noise around 
ICANN? How can you get any work done over there? My response is 
that ICANN is noisy by design. We are intended to be the forum 
in which interested parties, some might characterize them as 
combatants, have the opportunity to advance multiple futures 
for the domain name and address system and have those competing 
and frequently contradictory futures merged into one 
satisfactory solution.
    By definition, it will be noisy. It will be messy, and 
sometimes slow, and frequently contentious, but if it works--
and the jury is still out, although I am reasonably 
optimistic--it may well be a useful model for other global 
issue resolution mechanisms.
    Thank you for the opportunity to appear, and I will be glad 
to answer any questions.
    [The prepared statement of Mr. Roberts follows:]
            Prepared Statement of Michael M. Roberts, CEO, 
          Internet Corporation for Assigned Names and Numbers
                            i. introduction
    Mr. Chairman and members of the subcommittee, I appreciate the 
opportunity to appear here today and offer a status report on the 
Internet Corporation for Assigned Names and Numbers (ICANN), which I 
have served as President and Chief Executive Officer since its 
formation in November 1998. I am also happy to report that the ``only a 
few months'' assignment, as it was described when I came out of 
retirement to take it on a little over 2 years ago, will finally come 
to an end next month, when I will retire once more, and Stuart Lynn 
will take over this challenging but interesting task.
    Before I report to you on ICANN, I would like to take just a minute 
to set some context. The reason why there is a need for an ICANN-like 
organization today is directly traceable to the enormous, worldwide 
success of the Internet. The Internet's success, in turn, is a product 
of a sustained commitment by the U.S. Government over many years to a 
public-private partnership among Federal research agencies, our pre-
eminent research universities, and the energy and entrepreneurial 
ingenuity of American high technology companies.
    Beginning with the Defense Department's sponsorship of the original 
basic research, and moving through the participation of other agencies 
such as Energy, NASA, and particularly the National Science Foundation, 
those of us involved in this process have had at every key point in the 
evolution of Internet technology, infrastructure, and commercial 
deployment the kind of U.S. Government support that was needed. 
However, we should also recognize the many contributions of our 
international partners, which have been essential to the worldwide 
development and deployment of the network. Indeed, if the Internet was 
not based on a solid foundation of international partnership, many of 
the opportunities which it offers for trade, economic development, 
enhancement of national security and the growth of democratic 
institutions would not be possible.
    The important role of Congress should also be acknowledged. It was 
my privilege in my former role as a technology policy advocate for 
higher education to work closely with Mr. Boehlert and Mr. Brown and 
other members of the House Science Committee in the middle 1980s on 
legislative programs for support of broader use of the Internet in 
research and education. It is notable that the High Performance 
Computing and Communications Act, which President Bush signed in 1991, 
originated in this Committee. Hearings such as this, and the recent 
hearing in the House, continue the constructive tradition of the 
Congress of encouraging the continued development of a stable, secure 
and open infrastructure for global commerce and communication.
    ICANN itself is a unique entity, but it follows a great tradition 
of finding and using practical means to address problems that stand in 
the way of progress. Several years ago, the U.S. Government was 
confronted with the fact that its agency assignments for coordination 
of Internet activities were seriously lagging the rate at which the 
Internet was growing, especially in areas related to commercial use. To 
very much shorten an interesting story, the result of scrutiny of the 
issues involved was a judgment that the most appropriate solution was 
to entrust the management of a small set of key technical 
infrastructure management and coordination responsibilities to the 
private sector. ICANN was the response of the Internet community to the 
call for the creation of a private sector, non-profit, global consensus 
development entity to take over these functions.
    In an important sense, the strenuous effort that resulted in the 
creation of ICANN was the last public service by Dr. Jon Postel, who 
sadly is no longer with us. His almost thirty-year stewardship of the 
Domain Name System has left us with a remarkable legacy of selfless 
devotion to the public interest, along with a basic framework for 
ICANN's functions that is of important and continuing value.
    ICANN was recognized by the U.S. Government in November, 1998, by 
means of a Memorandum of Understanding between the Department of 
Commerce and ICANN. It was and still is the case that ICANN and its 
stakeholders are required to earn the trust of the citizens and nations 
of the world and their governments by demonstrating that private sector 
consensus management of these functions works efficiently and serves 
the public interest while promoting opportunities for businesses to 
engage in the research, development and delivery of network services.
    Although ICANN was formed in 1998, we have really been operational 
for only about 14 months. I think it is fair to say that much has 
already been accomplished--indeed, more than some imagined could be 
done, either in that time or by this entity. For example, there has 
been a dramatic transformation in the domain name registration market, 
from a monopoly to an extremely competitive market, with predictably 
positive impacts on consumers--including cutting the average price for 
registration in half. We now have a well-functioning global dispute 
resolution system for certain of the most common domain name disputes--
a system that one recent commentator stated was ``widely viewed as a 
model of dispute resolution for the 21st Century.'' And we are on the 
verge of introducing real competition at the domain name registry 
level, a goal that has been fiercely debated and energetically pursued 
for much of the last decade, but for various reasons never able to be 
accomplished until the creation of ICANN.
    But these achievements, real and important as they are, are only 
part of the story. We have certainly not yet accomplished ICANN's 
ultimate goal--to become a truly effective consensus development body 
for the entire Internet community in the areas for which ICANN is 
responsible. We have been forced by events and the speed of Internet 
time to undertake some complex operational tasks, even though we are 
still working to complete the basic organizational architecture of 
ICANN. All the necessary parts are not yet in place. We have certainly 
not solved the very difficult problem of how to create a global process 
that is, on the one hand, broadly viewed as fair and effective, but on 
the other hand, does not erect a procedural, political and legal 
thicket that makes it impossible to achieve the kind of consensus 
decisionmaking that ICANN was created to accomplish.
    As a result, no one is really satisfied with the current State of 
affairs, and rightly so. As it turns out--and this will be no surprise 
to any member of this Committee--achieving global consensus is a 
difficult task, especially on issues as complex and important as those 
which prompted the creation of ICANN. There are important parts of the 
Internet community--country code registry operators, address registry 
operators, root server operators, and the general user community--where 
we have not completed the discussions that will formalize their 
relationships with or within ICANN. Even those elements of the 
construction that appear to have been completed, such as ICANN's three 
Supporting Organizations, need refinements of various kinds; any 
structure that is, as ICANN was, the product of a series of compromises 
is not likely to be perfect at first creation.
    And so, while we have attempted to be responsive to the important 
operational objectives that formed much of the impetus for the creation 
of ICANN, we have also worked very hard--and we continue to work hard--
to assemble a complete working organization for the development of 
global consensus on these issues, and to ensure that all the 
stakeholders in the Internet community have an appropriate place in, 
and the ability to have their voices heard in, the ICANN process.
    I am frequently asked, ``Why is there so much noise around ICANN? 
How can you get any work done over there?'' My response is that ICANN 
is noisy by design. We are intended to be the forum in which interested 
parties--some might characterize them as combatants--have the 
opportunity to advance multiple futures for the domain name and address 
system, and have those competing and frequently contradictory futures 
merged into one satisfactory solution. By definition, it will be noisy, 
and messy, and sometimes slow, and frequently contentious, but if it 
works--and the jury is still out, although I am reasonably optimistic--
it may well be a useful model for other global issue resolution 
mechanisms.
                             ii. background
    For much of its formal history, which begins in 1973 with roots 
stretching into the 1960s, the functions of ICANN were performed by one 
computer scientist, Jon Postel, under a research contract to the U.S. 
Defense Advanced Research Projects Agency (DARPA). During the mid 
1990s, as the Internet emerged as a potent commercial force in the 
telecommunications environment, it became clear that such functions 
needed to be institutionalized. Dr. Postel participated in attempts to 
achieve that goal beginning as far back as 1995. In the midst of the 
effort in the late 1990s that led to the creation of ICANN, Dr. Postel 
unexpectedly passed away. ICANN was formed to privatize, 
institutionalize and internationalize the functions that Dr. Postel 
performed so ably for so long.
A. The Formation of ICANN
    ICANN is a non-profit private sector organization with a 19-member 
international volunteer Board of Directors \1\ drawn from a set of 
specialized technical and policy advisory groups, and from an online 
voting process of Internet users worldwide. Through a series of 
Supporting Organizations, Advisory Committees and Working Groups,\2\ it 
functions as a consensus development body for certain technical and 
administrative management issues related to the name and address 
functions of the Internet.
---------------------------------------------------------------------------
    \1\ Short biographies of the directors can be found at http://
www.icann.org/general/abouticann.htm.
    \2\ An organizational chart of ICANN and its constituent units is 
attached to this testimony.
---------------------------------------------------------------------------
    ICANN is the end result of an extensive policy development process, 
both within the U.S. Government and within the global Internet 
community. During 1997 and 1998, under the leadership of the U.S. 
Department of Commerce, a framework for private sector management of 
the Internet's Domain Name System (DNS) and Address System was 
developed and put into writing in the form of a policy document known 
as the White Paper.\3\
---------------------------------------------------------------------------
    \3\ The White Paper can be found at http://www.icann.org/general/
white-paper-05jun98.htm.
---------------------------------------------------------------------------
    The White Paper, which was issued in June 1998, proposed that the 
private sector undertake management of these functions through the 
formation of a private, non-profit corporation, and it outlined the 
substantive responsibilities of the new organization and a number of 
guiding principles for its work. Following several months of public 
meetings and dialog in the summer of 1998, during which the White Paper 
framework was turned into a specific charter and set of Bylaws, ICANN 
was incorporated in September of that year, and was recognized by the 
U.S. Government in November 1998, in the form of a 2-year Memorandum of 
Understanding/Joint Project Agreement between the Commerce Department 
and ICANN. The MOU has subsequently been amended twice and currently 
has a term expiring on September 30, 2001.\4\
---------------------------------------------------------------------------
    \4\ The full text of the MOU/JPA can be found at http://
www.icann.org/general/icann-mou-25nov98.htm.
---------------------------------------------------------------------------
B. ICANN Responsibilities
    The White Paper identified four principal areas of responsibility 
for the new private sector consensus organization: Coordination of the 
Internet Domain Name System; Overseeing operation of the authoritative 
root server system; Coordination of the Internet Protocol (IP) Address 
space; Coordinating the assignment of Internet technical parameters.
     As recognized in the White Paper, these four functions were 
broadly seen by the global Internet community as requiring coordinated 
action to assure the smooth and reliable operation of the Internet.
C. Guiding Principles for ICANN
    The White Paper identified 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 U.S. 
Government was seeking to extract itself from what it had concluded was 
no longer a proper role for the U.S. Government--the funding of private 
contractors by research agencies 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 registration of domain names is theoretically 
possible at both the registry (or wholesale) level, and at the 
registrar (or retail) level. Increasing competition at the retail level 
involves only allowing multiple providers of registration services to 
add domain name registrations to registry data bases; as a result, that 
objective can be accomplished without major stability concerns. For 
this reason, adding new competition at the retail level was the first 
substantive goal that ICANN quickly accomplished after its formation. 
By contrast, the introduction of competition at the new registry (or 
wholesale) level 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 with a stake in the Internet.
    3. A third White Paper principle was private sector, bottom-up 
consensus development, and the entirety of ICANN's processes are 
organized around this principle. ICANN is a private-sector body, and 
its participants draw from the full range of Internet stakeholder 
organizations, from business entities to non-profit organizations to 
academic institutions to individual Internet users. Its policies are 
the result of the complex, sometimes cumbersome interaction of all 
these actors in an open, transparent, sometimes slow and sometimes 
contentious progression from individuals and particular entities 
through the ICANN working groups and Supporting Organizations to 
ICANN's Board, which under its bylaws has the principal role of 
recognizing consensus as developed below, rather than imposing it from 
above. Like democracy, consensus is far from a perfect system, but it 
is an attempt, and the best way we have yet been able to devise, to 
achieve globally acceptable policies 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 decisionmaking.'' 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 Carl Bildt, the former Prime Minister of 
Sweden, to oversee a new effort to find a consensus approach to 
obtaining input from and providing accountability to the general 
Internet user community, which might not otherwise be involved in or 
even knowledgeable about ICANN and its activities. This is a formidable 
challenge, given that there are an estimated 400 million Internet users 
around the world in over 200 countries--a number that has been growing 
at 100 percent per year since 1988.
    We have also undertaken a number of other organizational tasks 
necessary to ensure that ICANN is fully representative of the entirety 
of the Internet community. This is hard work, and there is more to do 
to get it done right.
                   iii. icann accomplishments to date
    The tasks assumed by ICANN in the Memorandum of Understanding were 
of two general kinds. The first were related to completion of its 
organizational structure, particularly its three specialized Supporting 
Organizations (for domain names, technical protocols, and IP 
Addresses--the numeric identifiers used in Internet routing), and its 
fourth component, known as ``At Large'' (which is intended to provide a 
vehicle for input and participation by the full range of Internet users 
in ICANN's work). The second set of tasks were related to specific 
problems that had arisen as a result of the rapid growth and 
commercialization of the Internet in the middle 1990s.
    Obviously, ICANN is still a work in progress. Nevertheless, it has 
already made remarkable progress in the short span of little more than 
2 years.\5\ In the following portions of the testimony, I describe our 
work on four specific tasks--the enhancement of the Internet's Root 
Server System; introduction of retail competition in domain name 
registrations for .com, .net, and .org; adoption of a non-judicial 
mechanism for resolving certain disputes over the registration of 
domain names; and introduction of new Top Level Domain Name Registries 
to provide ``wholesale'' competition. Because staff has indicated that 
the Committee has a special interest in the Root Server System, I will 
begin with that subject.
---------------------------------------------------------------------------
    \5\ For the first two annual summaries of progress provided to the 
Department of Commerce, see First Status Report at http://
www.icann.org/general/statusreport-15june99.htm;  Second Status Report 
at http://www.icann.org/general/statusreport-jun00.htm.
---------------------------------------------------------------------------
A. Enhancement of the Security and Reliability of the Root Server 
        System
    A.1 Functioning of the Domain Name System. In recent years, the 
domain-name system (DNS) has become a vital part of the Internet. The 
function of the domain name system is to provide a means for converting 
easy to remember mnemonic domain names into the numeric addresses that 
are required for sending and receiving information on the Internet. The 
DNS provides a translation service that permits Internet users to 
locate Internet sites by convenient names (e.g., http://www.senate.gov) 
rather than being required to use the unique numbers (e.g., 
156.33.195.33) that are assigned to each computer on the Internet.
    The Internet engineering community devised the DNS in the early 
1980s.\6\ One of the Internet's prominent engineers, Dr. Jon Postel 
(the creator of the IANA function that preceded ICANN, and the 
principal force behind the creation of ICANN) took on responsibility 
for coordinating a decentralized system of computers throughout the 
Internet to implement the DNS. These computers are organized in a 
hierarchical manner, with ``root nameservers'' at the highest level 
that point to nameservers for top-level domains (e.g., .gov), that in 
turn point to nameservers for second-level domains (e.g., senate.gov), 
and so on. In all there are 253 top level domains, of which the 
greatest number are assigned to the national, or ``country code,'' top 
level domains.
---------------------------------------------------------------------------
    \6\ The DNS replaced an earlier, smaller capacity translation 
mechanism known as the ``hosts.txt'' system.
---------------------------------------------------------------------------
    Upon the deployment of this new system in 1985, Internet users 
worldwide could point their computers to the root nameservers, and use 
them to receive the translation services (i.e. from names to numbers) 
that the DNS provides. The system is highly redundant and 
decentralized, consisting of almost 100,000 nameservers arranged in a 
topologically and geographically distributed system. It has repeatedly 
demonstrated its technical resilience and robustness, including during 
last year's Y2K event during which the system functioned smoothly 
without interruption.
    As a first step in deploying the DNS nameserver system, Dr. Postel 
arranged for voluntary operation of the root nameservers by a group of 
expert and trusted individuals and organizations throughout the world, 
who each volunteered to operate a root nameserver. This group now 
numbers nine organizations, plus the U.S. Government; they operate the 
13 root nameservers on a completely voluntary, free-of-charge, and 
public interest basis. The following map and chart show the identities 
and locations of the organizations operating the DNS root servers:
[GRAPHIC] [TIFF OMITTED] 87255.001


                                            List of the Root Servers
----------------------------------------------------------------------------------------------------------------
                 Name                            Org                      City                     Type
----------------------------------------------------------------------------------------------------------------
a....................................  NSI....................  Herndon, VA, U.S.......  com
b....................................  USC-ISI................  Marina del Rey, CA,      edu
                                                                 U.S..
c....................................  PSInet.................  Herndon, VA, U.S.......  com
d....................................  U of Maryland College    edu....................
                                        Park, MD, U.S..
e....................................  NASA...................  Mt View, CA, U.S.......  usg
f....................................  Internet Software C....  Palo Alto, CA, U.S.....  com
g....................................  DISA...................  Vienna, VA, U.S........  usg
h....................................  ARL....................  Aberdeen, MD, U.S......  usg
i....................................  NORDUnet...............  Stockholm, SE..........  int
j....................................  NSI (TBD)..............  Herndon, VA, U.S.......  (com)
k....................................  RIPE...................  London, UK.............  int
l....................................  ICANN..................  Marina del Rey, CA,      org
                                                                 U.S..
m....................................  WIDE...................  Tokyo, JP..............  edu
----------------------------------------------------------------------------------------------------------------


    At lower levels in the DNS hierarchy (for example .com), the 
operators of the nameservers and the associated registries have 
received compensation, first by governmental subsidies in the late 
1980s and early 1990s and then, beginning in the mid-1990s, by charging 
those who wished to register domain names within the system. The root 
nameserver system itself, however, has always been operated on a 
voluntary basis and without user fee (or even government subsidy, 
though the U.S. Government does contribute by operating some of the 13 
root nameservers). As a result, the system has become broadly accepted 
by Internet users worldwide as an integral feature of the Internet.
    A.2 U.S. Government Policy Concerning the Root Server System. As 
the Internet has evolved from a system for research conducted under 
U.S. Government sponsorship to an essential medium for global commerce, 
the need for a secure, stable, and reliable DNS root nameserver system 
coordinated according to the needs of the Internet community has also 
grown. The White Paper reflected a broad consensus within the Internet 
community when it said, ``coordination of the root server network is 
necessary if the whole system is to work smoothly. While day-to-day 
operational tasks, such as the actual operation and maintenance of the 
Internet root servers, can be dispersed, overall policy guidance and 
control of the TLDs and the Internet root server system should be 
vested in a single organization that is representative of Internet 
users around the globe.''
    In the ICANN MOU, the U.S. Government represented that it would 
``undertake, in cooperation with IANA, NSI, the IAB, and other relevant 
organizations from the public and private sector, a review of the root 
server system to recommend means to increase the security and assure 
professional management of the system. The recommendations of the study 
should be implemented as part of the transition process; and the new 
corporation should develop a comprehensive security strategy for DNS 
management and operations.''
    Subsequently, one of the first Advisory Committees established by 
ICANN was the Root Server System Advisory Committee (RSSAC), chaired by 
ICANN Board member Jun Murai of Keio University in Japan. Professor 
Murai is also responsible for the operation of the root nameserver 
located in Tokyo. All root nameserver operators are members of the 
RSSAC, which also includes technical experts from the Internet 
Engineering Task Force (IETF).
    The RSSAC has been working diligently since ICANN's creation to 
evaluate and improve where necessary the security and reliability of 
the root nameservers. In its last report, at ICANN's public meeting in 
Yokohama in July of last year, it described the results of its efforts, 
which basically involve the evolution in the near future of the current 
root nameserver system structure to one in which a ``dedicated 
primary'' server, rather than one of the 13 operational root servers, 
is responsible for distributing updated root zone files to the publicly 
accessible root nameservers in a secure, reliable and robust system 
transparent to users. When implemented, this will be a major 
improvement in the security and reliability of the root nameserver 
system, and therefore of the DNS and the Internet.
    A.3. Formalization of Arrangements for Operation of the Root 
Nameservers. In addition, ICANN has been working on formalizing the 
legal relationships under which the various organizations have operated 
the individual DNS root nameservers. As described above, since the 
initial deployment of the DNS the root nameservers have been operated 
under the voluntary arrangements originally made by Dr. Jon Postel. 
After ICANN was established, some additional formality was introduced 
by the participation of the operators in the RSSAC, and in mid-1999, 
ICANN and the National Institute of Standards and Technology entered 
into a Cooperative Research and Development Agreement under which the 
U.S. Government is participating in the RSSAC's work toward enhancing 
the stability and security of the root nameserver system. As part of 
this effort, ICANN is near the completion of agreements with the 
organizations operating the individual root nameservers, with the goal 
of mutually recognizing in an appropriate way each other's obligations 
and responsibilities to protect the stability of the DNS and the 
Internet. We are well along in those discussions and I expect they will 
be completed in the near future.
    A.4 Administration of Changes to the Root Server System. There has 
been, and continues to be, some confusion about the current and 
proposed procedures for coordination and administration of changes to 
the files contained in the root server computers.
    Currently, the root nameserver operators follow the convention that 
one of the operators, Network Solutions, Inc. (NSI), is responsible for 
implementing edits to the ``root zone'' file that designates the top-
level domains in the DNS. Under agreements among ICANN, the U.S. 
Government, and NSI, ICANN (through IANA, now absorbed into ICANN), 
sends documentation for needed changes to the root zone file to the 
U.S. Department of Commerce, which directs Network Solutions to 
implement them by editing the authoritative root zone file. By 
convention among the RSSAC's root nameserver operators, that file is 
loaded twice daily into all 13 DNS root nameservers.
    ICANN, through the RSSAC and through its soon-to-be-completed 
agreements with the root server operators, is already playing an 
important role in facilitating a more structured understanding among 
these most critical participants in the DNS. As a result, the very 
informal arrangements that have served us well in the past are in the 
process of a transition to a more transparent but still collegial and 
consensus-based structure that we believe will continue this 
outstanding record of service into the future.
B. The Introduction of Retail Competition
    A very important impetus for the formation of ICANN was the 
perception that the name registration market was not competitive, and 
as noted above, the introduction of competition was an important goal 
outlined in the White Paper. Thus, as one of its very first actions, 
ICANN created an accreditation system for competitive registrars and, 
pursuant to its agreements with NSI, gave those new competitors access 
to the NSIoperated registries (specifically, .com, .net and .org).
    When ICANN was formed, there was only a single registrar (NSI) for 
.com, .net. org, and everyone had to pay the single price for the 
single domain name product that sole registrar offered: $70 for a 2-
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 1-year domain name registration 
in the NSI registries is probably $10-15--or less than half the retail 
price just 18 months ago.
    As another illustration of the dramatic changes over the last year, 
NSI's share of the registration market for the .com, .net and .org TLDs 
has fallen from 100 percent at the time of ICANN's creation to less 
than 40 percent of new registrations in those TLDs today--a market 
share drop of more than half in just over a year.
    There are still issues that must be dealt with in this area; some 
registrars appear not to have not lived up to their contractual 
commitments, and ICANN needs to ensure that they do. And indeed, there 
may be more registrars than the market will support in the long term; 
94 percent of all registrations come from the 10 largest registrars, 
with the other 80 or 90 active registrars sharing the other 6 percent. 
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. While these issues must 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.
C. Creation of a Cost-Effective, Efficient Dispute Resolution System
    Another significant accomplishment has been the creation of the 
Uniform Dispute Resolution Policy (UDRP), 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 cases 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 TLDs
    D.1 Background. This brings us to the current effort to introduce 
competition at the registry (or wholesale) level of the domain name 
market. ICANN was able to create 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 can 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 U.S. 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 communications 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.
    D.2 ICANN Process. 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 
a consensus position. 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.\7\ 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.\8\
---------------------------------------------------------------------------
    \7\ See generally ICANN Yokohama Meeting Topic: Introduction of New 
Top-Level Domains, at http://www.icann.org/yokohama/new-tld-topic.htm.
    \8\ See Resolutions of the ICANN Board on New TLDs, at http://
www.icann.org/tlds/new-tldresolutions-16jul00.htm.
---------------------------------------------------------------------------
    D.3 Criteria for Evaluating Applications. In early August, ICANN 
posted a detailed discussion of the new TLD process it proposed to 
follow,\9\ and in mid-August a detailed set of Criteria for Assessing 
TLD Proposals.\10\ These nine criteria have been constant throughout 
this process, and so they bear repeating here:
---------------------------------------------------------------------------
    \9\ See New TLD Application Process Overview, at http://
www.icann.org/tlds/applicationprocess-03aug00.htm.
    \10\ See Criteria for Assessing TLD Proposals, at http://
www.icann.org/tlds/tld-criteria-15aug00.htm.
---------------------------------------------------------------------------
    a. 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 subordinate to that. Thus, 
any proposal that could be shown to threaten this stability (other than 
any risk inherent in any new TLD introduction) was obviously 
unacceptable.
    b. The extent to which selection of the proposal would lead to an 
effective ``proof of concept'' concerning the introduction of toplevel 
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 larger 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.
    c. 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 market participant that already 
has high brand awareness, 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 data base 
of several million names that gets hundreds of 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 criterion 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.
    d. 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, so that confusion, recognition difficulties, and 
the like do not impair the DNS's ease of use.
    e. 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.
    f. 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, noncommercial or commercial, personal or 
business-oriented, etc.) The criteria also sought diverse business 
models and proposals from different geographic regions, for the same 
reasons.
    g. 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 representative participation of all 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.
    h. 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.
    i. 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 
how businesses and consumers might suffer from a failure. It was also 
not intended to be clairvoyant with regard to the outcome of any 
particular proposal. Thus, to the extent possible and consistent with 
other goals, the Board favored those applications that appeared to have 
the soundest business plans, and were based on the most realistic 
estimates of likely outcomes.
    D.4 The Application Process and Fee. 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 in an open, transparent, 
bottom-up consensus based manner.
    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 not satisfied with the process or 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, 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 canceled 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 considerable, and 
especially if the goal is to operate a registry that charges low or no 
fees for name registrations (many of the persons and entities advancing 
this particular complaint are nonprofit or public interest bodies), 
those fees would not likely cover the costs of operation, much less the 
necessary startup 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 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 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 were 
not selected in the evaluation process at least in part on 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.
    D.5 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.\11\  Another 1,000 public comments were received on the staff 
report. The Board, of course, had access to the applications and the 
public comments as they were filed, and was kept generally informed as 
to the process of the evaluation.
---------------------------------------------------------------------------
    \11\ 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 10, 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 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.
    In one sense, it would have been preferable to have issued the 
staff report earlier. But on the other hand, doing that would have 
required shortening the period that the public had to make comments 
that would be summarized in the report. In fact, in the 6 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 nearly all 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 for the applicants (given the other parts 
of the community who also wished to be heard) was limited to about 2 
hours, 3 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 applicant withdrew its application because of 
its unwillingness to allow significant material in the 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 this 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 public 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.
    D.6 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,\12\ 
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.
---------------------------------------------------------------------------
    \12\ In the application instructions, each applicant was told: 
``The requirements for sponsoring or operating a new TLD are very 
stringent. Only a limited number to TLDs will be established in this 
round of applications, and it is likely that only applications with 
very high qualifications will be accepted.'' http://www.icann.org/tlds/
new-tld-application-instructions-15aug00.htm#12. To make doubly sure 
there was no misundeerstanding, every applicant was required to 
acknowledge in writing: ``The applicant understands and acknowledges 
that ICANN has the right to reject all applications for new top-level 
domains that it receives and that there is no assurance that any 
additional top-level domain will ever be created in the future.'' 
http://www.icann.org/tlds/eld-app-unsponsored-transmittal-
15au00.htm#B6.
---------------------------------------------------------------------------
    Many applications with likely merit were necessarily not going to 
be selected, since 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 organizations 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 experiment. Although some suggest that the decision 
process was somehow hidden, in fact all of this consideration was 
conducted in a public meeting, in full view of the assembled audience 
and of hundreds of users observing the webcast. In a meeting that 
lasted more than 6 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.\13\ 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.
---------------------------------------------------------------------------
    \13\ See http://www.icann.org/minutes/prelim-report-
16nov00.htm#00.89.
---------------------------------------------------------------------------
    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, we believe, the objectives of the general 
Internet community, 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 dissatisfied, 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.
    D.7 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. (There 
have been a number of country code TLDs introduced over that period, 
and some of those have recently begun to function in a way quite 
analogous to a global TLD. These have only achieved relatively small 
numbers of registrations, so that they do little to test whether the 
stability of the DNS by large TLDs competitive with .com.) 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 sideeffects, and that is 
precisely why we are conducting this experiment. The results will guide 
our future actions.
                    iv. important outstanding issues
    A. Country Code Top Level Domain (ccTLD) Relationships. This is 
certainly one of the most complex parts of the ICANN structural process 
that remains to be resolved. While there are many moving parts, the key 
issues are the proper relationships between governments, current ccTLD 
operators, and ICANN.
    To properly understand how we got to where we are, we need to look 
back to the early days of the DNS, when Jon Postel and others were 
seeking primarily to expand connectivity throughout the globe. In order 
to have a truly global network, and for all of the world's population 
to enjoy the benefits of that network, worldwide connectivity is a 
crucial first step. After the creation of the original seven generic 
TLDs in the mid-1980s, Dr. Postel (in his IANA role) delegated what he 
described as ``country code'' or ``cc'' TLDs to persons (often academic 
researchers) willing to operate those registries for the benefit of the 
residents of that particular geographic area.
    While in general these delegations were made on a national boundary 
basis, Dr. Postel also made delegations to persons willing to take on 
this commitment in isolated geographies, such as island groups, even 
though they might be part of an already existing national cc 
delegation. Typically, each ccTLD was operated by a designated 
individual. Since the goal was to expand connectivity, and since there 
was in fact very little interest in this subject on the part of most 
national governments at the time, there was clearly less care and 
precision about the specifics of those delegations than might seem 
desirable today.
    Over time, the standards and criteria for such delegations grew 
more rigorous, and were eventually described in a document known as RFC 
1591.\14\ It became the practice to only create new delegations for 
those nations or geographic areas included on a list maintained by the 
Organization for International Standardization (ISO) on behalf of the 
United Nations Statistics Office, which maintains two-letter codes for 
nations and various external territories. But the legacy of those early 
days still remains in some instances, and so there are separate ccTLDs 
for locations such as the Cocos (Keeling) Islands (.cc) and Christmas 
Island (.cx), both territories of Australia, as well as various French 
overseas departments and territories (e.g., Guadeloupe (.gp) and 
Mayotte (.yt)) and miscellaneous others (e.g., American Samoa (.as) and 
Pitcairn Island (.pn)).
---------------------------------------------------------------------------
    \14\ ``Requests for Comments'' (RFCs'') are standards and other 
related documents developed and published under the auspices of the 
Internet Engineering Task Force.
---------------------------------------------------------------------------
    The 244 ccTLDs are quite diverse. Some, like .de (Germany) or .uk 
(Great Britain) are large and active registries; some, like .aq 
(Antarctica), have almost no registrations at all; and some are 
completely inactive. In addition, the way the ccTLDs are operated 
varies enormously. Some are highly restricted to residents or citizens 
of the particular country, while others are completely unrestricted. 
Some are limited to particular kinds of registrations, while others 
allow registrations of almost any string of letters. Some are operated 
as non-profit cooperatives, while others are highly entrepreneurial 
businesses.
    A few delegees have decided to essentially license the marketing of 
the ccTLD to a commercial enterprise for various forms of compensation, 
and that has produced out-of-territory marketing campaigns for such 
ccTLDs as .tv (Tuvalu), .md (Moldova), .nu (Niue), and .cc (Cocos 
Islands). This practice, of course, is a distortion of the original 
intended use of the ccTLDs by Jon Postel: opening up the Internet to 
all parts of the globe, allowing it to accommodate diversity in 
linguistic, cultural, economic, political, and legal circumstances. Dr. 
Postel was seeking stewards for the local community's interest in being 
part of this growing global network we now call the Internet. He was 
looking for, and generally found, volunteers who were willing to take 
what he (and they, in the vast majority of cases) viewed as a public 
trust for the Internet community of which the person or entity 
receiving the delegation was a part.
    But Dr. Postel, while a genius in his field, was no more prescient 
than anyone else about what the Internet would become, and in any event 
did not insist upon written contracts and legal agreements as a 
condition of a delegation. He relied, as did all involved at the time, 
on the good faith and interest in serving the public of all involved. 
The Internet we see today--a global medium for commerce and 
communication that presents enormous opportunities for profit--is 
vastly different than the infant network that he was trying to nurture 
to adolescence. And it is this evolution that is the principal reason 
that Dr. Postel and the great majority of the Internet community 
concluded that something like ICANN needed to be created.
    Unfortunately, the task that ICANN inherited with respect to the 
ccTLDs is complicated greatly by the fact that much water has passed 
under the bridge since most of the original delegations. In some 
countries, the national government is intimately involved in oversight 
of the ccTLD delegated for that country. In other countries, the 
national government has shown little or no interest in these issues. 
And in some countries or geographic areas, the operation of the ccTLDs 
have run strongly counter to governmental preferences and, in several 
cases, legislation. As we have seen, in some of those situations, where 
a private entrepreneur has obtained an agreement to market a ccTLD from 
the original delegee, that entrepreneur has interests that are 
completely unrelated to the original goals of the delegation, and may 
have a significant economic interest in maintaining the status quo, 
without regard to the interests of the global or local Internet 
communities.
    One of the great changes over the last two decades is the 
involvement and interest of many of the world's governments in the 
Internet. For many reasons, national governments and even multi-
national bodies now see the Internet as an important vehicle or tool 
for economic development, for communication, for cultural preservation 
or many other objectives. Since ICANN is a private sector entity, 
governments or government officials cannot directly participate in the 
governance or operations of ICANN. But since the interests of national 
governments are obviously important elements of the global Internet 
community, and certainly have to be taken account of in the creation of 
any meaningful global consensus, ICANN created its Governmental 
Advisory Committee (GAC) to serve as a device for sharing information 
and concerns between national governments and recognized geographic 
areas, on the one hand, and the private sector participants in ICANN on 
the other. The GAC meets (at least) quarterly, in conjunction with the 
quarterly ICANN meetings, and has developed the tradition of issuing a 
public communique following each such meeting. ICANN's bylaws provide 
that it will receive advice from the GAC, and deal with it as it sees 
fit, but any such advice is always given the serious consideration that 
it deserves, since it comes from those chosen as representatives of 
populations that make up much of the Internet community.
    The GAC has a particular interest in the relationships between 
ccTLD delegees and ICANN, since it and its members believe that nations 
have a sovereign interest in the ccTLD that has been created to 
represent the interests of the citizens of those nations. On the other 
hand, while ICANN has recognized and accepted that sovereign 
interest,\15\ ICANN's prime directive--the stability of the Internet--
cannot be sacrificed or ignored because of it. And finally, there are 
commercial relationships that have been created over the years, and 
investments made in reliance on those relationships, that should not be 
ignored either, both as a matter of common equity and because to do so 
could adversely affect the very stability that ICANN (and the Internet 
community it represents) seeks. Thus, finding the correct articulation 
of the appropriate relationships between (1) the government and the 
ccTLD administrator; (2) the ccTLD administrator and ICANN; and (3) 
ICANN and the government is inherently complex.
---------------------------------------------------------------------------
    \15\ The White Paper summarized this interest as follows: ``Of 
course, national governments now have, and will continue to have, 
authority to manage or establish policy for their own ccTLDs.''
---------------------------------------------------------------------------
    We have worked hard, but we don't have this part of the ICANN 
construction project done yet. We have just hired the former ccTLD 
administrator for Austria, Herbert Vitzthum, to help bring this 
particular set of conversations to a conclusion as soon as possible.
    B. At-Large (or general user) Participation in ICANN. The original 
ICANN proposal to the Department of Commerce to be recognized as the 
Internet community private sector consensus entity called for by the 
White Paper proposed that nine of the 19 members of the ICANN Board 
would be selected with the participation of the general user community, 
``if feasible.'' The reason for the qualification was purely practical; 
there was a clear consensus that users should have some appropriate way 
to participate in the ICANN consensus development process, but there 
was no consensus--and indeed no good ideas--about how that could be 
accomplished without risking the very ability of ICANN to carry out its 
principal mission. There were loud voices calling for global online 
elections--one-person (or one-domain name, or one email address), one 
vote. But there were other equally loud voices raising concerns about 
the possibility that such elections could be easily captured by 
determined minorities--business, geographic, ethnic, religious, 
philosophical or other--and even if that did not happen, having half 
the Board of an organization whose principal mission was technical 
stability of the Internet selected by an electorate that almost 
certainly would know almost nothing about the subject was unwise. No 
one had come up with a scheme for accomplishing the objective while 
eliminating the obvious risks, and so the original proposal promised 
only to do what was feasible.
    The Clinton Administration, in the form of Ira Magaziner, who had 
been delegated the lead responsibility in this area, took the position 
that it would not recognize ICANN unless it committed to user 
participation (comprising at least nomination) in the process of 
selecting nine Board members--presumably on the basis that, without 
that commitment, it would not accept that ICANN truly represented a 
consensus of the Internet community. Whatever the merits of that point 
of view, the ICANN organizers acquiesced, and thus began 18 months of 
searching for a method to accomplish this goal that could achieve 
consensus support. We have not yet found that needle in the haystack, 
and this failure has been a constant source of criticism from a portion 
of the Internet community and from various academics and interest 
groups who feel strongly about the issue. An appropriate solution for 
the At Large issue is necessary if ICANN is to truly be an effective 
consensus development body for the entire Internet community.
    Because all other attempts had failed, the ICANN Board last year 
determined that it would, on an interim basis, conduct a global online 
selection process for five members of the ICANN Board, which would be 
followed with a new study effort to find the consensus that has eluded 
the community so far on this issue. Those selections were held last 
fall, and selected one Director from each of the five ICANN regions--
North America, Europe, Asia-Pacific, Latin America, and Africa. The 
reason for selecting five rather than nine was to obtain support for 
this interim compromise from those who oppose direct online selections; 
with five directors selected by online voting, those directors in the 
aggregate (even in the event of a total capture of the selection 
process by some determined minority) would still amount to one director 
less than one-third of the Board. The Board would still be able to act, 
even where a two-thirds majority was required, even if all five (in 
this hypothetical) ``captured'' directors voted as a block. To assure 
that nine At Large seats continued to be occupied, four of the original 
interim directors agreed to serve beyond their original 2 year 
commitment.
    In fact, the online selection process was unsatisfactory in a 
variety of ways, but it does not appear that there was any ``capture'' 
of the five selected directors as a group. They have taken their Board 
seats and are functioning in every way as ICANN directors today. The At 
Large Study Committee is in the process of being established, with Carl 
Bildt, the former prime minister of Sweden as its Chair, and Charles 
Costello, an elections expert from the Carter Center, and Pindar Wong, 
a well-known Internet technologist from Hong Kong, as Vice-Chairs. The 
remainder of the Committee will be named soon, and its goal is to find 
that consensus solution to this problem that has gone undiscovered to 
date.
                             v. conclusion
    I trust that this description of the background and current status 
of the most important ICANN initiatives will be helpful to the 
Committee, and we stand ready to provide any other information that the 
Committee might find useful.

    Senator Burns. Thank you, Mr. Roberts, for your statement.
    I want to start off with the situation on the dispute 
resolution. In that, and I have not studied that end of it, and 
you will have to enlighten me, does that also include due 
process?
    Mr. Roberts. The history of dispute resolution over domain 
names goes back several years, involves a good deal of activity 
and, as you know, the Senate decided that it needed to enact a 
cyber-squatting statute, which it did.
    In addition to that, there has long been a demand for a 
non-judicial way of resolving these disputes, particularly 
because going to court is a significant burden to many small 
businesses whose domain names may be involved in an 
infringement action of one kind or another.
    So with a worldwide process that involved hearings in many 
countries, in the U.S. and elsewhere, we worked with the 
stakeholders that are particularly interested in this area to 
come up with something that's called the Uniform Dispute 
Resolution Policy. That policy was adopted by the Board a 
little bit over a year ago, and we selected several companies 
that are completely independent of ICANN to administer that 
policy and those procedures on a worldwide basis, starting last 
January.
    In the course of the subsequent 12 or 13 months, there have 
been some 2,000 disputes that have been resolved. We do not 
claim perfection for that. In fact, the Board specifically said 
when it adopted the policy that, after a period of experience 
with it, it would conduct a review of the policy, and the 
pluses and the minuses, and any mid-course corrections that 
needed to be made in dealing with the outcomes of those actions 
and those reviews.
    Senator Burns. You have been critical of this, Mr. 
Auerbach. Would you like to respond to that?
    Mr. Auerbach. Yes, I would. The UDRP, Uniform Dispute 
Resolution Policy, amounts to an international law. It is a law 
refining the relationship of trademarks over other uses of a 
name and, because it is international, it is actually superior 
to a law which you, the Senators, along with Congress, can 
pass. It is stronger than that. It supersedes that.
    It is also a policy which favors trademark intellectual 
property interests over other users of names. It is only 
available to those who have trademarks. That is a condition 
precedent to bringing an action under the UDRP. If my name, if 
Senator Boxer's name is being misused by anyone else, neither 
of us could bring a claim on the UDRP because neither of us has 
a trademark in our name, which is a precondition to bringing 
it.
    The UDRP is very, very flawed. There has been some research 
on it at the University of Syracuse New York, by Professor 
Milton Mueller, and I can bring that to the attention of the 
Subcommittee if you would like.
    Senator Burns. The process of resolving these disputes, Mr. 
Roberts, are they laid out specifically in the MOU? Did the MOU 
address that situation at all?
    Mr. Roberts. The Administration was very much involved as a 
member state of the WIPO compact in attempting to find a way to 
allay the concerns of the trademark community, worldwide 
trademark community, and there was a specific mandate in the 
White Paper that said that non-profit entity that was organized 
was to take up this issue and work with the community to see 
what could be devised. The Congress has already held hearings 
on this, and there is testimony in the record from last fall 
with regard to the issues.
    Senator Burns. When those negotiations were going on, and 
from the Commerce Department in developing the MOU and the 
setting up of ICANN, was there any reference made that it might 
take congressional action to make it legal?
    Mr. Roberts. Are you referring specifically to the UDRP?
    Senator Burns. Yes.
    Mr. Roberts. The Administration invited the World 
Intellectual Property Organization to conduct a process leading 
to a report, and that report came out in the spring of 1999 and 
was referred to ICANN and to its Board to work with the 
stakeholders to see what parts of that report might be 
pertinent to a process that ICANN could deal with.
    ICANN's powers in this area are extremely limited. I would 
just like to point out that the way that this process works, it 
is only available to domain name registrants. It is completely 
non-judicial, and it does not affect the opportunity of any 
party to such a dispute to seek judicial relief under 
applicable law.
    Senator Burns. Would you care to comment, Mr. Auerbach?
    Mr. Auerbach. I am just wondering under what section of the 
Constitution the Department of Commerce obtains the authority 
to delegate this power to ICANN. I have not seen such a 
section, and I would like to be educated.
    Senator Burns. I have got a couple of other questions, and 
I yield to my good friend from California.
    Senator Boxer. Would you prefer to finish your set?
    Senator Burns. No.
    Senator Boxer. Thank you, Mr. Chairman.
    Senator Burns. I think there will be a lot of rounds with 
this panel, I have a feeling.
    Senator Boxer. It is interesting.
    Mr. Auerbach, I get the sense from your statement and your 
comments that you do not think there is a need to do anything 
in this arena. Am I right?
    Mr. Auerbach. I am not sure what you mean.
    Senator Boxer. I mean, you seem very critical of where 
things are going.
    Mr. Auerbach. I am very critical.
    Senator Boxer. What would you suggest?
    Mr. Auerbach. OK, in terms of concrete, ICANN is needed. 
There are certain network resources. There is the domain name 
space, and we should not forget the IP address space, which is 
actually the 9/10ths of the iceberg under ICANN which everybody 
forgets, that need some degree of central coordination.
    Senator Boxer. IP meaning?
    Mr. Auerbach. Internet protocol addresses.
    Senator Boxer. Thank you.
    Mr. Auerbach. They are the numbers that actually represent 
your machine. They are the things that actually make packets 
move around the network.
    If you think about it, the domain name service is actually 
a layered-on service. If we compare it to your telephone 
system, the ability to make a phone call is the primary 
service. The ability to call 411 and look in a phone book is a 
layered-on service. DNS is a layered-on service.
    Anyway, as far as ICANN goes, we need an ICANN. We need 
something, and the real question in my mind is, ICANN in the 
end game has to be something that is pretty much a fairly 
independent, international type body that is really beyond any 
particular nation's control. The question is really how do we 
go from here, which is, we have a California corporation in the 
United States, and how do we get to this new kind of entity 
which is sort of free-floating?
    To my mind it really requires at least two major 
components. One is, it has to have public participation, 
because unless we get acceptance of ICANN by those who are in 
the Internet who are affected by its decisions, it will not 
have legitimacy.
    The second point is, to the extent that ICANN has to be 
released from United States control, I believe it's going to 
take some action on the part of Congress, painful as it may be, 
to possibly slightly relinquish a little bit of United States 
sovereignty. It is going to be difficult. It is going to be 
painful. I do not know details of how we can achieve it. I see 
a very fuzzy road in front of us, but I know we need 
congressional help to do this.
    Senator Boxer. Well, if I might ask Mr. Roberts to comment, 
because I look at America as the cutting edge here, and at this 
stage if we don't take the ball and run with it, so to speak, I 
do not know what would happen. Could you perhaps comment on Mr 
Auerbach's statement.
    Mr. Roberts. I do not believe it is appropriate at this 
time to consider any country relinquishing any national 
sovereignty in connection with ICANN. I do not believe that the 
private contracts, which are the source of the mutual 
obligations which our stakeholders assumed as a result of our 
policy deliberations, should go any further at this time.
    If the world evolves to the point where we can have a 
genuine transnational community of nations, that time will 
arrive. ICANN absolutely wishes to stay out of that. Our 
authorities have been very clearly set forth by the White Paper 
and by agreements with the Commerce Department, and we stick 
very closely to them.
    Senator Boxer. Let me go back to my first point about this 
identity theft issue, Mr. Roberts, and see if you can help me 
out here. Last August, California passed a new law to protect 
personal names. It goes further, Mr. Chairman, than what we 
did, because, as I understand, the cyber-squatting legislation 
we passed said that if you are going to be liable for using 
someone's name, you have to profit from it.
    In other words, if you're going to profit from it, then we 
can go after you, but if they just steal your name to do 
something other than that, such as what I showed you, which is 
cynical and misleading at best, and harmful at worst--I found 
it to be extremely harmful and disturbing--you cannot do 
anything.
    Mr. Roberts, I wonder if you think we ought to take a look 
at that California law, because there you are liable if you 
take someone's name for a bad faith purpose. I wonder whether 
you think we ought to take a look at our legislation and see if 
we can strengthen it to protect people from having this happen 
to them.
    Mr. Roberts. Senator, you have put your finger on a very 
difficult situation that I know is of personal concern to 
Senator Hatch, because he himself has had exactly the same 
difficulty that you have, as well as other members of the 
Congress have had.
    On the other hand, we are dealing with a rather tricky area 
of the law. I am not a lawyer or a legal scholar. Professor 
Froomkin has worked with WIPO very extensively, and he may have 
comments on the next panel.
    The issue of the extent, and how statutory authority to 
control what everyone says in a common-sense way, as you have, 
that this is wrong, without compromising constitutional rights, 
is a difficult one, and it needs your scrutiny, and I should 
point out that this is not an area in which ICANN has any 
competence or any desire to be involved.
    Our procedures under UR--UDRP, pardon me, I stumble on my 
own acronyms. The procedures are to deal with a non-judicial 
settlement of abusive registration tactics.
    Senator Boxer. Well, I think it is abusive to take 
somebody's name and put up a false site, so I hope you will 
rethink it, because I think it would be a very helpful thing.
    Mr. Roberts. Well, of course, there are always remedies 
available to you for defamation and libel, but as I think every 
member of the Congress is aware, a public figure is severely 
disadvantaged.
    Senator Boxer. Well, that is not available to us.
    Mr. Roberts. Right.
    Senator Boxer. That is not available to us as public 
figures.
    Mr. Auerbach, did you want to comment, or do you have any 
comment?
    Mr. Auerbach. I was just going to reiterate that yes, the 
standard court laws, there are such things, misappropriation of 
identity, but ICANN should not be a legislature. You do a much 
better job of it than we do.
    Senator Boxer. We hope so.
    Senator Burns. There are times, however----
    [Laughter.]
    Senator Boxer. There are times, and there are times.
    Mr. Chairman, I have another question, but why don't I wait 
till after your next round.
    Senator Burns. Mr. Auerbach, you said in your opening 
testimony that you as an individual have been denied access to 
some areas of ICANN. Can you give me an example of that?
    Mr. Auerbach. There is a group called the Government 
Advisory Committee. It is formally part of ICANN. There is no 
legal distinct existence. It is part of ICANN, yet they lock 
the doors and they keep directors out. I am not allowed in the 
meetings. I do not know what goes on in the meetings. I do not 
know whether they are violating any particular laws. It is a 
secret to me.
    There is another part. There is a domain name supporting 
organization, which again is legally part of ICANN. I am 
responsible for its assets. I am responsible for its debts, as 
director. I am responsible for its actions. Its assets and 
liabilities were not, as far as I can tell, on the annual 
statement. I do not know where that money is.
    Senator Burns. Do you believe that every part of ICANN 
should be open for scrutiny and public scrutiny?
    Mr. Auerbach. To gain acceptance and legitimacy so it can 
make the transition to being more than a mere California 
corporation I believe is going to require that, but also, what 
has it got to hide?
    Other than personnel matters, contract negotiations, and 
litigation, part of the premise of its existence would be that 
it would be open and transparent. Part of its bylaws are that 
it shall operate in an open and transparent manner to the 
maximum extent possible, yet I have been an outsider for 
several years, and I can tell you it is not open and 
transparent, and even as an insider it is not open and 
transparent.
    I learn more about what goes on inside ICANN from people 
who are part of my community outside of ICANN who watch it very 
closely, reading tea leaves, than I do from internally.
    Senator Burns. Mr. Roberts, do you want to comment on that?
    Mr. Roberts. I would just make two brief comments. One is 
that our fiduciary responsibilities that are incumbent upon 
directors and management of a non-profit corporation are set 
forth in the California statute. Our books are audited. We 
comply religiously with all the legal requirements in the 
corporation. We publish our financial statements, and if Mr. 
Auerbach has any unresolved questions I would be delighted to 
have him sit down with our auditors.
    With regard to the issue of openness of the actions of some 
of our committees, the Board of Directors is obliged by the 
portion of the bylaws dealing with open and transparent 
procedures to conduct all of its policy activities in the open 
and publicly, and it does so.
    On the other hand, the stakeholder activities that were 
designed in the White Paper to provide a compartmented voice 
for the specialized technical areas of the Internet that 
represent the expertise that feeds to our Board, when the Board 
undertakes a policy thing, the chairs of those bodies and those 
committees are given considerable latitude to conduct their 
affairs, which frequently are on a worldwide basis, by 
electronic mail and telephone calls, and quarterly public 
meetings, in the manner that they think facilitates carrying 
out their part of the charter of ICANN.
    It is, in fact, the delegated responsibility of the chair 
of the Government Advisory Committee, who is a Government 
official, to ensure that his committee, whose recommendations 
to the ICANN Board are purely advisory, gets its work done in 
the most efficient manner that its members believe it should 
operate under.
    It is, I think, of note that my reports to the Government 
Advisory Committee and reports of certain other non-GAC members 
are made in public session.
    We have been feeling our way along with this. I think you 
are aware that on a worldwide basis, practice about how to get 
these kind of stakeholder activities done varies considerably, 
and we take our openness and transparency responsibilities very 
literally, and on the other hand, we have to adapt to the 
manner in which people around the world are used to getting 
things done. We have an international board of directors. A 
substantial number of the members of our supporting 
organization councils and their subordinate organizations are 
non-U.S.
    Senator Burns. I am very much interested to note that the 
election of the five at-large, in quotes, Board members of 
ICANN took place over the Internet. However, I have also heard 
reports that there are many technical difficulties in this 
process, along with other problems.
    Mr. Roberts, can you comment on how the procedure for this 
election was created, and Mr. Auerbach, what are your views of 
that process, as you were a candidate?
    Mr. Roberts. The story of the at-large, which I have a 
substantial amount of narrative in my prepared testimony, goes 
back to the beginning of ICANN. The first thing that the Board 
did back at the beginning of 1999 was to appoint a committee 
from around the world of knowledgeable individuals to attempt 
to fashion a set of rules for how to do the first worldwide 
electronic election of individuals who would be able to 
participate in and assist the Board in carrying out its 
technical management responsibilities.
    Throughout 1999, this topic was the subject of committee 
hearings, of reports to the ICANN Board, and the adoption of 
resolutions, beginning to converge to a solutions base. To 
shorten my remarks, at the quarterly meeting in Cairo in the 
first quarter of 2000, the Board was confronted with a 
cacophony of voices disputing the decisions it had made the 
previous November at its annual meeting in California.
    The result of what is now known, and there is considerable 
backup to this, as the Cairo compromise, is the Board could not 
find consensus about how to proceed on at-large. It had 
attempted to do so. It had had several meetings on it, lots of 
discussion, hours and hours of public testimony on the matter, 
and the end result of that was violent disagreement about what 
to do.
    As a result of that, what the Board decided to do was to 
hold an election using a system that was under development for 
somewhat another purpose, of five directors, of five at-large 
directors in 2000 and then, having seated those directors, to 
completely reexamine how a worldwide at-large component of 
ICANN might usefully contribute to the work of the corporation 
and its responsibilities.
    We held that election. We elected those five individuals. 
We have publicly stated here and in my testimony and elsewhere 
that it was a traumatic learning experience for many people, 
including the candidates, and that when we have the work of the 
study committee, which Mr. Karl Bilt, former Prime Minister of 
Sweden, is just putting into operation as I speak, that we will 
look real hard at how to do this better the next time.
    Senator Burns. Mr. Auerbach, would you like to make a 
comment?
    Mr. Auerbach. Oh, certainly. There was no compromise. There 
was a choice in Cairo between having no viable election 
whatsoever and a minimal election. It was the kind of 
compromise one makes with a starving person who will pay any 
price for food. That is why we have an election that is only 
electing a portion of the half of the ICANN Board that should 
be elected by the public.
    As far as the election process itself goes, first of all, 
the ballot itself was stuffed by ICANN hand-picked candidates. 
There are only a subportion of those candidates who were 
actually nominated by the public. The second part was, ICANN 
controlled every communication channel between the electors, 
between the voters.
    Imagine campaigning if you were in your own State and you 
could not get the names of the people on your voter rolls. How 
would you reach them? How would you communicate with them? How 
would you discuss issues? How would they talk to one another to 
form parties? How would they give you funds? How would they 
support you? We had none of that opportunity with ICANN. ICANN 
controlled every communication channel. It withheld the address 
list, in my mind in violation of California law, which says 
those lists shall be made public to the voters.
    Then the election itself, the technology was somewhat 
flawed. Yes, there were more people signing up than were 
anticipated. Many people could not sign up. Many people did not 
get the pass codes for the election. That was explained because 
158,000 people signed up.
    Now, if you compute that over the period of the sign-up 
period, that worked out to between three and four transactions 
per minute, and I do not know of any computer that slow these 
days, so we are talking about a system that overloaded under 
extremely low transaction rates.
    This election was a success in the fact that it actually 
occurred. It was a failure in the fact that there were an 
extraordinary number of obstacles put in the way of candidates.
    Senator Burns. Can you comment, Mr. Roberts, on the ICANN 
funds, how you gain your funds and how you do your activities? 
Also, specifically refer to the $50,000 application fee charged 
to applicants for new top-level domains, how this number was 
arrived at, and is it fair.
    Mr. Roberts. Thank you. The White Paper suggested, I think 
it is the right term, that the appropriate source of funds for 
the new private sector corporation and, of course, since this 
was not a government corporation or a government-controlled 
corporation, it was totally required that the stakeholders 
provide all of the funding for it, including all of the startup 
funding.
    This was a substantial challenge to me when I took over as 
the startup CEO in October 1998. We took the guidance of the 
White Paper and sat down with what are known as the registry 
companies, the operators of the domain name and address 
registries, and over the past couple of years we have begun to 
fashion the written agreements and the commitments to provide 
financial support to ICANN.
    It was intended that the community do this in a self-
supporting manner. We have, I would say, at the current state 
of affairs, that we're about half-way through there. We have an 
extremely diverse array of worldwide registries and registrars, 
in the several hundreds, and at the present time about 60 
percent of our funding base is confirmed by written agreement, 
and the balance remains to be so confirmed.
    With respect to the $50,000, this was a process, of course, 
that had to be entirely self-supporting. It had never been done 
before. In fact, it was taking place after 5 years of violent 
argument about even whether it should be done, much less how it 
should be done, and so we believe that the $50,000 represented 
a reasonable sum under the circumstances as we knew them going 
into this.
    As the Board's policy process and its' structure for 
soliciting applications was developed, as it has turned out at 
the end of January, we have expended about $1,022,000 out of a 
total of $2.2 million that has been received, and we still have 
a substantial negotiations of the seven contracts that take 
place, and we also, of course, have implementation of valuation 
and some hazard from those non-selected of pursuing their case 
in the courts, which, of course, is a hazard that we were aware 
of from the very beginning of the process.
    Senator Burns. I guess the most visible that we read about 
was the .travel, and if you would comment on that, why were 
applications for seemingly reasonable new TLDs, such as 
.travel, for instance, they were rejected, while more obscure 
new TLDs such as .museum was accepted? The $50,000 was kept 
after the application was paid for.
    Mr. Roberts. Well, let me make very brief comments about 
that. First of all, the process was to lead to a proof-of-
concept selection of a diverse group of registry operators who 
could demonstrate to the community whether the assumptions on 
which we were going forward were, in fact, valid.
    The bottom line of what is going to happen here is a 
determination by the marketplace that expansion of the name 
space in this manner is appropriate, it's safe for the 
Internet, it's stable with regard to the economics of what 
these companies are going to do, and that they won't fail. 
There is a lock-in hazard here that someone who registers in 
these new companies, if it goes bankrupt, there will be 
disruption. There will be people whose business plans will be 
broken, and so we have had all along, for that reason and other 
reasons, considerable caution about doing this.
    So I think the travel situation reflected an analysis of 
the record and of the evaluation and of a substantial number of 
public comments calling into question, since this was a 
sponsored proposal, this was a proposal on behalf of a specific 
community, that the community support for the proposal was not 
all there.
    Senator Burns. Now, my eyes glazed over, but if you wanted 
to establish a .travel, I guess, why would you be concerned the 
companies that join and do business in that particular area?
    Mr. Roberts. Well, the Board's structure for the proof of 
concept introduction of new TLDs have two main categories.
    One was unsponsored, and one was sponsored. Sponsored 
basically were people who thought that they were equipped to go 
into competition with .com on a worldwide basis, and they were 
evaluated on the basis of their technical business and 
financial ability to, in fact, do that.
    Those applicants who were seeking a sponsored top-level 
domain were required to demonstrate, to be very particular 
about what community they were representing, and how they were 
confident they were going to represent that community in the 
registration of domain names to the members of that community.
    For instance, the .museum, which I think you're aware is 
very widely internationally supported and supported in 
California by the Getty Museum and the Getty Foundation, is 
four museums, and it is intended to enable the worldwide museum 
community to extend their educational and other kinds of 
outreach via the Internet, and so in these sponsored proposals 
it is necessary that you take a good look at the people who 
have developed the proposal.
    In fact, do they have the confidence of the community that 
they are purported to support? For instance, you would not want 
organizations that were not museums getting a domain name in 
.museum and undertaking some sort of consumer--creating a 
consumer problem and a consumer confidence problem.
    Senator Burns. Senator Boxer.
    Senator Boxer. Thank you.
    Mr. Roberts, this is new territory for all of us, so if we 
ask very basic questions, please understand.
    Now, I understand before these new top-level domain names 
become operational, ICANN must negotiate with these new seven, 
or with these players, as to how they plan to protect trademark 
holders. It is important that before this flood of new 
addresses hit the market, that trademark holders have the 
chance to protect their existing trademarks, and I understand 
that there is a sunrise scheme that would do that.
    As I understand it, even these new seven top-level domains 
are required to establish a protocol on intellectual property 
protection before ICANN will sign a contract with them. I 
understand that .info, and I think also .pro, that they are 
working on a so-called sunrise period that requires pre-
registration, a holding period, and preferences for trademark 
holders on a first-come, first-served basis.
    It seems to me this sunrise scheme, which I look at as sort 
of a waiting period where you can make sure everyone is 
protected, would go a long way toward protecting trademark 
holders. Now, do I understand what this sunrise period is? Have 
I described it correctly?
    Mr. Roberts. Yes, you have.
    Senator Boxer. And is this going to be applied to all of 
the new names, or just those two domains?
    Mr. Roberts. Let's talk about the principle we're trying to 
deal with here. The principle is that a legitimate holder of a 
trademark does not have that trademark infringed by the 
registration of domain name transactions, and we have lots of 
evidence from the difficulties with Network Solutions that this 
not only happened, but it was extremely difficult to remedy, 
and so one of the things that the community and the 
stakeholders have told us, emphatically told us, is, don't 
introduce these new top-level domains in a way that takes us 
down that path again.
    So as you might imagine, what will happen here if there is 
an infringement action, it will not be an action against ICANN. 
It will be an action against the registry operator. The 
registry operator, after all, now has a business plan that they 
have staked several millions of dollars, because the problem 
you are pointing out is mostly in the worldwide commercial area 
and not in, for instance, .museum, where there really is not 
this kind of problem.
    They have to gain the confidence of the market that they 
are a viable entity and that they will conduct their affairs in 
a reasonable way, and so we are not trying to put anybody in a 
straitjacket about this. What we want is to see evidence that, 
in fact, the companies are knowledgeable about the problem, 
that they are talking to people that are involved here, the 
trademark holders and others, and that they intend to see that 
the right thing is done, and that is our bottom line.
    Senator Boxer. Before I ask you, Mr. Auerbach, because I 
see you want to put your word in, I just want to make sure that 
I understand. This sunrise scheme, which sounds to me is the 
right way to go, is only going to apply to two of the seven 
top-level domains, or more than that?
    Mr. Roberts. Well, in theory it applies to any top-level 
domain registry, but as a practical matter, where you have a 
highly restricted registry, there is very little room for that 
particular type of abuse.
    Senator Boxer. What minimum standards will you require from 
these new applicants before you sign the contract? Can you lay 
that out?
    Mr. Roberts. Well, our registry accreditation agreements, 
which were developed a year-and-a-half ago in connection with 
our duties under what was known at the time as Amendment 11 of 
the Cooperative Agreement between the Government and Network 
Solutions--we were the instrumentality by which competition was 
introduced into the .com, .org, and .net registry--have 
provisions in this area. The basic provision that was in those 
agreements was, if ICANN, through its policy process adopts a 
dispute resolution process, then you as a registrar are 
obligated to include that process in your agreements with the 
people who register domain names, which they have now done, and 
something similar to that will occur with regard to the new 
registries.
    Senator Boxer. Well, could you put in writing the minimum 
standards ICANN will require for these new applicants before 
you sign the contracts?
    Mr. Roberts. I would be delighted to send you a letter 
about that.
    Senator Boxer. That would be very important. Thank you.
    How do you plan to ensure, or can you ensure, that when 
these new TLDs are open for business we are not faced with a 
flood of new cyber-squatters?
    Mr. Roberts. Well, first of all, since we have had this 
very painful experience over the past 5 years, everyone is 
extremely--all of our stakeholders and all of the parties to 
this are very aware of the problem.
    It was much discussed. It was part of the proceedings of 
the working group and the domain name support organization that 
forwarded its recommendations about the manner in which new 
TLDs should be introduced to the Board, so I am trying to 
distinguish here between the principle that guides how the 
things are to be done versus the specific implementation.
    It is not up to us to get down into the trenches on the 
implementation, so long as the result of that is fairness and 
adherence to the policies.
    Senator Boxer. So your point is that one of the minimum 
requirements will be that they are held liable if, in fact, 
they are cyber-squatting, so that they are actually going to 
sign something to that effect. Then you step out of the picture 
and let other people go at it. Is that what you are saying?
    Mr. Roberts. The only qualification to that is to go back 
and remind you again that our authority and our responsibility 
is with private contracts, with registry operators and 
registrars that are limited to the scope under which a private 
contract is enforceable. We do not have any statutory 
authority, and there are some classes, some potential classes 
of a problem that you describe that would require judicial 
remedy of some kind, for instance. Some of those are already 
dealt with in the U.S. cyber-squatting statute.
    Senator Boxer. So basically what you are trying to do, as I 
see it, is to have some document signed which would hold people 
accountable if they do the wrong thing, but the actual 
enforcement would be outside your jurisdiction.
    Mr. Roberts. That is correct.
    Senator Boxer. Mr. Auerbach, you have been shaking your 
head vigorously. Why don't you give us your side of this?
    Mr. Auerbach. First of all, until now I did not realize I 
was on the Board of Directors of an insurance company that is 
insuring that these new TLD operators will stay in business. To 
my mind, a TLD can perfectly well go out of business. If I am a 
customer of that TLD, I have the ability to pay them more 
money. Standard, Adam Smith kind of control. I can pay them 
more money to put in better infrastructures, rather than having 
a new regulatory body with governmental dedicated powers to do 
this. I think the standard economic methods will work here.
    Senator Boxer. So you do not support the idea of these 
agreements, signed by people saying that they are not going to 
infringe?
    Mr. Auerbach. That is a different subject. I said that 
ICANN should not be looking at the business plans, the business 
finances, the personnel, the management, whatever, of these TLD 
operators. ICANN should let these operators go out of business 
if they are bad business people.
    Senator Boxer. Before you continue, I did not hear you say 
that that is exactly what you are doing. Could you comment on 
that, Mr. Roberts?
    Mr. Roberts. I think that the judgment of the community, 
and it has been repeated several times, and, in fact, it is 
even contained in a White Paper language, is that the 
introduction of new TLDs ought to be done in a cautious manner 
which allows the community to learn to crawl before it walks 
about this.
    As I have already stated earlier in my testimony, 
ultimately the market will provide the verdict on the success 
of these companies. I think on the other hand, ICANN, on behalf 
of its stakeholders, it has been told it has a responsibility 
to exercise caution with regard to the integrity and the 
ordinary prudence of the business plans and operational plans 
that have been submitted to us by the applicants.
    Senator Boxer. Mr. Auerbach.
    Mr. Auerbach. Stakeholders, that is a code word that means 
insiders. We're talking about intellectual property interest 
and other registrars. Of course, they do not want more TLDs for 
the trademark people. That means more space for them to search 
for the registrars. That means more competitors. They have a 
built-in interest against new competitors. The notion of 
stakeholders in ICANN has been used to select who is in ICANN, 
who can make decisions.
    There is no participation by the community. I was not 
permitted to participate in this TLD selection process, because 
there were shortened periods for comment. The decision was 
accelerated so that I could not participate. The community, the 
elected representatives did not participate in this, so when 
Mr. Roberts says community, he's really talking about the 
intellectual property community and the registrars, both of 
whom do not want new TLDs.
    Mr. Roberts. I think the fact that we received 5,000 public 
comments in the 6 weeks we are talking about is a substantial 
verdict on the side of openness.
    Senator Boxer. Did you use the web to let people know what 
you were doing?
    Mr. Roberts. We did, at every step of this process over a 
period of 18 months, and thousands of pages of the applications 
were posted for community scrutiny, and as I just said, we 
received over 5,000 comments in response to those postings.
    Senator Boxer. What is your website?
    Mr. Roberts. It is ICANN.org.
    Senator Boxer. Well, Mr. Chairman, I think those are my 
questions for this panel. I will hold for the next panel.
    Senator Burns. Well, thank you very much, Senator.
    I think I hear you saying two different things, Mr. 
Roberts, and correct me if I am wrong. In other words, I do not 
understand, on the domain--let us go back to the .travel and 
the .museum again, OK?
    You are saying that if a commercial operator was assigned 
into the domain of .museums, or had requested that, and that 
was kind of against the rules that you have set up for .museum, 
because that was set up for education, and without commercial 
exploitation I would imagine, and you say if you made that 
assignment and it was a mistake, then you have no liability in 
that mistake? You are absolved from any liability of a 
misassignment?
    Mr. Roberts. Well, Senator, the applications were evaluated 
on nine different criteria. My submitted testimony goes into 
that.
    Senator Burns. I will have to read that, and I will 
probably glaze over again.
    [Laughter.]
    Mr. Roberts. I think the bottom line of the question you 
are asking me is, does the record show that the staff 
evaluation and the result of the public comments and the 
Board's public deliberations and the Board's board meeting 
deliberations, which extended over some 14 or 15 hours, does 
the record show that these applicants were evaluated on those 
criteria, and that appropriate judgments were made to engage in 
a proof of concept limited introduction, and I believe the 
record supports that.
    Senator Burns. OK. Now, let us go over on the travel side 
of it now. I run a travel business, and I kind of like the idea 
of a .travel, maybe it is an industry-type thing, or maybe it 
is people that would go to that site seeking information on 
travel that was denied because you did not think there was 
substantial support.
    Now, what is your expense of setting up that domain if 
there are maybe one or maybe two of us that are the only two 
people that are active in that domain?
    Mr. Roberts. First of all, let me point out that the 
application was----
    Senator Burns. And I am learning here.
    Mr. Roberts. The application was not denied. The 
application was not selected for a proof of concept ground, and 
I understand that it may sound like a thin distinction, but it 
was a very important distinction to the Board. The Board does 
not know how many more new TLDs there ought to be, but there is 
obviously, from the record of this hearing and of last week's 
hearing, considerable sentiment that it should, provided that 
the evaluation of what happens with the seven supports that.
    But going more to your point, we had a category of 
applications where the applicants could, on behalf of a defined 
group of sponsoring groups, say, we wish to apply for the 
delegation of a top-level domain that reflects the business 
sector we are in, and that we will be the domain nameholders 
in, and we will serve the public through those domains in the 
following ways.
    The assumption was, and in fact, one of the stated 
requirements was, of the applications, that the applicant or 
the applying organization had to demonstrate it had very 
substantial support of all of the people in the sponsoring 
group.
    Now, the worldwide travel agency business is a very, very 
complicated and very highly distributed business.
    Senator Burns. It is competitive.
    Mr. Roberts. The applying organization had difficulty 
demonstrating it had substantial support and, in fact, our 
public record is full of a large number of complaints that they 
did not.
    Senator Burns. I have no further questions for this panel. 
I know there are going to be some questions arise on your 
comments here by other Senators and, if you would, if you are 
asked to make comment on their questions, if you would submit 
that to the individual Senator and to the Subcommittee we will 
leave this record open for the time being.
    I want to thank you very much for coming this morning and 
offering your testimony. Now we go the second panel, and thank 
you. This panel is excused.
    We have Brian Cartmell, Chairman and CEO of eNIC 
Corporation out of Seattle, Washington; A. Michael Froomkin, 
Professor of Law at University of Miami School of Law in Coral 
Gables, Florida; Roger Cochetti, Senior Vice President, Policy, 
at VeriSign Network Solutions; and Kenneth Hansen, Director of 
Corporate Development at NeuStar here in Washington, DC.
    Gentlemen, we welcome you to the hearing this morning. We 
look forward to your testimony.
    Mr. Cartmell, we will start with you.

       STATEMENT OF BRIAN R. CARTMELL, CHAIRMAN AND CEO, 
                        eNIC CORPORATION

    Mr. Cartmell. Good morning, Mr. Chairman, members of the 
Subcommittee.
    Senator Burns. You might want to pull the microphone up 
there. You are a little soft.
    Mr. Cartmell. Good morning, Mr. Chairman, members of the 
Subcommittee. My name is Brian Cartmell, and I am Chairman and 
CEO of eNIC Corporation, a privately-held company based in 
Seattle, Washington. I thank the Subcommittee for its 
invitation to participate in the hearing this morning. I 
welcome this opportunity to provide the Subcommittee with 
eNIC's views on the Internet Corporation for Assigned Names and 
Numbers, generally referred to as ICANN.
    My perspective of ICANN and the issues being addressed by 
this Subcommittee is a result of extensive experience in and 
knowledge of the domain name system. My involvement began even 
before the creation of ICANN, when I submitted an application 
to the Internet Assigned Numbers Authority, IANA, to manage and 
operate the .cc top-level domain, which is associated with the 
Cocos-Killian Islands. That application was approved on October 
12, 1997, and we commenced our name domain registrations a 
couple of weeks thereafter.
    Since that time, we have grown to be the second largest 
domain registry in the United States, second only to VeriSign, 
with approximately 400,000 domain names registered, including 
nearly 300,000 in the United States alone. We have invested 
literally millions of dollars to develop a globally diverse and 
robust infrastructure that we believe rivals any in the 
industry. .cc registers a cross-section of Internet users, and 
among them small and medium-sized businesses, educational 
organizations, and public interest groups.
    You received a lot of information today, so I will just 
make five points.
    One, despite a lot of suggestions to the contrary, there is 
no shortage of domain name space for customers looking for 
domain names. They can choose from the existing generic top-
level domains, or from more than 240 top-level domains such as 
.cc or .TV. Since very few top-level domains have more than 
15,000 registrations, there is still room for literally 
billions of domain names.
    Two, while ICANN has definitely made some mistakes, we 
should recognize the importance and difficulty of what they are 
trying to do, all without any statutory or regulatory guidance, 
or regularized source of funding. No one has ever tried what 
they are attempting, to guide, if not manage, the world's 
largest marketplace. Since its actions involve the very 
architecture of the Internet, ICANN affects millions of 
consumers and businesses.
    Three, we are concerned about proposals that have been made 
to confer national sovereignty over country code top-level 
domains. That idea, I believe, would lead to a fractured 
Internet where national regulatory schemes and privacy rules 
apply to different pieces, creating uncertainty for businesses 
and confusion for customers.
    Four, as you know, ICANN does not control the domain name 
system. Rather, the ultimate authority rests with the U.S. 
Government, namely the Department of Commerce, which is under 
the jurisdiction of this Committee. As stated recently by 
ICANN's general counsel, ICANN has no legal authority to 
authorize the issuance of new top-level domains or change the 
delegation of existing top-level domains. The legal authority 
to make these decisions rests with the Department of Commerce.
    Five, ICANN should not take further actions involving the 
policy or the architecture of the domain system until Congress 
or a congressionally-mandated commission first conducts a 
comprehensive study of critical policies and legal questions. 
As more fully described in my written testimony, these include:
    What should ICANN's mission be, if any?
    What is the appropriate scope of its authority?
    What role should foreign national governments play?
    What tools and resources are needed for the governing body?
    What is the effect of this initiative on U.S. national 
consumer and business interest?
    The answer to these and many other questions need to be 
fully and publicly explored.
    Mr. Chairman, I would like to thank you and the 
Subcommittee for your time, and interest in these important 
issues. I welcome any Subcommittee questions you might have.
    [The prepared statement of Mr. Cartmell follows:]
      Prepared Statement of Brian R. Cartmell, Chairman and CEO, 
                            eNIC Corporation
    I thank the Committee for its invitation to participate in the 
hearing this morning and welcome this opportunity to provide the 
Committee with eNIC's views on the Internet Corporation for Assigned 
Names and Numbers, generally referred to as ICANN.
    I commend the Committee for recognizing the importance of the 
matters being discussed here today. Indeed, under review is the 
governance and control of the underlying architecture of the Internet, 
the super-highway that is quickly emerging as the world's largest 
marketplace and a primary forum for exchanging information and ideas. 
Much like the human body which is dependent on the heart for life, the 
Internet is dependent on a properly functioning, stable, and secure 
Domain Name System. Without it, the important Internet-related issues 
being debated in these halls, issues such as Internet privacy, consumer 
protection and security, literally would become moot. If the Domain 
Name System fails, an exchange or transmission of information across 
the Internet would not be possible. Consumers would not be able to 
access websites to look up information. Businesses would not be able 
transact business with their customers.
                      overview of enic corporation
    My perspective of ICANN and the issues being addressed by this 
Committee is the result of my extensive experience in and knowledge of 
the Domain Name System. My involvement began even before the creation 
of ICANN when, in conjunction with an associate, I submitted an 
application, on September 25, 1997, to the Internet Assigned Numbers 
Authority (``IANA''), an agency contracted by the U.S. Department of 
Commerce, to operate and manage the Dot-CC top level domain. The 
application was approved on October 13, 1997, and we commenced domain 
name registration operations a couple of weeks thereafter. The Dot-CC 
domain is associated with the Cocos Islands, a group of islands in the 
Indian Ocean that, at the time we submitted our application, were 
privately owned, but today are a territory of Australia.
    Since that time, we have grown to be the second largest domain name 
registry in the United States, second only to VeriSign Global Registry, 
with approximately 400,000 domain names registered. We employ 40 people 
and have invested literally millions of dollars to develop a globally 
diverse and robust infrastructure that we believe rivals any in the 
industry. Our Dot-CC registrants are located in all parts of the world, 
including nearly 300,000 in the United States alone, a scenario which 
is quite different from the widespread perception that correlates 
``country code top level domain'' registrants to a particular 
geographical area. Dot-CC registrants are a varied cross-section of 
Internet users, among them individuals, small- and medium-sized 
businesses, educational organizations, and public interest groups. Our 
internal monitoring systems indicate that Dot-CC sites are accessed 
millions of times daily around the world, indicating a widespread use 
and adoption of the Dot-CC top level domain by both registrants and 
consumers. Incidentally, my engineers tell me we have 43,893 customers 
in Florida but, given recent events, I have asked for a recount.
    I speak today as an active participant in the process, both prior 
to and after ICANN's founding in November 1998. In that regard, I have 
attended and participated in almost every quarterly ICANN meeting and 
have had countless discussions with ICANN executives. I also speak as a 
representative of a U.S.-based organization that has made tremendous 
commitments and expended significant resources to promote the long-term 
viability of the Internet as a whole, while also advancing the 
interests of eNIC Corporation, its employees, customers and those we 
serve.
                 a recipe for error from its inception
    In his testimony on February 8, 2001 before the House Energy & 
Commerce Committee's Telecommunications Subcommittee, Mr. Vinton Cerf, 
Chairman of ICANN, likened the process of establishing ICANN 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.'' Mr. Cerf further characterized ICANN 
as a ``young, and still maturing organization,'' while acknowledging 
that it has made mistakes and is still a ``work in progress.'' As a 
representative of an organization that is vitally interested in the 
workings of the Domain Name System and which has invested millions of 
dollars to establish a world-class technological infrastructure and 
maintains obligations to several hundred thousand consumers in the Dot-
CC domain sphere, I consider such admissions both disconcerting and 
alarming.
    Looking back at the genesis of ICANN, it appears that the situation 
described by Mr. Cerf was inevitable. ICANN launched into uncharted 
waters without a prior, meaningful, thorough analysis of crucial issues 
involved, or of the far-reaching ramifications of the ICANN initiative, 
including how to protect the interests of the U.S. in this critical 
asset and those of U.S. businesses who would be directly affected by 
ICANN's decisions.
    Upon reflection, I am amazed. In my relatively short life, I am 
aware of millions of dollars being spent on governmental commissions 
studying the construction of single highways connecting two points. I 
find it ironic that in the case of perhaps the most important ``super-
highway'' of my generation, the ``information super-highway'' we know 
as the Internet, the U.S. Government has not commissioned even one such 
study. Rather, much like the development of the Internet itself, the 
principles for its governance have simply been viewed as a developing, 
``adapt as we go'' experience. Absent is any enabling legislation or 
other road map other than the general principles stated in the ``White 
Paper.'' Please allow me to enumerate some to the critical issues to 
which I refer and which have yet to be analyzed in any meaningful way.
    1. To What Extent Does the Department of Commerce have authority 
over the root server system or to delegate powers to ICANN? One need 
only review the findings of the General Accounting Office, set forth in 
a report dated July 7, 2000 delivered to this Committee and a 
corresponding committee in the House, as an example of the Department 
of Commerce's failure to conduct even the most basic inquiries before 
it took the ICANN ``plunge.'' On page 27 of its report, the GAO noted 
that the Department of Commerce did not even know whether it had the 
legal authority to delegate the control of the authoritative root 
server to ICANN as contemplated by the seminal ``White Paper.'' Indeed, 
the General Counsel of the Department of Commerce acknowledged to the 
GAO that in the ``absence of such plans [to transfer the ``A'' root 
server], we have not devoted the possibly substantial resources that 
would be necessary to develop a legal opinion as to whether legislation 
would be necessary to do so.'' Obviously, this issue is a cornerstone 
of any analysis and must be answered before any decisions should be 
made on the proper course of action.
    2. Is a private, non-profit organization the proper structure to 
govern such crucial functions of the Internet? One of the most frequent 
arguments of ICANN's defenders is effectively stated by simply asking 
the question, ``can you identify a better alternative? On the surface, 
such an argument is compelling and makes a great deal of sense, as 
``privatizing'' the Internet functions seems to be preferable to 
government control thereof. In reality, however, it is premature to ask 
such a question as no meaningful study has been conducted to discover 
viable alternatives or, considering critical U.S. interests, even the 
desirability of such a non-profit entity handling governance 
responsibilities. For example, even now ICANN is faced with the dilemma 
of deciding what safeguards it can implement to shield its assets and 
operations from potential liabilities that will inevitably materialize 
and which, in the worst case, could threaten ICANN's very existence. 
While administrative agencies of government benefit from certain 
immunities for their rulemaking functions, ICANN cannot claim such 
immunities without appropriate governmental action.
    3. What effect does the transfer to ICANN of the governance of the 
Domain Name System have on current and future U.S. interests, including 
those of its consumers and businesses? Much like the GPS network, the 
Internet was primarily a U.S.-based initiative, with significant 
taxpayer funds expended in its development. With the explosion of 
commercial growth on the Internet, the interests of U.S. based 
businesses and the global economy are increasingly dependent on the 
Internet, its stability and robustness. What effect, if any, will such 
a transfer have on matters of national security or governmental 
operations in the ``.mil'' and ``.gov'' top level domains? Can security 
be assured on a go-forward basis under the ICANN structure?
    In sum, an important question is whether the transfer of those 
crucial functions to a private, non-profit corporation which is exposed 
to liability claims, in reality, advances and protects U.S. interests 
or, to the contrary, exposes them to unnecessary or unwarranted 
threats. Incidentally, it is my position that it is the role and 
responsibility of the U.S. Congress, not ICANN or even the Department 
of Commerce, to decide what U.S. assets should be ``gifted'' to the 
world or exposed in some way, and that such a decision should be based 
on complete information garnered from appropriate inquiry and 
investigation. Unfortunately, to date, Congress has not been included 
in, nor been involved with, this important decision.
    4. Is ICANN being established exclusively as a technical standards 
body or should it be delegated policy and rulemaking powers as well? 
Mr. Cerf and other officers of ICANN continually stress that, rather 
than being a policymaking entity, ICANN's main role is as a 
``consensus''-building organization charged with making decisions in 
accordance with the will of the ``international Internet community.'' 
Oddly, no one has yet defined what the term ``international Internet 
community'' really means. I would submit that without clear definition, 
the term has no meaning at all because, as we have seen through 
history, even illegitimate governments claim to be governed by the 
``consensus'' of the ``people.'' Without clear standards for 
measurement, unfettered democratic processes, and uncompromising 
transparency, a ``consensus'' can either be manipulated, or a mirage 
created by, those in power.
    In reality, ICANN's assertions are somewhat simplistic and ignore 
the tremendous governance function that ICANN has assumed, either 
rightfully or in excess of its charter. One only needs to review (a) 
the recent decisions relating to the approval of new ``generic'' top 
level domains, or (b) ICANN's requirements imposing the uniform dispute 
resolution process (``UDRP''), as evidence that ICANN is exerting 
tremendous and wide-ranging policy powers over the Domain Name System. 
Indeed, the power to give and take away rights equates to the power to 
govern, and extends well beyond the ``consensus'' building function 
championed by ICANN.
    5. To whom, if anyone, should ICANN be accountable? A key element 
of any governing body is the idea of effective accountability, 
including the question of due process that has been raised by several 
observers. Yet in the present situation, the question of the 
accountability of ICANN has not been addressed in any meaningful way. 
To whom will ICANN be accountable on an on-going basis once the 
privatization of the Domain Name System is complete? ICANN proponents 
suggest that it will be accountable to the ``international Internet 
community.'' As discussed previously, such a standard has never been 
defined or evaluated. Consequently, for purposes of governance, it is 
virtually meaningless and equates to no accountability whatsoever in 
the real sense of the word. Perhaps a more important question is what 
mechanism or standard for accountability is in the best interests of 
the U.S? Such a question is for Congress to address, not ICANN or other 
interest groups.
    6. What interests should foreign governments or sovereigns have 
over the Domain Name System and Internet governance? This issue is of 
particular importance to eNIC Corporation, and its worldwide customer 
base because Dot-CC is officially a ``country code top level domain.'' 
Our administration of, and interest in. the Dot-CC top level domain 
arises from a delegation from IANA in October 1997, more than a year 
before ICANN was established. Since that time we have expended 
literally millions of dollars establishing a state-of-the-art system of 
servers worldwide, marketing the Dot-CC top level domain around the 
world, and serving our customers and others. We have spent nearly $2 
million on projects that benefit the people of the Cocos (Keeling) 
Islands, something that we have voluntarily undertaken to fulfill our 
charge to act for the ``benefit'' of the local Internet community on 
the Cocos (Keeling) Islands under RFC 1591.
    From the beginning, the country code TLDs have not been based on 
country names and abbreviations but rather on a list known as ISO 3166-
1. This listing is a compilation of names and codes developed by the 
International Organization for Standardization for various statistical 
purposes and includes country names as well as names of territories, 
such as Puerto Rico, the Netherlands Antilles and the Cocos Islands. In 
the paper establishing the Domain Name System, RFC 1591, March 1994, 
Jonathan Postel, head of IANA (the predecessor to ICANN), stated: ``The 
IANA is not in the business of deciding what is and what is not a 
country. The selection of the ISO 3166 list as a basis for coutnry code 
top-level domain names was made with the knowledge that ISO has a 
procedure for determining which entities should be and should not be on 
that list.''
    Neither IANA nor ICANN has ever deviated from this position. In an 
affidavit in November 2000, Mr. Louis Touton, ICANN's general counsel, 
stated that foreign governments have no ownership interest in or rights 
to control any country code TLD. Rather, he specified ``[c]ountry code 
TLDs are administered by appointed ccTLD managers, who act as trustees 
performing a service on behalf of the Internet community, both globally 
and in the country or territory designated by the country code.'' In 
his February 8, 2001 testimony, ICANN's chairman, Dr. Vinton Cerf, 
again confirmed this. ``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.'' As discussed, eNIC has 
operated the Dot-CC top level domain both for the benefit of the local 
Internet Community on the Cocos Islands and for the broader Internet 
community by registering top level domains on a worldwide basis.
    Unfortunately, recent statements by some have implied that 
governments of foreign countries may be given more control over 
important policy issues, including the operation of country code TLDs. 
Any such attempted delegation of authority would have significant 
ramifications, both for the Internet as a whole and for U.S. national 
interests, those of its consumers and U.S. businesses such as eNIC 
Corporation. In my view, Congress, rather than ICANN, is the 
appropriate body to make policy regarding such critical issues.
    7. Are additional top level domains necessary? The issue of the 
approval of new ``generic'' top level domains, and ICANN's process for 
approving them, has generated heated and rather divisive debate since 
September of last year. I would suggest that there is no real 
``shortage'' of domain name space using existing top level domains that 
are already root recognized. In fact, with over 240 existing top level 
domains, many of which are ``open'' to worldwide registrations and most 
of which are dramatically underutilized (less than 15,000 domain 
registrations in them), there is plenty of room for literally billions 
of domain names without the creation of new top level domains. In other 
words, there is no ``shortage'' as has been so widely publicized.
    8. What is the proper way to fund the governance of the Internet? 
Until last fall when it received U.S. $50,000 from each of the 
applicants for new top level domains, ICANN was under-funded and 
``boot-strapping'' its operations. The non-refundable application fee 
has subjected ICANN to widespread criticism and controversy as many 
have suggested that the fee was nothing more that a funding mechanism. 
Clearly, any governing body of the Internet needs proper, reliable 
funding sources in order to fulfill its mission. Unfortunately, this 
rather critical issue had not been addressed at the time ICANN was 
launched.
        call for a comprehensive congressionally-mandated study
    Looking back, it is abundantly clear that the turmoil surrounding 
ICANN, the questions regarding its international legitimacy, the 
growing doubts about its decisionmaking processes and structure, and 
the lingering skepticism relating to its longevity can be traced 
directly to the lack of any meaningful analysis or study of material 
issues prior to its establishment. Such a study would have identified 
(1) the legality of such an endeavor, and its effect on important U.S. 
national interests or those of consumers and U.S. businesses, (2) 
alternatives for Internet governance that might prove to be superior to 
the establishment of a California non-profit corporation to assume the 
tasks, (3) the tools and liability protections that such an 
organization would need to succeed, (4) the specific interests of the 
nations in the international community, (5) a clear definition of 
ICANN's mission, the boundaries of its authority, well-delineated 
guidelines for the exercise of its powers, and a road map for Congress 
to enact such legislation as would be necessary to carry out that 
mission. Instead, ICANN was given only broad statements regarding the 
objectives of such a governing body.
    The good news is that there is still time for Congress to exercise 
its rightful oversight and legislative roles. If the U.S. is going to 
give the Internet to the world through privatization, at a minimum it 
should be the result of a fully informed decision. The bad news is that 
the a failure to act will likely lead only to an escalation of the 
turmoil, a fracturing and destabilization of the Domain Name System, an 
increased regulation of the Internet by foreign sovereigns, and the 
further denigration of U.S. national interests and those of its 
consumers and U.S. businesses such as eNIC Corporation.
    While my instincts tell me that the Internet should move forward 
with minimal governmental intervention, the questions that have been 
raised are so important, with ramifications so far-reaching, I am 
convinced that a comprehensive study should be conducted immediately to 
avoid long-lasting mistakes. eNIC Corporation respectfully submits that 
the Senate take the following actions:
    (1) In conjunction with the House of Representatives, commission a 
panel of experts to perform an in-depth study of the issues relating to 
ICANN, the governance of the Internet and, in particular, the Domain 
Name System; and
    (2) Pending the delivery of the conclusions of the appointed 
Congressional commission, direct the Department of Commerce to refrain 
from taking further actions to expand the role of ICANN, including the 
(a) turn-over of the authoritative root servers, (b) recognition of new 
generic top level domains, or (c) recognition of rights of foreign 
sovereigns over top level domains (except to the extent the foreign 
sovereigns have been delegated a country code top level domain by IANA 
or the designated country code top level domain manager has already 
entered into an agreement with the applicable foreign sovereign 
relative to the operation of a particular country code top level 
domain).
                               conclusion
    While ICANN has made mistakes, it should be recognized that it has 
been undertaking an immensely important and difficult job without any 
statutory or regulatory guidance, or regularized source of funding. It 
is time to fully analyze the situation and, if merited, give ICANN the 
tools and guidance that it needs to succeed. Like a developing child, 
it cannot be expected to run before it has been instructed on how to 
walk. At the same time, if it is ultimately decided that the ICANN form 
of governance is unsuitable for the task at hand, then steps should be 
taken as soon as possible to implement a proper governmental form, 
before it is too late.
    In conclusion, I once again express my appreciation for your 
inviting me to participate in these hearings. I will gladly lend any 
assistance that this Committee may require to fully and fairly address 
the important issues presented today. I welcome any questions that you 
may have.

    Senator Burns. I appreciate your testimony this morning.
    A. Michael Froomkin, Professor of Law, Miami University. 
Thank you for coming this morning, and welcome.

STATEMENT OF A. MICHAEL FROOMKIN, PROFESSOR OF LAW, UNIVERSITY 
                     OF MIAMI SCHOOL OF LAW

    Mr. Froomkin. Thank you, Mr. Chairman and members of the 
Subcommittee. My name is Michael Froomkin. I would like to 
thank you very much for holding this hearing and for inviting 
me here. As you know, I am a Law Professor at the University of 
Miami. I have published a lot of articles in this area, 
including one you were kind enough to mention, a 168-page study 
of the legality of ICANN's relationship with the Department of 
Commerce.
    Now, both legally and politically, ICANN is not a unique 
creation. It was dreamed up, as you know, by Ira Magaziner in 
the so-called DNS White Paper. Eventually the Department of 
Commerce delegated to ICANN powers of worldwide significance, 
yet it did so without congressional authorization. In fact, it 
did it without even a rulemaking.
    All that the Department of Commerce and Magaziner issued 
was a so-called policy statement, which is legally binding. 
Since then, Commerce has entered into an MOU with ICANN, a 
zero-dollar procurement contract--that is an unusual one--and a 
contract for ICANN to do a study on the DNS, but it is a study 
in which ICANN studies by actually regulating the DNS, not one 
in which it produces reports or standards.
    What is worse is that the system that the Magaziner White 
Paper set into motion is almost as Byzantine as his health care 
proposals. I include a simplified--and, believe me, this is a 
simplified chart--organizational chart of my prepared 
testimony. It has got lines and dashes all over it, and it does 
not even fit on the page. There is more on the back, and that 
is not the whole story.
    The consequence of this Rube Goldberg system has been lack 
of accountability and lack of due process. ICANN says it is a 
technical standards body, but so far, at least on the whole, it 
is not acting as one, nor is it a technical coordination body. 
Rules about arbitration, domain name disputes, rules about what 
jurisdiction you can sue if you lose an arbitration are not the 
sort of technical standards for which we ordinarily consult 
network engineers, and I have got to say that, at least in my 
opinion in the forthcoming article, I am going to argue that 
this arbitration system is anything but a good model.
    It lacks due process. Plaintiffs get to choose the forum. 
They pay the arbitrators. There are all kinds of issues, 
unequal access to judicial review, a whole bunch of problems 
that make it anything but a model.
    Now, more recently ICANN justified its very tentative 
approach to new gTLDs by saying it is engaged in a proof of 
concept. You just heard a lot of that this morning. 
Unfortunately, it has not really told us what is this concept 
it is trying to prove. It has not told us when the tests will 
be evaluated, or what constitutes success.
    The concept cannot be gTLD creation itself. We know how to 
do that, and we have been doing it over and over again over the 
past few years. You just type in a few lines of code into one 
computer in Northern Virginia and through the magic of the 
Internet it propagates within a week. We created a new domain 
for .Palestine.PS a few weeks ago, and the Internet did not 
come grinding to a halt.
    In fact, the shortage of new domain names today, the 
perceived shortage, is entirely artificial and easily curable. 
Experts agree there is no technical obstacle to at least 
thousands, maybe tens of thousands or millions of new top-level 
domain. Nobody is quite sure where the line is, but it is 
nowhere near where we are. There are financial and political 
questions involved, but the only real technical issue is 
sequencing, keeping them from all happening at once and messing 
things up.
    Now, we just had this big gTLD creation process, but one 
story captures just how arbitrary it was. ICANN rejected a 
proposed TLD called .III, and the reason they did was that 
somebody on the Board thought that was hard to pronounce. It 
seems to have passed all the other tests, but at the last 
minute they invented a new one that had never been mentioned 
before and it flunked.
    Another example of arbitrary behavior goes back to 1999. In 
fact, to the creation of ICANN, when they promised that half 
the Board seats would be elected at-large. In July 1999, then-
Board Chairman Esther Dyson came into House committee and 
reiterated that promise and said it was their highest priority. 
But they did not do it. They reneged and said they decided, as 
you heard, they would have just five, and now they are going to 
have another study, maybe take the five away, zero-base it, 
think it over--who knows.
    Meanwhile, they amended their timetables to rush the 
selection of new gTLDs so that decisions would be made before 
even the five elected members got to be at the table. It's not 
surprising, therefore, that when ICANN says it has got a 
consensus, it is really talking about the views of the people 
who get to be at ICANN's table, and that leaves out a lot of 
groups. I guess I am not a stakeholder.
    Now, why is ICANN acting in this arbitrary fashion? Why did 
they put a limit on new gTLDs? Why did it rush? I think it is 
really just not acting as a proper standards body. It is not 
coordinating anything. It is not casting its net widely enough 
for consensus.
    In my Duke Law Review article I explained in some detail 
why the Department of Commerce must act in conformity with the 
Administrative Procedures Act and the Constitution, otherwise 
if you say ICANN is private, there is a violation of the non-
delegation doctrine. If you say it is public, the APA ought to 
apply directly.
    In my opinion, ICANN is a state actor and is fundamentally 
acting as a regulator of the registries and maybe the 
registrars. Now, there is no question that if a Federal agency 
acted like ICANN it would have a lot of trouble with judicial 
review and, given that, I think if nothing else it would be 
unreasonable for Commerce to rubber-stamp its decisions.
    Let me make a couple of positive suggestions about what 
ICANN ought to do. It seems to me that with gTLDs, the right 
thing for ICANN to do to maximize competition and be fair is to 
accept all gTLD applicants who meet a preannounced, open, 
neutral and objective standard of competence. You can define 
that in lots of interesting ways. Maybe it includes financial, 
but it ought to be open and above-board and a priori, not on 
the fly.
    Once a name is allocated, instead of ICANN spending months 
and maybe piles of money secretly negotiating the contracts 
like they're doing right now, they ought to be doing that in 
the open, or maybe have standard forms to sign in advance, and 
say you pick column A, column B, column C, whichever.
    In my last minute, let me suggest one other sort of 
idealistic alternative, one that would really enhance 
competition and be truly international and borrow from major 
league sports. Maybe what ICANN ought to do is take a leaf from 
the Internet, which was designed to avoid single points of 
failure. When it comes to policy right now, ICANN is a single 
point of failure.
    If you could take the policy function out and distribute 
that to other people, so that ICANN just kept a master list and 
avoided collisions so it was doing true technical coordination, 
ICANN could have an annual TLD draft. They could pick a bunch 
of policy partners from around the world, both governmental, 
non-governmental civil society, public-private, and give them 
all draft choices. Some of them might get more than one.
    You would then run the draft either randomly or by some 
other process, and when your number came up you would pick a 
name and that other body would set the policy. The U.S. 
Government might do some, you might do some, civil liberties 
groups might do some, and so on, and then ICANN would just make 
sure that no two people got the same name.
    Now, whatever model we end up with, however, I am concerned 
that we are not going to get the right one, and necessary 
changes will not come to ICANN without outside pressure, so I 
think this hearing is a wonderfully useful step, and I commend 
you all enormously for doing this and for making it one of your 
top seven tech issues for the coming year.
    Thank you very much.
    [The prepared statement of Mr. Froomkin follows:]
     Prepared Statement of A. Michael Froomkin, Professor of Law, 
                   University of Miami School of Law
    Mr. Chairman and members of the Subcommittee, my name is Michael 
Froomkin. I would like to thank the Subcommittee for inviting me to 
appear today at this hearing on ICANN governance. I commend the 
Subcommittee for its wisdom and foresight in recognizing the importance 
of this issue.
    I believe it is useful to separate this complex issue into three 
parts: (1) ICANN's mission or, if you will, ICANN's ``jurisdiction''; 
(2) ICANN's internal organization; (3) The extent to which ICANN is 
subject to oversight by the Commerce Department, the U.S. Congress, or 
any other outside forces.
    These three issues are intertwined. The nature and extent of 
ICANN's powers over the Internet and over Internet users that 
determines the type of internal governance structures which are 
appropriate for it. Similarly, the nature and quality of both ICANN's 
powers and its internal representativeness, not to mention checks and 
balances, determines the extent to which it needs to be subjected to 
searching external oversight. In particular, it is appropriate for this 
committee to enquire into the nature of the workings of the 
relationship between the Department of Commerce and ICANN.
                          summary of testimony
    ICANN's go-very-slow policy on new gTLDs had no technical basis. 
Why then would ICANN adopt such a policy? The reason is that ICANN's 
policies are a product of an internal deliberative process that under-
weighs the interests of the public at-large and in so doing tends 
toward anti-competitive, or competitively weak, outcomes skewed by 
special interests ICANN routinely claims to be either a technical 
standards body or a technical coordination body. If this were correct, 
then it might be proper for the Department of Commerce to defer to 
ICANN's presumed technical expertise and rely on ICANN's standards or 
allocation decisions without undertaking independent Administrative 
Procedure Act (APA)-compliant processes of its own. When, however, 
ICANN acts as policymaking rather than a standard-making body, then due 
to ICANN's unrepresentative nature its decisions do not carry any 
presumption of regularity or correctness and the U.S. Government cannot 
rubber-stamp its decisions without additional independent fact-finding 
and deliberation.
    We would all be better off if ICANN could confine itself to true 
standards issues, or to true technical coordination. If ICANN cannot, 
then ICANN needs to be subjected to constant scrutiny.
    Terminological note: A ``registrar'' is a firm that contracts with 
clients (``registrants'') to collect their information and payment in 
order to make a definitive and unique entry into a database containing 
all domain names registered in a top-level domain (TLD). This database 
is maintained by a ``registry.'' Top-level domains are sometimes 
grouped into ``generic TLDs'' (gTLDs), which are currently three- or 
four-letter transnational domains, and ``country code TLDs'' (ccTLDs) 
which are currently two-letter TLDs. The ``root'' is the master file 
containing the authoritative list of which TLDs exist, and where to 
find the authoritative registries that have the data for those TLDs. 
Registrants typically register second-level domains (e.g. myname.com), 
but sometimes are limited to third-level domains (e.g. 
myname.genericword.com).
                           i. icann's mission
    ICANN's processes little resemble either standard-making or 
technical coordination. To date, ICANN's ``standard making'' has 
produced no standards. ICANN's ``technical coordination'' has been 
neither technical nor has it coordinated anything. Rather, in its 
initial foray into the creation of new gTLDs, ICANN has acted like a 
very badly organized administrative agency. Instead of engaging in 
standards work, ICANN is instead engaged in recapitulating the 
procedural early errors of Federal administrative agencies such as the 
Federal Communications Commission (FCC).
    What real standard-making would look like. A standard-based (or, at 
least, standardized) approach to gTLD creation would required ICANN to 
craft a pre-announced, open, neutral, and objective standard of 
competence rather than to pick and choose among the applicants on the 
basis of the ICANN Board's vague and inconsistent ideas of aesthetic 
merit, market appeal, capitalization, or experience. All applicants 
meeting that standard would be accepted, unless there were so many that 
the number threatened to destabilize the Internet (as noted below, if 
there is such a number, it is very large). ICANN might also put in 
reasonable limits on the number of TLDs per applicant, and on 
sequencing, in order to keep all of them going online the same day, 
week, or month.
    Under a standards-based approach ICANN would have tried to answer 
these questions in the abstract, before trying to hold comparative 
hearings in which it attempted to decide to which of specific 
applicants it should allocate a new gTLD registry:
     What is the minimum standard of competence (technical, 
financial, whatever) to be found qualified to run a registry for a 
given type of TLD?
     What open, neutral, and objective means should be used to 
decide among competing applicants when two or more would-be registries 
seek the same TLD string?
     What are the technical limits on the number of new TLDs 
that can reasonably be created in an orderly fashion per year?
     What open, neutral, and objective means should be used to 
decide among competing applicants, or to sequence applicants, if the 
number of applicants meeting the qualification threshold exceeds the 
number of gTLDs being created in a given year?
    Today, reasonable people could no doubt disagree on the fine 
details of some of these questions, and perhaps on almost every aspect 
of others. Resolving these issues in the abstract would not necessarily 
be easy. It would, however, be valuable and appropriate work for an 
Internet standards body, and would greatly enhance competition in all 
the affected markets.
    Once armed with a set of standards and definitions, ICANN or any 
other allocation body, would be on strong ground to reject technically 
incompetent or otherwise abusive applications for new gTLDs, such as 
those seeking an unreasonably large number of TLDs. A thoughtful answer 
would inevitably resolve a number of difficult questions, not least the 
terms on which a marriage might be made between the Department of 
Commerce's ``legacy'' root and the so-called ``alternate'' roots.
    What technical coordination would look like. An alternate approach 
to gTLD creation, one that would most certainly enhance competition, 
would take its inspiration from the fundamental design of the Internet 
itself and from major league sports. The Internet was designed to 
continue to function even if large parts of the network sustained 
damage. Internet network design avoids, whenever possible, the creation 
of single points of failure. When it comes to policy, however, ICANN is 
currently a single point of failure for the network. A solution to this 
problem would be to share out part of ICANN's current functions to a 
variety of institutions.
    In this scenario, ICANN would become a true technical coordination 
body, coordinating the activities of a large number of gTLD policy 
partners. ICANN's functions would be: (1) to keep a master list of 
TLDs, (2) to ensure that there were no ``name collisions''--two 
registries attempting to mange the same TLD string; (3) to fix an 
annual quota of new gTLDs; (4) to run an annual gTLD draft; (5) to 
coordinate the gTLD creation process so that new gTLDs came on stream 
in an orderly fashion instead of all at once.
    Each of ICANN's policy partners would be assigned one or more draft 
choices, and then ICANN would randomly (or, perhaps, otherwise) assign 
each one their draft picks. As each policy partner's turn came up, it 
would be entitled to select a registry--imposing whatever conditions it 
wished--to manage any gTLD that had not yet been claimed on ICANN's 
master list. In keeping with the transnational and public/private 
nature of the Internet, ICANN's policy partners could be a highly 
diverse mix of international, national, and private ``civil society'' 
bodies.
    While I think this alternate solution would best achieve the ends 
of internationalization, competition, and diversity, it might well 
require legislation since it is unclear if the Department of Commerce 
has the will (or the authority) to implement such a plan, and we have 
seen no sign that ICANN is about to divest itself of any policy 
authority unless forced to do so.
    What ICANN actually did: select an arbitrarily small number of 
gTLDs based on arbitrary appraisals of aesthetic merit, market appeal, 
capitalization, and experience. Rather than adopt either a standards or 
a technical coordination approach, ICANN instead adopted an arbitrary 
approach. First it set an arbitrarily low ceiling on the number of 
TLDs, then it allocated most but not all of that quota based on its 
arbitrary appraisals of the applicants aesthetic merit, market appeal, 
capitalization, and experience.
    ICANN's decision to impose an arbitrary limit on the number of new 
gTLDs. The closest thing to technical standards work that ICANN has 
done to date was to adopt an artificially low limit on the number of 
gTLDs it would recommend the Commerce Department create under the guise 
of a so-called ``proof of concept.'' The grounds on which ICANN based 
this arbitrarily low limit on the number of new gTLDs demonstrate as 
clearly as anything else that ICANN is not making technical decisions 
but instead making policy choices on the basis a wholly inadequate an 
unrepresentative structure.
    ICANN has never claimed that the technical stability of the DNS 
would in any way be threatened by the introduction of a very large 
number of new gTLDs. Indeed, it could not easily make this claim, since 
all the technical evidence is to the contrary. Rather, the dangers that 
ICANN seems concerned about are social--potential consumer confusion, 
and a potential ``land rush'' mentality due to the enormous pent-up 
demand. (In my opinion, however, ICANN has selected a policy that 
maximizes the risk of a ``land rush.'' Panic buying happens when 
consumers fear a shortage. Here, ICANN is proposing the creation of a 
very small number of gTLDs, with no assurances as to when if ever the 
next batch will be created. This gets it exactly backwards: the way to 
avoid a land rush would be to have a very predictable path for new 
gTLDs so that everyone understands that there's no need to panic since 
plenty of names will always be available.)
    I am not an expert on Internet engineering. However, my 
understanding is that while experts do not agree on precisely how many 
gTLDs could be created without adverse consequences to DNS response 
time, there appears to be a technical consensus that we are nowhere 
near even the lowest possible limit. ICANN At-Large Director Karl 
Auerbach, himself a technical expert, has suggested that the smallest 
technically mandated upper level for the number of gTLDs might be as 
high as a million.\1\ Persons with long experience in DNS matters, 
including BIND author Paul Vixie, apparently agree.\2\ Others have 
performed tests loading the entire .com file as if it were a root file, 
and found that it works. In principle, this is not surprising, as there 
is no technical difference between the root file containing the 
information about TLDs and a second-level domain file. Given that there 
are currently about 16 million registrations in .com, if this argument 
is right, then the maximum number of TLDs may be very high.\3\ Some 
experts worry, however, that a very large number of new TLDs, such as a 
million, might affect DNS response time.\4\ If so, that still means 
that with fewer than 300 TLDs in operation today (gTLDs + ccTLDs), we 
can afford to create tens of thousands, and probably hundreds of 
thousands, more.
---------------------------------------------------------------------------
    \1\ Posting of Karl Auerbach, [email protected], http://
www.dnso.org/wgroups/wg-c/Arc01/msg00195.html.
    \2\ E-mail from Paul Vixie, BIND 8 Primary Author, to Eric Brunner 
(Dec. 15, 1999) (``A million names under `.' isn't fundamentally harder 
to write code or operate computers for than are a million names under 
`COM.' ''), http://www.dnso.org/wgroups/wg-c/Arc01/msg00203.html.
    \3\ See  Quickstats at http://www.dotcom.com/facts/quickstats.html 
(reporting 20 million registrations, of which 80 percent are in .com).
    \4\ See, e.g., E-mail from Paul V. Mockapetris, BIND Author, to 
Paul Vixie, BIND 8 Primary Author, & Eric Brunner (Dec. 15, 1999) 
(querying whether one million new TLDs would impose performance costs 
on DNS), http://www.dnso.org/wgroups/wg-c/Arc01/msg00202.html.
---------------------------------------------------------------------------
    It is an article of faith among Internet entrepreneurs that 
possession of a good domain name is a necessity for an Internet 
startup. Many traditional firms also consider the acquisition of a 
memorable or short domain name to be of strategic importance. Recently, 
for Internet startups, possession of a ``good'' name was seen as a 
major asset--reputedly enough in some cases to secure venture 
financing.
    For some time now, however, it has also been an article of faith in 
the Internet community that ``all the good names are taken'' Recently 
it has seemed as if simply all the names that were a single word were 
taken. This apparent shortage, especially in .com, has driven firms 
seeking catchy names into the aftermarket. There does appear to be a 
reasonably large stock of names in the existing gTLDs being held by 
domain name brokers for resale in the aftermarket. Prices are very 
variable. Although few firms paid millions of dollars like the 
purchasers of business.com, and loans.com, it appears that at least 
until the .com bubble burst, the shortage of attractive names in .com, 
and the resulting need to purchase them at high markups in the 
aftermarket created what amounted to a substantial ``startup tax'' on 
new businesses.
    ICANN justifies its very tentative initial foray into gTLD creation 
as a ``proof of concept'' but it has not disclosed the concept that is 
believes it is trying to prove, nor described how one tells if the test 
is successful, nor even when one might expect ICANN to do the 
evaluation. The ``concept'' cannot be gTLD creation itself: There is no 
rocket science to the mechanics of creating a new gTLD. From a 
technical perspective, creating a new gTLD is exactly like creating a 
new ccTLD, and creating new ccTLDs is quite routine. Indeed, .ps, a TLD 
for Palestine, was created less than a year ago with no noticeable 
effect on the Internet at all.\5\
---------------------------------------------------------------------------
    \5\ See IANA Report on Request for Delegation of the .ps Top-Level 
Domain at http://www.icann.org/general/ps-report-mar00.htm (Mar. 22, 
2000).
---------------------------------------------------------------------------
    In fairness, ICANN is not originally responsible for the gridlock 
in gTLD creation policy, which in fact long predates it. Indeed the 
Department of Commerce--which currently has the power to create new 
gTLDs--called ICANN into being because it wanted to find a politically 
feasible way to create new TLDs in the face of difficult political 
obstacles, not least a belief in the intellectual property rights 
holders community that new TLDs might add to the risk of customer 
confusion and trademark dilution.
    This political fear, more than any mythical technical consideration 
requiring a ``test'' or ``proof of concept'', explains why ICANN 
imposed a needlessly low limit on the number of new gTLDs it would 
recommend the Department of Commerce create in this first round, and 
why ICANN has as yet not been able to consider when if ever it will 
contemplate future rounds of gTLD recommendations. It does not explain, 
however, why ICANN persists in falsely claiming consensus for its 
artificially low number of TLDs, nor why went about selecting its seven 
finalists in the manner it did. Indeed, as described below, ICANN's 
gTLD selection procedures were characterized by substantial failures.
    Nevertheless, it might seem that despite any procedural 
irregularities, ICANN's recommendation that the Department of Commerce 
create a small number of new gTLDs can only be good for competition as 
it will increase supply and thus drive down prices. And indeed, supply 
will increase. Unfortunately, of the new gTLDs, only .biz and maybe 
.info are likely to be of attractive to the majority of startups and 
other Internet newcomers. Because there are only two such domains, and 
because there is no easily foreseeable date at which additional gTLDs 
might become available, there is a substantial risk of a speculative 
frenzy in which domain name brokers, cybersquatters, and amateur 
arbitragers all seek to register the catchy names that have not already 
been snapped up by trademark holders who took advantage of their pre-
registration period. I am concerned that the faction which controls 
ICANN will use this very predictable speculative frenzy as ``evidence'' 
that new gTLDs are a bad idea, or that the number must be kept down in 
the future.
    The surest way to drive down and keep down the price of domain 
names, thus eliminating the ``startup tax'' and enhancing the ability 
of new firms to enter new markets and incidentally greatly reducing, 
perhaps even almost eliminating, cybersquatting, is to create healthy 
expectations. As soon as participants in the market understand that a 
steady supply of new domain names in attractive gTLDs will continue to 
become available on a predictable schedule, the bottom will fall out of 
the after-market, and the incentive (albeit not the opportunities) for 
cybersquatting will be greatly reduced, thus helping e-commerce by 
making attractive names available on reasonable terms to a much greater 
number, and wider variety, of persons and firms.
    Selection of gTLDs. In ICANN's recent gTLD process, ICANN acted not 
as a standards or coordination body, but as if it were allocating 
scarce broadcast spectrum is some kind of comparative hearing process. 
ICANN created no standard. It ``coordinated'' no projects with running 
code being deployed by outside parties. Rather, ICANN acted like a 
foundation grant committee, trying to pick ``winners.'' In practice, 
ICANN's exercise of its gatekeeper committee role contributes to the 
artificial shortage of gTLDs. Worse, the selection processes ICANN 
employed were amateurish and arbitrary.
    Although all applicants were charged the same non-refundable 
$50,000 fee, a sum that immediately skewed the process toward 
commercial uses and away from non-profit or experimental uses, it 
appears not all applicants received equal treatment. During the Los 
Angeles ICANN Board Meeting, it transpired that the staff had not 
subjected all the proposals to the same level of analysis. Thus, when 
Board members sought more detailed information about proposals that 
interested them, but which the staff had relegated to the second tier, 
that information sometimes did not exist, although it existed for the 
staff's preferred picks.
    ICANN then attempted to hold a 1-day comparative hearing between 
more than 40 applicants, each of whom had complex applications that 
referenced multiple possible gTLDs. During this process, each applicant 
was given 3 minutes to speak.
    Both before and during the 1-day Board meeting, both the staff and 
the Board seemed excessively concerned with avoiding risk. Although 
true competition in a fully competitive market requires that 
participants be allowed to fail if they deserve to do so, there are 
reasonable arguments as to why it makes sense to have a body like ICANN 
require potential registry operators to meet some minimum standard of 
technical competence. One can even make a case for requiring a showing 
of some financial resources, and for requiring the advance preparation 
of basic registry policy documents spelling out who will be allowed to 
register names and under what terms. Perhaps there are other neutral 
criteria that should also be required and assessed. This is a far cry 
from ICANN's apparent tendency to tend to prefer established 
institutions and big corporations, and to downplay the value of 
experience in running code. If in 1985 the Internet itself had been a 
proposal placed before a committee that behaved as ICANN did in 2000, 
the Internet would have been rejected as too risky. Risk aversion of 
this type is antithetical to entrepreneurship and competition.
    Worst of all, ICANN applied its criteria arbitrarily, even making 
them up as it went along. The striking arbitrariness of the ICANN 
decisionmaking process is illustrated by the rejection of the 
``.union'' proposal based on unfounded last-minute speculation by an 
ICANN board member that the international labor organizations proposing 
the gTLD were somehow undemocratic. (That this same Board member was at 
the time recused from the process only adds to the strangeness.) The 
procedures ICANN designed gave the applicants no opportunity to reply 
to unfounded accusations. ICANN then rejected ``.iii'' because someone 
on the Board was concerned that the name was difficult to pronounce, 
even though the ability to pronounce a proposed gTLD had never before 
been mentioned as a decision criterion. I am not in a position to vouch 
for the accuracy of each of the claims of error made by the firms that 
filed reconsideration requests after the Los Angeles meeting (available 
at http://www.icann.org/committees/reconsideration/index.html) but as a 
group these make for very sobering reading.
    If ICANN were to limit itself to either standard making or 
technical coordination it would have approached its mission very 
differently from the arbitrary and amateurish procedures it used. It is 
critical to note that the relevant standards of comparison for ICANN's 
decisionmaking are not the private sector. As a non-profit standards 
body contracting with the U.S. Government, ICANN should either be held 
to standards of openness, professionalism, and neutrality appropriate 
for standard-making or, if making political and social choices, be 
treated as a state actor and expected to act in conformity with 
fundamental norms of due process. Suggestions heard from some 
victorious gTLD applicants that ICANN's processes compare favorably 
with those used for procurement in the private sector are both 
erroneous and irrelevant. ICANN is not engaged in procurement. It is 
not ``buying'' anything. And ICANN paid almost no attention to the 
prices proposed by would-be registries.
                       ii. internal organization
    ICANN's go-very-slow policy on new gTLDs had no technical basis. 
Why then would ICANN adopt such a policy? The reason is that it is a 
product of an internal deliberative process that under-weighs the 
interests of the public at-large and in so doing tends toward anti-
competitive, or competitively weak, outcomes skewed by special 
interests.
    The source of this predisposition is the distribution of 
decisionmaking authority on the ICANN Board, and in ICANN's subsidiary 
institutions, which have been manipulated to neuter the public voice, 
and the role of individuals, non-profits, and civil society groups. 
Originally, half of ICANN's governing Board would have been elected by 
at-large members of ICANN. Instead, ICANN has worked at every turn to 
prevent this.
    In July, 1999, ICANN Chair Esther Dyson told the House Commerce 
Committee's Subcommittee on Oversight and Investigation that ICANN's 
``highest priority'' was to elect nine at-large Board members,\6\ 
exactly as ICANN had committed to do as an original condition of being 
approved by the Department of Commerce. Instead, ICANN reneged on its 
commitment to the United States Government, and to the public, that 
half its Board would be elected by an at-large membership. Thus, today:
---------------------------------------------------------------------------
    \6\ Testimony of Esther Dyson, Chair, ICANN, before the House 
Commerce Committee, Subcommittee on Oversight and Investigations, July 
22, 1999, http://www.icann.org/dyson-testimony-22july99.htm.
---------------------------------------------------------------------------
     Instead of half (nine) of the Board members being elected 
at-large, as promised to NTIA and to Congress, ICANN amended its bylaws 
to allow only five members to be elected at-large;
     Instead of all the self-appointed nine original directors 
leaving office as they promised Congress and the public they would do, 
four remain in office;
     Instead of allowing the five elected at-large members to 
participate in the selection of the new gTLDs, ICANN amended its bylaws 
to seat them at the close of a meeting, instead of at the start (the 
process used for all previous new directors). Then ICANN rushed its 
processes so that it could make the final decisions minutes before the 
new directors took office.
     In a move that risks further neutering the five elected 
at-large members, ICANN announced that their jobs would all be 
abolished at the end of their 2-year terms, unless a majority of the 
full Board voted (after a ``clean sheet study'') to re-establish 
elected at-large Board seats. [Note that under the current bylaws, the 
un-elected directors apparently get to keep their jobs indefinitely.]
     The internal institutions that ICANN created to take the 
lead in domain name policy--the seven constituencies in the ``Domain 
Name Supporting Organization'' (DNSO)--were designed from the start to 
exclude individuals from membership. The very engineers who built the 
Internet are not represented in their personal capacities--only if 
their employers choose to send them.
     All non-commercial groups, including all universities, all 
consumer groups, all political groups throughout the world are 
shoehorned a single DNSO constituency. They are, in the main, 
ineligible for full voting membership of any of the other six 
constituencies. Meanwhile, many businesses such as Internet first-
movers and others who have an interest in reducing on-line competition 
for established firms are eligible to be in two, three, or even four of 
the seven constituencies, thus allowing them multiple votes--and a 
certain majority.
    The interest groups that acquired a voting majority in those 
institutions have shown relatively little interest in the rights and 
needs of small businesses, non-commercial entities, or individuals. 
They have shown considerably more interest in securing special 
protections for trademarks, above and beyond what is provided by 
statute, than they have in maximizing the liberty-enhancing and 
competitive potential of the Internet.
    ICANN is a highly complex organization (see attached charts, 
prepared by Tony Rutkowski). It is simply impossible for anyone to keep 
track of what is happening in all the different pieces, except an 
organization capable of deploying a fleet of lawyers. Similarly, 
because ICANN sees its mission as global, it meets four times a year on 
four different continents. Next month's meeting, for example, is in 
Australia. The result of this laudable attempt at internationalization 
is that only interests wealthy enough to attend all these meetings--
with several representatives--can achieve the continuity of 
participation required to influence ICANN's decisions in any sort of a 
consistent manner. The result tends to be a ``consensus'' of those with 
the necessary expense accounts.
[GRAPHIC] [TIFF OMITTED] 87255.002

[GRAPHIC] [TIFF OMITTED] 87255.003

                     iii. external checks on icann
    I do not deny that one can identify potentially serious social 
issues that might be caused as side effects of the creation of new 
gTLDs. I do submit that ICANN has no competence to deal with them, and 
that its actions have to date in creating special domain name 
registration rights for trademark holders, well in excess of the rights 
granted to them by Congress, have been anti-competitive, unfair, and 
counterproductive.
    ICANN's mandate and its competence is, at most, for technical 
matters. Social policy issues such as the intellectual property 
consequences of new gTLDs, the number of days a person should have to 
respond to an arbitration over a domain name, or issues of content 
management, should not be decided by engineers or by the people who 
happen to have seized control of ICANN. Rather, they should be decided 
via the means we traditionally use for making social policy choices--
markets and representative democracy.
    Since ICANN's decisions as to its gTLD recommendations were not 
based on purely technical criteria, as a formal matter ICANN is making 
social policy choices, not just acting as a standards body. It is 
therefore right that ICANN's decisions are subject to external checks. 
Indeed, as I argue in my article Wrong Turn in Cyberspace: Using ICANN 
to Route Around the APA and the Constitution, 50 Duke L.J. 17 (2000), 
available online http://www.law.miami.edu/froomkin/articles/icann.pdf, 
as a matter of law ICANN as currently constituted amounts to a state 
actor, and thus is subject to the same Due Process constraints as apply 
to any Federal agency. Accordingly, its arbitrary and capricious 
decisions violate both the APA and the Due Process Clause of the 
Constitution.
    ICANN and the U.S. Department of Commerce dispute this 
characterization. They prefer to rely on form over reality, and insist 
that ICANN is legally private despite the fact that ICANN derives all 
of its authority and revenue from Commerce's loan to ICANN of authority 
over the root. It follows, however, that if this characterization of 
ICANN as a purely private body is correct, then there are strict limits 
on the extent to which the Department of Commerce can implement ICANN's 
recommendations without violating the Administrative Procedures Act, or 
the Constitution's Due Process clause.
    Once ICANN makes its formal recommendations, the Department of 
Commerce will have to decide how to proceed. Rubber-stamping of ICANN's 
decisions by the Department of Commerce would amount to adopting 
ICANN's arbitrary and capricious choices, since the U.S. Government 
would essentially endorse both ICANN's practices and its conclusions.
    The Department of Commerce has maintained that its relations with 
ICANN are not subject to the APA, or indeed to any legal constraint 
other than those relating to relations with a government contractor 
and/or a participant in a cooperative research agreement. But whatever 
the legal arguments, when contemplating decisions which will shape the 
very nature of the Internet naming system, Commerce should proceed with 
deliberation, and act only on the basis of reliable information. The 
need for reliable information, proper public participation, and 
transparent and accountable decisionmaking is even stronger when 
Commerce contemplates making the sort of social policy choices--as 
opposed to mere technical standard-setting--embodied in creating new 
gTLDs and imposing conditions on their use. Basic requirements of 
fairness, due process, and the need to make reasonable decisions 
counsel in favor of notice, public access, the making of an official 
record, and deliberation.
    There is no question but that if a Federal agency had acted as the 
ICANN Board did, its decisions would not satisfy even cursory judicial 
review. In the circumstances, therefore, it would be unreasonable and a 
denial of due process for Commerce to rely on the outcome of such a 
flawed process without conducting its own review.
    ICANN faces a choice: On one path it becomes a true standards body, 
or a true technical coordination body, and leaves the social policy 
choices to those--like Congress--who have the legitimacy to make them. 
On the other path, the one it currently seems to be following, it is a 
state actor. In that case, its actions to date have been far too 
arbitrary to survive judicial review.

    Senator Burns. Thank you very much.
    Roger Cochetti, Senior Vice President, Policy, VeriSign 
Network Solutions, here in Washington.

          STATEMENT OF ROGER J. COCHETTI, SENIOR VICE

         PRESIDENT, POLICY, VeriSign NETWORK SOLUTIONS

    Mr. Cochetti. Thank you, Mr. Chairman, and thank you, 
members of the Subcommittee. I am, as you indicated, Senior 
Vice President for Policy at VeriSign Corporation, which merged 
last year with Network Solutions. Before joining VeriSign in 
1999, I had been with IBM Corporation, where I coordinated many 
of their electronic commerce policies, including this area, 
which has given me some perspective in the subject of today's 
hearings.
    I have a prepared statement, as you know, Mr. Chairman, and 
ask that it be entered into the record in its entirety.
    Let me begin if I may, Mr. Chairman, by commending you for 
your leadership in highlighting the tech seven issues that are 
starting, the first of which is being highlighted in today's 
hearing, and for your work in the previous Congress in 
highlighting the digital dozen issues.
    Like many companies that are fully involved in electronic 
commerce, we look forward to working with you and the 
Subcommittee as you work your way through these issues in the 
coming months.
    I have three points I would like to make in my testimony, 
Mr. Chairman. The first is that, as a major provider of 
services that make up the logical infrastructure of the 
Internet, VeriSign is both deeply interested in and uniquely 
qualified to comment on the topic of today's hearing.
    Second, ICANN is an experiment in its early stages, with 
many of its most important challenges still ahead. 
Consequently, we believe it is too early to reach many 
meaningful conclusions about ICANN.
    Third, we are hopeful about ICANN's future, and committed 
to helping it become successful.
    Mr. Chairman, VeriSign is an American company with major 
operations in California and Virginia and in other States that 
is a leading e-commerce enabler, providing such essential e-
commerce services as authentication, often called digital 
signature, domain name registrations, web merchant payments, 
security, and others. These e-commerce utility functions are 
often described as the logical infrastructure of the Internet.
    More to the point of today's hearing, VeriSign has operated 
the authoritative registry for .com, .net, and .org since 1991. 
The registry is the central database that permits resolution 
for .com, .net, and .org domain names.
    There are around 28 million registrations in .com, .net, 
and .org today, and that number grew last year by around 50,000 
new registrations each day, distributed to servers around the 
world for access by every Internet network operator and end 
user. On a typical day, our databases experience over 2 billion 
queries. That number has been doubling every 6 months, 
incidentally.
    VeriSign is active in providing end user registration 
services as well, one part of which is our registrar business. 
We operate one of about 80 competing registrars for .com, .net, 
and .org registrations. Prior to 1999, our registrar, called 
the NSI registrar, under a mandate from the National Science 
Foundation, was the only provider of direct registration in 
.com, .net, and .org.
    Following the introduction of registrar competition in 
1999, the NSI registrars' market share of new registrations has 
declined to below 50 percent by the end of 2000. A whole new 
industry of competing registrars has emerged.
    Under the direction of the U.S. Commerce Department, 
VeriSign maintains the Internet's primary route server, or what 
is called the ``A'' server, sometimes called the heart of the 
Internet. This server originates the authoritative directory of 
all of the Internet's top-level domains, everything from .com 
to .gov to .uk.
    Also at the request of the Department, we operate as a 
public service and at no charge, the registries for .us and 
.edu, and we provide the registrar services for colleges that 
use .edu at no charge to the colleges.
    Mr. Chairman, to my second point, ICANN is intended to be 
the principal provider of technical coordination services for 
the Internet, particularly in the area of domain names and 
numerical Internet addresses, and we believe we are the 
principal provider of corresponding operational services for 
the Internet, particularly in the area of domain name 
registrations.
    ICANN grew out of two fundamental goals, first to create a 
non-governmental structure that coordinates by way of consensus 
among those that are affected certain international functions, 
domain name and IP addressing, and second to do so in a way 
that is globally acceptable. I believe, Mr. Chairman, that 
ICANN is a bold experiment still in an early stage. It is 
premised not on regulation by governments, but on consensus and 
voluntary contracts.
    Private sector technical coordination is not new, but 
rarely has it been attempted on a global scale. International 
technical coordination is not new, either, but it has never 
been attempted by a completely new organization for a medium 
that affects a diverse global community of hundreds of millions 
of users.
    Finally, Mr. Chairman, if ICANN is a bold experiment, we 
should not make the mistake of thinking that the experiment is 
concluded, or that this has either failed or succeeded. Many of 
ICANN's most important challenges lie ahead. These include the 
establishment of stable relationships with all of the 
operational groups that provide domain name and Internet 
numbering services.
    While ICANN has stable relationships with both .com, .net, 
and .org registrants, and registrars, most notably us, it has 
not yet established stable relationships with the operators of 
the country code top level domain registries and registrars.
    These registries, such as those who operate .uk or .fr, are 
responsible for about a third of all domain name registrations 
in the world today, and no ICANN system would be complete 
without their stable participation in it.
    Similarly, ICANN needs to establish stable relationships 
with the operators of the Internet address numbering registries 
which provide the essential Internet numbering that makes the 
Internet work, as Carl described earlier, identifies and 
connects the machines on the Internet.
    Finally, ICANN needs to establish stable relationships with 
the operators of the route servers, the 12 other operators of 
the route servers other than VeriSign that distribute the route 
that we originate of the Internet.
    Internally, we believe that the organization is still in a 
formative period in its budget processes and the procedures by 
which its councils and Board are selected, and even the voting 
members are selected, as well as in the procedures that it uses 
to make fundamental decisions. VeriSign is committed to making 
ICANN a success.
    We are by far the largest contributor of funds to ICANN. We 
have probably voluntarily donated more money, beyond our dues, 
to ICANN than has anyone else. Last year, for example, we 
announced a $100,000 matching donation to ICANN's domain name 
supporting organization to support hiring its own staff.
    Mr. Chairman, we look forward to the opportunity to work 
with both the Subcommittee and with ICANN in helping move this 
organization forward to what we believe and hope will be a 
successful future. Thank you again for inviting us to 
participate.
    [The prepared statement of Mr. Cochetti follows:]
    Prepared Statement of Roger J. Cochetti, Senior Vice President, 
                   Policy, VeriSign Network Solutions
                              introduction
    Mr. Chairman, Members of the Subcommittee, thank you for the 
opportunity to testify before today's hearing on the Internet 
Corporation for Assigned Names and Numbers or ICANN. This is the first 
in an important series of Internet-related hearings being conducted by 
the Subcommittee and we commend you and your colleagues for taking this 
initiative. My name is Roger Cochetti and I am Senior Vice-President 
for Policy of VeriSign Corporation, which merged with Network 
Solutions, Inc. (NSI) last year. Before joining VeriSign, I was with 
IBM Corporation for several years, where I coordinated many of IBM's 
Internet policies, including their approach to ICANN. This has given me 
some perspective on this important experiment in international 
cooperation.
    VeriSign today is the largest and, we believe, the most important 
company anywhere to provide trusted services that make the Internet 
work.
    VeriSign has been a global pioneer, and a primary force, in 
developing the technology and the market for Internet domain names and 
public key infrastructure (PKI)-based digital certificates--commonly 
called digital signatures. We're also a leader in providing Web 
merchants with automated payments tools and services, as well as with a 
growing array of utility services that enable electronic commerce. 
These include Website hosting, e-mail, Website design, domain name 
search and re-sale, and other services.
    Mr. Chairman, VeriSign is not a phone company, a retail Internet 
startup, an Internet Service Provider or an Online Service Provider. We 
don't make computers, routers or other hardware. But we do make e-
commerce possible by enabling merchants and enterprises to take 
advantage of the full potential of the Internet by providing services 
that are essential to electronic commerce, such as security, identity, 
payments, and authentication. Together, these services are key 
components of what is increasingly called the ``logical infrastructure 
of the Internet.'' As such, we believe that we are a great example of 
an American company that is entirely Internet focused, and is bringing 
the benefits of e-commerce to people everywhere in the world.
    More to the point of these hearings, Mr. Chairman, VeriSign today 
operates, and has operated since 1991, the global registries--that is 
the central databases that permit what is called ``resolution''--for 
.com, .net, and .org. ``Resolution'' is what happens when one inputs a 
URL in text form, such as ``verisign.com,'' and is connected over the 
Internet to the machine that hosts the proper Website; in this example, 
our own. We're proud to say that these databases sustain enormous 
volumes of daily use, deflect frequent cyber-attacks, and operate with 
very nearly no service interruptions. In fact, our .com, .net, and .org 
servers, which are located in 12 sites around the world, respond to 
upwards of 12 billion queries a day; a number that has historically 
doubled every 6 months. Due to our efforts, anyone from essentially any 
country anywhere in the world can sign up, on-line, for a ``.com'' 
registration in a matter of minutes. We've got over 28 million .com, 
.net, and .org registrations in our databases today and the number grew 
by an average of about 50,000 registrations a day last year.
    In addition, in the highly competitive market for .com, .net, and 
.org end-user registration services, we operate one of the largest and 
most advanced registrars. Since the introduction of competition in the 
.com, .net, and .org registrar marketplace in 1999, the market share of 
the VeriSign registrar--called the NSI Registrar--has dropped from 
around 100 percent to less than half of all new registrations today, 
while a whole new industry of almost 80 competing registrars has grown 
up.
    Just as important, at the request of the U.S. Commerce Department, 
we have operated for quite some time what is called the ``A'' Root 
Server. This remarkable facility is frequently called ``the heart of 
the Internet'' because it is the single point of integration of all the 
Internet's domain name services. In this server, we maintain the 
authoritative list of the Internet's top-level domains--everything from 
``.com'' to ``.gov'' to ``.uk''--and who is responsible for operating 
each of them. This list is called ``The Root''; and from our server, it 
is distributed to a global network of secondary servers, which host 
identical copies of the files that we generate, and who themselves 
distribute the data to every network connected to the Internet around 
the world.
    Finally, also at the request of the U.S. Commerce Department, we 
operate at no charge, the domain name registries for ``.us'' and 
``.edu'', as well as provide the registrar services for the thousands 
of colleges that use ``.edu''. We're pleased and proud to provide these 
as a public service, with the same high quality as our commercial 
services, until such time as they are spun out to permanent registries 
and registrars by the Commerce Department.
    Because of our decade of commitment to these and related domain 
name services, the subject of today's hearing is very important to us. 
But it is also important to everyone who is using the Internet or 
thinking about using it in the future. Along with the competent 
operation of the registry and registrar services that make the Internet 
actually function, the technical coordination of these services (which 
is what ICANN addresses) is central to the smooth and stable operation 
of the medium. As it is structured today, the Internet requires both a 
central mechanism for technical coordination and the competent 
performance of the operational functions. ICANN is the leading provider 
of Internet technical coordination, particularly as it relates to 
domain names and Internet Protocol addresses; and we believe that we 
are the leading provider of Internet operational services, particularly 
in the area of domain name registration services.
    Thus, we think it is appropriate for the Subcommittee to examine 
the role of ICANN in the Internet and we are pleased to share our 
thoughts on the subject with you. Mr. Chairman, as you and the 
Subcommittee members no doubt know, ICANN grew out of two fundamental 
goals: First, to create a non-governmental structure to coordinate 
Internet domain name and IP addressing functions; and second, to do so 
in a way that is globally viable. We are committed to both of these 
goals.
    To achieve these twin goals, a non-profit organization was 
envisioned in 1998 that would operate on the principle of consensus of 
those affected, and bring together the diverse community of interests 
called ``the Internet community.'' By using procedures that are 
designed to ensure something akin to due process and the protection of 
the rights of service providers and users alike, ICANN is organized to 
bring many diverse communities into a single conversation about where 
domain name and IP address services are headed, and with them the 
Internet itself.
    Mr. Chairman, I believe that ICANN is a bold experiment. Although 
it is sometimes done by governments, technical coordination by the 
private sector is not new, but rarely has it been attempted on a global 
scale. International technical coordination of this sort is not new 
either, but it has never been attempted by a completely new 
organization for a medium that effects the daily lives of hundreds of 
millions of users. Finally, rarely in the history of private sector-
based international technical coordination has the community of 
interested parties been either as diverse or as large as we have seen 
with ICANN and the domain name system.
    But if ICANN is a bold experiment, we should not make the mistake 
of thinking that this experiment has concluded; or that it has been 
either successful or failed. We are early in the process of this 
experiment and we need more results before we can reach many useful 
conclusions. For example, of the five groups of service providers with 
whom ICANN must establish stable relationships for its coordination to 
work as planned, it has successfully done so with two: the operator of 
the generic Top-Level Domain registries (The VeriSign Registry); and 
the operators of the generic Top-Level Domain registrars (The NSI 
Registrar and its competitors.)
    ICANN still has before it the establishment of stable relationships 
with the operators of the country code Top-Level Domain registries and 
registrars (such as ``.uk'' or ``.fr'') who today issue around a third 
of all domain names globally. It also has before it the establishment 
of stable relationships with the operators of the IP address 
registries, which issue the number blocks that are used to assign 
Internet numbers to networks and machines on the Internet. And finally, 
ICANN has yet to establish stable relationships with the operators of 
the system of secondary root servers, described above, that distribute 
the root of the Internet around the world.
    In addition, we think it is fair to say that ICANN is still in a 
formative period in the development of both its budget process, the 
procedures by which its Councils and Board are selected, and the 
procedures that it uses to make fundamental decisions. Until we see a 
lot more about how these processes and procedures come together, it 
would, in or view, be premature to reach many conclusions.
    For our part, we are committed to ICANN's success. VeriSign is by 
far the largest contributor of funds to ICANN and I believe that we 
have voluntarily donated more money, above our dues, to ICANN than has 
anyone else. Recently, for example, we announced a new, $100,000 
matching donation to the ICANN Domain Names Supporting Organization 
that will help that ICANN body hire its own professional staff. We 
intend to do more and we do not intend to sit on the sidelines just 
watching to see if ICANN can become a success.
    Mr. Chairman, we thank you for your involvement in this important 
area and appreciate the Subcommittee's continued interest in ICANN. We 
look forward to the opportunity to work with both you and ICANN in 
helping move this organization forward to what we believe, and hope, 
will be a successful future.
    Thank you.

    Senator Burns. Thank you, Mr. Cochetti. We appreciate your 
testimony.
    Kenneth Hansen, Director, Corporate Development, NeuStar, 
Inc.

           STATEMENT OF KENNETH M. HANSEN, DIRECTOR, 
              CORPORATE DEVELOPMENT, NeuStar, INC.

    Mr. Hansen. Good morning, Mr. Chairman. My name is Ken 
Hansen. I am the Director of Corporate Development for NeuStar. 
I am a neutral third-party provider of clearinghouse and 
database administration services. NeuStar serves as a number 
plan administrator and local number portability administrator 
for North America.
    Our joint venture with Melbourne IT, a Melbourne, 
Australia-based provider of domain name services, was recently 
selected by ICANN to operate the registry for the top-level 
domain name .biz. During the application process, the joint 
venture was referred to as JVTeam, and is now known as 
NewLevel.
    I appreciate the opportunity to appear before the 
Subcommittee to discuss the ICANN selection process. NeuStar 
has been following the potential introduction of new TLDs and 
attending ICANN meetings for over 2 years prior to the issuance 
of the August 2000 RFP.
    NewLevel was one of the seven selected to operate 
registries for new top-level domains. The criteria and 
objectives utilized in the selection process represented the 
culmination of many years of well-publicized industry debate 
and consensus-building concerning the introduction of new top-
level domains, and were not solely the result of the recent 
ICANN process.
    Having been directly involved in over 100 requests for 
proposal processes during my 15 years in the communications 
industry, I can say with confidence in terms of openness and 
transparency that the manner in which ICANN conducted the 
application process far exceeds measures taken by private 
companies in conducting procurement activities for services of 
similar complexity.
    I would like to direct your attention to the attached 
exhibit, which contrasts these differences. Although the 
process was not perfect, the procurement was more open and 
transparent than most government procurements as well.
    It is important to note that it is the open and transparent 
nature of the ICANN process that invites public scrutiny and 
debate. Had the process not been quite so open, we might not 
even be here today. That is not to say that the bar should be 
lowered in that regard.
    The open process described in the exhibit represents a 
process in which all competitors had equal access to 
information and an equal opportunity to prepare their responses 
and compete with other applicants. We believe that the TLDs 
selected are a direct reflection of the situation criteria 
identified by ICANN and communicated to all applicants and the 
public in advance on the ICANN website.
    The criteria is as follows:
    Maintain the stability of the Internet, the number one 
priority.
    Demonstrate an effective proof of concept concerning the 
introduction of new top-level domains.
    Enhance competition for registry services.
    Enhance the utility of the Internet.
    Meet currently unmet needs.
    Enhance diversity of the Internet.
    Evaluate the delegation of policy formulation functions for 
special purpose TLDs.
    Ensure the appropriate protections of the rights of others, 
and require completeness of proposals.
    ICANN stated clearly its intent was to select a limited 
number of TLDs initially and to proceed carefully in order to 
ensure the stability of the Internet was maintained.
    In the new TLD application process overview, which was 
posted through the ICANN website, ICANN stated that, and I 
quote: it is anticipated that only a few of the applications 
that are received will be selected for further negotiations 
toward suitable contracts with ICANN.
    This statement was consistent with the resolution of the 
ICANN Board on new TLDs, in which the Board, quote, adopted the 
Names Council recommendation that a policy be established for 
the introduction of top-level domains in a measured and 
responsible manner.
    The selected TLDs were also consistent with ICANN's desire 
to create diversity. Specifically, ICANN stated that the 
diversity the proposal would bring to the program would be 
considered when selecting new TLDs.
    The criteria for assessing the TLD proposals document 
described in detail the elements of diversity that would be 
considered. Although some qualified TLDs were not selected for 
this very reason, ICANN made it clear that additional TLDs were 
likely to be introduced in the future.
    The ICANN process described above will create competition 
where none exists today. Competition will create new choices 
for individuals, organizations, and businesses in terms of name 
availability, pricing, and functionality. The ICANN evaluation 
criteria and objective in introducing new TLDs was the result 
of an open, public debate and widespread Internet community 
consensus. In other words, the market participants played a 
significant role in the creation of the ICANN process.
    Although it can be argued for subjective reasons that other 
selections would or would not have been optimal, the ICANN 
process resulted in TLD and registry operator selections that 
are consistent with the communicated criteria and objectives. 
It is therefore in the interests of the Internet community as a 
whole for the introduction of the selected new TLDs to proceed 
while other applicants who have chosen to do so make use of the 
ICANN request for consideration mechanism which appropriately 
supports such appeals.
    Thank you very much.
    [The prepared statement of Mr. Hansen follows:]
          Prepared Statement of Kenneth M. Hansen, Director, 
                  Corporate Development, NeuStar, Inc.
    Good morning, my name is Ken Hansen, and I am the Director of 
Corporate Development for NeuStar, Inc., a neutral third party provider 
of clearinghouse and database administration services. NeuStar serves 
as the Number Plan administrator and the Local Number Portability 
administrator for North America. Our joint venture with Melbourne IT, 
Ltd (MIT), a Melbourne, Australia-based provider of domain name 
services was recently selected by the Internet Corporation for Assigned 
Names and Numbers to operate the Registry for the Top-Level Domain Name 
``.biz''. During the application process the joint venture was referred 
to as ``JVTeam'' and is now known as ``NeuLevel.''
    I appreciate the opportunity to appear before the Subcommittee to 
discuss the ICANN selection process. NeuStar has been following the 
potential introduction of new TLDs and attending ICANN meetings for 
over 2 years prior to issuance of the August 2000 RFP.
    NeuLevel was one of seven selected to operate Registries for the 
new Top-Level Domains (TLDs). The criteria and objectives utilized in 
the selection process represented the culmination of many years of 
well-publicized industry debate and consensus-building concerning the 
introduction of new TLDs, and were not solely the result of the most 
recent ICANN application process.
    Having been directly involved in over one hundred Request for 
Proposal processes during my 15 years in the communications industry, I 
can say with confidence, in terms of openness and transparency that the 
manner in which ICANN conducted the application process far exceeds 
measures taken by private companies in conducting procurement 
activities for services of similar complexity. I would like to direct 
your attention to the attached exhibit, which contrasts these 
differences. Although the process was not perfect, the procurement was 
more open and transparent than most government procurements as well. It 
is important to note that it is the open and transparent nature of the 
ICANN process that invites public scrutiny and debate. Had the process 
not been quite so open, we might not be here today. That is not to say 
that the bar should be lowered in that regard.
    The open process described in the Exhibit represents a process in 
which all competitors had equal access to information, and an equal 
opportunity to prepare their responses and compete with other 
applicants. We believe that the TLDs selected are a direct reflection 
of the evaluation criteria identified by ICANN and communicated to all 
applicants and the public in advance on the ICANN website. The criteria 
is as follows:
     Maintain the stability of the Internet, the No. 1 
priority.
     Demonstrate an effective proof of concept concerning the 
introduction of new top level domains.
     Enhance competition for registry services.
     Enhance utility of the DNS.
     Meet currently unmet needs.
     Enhance diversity of the Internet.
     Evaluate the delegation of policy formulation functions 
for special purpose TLDs.
     Ensure the appropriate protections of the rights of 
others, and
     Require completeness of proposals.
    ICANN stated clearly that its intent was to select a limited number 
of new TLDs initially and to proceed carefully in order to ensure that 
the stability of the Internet was maintained. In the New TLD 
Application Process Overview  (which was posted to the ICANN website) 
ICANN stated that, ``It is anticipated that only a few of the 
applications that are received will be selected for further 
negotiations toward suitable contracts with ICANN.''
    This statement was consistent with the Resolution of the ICANN 
Board on New TLDs, in which the Board ``adopted the Names Council's 
recommendation that a policy be established for the introduction of new 
TLDs in a measured and responsible manner.''
    The selected TLDs are also consistent with ICANN's desire of 
creating diversity. Specifically, ICANN stated that, ``the diversity 
the proposal would bring to the program'' would be considered in 
selecting the new TLDs. The Criteria for Assessing TLD Proposals 
document described in detail the elements of diversity that would be 
considered. Although some qualified TLDs were not selected for this 
reason, ICANN made it clear that additional TLDs were likely to be 
introduced in the future.
    The ICANN process described above will create effective competition 
where none exists today. Competition will create new choices for 
individuals, organizations and businesses in terms of name 
availability, pricing and functionality.
    The ICANN evaluation criteria and objectives in introducing new 
TLDs were the result of an open public debate and widespread Internet 
community consensus. In other words, the market participants played a 
significant role in the creation of the ICANN process. Although it can 
be argued for subjective reasons that other selections would or would 
not have been optimal, the ICANN process resulted in TLD and Registry 
Operator selections that are consistent with the communicated criteria 
and objectives.
    It is, therefore, in the interest of the Internet community as a 
whole for the introduction of selected new TLDs to proceed while other 
applicants who have chosen to do so, make use of the ICANN Request for 
Reconsideration mechanism, which appropriately supports such appeals.
    I thank the subcommittee for giving me the opportunity to testify.

     Exhibit--Typical Private Company RFP Process vs. ICANN Process
------------------------------------------------------------------------
                                    Typical Private
                                      Company RFP
           Description               Process  (for       ICANN Process
                                  complex service or
                                        system)
------------------------------------------------------------------------
Announcement of RFP.............  Potential bidders   Notice posted to
                                   selected and        the Internet for
                                   notified            public  viewing.
                                   directly.
                                  No public notice..  Expressions of
                                                       interest
                                                       requested, but
                                                       not  required.
Who can submit a bid?...........  Limited number of   Any company
                                   selected            permitted to
                                   companies.          submit an
                                                       application.
                                  Those bidders the   Forty-seven
                                   company feels are   complete
                                    qualified and      applications
                                   can meet needs.     received.
                                  Number of bidders
                                   limited.
                                  Typically 3-5
                                   proposals
                                   accepted.
Publication of the RFP..........  Sent directly to    Posted to the
                                   limited number of   Internet for
                                   qualified bidders.  public viewing.
Public posting of proposals.....  None..............  Posted to the
                                                       Internet for
                                                       public viewing.
Confidential information........  Proposal            Posted to the
                                   considered          Internet for
                                   confidential        public viewing.
                                   document.
                                  Not to be           Confidential
                                   disclosed.          information not
                                                       to be considered
                                                       by evaluators.
Public comment..................  None..............  Comment forum on
                                                       the ICANN site.
                                                      Public able to
                                                       submit a
                                                       comments.
                                                      Applicants able to
                                                       comment on
                                                       competitors
                                                       proposals.
                                                      All comments
                                                       published on the
                                                       web for  viewing.
Questions concerning  responses.  Private             ICANN questions
                                   correspondence      and Applicant
                                   with bidders.       answers posted to
                                                       the ICANN site.
                                  Private meetings
                                   with bidders.
Evaluation results..............  Not shared with     Written evaluation
                                   the bidders or      posted to the web
                                   any outside party.  for viewing by
                                                       bidders and the
                                                       public.
                                  No opportunity to
                                   respond or
                                   comment.
Decisionmaking process..........  Private             Board deliberation
                                   decisionmaking      with access to
                                   process.            the public.
                                  No involvement or   Live broadcast on
                                   access by bidders.  the Internet.
                                                       Transcripts
                                                       published on
                                                       ICANN site.
Decision announcement...........  Bidders privately   Announced during
                                   notified by phone.  public meeting
                                                      Broadcast on the
                                                       Internet
                                                      Published on the
                                                       ICANN site.
------------------------------------------------------------------------


    Senator Burns. Thank you, Mr. Hansen.
    I want to go to Mr. Froomkin, since you were a little bit 
critical on the structure of ICANN. I keep going back to these 
domains, as you well know, and I still do not understand the 
process there. I just now got a copy of the memorandum.
    What would you propose that the action of Congress now--in 
light of this MOU, and in light of some complaints, and some 
being founded and some being theoretical, what would you 
propose?
    Mr. Froomkin. Well, I think, Senator, the most important 
issue is not setting a precedent by which a department, like 
the Department of Commerce, can really end run the 
Administrative Procedures Act.
    That is an issue that is frankly bigger than the Internet, 
and so the global concern here is not just in this process, and 
that if you accept that this is a way in which agencies can 
bypass ordinary procedures to create a privately organized 
regulator in all but name, that uses control over a federally-
dominated resource to make people sign contracts with it, pay 
it money, and do what it says, and then not be subject to due 
process, not be subject to ordinary court challenge, not be 
subject to ordinary oversight, that is really cutting Congress, 
and cutting the American people out of the regulatory process.
    So while in this case you might have got an outcome which 
was better than no decision at all--I have nothing against any 
of the winners here. I have no reason to believe any of them 
are bad, or imperfect, and for all I know we would be all 
better off if they were all put on the route, and lots of 
others, too--it seems to me there is a sort of good Government 
issue, to use the term, that is pretty serious here, and 
someone needs to hold Commerce's feet to the fire on that one.
    Senator Burns. Senator Boxer.
    Senator Boxer. Mr. Cartmell, I wanted to ask you about the 
way you conduct your business in one particular area, which is 
the ``WHOIS'' database, and I wanted to get your answer to it. 
The ``WHOIS'' database allows Internet users to type in a given 
domain name and receive contact information for the person or 
company that holds that domain name registration.
    A public web-based availability of ``WHOIS'' information, I 
believe, is critically important for intellectual property 
holders in investigating possible infringement of their 
trademark rights and copyrights as well as for law enforcement 
authorities that use ``WHOIS'' to investigate possible crimes.
    In addition, in my example that I held up before, we are 
able to find out the individual who did this, perpetrated this 
fraud on my colleague and on me, and so it is a help. Whether I 
can stop it is another question that we have to deal with, but 
I can find out.
    Now, further, ICANN's Uniform Dispute Resolution Policy is 
a convenient, low-cost procedure that resolves disputes arising 
from the bad faith registration of domain names, or cyber-
squatting. Now, I am concerned and troubled by the fact that 
.cc, a domain that markets itself as an alternative to .com, 
does not even have an adequate public ``WHOIS'' database. I am 
concerned that by failing to provide ``WHOIS'' information, .cc 
will become a haven for those who might wish to defraud my 
constituents, or a Senator's constituents here.
    I understand, in fact, that your company charges users up 
to $50 to obtain contact information for domain name registered 
in .cc. Further, I understand that .cc does not offer a 
convenient mechanism, such as UDRP, to settle cyber-squatting 
disputes. I hope I did not misstate this. This is the 
information that I have gotten, and I wonder if I am correct on 
this, if these facts are true. Could you explain why this is, 
and if you plan to implement what I would consider to be more 
responsible policies such as that of Mr. Cochetti's 
organization?
    Mr. Cartmell. Certainly, Senator. .cc ``WHOIS'' information 
is provided at a cost of around $15. The way we provide that 
information is via postal information to the requester, and at 
the same time we alert the registrant of the domain name that 
someone has requested that information and provide the 
registrant with the information of the requester. We do that so 
that we not only protect our customer database, but protect the 
identity of the user. It is available. Some people wish that 
information to be public, some do not, so the information is 
available.
    As far as the UDRP, we have not been required to sign on to 
that as we have no agreement with ICANN or any other 
organization that has come forward. We would be willing to 
enter into some sort of dispute resolution policy. My 
organization does not necessarily endorse the UDRP. It favors 
trademark holders over other holders, and supersedes our U.S. 
trademark laws.
    Under U.S. trademark, there are multiple holders of the 
same word mark under different categories, so there is not 
necessarily the same translation to the domain name system, so 
I think once ICANN stated that they would go back and 
investigate the UDRP and maybe further define it, we might be 
willing to accept it in the future.
    Senator Boxer. Well, I do not think it is right to have to 
spend $15 and wait to find out who is perhaps committing a 
crime.
    Mr. Cartmell. If law enforcement officers contact our 
organization, we provide that information to them at no charge.
    Senator Boxer. I do not mean just law enforcement and 
criminal activity, I mean a crime of someone stealing your 
identity or intellectual property.
    I come from a State where intellectual property is the same 
as any other property, so if you steal someone's car, that is a 
theft, and you would waive the $15. If you steal someone's idea 
you do not look at it the same way.
    Mr. Cochetti, could you comment on the policy of your 
company in terms of being able to find out very quickly, 
without a charge, who may be stealing your property?
    Mr. Cochetti. Yes, Senator Boxer. First, if I may comment 
on the issue you raised earlier, when your staff first notified 
us of a problem that had occurred, we investigated it and 
discovered that unfortunately it was not our--or fortunately--
it was not our registrar that was involved, but we have, as you 
may know, used our good offices to try to help resolve it.
    I think the answer you need to hear in problems like that, 
however, is not that somebody is using their good offices to 
help resolve it, because not everybody is a United States 
Senator, and not everybody gets that kind of assistance.
    The answer you need to hear is that this is the procedure 
you use and these are the rights that you have. You may win or 
lose, but you ought not hear someone say, gee, I never thought 
about that, and who cares, so we are working and would be happy 
to work with your staff to see if there is a long-term, fair 
and equitable way to deal with this question of individual 
names.
    On the question of intellectual property, and the misuse of 
intellectual property in domain name registrations, we, of 
course, are full participants in and are pleased to say that we 
helped design the UDRP and have been fully supportive of it.
    The VeriSign registry today supports about 30 million 
``WHOIS'' inquiries each day. In other words, each registrar 
where somebody is doing a ``WHOIS'' inquiry routes it to the 
VeriSign registry, and we support them.
    The NSI registrar fully supports and complies with the 
procedures of the UDRP, which is to say, if a claim is made and 
referred to arbitration, the arbitrator makes a decision in a 
relatively short time, renders that decision back to the 
registrar, and if we are the registrar it is implemented by the 
registrar swiftly.
    We think this is a reasonable and fair way to deal with the 
question, because the criteria that the arbitration uses is, 
does the registrant have any rights to the name, or is it a 
situation where they simply do not have rights to it, and so we 
are supporters of and help design the UDRP and are interested 
and willing to sort of work in ways to improve both it and 
other rights of protection on the domain name system.
    Senator Boxer. Well, Mr. Cartmell, do you make a lot of 
money from charging the $15?
    Mr. Cartmell. No, we do not.
    Senator Boxer. Then do not charge it.
    [Laughter.]
    Senator Boxer. If this is not a big money-maker deal for 
you, then you could do a lot better with your public relations, 
at least from my standpoint, if the service was offered at no 
charge. I do not speak for anyone else, but it just seems to me 
to be wrong if somebody--and especially when you get into a 
State where you think someone is stealing your property, you 
want to know who the heck is that person, and now you have to 
send money and a credit card. How long does it take you before 
you get the $15? How do you do that?
    Mr. Cartmell. It is online, so we accept credit card 
payment, and then immediately that same day the information is 
sent out via U.S. postal. The reason we have implemented this 
is because we are a relatively new registry, and the ``WHOIS'' 
information was never publicized or published on our site. We 
have consumers that are concerned about their own privacy and 
being released. In addition to that, we feel that we have some 
intellectual property rights of our customer database itself, 
and do not generally have to provide our customer database to 
the public.
    Senator Boxer. So your people are concerned about privacy, 
but you sell their privacy for $15? Either you protect their 
privacy, or you do not protect their privacy.
    Mr. Cartmell. At the time of the request of the ``WHOIS'' 
information they also receive the information of the person who 
requested their information, so they knew who has received 
their private information.
    Senator Boxer. So you do not respect anybody's privacy in 
the end. I just do not get it, and also you are now going to 
send this information via snail mail, so you are not sending it 
that fast. It just seems to me that when I look at Mr. 
Cochetti's policy there, it just seems like the right thing.
    If somebody is going up on the Internet, they have got to 
know they are going up on the Internet. People are going to 
want to know who they are. If you do not want to have people 
know who you are, do not go up on the Internet. It is pretty 
simple.
    Believe me, I want to protect what people do once they are 
up on the Internet, but the bottom line is, if they are taking 
a site and somebody thinks they are stealing their intellectual 
property, I think that person ought to be able to know who it 
is.
    Mr. Froomkin, you wanted to comment.
    Mr. Froomkin. Yes. Thank you, Senator. You made a lot of 
valid points. I just wanted to point out some of the reasons 
that the other version of the policy makes some sense, the 
version which does not automatically release information online 
about registrants.
    Senator Boxer. In other words, Mr. Cartmell's?
    Mr. Froomkin. Or something like it. I am not going to go 
into the $15 issue, and I know of at least two cases of people 
who were stalked who had home offices and who gave their home 
address in the ``WHOIS'' and were stalked as a result of that 
information being public, so I think people do have some 
legitimate reasons to not want it to be automatically available 
to everybody and to want to delay to know who is asking so they 
can take the appropriate safety measures if necessary.
    The second is, when you say people ought to know if you are 
online it is publicly available, I do not think people say that 
about unlisted phone numbers, and I always think of the 
Internet as being a lot like telephone, so I wonder if people 
really ought to know just as a condition to having a domain 
name you need to make your address and phone number available 
for every marketer and spammer and phone salesperson out there 
in the world. I am not sure I am entirely comfortable with 
that.
    Senator Boxer. You are saying if someone goes up on the 
Internet and they steal your property, you should not ever be 
able to find out who they are?
    Mr. Froomkin. There should be a way. I said it does not 
necessarily have to be instant and automatically available.
    Maybe you ought to write a letter that says who you are and 
why you are asking. Maybe that is not asking too much. What I 
am concerned about is the spillover effects of making it 
automatic and easy is there are other people who you do not 
necessarily want to have that information also get it. I think 
your points are absolutely valid, of course.
    Senator Boxer. Mr. Cochetti, how do you respond to that? 
Have you had problems of stalking and so forth?
    Mr. Cochetti. Senator, I honestly do not know the answer to 
whether we have had experienced problems with stalking. It is 
obvious to us, though, that there is an important need not just 
for trademark holders, by the way, but for law enforcement and 
network operators to have access to registration information.
    What we do today is provide that instantaneously and, by 
the way, one of the issues that I think the colloquy that just 
took place sort of highlights that has not been paid attention 
to is that doing this is not easy and not inexpensive. 30 
million inquiries a day is a substantial expense and a 
substantial operational burden for anyone to carry, but we do 
it because we think there is an important need among trademark 
holders, among law enforcement and among network operators to 
get this information.
    Senator Boxer. But you do not necessarily have to put your 
home phone number there, do you?
    Mr. Cochetti. The registration information requests 
telephone numbers as well as address.
    Senator Boxer. For your home phone?
    Mr. Cochetti. It is not home telephone. It is the 
registrant's information.
    Senator Boxer. That is a legitimate concern that Mr. 
Froomkin raises, but I do not think you necessarily should have 
to put a home phone and a home address. You could put your 
business, which you would do in any event.
    In any case, those are my questions. Thank you.
    Senator Burns. I have a feeling we are just touching the 
tip of the iceberg in this discussion here today, and this is 
going to go much further.
    I have got just a crazy question, Mr. Cartmell. What do you 
think has taken so long for this thing to finally bubble up in 
Washington, DC.?
    Mr. Cartmell. That is an interesting question. I think the 
public's perception that ICANN was a de facto organization that 
was given the powers and everyone just accepted it.
    Recently even Microsoft, when their DNS went out a few 
weeks ago, blamed ICANN for the situation, even though ICANN is 
not running the route server system today.
    Senator Burns. And Mr. Froomkin, with your question from 
Senator Boxer and the way you answered it, it boils down to who 
should ultimately control the route server. In your opinion, 
who should control that?
    Mr. Froomkin. Right now, Senator, that is a terribly hard 
question, of course. You asked the perfect question.
    Right now, the U.S. Government has de facto control. I have 
to confess, and it is not politically correct to say this and 
my European friends do not like to hear it. At the moment, I am 
more comfortable with the U.S. Government, with its 
constitutional guarantees of due process, First Amendment 
rights, and fair play, than I am with some sort of 
international organization.
    My experience with international organizations has been 
they are not representative. They are not democratic. 
Representatives of democracies have to negotiate with 
representatives of despots, so that although there is a great 
imperfection, and to some extent, understandably in the eyes of 
the Europeans, unfairness at having ultimate control being in 
the U.S., it seems to me that ultimately, in the short term at 
least, gives us the kind of democratic and fair play guarantees 
we need.
    So until ICANN demonstrates that it can narrow its 
jurisdiction to truly technical matters, I guess I kind of like 
the status quo.
    Senator Burns. You described somewhat of an alternative 
approach involving a draft system, involving numerous interest 
groups to create new top-level domain names. Would you 
recommend legislation and, if so, I guess should we be 
clarifying some of these ares like due process and this type of 
thing, and Mr. Hansen, would you like to comment on that? You 
have got a very positive statement on that, and maybe both of 
you, and anybody could comment on that.
    Mr. Hansen. Well, the positive nature of my comments has to 
do with the open and transparent manner in which the selection 
process was carried out. I think that we are here today, and 
the question was asked why did this take so long to bubble up 
and become the topic of discussion here.
    Well, the selection process itself, and the open and 
transparent manner in which it was conducted leads to public 
scrutiny, which I assume landed us here today, and rightly so 
for those with concerns and questions, to hear those concerns 
discussed.
    Senator Burns. Do you want to address the initial question 
of legislation?
    Mr. Froomkin. Senator, I think that ICANN could choose to 
do it itself, in which case that would short-circuit the 
question, but if it did not, then I think it would be 
appropriate to consider legislation authorizing the appropriate 
rulemaking by Commerce, or whoever, to create such a system in 
which it would be truly international, open-ended, and let 
policy be made.
    I mean, the critical point to satisfy international 
concerns is not all the choices be made in one country. You 
distribute the policymaking choices around the world. We make 
some here, they make some there, and you just keep the master 
list at ICANN to prevent the collisions that the technical 
people are worried about.
    Senator Burns. Mr. Cartmell, why are you so opposed to the 
transfer of the authority of the route server to ICANN?
    Mr. Cartmell. I am not necessarily opposed.
    Senator Burns. And what is your worst-case scenario? Give 
me something that us fourth graders can understand here.
    Mr. Cartmell. I am not necessarily opposed to the transfer 
of the route service system to ICANN. I think it is premature, 
the transfer to ICANN, at this time. The worst-case possible 
scenario is simply the Internet domain name system does not 
function any longer. You go to your computer and type in www 
some address, and it does not go anywhere. That would be the 
worst-case possible scenario.
    Senator Burns. I have that problem now.
    [Laughter.]
    Senator Burns. But I do not spell too good, either.
    [Laughter.]
    Senator Burns. We can leave it there.
    Senator Boxer, do you have any more questions?
    Senator Boxer. I have so many, and I am like you, I am just 
sort of feeling my way.
    Mr. Froomkin, on the issue of the Government taking over 
some more responsibilities, you have mentioned the 
international community. It is my understanding, and correct me 
if I am wrong, that the international community has stated that 
it would prefer an independent non-profit group to do that, and 
so you have sort of answered that in your first comment by 
saying, well, if we--the American Government--just did XY&Z, 
and another government did AB&C, and another did DE&F, but it 
is my sense that there is an expectation that we would have 
this non-profit, independent agency.
    Am I wrong on that? Would that not cause an outcry if we, 
let us say, introduced legislation to take the responsibility 
of ICANN and take it back into the Government?
    Mr. Froomkin. Senator, I was told you must never tell a 
Senator they are wrong.
    Senator Boxer. No, I appreciate your candor, because I 
would be the first to tell you if I thought you were wrong.
    Mr. Froomkin. This is not about the Government taking over 
something, because the Government has it now. It has it now, so 
it has got it.
    Senator Boxer. But the managing of it.
    Mr. Froomkin. Effectively it has the power over that, too, 
because it keeps ICANN on such a short leash and tells it what 
to do.
    Now, you are absolutely correct to say that a lot of our 
allies have bought into the ICANN idea as a way of distancing 
the U.S. Government, so you have got two different tracks. One 
is the domestic U.S. law consequences of the jerry-rigged 
system they built to try to do that, and the other is, how you 
sort of honor----
    Senator Boxer. Jerry-rigged meaning?
    Mr. Froomkin. The system where Commerce enters into all 
these peculiar agreements with ICANN, supervises, nudges and 
winks, gets a letter asking--you know, it is going to get a 
letter in a few months saying, here are the names you would 
like entered in the route. It has to decide what kind of 
process it does, or if it just rubber-stamps. These are not 
under the Administrative Processes Act.
    Senator Boxer. Do you think we ought to look at that? Do 
you think Senator Burns ought to call a hearing and look at 
that relationship and how it works?
    Mr. Froomkin. I do.
    Senator Boxer. So to make it more transparent, to make it 
more transparent?
    Mr. Froomkin. That was really the point of my statement.
    Senator Burns. Mr. Hansen, do you want to comment on that?
    Mr. Hansen. Yes. Let me just make a statement concerning 
whether legislation is required. I believe legislation at this 
point would be a mistake.
    Senator Boxer. I did not say a legislation. I said a 
hearing to look at the relationship, but go ahead.
    Mr. Hansen. Well, I am certainly in favor of hearings, and 
today's hearing has already, I am sure, enlightened a number of 
people concerning the issues, but the ICANN itself, as Mike 
Roberts pointed out earlier, is somewhat of an experiment. It 
is a 14-month-old experiment.
    There have been significant accomplishments, I think more 
good done than harm done by ICANN in the 14 months it has been 
operational, things like the UDRP for dispute resolution, the 
introduction of competition for registrars. It is new, so it 
has not been perfect. It needs to be given an opportunity to 
work, and hearings like this one and other oversight hearings 
are the appropriate mechanism to support the continued 
internationalization of the Internet and the continued support 
for grassroots consensus policymaking and operation of the DNS.
    Senator Burns. I think I agree with that statement in some 
areas, because when we start dealing with legislation on this 
thing it has been the result of the past. We have not helped 
the situation for it to grow and to let it become an even 
larger part of our life than it already is. I have got a couple 
of other questions.
    I think we are going to have another hearing on this, 
because there are questions out there yet, and once we have 
gone through your information and the testimony that we have 
heard here today--I am concerned about redress and due process. 
I am concerned, and I want to go through this MOU so that I am 
a little more enlightened on the situation between Commerce, 
and was that transfer made? Was it made legal?
    Maybe we might do it that way, not necessarily getting into 
the operation of ICANN, but let us make sure that the parties 
understand that it is laid out a little bit better where there 
is due process and some of those things I think are important 
in the business world. Before the technology can reach its full 
potential, I think the users have to be confident that they are 
being protected.
    Mr. Cochetti, you had a comment?
    Mr. Cochetti. Thank you, Mr. Chairman. I did want to lend 
one comment to the discussion that took place a moment ago, 
which is to say that as I indicated in my testimony we view 
ICANN as an experiment that is in its early stages. We have 
taken no issue with the procedures used by the Commerce 
Department. They were investigated by the GAO. We found nothing 
constitutionally wrong with them.
    On the other hand, a great deal depends on how the 
organization develops, and we are at such an early stage in 
sort of evaluating that that we find it very difficult to say 
conclusively it has been a success or it has been a failure. A 
lot depends on how this organization evolves over time.
    Thank you.
    Senator Burns. Any other comments?
    Senator Boxer. Yes. I just want to make a couple of closing 
comments. I again want to thank you. This is a learning 
experience for some of us, and I have learned a lot.
    Mr. Chairman, I would like to tell you just a couple of 
things that I hope you can continue to lead us on. One is the 
relationship between Commerce and ICANN. I think it would be 
good. I do not know much about how it actually works.
    I think it would be helpful--I am a believer, and I know 
you are, in transparency and openness, and I have some concerns 
about that, and there may be some reasons why we may not be 
seeing this openness, or maybe those claims that it is closed 
are exaggerated. I think I need to know more. I cannot make a 
conclusion.
    I continue to be concerned about the ability to protect 
identities and to protect intellectual property rights. I do 
not want to do a thing that is going to in any way dampen this 
whole arena, because sometimes we put our hands on it and 
stifle it, and that is certainly not what I want, nor is it 
what my people in California want. I think I need to know more, 
so I want to just close by thanking you for this. You can see 
by the attendance it is not an area that people say, this is 
the most exciting thing we have ever dealt with, but in 
essence, it is the future.
    I also wanted to say thank you for your choice of 
witnesses, because I think every one of them has really added 
on both sides. I look forward to future hearings and getting to 
be a little more knowledgeable so I can be more helpful than I 
can be at this point.
    Senator Burns. Well, I think you are exactly right, it is a 
continuing education, and I wish I had had the opportunity to 
visit with John Postale, who was really the man with the 
vision, I think, of what he wanted to happen, and I wish I had 
had that opportunity. We do not, however, as he has gone to a 
bigger Internet, so to speak.
    I want to thank you for the expertise you have brought to 
the table. We are going to continue to interact with you as we 
have questions. I know we will have some more, and we are going 
to leave the record open for a couple more weeks if you have 
comments that you have heard here that you want to comment on 
to enlighten us, because we are looking for information, and we 
know that there are some serious doubts out there and, like I 
say, oversight is to bring problems to the table and solve 
those problems before they become so large and impossible that 
we cannot solve them.
    So I appreciate that very much. This afternoon at 5 p.m. 
you are all invited to the Internet Caucus under Senator Leahy, 
and we will welcome the new Chairman of the FCC this afternoon. 
He will speak around 5:30. That is up in Hart 902, upstairs, 
those of you who would want to, and that is a very active 
caucus, by the way, and I am glad we have enjoyed the 
leadership of Senator Leahy and several other folks here in the 
Senate, and that was put together for continuing education on 
the things that are happening on the Internet, and items just 
such as this that I think are terribly important to the 
American people.
    So thank you again, and this hearing is closed.
    [Whereupon, at 11:25 a.m., the hearing was adjourned.]
                            A P P E N D I X

            Prepared Statement of Elana Broitman, Director, 
                Policy and Public Affairs, register.com
                              introduction
    Mr. Chairman, Members of the Committee, Thank you for inviting me 
to appear before you today. I commend the Committee for holding this 
hearing. Your role is important to continuing the stability and 
innovative growth of the Internet.
    I am here representing register.com, an equity partner in 
RegistryPro. RegistryPro, as you know, is one of the new registries 
that was selected by the Internet Corporation for Assigned Names and 
Numbers (ICANN) to operate a new global Top Level Domain (TLD).\1\ 
RegistryPro is a new company formed by register.com, one of the leading 
registrars on the Internet today, and Virtual Internet Ltd, a top 
European registrar.
---------------------------------------------------------------------------
    \1\ A TLD is the domain name address, such as .com, .net, and .org. 
The new TLDs would be .pro, .info, .biz, .name, .aero, .museum, and 
.coop.
---------------------------------------------------------------------------
    I am here to provide the perspective of a company that was awarded 
a new TLD, .pro. Building on the restricted model of .gov, .edu, and 
.mil, the .pro TLD focuses on professional registrants--such as 
doctors, lawyers, and accountants. I can also offer the perspective of 
a registrar. Based on our 2 years' experience, register.com believes 
consumers will benefit significantly from the introduction of new TLDs.
                           industry overview
    To fully answer the question about the new TLDs, please allow me to 
briefly review the structure and growth of the domain name market.
    Securing a domain name, or Internet address, is the first and 
fundamental step for businesses, individuals, and organizations that 
are building a presence on the web. Before setting up a website or 
launching e-commerce, a consumer contacts a registrar, such as 
register.com, to secure a domain name, such as www.house.gov. 
Registrars maintain contact with the consumer, invoice the customer, 
handle all customer services, and act as the technical interface to the 
registry on behalf of the customer.
    A registry, such as VeriSign Global Registry Services for .com, 
.net and .org, maintains the list of available domain names within its 
TLD and allocates those names on a first-come, first-served basis. 
Registrars get the domain names for the consumer by purchasing them 
from the registry that manages that TLD.
    As this Committee knows, the Internet, and the domain name market 
in particular, has grown and expanded at a rapid pace. From 1993 to as 
recently as 2 years ago, a single company, Network Solutions (``NSI''), 
today owned by VeriSign, was both the only registry and the sole 
registrar for .com, .net, and .org TLDs. Presently, these TLDs are the 
only globally available generic domain addresses.
    In determining the best manner to introduce competition and oversee 
the domain name system, the Department of Commerce called for the 
creation of a not-for-profit corporation. ICANN was recognized to fill 
that role.
    To introduce competition, ICANN has taken two major steps. First in 
April 1999, ICANN launched a test bed of five registrars. Register.com 
was the first registrar to go ``live'' and register .com, .net, and 
.org names. Although NETWORK SOLUTIONS remained the sole registry for 
the com, .net, and .org TLDs, today there are over 140 accredited 
registrars. Consumers have benefited from the competition in prices and 
services.
    In November 2000, ICANN took the second step toward competition by 
approving the introduction of seven new global TLDs to generate 
competition in the registry business. RegistryPro was selected to 
manage the .pro TLD, which is restricted to the professional business 
sector. Other new TLDs include unrestricted, personal, and non-profit 
domain name sectors.
    The domain name market has grown to about 29 million .com, .net, 
and .org domain names, and growth has increased dramatically since the 
days that Network Solutions was the sole registrar, from 8-9 million in 
1999, to more than 20 million in 2000, the first full year of 
competition. This market is projected to grow to over 140 million 
registrations over the next 4 years. This growth is fundamental not 
only to the health and competitiveness of the registrar business 
community, but the introduction of new TLDs will also expand the 
opportunity for other Internet-related businesses.
                      competition among registries
    This Committee has endorsed competition in this sector, knowing 
that it would deliver value to consumers. It has been proven right. 
Competition among registrars has improved technology and customer 
support, introduced price competition, and fostered innovative new 
products to better serve the needs of domain name holders and Internet 
businesses.
    Competition among registries will similarly deliver value. First, 
consumers will have a choice among competitive TLDs and registries, 
leading to improved services. For example, alternative registries may 
accelerate the launch of websites and make them more secure. Second, 
consumers can register for the web address of their choice, as the best 
addresses, in many cases, are already taken in the .com, .net and .org 
TLDs. Third, consumers will be able to distinguish their web address 
based on the TLD they chose--we believe, for example, lawyers would 
prefer .law.pro and accountants, .cpa.pro.
    Conversely, delay in launching new TLDs serves to protect the sole 
global TLD registry and deny consumer choice.
                    do not delay launch of new tlds
    While registry competition will not exist until these new TLDs are 
operational, this will take months of preparation and significant 
resources. Substantial technological facilities must be built, 
engineering protocols and software applications written and tested, and 
highly skilled personnel located and retained. In fact, substantial 
resources have already been spent and committed--both during the 
application process and since then.
    Not only is competition going to improve the registry sector, it is 
fundamental to future innovation. New technology is on its way--if new 
registries are not introduced rapidly, there will be only one company 
in a position to operate the new technologies and determine the course 
of their evolution. For example, VeriSign launched the worldwide test 
beds with respect to two recent developments--multilingual domain 
names, and eNUM, a convergence of telephony and domain names. There 
were no other competitive registries in place to create an alternative 
environment.
    Moving expeditiously to add these new TLDs to the domain name 
system is critical.
               registrypro's experience with the process
    As for the process, we believe it achieved the fundamental goals of 
determining whether an applicant had what it takes to run a successful 
TLD, and balancing the interest in new TLDs with the imperative to 
preserve the stability of the Internet.
    While notice of its plans to authorize competitor registries has 
been publicly available for about 2 years, ICANN posted a set of 
criteria for assessing new TLD proposals on August 15, 2000:
    1. The need to maintain the Internet's stability. ICANN analyzed: 
(a) the prospects for the continued and unimpaired operation of the 
TLD; (b) provisions to minimize unscheduled outages due to technical 
failures or malicious activity of others; (c) provisions to ensure 
consistent compliance with technical requirements; (d) the effect of 
the new TLD on the operation of the DNS and the root-server system; (e) 
measures to promote rapid correction of potential technical 
difficulties; (f) the protection of domain name holders from the 
effects of registry or registration system failure; and (g) provisions 
for orderly and reliable assignment of domain names during the initial 
period of TLD operation.
    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. Proposals were to be examined for their ability 
to promote effective evaluation of: (a) the feasibility and utility of 
different types of new TLDs; (b) the effectiveness of different 
procedures for launching new TLDs; (c) different policies under which 
the TLDs can be administered in the longer term, different operational 
models for the registry and registrar functions; (d) different business 
and economic models under which TLDs can be operated; (e) the market 
demand for different types of TLDs and DNS services; and (f) different 
institutional structures for the formulation of registration and 
operation policies within the TLD.
    3. The enhancement of competition for registration services. ICANN 
noted that though the market will be the ultimate arbiter of 
competitive merit, the proposals were to be evaluated with regard to 
whether they enhanced the general goal of competition at both the 
registry and registrar levels.
    4. The enhancement of the utility of DNS. Under this factor, TLDs 
were to be evaluated as to whether they added to the existing DNS 
hierarchy without adding confusion. For example does the TLD's name 
suggest its purpose, or in the case of a restricted TLD, would the 
restriction assist users in remembering or locating domain names within 
the TLD?
    5. The extent to which the proposal would meet previously unmet 
needs. Close examination was to be given to whether submitted proposals 
exhibit a well-conceived plan, backed by sufficient resources, to meet 
presently 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.
    7. The evaluation of delegation of policy-formulation functions for 
special-purpose TLDs to appropriate organizations.
    8. Appropriate protections of rights of others in connection with 
the operation of the TLD. The types of protections that an application 
was to address included: (a) A plan for allocation of names during the 
startup phase of the TLD; (b) A reasonably accessible and efficient 
mechanism for resolving domain-name disputes; (c) Intellectual property 
or other protections for third-party interests; (d) Adequate provision 
for Whois service that balances personal privacy and public access to 
information regarding domain-name registrations; and (e) Policies to 
discourage abusive registration practices.
                   registrypro met icann requirements
    We worked hard to meet these requirements. We prepared a detailed 
description of innovative state-of-the-art technology, which would 
enhance the usefulness and dependability of the .pro websites. The 
RegistryPro technology would: Allow for near real time posting of 
websites (as opposed to today's 48-hour waiting period); Diminish the 
potential for system crashes; Protect consumers against potential 
registrar failures; and Provide better tools to protect against 
potential cyber squatters or professional imposters.
    We proposed an innovative TLD that would add diversity to the 
current domain name space and address the needs of the marketplace. 
Based on our surveys of consumers and professionals, we determined that 
consumers were looking for a trusted way to identify professionals on 
the Internet, and professionals would be more inclined to register 
domain names if they had a designated address.
    In devising that trusted addressing system, we have reached out to 
professional associations, to work out the mechanisms for verifying 
professional credentials.
    We also outlined a set of policies to address the needs of various 
constituencies. We balanced intellectual property protections, which 
earned us one of the highest ratings by the intellectual property 
constituency, with personal privacy concerns. We also guaranteed a 
level playing field for all accredited registrars.
    We invested hundreds of thousands of dollars--including in market 
research, legal drafting, and financial analysis--to prepare the 
application. The build out and operation of a stable and secure 
registry requires a commitment of millions more.
    We believe that our application, like others, received substantial 
scrutiny--by the independent panels of international experts in 
technology, law and finance; by ICANN staff, by the public during 
several public comment periods; and ultimately by significant 
independent deliberation by the ICANN Board. There was an opportunity 
for applicants to clarify their documents, on the public record. While 
no process is perfect, we believe a genuine effort was made by ICANN to 
provide notice, transparency and due process.
                       ultimate goal accomplished
    ICANN accomplished the ultimate goal of launching new global TLDs 
while protecting the security of the Internet. These new TLDs offer a 
variety of business models and domain name addresses--from generic to 
non-profit. Incremental growth will protect stability and pave the way 
for future development.
    As the Chairman had noted in the last hearing on this topic, ICANN 
is responsible for introducing competition into the registration of 
domain names. We hope that the Committee's conclusion today is an 
endorsement of an expeditious launch of these new TLDs, so that 
consumers can benefit from the resulting innovation and the 
availability of new domain names.
    Mr. Chairman, Members of the Committee--it has been my pleasure to 
testify today. Thank you for the opportunity.
                                 ______
                                 
                                               RegistryPro,
                                                     Feb. 16, 2001.
Hon. Barbara Boxer,
Hart Senate Office Building, Washington, DC
    Dear Senator Boxer, Please allow us to congratulate you on your 
joining the Senate Communications Subcommittee and to commend you on 
the Subcommittee's informative hearing on ICANN Governance on February 
14, 2001.
    Among your remarks and questions at the hearing, you made some very 
astute observations regarding protection of intellectual property 
rights (IPR) by the new registries. We appreciate your citing .pro, the 
top level domain awarded to RegistryPro, as a positive example of IPR 
protection and wanted to supplement your remarks on this issue.
    RegistryPro's mission is to create a reliable, sustainable registry 
for professionals, such as doctors, accountants, and lawyers. With the 
proliferation of Internet usage, consumers are experiencing increasing 
levels of uncertainty on the Internet, particularly in searching for 
legitimate professional sites. By coupling concrete registration 
qualifications with authentication, and working with professional 
associations, RegistryPro would establish a verifiable global directory 
on professional websites. In addition, RegistryPro will focus on 
providing reliable and robust technology, which will not only improve 
the service available via .pro, but also raise the standards of 
reliability, responsiveness and world-class intellectual property 
protections for all registries.
    For further detail regarding intellectual property policies in the 
.pro domain, we respectfully request that you would insert in the 
record a description of RegistryPro's IPR protection policies.
    Please let us know if we can provide you or your staff with any 
additional information or clarification about RegistryPro and the pro 
top level domain.
            Best regards,
                                                    Elana Broitman.
                                 ______
                                 
            registrypro's intellectual property protections
    RegistryPro is committed to protecting intellectual property 
rights.
    Restricted Class. By its very nature, .pro will provide fewer 
opportunities for cyber-squatting.
    First, it would be restricted, and thus impose an additional screen 
against potential cyber-squatters.
    Second, a significant percentage of .pro websites would be used by 
professional individuals, who do not trademark their names.
    Third, the target business sector is a trusted professional class, 
members of which are subject to professional ethics standards and are 
far less likely to engage in cyber-squatting, particularly as they 
would not want to compromise their professional relationships and 
reputations.
    UDRP. The Uniform Dispute Resolution Policy (UDRP) will fully apply 
to this registry and registrars will have to comply with the UDRP and 
all applicable laws of their respective jurisdictions.
    Sunrise Protection. RegistryPro adopted the IP Constituency's 
proposal for a sunrise period. Holders of trademarks and service marks 
having been registered prior to the creation of .pro will be able to 
pre-register their marks as a domain name in the .pro suffix.
    Moreover, the requirement that the sunrise registrants also qualify 
as professionals would further screen out cyber-squatters.
    The registry would set up an enforcement mechanism to ensure that 
the pre-registration period is used only for trademark protection: 
Registrants would be required to provide the registration number, date, 
and jurisdiction for their trade or service mark. In order to limit 
cyber-squatters and any abuse of this sunrise period, there will be an 
opportunity to challenge the registrations through the UDRP.
    Centralized WHOIS. Additionally, the complete domain name records 
of all .pro registrants will be housed at the registry level, rather 
than scattered among various registrants, as is the case today in .com. 
IPR owners could turn to a single place to police and protect their 
rights.
    Enhanced Searchability. To support intellectual property holders' 
ability to defend their rights, RegistryPro would build the capability 
to make certain information accessible via searches by appropriate 
parties. At the same time, the registry must respect the different 
jurisdictions' laws and regulations, such as those protecting data 
privacy. Therefore, the search capability would be focused to 
accommodate legitimate interests, such of intellectual property holders 
and law enforcement, while protecting consumers from misuse of their 
data.
    Best Practices for Registrars. RegistryPro would require all 
registrars to agree to the registry policies and to comply with ICANN 
policies in order to participate in the .pro TLD. Compliance with the 
terms and conditions of the registry-registrar agreement will be 
enforced via a trusted independent arbitration mechanism, including the 
providers approved to provide UDRP services.
                               __________
            Prepared Statement of Leah Gallegos, President, 
                       AtlanticRoot Network, Inc.
                          summary of testimony
    The public has demanded, and the government has recognized, the 
need for more Top Level Domains (TLDs) to be entered into the USG root 
that is controlled by the Department of Commerce (DoC). ICANN has been 
tasked with determining which TLDs should be chosen. Unfortunately, 
their process for making the determination has been discriminatory and 
damaging to our small business that is dependent upon domain name 
registrations in our TLD. ICANN's apparent choice is to refuse 
acknowledgment of our legitimate business and usurp our product, the 
dot BIZ TLD, thus duplicating it and creating chaos. ICANN refuses to 
acknowledge any entity outside its own framework, creating a platform 
from which to rule the Internet and crush a free market industry in its 
infancy. If ICANN succeeds now, it portends the destruction of more 
such businesses in the future.
    In addition, ICANN has ventured well beyond its scope of a 
technical administration body for the DNS and has attempted to become a 
world governing body for the Internet.
                        main points of testimony
    1. ICANN fails to acknowledge legitimate businesses of TLDs and 
root systems existing outside its framework.
    a. They claim separate name space when DNS is ONE name space, and 
use it as an excuse to usurp our product.
    2. ICANN has chosen to co-opt our product and award it to a 
competitor.
    3. ICANN ignored dot BIZ while recognizing the pre-existence of dot 
WEB.
    4. ICANN's application process discriminates against small business 
and non-profits.
    5. ICANN's duplication of pre-existing TLDs now will open the door 
to do even more harm to business.
    6. ICANN has violated its agreement with the government that 
mandates they will not do harm to existing entities.
    7. ICANN's Board of Directors still consists mainly of the original 
interim Board which was to have been replaced by an elected Board 
within months of its creation.
    8. ICANN is supposed to be a bottom-up, open and transparent 
organization. It is not. The evaluation of applications for new TLDs is 
a prime example.
                               testimony
    My name is Leah Gallegos, President of AtlanticRoot Network, Inc. 
(ARNI) The BIZ TLD Registry is an entity of AtlanticRoot Network, Inc. 
I am the manager of the dot BIZ TLD. This Top Level Domain resolves in 
several of the ``inclusive name space'' roots, which many people refer 
to as alternative or alternate roots. The inclusive name space roots 
are root server systems that operate in the same manner, but 
independently of the DoC root system (the ``USG'' root hereinafter). 
They each have a master root server and a group of slave servers which 
obtain Information from their master. Each root also includes all the 
TLDs found in the USG root for the benefit of users and also additional 
TLDs. Users have the choice of ``pointing'' their computers to any of 
the roots, and Internet Service Providers (ISPs) have the same choice. 
There has been dramatic growth in the number of ISPs and users pointing 
to the inclusive name space roots in order to see the rest of the 
Internet. (See Exhibit C, Page 8 of this document)
    As a citizen of this country, I am fortunate to be able to defend 
my right to have a small business and to not have my product taken away 
from me arbitrarily by a covetous entity under agreement with the 
government. I thank this Subcommittee for providing a forum to present 
our reasons for believing that ICANN's process for selecting new TLDs 
to enter into the USG root is detrimental to our survival and to the 
continued survival of all the TLDs outside the auspices of ICANN.
    ICANN has selected seven TLD strings to enter into the USG root 
that is controlled by the Department of Commerce. The process used for 
this selection was ill advised, badly handled and ignored the very 
premise for which ICANN was established--to preserve the stability of 
the Internet and do no harm to existing entities.
    How can fair competition be accomplished with ICANN's co-opting of 
dot BIZ from ARNI, thus ``taking away'' its product? Under ICANN's 
policy, a competitor can pay a $50,000 fee to have ICANN ``take away'' 
our business, or any other, at their whim.
    As I said earlier, ARNI is a small company. Our entire business at 
this time is based upon domain name registrations. With the 
announcement by ICANN that dot BIZ was to be handed over to JVTeam, e-
mail began pouring in asking if we were going to be closed by ICANN or 
if ICANN was going to take our TLD. Others asked if there were going to 
be duplicates of each name and who would be the legitimate registrants. 
Even more asked if their names would even resolve if ICANN ``took'' the 
TLD. The public has indicated that they are afraid now to register 
names with us and we are losing business merely on the mistaken 
assumption that ICANN has the right to take it from us.
    Why didn't we opt for the $50,000 application to be included in the 
ICANN process? We have been asked that question many times. There are 
several reasons.
    1. For a small company, $50,000 is a high price to pay for 
consideration as a non-refundable fee. $50,000 could be much better 
spent on development and infrastructure as opposed to a lottery--worse 
than a lottery. There was bias with this one. It is obvious that the 
large dollar monopolies were favored. In fact, they are the ones who 
were selected. CORE, NEUSTAR, MELBOURNE IT, AFILIAS. We would not have 
had a chance.
    As it turned out, several Board members recused themselves, leaving 
less than the required number to legitimately vote on this issue. The 
remaining members voted anyway.
    It is also interesting to note that the Board members (except one) 
waited for this recusal until after the deliberations had been made 
regarding qualifications, business models, etc. They had definite 
conflicts of interest, yet they stayed in a position to render opinions 
on which applicants would ``make the cut.'' Dr. Cerf stated in 
testimony given at the recent House Telecommunications Subcommittee 
hearing that the recusals were based on ``thin'' criteria. This is not 
the case. Some Board members had been involved in the preparation of 
applications for TLDs, or were involved with the companies making 
application. That is a direct conflict of interest. Those Board members 
should have recused themselves from the selection process before it 
began, that is, before selection criteria were decided and before 
selection made. As it stands now, new gTLDs have been awarded to 
companies in which ICANN Board and DNSO members are involved. These 
persons are giving business to themselves, while taking away mine.
    2. Why should we have to apply to keep a business that is already 
ours? It was well known that the Board considers our registrants to be 
illegitimate and registrations to be pre-registrations even though they 
are live registrations, many with published commercial websites. The 
comments made by Esther Dyson and others at past meetings and 
interviews made that very clear. At the Yokohama and MDR meetings, our 
projections were proven correct and emphasized by Mr. Kraaijanbrink and 
Mr. Fitzsimmons, especially, and by other members in general (see 
quotes from MDR transcript later in this document). Dr. Cerf also made 
it clear in his testimony that ICANN does not feel responsible for 
duplication of TLD strings in the name space and that they are 
concerned only with the USG root. ICANN is, therefore, setting a 
precedent for harming any business using any TLD strings outside that 
one root. The result of this attitude will be chaos in the DNS. It is 
obvious that the intent is to control the world's Internet 
communications medium.
    Additionally, ICANN's processes, policymaking and lack of 
cooperation with the rest of the world has resulted in its alienating 
many countries to the point where further fragmenting of the Internet 
is plausible and even likely. China is furious because ICANN's 
contracted registry--Network Solutions, Inc.--has claimed authority 
over the Chinese-language name space, and as a result mainland China 
has formed a partnership with Taiwan (a first!) to oppose ICANN & NSI, 
and is threatening to form its own root. (See http://
www.Cookreport.com). On November 17 in an article headlined ``Beijing 
Moves to Control Domain Names,'' (http://www.techweb.com/wire/story/
reuters/REU20001117S0001) CMP Tech Web reported: ``The Chinese 
government has mandated that only a handful of domestic companies may 
assign Chinese-language Internet addresses, striking a blow to the 
registration service launched last week by VeriSign.''
    Likewise, some ccTLDs that have been treated unfairly, like .cx 
(ICANN refuses to change the .cx name servers to the new ones run by 
the current registry) (http://australianit.news.com.au/common/
storyPage/0,3811,1589302 percent5e1285,00.html), are being forced to 
think of operating outside the ICANN ``monopoly root.''
    An independent, legitimate, and existing registry such as ARNI's 
and others saw no reason to apply to ICANN for ``permission'' to 
participate in the process of a coordinating body that does not have 
the authority to determine the legitimacy of a registry by virtue of 
acknowledging it. We (ARNI) already existed as a legitimate commercial 
registry under our own legitimate terms and conditions and were 
supported by a commercial root system that supported our TLDs globally, 
making these TLDs universally available to anyone on the Internet. We 
are a private, commercial entity and are only asking that we be 
respected as such. We are provided resolution by a commercial network 
offering root-level services to the global community universally. ICANN 
hasn't the right to either award permission to, or deny the right of 
one of the owners of the Internet to engage in its commercial 
operations--operations that predate the existence of ICANN by more than 
a decade.
    3. There was no need to go through the ICANN process to prove what 
has already been proven, that the registries are open to the public, 
they work, and the roots that do recognize them have also proven 
themselves for well over 5 years.
    4. Just as visible was the obvious lack of understanding of the 
basis for adding new TLDs and the content of the applications 
themselves. ICANN continues to claim that they have the consensus of 
the Internet community. This claim was repeated by Dr. Cerf in his 
testimony at the House Telecommunications Subcommittee. If that 
community consists mainly of the special interests--mega corporations 
and monopolies in the domain name business, and excludes the users, 
then they are correct. If that community is supposed to include ALL the 
stakeholders, then they do not have consensus at all.
    And last, the new at-large directors had no input in the selection 
of these TLDs. This is important since those directors are inclined to 
be more objective and are more concerned with domain name holders and 
small businesses. If they were included, we might have seen something 
closer to consensus. ICANN pressed the timetable for introducing the 
new TLDs so that the elected Board members would have no voice in those 
deliberations. Karl Auerbach stated quite adamantly that had he been 
involved those deliberations, and there were a conflict between two TLD 
claimants, that ``first demonstrated use on the Internet would 
prevail.'' (See video segment from the plenary meeting at MDR, November 
15, 2000, first 3 minutes (http://cyber.law.harvard.edu/scripts/
rammaker.asp?s=cyber&dir=icann&file=icann-111500&start=10-31-30).
    This Board member also uses the inclusive name space roots and has 
advocated multiple roots.
    It is crucial to understand, at this point, just what the status of 
ICANN is versus the rest of the Internet with regard to TLDs. ICANN, at 
the direction of DoC, is tasked with monitoring three TLDs at present--
dot com, dot net and dot org. They are under an agreement with the 
government to make recommendations to the root manager, the Department 
of Commerce, regarding the entry of new TLDs to the root.
    By comparison, ARNI is the manager of some TLDs (including dot BIZ) 
that are homed in an inclusive name space (or alternative) root managed 
by another entity. The inclusive name space roots were first 
facilitated by IANA. If ARNI wishes to enter more TLDs into that root, 
then it must petition that root manager. If there are no conflicts 
(pre-existing TLDs) and technical standards have been met, the root 
manager will then most likely enter the requested new ones. Both the 
root manager(s) and the TLD operators cooperate in determining the 
existence of any conflicting TLD strings. A prime factor in the DNS is 
avoidance of collisions. If the requested TLD string is found to exist 
in another root, then the prospective TLD manager could negotiate with 
the existing one or withdraw the request. Often, the root manager(s) 
will assist in facilitating potential negotiations. There is no charge 
to the potential TLD operator to make this determination. With the 
WHEREIS TLD Finder tool, it is not difficult to ascertain whether there 
are conflicts with a new TLD request. This tool can be found at http://
www.pccf.net/cgi-bin/root-servers/whereis-tld. Requests for the entry 
of new TLDs are accepted on a first-come, first-served basis.
    In addition to the DoC TLDs that ICANN monitors, there are in 
excess of 240 ccTLDs that are included in the root, but managed by 
other entities and under different policies.
    In other roots, there are TLDs included which are not homed in 
those roots, but included in order to allow users to see all known, 
non-colliding TLDs. Therefore, ICANN could, and should, do the same 
thing and include all existing non-colliding TLDs for the benefit of 
users worldwide and still add new ones that could be included under 
their specific management. Technically, it is a simple task that has 
been proven with the addition of the ccTLDs in the USG root and over 
150 TLDs in the inclusive name space roots. There is absolutely no need 
to duplicate, and in fact, compelling reason not to duplicate what is 
already in place.
    The dot BIZ TLD was created in 1995 and resolved in the eDNS and 
later in ORSC the (Open Root Server Confederation) and PacificRoot. We 
are recognized in all the major roots, except, of course, the USG root. 
We were delegated the management of dot BIZ in 2000 and re-opened for 
public registration in the spring. We had an automated registration 
system in beta at that time, but were able to provide registrations 
manually until the launch of the automated web-based system. That 
system was publicly launched in October. Registrations increased from a 
few hundred to over 3,000. Total registrations in the TLDs serviced by 
the registration system have topped 10,500 since that launch. The re-
delegation was made and the registry was open well prior to any 
announcement of applications for the character string (BIZ) with ICANN. 
Again, dot BIZ has been in existence at least as long as dot WEB.
    The moment the applications to ICANN were lodged, we e-mailed every 
applicant for our string and notified them, using the contacts listed 
on the ICANN website, that dot BIZ already existed and asked why they 
would choose an existing TLD. We also posted numerous comments on the 
ICANN Board, since they would accept no communication in another form 
regarding TLDs. We also posted to many public mail lists questioning 
why ICANN would consider duplicating existing TLDs, especially dot BIZ. 
We received no responses from anyone. We were ignored by all 
recipients.
    ARNI was doing just fine with dot BIZ registrations prior to the 
selection process for new TLDs by ICANN. There were no conflicts. We 
are now faced with a substantial loss due to ICANN's refusal to 
recognize that we exist. It is baffling because they obviously 
recognize that IOD's dot WEB exists and decided not to award that 
string to Afilias as a result. Current Chairman Vint Cerf stated his 
discomfort and reaffirmed later saying, ``I continue to harbor some 
concern and discomfort with assigning dot web to Afilias, 
notwithstanding the market analysis that they did, which I internally 
understand and appreciate. I would be personally a lot more comfortable 
if we were to select a different string for them and to reserve dot 
web.'' (See Appendix A, 2:17). Without his intervention, the Board 
would have handed dot WEB over to IOD's competitor, Afilias, another 
900-pound gorilla, and IOD would be making the same arguments I am 
making today. The Board did ``the right'' thing with dot WEB, but has 
ignored dot BIZ.
    The video clip maintained at the Berkman Center (http://
cyber.law.harvard.edu/scripts/
rammaker.asp?s=cyber&dir=icann&file=icann-111600&start-6-16-00) clearly 
illustrates the reluctance of Vint Cerf to award the TLD to any entity 
other than its current operator. It also illustrates the unreasonable 
attitude typical of most of the Board to deliberately ignore any entity 
that is not within the ICANN framework. The video would be entertaining 
if it were not so important an issue at stake. In that sense, it is 
rather sad, and very frustrating to hear the ping-pong ball going back 
and forth with people's futures at stake. Why, then, has ICANN decided 
that it would not take away IOD's dot WEB, but would do so with our dot 
BIZ?
    Mr. Kraaijanbrink's outburst (Exhibit A 3:3): ``Well, I would not. 
I believe that we have discussed them considerably. The Afilias on 
.web. And, from their proposal, and from the discussions, I believe 
that we should award dot web KNOWING that IOD has been in operation as 
an alternative root with dot web for some time. But I am reminded, and 
I fully support what Frank Fitzsimmons said a few minutes ago that 
taking account of alternatives should open an unwanted root to pre-
registration of domain names and domains. So I am fully aware of what I 
am doing in voting in support for Afilias dot web.''
    Note that this Board member refuses to recognize not only the 
legitimacy of IOD's TLD registry, but even considers their registrants 
to be illegitimate, calling them pre-registrations. There are no pre-
registrations in any of our TLDs or in IOD's dot WEB. They are live and 
resolve. It is this very attitude that has prevailed throughout ICANN's 
deliberations and decisions regarding the selection and adoption of new 
TLDs. It is also due to this posture that ICANN will irreparably harm 
our business and that of any other TLD operator whose product it 
chooses to ``take away.''
    At these meetings in Marina del Ray, while attending via webcast, I 
posted questions to the ICANN Board of Directors, raising the issue of 
duplication and was ignored, even though one of the questions was read 
aloud to them. At the Board meeting, the issue was never addressed at 
all. I did receive an acknowledgment from Board member, Vint Cerf, 
saying he would pass the message along. Others had been faxing him 
regarding this issue steadily during those meetings. If they did not 
``know'' that dot BIZ existed, even after the postings and email, 
something is wrong. They are supposed to ``coordinate technical 
parameters'' and they haven't even found the technical parameters yet.
    It is important to note that while ICANN insists that it has its 
name space and we all have ours, that there is truly only ONE name 
space and that we all must work within it. This has always been the 
prime directive for stability of the Internet. Dr. Cerf has made 
mention of this aspect of the DNS. In fact, he made a point of it in 
his testimony on February 8, 2001. Unfortunately, he reversed it to 
sound as though it is we who will cause this collision, rather than 
ICANN/DoC. Dot BIZ has been in existence for many years. It is ICANN 
who will cause the duplication and threaten stability. If ICANN is 
successful in duplicating a TLD string in its root, there will be 
duplicate domain names--many thousands of them. No one will know which 
they will see when keying an address into a browser because more and 
more ISPs are choosing to point to inclusive name space roots. Hundreds 
of thousands of users will be affected. One TLD operator has indicated 
an increase of 30 percent per month in the use of one of his servers, 
which happens to be one of the ORSC root servers.
                 exhibit c--atlanticroot network, inc.
    The DoC root is just one root system. Others are in service and 
have been for many years. Any user, including ISPs can, and do, point 
to whichever root they desire. All roots include the TLDs found in the 
DoC root plus additional non-colliding TLDs. Now, however, we are faced 
with a collision in THE name space--ICANN's duplicate dot BIZ.
[GRAPHIC] [TIFF OMITTED] 87255.004

[GRAPHIC] [TIFF OMITTED] 87255.005

    The choice to point elsewhere could be compared to a choice 
of television cable and satellite companies. Each company 
offers essentially the same basic channels, but some offer many 
more. Users have a choice of a variety of cable companies and 
satellite dishes. It is their best interests to offer as much 
as possible.
    The major difference is that with the Internet there are no 
spectrum limitations. Users and ISPs have the choice to point 
anywhere in the world where there is connectivity.
    If DoC enters a duplicate dot BIZ into their root, users 
will not know which version they will see, since ISPs may be 
pointing to any of them. Only the DoC root will be different. 
Users are confused, businesses harmed.
    With a distributed system of several roots, there is no 
single point of failure. An entire system could be destroyed 
and the Internet would still be live.
    ICANN's refusal to respect our presence in a free market is 
harming our business and depriving users of their choice of 
vendors in addition to causing mass confusion. The ``taking 
away'' of our business product offends the MOU signed by ICANN 
and the DoC. This precedent threatens to harm all other TLD 
operators in the inclusive name space and associated businesses 
owned by domain name holders within those TLDs. At present 
there are over 150 TLDs and thousands of domain names 
registered. Hundreds of thousands of dollars have been invested 
in networks and registry systems. As the accredited registrar 
for dot BIZ, PacificRoot has invested over $200,000 and 
continues to invest in upgrades and scaling.
    As an analogy, consider what would happen if AT&T summarily 
took New York's 212 number space away from Verizon. That would 
be considered an anti-competitive move, putting Verizon out of 
business. Certainly no one would consider suggesting that AT&T 
and Verizon issue mirror 212 phone numbers to different 
customers. The phone system wouldn't work! It would be just as 
foolish to suggest that ICANN and AtlanticRoot issue mirror dot 
BIZ names to different customers.
    How can this not harm us? Our TLD has been in existence for 
over 5 years. Our registrants have e-commerce businesses 
operating using dot BIZ domains. We have over 3,000 registrants 
and growing daily, albeit at a much slower pace due to the 
confusion generated by ICANN. Those businesses will be 
destroyed because of the fracture ICANN will cause with this 
duplication. In addition, if ICANN is allowed to ``take away'' 
our business product now, what will happen to all the other 
TLDs when ICANN decides to add more in the future? We will then 
be talking about hundreds of thousands of domain name holders 
and thousands of businesses and organizations being 
disenfranchised--ruined.
    Why do the inclusive name space roots not duplicate dot 
com, net or org? They could. They do not for a couple of 
reasons. One is that it is understood that duplication in the 
name space is not in the best interests of the Internet or its 
users. As a matter of fact doing so is detrimental. It is a 
cooperative effort to keep the name space uniform and 
consistent. The second is that they all recognize the prior 
existence of the USG and ccTLDs and include them in their 
roots. So why is ICANN doing the opposite? It is quite 
deliberate, as is noted in Mr. Kraaijenbrink's outburst at MDR.
    If there were over one hundred TLDs available to the public 
and included in the USG root, we would see not only a 
competitive free market, but the disappearance of many of the 
disputes and speculation present today. The so-called scarcity 
of domain names has been created by the delay in entering more 
TLDs into the USG root. The simplest solution is to recognize 
the existing TLDs before entering new ones. There is no reason 
why there cannot be new TLDs added to the roots, but there is 
ample reason not to duplicate existing ones. It is not a 
function of the government to deliberately destroy existing 
businesses, nor is it a function of ICANN to facilitate that 
destruction. It is also not a function of ICANN to determine 
what business models should be allowed to exist or to compete, 
any more than any other root dictates policies of TLD managers, 
or indeed, other roots. The market will decide which will 
succeed and which will fail.
    ICANN has overstepped its mandate in determining 
subjectively which business models and character strings are 
worthy of inclusion in their root. They are supposed to be a 
technical body, not a policymaker for the world's Internet.
    The Internet is almost entirely a private commercial 
operation, owned by private companies such as The PacificRoot, 
SPRINT, Verizon, WorldCom, Qwest, Verio, etc., traffic is 
permitted to traverse from one network to the next by 
contractual agreements, and traffic is prevented from passing 
through our networks if those entities don't like it--for a 
myriad of reasons. The Internet is not publicly owned or 
controlled. What little and relatively insignificant portions 
(percentage wise) of the Internet are government controlled are 
primarily dedicated to public services such as libraries, 
public schools, or archives, and of course MILnet functions 
that are really better defined as Intranets with gateways to 
the Internet. There are other government owned sections too, 
but almost without exception, those government controlled 
sections are using privately owned infrastructure belonging to 
private sector entities like The PacificRoot, Verizon, UUnet, 
etc., and almost without exception, these government-controlled 
portions must pay for, and have permission (implied, explicit, 
or otherwise) to pass over the copper, and fiber, and routers 
and other parts of the Internet owned by us--the private 
sector.
    The MOU between ICANN and the government clearly states in 
its prohibitions, Section V:D:2. ``Neither Party, either in the 
DNS Project or in any act related to the DNS Project, shall act 
unjustifiably or arbitrarily to injure particular persons or 
entities or particular categories of persons or entities.''
    ICANN has acted both arbitrarily and unjustifiably in 
deliberately ignoring our existence as a viable registry 
offering legitimate, resolving domain names to the public.
    Whether ICANN/DoC chooses to include the pre-existing TLDs 
in the USG root or not is one thing. Whether they choose to 
ignore their existence and threaten them with destruction via 
abuse of power is another.
    By moving ahead with their process they have created 
dissension, confusion and harm to our business and our 
registrants. They are eliminating true competition by assuming 
authority over the world's name space rather than remaining 
focused on their own narrow responsibility. They have shown no 
respect for our existence or that of all the other TLD 
operators who have the right to operate their businesses or 
organizations, and they threaten, by their actions to date, to 
crush them as they appear to intend to crush us. We must also 
consider the effect this situation is having on countries 
around the world. More and more of them are considering 
alternatives to the USG root and some have already moved to 
create them or use the existing roots; all because ICANN will 
not recognize the fact that they manage just one set of TLDs in 
one root.
    Because ICANN currently enjoys the largest market share in 
terms of those ``pointing'' to the USG root, it has a 
commensurate responsibility to ensure fairness in a free 
market. It was the government that determined the Internet 
should be privatized, yet it has allowed ICANN to assume a 
governmental attitude toward the Internet. It was formed at the 
order of the government, and remains under the oversight of the 
government, yet it competes against small business in what 
should be a free market, with the power to ``take away'' the 
businesses it is competing against, without due process. It has 
invited applicants to do so. It answers to no one and is not 
bound by the APA even though its oversight is the 
responsibility of the government and the government has final 
authority over additions or changes to the root. ICANN should 
be either a government contractor and bound by the APA or it 
should be private and liable for its actions. This is a dilemma 
because the root is controlled by the government and cannot 
simply be handed over to a private entity without due process 
and compensation to us, the taxpayers. There seems to be a 
circular problem here.
    With regard to their so-called ``new'' TLDs, ICANN 
threatens not only small businesses, but, as a result of their 
arrogant, ill conceived actions, actually threatens the world's 
economy and the stability of the Internet--in direct conflict 
with the agreement they signed with the United States 
Government.
    We feel that ICANN, under the oversight of DoC, has acted 
completely irresponsibly. DoC will do the same and has stated 
it will most likely rubber stamp any decisions made by ICANN. 
We feel they have breached their agreement by harming our 
business and will potentially do so with any other duplications 
of existing TLDs placed in the USG root. In addition, we 
believe that DoC will, and ICANN has, abused their power and 
that this issue falls under the Administrative Procedures Act 
(APA). We have filed a Petition for a Rulemaking with the NTIA, 
which is attached as Exhibit B.
    In terms of Internet Governance, there is a violation of 
ICANN's mandate in the use of that term. ICANN was formed to 
administer the DNS in the USG root. It was never intended to 
govern the world's Internet. The Internet is in its infancy and 
should be allowed to grow and evolve in freedom and in a free 
market. To allow this body that was formed to coordinate the 
technical aspects of the DNS the power to ``govern'' for the 
world is a grave error. ICANN has already overstepped its 
mandate in several ways.
    First, the initial Board was to have been replaced by an 
elected Board within months of its formation. Two-and-a-half 
years later, that Board is still not elected, except for five 
at-large directors.
    Second, there were to be nine at-large directors elected by 
the at-large membership. The unelected Board decided to not 
only limit that election to five and re-appoint four existing 
Board members to those seats, but to effectively disenfranchise 
at-large membership by manipulating the by-laws.
    Third, the Board has instituted a ``clean sheet study'' of 
the at-large to determine if there should even be such a 
membership.
    Fourth, it has changed the bylaws to define the at-large 
members as not being statutory members under California law.
    In other words, it has effectively cutoff membership at the 
individual level.
    Fifth, individuals and small businesses are not represented 
on the Board and have no voice.
    Sixth, many decisions and deliberations are conducted by 
staff behind closed doors. There is still no open and 
transparent organization. The handling of TLD applications is a 
prime example.
    Fourth, ICANN should have nothing whatever to do with legal 
or policy issues. It should stay within technical issues only.
    Fifth, ICANN must function within the single name space and 
act as the coordinator of the one root's TLDs as well as 
cooperate with the rest of the world's root systems in avoiding 
collisions. Multiple distributed roots, as described on Exhibit 
C (page six) of this document is desirable and prevents having 
a single point of failure.
    It is our hope that this committee will intervene to ensure 
that there is fair play and consideration for existing 
businesses; that the entry of duplicate TLDs in the USG root 
will not be permitted and that ICANN be directed to elect its 
Board immediately and adhere to the technical coordination of 
the USG root cooperating with the rest of the world rather than 
perform as an uncontrolled quasi-governmental body answerable 
to no one.
                         attachments--exhibit b
    Re: ICANN Recommended Internet Top Level Domain Names/Petition for 
Hearing:
    On behalf of Atlantic Root Network, Inc., a private registry for 
the ``.biz'' Top Level Domain Name (``TLD''), we hereby petition the 
National Telecommunications and Information Agency (``NTIA'') and the 
Department of Commerce (``DoC'') to hold a public hearing pursuant to 
the Administrative Procedures Act (``APA'') (5 U.S.C.A. Sec. 551, et. 
seq.) prior to consideration and approval of the ICANN recommended 
TLDs. The approval of the ICANN recommended ``.biz'' TLD would impair 
the rights of Atlantic Root Network, Inc., and would violate the U.S. 
Constitution, Federal statute, and the common law. The approval of the 
``.biz'' TLD would also violate the Memorandum of Understanding between 
ICANN and the DoC.
                               background
Interest of Atlantic Root Network, Inc.
    Atlantic Root Network, Inc. (``ARNI'') is a Georgia corporation 
that has been delegated maintenance and operation of the ``.biz'' TLD 
in the Open Root Server Confederation (``ORSC''), the PacificRoot, and 
the North American Root Server Confederation (``NARSC'') Internet root 
server systems. MCSNet established the ``.biz'' TLD in 1996, and began 
accepting registrations in 1996. ARNI acquired authority to operate the 
``.biz'' TLD in May of 2000, and has been accepting domain name 
registrations through PacificRoot.com pursuant to a contractual 
arrangement. ARNI currently manages over 1,000 Internet domain names 
actively using the ``.biz'' TLD. ARNI and the PacificRoot have expended 
considerable capital and effort in maintaining the ``.biz'' TLD.
    The ORSC is a public, viable ``inclusive name space'' root server 
system that operates in parallel with, and complements, the ICANN/DoC 
root server system. Established as an alternative root server system to 
the NSF/NSI operated system in 1995, the public can readily obtain 
access to ORSC (or other inclusive name space root servers such as the 
PacificRoot and Superroot). This is done by merely ``pointing'' their 
computer to them, or requesting their Internet Service Provider to 
designate the alternative root server. In turn, the inclusive name 
space root managers accommodate communication with the ICANN/DoC 
managed root server, including the ``A'' root server, by incorporating 
the DOC root TLDs in their root system as ``baseline'' TLDs. 
Specifically, to ensure universal Internet name space compatibility, 
the inclusive name space root server managers imprint on their system 
and carry all of the recognized ICANN/DoC TLDs 
(.com/.net/.org/.edu/.us), as well as, the country code (cc) TLDs as a 
complementary set. The TLDs that are approved and then activated on 
their systems thus complement and augment the ``baseline'' ICANN/DoC 
TLDs. In this way the interests of the Internet public in choice and 
convenience are advanced, while governmental interests in competition 
and efficiency are preserved.
    Obviously, the functioning of the entire Internet name space 
system--ICANN/DoC's 13 root servers, and the alternative root servers--
would be compromised were ICANN/DoC to commission new TLDs, which 
collided with existing TLDs in the greater Internet name space system. 
It is just this collision, however, that is threatened by the recent 
announcement of ICANN that it will recommend for approval the proposed 
``.biz'' TLD for inclusion in the ICANN/DoC root server system.
ICANN TLD Proceedings
    In conformance with the general mandate conveyed in the ``White 
Paper'' (63 FR 31741-01 (June 10, 1998), and in its Memorandum of 
Understanding with DoC, ICANN commenced a process in approximately 
August 2000 to solicit, evaluate, and approve new TLDs. This process is 
well documented in the ICANN website (icann.org). The process 
culminated in an ICANN announcement that ``on 16 November 2000, the 
ICANN Board selected seven new top-level domains (TLDs) for negotiation 
of agreements.'' (See, ICANN web page, Announcements). Furthermore, 
ICANN is now apparently engaging in deliberations with the chosen TLD 
applicants to negotiate operating agreements. ICANN states that it 
anticipates that final agreements will be secured in the near future. 
Thus, if these TLDs are approved by DoC and implemented, including the 
``.biz'' TLD, the rights of ARNI in the ``.biz'' TLD will be 
immediately compromised.
                          petition for hearing
    ARNI asserts that ICANN has no inherent authority to approve new 
TLDs (Indeed, even ICANN's authority to operate is questionable as 
matter of law. See  Wrong Turn in Cyberspace: Using ICANN to Route 
Around the APA and the Constitution (Duke Law Journal 50:17 (Prof. M. 
Froomkin, October 2000)). The Government Accounting Office (``GAO'') 
has affirmed that ICANN can make no authoritative decision concerning 
Domain Name administration without express approval from the DoC. In 
its definitive July 7, 2000 letter/report to Congress (``Department of 
Commerce: Relationship with the Internet Corporation for Assigned Names 
and Numbers'') the GAO was emphatic that final authority over the root 
server and its administration rests with DoC. GAO interpreted the 
November 25, 1998 Memorandum of Understanding between ICANN and DoC as 
a ``joint project agreement'' for the domain name system management, 
including ``the policy for determining the circumstances under which 
new top-level domains would be added to the system.'' Report at page 
16. The GAO made it clear that the transfer of decisionmaking to ICANN 
would constitute a transfer of property, which would be unlawful under 
the doctrine of subdelegation. See National Parks and Conservation 
Association v. Stanton, 54 F. Supp. 2d. 7, 18-19 (D.D.C. 1999). 
Finally, the GAO noted that such a violation of law is not implicated 
in light of the language included in Amendment 11 to the Cooperative 
Agreement with Network Solutions, Inc. Pursuant to Amendment 11, the 
GAO states, ``Network Solutions, Inc. must receive written 
authorization from a Department official before making or rejecting any 
modifications, additions, or deletions to the root zone file.'' 
Further, citing to the November 1999 agreements among ICANN, Network 
Solutions, and the DoC, the GAO found that collectively, these 
agreements ``make clear that the Department retains final policy 
authorization over the ``A'' root server.'' Report page 30. This 
includes, of course, final decisionmaking on the entry of new TLDs to 
the ``A'' root server.
    ICANN itself clearly agrees with the GAO legal analysis. In recent 
litigation, Economic Solutions, Inc. v. Internet Corporation for 
Assigned Names and Numbers (U.S. District Court, Eastern District of 
Missouri (No. 4:00CV1785-DJS)) ICANN submitted the Declaration of its 
officer and general counsel, Louis Touton, in opposition to the Motion 
for a Preliminary Injunction filed by Economic Solutions, Inc. Mr. 
Touton explicitly states in this Declaration that only the DoC can make 
a decision regarding new TLDs, and that ICANN has no inherent power to 
do so. The Federal district court, in reliance on this Declaration, 
denied the motion holding: ``ICANN represents that it has no authority 
to implement TLDs, and that instead, it merely makes recommendations to 
the Commerce Department, which has the ultimate authority to make such 
a decision.'' Based on these authorities, and the elemental application 
of constitutional and statutory law, it is clear that the DoC will 
shortly be tasked with the responsibility for considering ruling on the 
ICANN recommended TLDs. Based on this legal premise, ARNI hereby 
petitions NTIA to implement a Rulemaking pursuant to the provisions of 
Sections 556, 557, and 558 of the APA. Given the abundance of case law 
authority, it can not be denied that the approval of TLDs constitutes 
either a ``rule'' or ``license'' within the meaning of the APA. Once 
this is established it is mandatory under the APA for the NTIA to 
conduct a Rulemaking. This in turn, requires a statement of the 
proposed rule, a request for public comment, and a studied 
consideration of these comments. In particular, NTIA will be required 
to consider not only the rationale and criteria developed by ICANN, but 
more broadly, the competitive impact of the recommended TLDs on 
Internet name space, the interests of efficiency, the legal 
ramification of approval, and the availability of alternate TLDs.
    ARNI petitions for this Rulemaking fully convinced that when NTIA 
carefully evaluates all of the factors it must consider as an executive 
agency of the U.S. Government it must reject the ICANN recommended 
``.biz'' TLD. In particular, ARNI believes that the ``.biz'' TDL 
violates ARNI's constitutional safeguards, conflicts with a number of 
statutory requirements, undermines ARNI's property rights, and offends 
the Memorandum of Understanding between ICANN and DoC. Indeed, the 
essence of these safeguards is captured in the Memorandum of 
Understanding which states under paragraph D(2) ``Prohibitions'' that 
``Neither Party, either in the DNS Project, or in any act related to 
the DNS Project, shall act unjustifiably or arbitrarily to injure 
particular persons or entities or particular categories of persons or 
entities.'' The adoption of the ``.biz'' TLD would violate this 
provision with respect to ARNI and threatens the viability of inclusive 
name space providers.
                               conclusion
    Only the NTIA/DoC may authorize and commission new, ``A'' root 
TLDs; ICANN can not. The new TLDs recommended by ICANN must be subject 
to formal Rulemaking under the Administrative Procedures Act. Such a 
rulemaking will reveal the legal infirmity of the contemplated ``.biz'' 
TLD.
                               __________
       Prepared Statement of Bart P. Mackay, Vice President and 
                   General Counsel, eNIC Corporation
    My name is Bart P. Mackay, and I am the Senior Vice President and 
General Counsel for eNIC Corporation. I am providing a supplemental 
statement to Mr. Cartmell's testimony in order to respond to certain 
issues raised in the hearing before the Subcommittee on February 14. 
Specifically, those issues were eNIC's reluctance to adopt the Uniform 
Dispute Resolution Procedures (UDRP), and our charging a nominal fee 
for WHOIS information.
    Briefly as to my background, I have been practicing law for nearly 
16 years, with a primary focus on corporate finance, commercial 
transactions, and intellectual property issues. My experience in 
intellectual property issues includes working directly with many 
companies and trade associations, including such notables as Mr. Eric 
Smith of the International Intellectual Property Alliance, the Business 
Software Alliance, the Motion Picture Association, the Recording 
Industry Association, and the International Trademark Association, in 
developing and pushing legislative and regulatory reforms for 
copyright, trademark and other intellectual property protections in the 
former Soviet Union.
    As an initial matter, eNIC Corporation wishes to offer one point of 
correction to the written testimony of Brian R. Cartmell submitted in 
conjunction with the Subcommittee's hearing held on February 14, 2001, 
addressing the governance of the Internet Domain Name System by the 
Internet Corporation for Assigned Names and Numbers. The last sentence 
of the first paragraph of the subsection entitled ``Overview of eNIC 
Corporation,'' erroneously states that ``[T]he Dot-CC domain is 
associated with the Cocos Islands, a group of islands in the Indian 
Ocean that, at the time we submitted our application, were privately 
owned, but today are an external territory of Australia.'' In fact, the 
Cocos (Keeling) Islands are a group of islands in the Indian Ocean that 
at the time it appeared on the ISO-3166-1 list (referred to in section 
6 of Mr. Cartmell's written testimony) were privately owned, but today 
are a territory of Australia.
    The primary purpose of this supplemental written testimony is to 
respond more fully to Senator Barbara Boxer's questions posed during 
the Subcommittee's hearing. This opportunity is particularly important 
to us as Senator Boxer's inquiry and comments raised questions about 
our reluctance to adopt the Uniform Dispute Resolution Policy and our 
WHOIS procedures. I want to assure the Subcommittee that we have 
adopted these business practices only after long and careful 
consideration of the alternatives, and we hope that this full 
explanation of those practices will prove the merit of our position.
                  1. uniform dispute resolution policy
    eNIC's position on the UDRP is straightforward. While we definitely 
favor an accelerated dispute resolution procedure much like the UDRP, 
we have been unwilling to adopt the UDRP system in its present form. As 
discussed by Professor Froomkin and Mr. Auerbach at the Committee's 
hearing, and acknowledged by ICANN's President, Mr. Mike Roberts, the 
existing UDRP needs to undergo a complete re-evaluation to address 
certain aspects that have proven deficient. To date, few of the nearly 
250 existing top-level domains have adopted the UDRP or any other 
alternative dispute resolution mechanism. Thus, eNIC is not alone in 
its doubts about the UDRP. eNIC has consistently said that we will 
adopt such a dispute resolution mechanism when we find or develop one 
that meets traditional and acceptable notions of fairness, due process, 
and equitable application.
    It should be noted that eNIC is not simply waiting for ICANN to 
make badly needed changes to the UDRP before it acts. Instead, eNIC has 
undertaken the development of a new dispute resolution policy and 
mechanism that we believe: (a) addresses the material deficiencies of 
the UDRP; (b) provides fairness, due process and an even playing field 
to all participants; (c) contains detailed standards and substantive 
guidelines for dispute resolution proceedings that more closely follow 
existing trademark laws; and (d) eliminates the ``forum'' shopping 
abuses prevalent under the UDRP. This initiative, which commenced 
approximately 4 months ago, is being undertaken by outside legal 
counsel and at significant expense to eNIC. We expect that a 
preliminary draft will be completed before the March 2001 ICANN meeting 
in Melbourne. It will be circulated to a broad range of interest groups 
for comment and then revised accordingly. We hope to implement the 
dispute resolution procedure during 2001. In the meantime, eNIC will 
continue to readily abide by the decisions of the courts relative to 
cyber-squatting and other domain name matters. We also intend to offer 
the new dispute resolution mechanism as a model for dispute resolution 
that can be adopted by other top-level domain managers as well.
    A final point on this issue: Over the past year, I personally have 
had numerous conversations regarding UDRP issues with individual 
trademark attorneys as well as representatives of several intellectual 
property organizations including the International Intellectual 
Property Alliance, the Motion Picture Association, the International 
Trademark Association and the Business Software Alliance. Inevitably, 
each begins the conversation claiming that eNIC is a ``safe haven'' for 
cyber-squatters and infringers, and each insists that eNIC adopt the 
UDRP to remedy the situation. Notably, none has offered any specific 
evidence or data to substantiate or document their claims against eNIC 
or which would correlate the adoption of the UDRP to any meaningful 
reduction in cyber-squatting or infringement. Let me be clear: eNIC is 
not a haven for infringers or cybersquatters. We take very seriously 
our obligation to our customers and the Internet community. Our 
concerns about the UDRP should not be confused with indifference to 
property rights.
                       2. enic's whois procedure
    eNIC Corporation's existing WHOIS disclosure policy is the result 
of a careful balancing of competing factors and interests in the 
disclosure of Dot-CC registrant information. These factors and 
interests can be grouped into three general categories which include 
(a) the fiscal and intellectual property interests of eNIC Corporation, 
(b) the disclosure interests of trademark owners and others in the 
identity of Dot-CC registrants, and (c) the privacy interests of Dot-CC 
registrants. Permit me to briefly discuss these three categories.
    (a) Initially, it should be noted that eNIC Corporation is one of 
the few top-level domain managers that even offers a WHOIS function. 
Any registry offering the WHOIS function can do so only by significant, 
on-going monetary expense and dedicating substantial technical 
resources to its development and maintenance, a fact confirmed by Mr. 
Roger Cochetti of VeriSign in response to questioning from Senator 
Boxer. As Mr. Cartmell pointed out during oral testimony, eNIC does not 
generate substantial revenues from assessing the $15.00 fee. In fact, 
the fee does not recoup eNIC's costs of maintaining the WHOIS function. 
If eNIC desired to ``profit'' from its WHOIS function, or protect 
cyber-squatters and infringers, certainly the price for the WHOIS 
report would have been set at a higher price than $15.00.
    As explained below, the nominal $15.00 fee acts to limit frivolous 
inquiries and adds a measure of privacy protection for Dot-CC 
registrants, while at the same time making the registrant information 
affordable and available to trademark owners and others who have a 
legitimate interest in discovering registrant information. It also 
serves to compensate eNIC, albeit only in part, for operating the WHOIS 
system. Few businesses are expected to disclose the identity, address 
and other such information of their clients at all. (Few other Internet 
registries do at all.) After all, such information is considered 
proprietary and extremely valuable.
    (b) eNIC recognizes that trademark owners and others have a clear 
interest in discovering the identities, contact information and other 
information of Dot-CC registrants. That is one of the primary reasons 
eNIC incurs the significant expense of maintaining a WHOIS function, 
unlike most top-level domain registries. eNIC has also consistently 
responded to inquiries of law enforcement agencies in a prompt and 
efficient manner, without charge. Consequently, those important 
interests are not at issue. However, eNIC has witnessed the abuses of 
the dot-com WHOIS function that the VeriSign Global Registry is 
compelled to maintain (rather than voluntarily maintain) under its 
agreement with ICANN and the Department of Commerce. The two primary 
reasons for the existence of our fee are (i) the unauthorized ``data 
mining'' that readily occurs as a result of the ``open'' structure of 
the dot-com WHOIS function, and (ii) the privacy interests of the Dot-
CC registrants as discussed in subsection (c) below.
    eNIC has and maintains a strict policy against ``spam'' (e.g. 
unsolicited bulk electronic mail) and consistently takes action against 
those Dot-CC registrants that we determine are involved in such 
activities. We can state unequivocally that eNIC Corporation has never 
undertaken any ``spam'' activities, nor have we sold our database to 
marketers. In our view, the ``open'' WHOIS requirement in the dot-com, 
dot-net, and dot-org domains is a primary contributor to the unsavory 
``spam'' activities conducted on the Internet.
    Indeed, the ``open'' nature of the WHOIS function in those top 
level domains leaves few access barriers to the ``data mining'' 
activities of numerous automated programs that collect registrant 
identities, e-mail addresses, and other registrant information. The 
``mined'' information is then used for many purposes, including illicit 
``spamming'' activities. By limiting the WHOIS function, including 
charging a nominal fee for WHOIS data access, eNIC is able to limit the 
access of automated programs to Dot-CC registrant data by making such 
access uneconomical, thus substantially reducing spamming activities on 
Dot-CC registrants. The result is that, instead of being a ``haven'' 
for spammers, eNIC is an active participant in the fight against 
illicit ``spam.'' In sum, the ``open'' WHOIS encourages ``spam,'' while 
limiting access to WHOIS data actually deters illicit ``spam.''
    (c) A primary consideration of eNIC Corporation is the privacy 
interests of its Dot-CC registrants, although those interests must be 
balanced with the interests of trademark owners and others. As 
indicated by Professor Froomkin, an ``open'' WHOIS function provides 
tremendous opportunities for misuse of registrant information. While 
registries such as VeriSign Global Registry and eNIC cannot monitor 
websites or control the use of registrant data derived from their 
databases, news accounts abound with examples of stalking, spamming, 
and other illicit uses of registrant information in the dot-com domain 
space. Unfortunately, we do not live in ``Mr. Rogers' neighborhood'' 
and people with access to addresses, telephone numbers, e-mail 
addresses and other registrant information do not always use such 
information for honorable purposes. Consequently, the privacy concerns 
of domain registrants are critical and are best served by a 
``restricted'' WHOIS function.
    As with virtually all compromises, eNIC's position on the WHOIS 
database is likely imperfect and does not fully satisfy the demands or 
wishes of any one party. However, after careful and thorough 
consideration of the issues, taking into account and balancing the 
varied competing interests involved, eNIC believes that its decision 
strikes an appropriate balance and ultimately promotes the best 
interests of the Internet community as a whole.
    Response to Written Questions Submitted by ICANN to Mike Roberts
    Question 1. One of the applicants for a new top level domain names 
was Image On-line Design. Despite having over 23,000 dot.web 
registrations and thousands of letters of support for application, 
ICANN chose not to accept Image On-line Design. Can you explain why 
ICANN chose not to grant the application especially in light that ICANN 
is a consensus driven organization?
    Answer: That Image On-line Design application had deficiencies that 
were cited by technical and financial teams that did the analysis.
    Followup: Image On-line Design submitted corrections to numerous 
inaccuracies presented by the review and those corrections were not 
properly noted. Additionally Image On-line Design and eight others 
applicants filed requests for re-consideration. What is the status? 
Will the deficiencies by the people seeking reconsideration still be 
taken into account? Is that fair when so many of the inaccuracies cited 
by so many of the applicants in the application process.
                               __________
                       Bridge International Holdings, Inc.,
                              St. Simons Island, GA, Feb. 12, 2001.
Hon. Burns, Communications Committee.
    Dear Senator Burns, I have just learned that your committee will be 
holding hearings on the choices and choice making methods of ICANN with 
regard to the ``new'' TLDs (Top Level Domain) in the DOC Root of the 
Internet.
    As you must know, the Internet has come a long way since its early 
days of exclusively DoD and research responsibilities. Among the myriad 
evolutions since those days has been the birth of numerous robust root 
systems to compliment the original. Most of these were established and 
running smoothly BEFORE the creation of ICANN just a few years ago. 
Operating on these root systems are many and varied TLDs not 
represented on the DoC root. The earliest of these was .nomad, started 
by Bradley Thornton, now of the Pacific Root Network, but way back in 
the 1980s, long before anyone ever even conceived of conflict over 
domain names and perceived shortages of them. It was started, not to 
compete with ICANN, for ICANN did not exist, it was created as a 
private initiative in keeping with the free market economy and 
initiative this country likes to pride itself for. Since that pioneer, 
others have followed, and with few exceptions, have worked very civilly 
and professionally with each other so that no conflicting TLDs would be 
developed and the integrity of the Internet naming and numbering system 
would be preserved. About 5 years ago, one such entry to the field was 
a .biz TLD. It is now under different control than the original, but 
has been in continuous operation since creation. The Atlantic Root 
Network, Inc., in close cooperation with online registration and DNS 
services of the Pacific Root Network are now not only taking live 
registrations for .biz domain names but have active and functioning 
commercial sites ongoing.
    Atlantic Root Network, Inc. is a small and relatively new company. 
We do not want to get into prolonged court battles for our obvious 
right to pursue our business as we had before ICANN chose to knowingly 
usurp our entire business line of domain registration by claiming this 
.biz string as their own and assigning it to one of their 
``applicants'' (contributors). Given the over-riding rule ICANN is to 
respect and create respect for, that the stability of the Internet be 
maintained at all costs, it is simply appalling that they would 
consciously create a ``colliding'' (duplicate) TLD in the general 
namespace that is the Internet. That they have, should be recognized as 
a swipe against small business in general, and more specifically a 
serious blow to the future integrity of the naming and numbering system 
of the Internet. There is a small but growing number of Internet 
Service Providers (ISPs) that have learned to respect the first 
established TLDs of any particular string and will show the Atlantic 
Root Network, Inc. ``.biz'' rather than the ICANN designated one. This 
will cause an addressing problem such as we have never seen before. 
(I.e. What if two separate companies were to assign telephone numbers 
and service for the 212 area code in New York. What assurance of 
getting the desired party could there ever be. It would not be a 
momentary problem that would work itself out, either.) As long as there 
are two independent and non-cooperating systems in one number space, 
chaos would reign. It is much the same in Internet addressing. By 
ICANN's decision to institute a second operator for .biz in the same 
overall scheme of things, they not only contradict their responsibility 
to foster independent business involvement in the Internet as dictated 
by the DoC upon their creation, but they will also be creating utter 
chaos within the Internet.
    Even before final approval of the new .biz, several companies have 
sprung up to ``pre-register'' these domain names. This is most 
confusing to our current customers who see .biz already functioning 
just fine in the inclusive namespace, but even more confusing to 
potential new customers. Thus it is already serving as a disruptor of 
our business, all because ICANN failed to respect one of the Internet's 
golden rules.
    ICANN is a poor steward of a very important resource and must be 
harshly reprimanded and mistakes corrected, or be simply replaced by 
some group that understands the meaning of representative government, 
living within one's means and using authority wisely and judiciously.
    It can not be allowed to continue to run roughshod over anyone they 
deem not big enough to sue them. Remember, ICANN, while private, is 
doing its business as the DoC's right hand and whatever they are 
allowed to get away with reflects badly on the DoC, those who oversee 
them and on our Nation as a whole.
    Please do your part to fix this blotch on the American business 
landscape.
            Sincerely yours,
                                                    Karl E. Peters,
                                           President & CEO.

    P.S. Bridge International Holdings, Inc, is 50 percent owner of the 
Atlantic Root Network, Inc.
                               __________
        Prepared Statement of Kent Crispin, Computer Scientist, 
                     Livermore National Laboratory
    Honored Committee Chairpersons and Members, during the hearing you 
will doubtless hear a great deal from well-meaning, passionate 
witnesses who are deeply concerned about freedom of speech and other 
civil liberties issues.
    These issues are, of course, extremely important, and as 
responsible, patriotic Americans we cannot help but take them very 
seriously. However, I would like to suggest that in this case these 
concerns are largely misplaced, and are based on fundamental 
misconceptions about the Internet, the nature of ICANN, and the domain 
name registration business.
    While the U.S. Government funded much of the basic research that 
started the Internet, for perhaps the last 10 years the Internet has 
been in the realm of private business. Private investment at this point 
completely dwarfs the contribution by the U.S. Government. The U.S. 
Government should be justifiably proud of the Internet as a child of 
research it funded, but that child has long ago grown up.
    The Internet is largely decentralized; there are only a very few 
core services that require central coordination. ICANN is intended to 
fill that role. ICANN is a private organization coordinating the 
activities of private businesses. Such an organization does require 
oversight, but in the normal case oversight from Anti-Trust authorities 
is deemed sufficient: unlike some other governments, the U.S. 
Government does not lightly interfere with the economic engine of 
private enterprise.
    When viewed from the perspective of private enterprise, the 
concerns of freedom of speech and civil liberties take a much different 
appearance. Domain name registries are independent businesses offering 
services to customers, just as publishing houses offer their services 
to customers. The freedom of the registry and the freedom of the 
customers is the freedom of the private transaction: The U.S. 
Government does not tell the customer what names they can register; 
neither does it tell the registries which names they must offer. If a 
registry wishes to disallow domain names that are dirty words, that is 
the right of that registry.
    The U.S. Government does not tell newspaper publishers what stories 
they must accept from private citizens; we have confidence in the fact 
that there is a tremendous market for free speech to guarantee that 
there will be newspaper publishers of every conceivable perspective. 
Likewise, the U.S. Government does not need to worry about freedom of 
speech in domain name registrations--in only needs to be sure that 
there is adequate competition in the domain name registry business.
    There is an important caveat: domain names are not a publishing 
medium in any conventional sense of the word. They are intended as a 
means of addressing particular machines on a network, and they are 
active objects, interpreted by computer software for a technical 
purpose. This technical purpose is fundamental to domain names; and 
consequently the opinion of the technical community must be given 
priority in ICANN's processes. ICANN has no choice but to listen to the 
best technical opinions; when the Internet Architecture Board, for 
example, makes a formal statement that ``alternate roots'' are 
technically unsound, ICANN has no real choice but to accept that 
judgment. When the weight of opinion from experienced operators of 
networks says that ICANN should go slow in the introduction of new 
names, ICANN has no choice but to listen.
    These technical constraints on ICANN mean that oversight of ICANN 
is a very complex affair, and will require careful monitoring by anti-
trust authorities. The Departments of Commerce and Justice are closely 
monitoring the progress of ICANN, and I believe that oversight is 
adequate.
    The activities of private enterprise are not perfect, by any means. 
We can expect ICANN to make numerous mistakes as it takes its own road. 
This is normal, and should be expected. Free enterprise necessarily 
involves the freedom to make mistakes, and the freedom to correct those 
mistakes without the paternalistic direction of Uncle Sam.
    Thank you very much for your consideration.
                               __________
         Prepard Statement of Ray Fassett, Think Right Company
    I wish to take the opportunity to thank your Subcommittee for 
reviewing ICANN governance. I desire to have this written testimony 
focus only upon such governance as it relates to the expansion of the 
Top Level Domain space, or new TLDs.
    As your Subcommittee is probably aware, there is widespread opinion 
that the recent selection process was quite arbitrary in its selections 
and, perhaps, even unfair, involving various conflicts of interest. I 
wish to only focus upon the former issue, rather than the latter at 
this point in time.
    It is important, in moving forward, that the subjective nature in 
which TLD applications are accepted be removed and that the ICANN be 
clearly accountable for such removal.
    This can be very easily accomplished (vs. the round of 
applications) by: (1) Mandating to the ICANN to define the technical 
criteria necessary for the applicant to achieve acceptance to the A-
root zone; and (2) Mandating the ICANN to accept applications that meet 
such pre-defined criteria.
    A by-product of these mandates would be that the ICANN would be 
further removed from a body that is governing policy (subject to 
Congressional review) to one that is applying its technical expertise.
    I am a small business operator that has a desire to file with the 
ICANN in the second round of applications. I can raise the necessary 
funding to scale my existing Internet infrastructure to meet the 
technical requirements for admittance to the A-root zone if the ICANN 
would define what these criteria are.
    As long as arbitrary and subjective decisionmaking on the part of 
the ICANN remain part of the application process, small businesses--
such as mine--will be competitively disadvantaged in relation to larger 
corporations with the resources to withstand a ``turned down'' 
application only to file again in the next round (or the round after 
that).
    My business cannot move forward, for example, in scaling up its 
infrastructure for the second round of applications not knowing that, 
even if all technical criteria are met, my application could be 
subjectively turned down. Without mandating against this, small 
business will be largely removed from the application playing field. No 
bank would support my business expansion based upon ``hope'' of 
acceptance. Some feel the application process is this way by design, 
though I am not ready to fully draw this conclusion as yet.
    I respectfully request your Subcommittee to stand behind small 
business by mandating the ICANN to clearly define technical criteria 
for admittance and to adhere to these criteria in their selection 
process.
    Thank you for accepting my stated views on the subject matter and I 
sincerely appreciate your attention to my concerns.
                               __________
            Prepared Statement of Paul Stahura, President, 
                        Group One Registry, Inc.
    Mr. Chairman and Members of the Subcommittee, my name is Paul 
Stahura. I am the President of Group One Registry, Inc. I want to take 
this opportunity to share with you a vision for the future of the 
Internet and to express my views about the process used by the Internet 
Corporation for Assigned Names and Numbers (ICANN) to select new top 
level domains.
                   the creation of group one registry
    I have been involved in the business of registering domain names 
for several years. As President of eNom, an accredited domain name 
registrar, I conceived of the Group One concept in response to a 
fundamental realization. The practical reality is that with the 
explosive growth of the Internet into consumer products there will have 
to be a domain name for every new consumer device connected to the 
World Wide Web (the Web).
    To implement my idea, I worked with WebVision, the Internet 
consulting and hosting company that is the parent of eNom, and Internet 
Computer Bureau, an experienced operator of country code top level 
domains. We formed Group One to apply for and operate the new top level 
domain .ONE.
    Our goal was that .ONE would serve as the domain for Internet-
connected devices like game players, PDAs, security cameras, 
refrigerators, and wireless phones. The domain names would consist of 
digits, making them easier to access from a limited keyboard, using the 
name space more efficiently, and eliminating most of the intellectual 
property concerns raised by character-based domain names. A substantial 
additional benefit to the .ONE concept is that our system would 
eliminate many of the growing Internet privacy concerns that have 
developed since the last TLD selection process. Ours is a unique 
proposal in response to a practical reality.
                       new tlds and icann's role
    As new applications for Internet services continue to develop, we 
will bring the Internet to consumers in new and exciting ways. This 
growth in the practical utilization of the Internet requires that we 
add new top level domains (TLDs). More TLDs will reduce the crowding in 
.com addresses and the thoughtful addition of new TLDs will increase 
competition in operating the Internet's technical services.
    In the time since the last new TLDs were introduced, the Internet 
has grown beyond most expectations and also has become a critical 
medium of international commerce. Businesses and individuals now 
regularly rely on the Web for their daily activities. Changes in the 
Web's operation can create--or destroy--businesses, consumer services, 
and jobs.
    The process by which we select the most appropriate TLDs requires 
consideration of a number of factors. Adding new TLDs can introduce the 
risk of technical failure and requires thorough consideration and 
oversight. Some TLD requests or applications are simply inappropriate 
for our contemporary commercial or social values. The allocation of new 
top level domains is more than a technical function. Social, economic, 
and political judgments on an international scale are required. ICANN 
has been carefully structured to receive input from a broad range of 
constituencies around the world. I support ICANN as the institution 
necessary to make decisions about new TLDs. However, the process used 
by ICANN must recognize the significance and complexity of the 
decisions and its processes for decisionmaking should reflect the 
critical nature of its function.
                        icann's new tld process
    Despite the critical nature of TLD decision, the process followed 
by ICANN in the most recent selection of TLDs was, in many respects, 
deeply flawed. Rather than acknowledge that selecting new TLDs 
inherently involves value judgments and building a process to make 
those judgments as fair as possible, ICANN pretended those judgments 
didn't exist. ICANN has a history of creating ``test beds'' whose 
participants attain large profits and secure entrenched positions. The 
new TLD selection cannot be written off as a mere experiment; it, too, 
is an economically important act and should be made on the merits of 
the applications.
    There were three main problems with ICANN's process: the time 
allowed was too short, ICANN selectively held discussions with some 
applicants but not others, and the process produced no clear record of 
the basis for the decision.
    ICANN did not allow itself enough time to consider the 
applications. The initial schedule apparently was created based on the 
expectation that only 15 to 20 applications would be submitted. When 
far more arrived, ICANN should have extended the timeframe to allow for 
more careful consideration. Precisely because this was the first 
selection of new TLDs, the structure of the process was of paramount 
concern. ICANN seemed to value finishing the process on schedule above 
doing it right.
    As events transpired, there were only 6 weeks from the application 
due date to the date of Board action on 44 applications totaling 
thousands of pages. The ICANN staff analysis (300-plus pages in length) 
was published only 6 days before the Board voted on the applications. 
This did not give adequate time for the Board members to review the 
analysis, or for applicants to respond to it. The 3 minutes allocated 
to each applicant for presentations to the Board were not a meaningful 
opportunity for response and comment, and it was unreasonable to 
believe that the Board members would review the vast amount of material 
on the public comment site. The only reasonable conclusion to be drawn 
was that Board members relied on something other than the written 
materials to make their decision.
    During the application review process, ICANN instructed applicants 
not to contact the Board or staff. However, ICANN contacted several 
applicants to request additional information or seek answers to 
questions. This provided opportunities for only a select group of 
applicants to clarify, explain, or augment their applications. The 
applicants who were not contacted were clearly put at a competitive 
disadvantage in the process. While applicants were free to post 
additional material on the public comment site, only those who received 
questions from ICANN knew what additional material would be helpful or 
informative. It appeared that ICANN asked questions of applicants it 
had already decided to select. This method of decisionmaking, suggests 
Board pre-selection, and undermines the credibility of the process.
    The ICANN procedures need to be standardized and all potential 
applicants need to be advised of the procedures in advance of 
submitting their applications. In addition, all applicants should play 
and be judged by the same set of rules. Although the application 
process produced voluminous public documents and comment, there was no 
statement of the basis for the Board's decisions. Absent such a 
statement, it is unclear how the stated criteria were applied and how 
the Board distinguished among the applications. The only extant record 
evidencing Board intent is the brief discussion at the public Board 
meeting. For example, ICANN stated that elements such as the staff 
evaluation and public comments were only part of the process and not 
the full basis for the final decision. However, it is unclear whether 
these factors were considered at all and if so, what weight was 
attributed to them. This lack of clarity regarding the process itself 
as well as the absence of a clear record of review leaves applicants 
unsure whether they were treated fairly. Furthermore, it gives future 
applicants little guidance about the criteria upon which they will be 
judged.
    To its credit, ICANN has in place a process to reconsider Board 
decisions. However, that process clearly was not designed for decisions 
as significant and complex as TLD allocations. The reconsideration 
process suffers from many of the same flaws as the initial 
consideration process, and once again does not provide applicants with 
a meaningful assurance of fair and equal treatment.
    Finally, ICANN has insulated itself from accountability for its 
decisions by forcing applicants to sign a broad waiver as a condition 
to submitting an application. If these waivers are upheld, they permit 
ICANN to make arbitrary decisions without explanation--and leave 
aggrieved parties with no appeal or recourse. The assumption of such 
final and absolute power is contrary to ICANN's ideals as an open, 
fair, and accountable body.
                       group one as a case study
    Group One's experience illustrates many of the problems described 
above. The .ONE application is technically sound and is backed by 
substantial financial resources. Our solution is innovative, and 
promises to increase competition in Internet registries while providing 
new services to consumers. On its merits, the .ONE application is very 
strong.
    The first hint that ICANN was not inclined to approve the Group One 
application, despite its clear merit, was that we were not among the 
applicants contacted by ICANN during the review process. A second 
indication came when the staff analysis was released on the Friday 
before the Board meeting. The publication of the staff analysis was the 
first indication Group One received that ICANN considered its 
application ``telephony related.'' Three days after the analysis was 
released, Group One sent a letter to ICANN and raised several of the 
concerns about the ICANN process that I bring to your attention today. 
We also asked ICANN to remove .ONE from the ``telephony-related'' 
category and to keep the application open for 3 months to provide time 
to consider the complicated issues presented by ENUM and the 
International Telecommunication Union (ITU). ICANN summarily refused 
this request.
    When the Board considered Group One's application Board members 
consistently spoke favorably of it. Nonetheless, the concerns raised 
about the ``telephony'' aspects caused the Board to decide there was 
``enough uncertainty'' not to proceed. The source of ICANN's confusion 
appears to be a belief that .ONE would conflict with the ongoing ENUM 
project by the ITU and others to integrate the telephone numbering 
system with the domain name system. Given the opportunity, we could 
have explained that .ONE is not targeted at telephones and telephony 
applications. In fact, many of the devices that might be served by .ONE 
would never be served by a telephony numbering system. In addition, we 
could have pointed out that ENUM's proposal raises substantial privacy 
concerns which .ONE avoids. Indeed, .ONE could be used in conjunction 
with ENUM to eliminate the problem that a phone number as a domain name 
means that one's phone number is published to the world. Unfortunately, 
we were not given any meaningful opportunity to present these points to 
the Board, and Group One's very strong application was rejected.
                               conclusion
    It is not settled whether ICANN is or should be subject to the 
Administrative Procedures Act that governs decisionmaking by government 
bodies. However, to secure its credibility and exercise its authority 
responsibly, ICANN should carefully consider the spirit of the APA when 
it makes decisions on broad policy issues like the allocation of new 
TLDs. It is not enough for ICANN to say that it seeks consensus, for in 
contested processes like the granting of TLDs there always will be 
disputes. ICANN should instead follow a process that allows its 
decisions to be scrutinized and, if unfair or improper, corrected.
                               __________
    Prepared Statement of Paul Gerrin, Founder/CEO, Name.Space, Inc.
                     examining governance and icann
    With respect to governance, the government that governs least 
governs best. The government that listens to the will of the people can 
best serve the needs of the people.
    ICANN does neither. ICANN has morphed from its intended role as the 
coordinator of Internet names and numbers into a private, corporate 
world government over the Internet that deliberates in secret and 
ignores the will of the people, while ``hiding'' behind a facade of 
slogans like ``openness and transparency.'' Their words and deeds prove 
to be anything but open or transparent.
    As ICANN Director Dr. Vint Cerf admitted before the House Commerce 
Subcommittee on Telecommunications on February 8, 2001, the selections 
of 7 new companies to act as Top Level Domain (TLD) registries by ICANN 
was ``subjective.'' The ICANN board's selection of dominant industry 
players at the exclusion of entrepreneurs and small businesses also 
ignored the voices of the only publicly-elected members of its board 
who were denied a vote in the TLD selection process.
    Privatization of government services may act as a way to streamline 
government efficiency and provide opportunities to the private sector, 
but it should not act as a replacement of government. Certain aspects 
of government that are essential to the functioning of civil society 
are those that protect the rights of its citizens by rule of law. When 
those elements are privatized there must be adequate measures taken to 
assure no Constitutional protections are lost.
    The ROOT domain of the Internet, the ``invisible'' dot AFTER the 
``dot-com'' is the heart of the Internet, the ``master list'' that 
identifies which TLDs such as ``.com'' or ``.uk'' or even ``.art'' or 
``.politics'' appear to all the users of the Internet ``by default.'' 
One could say that the ROOT domain is the ``gateway'' by which all 
content is made visible to the entire Internet. Only TLDs included in 
that ``master list'' can be accessed by the entire Internet, and 
anything excluded cannot.
    Presently, the U.S. Government holds the authority over the ROOT 
domain through its agency the National Telecommunications and 
Infrastructure Agency (NTIA) under the Department of Commerce. The NTIA 
has entered into an agreement with ICANN to oversee the assignment of 
TLDs to operators who will provide services for those TLDs and to 
recommend their inclusion into the ROOT domain so they will be visible 
to the entire Internet. ICANN at its own admission had acted 
arbitrarily and capriciously in selecting 7 TLDs and their operators. 
The beneficiaries of the TLD selections include the dominant industry 
players, and companies whose principals resided on the ICANN board. 
Although some of the board members recused themselves from the actual 
vote on the TLD selections, they inevitably made their impression on 
the other board members who voted unanimously in their favor. The 
exclusion other qualified applicants, and more than 130 new and 
expressive TLDs by the ICANN board not only reeks of favoritism, but is 
an ominous sign of things to come should ICANN gain control of the ROOT 
domain. Some have argued that the restricted number of TLDs selected by 
ICANN is meant to ``preserve stability of the Internet.'' In reality, 
since the addition of hundreds, thousands, even millions of TLDs would 
have no adverse technical impact on the Internet, the artificial 
limitation of TLDs is in fact a form of censorship imposed through 
pressure by the trademark and intellectual property special interests 
who place the value of ``brand'' above free speech and who wish to 
profit by creating monopolies and artificially limiting supply in order 
to control the market, and in this case, access and free speech.
    Should the NTIA move forward to fully privatize the ROOT domain to 
ICANN, U.S. Citizens would stand to lose their First Amendment Rights 
with respect to the Domain Name System that enables them to access, 
publish and express over the Internet. It would be a great tragedy to 
our society to see the First Amendment replaced by the Lanham Act! 
Should First Amendment rights with respect to the Domain Name System 
become lost, the Internet would become a world in which trademark 
rights supercede and even chill free expression and speech.
    I respectfully urge this Committee to intervene if necessary to 
assure that the ROOT domain remain under the authority of the U.S. 
Government, and that any ``outsourcing'' of services to manage it 
technically or administratively be limited so as to protect the rights 
of U.S. citizens under the U.S. Constitution.
    Thank you for your time and for the opportunity to present my views 
to this Committee. I would be pleased to answer any of your questions 
to the best of my ability.
                               __________
            Prepared Statement of International Congress of 
                   Independent Internet Users (ICIIU)
    The International Congress of Independent Internet Users ICIIU) 
thanks this Subcommittee for an opportunity to present its views on 
ICANN and the so-called Internet privatization process in charge of the 
U.S. Department of Commerce.
    In addition to the comments presented here, the ICIIU has made a 
formal complaint to the U.S. Government regarding what we believe to be 
the illicit creation of ICANN by special interests and its ongoing 
catering to those interests. The complaint can be read at the ICIIU 
website (http://www.iciiu.org/Protest.htm), and a news article on the 
complaint at http://www.internetnews.com/ec-news/article/0,4-
315131,00.html.
    Senators, we users of Internet domain names presently number in the 
millions. We are not a small group of special interests like some of 
the other stakeholders involved in the Internet. We belong to all 
sectors of society, in every country on earth.
    We users of Internet domain name registration services should be 
free to choose with whom and on what terms we contract for those 
services. But we are being restricted to registration of our domain 
names with so-called ICANN-accredited registrars, which are companies 
that have signed an agreement with ICANN in which they have promised to 
impose many unfair conditions on user-registrants, including the 
condition that we agree that our domain name can be revoked, suspended, 
or canceled by the registrar, the registry (NSI), or ICANN upon the 
decision of any one of these to do so, without any show of cause, and 
with no provision for review.
    This is the essence of anti-competitive and anti-consumer behavior. 
ICANN, NSI, and the ``accredited'' registrars comprise a combine, a 
trust, that has conspired to deprive companies offering a better 
service and fairer terms from doing so, and to deprive registrants of 
due and democratic process, with a perpetual threat of discontinuance 
of service of our domain name, on which our website and our business 
depend.
    In its contractual relationship with the accredited registrars and 
with NSI-the-registry (this last giving ICANN power to enforce domain 
name registrations to its accredited registrars), ICANN has made the 
businesses of domain name holders, which depend on continuous domain 
name service, subject to the whim of ICANN, registry, and registrar. 
This makes it extremely precarious to invest time and money in a 
website, which can disappear overnight if the domain name which makes 
the website visible to the world is removed from the root domain name 
database, controlled by NSI under the aegis of ICANN.
    According to the provisions of the registrar/registrant agreement 
(the contract of adhesion between registrant and registrar) and the 
UDRP, ICANN, registry, and registrar may revoke a domain name for any 
reason, or without a reason. There is no due process, there is no 
administrative process controlled by law, there is no judicial review, 
because ICANN is an administrative agency masquerading as a private 
non-profit corporation which believes it cannot be made to answer 
either for violations of the Admin. Proc. Act, on the one hand, or the 
antitrust violations of a private for-profit corporation, on the other. 
Yet ICANN, NSI, and the registrars are, in fact, a cartel illicitly 
(that is, without the requisite legislation and in restraint of free 
trade) regulating interstate and international commerce.
    ICANN itself has been formed, not by the meeting and consensus of 
all stakeholders--of which we users are a very considerable part--
called for by the White Paper issued by the Department of Commerce 
(http://www.ntia.doc.gov/ntiahome/domainname/6-5-98dns.htm), but by a 
secret process that has never been revealed (see ``The Domain Name 
System: Hearings Before the Joint Subcommittees of the House of 
Representatives Committee on Science and Technology--1998,'' 
Congressional Record, U.S. Gov't Printing Office).
    The initial Board of ICANN, which still runs it after over 2 years 
of existence without a membership, and which is determining all of its 
policies on domain name usage, was chosen by a small group of persons 
representing an alliance of big businesses that includes IBM, MCI, and 
AT&T (see http://www.cookreport.com/08.10.shtml [lower part], and 
http://www.cookreport.com/icannregulate.shtml).
    No end-user of the Internet, no individual, no small business, nor 
non-commercial user, has been permitted by ICANN to participate in its 
policymaking. When individual and independent domain name holders or 
their spokesmen like the ICIIU, IDNO, CPT, etc., have demanded 
participation in policymaking committee meetings, we have been thrown 
out, disconnected, and refused admission. (The ICIIU has first-hand 
evidence, in the form of a tape recording of a teleconference of the 
Names Council, the central committee of the Domain Name Supporting 
Organization of ICANN from which all domain name-related policy is 
supposed to originate, of persons and organizations being disconnected 
and excluded, even though these people had a perfect right to 
participate as domain name registrants and Internet stakeholders.) 
ICANN knows that, if our participation were permitted, the anti-
competitive and anti-consumer contracts and agreements it has 
engineered with its registrars and with the monopolist registry NSI 
could not have been effected.
    The Constituencies and Names Council of the DNSO of ICANN have all 
been captured, through the use of undemocratic tactics, by members of 
CORE, a trade association of registrars illegaly incorporated in 
Switzerland (a complaint in this regard has been filed with the Swiss 
Department of Justice), or by members of ISOC, the so-called Internet 
Society, whose officers are predominantly employees of IBM, MCI, AT&T, 
or other large infrastructure corporations, and which is funded by 
those corporations (see http://www.isoc.org/orgs/orgsbylevel.shtml and 
http://www.cookreport.com/isoccontrol.shtml).
    In September, 1999, ICANN signed contracts with NSI and the ICANN-
accredited registrars, establishing the commercial and regulatory 
relationship between them (http://www.icann.org/nsi/nsi-
agreements.htm). These Agreements constitute a per se violation of the 
antitrust laws, since they are, in effect, an arrangement between a 
producer (NSI), the wholesaler (ICANN), and the retailers (the 
registrars) to restrain trade.
    No consumer representative nor spokesperson of domain name users 
was permitted to be present at the negotiations of the above 
Agreements. They were authorized by Beckwith Burr in the name of the 
Department of Commerce; Ms. Burr was given the job of representing the 
DOC through lobbying pressure from IBM, MCI, AT&T, and others; sheis 
IBM's operative in the DOC. And IBM, together with its combine 
partners, is funding ICANN: http://www.icann.org/correspondence/ibm-
letter-24sept99.htm ($100,000 contribution from IBM--letter from John 
Patrick, IBM VP for Internet).
    The ICIIU asks this Committee to investigate ICANN, its creation 
and operations, and, if it finds, as we have no doubt it will, that 
ICANN has not been created in accordance with law and democratic 
procedure, and is not conducting its policy decisionmaking for the 
benefit of all alike, to dissolve ICANN and in its place create a new 
and proper Internet regulator, responsive to the needs of the millions 
of Internet domain name users, who petition this Committee to intervene 
and redress our grievances.
                               __________
      Prepared Statement of The Domain Name Rights Coalition and 
            Computer Professionals for Social Responsibility
                              introduction
    Thanks to the Committee for providing the opportunity to provide 
feedback to the Senate regarding the role of ICANN and the Commerce 
Department in the ongoing battle for Internet governance. Although you 
have received letters from others who attempt to downplay ICANN's role, 
make no mistake; it goes far beyond that of technical management and 
enters the realm of a regulatory body. ICANN's policy will affect 
commerce, freedom of expression, and likely stifle the very medium it 
seeks to regulate. ICANN has not provided an accurate picture of the 
Internet world to the Committee. We felt it was necessary to correct 
and explain much of what they reported to you in response to your 
questions.
                          about dnrc and cpsr
    The Domain Name Rights Coalition has participated in the ongoing 
debates concerning Internet management as a member of the Boston 
Working Group, a member of the Open Root Server Confederation, former 
steering committee member of the IFWP (International Forum on the White 
Paper.) DNRC submitted comments on the Green Paper, use of the .US 
domain, testified before Congress, submitted comments to the World 
Intellectual Property Organization, and has dissented in the formation 
of ICANN's Uniform Dispute Resolution Policy.
    CPSR is a public-interest alliance of computer scientists and 
others concerned about the impact of computer technology on society. We 
work to influence decisions regarding the development and use of 
computers because those decisions have far-reaching consequences and 
reflect our basic values and priorities.
    As technical experts, CPSR members provide the public and 
policymakers with realistic assessments of the power, promise, and 
limitations of computer technology. As concerned citizens, we direct 
public attention to critical choices concerning the applications of 
computing and how those choices affect society.
                                summary
    ICANN continues to execute fundamental Internet policies beyond its 
mandate as ``technical coordinator,'' and without creating the 
participatory structures that would allow its decisions to be accepted 
and trusted by a broad spectrum of stakeholders. The sad fact is that 
ICANN has been ``captured'' from the beginning. Special interest groups 
have dictated the direction of ICANN, and have morphed it into an 
Internet Governance body with none of the protections afforded by 
governments.
    Governmental safeguards to American ideals such as Free Speech and 
other civil liberties, must be codified in ICANN, as well as other 
quasi-governmental corporations in the private sector.
    There is no technical reason to refuse any applicant for a top 
level domain. Instead, policy reasons were substituted for technical 
reasons, resulting in limiting competition, not enhancing it.
    By maintaining a false artificial scarcity, ICANN is risking an 
increasingly fragmented and incoherent Internet system. By their own 
statements ICANN claims to be concerned with stability above all. 
However, ICANN has now actively sought to cause domain names already 
registered by existing businesses (.web, .biz, .museum, .pro, .info and 
others) to be registered to potentially different parties at another. 
Rather than taking the opportunity to strengthen the domain name 
system, ICANN is risking the single predictable factor of the Internet. 
They are, in effect, ensuring that current domain names maintain their 
scarcity, and thus, value. The Department of Commerce hopefully did not 
contemplate that ICANN would become the Federal Reserve Board of domain 
names.
    Domain name registrars who have proven technical competence beyond 
a doubt by registering domain names for years as well as providing 
their own alternative roots were refused permission, not on technical 
grounds, but purely on policy grounds. TLD registries should be allowed 
to set policy independently of ICANN and that no registry be excluded 
from TLD operator status if its policy differs from that of ICANN.
    The burden of proof should be placed on ICANN to refuse to admit 
competition. Potential competitors should not prevented from entering 
the market, and force to prove to ICANN that they are worthy of an 
artificiality small number of slots.
    ICANN further claims to honor intellectual property law. Yet the 
fundamental basis of a natural right of property is that one earns 
property by the sweat of the brow. The ICANN uniform dispute resolution 
protocol (called a protocol to falsely deny that it is clearly a policy 
document, with negligible technical content) does not acknowledge any 
sweat of the brow argument. In multiple cases (for example, etoys and 
workingwomen) entrepreneurs entered the risky world on on-line commerce 
and sweat over their domain names to create value. The UDRP policy does 
not acknowledge that risk-taking or investment even over such generic 
words and phrases as ``toys'' and ``working women.'' The UDRP appears 
to have nothing to do with law. For example the published procedural 
rules used by one registered UDRP provider are in clear violation of 
any standard of procedural due process.
    As currently constituted ICANN has failed on all charges. It has 
moved slowly; been unrepresentative; acted to limit competition; and 
failed to offer useful, fair, coherent policies, or even policies which 
encourage investment in virtual property. ICANN is a policy experiment 
that has failed.
                                history
    The Domain Name Rights Coalition was formed in 1995 directly 
because of the NSI domain name dispute policy which we thought stifled 
the rights of individuals and small businesses to choose domain names. 
The development and growth of the World Wide Web brought with it a 
significant interest by the business community. It soon became clear 
that IANA, a US government contractor run by Dr. Jon Postel, would be 
unable to continue its management of domain names and numbers without 
significant help. The first attempt to transfer control occurred in 
1994 when Dr. Postel attempted to place IANA under the Internet Society 
(ISOC.) This failed, but something else grew from that union. The IAHC 
(International Ad Hoc Committee) was created, and tried to take over 
Internet governance via a document called the gTLD-MOU. Comments were 
solicited by the IAHC from the Internet community, but the responses 
were largely ignored. It is not coincidental that many of the members 
of CORE, POC (the Policy Oversight Committee), ISOC (an original IAHC 
advocate), WIPO, and the ITU are now heavily involved with the ICANN 
process, and have in a sense ``captured'' that process.
    The gTLD-MOU was stopped by the Internet community when it became 
clear that the process was closed, unaccountable, and non-transparent. 
Various people appealed to the Department of Commerce and the State 
Department for help. Through significant work and effort, the IAHC 
plans were thwarted, and the Commerce Department produced the ``Green 
Paper'' as a roadmap for technical management of names and numbers. The 
Green Paper was truly a pro-competitive solution, one that was hotly 
contested by many European governments, and the previous supporters of 
the MoU. In fact, it was right around this time, that Jon Postel 
redirected over half of the worldwide root servers to his server in 
California. While we may never know, this combination of events 
apparently derailed the Green Paper, and started the process that 
resulted in the White Paper.
    Thousands of comments were submitted by a large cross section of 
the Internet community, although many questioned (and still question) 
under what authority the Department of Commerce was taking control of 
Internet functions. Many of these comments were incorporated in the 
``White Paper'' which provided a framework for considering these 
issues. Using the White Paper as a foundation, the IFWP (International 
Forum on the White Paper) was created in 1998 to discuss these issues 
and attempt to reach the consensus that was required to move forward 
with the plans envisioned in the White Paper for an open, transparent 
and accountable organization, Newco, to manage domain names and 
numbers. Please note that even with the White Paper, significant 
numbers of people still ask under what authority Commerce is operating 
in choosing one company over another, mandating that company's bylaws, 
mandating that company to be non-profit, and assisting in choosing the 
unelected board members of that company.
    The IFWP steering committee consisted of members of the Internet 
community who were involved with not-for-profit enterprises. These 
included CORE, the Commercial Internet Exchange (CIX), Educause, the 
Domain Name Rights Coalition (DNRC), and various other groups. It was 
chaired by Tamar Frankel, a respected law professor and expert on 
corporate structure and process from Boston University. The IFWP held 
meetings around the world, and worked to come to consensus on various 
issues. In the midst of this process, Joe Sims, attorney for Dr. 
Postel, prommulgated a set of bylaws for Newco. He did this in closed 
meetings with no public input. These bylaws were presented to the IFWP, 
but did not gain consensus, largely because the points on which the 
IFWP had already garnered agreement were not included. Various further 
drafts followed, but still none of them achieved consensus.
    In late August 1998 after the final IFWP meetings, the steering 
committee met telephonically to plan the final or ``wrap-up'' meeting 
in which the consensus points would be memorialized, and further 
concessions would be provided by all sides. Although there had been 
multiple votes already taken that clearly supported a wrap-up meeting, 
yet another vote was called at that time. Mike Roberts vehemently 
opposed a wrap-up meeting, and was supported in this by Barbara Dooley 
of the CIX. There is speculation that Mr. Roberts had already been 
contacted at that time regarding serving with the ICANN board in some 
capacity. Further, around the time of the wrap-up meeting, Esther Dyson 
says that she was approached by Roger Cochetti of IBM and Ira Magaziner 
in Aspen, Colorado and asked if she would be interested in joining the 
ICANN Board. The IFWP wrap-up was finally completely derailed by 
ICANN's refusal to participate in the meeting.
    Some of the members of IFWP continued their work to create an open, 
transparent and accountable Newco. Two major groups, the Open Root 
Server Confederation (ORSC) and the Boston Working Group (BWG) 
promulgated bylaws for Newco through open process. Three sets of bylaws 
were provided in a timely manner to the Department of Commerce. 
Although the Commerce Department had long stated that they would not 
choose one set of bylaws over any other, they chose the ICANN's bylaws 
as a starting point.
    The Commerce Department directed ICANN to consult with the BWG and 
the ORSC regarding areas of concern to Commerce but there was little 
reason for them to do so since their bylaws and structure had already 
been chosen. ICANN did meet telephonically with BWG and ORSC, but 
failed to make substantive changes in its bylaws to accommodate the 
diversity of opinions toward fundamental issues such as openness of 
board meetings, voting on the record, voices for individuals and non-
commercial entities, limitations on ICANN's powers to strictly 
technical issues, etc. Both BWG and ORSC warned that the concept of 
constituencies would lead to capture by corporate interests at the 
expense of expression. BWG wanted to do away with constituencies 
altogether. ORSC wanted constituencies structured so that everyone 
would have a voice. The ICANN constituency structure has, as predicted, 
become the catalyst for capture by the old gTLD-MOU crowd, and a large 
and powerful group of trademark interests. These trademark interests 
are currently pressing non-legislative expansion of rights for 
trademark holders, at the expense of free speech and expression.
                              competition
    It is ironic in that in the midst of all the controversy over 
competition, ICANN has hesitated to take the single step that would 
introduce the most competition: creating objective technical guidelines 
for choosing new TLD registries. Although ICANN has indeed chosen 7 new 
gTLDs, no guidelines have been established that would allow for future 
expansion. There are no roadmaps by which prospective registries can 
turn to structure their technical business plans.
        the process of consensus development and implementation
    ICANN is correct in that its formation was an unprecedented 
experiment in private sector consensus decisionmaking. Unfortunately, 
that experiment is in the process of failure. ICANN's claim of 
``openness and transparency, based on Internet community consensus, 
bottom-up in its orientation and globally representative'' is far from 
the reality of the situation. ICANN is the classic top-down 
organizational structure without accountability. When its bylaws are 
inconvenient, they are changed without discussion.
                           board of directors
    Currently, the 9 seats that were to be elected from the Internet 
stakeholders, the so called ``at-large'' directors, were whittled down 
to 5. The other 4 seats have been held by ``Board Squatters,'' those 
who were appointed and not elected. Despite calls for elections to 
replace the squatters, and calls for their resignations, no movement 
has occurred.
    Instead, the Board has responded with a ``clean sheet'' study that 
could, conceivably, dismantle the entire at-large process altogether. 
Leaving ICANN controlled solely by special interest groups.
                              icann staff
    ICANN's staff seems, by all outside examination, to be driving all 
policy decisions. The non-elected staff, submits reports to the Board 
which are normally accepted verbatim, with no indication to the 
Internet community of what criteria was used to reach the conclusions 
contained therein. These policy decisions, often clearly outside the 
reach of a ``technical management'' organization, are then presented as 
a ``fait accompli'' with no accountability or transparency, and no 
input from the Internet community that they affect.
                               conclusion
    The Internet is the single most significant communications medium 
ever created. Its power goes well beyond that of shopping malls and e-
commerce, and empowers individuals in a way never before imagined. It 
is thus a national as well as an international resource. The ability to 
control important aspects of this technology cannot be underestimated. 
It is up to all of us to remain vigilant when organizations are given 
special privilege by a branch of the U.S. Government to control this 
vast means of expression. Safeguards must be put into place whereby 
individuals, non-profit entities, churches, tribal governments, and 
other disenfranchised groups may provide unencumbered input and opinion 
to an open, transparent and accountable entity. This entity is, 
unfortunately, not ICANN in its current form.
    ICANN must be restructured. We suggest the following changes: (1) 
ICANN must limit itself to technical coordination only. This limitation 
must be irrevocably codified in ICANN's bylaws, and must be enforced by 
the Commerce Department and/or Congress.
    (2) All policy decisions, including the new selection of gTLDs must 
be clearly documented as to what objective criteria was used to select 
them. Any decisions without such objective, clearly stated criteria 
should be rescinded and revisited after such objective criteria are put 
in place.
    (3) ICANN's current constituency structure must be restructured to 
allow for more inclusion by Internet stakeholders, including 
individuals, educational entities, religious entities, consumer 
protection groups, civil libertarians, and others. The current practice 
of lumping all of these groups into one constituency, while leaving 6 
others who all represent overlapping business interests, must change.
    (4) ICANN must not be used as the arm of government to circumvent 
constitutional rights and liberties. An example is the ``takings'' 
clause. Several gTLDs are being operated currently that will 
essentially be ``taken'' if ICANN puts the identical strings in their 
root system. Another example is ICANN's non-accountability under the 
Federal Administrative Procedures Act.
    (5) ICANN must not be allowed to pick and choose provisions of its 
mandate that it will accept and others that it will ignore. The most 
glaring example is its lack of codifying the at-large group into an 
irrevocable part of the bylaws. Second to this is ICANN's failure to 
recognize a place for individuals to participate on an equal footing 
with business interests. Third, is ICANN's continued failure to 
constitute a membership in accordance with the White Paper, as well as 
California public policy under which it is organized.
    (6) Fundamental rights of American citizens, such as free speech 
must trump intellectual property rights of businesses. ICANN's Uniform 
Dispute Resolution Policy gives trademark and intellectual 
propertyholders a means to limit and silence legitimate speech without 
recourse. If ICANN is allowed to continue to use this policy, a balance 
must be struck whereby speech rights are protected and abuses by 
intellectual propertyholders are curtailed.
  

                                  
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