[Senate Hearing 108-984]
[From the U.S. Government Publishing Office]
S. Hrg. 108-984
INTERNET CORPORATION FOR ASSIGNED
NAMES AND NUMBERS (ICANN)
=======================================================================
HEARING
before the
SUBCOMMITTEE ON COMMUNICATIONS
of the
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
JULY 31, 2003
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska ERNEST F. HOLLINGS, South
CONRAD BURNS, Montana Carolina, Ranking
TRENT LOTT, Mississippi DANIEL K. INOUYE, Hawaii
KAY BAILEY HUTCHISON, Texas JOHN D. ROCKEFELLER IV, West
OLYMPIA J. SNOWE, Maine Virginia
SAM BROWNBACK, Kansas JOHN F. KERRY, Massachusetts
GORDON H. SMITH, Oregon JOHN B. BREAUX, Louisiana
PETER G. FITZGERALD, Illinois BYRON L. DORGAN, North Dakota
JOHN ENSIGN, Nevada RON WYDEN, Oregon
GEORGE ALLEN, Virginia BARBARA BOXER, California
JOHN E. SUNUNU, New Hampshire BILL NELSON, Florida
MARIA CANTWELL, Washington
FRANK R. LAUTENBERG, New Jersey
Jeanne Bumpus, Republican Staff Director and General Counsel
Robert W. Chamberlin, Republican Chief Counsel
Kevin D. Kayes, Democratic Staff Director and Chief Counsel
Gregg Elias, Democratic General Counsel
------
SUBCOMMITTEE ON COMMUNICATIONS
CONRAD BURNS, Montana, Chairman
TED STEVENS, Alaska ERNEST F. HOLLINGS, South
TRENT LOTT, Mississippi Carolina, Ranking
KAY BAILEY HUTCHISON, Texas DANIEL K. INOUYE, Hawaii
OLYMPIA J. SNOWE, Maine JOHN D. ROCKEFELLER IV, West
SAM BROWNBACK, Kansas Virginia
GORDON H. SMITH, Oregon JOHN F. KERRY, Massachusetts
PETER G. FITZGERALD, Illinois JOHN B. BREAUX, Louisiana
JOHN ENSIGN, Nevada BYRON L. DORGAN, North Dakota
GEORGE ALLEN, Virginia RON WYDEN, Oregon
JOHN E. SUNUNU, New Hampshire BARBARA BOXER, California
BILL NELSON, Florida
MARIA CANTWELL, Washington
C O N T E N T S
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Page
Hearing held on July 31, 2003.................................... 1
Statement of Senator Burns....................................... 1
Witnesses
Balogh, Aristotle, Senior Vice President, VeriSign, Inc.......... 18
Prepared statement........................................... 20
Davidson, Alan B., Associate Director, Center for Democracy and
Technology..................................................... 23
Prepared statement........................................... 25
Stahura, Paul, President and Chief Executive Officer, eNom, Inc.. 29
Prepared statement........................................... 31
Letter dated July 14, 2003 to ICANN Board of Directors from
Paul Stahura, Chief Executive Officer and President, eNom,
Inc........................................................ 35
Letter dated May 18, 2003 to Robin Layton, Associate
Administrator, National Telecommunications and Information
Administration, U.S. Department of Commerce from Paul
Stahura, CEO, eNom, Inc.................................... 40
Twomey, Dr. Paul, President and Chief Executive Officer, Internet
Corporation for Assigned Names and Numbers (ICANN)............. 10
Prepared statement........................................... 12
Victory, Hon. Nancy J., Assistant Secretary for Communications
and Information, National Telecommunications and Information
Administration, U.S. Department of Commerce.................... 3
Prepared statement........................................... 5
Appendix
Pool.com, statement.............................................. 55
Response to written questions submitted to Hon. Nancy J. Victory
by:
Hon. Maria Cantwell.......................................... 57
Hon. Ron Wyden............................................... 56
Response to written questions submitted to Dr. Paul Twomey by:
Hon. Maria Cantwell.......................................... 58
Hon. Ron Wyden............................................... 57
INTERNET CORPORATION FOR ASSIGNED NAMES AND NUMBERS (ICANN)
----------
THURSDAY, JULY 31, 2003
U.S. Senate,
Subcommittee on Communications,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:45 p.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'll call the Committee to order. Are we on
the air now? Can you hear me down there? I saw your ears fly
out like that. I expect so. My voice kind of carries.
Today's hearing concerns the operation and development of
the Internet Corporation of Assigned Names and Numbers,
otherwise known as ICANN. I'm convinced that this issue of the
proper role of ICANN is most critical. It's one of the real big
issues that come before this Subcommittee. And, broadly
speaking, the future of ICANN will define the future of the
Internet.
In 1988, a decision was made to turn over the task of
administering policy for Internet naming and addressing to not-
for-profit, private sector Internet stakeholders. The idea was
to create a management structure that would preserve the domain
naming system but would also adopt practices that would support
competition and consumer choice in all decisions. The bottom-up
management structure would have the ability to include public
input, both national and international, as a basic guiding
principle.
Since its murky beginnings in 1998, however, ICANN has been
an experiment which has lurched from crisis to crisis over
issues ranging from its very legitimacy to the lack of
transparency and due process, and whether it was engaging in
mission creep.
As this experiment is now over 4 years old and the Internet
now underpins the very foundation of our economy, issues of
accountability become preeminent. Given that ICANN has
eliminated its five elected at-large board seats under its new
structure, proper oversight by the Department of Commerce
remains more important than ever in making sure that ICANN
remains a technical and administrative body rather than
straying into areas of core policy.
I look forward to hearing from Mr. Twomey's testimony today
about how the changes to ICANN board structure will result in a
more responsive and responsible organization. I am particularly
concerned that the lack of accountability for the quasi-
governmental organization poses serious dangers for American
national security. While we have made great strides in
combating terrorism, our Nation is still very vulnerable to the
threat of a massive cyber attack. The denial-of-service attacks
on nine of the 13 Internet root servers last October highlights
these concerns even more.
A particularly troubling area is the lack of uniform
standards for the 13 root servers. Security of these systems is
critical to the function of the domain name system. And I look
forward to hearing what steps ICANN is taking to ensure that
they gain the support of the operators to be full ICANN
members.
What must not be allowed to happen is for a dispute among
the principals dealing with the management of the Internet to
make this key instrument vulnerable to senseless acts of
destruction. The bottom line is that ICANN must be a part of
the security solution and not part of the problem.
I'd also like to touch on the failure, so far, of ICANN to
integrate other countries into the structure. As the chairman
of the U.S./Asia network, this particularly concerns me, given
the explosive growth of the Internet in Asia.
Just this week, the Associated Press reported that a number
of people in China who use the Internet increased by 15 percent
in the past 6 months. Currently, 70 million people use the
Internet in China, a number which will undoubtedly see
continuing growth. Over half a million websites in China use
China's ``dot cn'' domain, which has no agreement with ICANN.
In fact, of the nearly 300 country-code top-level domains,
ICANN has contractual agreements with only ten. Clearly, to say
that there has been a lack of progress in this area is a
massive understatement. I should add that Mr. Twomey has
recognized this issue as a top priority for action, given the
trillion dollars in trade across the Asian/Pacific region, and
I recommend him to focus on this.
ICANN certainly faces many difficult tasks. Its
responsibilities are many. Primary, among them are making sure
that the Internet's infrastructure is stable. It also must act
to foster competition, rather than act as a supernatural
regulatory body which picks winners and losers. To accomplish
these goals, we must have greater global support and
coordination. When looking at options, we should not impose
strict governmental control, but look at an organization that
allows for the greatest industry input and most effectively
coordinates the development and practices that govern the
operation and the conduct of the Internet industry.
Ultimately, ICANN must focus on three operational areas if
it is to be successful: improving the global support and
coordination of the Internet domain name systems, strengthening
standards and practices of these systems to ensure stability
and security of the critical infrastructure, and promoting the
growth and innovation for all users of the Internet.
Today, I'm calling on the Department of Commerce to come
back to the Committee by the end of August with its proposals
of future ICANN and how the organization can accomplish these
operational goals. With ICANN's memorandum of understanding up
for renewal in September, it is imperative for the Department
to lay out its plans in a timely fashion.
I am considering offering legislation when we return from
August recess to ensure ICANN is, indeed, becoming more
accountable and that it is acting within its original
memorandum of understanding with the Department of Commerce. In
doing so, I'll be working closely with Senator Wyden and my
colleagues on this Committee.
The issues before the Subcommittee today are complex, and
the stakes are high. I look forward to hearing from our
witnesses about the best track forward to make the Internet
stronger, more secure, and more reliable.
Before we go to the testimony of you, Ms. Victory, I would
like to apologize for being late. We're trying to get out of
town. Everybody's got hay to cut at home. And it is time we be
there. And so there's a conference today. We've made some
progress on an energy bill. And so that's where I was.
And we look forward--Ms. Victory, who is Assistant
Secretary for Communications and Information, National
Telecommunications and Information Administration of the United
States Department of Commerce. Thank you for coming this
afternoon.
STATEMENT OF HON. NANCY J. VICTORY, ASSISTANT
SECRETARY FOR COMMUNICATIONS AND INFORMATION,
NATIONAL TELECOMMUNICATIONS AND INFORMATION
ADMINISTRATION, U.S. DEPARTMENT OF COMMERCE
Ms. Victory. Thank you very much, Mr. Chairman. I'd like to
thank you for inviting me here today to testify on this
important issue.
As you may recall, last year I testified before you on
developments related to the Internet domain name and addressing
system, specifically the memorandum of understanding between
the Department of Commerce and ICANN. While the Department
serves as the steward of critical elements of the domain name
system, ICANN is the private sector entity responsible for day-
to-day management of this system.
The Department continues to believe that the stability and
security of this important global resource can best be achieved
through privatization and global participation in the technical
management of the domain name system. The Department,
accordingly, supports the ongoing work of ICANN and its efforts
to engage all critical stakeholders in the decision-making
processes. The Department desires to see ICANN evolve into a
stable and sustainable organization that is well-equipped to
weather a crisis. We are encouraged that ICANN has recently
been making some progress toward this end.
Last year, when the Department of Commerce and ICANN chose
to renew the MOU for a period of one year, both parties agreed
that ICANN needed to focus its improvements in five major
areas: clarifying its mission and responsibilities, ensuring
transparency and accountability in its processes and decision-
making, increasing its responsiveness to Internet stakeholders,
developing an effective advisory role for governments, and
ensuring adequate and stable financial and personnel resources
to carry out its mission and responsibilities.
The Department believes that ICANN has made significant
strides this year in these areas. ICANN has completed a
comprehensive reform effort that has resulted in major
structural adjustments and refinements in its decision-making
processes. In addition, the organization has hired a new CEO
with both management expertise and experience in dealing with
this unique organization. ICANN has also implemented a new
nominating process to ensure qualified, committed, and
internationally representative board members. In short, ICANN
has made progress in developing into a more stable,
transparent, and responsive organization.
I'm also pleased to note that the ICANN Governmental
Advisory Committee, of which the U.S. is a very active
participant, has undergone an evolution of its own. Among other
things, the GAC has appointed liaisons to each of the ICANN
supporting organizations to improve communications on public
policy issues. It has also established working groups on
particular issues to facilitate analyses and the development of
recommendations.
Now, while ICANN has made progress, both the Department of
Commerce and ICANN recognize that much is still to be done for
ICANN to evolve into the stable and sustainable DNS management
organization that we would all like it to be.
First, ICANN needs to solidify relationships with the root
server system operators. While ICANN has worked with the root
servers to complete a report on the current status of root
server system security and recommendations for infrastructure
improvements to enhance security, ICANN needs to establish a
more concrete ongoing relationship with this critical
constituency. The formation of ICANN's Security and Stability
Advisory Committee, of which many of the root server operators
are members, is an important first step in the right direction.
Second, ICANN needs to formalize its relationship with the
regional Internet registries. Securing agreements with the RIRs
is essential, not only to ICANN's ability to perform its
address-allocation responsibilities, but also to the overall
stability of the Internet. I note the productive talks between
ICANN and the RIRs are currently underway.
Third, ICANN needs to complete actions it has initiated to
develop transparent mechanisms that ensure accountability to
all stakeholders. ICANN is in the process of instituting an
international arbitration procedure to provide a
reconsideration process for disputed decisions. It is also in
the process of hiring an ombudsman to investigate grievances
against the company. These tasks need to be completed.
Fourth, ICANN needs to establish stable agreements with the
country-code top-level domain operators. While we recognize the
competing pressures surrounding this issue, it's imperative for
ICANN to develop a framework agreement that would appeal to the
majority of ccTLD operators and which takes into account the
various national sovereignty issues. The establishment of a
country-code-name supporting organization during the last year
represents significant progress toward this end.
And, finally, ICANN needs to define a predictable process
for selecting new top-level domains. This strategy should use
straightforward, transparent, and objective procedures that
preserve the stability of the Internet. The ICANN board has
recently taken steps in this regard by charging its CEO with
providing a detailed policy-development plan and schedule for
the introduction of new TLDs and preparing to issue a request
for proposals for new sponsor TLDs.
Now, the current MOU between the Department of Commerce and
ICANN expires at the end of September. The Department is
currently in the process of reviewing ICANN's accomplishments
and assessing what actions remain. This review will underlie
any decision to extend the MOU, and, if so, how best to modify
the agreement to focus ICANN's and the Department's efforts
going forward. The Department remains committed to working
diligently with ICANN and all critical Internet stakeholders to
preserve and enhance this critical global resource.
Finally, I would like to thank you, Mr. Chairman and the
Members of this Committee, for their support and cooperation
during my tenure at NTIA. With your help, NTIA has been able to
log a number of accomplishments, including helping to make the
Internet more secure and accessible for a wide variety of
users. And I particularly would like to commend Congress for
its vision and leadership in passing legislation to establish
the .kids.us space. I hope I can count on you and your
colleagues to develop websites in this space, giving our
Nation's children a better understanding of the workings of
Congress and the issues before you.
Thank you, again, for this opportunity to testify, and I'd
be happy to answer any questions that you might have.
[The prepared statement of Ms. Victory follows:]
Prepared Statement of Hon. Nancy J. Victory, Assistant Secretary for
Communications and Information, National Telecommunications and
Information Administration, U.S. Department of Commerce
Thank you, Mr. Chairman. I would like to thank you and the members
of the Subcommittee on Communications of the Senate Committee on
Commerce, Science, and Transportation for inviting me here today to
testify on this important issue. I am Nancy J. Victory, Assistant
Secretary for Communications and Information and Administrator of the
National Telecommunications and Information Administration.
The Internet and the variety of applications that it supports
provide tremendous opportunities for economic and social development
around the world. What started as a small-scale system of links among
U.S. academic institutions is now a gigantic global network connecting
individual users, companies and institutions from any access point,
regardless of national or geographic borders. The Internet continues to
expand in terms of size and scope and has become a significant and
important means of doing research, communicating with each other, and
conducting business. In fact, e-commerce sales by U.S. retail
establishments reached $11.921 billion during the first quarter of
2003--a 25.9 percent increase over first quarter 2002. Given the
Internet's importance in all of these facets of daily life and the
country's general economic well-being, it is essential that the
Internet--and its underlying domain name and addressing system (DNS)--
remain stable and secure.
This is the primary concern of the Department of Commerce, which
currently serves as the steward of critical elements of the DNS. The
Department believes that the stability and security of this important
global resource can best be achieved through privatization of the
technical management of the DNS and continued global cooperation, via
appropriate public-private partnerships that reflect the international
nature of the Internet. Innovation, expanded services, broader
participation, and lower prices will arise most easily in a market-
driven arena, not in an environment that operates under substantial
regulation.
The Internet Corporation for Assigned Names and Numbers (ICANN) is
the private sector entity responsible for day-to-day management of the
DNS. ICANN performs this function pursuant to a Memorandum of
Understanding (MOU) with the Department of Commerce. The Department
supports the ongoing work of ICANN and applauds its efforts to engage
all critical stakeholders in its decision-making processes. We are
particularly encouraged by the progress ICANN has made over the past
year towards implementing a number of structural and procedural
reforms, as well as moving forward on several of the tasks set forth in
the MOU. The Department desires to see ICANN evolve into a stable and
sustainable organization that is well equipped to weather a crisis.
Last year, when the Department of Commerce and ICANN chose to renew
the MOU for a period of one year, both parties agreed that continued
progress toward stability and sustainability required ICANN to focus on
improvements in 5 major areas:
Clarifying ICANN's mission and responsibilities;
Ensuring transparency and accountability in its processes
and decision making;
Increasing its responsiveness to Internet stakeholders;
Developing an effective advisory role for governments; and,
Ensuring adequate and stable financial and personnel
resources to carry out its mission and responsibilities.
The Department believes that ICANN has made significant strides
this year in developing into a more stable, transparent and responsive
organization. ICANN has completed a comprehensive reform effort that
has resulted in major structural adjustments and refinements to its
decision-making processes that allow for greater transparency and
responsiveness to all critical Internet stakeholders. Specifically:
ICANN has refined its mission and restructured its
supporting organizations and advisory committees, including the
establishment of a new supporting organization for country-code
Top Level Domain (ccTLD) managers;
ICANN has implemented new, transparent, constituency-driven
policy development processes;
ICANN has established an at-large advisory committee and
regional at-large organizations to encourage greater global
public participation;
ICANN has created liaisons between the Governmental Advisory
Committee (GAC) and the other ICANN supporting organizations
and advisory committees;
ICANN has established a process for the ICANN board to
solicit and receive GAC advice on public policy matters between
meetings; and
ICANN has restructured its staff to better respond to
ICANN's technical policy, DNS management and financial
responsibilities.
In addition, the organization has hired a new CEO with both
management expertise and experience in dealing with this unique
organization. It has also implemented a new nominating process to
ensure qualified, committed and internationally representative board
members. It recently appointed eight new board members with impressive
credentials and very relevant experience.
I am also pleased to note that the ICANN GAC, of which the United
States is an active participant, has undergone an evolution of its own.
The establishment of GAC liaisons to each of the other ICANN supporting
organizations is intended to encourage communications between the GAC
and the relevant constituent groups with respect to public policy
issues. In addition, the GAC has established internal working groups on
relevant public policy issues to facilitate their analysis and to
engage in dialogue with ICANN supporting organizations and committees
as needed.
While ICANN has made a great deal of progress, both the Department
of Commerce and ICANN recognize that much is still to be done for ICANN
to evolve into the stable and sustainable DNS management organization
we would all like it to be. These include:
Ensuring Root Server Security. The root server system forms
a critical component of the DNS by linking domain names to the
corresponding numerical addresses. Ensuring the security of
this function is therefore of the utmost importance. While the
request for specific information set forth in the Cooperative
Research and Development Agreement (CRADA) was met, ICANN needs
to continue to exchange views and ideas with the root server
system operators to solidify relationships that guarantee the
security of this resource. The formation of ICANN's Security
and Stability Advisory Committee, of which many of the root
server operators are members, is a first step in the right
direction.
Securing Agreements with Regional Internet Registries. As
the entity responsible for the allocation of numbering
resources within their respective geographic region, the
Regional Internet Registries (RIRs) play a crucial role.
Although productive talks are underway, legal agreements
between the RIRs and ICANN have not yet been completed.
Finalizing these agreements to formalize the relationship
between ICANN and the RIRs remains essential not only to
ICANN's ability to perform its address allocation
responsibilities, but also to the overall stability of the
Internet.
Enhancing Accountability Mechanisms. As the Internet
continues to play a significant role in our daily lives,
transparent mechanisms that provide accountably to all
stakeholders are important. While ICANN has initiated a review
of suitable international arbitration providers to constitute
an Independent Review Panel and has called for the
establishment of an Office of Ombudsman, these mechanisms must
be finalized to ensure appropriate accountability to all ICANN
stakeholders.
Developing Agreements with ccTLD Operators. The fastest
growing segment of the DNS is within the ccTLD community. While
ICANN continues to make progress towards establishing stable
agreements with ccTLD operators, forward movement has been
slow. This is largely attributable to the complexities
resulting from the convergence of national sovereignty
assertions, international law considerations, and the general
concerns of global and local Internet communities. Despite
these competing pressures, ICANN must develop a framework
agreement that would appeal to the majority of ccTLD operators,
while recognizing the various national sovereignty issues
involved. The establishment of a country-code Name Supporting
Organization (ccNSO) during the last year represents
significant progress towards this end.
Refining the Processes for Selecting New TLDs. Determining
the circumstances under which new top level domains (TLDs)
would be added to the DNS was one of the key functions
identified in the White Paper. While ICANN has approved the
addition of seven new TLDs, much work remains to be done in
this area with respect to developing an appropriate long-term
strategy. This strategy should use predictable, transparent and
objective procedures that preserve the stability of the
Internet. While the ICANN Board has recently taken welcomed
steps in this regard--charging its CEO with providing a
detailed policy development plan and schedule for the
introduction of new TLDs and preparing to issue a Request for
Proposals for new sponsored TLDs--this remains one of ICANN's
core yet-to-be-accomplished objectives.
The current MOU between the Department of Commerce and ICANN
expires at the end of September. The Department is currently in the
process of reviewing ICANN's accomplishments and assessing what actions
remain under the MOU. This review will underlie any decision to extend
the MOU and, if so, how best to modify the agreement to focus ICANN's
and the Department's efforts going forward. The Department stands ready
to continue its stewardship obligations of critical elements of the DNS
during the transition period and to assist the global Internet
community in maintaining a stable and secure Internet. To this end, the
Department remains committed to working diligently with ICANN and all
critical Internet stakeholders to assist ICANN in its evolution and to
preserve and enhance this global resource.
Finally, I would like to thank the Members of this Committee for
their support and cooperation during my tenure at NTIA. With your help,
NTIA has been able to lob a number of accomplishments, including
helping to make the Internet more secure and accessible for a wide
variety of users. I particularly want to commend the Congress for its
vision and leadership in establishing the .kids.us space. The Internet
can be a wonderful resource for children, and soon we will be have a
safe place for children under 13 where they can discover and explore
educational, fun, and age appropriate content. I hope I can count on
you and your colleagues to develop websites in the .kids.us space,
giving our Nation's children a better understanding of the workings of
Congress and the issues before you.
Thank you and I would be happy to answer any questions that you may
have.
Senator Burns. Thank you very much.
Madam Secretary, last year, I guess, about--or this year, I
guess, last June, the GAO issued a report that was, sort of,
critical of your Department not fulfilling the role of
oversight with regard to ICANN. Since then, have you taken
steps to help that situation? And cite a few for this
Committee, if you could.
Ms. Victory. Yes, sir. I believe that report came out in
June 2002, and we did take the recommendations to heart. One of
the recommendations was to issue some sort of a status report
as to what was guiding our thinking as we were entering into
the MOU every year. Last year, when we did extend the MOU for
one year, the Department issued a separate statement that went
through our rationale, that went through the progress that we
had seen over the year, and that also laid out a road map for
ICANN for the upcoming year, and had a number of things in that
road map that were incorporated into the MOU.
I think one of the most important tools that we implemented
was a quarterly reporting mechanism that we imposed on ICANN
that was supposed to serve a number of purposes; one, to let
the Department know and to give it status updates on what was
happening, but it was also supposed to be an encouragement tool
for ICANN to recognize that it needed to make progress every
quarter, not just at the end of the year.
I believe that ICANN has been making those quarterly
reports public. We've also asked ICANN to deliver an annual
report to us that would inform our thinking as we're entering
the end of this MOU term and considering whether to renew or
modify or terminate the agreement, and we expect to receive
that annual report next week.
Senator Burns. Now, you've taken these actions. Based on
what you know now and based on some of the progress that ICANN
has made, would you recommend renewal of that MOU this year?
Ms. Victory. We have not reached a decision on that yet. I
think one of the--we are--certainly been very close to
monitoring what ICANN has been doing through these quarterly
reports and also through our participation in the Government
Advisory Committee. But one piece of evidence that I think is
going to be very important to us to assess will be this annual
report, which we hope to receive next week.
We've not reached a decision on what to do, but we have
seen progress in each of the five areas that I outlined in my
testimony, which were the five areas we told ICANN we would
like to see improvement last year in the MOU.
Senator Burns. You pointed out in your testimony developing
agreements with country-code top-level domain operators such as
.cn for China has been slow.
Ms. Victory. Uh-huh.
Senator Burns. What seems to be the problem there? What do
you think the problem is, as not getting more cooperation out
of the international community?
Ms. Victory. I think there are a number of problems there.
Actually underlying the difficulty with getting agreements with
any of the constituencies is the fact that there were no
agreements before, and the Internet was operating just fine. So
for a lot of these entities, just the idea of entering into
agreement is a new concept and a, sort of, a new philosophy to
get used to.
But I think with the ccTLDs, one of the most difficult
issues has been resolving all of the different approaches to
ccTLDs that you're seeing in each country. Not every country
has a tight relationship with its ccTLD. In the U.S., we do.
And, in fact, the Department has a contract with NeuStar, the
U.S. operator. But, in many countries, there is no formal
relationship between the Government and the ccTLD. We have
significant sovereignty issues that we want to make sure are
not impacted by the ccTLD agreement. Other countries may not
have that concern. And, frankly, just the fact that you have so
many different permutations, I think, has made it very
difficult to develop either a central agreement or a number of
variations of an agreement.
But I think we're hopeful that with this ccNSO, which has
recently been formed in the bylaws adopted at the June Montreal
meeting, that that will be an appropriate forum to be able to
make recommendations as to what some of the basic principles or
outline of this contract should be. So I think that's a step in
the right direction, that that group is organizing and
organizing formally within ICANN. And then, hopefully, through
their assistance, some basic forms of the contract can be
drafted, and we can move forward.
Senator Burns. In your estimation, when you look at those
reports and those negotiations with the international
community, what is the main concern of countries affiliating
themselves and joining this organization?
Ms. Victory. Well, I think that, in terms of the countries
joining, the Government Advisory Committee has gone through its
own evolution over the last year. We are seeing tremendously
increased representation within the Government Advisory
Committee, and a much more active group. And I mentioned in my
testimony that we do have these working groups that have been
formed under the leadership of the new Government Advisory
Chair from Malaysia. That's enabled this to be a much more
relevant organization. It's enabled a lot of concrete work to
be done on particular issues.
So I think in terms of attracting new members to the
Government Advisory Committee, that's certainly been a help.
And also, there's a strong interest in outreach, particularly
to some developing countries, to educate them about ICANN and
to educate them about the benefits of participating in the
Government Advisory Committee, even if their participation is
electronic, as opposed to physically attending the meetings.
And that seems to have moved things along quite nicely.
But, again, as far as the ccTLDs go, not all of them are
affiliated with their country's government. We've been trying
to educate some of the governments, and I think the Government
Advisory Committee is very interested in taking up some of the
issues of the ccTLDs to see if they can help advance the ball
with respect to the contracts.
Senator Burns. We've still got a lot of work to do.
Ms. Victory. Yes, we do.
Senator Burns. And ICANN does, too. And I want to
congratulate you on your service down at the Department of
Commerce. We wish you well in your next endeavor----
Ms. Victory. Thank you.
Senator Burns.--and in the work that you do. I would hope
that you're leaving an office down there that understands what
their duties are with regard to ICANN and our oversight
responsibilities there. And, also, we look forward to that
report coming out before the MOU is renewed.
Ms. Victory. Thank you very much, sir.
Senator Burns. So we thank you for coming today and sharing
your thoughts with us, and--happy trails.
Ms. Victory. Thank you very much, Senator.
Senator Burns. Thank you very much.
Our next panel is Mr. Paul Twomey, President and Chief
Executive Officer of the Internet Corporation; Ari Balogh,
Senior Vice President, VeriSign, here in Virginia; Alan
Davidson, Associate Director, Center for Democracy and
Technology; and Paul Stahura, Chief Executive Officer of eNom,
Incorporated, in Belleview, Washington. Gentlemen, we welcome
you here today. We look forward to your testimony and also some
conversation that we might have with regard to ICANN.
I want to call on Mr. Paul Twomey, and first of all I thank
you for dropping by my office, we had a nice visit there, and
we look forward to your report and some changes, and you said
you were going to have good news today, and I believe you, and
even though you may be from down under, I'll try a bit harder
to understand you, and we welcome you here today.
STATEMENT OF DR. PAUL TWOMEY, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, INTERNET CORPORATION FOR
ASSIGNED NAMES AND NUMBERS (ICANN)
Mr. Twomey. Good day.
Thank you, Senator, and I'm very pleased to be here today
and to give testimony to this Committee. I will make just some
opening remarks. It's my first appearance here in the role as
President and Chief Executive of ICANN. I assumed this
responsibility about 4 months ago. I have been spending much of
my time since then listening to the many constituency interests
that in aggregate make up the ICANN. In addition, I and many
others have been working very hard to finally implement the
ICANN reforms that had just begun when my predecessor last
appeared before this Committee. There's a lot of work been done
in that timeframe.
I've also published a comprehensive plan for the
reorganization of the ICANN staff function, which is in the
process of being implemented. I want to focus today on these
reform and reorganization efforts.
Senator Burns. You might want to pull that microphone a
little closer to you.
Mr. Twomey. Is that better? That is much better. Thank you,
Senator.
On specific accomplishments, it's hard to overstate the
comprehensiveness of the ICANN reforms that have taken place
over the last year. They include: restructuring the ICANN
board, advisory committees, supporting organizations and other
participatory bodies to build effective, transparent,
responsive, and balanced participation by all stakeholders;
Second, forming a country-code name supporting organization
to further participation in ICANN by the almost 250 country-
code top-level domains around the world, and that's just a very
recent event at our most recent meeting in Montreal;
Establishing more effective processes for ICANN to solicit
and receive advice on public policy and consumer policy matters
from the Governmental Advisory Committee, other multinational
expert agencies and supporting organizations;
Creating new constituency driven policy development
processes; monitoring and offering policy guidance on key
upcoming technical issues facing the domain name system, such
as implementation of internationalized domain names, and the
transition to a new numbering protocol, IP v.6;
Establishing accountability mechanisms, such as the
creation of an ombudsman program and independent review process
for board decisions;
In response to consumer demand, adopting new policies
relating to redemption grace period for at least deleted domain
names, integrated Star transfers and Whois data protection and
accuracy policies; and establishing an at-large advisory
committee and organizing regional at-large organizations to
encourage informed and productive public participation by
individual Internet users.
Now, there is a lot of progress there but I don't want to
overstate the case. ICANN 2.0, as we call it, is still a work
in progress, but in completing this reform and reorganization,
the ICANN community has demonstrated that it can develop
consensus on important and controversial issues. The various
ICANN constituencies have learned to work together to
compromise, to take account of the points that are important to
others, just as they want the points important to them
accounted for. The success of the reform efforts, and the
changes it has produced, leave me optimistic that ICANN will be
a more productive entity in the years ahead.
I want to just address some consumer issues.
Notwithstanding the fact that the participants in ICANN have
been devoting significant time and attention to the reform
effort over the past year, ICANN has also been able to respond
to concerns and issues about the DNS that directly affect
consumers and other users. Four examples of this are:
First, the redemption grace period service, which protects
against unintentional loss of a registered domain name.
Second, our efforts to deal with the very complex Whois
issues, where we need a balance of accurate information and
privacy protection.
Third, new procedures to enter registrar transfers which
increase the already vigorous competition between the more than
100 active registrars.
And finally, the Wait List Servers have the most
controversial of these efforts, which would offer a guaranteed
registration for a currently registered domain name when and if
the registration ever was allowed to expire.
Other of our reforms has been staff reorganization. Given
my business background, I came to office with some definite
plans about how ICANN staff could be organized to enable more
efficient and more effective performance, even working under
what will always be significant financial constraints. These
plans are now being implemented, and I believe will produce a
more businesslike management structure, one that takes into
account the increasing demand for and complexity of the work
that ICANN undertakes to support the Internet community. My
goal is to improve responsiveness and to streamline management
processes.
Finally, on security and stability. Let me state the
obvious. Security and stability are very important issues for
ICANN, as they are for everyone in the current environment. Two
ICANN entities, the Security and Stability Advisory Committee,
which is composed of operators of Internet infrastructure and
other security specialists, and the Root Service System
Advisory Committee, with members drawn from representatives of
the organizations responsible for operating the world's 13 root
name servers and other organizations focused on stable
technical operation and the authority to root serve a system,
concentrate on these issues.
As part of the ICANN reforms over the past year, the chair
of the Security and Stability Advisory Committee, Dr. Stephen
Crocker, holds a liaison seat on the ICANN board, thus ensuring
that body's constant attention to its critical subjects.
In conclusion, I hope this brief overview of the immense
changes that ICANN has been and is going through gives you a
greater feel for the velocity of change, which is considerable,
and a heightened sense of confidence that ICANN can, in fact,
carry out its limited but important mission effectively. I
believe that it can, or I would not have taken up this visible,
and let me tell you not always popular, position as CEO.
I took the job because I believe that ICANN's mission is
important, and because I want to help establish that a public-
private partnership of the kind that ICANN has become is, in
fact, a feasible and appropriate way to deal with the matters
like the DNS, over which no single Government can claim
sovereignty, but which all Governments and many private parties
have important and legitimate interests in seeing function
well.
I will be pleased to take any questions you may wish to
pose.
[The prepared statement of Mr. Twomey follows:]
Prepared Statement of Dr. Paul Twomey, President and Chief Executive
Officer, Internet Corporation for Assigned Names and Numbers (ICANN)
Mr. Chairman and members of the Committee, thank you for the
opportunity to make my first appearance before this Committee in my
role as President and Chief Executive Officer of the Internet
Corporation for Assigned Names and Numbers (ICANN).
I assumed this responsibility about four months ago, and have been
spending most of my time since then listening to the many constituency
interests that in the aggregate make up ICANN, which has kept me on the
road a very large portion of the last four months. In addition, I and
many others have been working very hard to finally implement the ICANN
reforms that were kicked off by Stuart Lynn's report to the Board in
February of 2002, and I have published a comprehensive plan for the
reorganization of the ICANN staff function, which is in the process of
being implemented. This testimony will focus on these two aspects of
ICANN reform.
Reform and Change at ICANN
In the year since Stuart Lynn last appeared before you to discuss
ICANN, the reform process that he described as underway has essentially
been completed. Of course, we still have things to do; important parts
of the reforms are still being implemented. But the basic and critical
building blocks of the new ICANN--ICANN 2.0, if you will--are now in
place. I would like to describe both the process and the results, since
I think both are important signs of the continuing maturation of this
still young entity.
ICANN is a complex body with a complicated mission--developing
consensus policies related to the technical coordination, at the
overall level, of the global Internet's systems of unique identifiers,
and in particular ensuring the stable and secure operation of the
Internet's unique identifier systems, including the Domain Name System.
Because it is intended to be a private sector consensus development
body, it necessarily must permit, and indeed encourage, participation
from all who have legitimate interests in the subject matter, from
individuals to governments. But if it is to be effective in overseeing
the management of this critical global asset, it must also be able to
come to conclusions and to implement them efficiently when required.
Finding the right balance of these two somewhat inconsistent objectives
has been a constant learning experience for those involved in ICANN,
none of whom had experience in such an entity, since no similar private
sector entity has ever existed. ICANN is unique, for better or worse,
and thus the learning curve has been steep.
The good news is that I believe that the various interests and
constituencies that make up the ICANN community have now moved very far
up that steep learning curve. We have more than four years of
experience in learning how to make this concept work, and with the
benefit of that experience, we have essentially completed a thorough
reform of ICANN structures, processes, and indeed its very
constitutional documents.
We have a new set of bylaws, a new mechanism for selecting the
ICANN Board of Directors, a new mechanism for enabling and encouraging
individual participation in a meaningful and productive way, and new
procedures and structures for ensuring transparency, fairness and
accountability. I don't want to overstate the case: ICANN 2.0 is still
a work in progress. But I believe that, in completing this reform and
reorganization, the ICANN community has demonstrated that it can
develop consensus on important and controversial issues. The various
ICANN constituencies have learned to work together, to compromise, to
take account of the points that are important to others just as they
want the points important to them accounted for. The success of the
reform efforts, and the changes it has produced, leave me very
optimistic that ICANN will be a more productive entity in the years
ahead.
Specific Accomplishments
It is hard to overstate the comprehensiveness of the ICANN reforms
that have taken place over the last year. They include:
Restructuring the ICANN Board, advisory committees,
supporting organizations and other participatory bodies to
build effective, transparent, responsive and balanced
participation by all stakeholders;
Forming a Country-Code Names Supporting Organization to
further participation in ICANN by the almost 250 ccTLDs around
the world;
Establishing more effective processes for ICANN to solicit
and receive advice on public policy and consumer policy matters
from the Governmental Advisory Committee, other multi-national
expert agencies, and its own Supporting Organizations;
Creating new constituency driven policy-development
processes;
Monitoring and offering policy guidance on key upcoming
technical issues facing the domain name system, such as the
implementation of Internationalized Domain Names and the
transition to a new numbering protocol, IPv6;
Establishing accountability mechanisms, such as creation of
an Ombudsman program and an independent review process for
Board decisions;
In response to consumer demand, adopting new policies
relating to a redemption grace period for deleted domain names,
inter-registrar transfers and Whois data protection and
accuracy policies; and
Establishing an at-large advisory committee and organizing
regional at-large organizations to encourage informed and
productive public participation by individual Internet users.
New Structures and Policy Processes
The reforms of the past year have completely transformed ICANN. A
majority of the ICANN Board is now selected by ICANN's Nominating
Committee, with the remainder being selected by ICANN's policy-making
bodies--the Address Supporting Organization, Generic Names Supporting
Organization and Country-Code Names Supporting Organization. Nominating
Committee members are delegated to act on behalf of the global Internet
community, and are guided by very specific and detailed criteria set
out in the bylaws for qualifications, international representation,
diversity, experience and eligibility. There is a Nominating Committee
Code of Ethics, and mandatory disclosure of any potential conflicts of
interest. In its initial experience of selecting eight ICANN Board
members earlier this year, the Nominating Committee solicited ideas and
statements of interest from the Internet community as a whole, and made
its eight selections from over one hundred persons considered.
In addition to the Board, the ICANN reforms of the past year
created the Generic Names Supporting Organization and the Country-Code
Names Supporting Organization as two new policy-making entities within
ICANN. The GNSO replaced a similar body, but with a more balanced
representation of those affected by generic domain names policies, and
with a carefully crafted Policy Development Process designed to ensure
the opportunity for participation by all relevant parties, a
transparent process and a decision within a reasonable timeframe. The
ccNSO, the formation and structure of which was agreed to by all
involved parties at the recent ICANN meeting in Montreal, is emblematic
of the recent progress. It reflects a judgment by the country-code Top
Level Domains that they must be a part of the ICANN policy development
process, and follows more than a year of detailed discussions between
ICANN, ccTLD administrators and other interested parties. The ccNSO
also includes a detailed Policy Development Process designed to ensure
a balance of input from country-code Top Level Domains from all
geographic regions, and an established process by which to deal with
policies of global concern affecting country-code Top Level Domains.
How to ensure informed and productive participation by individual
Internet users has been a frustratingly difficult problem for ICANN
since its creation. As part of the overall reforms adopted in the last
year, we have established the At Large Advisory Committee, which will
be the representative body of a supporting framework of local and
regional entities made up of and representing individual Internet
users. The At Large Advisory Committee will be responsible for
generating and providing advice to ICANN policy bodies and the ICANN
Board from the global user community. The At Large Advisory Committee
also appoints delegates to ICANN's Nominating Committee, and liaisons
to the managing Councils of the Generic Names Supporting Organization
and the Country Code Names Supporting Organization, as well as other
ICANN committees and participatory bodies.
Accountability and Transparency Mechanisms
ICANN is as much a process as it is an entity--a place where those
with legitimate interests in DNS operation and policies can come
together to discuss, and hopefully reach consensus on, matters of
common interest. To be successful, it must be open and transparent, and
there must be appropriate accountability mechanisms. like all things,
these goals must be balanced against the practical realities of
reaching and implementing decisions, but we believe we have now arrived
at an appropriate balance of all these factors.
Potentially the most important innovation in this area is the
Ombudsman Program. ICANN's new Bylaws provide for an Office of the
Ombudsman to act as a neutral dispute resolution practitioner for
matters not subject to reconsideration by the Board or eligible for the
Independent Review Process (both described below). The Ombudsman's role
is to serve as an objective advocate for fairness, tasked with
evaluating and clarifying complaints from members of ICANN's various
constituencies, and where possible, helping to resolve complaints about
unfair or inappropriate treatment by ICANN staff, the ICANN Board, or
ICANN constituent bodies, using the full range of conflict resolution
tools. ICANN has recently retained an individual experienced in the
establishment of Ombudsman Programs to provide assistance in developing
and writing ICANN's Ombudsman program policies and operating practices,
and in the identification of appropriate candidates to lead the Office
of the Ombudsman.
ICANN's new Bylaws also include a procedure by which any person or
entity materially affected by an action of ICANN may request review or
reconsideration of that action by the Board, to the extent that he,
she, or it have been adversely affected by: (a) a staff action or
inaction contradicting established ICANN policy or policies; or (b) one
or more actions or inactions of the ICANN Board taken or refused to be
taken without consideration of material information. All
reconsideration requests are publicly posted on ICANN's website, and
must be responded to in some fashion by the Board's reconsideration
committee within thirty days of receipt. To date, ICANN has received,
evaluated, and acted on a number of such reconsideration requests.
ICANN's new Bylaws also mandate that ICANN establish a process for
independent third-party review of Board actions alleged to be
inconsistent with ICANN's Articles of Incorporation or Bylaws. Requests
for review are to be referred to an independent review panel operated
by an international arbitration provider with an appreciation for and
understanding of applicable international laws, as well as California
not-for-profit corporate law. Three arbitration providers have emerged
as suitable candidates to operate the review panel, and the
qualifications and attributes of each are being reviewed currently,
with the intent for the organization to make a selection this Fall.
Finally, the new ICANN bylaws also incorporate a specific
articulation of ICANN's mission--to coordinate the allocation of the
global Internet's systems of unique identifiers, and to coordinate
policy development reasonably and appropriately related to these
technical functions. After considerable discussion and debate, the new
bylaws set forth in some detail the core values that underlie that
mission statement, and thus should inform the performance of that
mission by ICANN. ICANN 's bylaws also adopt policies to ensure
balanced input and participation reflecting the functional, geographic,
and cultural diversity of the Internet at all levels of policy
development and decision making.
Participation and a voice within ICANN is available to any
interested participant. ICANN's Board and Board committees, Supporting
Organizations, Advisory Committees, and other ICANN bodies all operate
under principles which include striving for geographic and professional
diversity. Each ICANN committee, Supporting Organization, and other
constituent body is charged with adopting rules and procedures intended
to ensure a balance of views within the entity.
Consumer Issues
Notwithstanding the fact that the participants in ICANN have been
devoting significant time and attention to the reform effort over the
past year, ICANN has also been able to respond to concerns and issues
about the DNS that directly affect consumers and other users. Four
examples of this are described below.
Redemption Grace Period Service
The Redemption Grace Period Service is a response to the increasing
number of complaints made by holders of domain names that were
unintentionally deleted (either because of unintentional failure to
renew or for other reasons) and then registered by someone else,
sometimes using the domain name to display content repugnant to the
former registrant. Frequently the registrant experienced significant
delays and costs in recovering the name and having the former services
(web service, e-mail, etc.) restored.
To address these unfortunate situations, it was proposed to
institute a grace period after expiration of a name, during which the
domain name would no longer resolve but the former registrant (and only
the former registrant) could have the name restored in return for
payment of any fees required. After favorable public discussion, the
Board concluded that the idea should be further explored. A technical
steering group was formed (including knowledgeable registry and
registrar personnel and in consultation with the relevant Supporting
Organization) to develop a concrete proposal implementing the
Redemption Grace Period Proposal. This resulted in amendments to
ICANN's agreements with registry operators designed to require the
implementation of a Redemption Grace Period Service.
To date, VeriSign has introduced a Redemption Grace Period Service
in the .com and .net top-level domains, subject to completion of
contractual documentation. Likewise, the Public Interest Registry has
introduced a Redemption Grace Period Service in the .org top-level
domain on a provisional basis. Neulevel has launched a Redemption Grace
Period Service in the .biz top-level domain.· Other registry
operators are expected to follow suit shortly. The decision of whether
and how to implement a Redemption Grace Period Service in sponsored
top-level domains has been left to the sponsors of those domains.
The implementations mentioned above have incorporated the first
phase of the Redemption Grace Period Service. The next step in
implementation of the Redemption Grace Period Service is expected to
occur this Fall, and will allow a registrant to move the renewed
registration to another registrar if so desired
Whois
ICANN is the leading global forum for discussion of Internet Whois
issues. We are currently moving forward with implementation of four
consensus policies related to Whois that were adopted at the ICANN
Board of Directors meeting in March 2003 in Rio de Janeiro. One of the
four recommended policies, the Whois Data Reminder Policy, was
implemented in June 2003. The Whois Data Reminder Policy calls for
ICANN accredited registrars to provide domain name registrants with an
annual listing of their Whois data and to remind registrants of the
need to correct inaccurate or out-of-date information. The other three
policies, as to which the technical considerations of implementation
are currently being considered, are expected to be implemented this
Fall.
ICANN also recently posted a ``Registrar Advisory Concerning the
`15-day Period' in Whois Accuracy Requirements.'' The advisory was
posted in order to promote a clearer understanding of registrar Whois
data-accuracy requirements. As explained in detail in the advisory,
registrars have the right to cancel a registration if a customer fails
to respond within 15 days to an inquiry concerning Whois data accuracy,
but registrars also have flexibility to decide when to use that right,
depending on factors including whether the inaccuracy appears
intentional and whether third parties are being harmed by maintaining
the registration with inaccurate data. Registrars are obligated to take
reasonable action to correct reported Whois inaccuracies, but are not
bound to a fixed timetable or specific action.
A two-day Whois Workshop held during ICANN's meetings in Montreal
initiated a new phase of discussion within the ICANN community on Whois
and related privacy and other issues. The Whois Workshop was held in
response to a request from the GNSO, and in cooperation with the GAC's
Whois policies program. The two-day workshop consisted of one day of
tutorial-style presentations (with public comment and question/answer
sessions) dealing with current Whois policy and practice, and one day
of public policy-focused panel discussions on ``Balancing Public Policy
Issues in the Current Whois System'' and ``New Approaches to Whois
Policy and Practice.''
Whois-related discussions will be a continued focus of ICANN's
Whois Steering Group and the ICANN President's Standing Committee on
Privacy.
Inter-Registrar Transfers
ICANN is in the process of implementing another new set of
consensus policies intended to improve inter-registrar transfers of
domain names. Domain transfers (portability) allow consumers and
business to freely select their domain registration service provider
based on price and service levels.
When competition was introduced into the domain registration market
in 1999, there were initially only five accredited registrars. There
are now more than 168 accredited registrars, approximately 100 of whom
are active. Competition has been extremely successful, with prices
having fallen approximately 80 percent, and widespread innovation and
creativity in the domain registration market. However, transfer issues
continued to be troublesome, and in 2001, ICANN's Domain Name
Supporting Organization convened a Transfers Task Force to study the
inter-registrar transfer system and recommend improvements. The
Transfers Task Force worked for over a year in crafting twenty-nine
(29) consensus policy recommendations set forth in its final report.
The Task Force's recommendations were accepted unanimously by the GNSO
Council, and were forwarded to ICANN's Board early this year. In March
2003, ICANN referred the recommendations to its Governmental Advisory
Committee (as is required for all proposed actions affecting public
policy concerns.) The GAC's recommendation to ICANN was ``to support
and implement the GNSO Task Force's recommendations, without
amendment.''
In April 2003, ICANN's Board unanimously adopted the 29 consensus
policy recommendations on transfers, and authorized staff to take steps
to implement the policy recommendations. ICANN has convened a Transfers
Assistance Group, including individuals from the Transfers Task Force,
the GNSO Council, the Registries and Registrars Constituencies, and the
At Large Advisory Committee. This Group will work with ICANN staff in
the coming weeks and months to draft notices and amendments to ICANN's
contracts with registries and registrars in order to put these
recommendations into practice.
Wait List Service (WLS)
The WLS is a new registry service proposed by Verisign, the
registry operator for the .com and .net. top-level domains. The
service, if implemented, would allow potential registrants to subscribe
to a ``wait list' that would guarantee they would be next in line to
register a name if the current registrant lets it expire.
Domain names ending in .com, .net, .info, etc. are registered
through ICANN accredited registrars--of which about 100 are currently
active. Generally, anybody can register any string of characters
through any registrar on a first-come, first-served basis. Once
somebody registers a particular name, no one else can register that
same name until the current registrant lets the registration expire and
the name is deleted from the registry. The WLS proposal is designed to
offer consumers and businesses the opportunity to secure the next place
in line to obtain the right to register a particular name should the
current registrant decide not to renew it. (Approximately 800,000 names
are deleted by the registry each year.)
The WLS proposal generated considerable controversy within the
ICANN community. In the absence of a registry service such as that
proposed by VeriSign, various ICANN registrars had created products
that purported to take reservations for names that might be deleted in
the future. Those registrars then regularly queried registries in an
attempt to be the first to learn of a deletion, in which case they
would then seek to register the name for their clients. Obviously, no
registrar could guarantee that any particular registration would be
successful, and since there were commonly a number of registrars
seeking to register any given deleted name, most people who signed up
for those services were destined to be disappointed.
The VeriSign proposal offered a significant improvement from a
consumer perspective to the various services already offered by
registrars. Because VeriSign operated two registries, it could
guarantee that a reservation made in the WLS for names registered in
those registries would always be successful IF the name was ever
deleted. Obviously, such a guarantee can only be offered by the
registry or its agent, since only the registry can guarantee such
performance. This fact lead some registrars to conclude that the
availability of the WLS (with its guarantee of performance) to
consumers would reduce the demand for their services (which were not
able to offer a comparable guarantee), and thus they strongly opposed
approval of the WLS. While reaction from other parts of the ICANN
community that did not have a direct competitive interest was more
mixed, it would be fair to characterize the majority view as opposed to
approval of the WLS proposal.
After considering the full range of views expressed, the ICANN
Board concluded that ICANN should act whenever possible in a way that
promotes consumer choice and innovative services, and that its general
goal to seek to increase competition when possible did not require it
to prevent consumers from having the option of purchasing services they
may decide are beneficial. It would be anomalous to ``protect''
competition between providers of non-guaranteed products by preventing
the new competition of a guaranteed product that at least some
consumers would likely prefer. Considering all these factors, the Board
approved the WLS proposal with certain conditions that it felt
appropriate under the circumstances to protect consumer interests.
Among these were a limitation of the approval to a twelve month
experimental period, after which time the Board would be required to
review and make an independent decision on the continuation of the WLS.
The Board authorized ICANN's CEO and its General Counsel to negotiate
amendments to the registry agreements with VeriSign that were
consistent with its approval.
The Board's approval did not end the controversy over WLS. In fact,
this issue is now the subject of two lawsuits, one filed in Canada and
one in California. In the California litigation, the plaintiff
requested a Temporary Restraining Order, which request was denied by
the Court. Further proceedings will likely take place. The WLS will not
be implemented until the registry agreement amendments that the Board's
approval requires are completed, and the new agreement is approved by
the Department of Commerce, as required by the Memorandum of
Understanding between ICANN and the DOC.
Security and Stability
Following the ICANN meeting at Marina del Rey in November of 2001,
ICANN created a Security and Stability Advisory Committee focused on
security and integrity of the Internet's naming and address allocation
systems. The committee draws its membership from operators of Internet
infrastructure and other security specialists, and presently continues
work on several ongoing projects, including a recommendation regarding
the layering of services on the DNS (for example, the Verisign ION
Program and the domain name ``auctions'' of various registrars), an
evaluation of the redundancy and resiliency of the major domain name
servers to withstand distributed denial of service (DDoS) attacks, and
an assessment of the status of DNSSEC, the forthcoming protocol to add
cryptographically signatures to the domain name system and thereby
prevent forgery and hijacking of domain names. The DNSSEC work includes
building a road map outlining its deployment and identification of
where further work is needed.
The Committee is also assessing most of the significant security
issues affecting the Internet; and is beginning an assessment of the
transition to the new Internet addressing system, IPv6.
Root Server Systems
ICANN's Root Server System Advisory Committee has a membership
drawn from representatives of the organizations responsible for
operating the world's thirteen root nameservers and other organizations
focused on stable technical operation of the authoritative root server
system. ICANN operates one of these thirteen root servers, which has
given ICANN valuable insight into the issues involved in root server
operations and enhancement.
The RSSAC has spent considerable time examining and monitoring the
deployment of more robust DNS infrastructure for the Internet. The
Committee has also closely followed the efforts of root server
operators to successfully expand the capacity of the system and its
geographical diversity through the use of ``anycast'' systems. At
present, the Committee is examining the implications of new
technologies on the root server system, such as implementation of IPv6
for the root.
Staff Reorganization
One of the first things that I focused on when I assumed this
position was the internal organization of ICANN. Since I had been
involved with ICANN, one way or another, since before its birth, and
because of my personal background in business and business consulting,
I had some very definite ideas about how ICANN staff could be organized
to enable more efficient and more effective performance, even working
under what will always be significant financial constraints. After some
consultation with various constituencies, I announced plans for
evolving ICANN into a more business-like management structure--one that
takes into account the increasing demand for and complexity of the work
that ICANN undertakes to support the Internet community. My goal is to
improve responsiveness and to streamline management processes.
The new structure contemplates two Vice President positions (a Vice
President of Business Operations, focusing on the day-to-day operation
of ICANN, and a Vice President of Supporting Organizations and
Committee Support, focusing on the need to support ICANN's constituent
bodies). It also includes the reorganization of the various ICANN staff
functions into four general groups, each headed by a General Manager;
these will be the lANA function, the Public Participation function, a
Global Partnerships function that focuses on our relationships with
governments and multi-national bodies, and Technical Operations, which
is self-explanatory. Finally, there will be a General Counsel
responsible for the legal activities of ICANN, principally the
negotiation of agreements and advising the Board and the CEO on various
legal requirements. Recruitment for these new positions is now well
underway.
This new management structure is intended to clearly delineate
internal and external operations; recognize important relationships
that ICANN has with the community; and provide clear lines of
accountability for key operational and strategic functions. While this
will involve the addition of a small number of new positions, I am
convinced that this structure will greatly assist in ICANN's efforts to
enhance the responsiveness and transparency of its operations to the
community.
Conclusion
1 hope this brief overview of the immense changes that ICANN has
been and is going through gives you both a feel for the velocity of
change--which is considerable--and a heightened sense of confidence
that ICANN can in fact carry out its limited but important mission
effectively. I believe that it can, or I would not have taken on this
visible (but not always popular) position. I took the job because I
believe that the ICANN mission is important, and because I want to help
establish that a public-private partnership of the kind that ICANN has
become is in fact a feasible and appropriate way to deal with matters
like the DNS, over which no single government can claim sovereignty,
but which all governments and many private parties have important and
legitimate interests in seeing function well.
1 will be pleased to answer any questions you may have.
Senator Burns. Thank you very much, Mr. Twomey. We
appreciate your testimony here today, and we will have some
questions. Mr. Aristotle--is that Balogh?
Mr. Balogh. Balogh, yes.
Senator Burns. Senior Vice President of VeriSign. Thank you
for coming today.
STATEMENT OF ARISTOTLE BALOGH, SENIOR VICE PRESIDENT, VeriSign,
INC.
Mr. Balogh. Good afternoon, Mr. Chairman. My name is
Aristotle Balogh. I'm Senior Vice President for Infrastructure
of VeriSign, Incorporated, based in Mountain View, California.
I have a prepared statement, which I would request be inserted
in the record.
VeriSign is pleased to have the opportunity to come before
you to discuss the Internet and its coordination, its impact on
our economic future, and the contribution ICANN might make
going forward. Our role in providing the Internet's
infrastructure gives us a unique perspective on the Internet.
VeriSign operates two of the 13 authoritative root server
operation centers that direct Internet traffic, including, at
the request of the U.S. Department of Commerce, the A root
server. In this server, we maintain the authoritative address
list of all Internet top level domains. VeriSign also manages
the .com and .net domain registries.
Today, I come with the simple message. Although the
Internet may have started as an interesting place to send e-
mails and check stock prices and sports scores, it is now part
of the essential fabric of global economic activity. In a very
short time, nearly every element of our global infrastructure
and every key industry has come to depend on the Internet to
function, to reach their customers and constituencies, to
increase their efficiency, and to maintain their ability to
operate, and that reliance will only grow.
By 2010, the Internet will have nearly 2 billion users,
serve as a platform for over $1 trillion in economic activity,
handle roughly 25 percent of all telephone traffic, and connect
billions of computer devices. This global dependency and its
associated enormous risks make it imperative that we, the
entire Internet community, evolve our notion of the Internet
from a technology spawned by academia and the Government for
their own use to the present reality, a system that is a
critical tool for a global economy.
VeriSign believes that any entity charged with assuring the
stability, availability, and growth of the Internet requires
the legitimacy, capacity, and authority necessary to accomplish
those tasks. Before it can be a truly effective organization,
ICANN has several steps to take. ICANN's legitimacy is hampered
by the noninclusion and nonparticipation of key Internet
constituencies. ICANN's capacity is questioned by those who see
security and stability as essential for the Internet but find
ICANN preoccupied with the minutiae of regulation. ICANN's
authority is clouded by its ambiguous status as an
international organization.
There are three key functions where we believe ICANN can
play a constructive leadership role in the next phase of the
Internet. The first, stability and security. The 13 root
servers are the nerve center of the Internet's addressing
system. Their failure would be highly disruptive to the smooth
functioning of the Internet. Last October's attacks that
paralyzed nine of those 13 root servers underscored how those
networks are increasingly under sophisticated attacks. We
believe ICANN can play a constructive role by fostering
information-sharing and serving as a forum that promotes
industry best practices and uniform operating standards.
The second, continued globalization of the Internet. The
Internet's domain name system is no longer just about .com,
.net, and .org. Besides other top level domains like .biz and
.info, there are over 250 top level domains such as .de for
Germany, .jp for Japan, and .br for Brazil. These country-
specific domain names today represent nearly half of all
registered names on the Internet. Soon, they will account for
the majority of domain names in the world, yet only a handful
of these 244 country-code domain-name operators have executed
agreements with ICANN. It is imperative that ICANN be
streamlined into an organization that country-code operators
can benefit in joining, rather than a burden or a risk.
The third is innovation in services and processes. While
the Internet has spawned many innovative services over the last
decade, the blunt truth is that few new services have been
added to benefit Internet users. For example, internationalized
domain names provide a means for non-English users to type in
domain names in their native language, but their introduction
has been slowed by, at least in part, an internal ICANN debate
in micromanagement.
ICANN should be streamlined to enable industry to develop
and offer new services in a timely fashion to meet the ever-
changing needs of the Internet. I've suggested a coordination
body to be in a position to play a useful role in the important
task of supporting effective growth of the global Internet. It
needs a broader user community and Internet support. As I
mentioned earlier, a good start in this regard would be for
ICANN to recognize that Internet constituencies have the
capacity for self-coordination, with ICANN serving as the
umbrella organization for technical coordination. We believe,
as do others in the community, that such a framework would
strengthen standards of operation and conduct, improve the
process for resolving critical issues, and promote information-
sharing and adoption of best practices that would make the
Internet stronger.
To summarize, for ICANN to be legitimate and effective,
ICANN must bolster its legitimacy by ensuring that critical
Internet constituencies that are responsible for the operation
of the global networks and domain names are active and
supportive members. ICANN must limit its attempts at
micromanagement in a way that will invite the participation of
key Internet constituencies as well as encourage innovation and
new services. ICANN must abandon its aspirations to be the
unchartered FCC of the Internet, and ICANN must sponsor the
discussions regarding the Internet security and growth that
will ratify a view among all constituencies that the
institution is adding real value.
Thank you, Mr. Chairman, for allowing me this opportunity
to testify today.
[The prepared statement of Mr. Balogh follows:]
Prepared Statement of Aristotle Balogh, Senior Vice President,
VeriSign, Inc.
Good afternoon Mr. Chairman and distinguished members of the
Committee.
My name is Aristotle Balogh; I am Senior Vice President of
Operations and Infrastructure for VeriSign, Incorporated, based in
Mountain View, California. I have a prepared statement, which I would
request be inserted in the record.
VeriSign is the leading provider of critical infrastructure
services for the Internet and telecommunications networks. Every day we
support 10 billion domain name lookups and e-mails, provide Internet
security for thousands of corporations, process 25 percent of all North
American a commerce and help facilitate billions of daily phone calls
and millions of daily SMS messages.
VeriSign is pleased to have the opportunity to come before you to
discuss the Internet and its coordination, its impact on our economic
future, and the contribution the Internet Corporation for Assigned
names and Numbers (ICANN) might make going forward.
We strongly support the concept of a central coordinator of the
administration functions of the Internet's address system.
Our role in providing the Internet's infrastructure gives us a
unique perspective on the Internet. VeriSign operates two of the 13
authoritative ``root'' server operation centers that direct Internet
traffic, including, at the request of the U.S. Commerce Department, the
``A'' Root Server. In this server, we maintain the authoritative
address list of all Internet top-level domains. VeriSign also manages
the ``dot COM'' and ``dot NET'' domain registries. These are the
central data bases that enable you as an Internet user to simply type
in a domain name on your computer, such as ``verisign.com,'' and
connect it over the Internet to the machine that hosts the proper
Website.
To support these functions, VeriSign has invested hundreds of
millions of dollars into building a global network of computers that
are a critical component of the Internet's infrastructure.
Today, I come with a simple message: although the Internet may have
started as an interesting place to send e-mails, and check stock prices
or sports scores, it is now part of the essential fabric of global
economic activity.
Among other indicators of this growing, central, critical role for
the Internet is the fact that in a little over two years, the daily
traffic of domain name resolutions--``hits''--on our servers has
increased tenfold (from 1 billion a day to over 10 billion a day).
In a very short time, nearly every key element of our global
infrastructure and every key industry--financial services and markets,
education, manufacturing, transportation, electric power, broadcasting,
government services--has come to depend on the Internet to function, to
reach their customers and constituencies, to increase their efficiency,
and to maintain their ability to operate.
And that reliance will only grow. By 2010, the Internet will have
nearly 2 billion users, serve as the platform for over $1 trillion in
economic activity, handle roughly 25 percent of all telephone traffic
and connect billions of computer devices. In short, the Internet no
longer can be seen as just the means of adding e-commerce to the mix of
retail activities, or providing a convenient set of e-government
services. As much as coal and iron were the keystones of the Industrial
Age, the Internet is the essential tool of the Information Age. That
means an Internet failure--such as the one we came close to
experiencing last October when nine of the thirteen root servers were
disabled for several hours--will have a devastating effect on the
global economy.
This growing global dependency, and its associated enormous risks
tell me that we--the entire community of governments, infrastructure
stewards and users--obligates us all to evolve our notion of the
Internet as a technology spawned by academia and the government for
their own use, to the present reality: a system that is a critical tool
for a global economy, in a manner that is historically without
precedent.
And so too, must evolve our institutions of Internet coordination
into those which will have the legitimacy, capacity and authority
necessary to assure the availability and growth of a reliable, secure
Internet.
For the past five years, ICANN has been the entity charged by the
U.S. Government and a community of Internet interests with coordinating
certain technical functions of the Internet's naming and numbering
system. As the ONLY institution serving in a multi-national capacity in
the Internet space--other than the professional technical standards
bodies--ICANN has ``acquired'' some roles, and ``assumed'' others that
have little to do with ``coordinating the administration of the naming
and numbering system.''
And this functional ``ambiguity'' for ICANN has led to significant
debate around the nature of and proper scope of responsibility for any
entity taking on responsibilities of Internet ``coordination.''
In our capacity as a leading provider of key Internet
infrastructure services relied on by the rest of the Internet, and
consequently, a half a billion users, VeriSign believes that any entity
charged with ensuring the stability, availability and growth of the
Internet requires the legitimacy, capacity and authority necessary to
accomplish those tasks.
Today's ICANN cannot effectively do this. ICANN's legitimacy is
hampered by the non inclusion/non-participation of regional numbering
authorities, the collective community of root server operators or over
200 country-code Top Level Domain registries. ICANN's capacity is
questioned by those who see security and stability as essential to the
Internet, but find ICANN preoccupied with regulation of registrar
business practices and the minutiae of delegation of new generic
registries. ICANN's authority is clouded by its ambiguous status as a
contractor with the U.S. Department of Commerce, but a PR message
espousing its ``international'' character.
So, while a need clearly exists for a coordination body to take on
the challenge of the 21st Century's Internet, a question exists as to
how ICANN can evolve to be that body.
If ICANN is to be that body let me suggest areas where important
work must be done. There are three key functions where we believe ICANN
can play a constructive leadership role in the next phase of the
Internet:
(1) Stability and Security. The 13 root servers serve as the nerve
center of the Internet's addressing system. Their failure would
be highly disruptive to the smooth functioning of the Internet
addressing system. Last October's attacks that paralyzed nine
of the thirteen root servers underscored how these networks are
under increasingly sophisticated attack. These attacks come
from not only cyber terrorists with grand designs to disrupt
the U.S. critical infrastructure but from IT professionals who
might work in the cubicle next door. We believe ICANN can play
a constructive role by fostering information sharing of
information and serving as a forum that promotes industry best
practices and uniform operating standards.
(2) Continued Globalization of the Internet. The Internet domain
name system is no longer just about .com, .net and .org.
Besides other top-level domains like .biz and .info, there are
over 200 country-code top-level domains such as .de for
Germany, .jp for Japan and .br for Brazil. These country
specific domain names today represent nearly half of all
registered names on the Internet; soon, they will account for
the majority of domain names in the world. Yet only a handful
of these 200+ country-code domain name operators have executed
agreements with ICANN.
This lack of true global support for ICANN limits ICANN's
legitimacy. It is imperative that ICANN be streamlined into
an organization that the country-code operators see benefit
in joining, rather than a burden or risk.
A good first step would be ICANN adopting an approach that
respected sovereignty of the country-code operators and
their ability to govern themselves. In short, to operate
within an ICANN model without fear of ICANN dictates. Only
then will the majority of this important constituency
consider joining ICANN.
(3) Innovation in Services and Processes. While the Internet has
spawned many innovative services over the last decade, the
blunt truth is that few new services have been added to benefit
Internet users. For example, Internationalized (sometimes
called ``multi-lingual'') Domain Names (``ION'') provide a
means for non-English users to type in domain names in their
native language. But the introduction of IONs has been slowed--
at least in part--by an internal ICANN debate--framed as an
almost FCC-like regulatory ``review'' process--with a current
implementation that falls short of the stated goal of providing
the end user the ability to navigate on the Web in his or her
native language.
Far too often, new and innovative Internet technologies have been
kept from the user community, bogged down and polarized in similar
processes that are murky even to the most ardent ICANN watchers. ICANN
should be streamlined to enable industry to develop and offer new
services in a timely fashion to meet the ever-changing needs of the
Internet.
I have suggested that for a coordination body to be in a position
to play a useful role in the important task of supporting effective
growth of the global Internet, it needs broad user community and
industry support. And for ICANN to have broad support, industry must
see a benefit to being a member. For many--such as root server
operators and country-code domain name operators--the ``pain'' of
joining ICANN (onerous contracts, lengthy review periods, and the
unfortunate politicization of ICANN's administrative functions) has not
made membership a viable option. ICANN--if it is to be the organization
that sets the tone for the Internet addressing system's future growth--
must be capable of instilling confidence in its actions among the
global user community.
As mentioned earlier, a good start would be for ICANN to recognize
that Internet constituencies have the capacity for self-coordination,
with ICANN serving as the umbrella organization for technical
coordination. We believe, as do others in the Internet community, that
such a framework would strengthen standards of operation and conduct,
improve the process for resolving critical issues and promote
information sharing and adoption of best practices that would make the
Internet stronger.
Invested with the support of these communities, an effective ICANN
could educate the growing user community on shared obligations of
security. An empowered ICANN could organize financial support for
advanced research at leading universities on next-generation
technologies to maintain the integrity of the Internet's assets, in the
face of the hundreds of daily exploits directed against it. And, a
visionary ICANN could serve as a forum that leads to innovative new
services that enrich the user experience.
To state again our road-map: We need a body that is legitimate and
effective. If it is to be ICANN, ICANN must:
bolster its legitimacy by ensuring that critical Internet
constituencies that are responsible for the operation of the
global networks and domain names are active and supportive
members;
limit its attempts at business micro-management in a way
that will invite the participation of ccTLD registries, IP
numbering registries and root server operators and encourage
innovation and new services;
abandon its aspirations to be the unchartered FCC of the
Internet; and
sponsor the discussions and actions regarding the Internet's
security and growth that will ratify a view among all
constituencies that the institution is adding real value.
Mr. Chairman, we are entering the next phase of the Internet--not
born in a bubble era of the Internet but driven by society's increasing
reliance on these networks for commerce and communications. VeriSign is
mindful of the enormity of this challenge; we stand ready to play our
part in the evolution of the present ICANN, or a successor
organization, into the leadership role necessary to ensure the
Internet's continued growth and role in supporting our global economy.
Thank you, Mr. Chairman and members of the Committee, for allowing
me this opportunity to testify today.
Senator Burns. Thank you very much.
Mr. Alan Davidson, Associate Director, Center for Democracy
and Technology here in Washington, D.C. Thanks for coming
today, Alan.
STATEMENT OF ALAN B. DAVIDSON, ASSOCIATE DIRECTOR, CENTER FOR
DEMOCRACY AND TECHNOLOGY
Mr. Davidson. Thanks for having us. Chairman Burns and
Members of the Subcommittee, on behalf of the Center for
Democracy and Technology, I'd like to thank you for this
opportunity to testify on what we believe are very important
issues surrounding the management of the Internet's naming and
numbering system.
I have to say that testifying in the late afternoon on July
31 in this Senate sort of makes us feel like we're standing
between you and lunch, or at least between you and recess.
Senator Burns. It's a very dangerous position to be in.
[Laughter.]
Mr. Davidson. So we'll try and make it brief, but that's
particularly why we commend the Subcommittee and the Chairman
for holding this hearing, because our belief is that continuing
Congressional oversight is important if we are to ensure that
the Internet's critical technical resources are being managed
in the public interest.
ICANN is important. I teach a course at Georgetown's
graduate school in Internet technology and policy, and one of
the things the students learn about is how this great
decentralized network of networks has led to this incredible
economic opportunity, civic discourse, free flow of
information, and when we get to the part about ICANN, they
always feel a little, I think, betrayed, because the fact is
that there's a truth here which is that, in fact, this great,
decentralized network of networks actually relies in a critical
way on a few very centralized naming and numbering functions,
and the way that those functions are managed actually could
have a big difference in the life of Internet users if it's not
done properly, and so we think it's extremely important that
we're paying careful attention to how ICANN does what it does.
I have a couple of key points here. First, ICANN is still,
in our belief, the right idea. We strongly believe in the
vision that was first articulated years ago by the Commerce
Department and that underlies ICANN: that of a nongovernmental
body--a sort of more-than nimble Government, bottom-up and
consensus oriented body, taking into account all of the things
that a broad community feels about this system, and narrowly
focused. Not a big, broad government organization, but one
focused on its mission, and globally representative, including
diverse viewpoints from a lot of different Internet
stakeholders. People have been working very hard to try to
fulfill that vision, and we think that that vision is far
superior to many of the alternatives.
We are particularly alarmed by new calls in some quarters
for a more governmental approach to managing these systems
through the ITU or some other organization, and we think that
kind of approach is to be avoided, because we think that the
private sector can do it better, and is a more appropriate
place and a better place to get the voice of the diverse
Internet community heard, so it is essential to strengthen
ICANN, because it's the best model that we have right now.
Our second major point, though, is that ICANN faces serious
risks if it does not make significant progress in meeting its
public interest obligations. ICANN and its staff have worked
hard, and there's a list of achievements now from the
accreditation of new registrars, introduction of competition,
completing a reform process, getting a new president who has
been welcomed broadly by a lot of folks in the community, but
at the same time, and I think the chairman alludes to this in
his opening comments, there is a decidedly mixed record in
meeting ICANN's public interest obligations.
ICANN has in many ways departed from its bottom-up policy
processes, which are so critical to making sure that
stakeholders feel like they have a voice. The user community
and noncommercial interests in particular are poorly
represented in ICANN. The chairman alluded to the fact that
ICANN has abandoned the election of at-large directors, which
were originally a significant proportion of its board.
That may be an OK decision for ICANN, but it is striking
that so little has been done to replace that mechanism with
other mechanisms to give the users a voice at ICANN. The
accountability mechanisms are still lacking--the ombudsman, the
independent review process that many people look to to provide
accountability--and ICANN's leadership has acknowledged these
challenges. The Department of Commerce has as well, but
Congress should not be left with the impression that ICANN's
reform effort has taken care of all of these concerns. The fact
is that it has not. There's a tremendous amount of work to be
done still.
That list of concerns is a road map for progress at ICANN.
ICANN needs greater accountability mechanisms, it needs a clear
meeting of the minds about what its mission is, it needs better
participation mechanisms for users. We are issuing a report
today about assessing ICANN, metrics for measuring ICANN's
success, and with the permission of the Committee we will
attach it to our testimony as part of the record, and it lays
out a set of goals or a set of metrics for assessing ICANN over
time. I think it will hopefully be something that the community
and the Department of Commerce can look at as it thinks about
renewing ICANN's MOU.
There are also several issues that are coming up in he next
few months at ICANN that will tell us a lot about ICANN's
responsiveness to the public and to the user community. The
Whois privacy issue raises serious concerns for users. There
are very legitimate reasons why we want to have data publicly
available in this Whois database and there are awful serious
privacy issues raised. We believe, CDT believes, that there's a
great balance to be struck that lets legitimate users have
access to information but also respects people's privacy. It
will be very important for ICANN to help strike that balance.
The selection of new top level domains is an issue of great
concern to the user community, and there have been some very
good ideas put out about how ICANN could do that better, but
our final point, and I think it's the point about what can
Congress and the U.S. Government do, is that we need to have a
continued measure of oversight over ICANN by the U.S.
Government, and I think it's particularly important that the
memorandum of understanding between ICANN and the Commerce
Department, it should be renewed, but it should be renewed
along the lines of its last renewal a year ago, which was for a
one-year term with some periodic reporting.
There's a tremendous amount of change that's happened at
ICANN, new leadership, massive internal reorganization, many
checklist items that have not been completed. NTIA itself is
undergoing major changes, and in that environment it is highly
appropriate for the Department of Commerce to move forward with
an MOU, but to move forward with one that asks ICANN to come
back here and show us what's been done.
Congress should continue holding hearings like this, and we
particularly hope that NTIA can play a role in improving
transparency and participation at ICANN, perhaps through public
reporting, perhaps through the creation of some sort of public
input or commission into what ICANN is doing. There are lots of
ideas out there.
In sum, we believe it is essential that ICANN succeed. If
ICANN is able to show progress in its commitment to a limited
mission, its commitment to public accountability, it will
greatly strengthen its position among Internet users worldwide,
and we look forward to working with ICANN and the Commerce
Department and Congress and the broader community to help make
this community-based vision of Internet coordination a success.
Thank you very much.
[The prepared statement of Mr. Davidson follows:]
Prepared Statement of Alan B. Davidson, Associate Director,
Center for Democracy and Technology
Chairman Bums, members of the Subcommittee, on behalf of the Center
for Democracy and Technology I would like to thank you for this
opportunity to testify on the important issues surrounding the
management of the Internet's naming and numbering systems. We commend
the Subcommittee for holding this hearing, because continuing
Congressional oversight is necessary if we to insure that the
Internet's critical technical resources are managed in the public's
interest.
The Internet's great promise to promote economic opportunity, civic
discourse, and the free flow of information relies largely on its open,
decentralized nature. Yet even such a decentralized network of networks
relies heavily on a small set of centralized mechanisms to coordinate
the unique assignment of domain names and addresses online. These
centralized naming and numbering systems are important because the way
they are managed can affect Internet users around the world.
The Internet Corporation for Assigned Names and Numbers (ICANN) is
an unprecedented experiment in open management of these important
global resources. The idea behind it--of global non-governmental
bottom-up coordination--is sound. The current alternatives to ICANN are
not attractive. But serious questions persist about ICANN's public
accountability and its ability to fulfill its role as a steward of an
important public trust. While CDT remains a believer in the ideal
behind ICANN, close oversight by Congress and the Department of
Commerce are essential to provide accountability for ICANN.
1. The vision underlying ICANN--private sector, bottom-up, technical
coordination--is still the right approach for administering key
Internet functions
The vision of that a non-governmental body managing key
coordination functions for the Internet--a vision first spelled out by
the Commerce Department six years ago--remains a remains the approach
most likely to reflect the needs of the Internet community. Key
features of this original vision included:
Non-governmental--to benefit from more nimble private sector
capabilities to handle fast-paced, complex Internet technical
decisions, and more likely to reflect the diversity of user
interests.
Bottom-up and consensus oriented--making decisions in the
best traditions of Internet bottom-up processes designed to
account for broad interests
Narrowly focused--to create trust that it would not exercise
undue power and to increase comfort in its non-governmental
character
Globally representative--to ensure both public
accountability and to include the interests of stakeholders
affected by its decisions.
CDT continues to believe that an institution with these
characteristics--like the original conception of ICANN--is the best
approach to managing the narrow set of functions necessary to
coordinate the domain name and numbering systems. If it can do a better
job of realizing these objectives, ICANN has the potential to provide
flexible, representative coordination that will support the Internet's
continued growth.
Most of the alternatives to this vision of ICANN remain
unattractive. The Commerce Department alone is likely to be an
unacceptable global coordinator in the long run. Some envision a form
of multi-lateral government administration of the Internet's critical
functions. The private sector remains the most likely venue to provide
technical expertise and flexibility for a rapidly evolving Internet. A
bottom-up and globally representative private body is actually more
likely to provide opportunities for participation and accountability to
the richly diverse Internet community than a government-only treaty
organization. So long as ICANN remains focused narrowly on its
technical coordination mission, it is likely to have sufficiently.
Despite serious shortcomings, interest in this multilateral
approach appears to be increasing in some circles. For example, as part
of its World Summit on the Information Society (WSIS), the
International Telecommunication Union (ITU) has hosted several
discussions of Internet management. But the case has not been made that
a government takeover of ICANN functions is likely to better reflect
diverse community interests, and such a takeover should be resisted at
his time.
2. ICANN will fail unless it makes significant progress in meeting its
public interest obligations
ICANN has had a number of significant accomplishments over the last
few years. It has accredited nearly 200 domain name registrars,
facilitating competition in the retail domain names market where none
had previously existed. It has introduced seven new global Top-Level
Domains (gTLDs), although many argue it should do more. It has
introduced a procedure for resolving disputes over name registration.
And it has recently established the framework for agreements with
country-code Top-Level Domains (ccTLDs). Most importantly from a user
perspective, ICANN has facilitated the assignment of names and IP
address blocks with high degree of stability, and broadly enhanced
competition.
At the same time, ICANN has a decidedly mixed record in meeting its
public interest obligations, which stem from its delegated authority
over globally critical Internet functions.\1\
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\1\ These obligations, and ICANN's record in meeting them, are
discussed more fully in ICANN, Legitimacy, and the Public Voice: Making
Global Participation and Representation Work, NGO and Academic ICANN
Study, August 2001, Available at . CDT was a partner in the NAIS effort.
ICANN has in many ways abandoned the ``bottom-up'' and
``consensus-based'' policy processes that were so critical to
giving stakeholders comfort that they would have a meaningful
role in policy at ICANN. Increasingly decisions are made top-
down by ICANN's Board, sometimes clearly against the stated
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views of much of the affected community.
There are insufficient limits on ICANN's regulatory
authority, and no well-understood delineation of its powers.
For example, ICANN's detailed and massive contracts with the
gTLD registries lead many to be concerned about how far it can
go in regulating the DNS. They are a striking contrast to the
very limited ccTLD agreement framework, which may indicate how
little is really needed to insure stable coordination of the
domain name system.
The user community and non-commercial interests are poorly
represented at ICANN. Last year ICANN eliminated its nine ``At-
Large'' board members, viewed as a central element to
representing public interests. While the public election of At-
Large directors was controversial, it is striking that ICANN
has done so little to replace that representation. An at-large
advisory council is still just forming, though welcome, and
there are few chances for user influence at ICANN.
Accountability mechanisms are still lacking. For example,
ICANN's ombudsman--itself a pale shadow of the independent
review process originally part of ICANN's bylaws--has yet to be
appointed.
ICANN's leadership has acknowledged many of these concerns, which
is much appreciated, but it remains to be seen what concrete steps will
be taken. Congress should not be left with the mistaken impression that
ICANN's recent reform effort has taken care of these public
accountability concerns. It has not.
Unless ICANN does more to address those shortcomings, it risks
failure. Without progress on these accountability issues, ICANN risks
becoming little more than a sophisticated trade association--but one
with substantial delegated powers. If ICANN continues to be viewed as
unaccountable, non-representative, and without adequate limits on its
powers, it will not be able to achieve the stability--political,
financial, and otherwise--crucial to long-term success. If ICANN cannot
earn the public trust, then users, companies, and organizations are
more likely to undermine its activity than to embrace it.
Moreover, if ICANN is perceived as an unaccountable organization
whose activities impinge the rights of users worldwide, then powerful
entities such as foreign governments, the ITU, or even the United
Nations will accelerate their search for alternatives. Such approaches
would likely include a vastly expanded role for governments, and could
fuel efforts at multilateral regulation of the Internet--a costly and
user-unfriendly environment that could constrain innovation
substantially.
If the goals of private, bottom-up coordination of key Internet
functions are to be sustained, ICANN must do better at meeting its
public interest obligations. Many at ICANN recognize this. We look
forward to their efforts.
3. Benchmarks should be developed to assess ICANN's progress over time
and to identify areas for improvement
How do we assess whether ICANN is succeeding? This question is
especially relevant as the Commerce Department prepares to renew its
Memorandum of Understanding with ICANN this September--and as people
worldwide evaluate ICANN. Yet there is no widely agreed upon set of
benchmarks for measuring how ICANN is doing--and it is unclear how
ICANN itself measures success.
Today CDT is releasing a new study, ``Assessing ICANN: Towards
Civil Society Metrics for Measuring ICANN,'' designed to assist in this
process. Our study is attached to this testimony and submitted for the
record. In it, we review the literature and indicate key recurring
themes or goals for ICANN. We then suggest ten ``civil society
metrics'' for assessing ICANN from a public interest perspective:
1. Stable and secure coordination of key Internet functions.
2. Adherence to clearly defined scope of activities.
3. Accountability to affected stakeholders, including effective
independent review procedures.
4. Transparency, including procedural and financial transparency.
5. Representation of key Interest groups, including the public's
interests.
6. Acceptance by key stakeholders, ccTLDs, Regional Internet
Registries, etc.
7. Minimized impact on user rights, such as privacy and free
speech; consideration of impact on Less Developed Countries,
etc.
8. Support for competition and, when possible, reliance on market
mechanisms.
9. Increased security of the root server system.
10. Support for long-term evolution and innovation in information
and computing technologies.
CDT believes that a set of commonly agreed metrics is critical to
evaluating ICANN's strengths and shortcomings. Our hope is that other
groups will use this list, or create their own, to develop a multi-
sectoral approach to assessing ICANN. We look forward to feedback of
others interested in ICANN's evolution.
4. ICANN faces crucial tests over the next year on key issues of public
interest, including Whois reform and the selection of new gTLDs
In the next year, ICANN is expected to undertake several issues of
broad interest to the Internet community--including Whois database
privacy, the selection of new top-level domains, root server security,
and international domain names. The way it handles these issues will be
a measure of its accountability and responsiveness after its reform
process.
Privacy and the ``Whois'' database--The Whois database--a public
listing of contact information for millions of domain name
registrants--has long raised significant privacy concerns. Currently,
the registrant of a domain name in the public gTLDs and many ccTLDs
must make certain technical and administrative contact information
available in the ``Whois'' database accessible to the public online.
Originally designed to allow contact in the case of a technical
problem, the database is now also used by law enforcement, consumer
protections agencies, and private groups including intellectual
property holders.
When individual Internet users register domain names, however, they
can be forced to make their names, home addresses, home phone numbers,
and home e-mail addresses publicly available to the world. Such
potentially sensitive personal information, released publicly, can be
used for unrelated purposes ranging from unwelcome marketing to
identity theft, fraud, stalking, or other criminal activities. This
exposure violates worldwide privacy norms and had put Whois on a
collision course with national privacy laws, particularly in Europe,
where is appears to violate the law of some countries.
A move is underway at ICANN to reform Whois in ways that will
address individuals' privacy concerns while maintaining legitimate uses
for the data. Proposals include the creation of a ``tiered access''
system for viewing Whois data, providing notice to users when their
data is viewed, and creating ``audit trails'' that could expose abuse
or misuse of the database. CDT believes a balance can be struck that
protects privacy and allows reasonable access to data for important
public purposes. ICANN's ability to incorporate the privacy interests
of the global user community in this debate will be closely watched.
CDT strongly believes that recently proposed U.S. legislation
criminalizing false Whois information is inappropriate.\2\ It is simply
unfair to make an Internet user a potential felon for putting
incomplete or inaccurate personal information into a public database
where there is no guarantee that their privacy or security will be
protected. If better accuracy is desired in the Whois database, the
best way to achieve it will be to protect the privacy of registrants.
---------------------------------------------------------------------------
\2\ H.R. 2572, introduced in July 2003, would make it a Federal
felony to submit false Whois information ``with an intent to
defraud''--a vague standard that could sweep in a great deal of
relatively innocent behavior.
---------------------------------------------------------------------------
Selection of new gTLDs--Three years after selecting a first set of
seven new global top level domains (such as .biz and .museum) ICANN is
now launching a process for the selection of new gTLDs. Since gTLDs are
a primary means of expression for millions of users, this process is of
substantial public importance.
ICANN's process for selecting new gTLDs in 2000 raised procedural
concerns that should be avoided in the future. Many observers
questioned the ``beauty contest'' approach taken by ICANN, which relied
heavily on relatively subjective and arbitrary criteria, and not enough
on the technical merits of the applications. For many, this subjective
approach was inappropriate, ripe for conflict and abuse, and corrosive
to the technically-focused bottom-up vision of ICANN activity. ICANN is
not a governmental body designed to make public choices about the
allocation of property and wealth, nor should it want to become one.
Thoughtful proposals have been put forward for improving this
process. They propose more objective criteria for new gTLDs--including
the selection of a fixed number annually by lottery or auction from
among technically-competent bidders.\3\
---------------------------------------------------------------------------
\3\ See, e.g., Mueller, Milton, and Lee McKnight, ``The Post-.COM
Internet: A Five-Step Process for Top Level Domain Additions,'' March
2003. Available at .
Another excellent resource is Crawford, Susan, and David Johnson. ``Old
Delusions and New TLDs.'' November 13, 2002. Available at .
---------------------------------------------------------------------------
ICANN has not yet announced what process it will use for the next
major round of gTLD selections--though for an immediate, smaller round
it has declared its intention to use criteria similar to those used in
2000. CDT strongly believes that ICANN should avoid any appearance of
arbitrariness in its next selections of gTLDs, and should pursuer more
objective systems consistent with its narrow technical coordination
mission.
5. Congress and the Department of Commerce should continue their active
oversight, and should only renew ICANN's MOU for a limited
period
The U.S. Government explicitly--and other nations implicitly--have
delegated administration of critical public interests to ICANN. Many
outstanding questions remain about how that delegated responsibility is
being met. There are few ways to hold ICANN accountable for its
actions. Continued government oversight of ICANN is badly needed. We
urge that:
ICANN's Memorandum of Understanding with the Department of
Commerce should be renewed for no more than one year. The MOU
is one of ICANN's few remaining tether to traditional notions
of public accountability. Today, ICANN has a new and untested
leadership and is undergoing massive internal reorganization.
Major checklist items from previous MOUs--on topics from
security to accountability to public representation--are
largely incomplete. NTIA itself is undergoing major changes. In
such an uncertain environment, it would be inappropriate to
renew ICANN's MOU for more than a year. The one year term
adopted last year, with interim reports to DOC, has worked well
and should be continued.
Congress should continue its active oversight of ICANN.
While Congress should not be directing ICANN's activity--no
national government can if ICANN is to work--.., the U.S.
Government had a special relationship with the root server
system and ICANN. Congressional oversight has been an essential
force for improving ICANN's' transparency and raising public
awareness about domain name policy issues. We hope that
Congress will continue to monitor ICANN's work closely, either
on its own or through an appointed commission to explore ICANN
in depth.
The National Telecommunications and Information
Administration should publicly report on ICANN's progress in
meeting the MOU and its other public responsibilities. A public
assessment of ICANN would greatly help to focus discussion on
improving ICANN for the future.
If ICANN is able to show progress in its commitment to a limited
mission, public accountability, and other goals, it will greatly
strengthen its position among Internet users worldwide. If it is not,
it risks rejection by the Internet community and the community of
nations. We look forward to working with ICANN, the Commerce
Department, and the broader Internet community to help make community-
based Internet coordination a success.
Senator Burns. You bet, and thank you.
Now we welcome Mr. Paul Stahura. Is that it?
Mr. Stahura. Stahura.
Senator Burns. OK. I'm not sure I'm pronouncing it right.
Chief Executive of eNom, and we thank you for coming today,
from Bellevue, Washington. Thank you.
STATEMENT OF PAUL STAHURA, PRESIDENT
AND CHIEF EXECUTIVE OFFICER, eNOM, INC.
Mr. Stahura. My name is Paul Stahura. I'm the President and
CEO of eNom, a company I started in my garage in 1997, and that
has grown into one of the largest domain name registrars in the
world. I appreciate the opportunity to appear before the
Committee today to discuss ICANN. I want to spend my time
talking about an issue that I think clearly highlights the
problems domain name registrars like myself have with ICANN,
its lack of transparency and accountability.
As you Senators may know, domain names are the central part
of the addressing system for the Internet. Prior to 1999, one
company had a Government-granted monopoly to register domain
names. Then, the Department of Commerce and ICANN wisely
introduced competition to the name space. Today, there is
vigorous competition among hundreds of companies to register
domain names for consumers. The Wait List Service, or WLS, was
proposed by VeriSign over 2 years ago. I have described this
service in more detail in my written testimony, and I am happy
to answer your specific questions regarding WLS, but for the
purpose of my oral testimony I'm going to try to keep it
simple.
WLS would replace today's fully competitive marketplace for
domain name reregistration services with another Government-
granted monopoly, and, as currently passed by the ICANN board,
it will tilt the level playing field among registrars that
ICANN itself has painstakingly set up. A troubling aspect is
that Verisign's own registrar, Network Solutions, would have
the greatest advantage.
My preference would be to stop WLS from going into effect.
I think it is bad policy, and will result in higher prices for
domain names, reduce consumer choice, and it will not solve the
so-called problems it was designed to address.
Despite opposition from consumers and registrars, 18 months
of studying, meetings around the globe, and consensus-building
that opposed WLS, ICANN has decided to go forward with WLS
without consensus. For that reason, but especially because it
will advantage larger registrars, I have joined with several
other domain name registrars to oppose ICANN in going forward
with the service, which was difficult for me, because I believe
ICANN is the right organization to oversee the Internet's
domain name system, though I believe it needs improvement.
If WLS can't be stopped, then at a minimum it should be
fair. This is not the case as WLS is currently drafted. The
current WLS gives registrars with the most domain names an
unfair advantage by allowing them to utilize their
foreknowledge about which names are going to be deleted.
This problem can be solved. Indeed, ICANN has recognized
that the original name for WLS that Verisign proposed was not
fair. ICANN attempted to correct the problem when the board
approved the current form of WLS, but despite their intent,
they failed to correct the flaw. Fortunately, because VeriSign
asked ICANN to reconsider the current version of WLS, there's
still a chance to get it right, because the ICANN board has
authorized staff to, quote, tailor this particular provision of
WLS.
However, because there's no way within ICANN procedures for
registrars like myself to participate in this, ``tailoring,'' I
have no idea whether this problem is going to get fixed,
ignored, or worse, tilt the playing field even more
dramatically toward the largest registrar. The best way to
describe my frustration over this process is to compare it to
something with which you Senators are familiar.
Imagine that you are considering a huge legislative issue
like national energy policy. Instead of going through the
regular order, bill introduction, hearings, Committee
consideration, full debate in the Senate, and amendments before
it becomes law, that instead the issue was generally debated
without addressing specifics. Then, the President introduces a
complicated bill that never goes through Committee but goes
straight to the floor for a vote. It passes and becomes law.
Later, you realize there's a major problem. There's no way
to fix this problem easily. That's where we are with WLS. The
issue was debated generally for a year and a half. Then a
specific proposal, written without consulting companies like
mine, was adopted by ICANN's board. It is law, even though
registrars like me had no opportunity to amend that proposal or
participate in a debate over any of its specific provisions.
Now we have discovered a major problem, but there appears
to be no way to have input over the solution. I call on Paul
Twomey to sit down with registrars to work out this problem. If
WLS is going to be become law, it is in everybody's interest to
make sure we get it right, that it is fair, and does not give
any registrar an unfair competitive advantage.
I ask the Committee's help in solving this matter. Today's
oversight hearing is a step in the right direction, and the
Commerce Department must step in to ensure that justice is done
in this case.
Again, thanks for allowing me to testify before the
Committee today. I'd be happy to hear any questions you have.
[The prepared statement of Mr. Stahura follows:]
Prepared Statement of Paul Stahura, President
and Chief Executive Officer, eNom, Inc.
Good afternoon. My name is Paul Stahura. I am CEO and President of
eNom. eNom is a domain name registrar. I started eNom in 1997 in my
garage in Redmond, Washington with one small computer on an ISDN line,
and now the company is one of the largest domain name registrars in the
world with loads of servers in five locations and millions of domain
names.
eNom is part of the Domain Justice Coalition. The Domain Justice
Coalition is comprised of domain name registrars and resellers who
oppose the proposed Wait List Service (WLS) that has been approved by
ICANN. Formed in March 2003, the Coalition shares the belief that the
proposed WLS will: harm competition in the secondary market for domain
names; increase the cost of acquiring domain names for consumers; and
add an unnecessary layer of bureaucracy to the process of acquiring
expiring domain names without adding measurable benefits to consumers.
I want to thank the Committee for inviting me to testify today
before the Communications Subcommittee and giving me an opportunity to
share my views on ICANN.
I want to state at the outset that I am a supporter of ICANN. While
I may not agree with all of their decisions, many of which have been
adverse to me--I do believe that ICANN is the correct organization to
oversee the Domain Name System and that, for the most part, the
organization has been doing a good job.
The success of my company, and the hundreds of other competitive
domain name registrars in existence today, is the result of ICANN
policies that promoted competition in the registration of domain names.
There is no question that competition has been tremendously beneficial
for consumers and businesses. The cost of registering a domain name has
dropped from a high of $70 for a minimum 2-year registration contract
to as little as $7 per name per year today. Consumers today have
choices that were simply not available to them when only one company
registered domain names. Competition has brought a variety of business
models, and improvements such as better customer service, more
distribution channels, and complementary products bundled with the low-
cost registration. All of these choices and other advances in the DNS
system are the result of competition.
I was involved in the early stages with the formation of ICANN.
What I want to communicate to the Committee today is that while ICANN
is the correct model, there should be changes to increase ICANN's
accountability to, and foster trust from, those they regulate:
(1) There must be assurances that those affected by ICANN's
decisions have some commitment or measure of comfort that they
are able to participate in the decision-making process.
Moreover, there should be some safeguards in place to ensure
that, ICANN's decisions are based on the facts and to remove
even the perception that the decisions are not the product of
behind the scenes, back room secret negotiations or funny
business.
(2) There must also be a way to challenge ICANN decisions and have
those decisions reviewed by an independent or objective
decision-making body.
(3) The way ICANN selects new TLDs and who will offer new services
should change from a ``beauty contest'' which is vulnerable to
decision-making based on favoritism to an objective standard
that would be free of potential bias.
(4) Finally, ICANN must have a higher degree of accountability. The
Department of Commerce must do a better job of overseeing ICANN
to ensure that the goals of the MOU, especially the goal of
increasing fair competition, are being fulfilled.
There are two issues that illustrate my concerns with ICANN and not
coincidentally also affect competition in the domain name space:
(1) Verisign's proposed wait-list-system (WLS)
(2) New top-level domains
WLS
No issue better illustrates the problems with ICANN in my mind than
WLS--the proposed Wait List Service. The WLS was proposed by VeriSign
as a way to supposedly make the process of registering expiring domain
names simpler for the consumer. Unfortunately, VeriSign's attempts at
simplification come at the expense of competition and consumer choice.
Since WLS is a monopoly service, to be only offered by Verisign, it
completely destroys today's competitive marketplace. WLS replaces good
old-fashioned free enterprise with a government-sanctioned monopoly.
But, whatever your opinion of WLS, I think virtually everyone can
agree that this issue has been badly handled by ICANN.
Initially ICANN declared that WLS was a policy change and therefore
a final decision would be handled through ICANN's consensus processes.
ICANN established a Task Force to study the WLS proposal and report
back to the ICAANN Board. For more than 18 months, many hundreds of
people from all types of companies--domestic and international--
participated in the consensus process debating Verisign's controversial
WLS proposal. Meetings were held around the globe . . . papers
submitted, conference calls conducted and task forces organized. This
effort took months to build what appeared to be a consensus--that ICANN
should not go forward with WLS--and was surprisingly rejected by ICANN
six months after a decision by the board on the grounds that a
consensus was not necessary on this issue. To those opposed to WLS,
this reversal appears, at best, extremely suspicious.
When the consensus process resulted in consensus that was adverse
to VeriSign, ICANN reversed its position and declared consensus was not
necessary with little justification for the complete about face.
This WLS situation highlights one of my principle concerns with
ICANN: the lack of transparency in its decision-making processes. ICANN
is a black box. You have what goes in, and you have what comes out,
with no idea of how or why. Even now, only a very few insiders are
privy to what the final WLS will be. This is significant because, in
the details, the WLS is a very conceptually complicated proposal. A
small change to the proposed WLS can make a big difference. Since I am
not one of these insiders, I can only go by what has come out of the
black box, I can only go by what the ICANN board has already approved,
and that decision, unfortunately, takes a step backwards, competition-
wise.
Besides that fact that WLS would replace today's competitive re-
registration system with a monopoly system and higher fees for
Verisign, the problem is that WLS, as approved by the ICANN board,
would tilt the competitive playing field among registrars, a, so-far,
even playing field that has been setup by ICANN and the rest of the
Internet community. Coincidently, the registrar that would gain the
largest advantage is Network Solutions, which is owned by Verisign, the
company proposing the WLS. The funny thing is that ICANN knew that a
certain aspect of Verisign's proposed WLS would have this effect, so
ICANN prudently modified Verisign's proposal in an attempt to remove
the advantage. ICANN's board subsequently approved the WLS with the
modification.
Unfortunately, ICANN's modification does not remove the advantage.
Again, as I am not inside the black box, I do not know why the form of
WLS approved by ICANN still had the flaw. Thinking the best of ICANN as
I usually do, I assume it was an oversight, or possibly ICANN needs
more resources to fully understand the repercussions of their
decisions, but since as far as outsiders can tell, these problems are
not being corrected, I'm reluctantly beginning to think baser thoughts.
So we are in a situation where it seems that the form of WLS that will
come out of ICANN and will be implemented by Verisign is anti-
competitive, a flaw that can be removed with only a few words changed
in the ICANN board's resolution on WLS.
I have appended my testimony with a letter I sent to the ICANN
Board outlining my concerns with WLS ``condition (c)'' and recommending
a small, but important change. This change could be made as part of the
ongoing, ICANN board authorized, WLS ``tailoring'' that, as far as
outsiders can tell, is happening between ICANN and Verisign.
As WLS is a controversial issue to many people, and there have been
few recent decisions that affect competition in the name space, a
competitively-neutral WLS output by ICANN is not just my test to
determine if the reformed ICANN is advancing competition or taking a
step backward, but many other people's as well.
It doesn't matter that the initial WLS as originally proposed by
Verisign or the final WLS that emerges out of the ICANN black box is a
better product or worse product than the competitive re-registration
system that exists today. At the end of the day, it doesn't matter what
previous process was used to come to the output, though if a fair
process was not followed, then that needs to be corrected. I know, as
you Senators do, that as they say, making sausage isn't pretty. But
what matters is the output. What matters is that whatever the final
WLS, it not tilt the exactly fair, competitive, playing field that
ICANN and the Department of Commerce have painstakingly put in place.
Another concern with ICANN that is relevant to the WLS issue is the
lack of independent review of ICANN decisions. Under the current
process there appears to be no way to appeal ICANN's decision to an
independent, objective third party, a process which is outlined and
guaranteed in ICANN's own bylaws, but has yet to be enacted even once.
In fact, one of the Domain Justice Coalition members requested such an
independent review board but this request, was denied. ICANN's grounds
for the denial is that only decisions made through the consensus
process are entitled to be reviewed by an independent review board.
Regrettably, the Domain Justice Coalition has had to resort to a
lawsuit in an effort to resolve this issue. Even if ICANN were to have
appointed an independent review panel, the so-called independence of
this review panel must be seriously questioned since the ICANN Board
determines who serves on the panel. The inability of complainants to
get an objective, impartial review of ICANN decisions seriously
undermines ICANN's credibility with the companies it regulates.
Time does not permit me to go into greater detail on WLS. I have
taken the liberty of including as part of my testimony a letter
submitted to the NTIA which outlines my concerns with the proposal in
greater detail. I have also included frequently asked questions, or
``FAQ'' page, on WLS for the Committee's review..
New Top-Level Domains (TLDs)
My company has had some experience with ICANN regarding TLDs. In
2001, eNom participated in the ``.one'' TLD proposal. ENom did not win
that beauty contest. That process resulted in many TLDs, if not all,
that have not met their projections. I know its impossible to get every
decision right, especially on the first time out, but many of the 7
TLDs selected back then have fewer than 10,000 names, and one is not
even live though it has been two years since its selection. The vast
majority of Internet users have not even heard of some of the TLDs
selected, TLDs such as ``.areo'', ``.coop'', and ``.museum''. Have you
ever seen a domain with these TLDs in use, let alone the others? The
proof of a successful test bed is in usage. The TLD round in 2000 was
not only a test bed for each of the new TLDs but also a test of the
selection process itself. Proof of a successful TLD distribution scheme
is in whether or not it results in TLDs that are utilized. Why repeat a
process that resulted in an allocation and expansion of the name-space
resource if the resulting ``expansion'' is not utilized?
In 2002, eNom participated in another proposal for ``.org''.
Another group, as well, won that contest. Though the winners have
successfully transitioned .org, which is good, I know that registrars
are paying the exact same price for the same services as before the
transition, while there were many others who had proposed the same
service for substantially less, and that were equally qualified to
perform the transition.
Without clear, quantifiable criteria, it is really difficult for
outsiders to tell if ICANN acted arbitrarily or with favoritism in its
approval processes, let alone for those who submitted proposals. I do
hope that there will be many more opportunities for ICANN to delegate
many new TLDs in the near future. And that the knowledge gained in the
past will be applied to make the selection incontrovertible.
To that end, I support the following two-step process: (1) the
ongoing accreditation of registry operators with objective technical
criteria, and (2) an auction to determine who is delegated which TLD.
Meanwhile; the issue of the remaining applicants from 2000 has to be
addressed.
First, accredit registry operators based on specific technical
operational criteria. This would focus this part of the debate on what
are the ``must have'' objective technical operational criteria, but at
least after the debate had ended; everyone would know what they are.
With a registry accreditation step, even if step 2 were a beauty
contest, instead of an auction, the prospective registries would know
with certainty that their selection of an accredited registry operator
will not bias the decision. Without this step, most new TLD proposers
will choose an incumbent operator to reduce the risk of ICANN having
some issue about an unknown operator and denying their application,
even if Step 2 was a more objective and impartial process, such as an
auction. Adding a registry operators' accreditation step to the process
will create more competition at the registry level and make for a more
indisputable outcome
Second, auction them, within limits. A suitable auction could be
designed to distribute a small number of TLDs. Safeguards could be
built-in to prevent the auction itself from weakening the proposers.
The winning bidders would advance to the registry agreement negotiation
stage with ICANN, with ICANN publicizing non-technical ``must have''
terms before the auction (such as adherence to the DRP and data escrow
or whatever), Payment to ICANN would occur after actual agreement.
Other terms that would be negotiated leave room for the prospective
registry to innovate. This will constrain this part of the debate to
what the ``must have'' terms should be. The who-gets-what-TLD
machinations would then be removed entirely. The proceeds of the
auctions would help fund ICANN. ICANN can use some of the funds to
support less objectively chosen TLDs that may be proposed for specific
interests, such as for public interest, or for non-profit groups. An
auction will help insure that proposers put their money where their
mouth is, and therefore that the TLDs delegated would actually be used.
And if it turns out that the TLD is not utilized, at least ICANN has
funding to make corrective action.
The incumbent registries would rather not have competitors, so they
will fight this 2-step process becoming policy. If I were a for profit
registry, I'd advocate more ``.museums'' or ``.nonprofits'' to occupy
ICANN's time. Its as if, in the early days of Television, CBS, NBC and
ABC, seeing an expansion in television channels, advocate for all new
channels to be PBS.
With that said, there remains the single issue of the existing
applications from the first beauty-contest round in 2000. These
remaining applications, each of which paid a $50,000 application fee to
ICANN, were specifically told by ICANN that their applications were not
denied, but are, instead, ``still pending'' the results of the initial
test bed. Clearly, these applications need to be addressed before
moving forward to Step 2 of the process.
With a beauty contest:
(1) There is incentive for the proposers to make wild projections to
get the TLD, while they are at no risk to losing the TLD if
those projections do not turn out. This has already happened.
(2) Much too much effort is spent in proposers lobbying the ICANN
board and other ICANN decision makers
(3) Insiders have an advantage
(4) With broad, subjective criteria, the proposers are forced to
attempt to read ICANN's mind, which results in ``hobbled''
TLDs, or TLDs that are constrained by imagined criteria. As if,
in granting spectrum in the early days of radio, the FCC had
such subjective criteria that it could be interpreted that
you'd have a better chance to be granted spectrum if you wanted
to use the space to broadcast music, so the proposers attempt
to guess the director's favorite kind.
(5) Even if all intentions were honorable, due to subjective
criteria such as ``The prospects for the continued and
unimpaired operation of the TLD'', it is very difficult to know
with certainty that the output of the process was arrived at
without shenanigans.
Finally, I urge the Department of Commerce to step up its level of
oversight over ICANN. The Memorandum of Understanding (MOU) that ICANN
signed with the Department of Commerce clearly envisions some oversight
role. Department of Commerce oversight is particularly important in the
WLS issue. Paragraph One of Amendment Three to the MOU, which was
entered on May 25, 2001 (http://www.icann.org/general/amend3-spamou-
25may01.htm) requires prior Department of Commerce approval for any
material amendments to ICANN's Registry Agreement with VeriSign. The
Domain Justice Coalition believes WLS falls under this requirement.
Yet, VeriSign began rolling out the WLS service on July 28th by
releasing its WLS software development kit despite the fact that the
Department of Commerce has yet to review, let alone approve, a single
word of the agreement between VeriSign and ICANN making the necessary
changes to the Registry Agreement for WLS to go forward.
Moreover, because ICANN's procedures offer no real opportunity for
review or reconsideration of ICANN Board decisions, the burden of
ensuring that ICANN is adhering to the MOU and of preserving a
competitive domain name registration system must fall to the Department
of Commerce. The Department of Commerce should make it clear that WLS
cannot go forward without the Department's review and approval.
The extension of ICANN's MOU provides the Department of Commerce
with a unique opportunity to make sure that ICANN is functioning as the
government and the Internet community intended. It is also a chance for
Commerce to review whether the reforms ICANN has recently adopted are
having the desired effect.
Congress must also continue to exercise its oversight jurisdiction
by holding the Department of Commerce accountable for its activities
regarding ICANN. Chairman Burns is to be commended for holding these
hearings. There is no dispute of the importance of the Internet to the
U.S. and global economy. Proper management of the Domain Name System
(DNS) is one of the most important aspects of ensuring the Internet is
a stable environment for business to operate.
To improve both the Department of Commerce and the Congress'
understanding of ICANN's operations, the Domain Justice Coalition has
endorsed legislation that would place a moratorium on further ICANN
activity until the GAO can conduct a review and report back to
Congress. H.R. 2521, ``The Fair, Transparent, and Competitive Internet
Naming Act'', introduced by Representatives Baird and Inslee, would
provide a much-needed objective and independent evaluation of ICANN.
The information contained in a GAO study could prove invaluable to
Congress and the Department of Commerce during the MOU extension
process and I urge the introduction of similar legislation in the
Senate.
ICANN has had many accomplishments in bringing competition to this
industry. I hope the reformed ICANN will continue to promote fair and
even competition and to bring more of it, not less.
I thank the Committee for giving me the opportunity to testify. I
am happy to now answer any questions that you may have.
______
eNom
July 14, 2003
ICANN Board of Directors
Internet Corporation for Assigned Names and Numbers (ICANN)
Marina del Rey, CA
Dear ICANN Board,
I've already sent this letter \1\ to Esme Smith and to Dan
Halloran, but on Friday they said it probably wouldn't get posted on
the ICANN site, so I thought I'd just send it to you directly to make
sure you at least have an opportunity to read it. The purpose of this
letter is: a) to elaborate on a competition concern regarding WLS b) to
show why the introduction of WLS, as currently approved by the ICANN
board, does not maintain fair and even competition among registrars in
registering domain names and c) to propose a modification to the WLS
conditions \2\ already approved by the ICANN board to insure no
preference is given to any registrar or group of registrars.
---------------------------------------------------------------------------
\1\ Essentially this same letter was sent July 8th
\2\ Specifically, condition ``c'' which, under the board's
authorization, is currently being ``tailored''
---------------------------------------------------------------------------
I will show that:
(1) ICANN must not advantage one registrar over another.
(2) WLS as originally proposed by Verisign would advantage some
registrars over others. Besides violating ICANN's bylaws, it
would be counter to the goals of the DOC since it would create
an un-level playing field among competitive registrars.
(3) ICANN attempted to fix this problem, which resulted in a WLS as
currently proposed and passed by the ICANN board of directors.
(4) The fix did not remove the benefit to some registrars over
others, thus the WLS as currently approved by the ICANN board
advantages some registrars more than others in the WLS market,
and therefore in the domain name market.
(5) The final WLS must have certain restrictions in order to provide
fair competition in selling WLS, and hence registering names. I
will explain what this restriction must be and why another
restriction may not be preferable to ICANN.
Then I will make some comments regarding tailoring condition ``c''
of the board resolution [02.100].
(1) ICANN must not advantage one registrar over another.
Introducing and promoting exquisitely fair competition in the
domain name space, to which ICANN and the Department of Commerce have,
in my opinion, so far been largely successful, is a major goal of both
ICANN and the Department.
``ICANN shall not apply its standards, policies, procedures, or
practices inequitably or single out any particular party for disparate
treatment, unless justified by substantial and reasonable cause, such
as the promotion of effective competition.'' From ICANN's bylaws see:
http://www.icann.org/general/bylaws.htm#II
From ICANN's agreement with DOC http://www.ntia.doc.gov/ntiahome/
domain
name/icann-memorandum.htm ``This Agreement promotes the management of
the DNS in a manner that will permit market mechanisms to support
competition and consumer choice in the technical management of the DNS.
This competition will lower costs, promote innovation, and enhance user
choice and satisfaction.''
(2) WLS as originally proposed by Verisign would advantage some
registrars over others.
As originally proposed by Verisign, wait-list-service customers
(via registrars) pay $24 \3\ per year to purchase a WLS subscription on
a domain name. If the domain name is then deleted within the next year,
the customer (again via a registrar) pays an additional $6 to actually
register the name. If the name is not deleted within the year, the
customer loses the $24. The word ``ripen'' is used to describe a name
that has a WLS on it and the name actually becomes deleted and is
assigned to the WLS holder.
---------------------------------------------------------------------------
\3\ This was not the originally proposed price, but for consistency
in this paper, is, I believe, the currently proposed price
---------------------------------------------------------------------------
Any registrar who has knowledge that a name is to be deleted \4\
can offer a WLS on those names for lower risk than another registrar
can. A registrar who does not have that knowledge must offer the WLS
with the full $24 risk. In other words, a registrar who is about to
delete a name can say ``if you buy the WLS on this name from me, I will
immediately delete that name, and your $24 will not be wasted, and none
of my competitors can make this no-risk offer to you''. Or the
registrar can say ``buy the WLS for $0, and when it ripens pay
$30''.\5\ No other registrar could make this offer since that registrar
does not know that the name will be deleted or not deleted until the
registrar-of-record deletes it or renews it.
---------------------------------------------------------------------------
\4\ For example, each registrar, and only that registrar, has this
knowledge of its own names that are in the 45-day auto-renew period and
knows which of those names have not been renewed by registrants. Some
names in the 45-day period (and before) are renewed and some are not.
Only the registrar-of-record has foreknowledge of which registrants
have renewed which names, and therefore only the registrar-of-record
has certain foreknowledge of which names will be deleted.
\5\ The prices leave the registrar's profit margin out, for
simplicity.
---------------------------------------------------------------------------
This advantage is proportional to the number of names for which
each registrar is the registrar-of-record and also proportional to the
number of names that are deleted by that registrar. Since most
registrars renew about 60 percent of their names nowadays, this means
that 40 percent of all names are deleted each year; therefore, any
registrar with foreknowledge of those deletes would have an advantage
in 40 percent of the market, if all those names were re-registered.
About 20 percent of them get re-registered, so that means the advantage
would exist in about 8 percent of the total name registration market.
The registrar-of-record can also exploit the renewal and deletion
foreknowledge by not renewing names until very far into the 45-day auto
renew period. If the registry does not automatically advance the
renewal date \6\ upon expiration (this information is available to the
public via the registry's public Whois database), the public will think
that the name was not renewed and therefore has a high likelihood of
deleting, therefore registrars will attempt to sell the WLS at low
risk, only to be find out on the 44th day of the auto-renew period that
the name actually renews. Thusly the registrar of record tricked its
competition into selling WLS on names that it knows will not be
deleted.
---------------------------------------------------------------------------
\6\ If it is advanced the registrar-of-record is at an advantage
because no other registrar will know for which names it was advanced
due to renewal or advanced due to the registry automating the date
advancement, and if it is not automatically advanced by the registry,
then the registrar of record can withhold renewals to the last day of
the 45 day period in order to gain the same advantage or to fool the
competition into selling worthless wait list subscriptions (worthless
because they will definitely not ``ripen''). Some registries advance
the date and some do not. Currently the Verisign registry automatically
advances the renewal date even if the registrant has not renewed the
name at the registrar of record.
---------------------------------------------------------------------------
With the re-registration of deleted names system that exists today,
there is are no advantages conferred based on the number of names the
registrar has, what information they have, or for that matter, any
other advantage. The competition is fair and equal with the current
system.
In the fiercely competitive domain name registration market, even a
small advantage will sway most of the market toward the registrar with
the advantage. Why would any rational customer pay registrar X $24 with
the risk that it would be for naught, when they could buy the same
thing from registrar Y, for the same $24, with a guarantee that the $24
would pay-off and not be wasted? Or why would any rational customer pay
$24, then $6 if the name is assigned to them, when they could pay $0
and $30 after assignment? The registrar who knows for certain that the
name will be deleted can offer the latter with no risk to the
registrar, while other registrars cannot.
NSI is the largest registrar and it deletes the most names (even
more than its pro-rata share of the market represents, based on number
of names under management), and it has foreknowledge of all those
deletes and therefore would have the largest advantage, and,
coincidentally, is also owned by Verisign, the company that is
proposing WLS.
If a registrar has an advantage in attracting WLS subscriptions, it
will therefore have an advantage in performing domain name
registrations when those WLS subscriptions fulfill (since the
registration for each name that has a WLS subscription goes to the
registrar that sold the WLS). Since a large part of the domain name
registration market is in re-registering deleted names (due to the fact
that 40 percent of all names become deleted), the registrar that has
even a small advantage in WLS has a large advantage in a big part of
the domain name registration market.
It is true that, as proposed, with WLS all registrars would have
the same price, and equal access to make wait list subscriptions on a
first-come-first-served basis, and subscribers can move the WLS to
another name up to 5 times, but, as originally proposed by Verisign,
registrars cannot all offer them with the same fulfillment risk.
(3) ICANN attempted to fix this problem, which resulted in a WLS as
currently proposed and passed by the ICANN board of directors.
See http://www.icann.org/minutes/minutes-23aug02.htm#02.100
ICANN passed resolution [02.100]. Part (c) of that resolution says
``No registrar sponsoring the registration of a domain name in the .com
and .net top-level domains shall be permitted to obtain (in its own
name or for another, directly or indirectly) a WLS subscription on that
[emphasis added] name at any time after a date sixty days before the
registration of the name is deleted;''
ICANN passed this resolution to fix the unfair advantage problem,
confirming that ICANN understands that there was a problem with WLS as
originally proposed by VeriSign.\7\
---------------------------------------------------------------------------
\7\ See: http://www.icann.org/committees/reconsideration/rc02-6.htm
``As noted in the 22 August 2002 General Counsel's Second Analysis
of VeriSign Global Registry Services' Request for Amendment to Registry
Agreement, the purpose of this condition is to avoid an incumbent
registrar acquiring a preference through advance knowledge of the
deletion of a domain name registration.''
---------------------------------------------------------------------------
As written, the resolution [02.100] would prevent a registrar, for
example, NSI, from selling WLS on their own names that are about to be
deleted. This would presumably prevent NSI from using its foreknowledge
on names it is about to delete to its advantage, but does not do so
(for reasons explained in #4 below). Not only that, but prohibiting the
registrar-of-record from selling WLS on some of its own names under
management, while allowing the other registrars that ability, in-and-
of-itself, skews the competitive landscape among registrars, this time
away from the larger registrars.
Since registrars do not have foreknowledge of deletions for all of
their names, presumably, if a registrar were to sell a WLS on its name
\8\ that is subsequently deleted, the name would not be awarded to the
WLS holder, but it would be deleted instead. In this case, presumably,
the registry would still collect the $24, and the WLS holder would not
be awarded the name. The name would become available for re-
registration even though it had a WLS on it. The WLS holder could then
move the WLS to another name (up to 5 times). The fact that a consumer
can have the WLS, but the name can still be deleted and it can wind up
with another registrant means WLS will have less than 100 percent
efficacy, so WLS is not ``better stuff '', but that's another issue. I
do agree that this effect will lead to a bad customer experience as
Verisign asserts in their request for reconsideration, and as ICANN
also agrees with as shown in its response to that reconsideration
request. More on this later.
---------------------------------------------------------------------------
\8\ A name for which the registrar is the registrar of record
---------------------------------------------------------------------------
(4) The fix did not remove the benefit to some registrars over others,
thus the WLS as currently proposed advantages some registrars
more than others in the WLS market, and therefore in the domain
name market.
ICANN mandates that a single entity cannot have more than one
accreditation. This is to maintain fair competition among registrars
when accessing the registry. Many registrars and most large registrars
(or the shareholders of registrars) own, control, or have very friendly
relationships with more than one other accredited registrar entity.
Maybe ICANN thought this rule (resolution [02.100], part (c)) was
sufficient to create fair competition, but it isn't, because the rule
applies only to names for which a registrar is the registrar-of-record,
and a registrar can simply give (or sell) the information (the
knowledge of which names it will be deleting) to another ``friendly''
registrar and that registrar can sell the WLS for those names at less
risk. For example, NSI can have another of its registrars (I believe
Verisign controls more than five ICANN accredited registrars) sell WLS
at lower risk on names for which NSI is the registrar of record. Either
NSI benefits because it is paid for the information, or the other
registrar benefits because it gets an advantage in selling the WLS
subscriptions, or both.
(5) The final WLS must have certain restrictions in order provide fair
competition in selling WLS, and hence registering names.
There are three solutions to this fair competition problem, two of
which require an additional restriction to be placed on registrars.
Either:
Option A
No registrar can sell WLS subscriptions for names that are
about to be deleted. Basically a one-word change to the
resolution passed by the ICANN board for it to read as follows:
``No registrar sponsoring the registration of a domain name in
the .com and .net top-level domains shall be permitted to
obtain (in its own name or for another, directly or indirectly)
a WLS subscription on any [changed from the word ``that''] name
at any time after a date sixty days before the registration of
the name is deleted;'' By changing the word ``that'' to ``any''
it prevents all registrars from selling WLS subscriptions
within the 60-day timeframe. Though this will still give the
advantage to registrars who do not sponsor names in .com and
.net top-level domains, therefore it must read:
``No registrar shall be permitted to obtain (in its own name or
for another, directly or indirectly) a WLS subscription on any
name at any time after a date sixty days before the
registration of the name is deleted;
Or
Option B
Require registrars to keep the information confidential.
Or
Option C
Disallow WLS altogether
Option A is preferable because it does not require a change to all
registrars' ICANN accreditation agreements (since any registrar who
wishes to sell WLS subscriptions will need to enter into an agreement
with the Verisign registry, and the restriction would be part of that
agreement) whereas Option B requires all registrars ICANN accreditation
agreements to change (because a registrar can disclose the information
even though it is not selling WLS subscriptions, so therefore there is
no mechanism to bind them except their accreditation agreement). Not to
mention that it would be difficult to enforce Option B.
I advocated the more restrictive version of the condition during
the ICANN process, and I do not know why it was modified to be less
restrictive, but maybe because ICANN thought that the less restrictive
version was sufficient, maybe it was just an oversight. I do know that
if the less restrictive one became policy, that Verisign would benefit
more than if the more restrictive one became policy. If WLS is allowed
to happen, I at least wish it to be offered fairly across registrars. I
am not asking ICANN to promote ``competitors'', just ``competition''.
Obviously, as eNom is one of the largest registrars, eNom would have
more of an advantage than most other registrars, if condition c stands
as-is. I am hoping that ICANN and/or the Department of Commerce will be
an advocate for exactly fair and exactly equal competition in WLS, not
just one that is still not fair, but yet slightly more fair than a
really unfair earlier version.
``Tailoring'' Condition C
Regarding the ongoing tailoring of condition c:
``. . . the reconsideration committee recommends that the Board
give the staff flexibility to negotiate with VeriSign to tailor
Condition c to result in a better customer experience, while still
substantially achieving the goal of that condition. This should be
accomplished by the Board's adoption of a new resolution restating
resolution 02.100, with an appropriate revision of Condition c.'' \9\
The goal of condition c, is ``is to avoid an incumbent registrar
acquiring a preference through advance knowledge of the deletion of a
domain name registration'' \10\
---------------------------------------------------------------------------
\9\ From http://www.icann.org/committees/reconsideration/rc02-6.htm
\10\ Also from http://www.icann.org/committees/reconsideration/
rc02-6.htm
---------------------------------------------------------------------------
The sixty-day period results in poor customer experience because
registrars, and for that matter, registries, do not know whether or not
some names will be deleted within 60 days. What is required is a
blackout time period that is based on a date certain of which
registries and registrars all have an equal knowledge. That date is the
renewal date. The renewal date is known in advance of any deletion or
renewal knowledge, and known at the same time, to all registrars and
the public.
Please refer to the following graph showing eNom's renewals vs.
time relative to the expiration date.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The VeriSign registry produced this graph for eNom and I believe
eNom is a typical registrar in this regard. The graph shows eNom
performs many renewals before expiration, therefore registrars know
before expiration, (with a high likelihood, though not certain as we
would after expiration) which of their names under management are not
renewed, and therefore which ones will likely be deleted in about 45
days hence.
If a name is not renewed just before expiration, then the registrar
knows that likely it will be deleted; therefore the period must include
a period before expiration.
Obviously the RPG period must be included in the blackout period as
well, otherwise the registrar that deleted the name knows before anyone
else that the name will not appear in the zone, therefore will have a
time advantage in getting the WLS on it quickly (if allowed to do so at
the very instant RGP begins, or any period beginning after RGP begins
but before the name is available for re-registration). This WLS
blackout period, which I propose be 30 days before the name expires
through to actual deletion \11\ is easily calculated by the registry
(and registrars) and so a registry could then easily implement the
condition.\12\ Since the period is deterministic, the WLS customers
would have a better customer experience because they would not be able
to obtain a wait list subscription during the period, therefore the
wait list subscriptions they did obtain would have a 100 percent
efficacy rate.
---------------------------------------------------------------------------
\11\ 30 days before expiration + 45 days during auto-renew + the 30
RGP period + the 5 day pending delete period
\12\ Since most if not all registrars also renew names before 30
days before expiration (again, see graph), the larger registrar will
retain an advantage on those names that are not renewed, which is why
I'm still against WLS, because even with the black-out period
modifications to rule c that I propose, the playing field that we have
painstakingly setup will still be tilted, though only slightly.
---------------------------------------------------------------------------
Therefore to maintain the intent of condition c, and to tailor it
to result in a better customer experience, it must be changed as
follows:
``No registrar shall be permitted to obtain (in its own name or
for another, directly or indirectly) a WLS subscription on any
name at any time during a period that starts 30 days before the
registration of the name expires and ends 80 days after the
registration of the name expires''
There are other flaws in the WLS system, some of which also involve
the competition issue, and most of which came out in the ICANN process,
and for which the GNSO Council voted for Option C above (to not allow
WLS). Why the ICANN board subsequently passed it, I do not know. Since
the ICANN board ignored the consensus, I can only assume there was some
legal, or other reason, for the board's decision. I do not know what
this reasoning is. Since, in response to Dotster's reconsideration
request, ICANN said that consensus was not required \13\, I've
concluded that building a consensus is not the answer, and therefore
the only targeted recourse is an appeal to you, or the Department of
Commerce or the courts.
---------------------------------------------------------------------------
\13\ See http://www.icann.org/committees/reconsideration/rc02-5.htm
---------------------------------------------------------------------------
Please feel free to contact me if you have any questions or need
clarification on any of the points I've made in this letter.
Best regards,
Paul Stahura,
President and CEO,
eNom, Inc.
______
eNom
May 18, 2003
Robin Layton,
Associate Administrator
Office of International Affairs
National Telecommunications and Information Administration
U.S. Department of Commerce
Dear Robin,
Verisign has made WLS and re-registration of deleted names a
complex issue. Their spin and the complexity they created works to
their advantage. This letter answers some questions surrounding this
issue and expresses eNom's support of those in opposition to WLS.
Current situation
All registrars currently register names at the registry on a first-
come-first-severed basis. This includes never before registered names,
very recently available names and name that were once registered then
were deleted and have been available for re-registration for long
periods of time. The wait list service, or WLS, is a proposal that will
change the way recently available names are re-registered. Currently,
each registrar registers these names on a first-come-first-served
basis. Without WLS, as soon as the name becomes available, the first
registrar that attempts to register the name will actually register it.
Many of the names that will become available are in demand, but are
unavailable because they are currently already registered. To service
this pent-up demand, registrars employ different models to register the
names on behalf of consumers. The following are three examples of
currently existing models:
1. One registrar employs an auction model, whereby the registrar
will devote its resources to registering a particular domain to
whichever customer pays the most money. If and only if the
registrar is successful at registering the name does the
registrant pay the registration fee, which in this case is the
top auction price.
2. Another registrar employs a ``club'' model whereby the registrar
will devote its resources to customers who pay a monthly
subscription fee ($100 per month) to be in the ``club''. If and
only if the registrar is successful at registering the name
does the registrant pay the registration fee, which in this
case is $6.95, or $.95 over the registry fee of $6.00
3. Another model is similar to the WLS model whereby customers
``backorder'' a name. Once a name is backordered, no other
customer can back order it. The fee to backorder a name is $69
per year. There is no additional fee once the name is actually
registered. If the name is not registered on behalf of the
customer during the year, the customer loses the $69.
Q and A
Q: What is the proposed pricing of the WLS, and will it be more
than now?
A: It is proposed that it will cost $24 for a WLS subscription,
then an additional $6 to the registrar that purchased the subscription,
but only when the name is registered. Additionally, the registrar will
likely charge at least $1 for profit, for a total of $31 per name if
the name is registered. At least $31 (with WLS) is more than $7-$10 on
average (now, without WLS), so yes, it will cost more than now. The
proponents of WLS spin the price by saying, ``hey, $24 less than the
$40 we originally proposed, so its cheaper''. For a WLS to be the same
price as today, it should cost $0, because 0+6=6, which is today's
price to re-register a deleted name.
Q: What if the name is not registered?
A: If the name is not registered after a year, the customer loses
all their money, or alternatively, they can change the WLS to another
name for up to 3 times over the year. If none of those names are
registered, the customer definitely lost their money. For example, if a
WLS is sold for ``yahoo.com'', since that name will most likely not be
deleted, that person ``lost'' their money, and the registry gained $24.
Q: Will a WLS be sold for ``yahoo.com''?
A: Most definitely yes, but not to a person who thinks they will
actually one day be the registrant for yahoo.com. It will be sold to
someone who wants to extract big money from the current registrant of
yahoo.com, because whoever buys it, though knowing that it is likely
never to be deleted, but would get it on the off-chance that it was
deleted, and therefore could offer the WLS to Yahoo, Inc. at a price
greater than $24, and in this case, much greater.
Much like as if the real estate deed to Rockefeller Center in NYC
transferred to someone if ever the current owners of Rockefeller Center
were late in filing their property tax return, so some other relatively
trivial event. The current owners of Rockefeller Center would not want
to take such huge risk in losing their property, so they will therefore
buy that right from the person for a substantial sum over the $24 the
person paid.
How would you feel if you were yahoo.com, or msn.com or apple.com,
or aol.com, and some, heaven forbid, pornographer, out there definitely
(100 percent remember?) gets the official rights to your name, if some,
albeit low probability, event happened? You'd have to disclose this
risk to your shareholders.
There will be many, many companies, you name them, not just yahoo,
which will not be at all happy about that situation once they find out
about it.
Q: Isn't WLS much like selling an option, for example, on shares of
stock?
A: No. Normally when you sell an option on shares, the shareowner
gets the proceeds and has the choice to not sell that option. In this
case the registry will get the proceeds and the registrant does not
have the choice to not sell the option. The situation is as if the
registered names are not the registrant's, but still the registry's to
do with as it pleases.
Q: Will people be duped to buying a WLS on their own names?
A: Yes. In the currently proposed WLS, you cannot opt-out your name
from having a WLS sold on it. Therefore every registrant:
(1) Is opened to the unscrupulous WLS holder saying (though not
exactly true, they'll say it anyway) ``I will get your name if
it is ever accidentally or maliciously deleted, so pay me $X
now''
(2) Will be fooled into ``buy the WLS for your name before someone
else does''
(3) Or will be fooled into the FUD (fear, uncertainty, and doubt)
pitch: ``buy the WLS as insurance incase your name is ever
accidentally deleted'', even though there are a number of
measures currently in place to already insure this does not
happen, including a) registrar-lock, b) 10-year registration
periods, and most importantly, c) the redemption grace period
Q: Will the introduction of WLS limit the choice of consumers?
A: Yes. Currently there are more than four competitive models to
re-register recently available names from which consumers can choose.
Due to this competition, prices to re-register deleted names have been
dropping. If WLS is implemented there will be only one model (WLS) and
the single monopoly registry will run it.
Q: Will implementation of WLS preclude the other registrars from
re-registering names that have been deleted?
A: Yes and No. Any name that has a WLS subscription on it will not
be available to be re-registered except to the registrar (on behalf of
the registrant) that placed the WLS subscription. Other registrars will
be able to re-register recently available names that do not have a WLS
subscription using the first-come-first-served system in use today.
Only names that are worth less than $31 will be able to be re-
registered in this manner, since ones that are worth more will already
have a WLS on them.
Q: Will WLS reduce the technical load on the registry?
A: No. Since it costs nothing to submit a registration request,
registrars will administer as many requests for low-value names as they
do today for high-value names.
Q: If WLS is implemented, who makes money?
A: The registry will make $24 on names that are worth more than
$31, even if the name is never actually registered. If the name is
actually registered, the registry will make $30 on names that are worth
more than $31. Currently the registry makes $6 on names, and then, only
when they are actually registered. In both cases, and depending on the
model, the registrar makes as little as $1, therefore the higher fees
come directly from consumers.
Q: So currently, where does the $25 go?
A: In one model, $1 goes to the registrar and the consumer saves
$24. In other models currently in use, the registrar makes more, but in
most if not all models, the registrant currently saves at least $24
when compared to the future WLS.
Q: Of the registrars that are currently participating in this
market, what will happen to them?
A: Many will go out of business. About 15 are being paid by
SnapNames to use their registry credentials, and for many of these, the
SnapNames revenue is their only income. If WLS is implemented,
Snapnames will not need those credentials and therefore those
registrars will not receive any more revenue. The registry will make
the money that these registrars were making, plus more that is
extracted from registrants (consumers) due to the registry's monopoly
position and the resulting higher overall fees paid by the public. The
registry will then pay some of this revenue to its SnapName partner.
The registry and SnapNames make more money, while the other registrars
make zero, and most importantly, the public spends more for the same
thing.
Q: Will WLS be a new offering?
A: Not really, SnapNames offers a similar model, albeit with less
efficacy (note that its less than 100 percent efficacy proves that
there is existing competition, and that there isn't already a monopoly
currently in place).
Q: Is WLS ``better stuff''?
A: No, because:
(1) Once a WLS is taken, no other customer can have the rights to
that name if it becomes available.
(2) If a name never becomes available, the consumer (WLS subscriber)
will most probably lose their money and end up with no names.
(3) It un-levels the registrar playing field because the registrars
who delete the most names (the larger registrars) can offer WLS
subscription at lower risk for the names they know they will be
deleting. This is a subtle but important point since
competition at the registrar level is important to maintain.
Larger registrars can say ``if you buy a WLS for this
particular name from me, I will guarantee that I will delete
it, and you will therefore be guaranteed not to lose $24''.
Other registrars cannot make the same guarantee for the WLS for
that name and must then offer the WLS with a higher risk. Since
50 percent of names are deleted (on average) and become
available each year, WLS removes the fair competition that has
been painstakingly established for 50 percent of the
registration market. As an added aspect, it may be no
coincidence that the registry that wants to implement WLS owns
the largest registrar; in who's favor the competitive landscape
will tilt. The current implementation proposal, while it may
attempt to, does not eliminate this.
Q: Is WLS less expensive?
A: No. Recently deleted names are currently available for $6 from
the registry and for as little as $7 to consumers. WLS will increase
this to at least $24 (for WLS to registry) + $6 (for registration to
registry) + $1 (to registrar) = $31. Just because WLS is priced at $31,
which is less than SnapNames retail price of $69 does not mean it is
less expensive than what already exists today. It is actually more
expensive because it must be compared to the average price of $7-$10
(and closer to $7) that, due to competition in the re-registration
market, the price has been driven down to.
Q: Doesn't WLS provide a better means to distribute re-registered
names to consumers?
A: No. The very first minute that WLS goes live, nearly all the WLS
subscriptions for valuable names (such as those valued at more than
$24) will be taken, and not by the average Joe consumer. The next
minute, those registrants will be solicited to buy the WLS on their own
names for more than $24. By the time the consumer knows what happened,
it will be too late, all the WLS subscriptions for valuable names will
be gone and more importantly (and ironically when comparing the current
status quo to WLS) any name that does not already have a WLS
subscription would have been available for re-registration anyway (and
at a lower cost) if WLS was never implemented. At least in the current
system, the average Joe consumer has as much chance at re-registering a
deleted name as anyone else. With WLS, after the WLS is taken (which
will happen very quickly after WLS go-live), Joe consumer has no chance
at all.
Q: Isn't WLS better than what exists now since the customer will
definitely get the name?
A: Not really. It is true that if there is a WLS on a name and if
the name becomes available, then the WLS-holder will definitely get the
name, but these two ``ifs'' do not always happen. If the name does not
become available, then the customer lost at least $25, whereas now (if
the consumer chooses one of the competitive models that is not WLS-like
such as SnapNames' model) if the name does not become available the
customer loses nothing. Additionally, if Yahoo, Inc. does not have the
WLS on yahoo.com, and someone else does, there is no chance that Yahoo,
Inc. will get the name if it ever becomes available, whereas with the
current system, there is.
It is true that 100 percent efficacy is more than 70 percent
efficacy, but in this case, more is not better, since 100 percent of a
bad (more expensive, monopoly, unfair competitive) model is worse than
70 percent of the same bad thing.
WLS:
(1) Brings a monopoly to 50 percent of the name registration market,
where there isn't one currently
(2) Increases prices to consumers
(3) Is not better, overall, for consumers, than what is available
today
(4) Makes for unfair competition, in favor of larger registrars.
(5) Removes choice by forcing the market to one model instead of the
diverse models available today.
Q: If WLS is not a monopoly service, why not let the registry set
any price it wishes, and let competition reign?
If it is a monopoly service, why then introduce it, and eliminate
the current competitive situation?
A: Because it is a monopoly service. What better mechanism to set
the price than true competition?
Q: Why should my government or another authority choose one model
over the others, especially when fair competition is in place now and
working to bring choice and drive down prices? Why should it take the
risk that WLS will make thousand, if not more, companies very unhappy
with the risk in losing their names if someone else gets the WLS?
A: It shouldn't
WLS is not new stuff, better stuff, or cheaper stuff.
WLS is a gussied-up, higher cost, monopoly service without even
much of a disguise to those that follow this complex issue. This
registry level service is not more attractive or convenient to
consumers, unless you think that a monopoly is more attractive and
convenient because there is only one place for consumers to go to pay
more.
eNom, one of the top-five largest registrars worldwide, supports
Dotster, GoDaddy and the numerous other registrars, resellers, and the
general public participants, and others who form a consensus and oppose
WLS.
Best regards,
Paul Stahura,
CEO,
eNom, Inc.
______
WLS Frequently Asked Questions
Q: Isn't WLS a better product offering because it has 100 percent
efficacy?
A: The WLS system will effectively replace the current system used
to re-register deleted names that all registrars use today. There are
many registrars who have innovated various business models to re-
register deleted names. Some offer a fair chance at the name for a low
price, whereas others offer an exclusive chance at the name in an
auction system, for example. In all cases the consumer has the choice
of which competitive model to select. In the case of WLS, this choice
is eliminated. The situation would be as if there were competition in
the beef market, for example in selling t-bone, New York, and top
sirloin. WLS may be the filet mignon in this case but it will be the
only type of beef you can by, and at six times the price.
Q: Does Verisign have the right to sell an option on someone else's
property?
A: Recently the 9th Circuit Court of Appeals affirmed that domain
names are in fact property. I'm sure each of you Senators owns your own
domain name. Does it surprise you to know that under the WLS system,
Verisign may sell the option to purchase your domain name to someone
else, should it be deleted? Or heaven forbid, should you accidentally
forget to renew it. This applies to every domain holder from my Uncle's
domain name to yours to your constituents' and to each and every
corporation in your state. In short Verisign is selling options on
other people's property. Is it a good idea to allow someone to sell an
option to buy the Brooklyn Bridge, in the case that NCY decides it does
not want it anymore, even if the chance of that is slim? Verisign is
not the city; it is only the county hall of records.
Q: Why doesn't ICANN's WLS ``rule c'', as it stands (with the
registrar of record blocking condition), already prevent a tilting of
the playing field?
A: Because the registrar of record blocking does not prevent the
registrar of record from disclosing the information to another
registrar who is not the registrar of record, therefore it must extend
to the other registrar, and since that registrar could be any
registrar, it therefore must extend to all registrars.
Q: So why not, instead of prohibiting WLS during the blackout
period, simply forbid the registrar of record from marketing during the
blackout period?
A: Because:
(1) How would the registry or ICANN bind the registrar who has not
signed up for WLS (for example, eNom won't sign up, but one of
the little registrars we are friendly with will). This is why
any type of prohibition (marketing blackout or WLS no-sell
blackout) must extend to all registrars, not just the
registrar-of-record.
(2) Even if you could bind them, how would you enforce it?
(3) Or even know that they violated it?
(4) Though registrars would definitely care that a marketing
blackout was violated (since it gives an advantage to one over
the others), why would the registry (assuming they somehow
bound the registrars) care that the marketing prohibition was
violated?
(5) A registrar does not have to do any marketing to exploit the
advantage, it only needs to offer a zero subscription price (no
risk to the registrar), and delete names immediately after a
WLS is placed on them for the market to get the message.
Q: Is WLS a new product offering?
A: Not Really, because 1) there is already a system in place to re-
register deleted names, and 2) one of the existing competitors is
currently offering a WLS-like service. What would be new would be the
fact that all the current competitors would not be able to offer their
current service to re-register a name if there were a WLS subscription
on it. Since WLS is a monopoly offering that pre-empts all other
current offerings, the registrars have no choice but to either sell WLS
or not play in that game.
Q: Isn't it true that if the underlying domain does not become
available, you can switch the WLS to another name, so your money is not
wasted?
A: Lets say someone had a leased Lexus, and you go to the leasing
company and say that you want that Lexus when the current owner turns
it in. In the WLS model, the leasing company would sell you an
expensive option to do just that: re-lease the Lexus if it were turned
in. If it were not turned in, however, the leasing company keeps your
money and offers you an option on a different car on their lot: perhaps
that nice '79 Pinto hatchback. This is, in effect, part of the proposed
WLS system.
Q: Wouldn't WLS be a great insurance policy for your name?
A: Within the first few minutes of WLS being offered, speculators
will purchase the WLS for valuable names. For example, in my home state
of Washington, companies such as Boeing, Microsoft and Amazon.com will
see the WLS subscription for their domain names taken by speculators
before those companies even have the chance to get them. So, in the
unlikely event that you get the WLS on your own name, we recall the
fact that WLS subscriptions only last one year. You will be forced to
compete with the speculators for that subscription year after year.
Q: Then why not allow the domain holder the first option on the WLS
on their name?
A: Protection racket. You mean to say that if I don't pay Verisign
for the WLS on my own name, Verisign will sell it to Rocko down the
street? Why don't I just renew my name every year, or register it for
10 years, and why am I not able to ``opt-out'' my name from a WLS being
sold on it?
Q: The system is gamed by registrars now, and people will always
attempt to game the system, so why try to prevent gaming of the system?
A: The re-registration system of today is a fair competitive
system. Of course competitors try to gain an advantage by innovating
new technology, if you call that ``gaming'', fine. I call it
innovating. All registrars are free to innovate. The crux is that today
one registrar does not have an inherent advantage over the others as
they would if WLS is implemented as the ICANN board has approved it. If
WLS is implemented, no amount of innovations by a small registrar will
overcome the advantage that a large, non-innovating registrar would
gain.
Q: Doesn't a large registrar already have an advantage over a small
registrar, so that if WLS gives a large registrar an advantage it is no
different than today? A: No, today a large registrar has the same
advantages as a small registrar and does not have more of an advantage
because of the registration system or any ICANN policy.
Senator Burns. Thank you for coming today, and thank you
for your testimony.
There's one way to really get this dialogue heated up and
going pretty good. I'd just ask Mr. Twomey if he would address
the criticism that was just offered by Mr. Stahura. Is this a
legitimate complaint?
Mr. Twomey. Mr. Chairman, as Mr. Stahura pointed out, this
is actually a matter which is before the courts at the moment,
so my comments will be a little constrained, but let me just
make some responses.
First of all, I think as other people at the table have put
to you, ICANN should not be in the business of trying to
determine offerings in the marketplace. I don't think that's an
appropriate role for the organization.
VeriSign came to ICANN under its existing contract and put
forward proposals for a new innovation, to put forward a new
product offering to the consumer. That product offering may
compete with product offerings put to the consumers by
registrars, but I'm not certain it's the organization's role to
say to one player in the market, you're not allowed to innovate
for the benefits of consumers because other people already have
a product in the marketplace, and that's--you know, we are an
organization especially about competition.
There is an issue here about people bringing a new product
to the market, new innovations to the market. Should we be in
the role of stopping that because other people have already got
products in the market? That's a difficult thing for us to do.
The question about process, this was before my time,
obviously, but one thing I would make observation on is, this
is not a question of ICANN policy in which we're very clear
about the processes that followup. This is a proposition where
one player under an existing contract comes into the discussion
and says, we wish to implement something that we think we have
the right to do anyway, you know. We wish to implement a new
product, and so this is not the same thing as the usual policy
process that we have internally.
I mean, I do welcome Mr. Stahura's call for discussion, but
perhaps I should leave it at that, considering issues are
before the courts.
Senator Burns. Would VeriSign like to make a comment on
that, being as they were mentioned here?
Mr. Balogh. Yes, Mr. Chairman. I'd like to begin by
describing a little bit about the Wait List Service and its
origins. Starting from the consumer's perspective, if a
consumer is interested in
getting a domain name that is already taken, and knows that
that domain name will be deleted soon--for instance,
SenatorBurnsForPresident.com, for example, and assuming that
domain name is going to be deleted in about a month, what a
consumer needs to do is figure out how to get the domain name.
There are a couple of different methods. One of those
methods is going with the backlist service that exists today
from several registrars. What a consumer will generally do is
pay somewhere from $9 up to hundreds of dollars for that kind
of a backlist service, hoping for a chance to get that name.
Now, what actually happens underneath, and how this
actually works is, the various registrars, when those names get
to be deleted--and by the way, those names are available via
report. The registry provides those reports of which names are
being deleted, and that is public record. You can look up the
information.
When those names are being deleted, registrars pound the
registry system as hard as they can to get the name within a
few milliseconds of when the actual delete occurs, so how some
registrars have found that they can get more advantage, get
more of their names over other registrars is by literally
consuming as much of the system resources of the registry as
possible with their ad stream, so you can imagine, if the
capacity of the system is, let's say, 100, if a registrar can
get 95 of their ads in while all the other registrars get only
five, then there's a much better chance for that particular
registrar to get more of those names.
As it turns out, a very, very small number of the 800,000-
some domain names that are deleted per month fall into this
category, and we did a study of about 2 weeks looking at all
the ad activity. We averaged almost 1/2 million adds per single
domain name that was actually acquired, just to give you a
idea, so the way the system is set up now, the consumer has a
very confusing experience.
They may go with the particular registrar, not realizing,
which the speculators, by the way, do, that you will want to go
with several different registrars backlists, or wait, backlist-
type service, hoping that you might get the name, never
knowing. The purpose of the Wait List Service is to take this
system which encourages abuse--we literally get attacks of
these ad storms. We had to shut down deletes for over a week
several years ago, about a year and a half ago to try and deal
with it, to take the chance out of it.
The Wait List Service provides a registration for a domain
name that may be deleted. That's deterministic. It's first-
come, first-served, and only one registration is allowed. What
this service does is allow the consumer to know exactly what
will happen, and by the way, this service is offered to all
registrars. A registrar can choose to offer this service or
not, and can continue to offer their Wait List Service as well.
Senator Burns. Mr. Davidson.
Mr. Davidson. I was afraid you'd say that.
[Laughter.]
Senator Burns. You know about this. You're aware of it.
Mr. Davidson. We are, and I have to say, this is tough,
because I think there are merits on both sides of this
argument. We've been fortunate enough to spend some time
discussing this with both sides of the folks who are working on
this. I think the process issues that are raised by eNom and
others have merit, and they resonate with a lot of people in
the public interest community about how some things happen at
ICANN.
At the same time, I think there are some benefits for
consumers from having a new service like this available.
Clearly some people believe that that's true, and there is a
certain nuttiness to a system where every time a domain name
becomes available 300,000 hits are registered by the registry
as people pound the registry servers to try and get it. I
understand why people would want to change that system.
Now, let me just add, you know, I think the bigger issue
here is, I honestly don't think we would be here if we were
talking about coming up with a WLS system for .museum, or
.coop, or a different registry, and that sort of underscores
the point that if there was a lot of competition among
registries and TLDs, this wouldn't be as big an issue, because
some of them would offer Wait List Service.
And if it was really popular, then they would succeed, and
consumers would go there, and if it was really stupid, then
people wouldn't go there and it would fail, and I think part of
what this underscores is that we do want registries to be able
to innovate, but to do that you've got to make sure you've got
a diversity of registries, and right now .com does have a very
special place in people's hearts.
Let me just say, as far as what Congress ought to do about
this, I think it is kind of tough to say that Congress ought to
be legislating about something like WLS, because if you believe
in the ICANN idea, which is that you know, they're supposed to
be doing this, it's very hard to have Congress going in there
and micromanaging it, and we would have a hard time supporting
a bill like that, but I feel the pain of those who are
concerned about the process.
Senator Burns. Yes, sir.
Mr. Stahura. Can I say something, too?
Senator Burns. You bet.
Mr. Stahura. First off----
Senator Burns. We may settle this whole thing right here.
Who knows?
Mr. Stahura. I doubt it. We've been talking about it for 2
years. I doubt if this will settle it.
I don't think Paul addressed the competitive part that I
was--that's my main point, you know. We are tilting the playing
field amongst registrars, which ICANN agreed with, the original
WLS did tilt the playing field, so they decided to modify it to
make it more even, but unfortunately that modification didn't
work, so I'd like to talk to Paul about making that
modification work.
The second thing said was about slamming the registry.
Well, that was debated a long time, too, and there were a
number of other proposals that came up that would actually
eliminate the slamming problem. Unfortunately, WLS is not one
of them, because if you go to WLS, with the WLS system in place
a name could still be deleted, so I and one of the registrars
that pounds the registry to get dropped names along with 30
other registrars, that's the system that they have in place.
First of all, they limited our capacity to slam it maybe a
year and a half ago, so that their systems don't take so much
of a burden, but the most important thing is, even with WLS in
place, some names will still be deleted, and so I will still
have an incentive to pound the registry for those deleted
names, and it's not like I'm going to pound it any less for one
name versus 100 names. I'm still going to pound it just as
hard, so their argument about WLS as a solution, so-called
solution to the slamming problem does not hold water.
I could go on, too.
Senator Burns. All right. When you brought that up, I was
going to say, Mr. Twomey, what changes to ICANN structure in
your opinion now--you've been there for a while, where do we
need to change the structure to reach these agreements with the
international community?
Mr. Twomey. Senator I was actually really interested in
your list of three things, because it was actually very close
to my list of three things, and I only wrote it down this
morning, so I can't have sent this to you, because I actually
do think the issue is around globalization, security,
competition and innovation, as you have heard, and the other
one I would add is putting in place a business-like structure.
That is my mission. That is what I see I need to achieve.
On the globalization issues, I think there are two
important things that have happened just very recently showing
progress there. One was the increasing attendance in the
Governmental Advisory Committee, more and more Governments
being involved, particularly from the developing world, and I
think the other one, very importantly, was the formation of the
country-code Name Supporting Organization.
Mr. Chairman, that has a 4-year history. There's a 4-year
debate that went on with country-code managers, as to whether
they actually wanted to be part of a world forum, to come
together with the world or not, and that actually came to a
conclusion only a month, 6 weeks ago where they decided to do
that, and that was a decision of some 65 country-code managers,
the main country-code managers. The vast majority of them
agreed to set this organization up.
I think the consequence of that in terms of agreements
changes the field a little bit. Here we have them agreeing that
ICANN is a forum in which they want to participate, in which
they want to be involved. We do need to talk to people more
about how we actually put together some sort of accountability
framework around their participation, but I think our approach
might be a little different than it was previously, as we try
to put that in place. I think that's very important.
If I can make a further observation to yours, coming from
the Asia Pacific, I fully appreciate the issues you raised in
terms of growth and participation, and where it's taking place.
I do foresee that as an organization we will need to be more
engaged in those parts of the world, and supportive of the
issues that those people have, and that will give us more
value, and I think that's just a natural progression of the
globalization of the Internet.
The particular communities you referred to are communities
that have a high target, if you like, in terms of my attention.
I am very concerned about that.
Senator Burns. I'm interested in your efforts to address
interoperability between languages in the domain name system,
particularly given what you have identified, and I have, too,
is a surge of the Internet access in the Asian countries. Can
you tell us about such interoperability and how it can be
ensured?
Mr. Twomey. Senator, I think it's incredibly important that
we do have that interoperability, and we maintain it, and one
of the key tests of the maintenance of a single Internet is the
introduction of internationalized domain names, and the key
test of that is severalfold. One is that we result in the main
names that appear in the characters, or the on-ASCII characters
for other languages around the world, but it's done in a way
which does not harm several things, it strikes me.
One is a single interoperable Internet, two, that we don't
end up with a flood of cyber-squatting, and three, that we
don't end up with quite a degree of linguistic confusion as to
what equals a particular phrase, and if I can give you an
example of the latter, the People's Republic of China uses
simplified Chinese character sets. Taiwan uses traditional
Chinese character sets.
One of the two character sets of Korea is a derivative of
the Chinese character set, and the Japanese character set is a
derivative of the Chinese character set, so here we have at
least 1.5 billion people accessing character sets that could
potentially be confusing, and that's the reason why it's
important in the way we move forward with internationalized
domain names, that we don't just have a technical standard, but
as the guidelines that were developed up in consultation with
key registries addressed that there is a process for ensuring
linguistic rules, and that there are guidelines.
Now, we're very conscious at ICANN that that's a process
that needs to be driven by those communities and by those
people with linguistic issues. We're not trying to set a
prescriptive language to do that. More, we're concerned about
how to ensure that the registries involved actually develop up
guidelines, and they themselves say, here's how we will address
implementation in a way which does not result in those
potentially bad things I said at the beginning,
noninteroperability, cyber squatting, et cetera.
Senator Burns. Well, are you geared up to deal with what
could be a huge upsurge in Internet use in that area, to deal
with that?
Mr. Twomey. A key part of our--well, I think we are
actually increasing resources this year, and part of it is to
address both that and, importantly, the increased
accountability and transparency mechanisms that we're putting
in place. A key part of that succeeding is actually the
engagement with the registries that actually deal with those
communities.
In other words, those registries are some of the generic
registries, but also the country-code registries, so this is
not an arena where an ICANN should be setting prescriptive--you
know, go to 1.5 billion people and say, here's what you must
do. Rather, it's about how we are an effective forum for those
specific registries to do two things: (1) to engage amongst
themselves to find a solution that works for their communities,
but (2) to be held to some sort of accountability that they are
accountable to the rest of the Internet so that it all works
well.
It is one Internet, Mr. Chairman. It's not several, it's
one, and we have an accountability to each other to ensure it
remains like that and operates like that, in an engineering
sense as well as some of the more business aspects of it. Our
true role is to be informed and help them come together and
solve that, but also to be a voice of conscience, if you like,
about responsibility to others on the Internet, and to ensure
that we maintain just one single Internet.
Senator Burns. Have you had dialogue with the Chinese, as
an example?
Mr. Twomey. The people who have been involved in--we have
actually two committees of our board, one committee of our
board and a working committee, plus some staff members, and
they have active involvement in our board.
I should make the point on China that one of our new board
members is actually a senior member of the Chinese CCTLD, and
so we actually do have strong linkages back into the Chinese
NIC.
Senator Burns. While we're along that, I would like to note
submitted testimony of Carl Auerbach, who has been an
incredibly thoughtful critic and participant in the ICANN
process. Mr. Auerbach began his statement with a very simple
and stark sentence: ``I am the only person in North America who
will ever be elected by the public to the ICANN's board of
directors.'' His term ran out last November, and after ICANN
decided to eliminate the five at-large elected board members.
If there's no electoral process involved, then it seems to
me that the role of ICANN should be strictly limited to
technical administrative functions. Can you please comment on
this, on how you view the elimination of those at-large
positions?
Mr. Twomey. Mr. Chairman, originally, and the continuing
motivation is that ICANN needs to be a balance, and at the
heart of that balance must be the interests of the consumers.
There are balances between country codes and generic codes,
there are balances between registries and registrars, but I
think very importantly there's a balance between the supply
side and the demand side. The demand side is represented partly
by intellectual property interests, partly by noncommercial
interests, but a very important part of that demand side is the
consumer.
Now, in the first, if you like, ICANN 1.0 attempts to try
to give voice to the consumer there was a process of elections,
online e-mail elections, Internet elections. I think an
objective analysis of that process--there were particularly
some potential flaws about how that could be implemented. There
were great difficulties, and you'd be very conscious, Senator,
in the political process of the difficulties of capture, and
how all those things worked.
Probably much less so in an obvious place here, but in
other parts of the world, I would say to you that you've got to
be a little careful about how those things can work, but our
commitment to giving a voice to the consumer, our commitment to
giving a voice and representation to the users of the Internet,
is undiminished, and our implementation of an at-large advisory
committee, and then developing regional at-large committees,
our response to that, to really put in place mechanisms for
drawing attention of the consumer's interests and trying to put
in place--we've identified some 325, I think it is, consumer
and other organizations, indirect, and who deal with consumer
interests and IT and Internet around the world.
We've started a process of engaging with those, and we are
also putting in place a general manager of public outreach and
communications. Part of that person's role is going to be to
continue to have engagement for the individual consumer.
It's a very difficult process. We are not the Government of
the Internet. We should not be put up as some sort of mechanism
for global voting, or experiences or experiments in global
Internet voting. I don't think that's our real role. Our role
is to focus on how to really get that effective voice for
consumers in this process.
Mr. Davidson. Can I make a----
Mr. Twomey. Shall I just make one----
Senator Burns. I'd like to hear other comments with regard
to that.
Mr. Twomey. Absolutely. I'll just make a final comment.
Mr. Auerbach has been a very active and vocal member of the
board and critic, and I actually really value the critiques he
offers, and he's had a very effective and positive input into
the process.
Senator Burns. Anyone else want to comment on that?
Mr. Davidson. I'd like to, and I was going to say, I think
the sentiment is welcome, but I think the problem is how do we
implement this question of providing for a real voice for the
user community at ICANN.
I just want to read a quick quote: ``As the ICANN process
develops, if it were simply to evolve into a series of groups
and committees representing the supply side, it would lose
legitimacy in the eyes of the Government in the sense it would
simply become an international trade association and not have
balance around end-users and public interests that governments
think of as important.''
I couldn't agree with that statement more, and it was made
by Paul Twomey a year ago when he was spokesman for the GAC,
and I think it's still a sentiment that a lot of people at
ICANN have, but the problem is, it's not enough to talk the
talk. We have to figure out how to walk the walk, and the
original part of the bargain when ICANN was created was that
half of the board was going to be selected at large from among
the user community.
There has been a great deal of debate at ICANN about how
that ought to happen, and I understand why many people in the
community did not feel comfortable going with some sort of
election process, but it's not sufficient to simply abandon
that idea and not put something that's powerful in its place.
The jury is still out right now about the processes that
have been place. The at-large advisory committee is a very
welcome idea, but it has not fully materialized, there are a
lot of questions, and I think the big problem is that for
groups like my own or the other public interest groups that pay
attention, it's very hard to get the resources to participate
in something like ICANN, and it's extra hard when you don't
feel like you have a voice.
And simply saying, well, you're part of a little group that
advises another group that advises the board is a big
difference from saying, you've got half the board seats, or
you've got a voice on this board, and I think that is the thing
that ICANN has still got to struggle with. We've really got to
find a way to get the user's voice in there and make it feel
like we're accountable.
A big piece of that is also going to be making sure that
ICANN is this more narrow technical body that has a narrowly
focused mission, as Mr. Auerbach has said. I don't think people
on the ICANN board disagree with that, but we haven't come to a
meeting of the minds about what that means.
Thanks.
Senator Burns. Ari, do you want to comment on that?
Mr. Balogh. The comment I would make is that that issue is
central to the relevance of ICANN. ICANN's mission needs to
pull all the various constituencies of the Internet together,
the root operators' groups, all the CCTLD's, the numbering
registries, and the other industry and other organizations that
can add benefit.
The Internet is becoming more and more critical for just
about everything, and as October 21 showed, an attack, a
relatively straightforward attack, can have some critical
implications about the availability of the Net and all services
depending on it. That focus on the salability and security of
the Internet, as well as creating an environment that fosters
innovation around the basic services is absolutely critical,
and it requires all those constituents to come together, and
that is the challenge.
Senator Burns. You'll have to beg my pardon for using this
term, but it just sounds like to me, though, there's a real
struggle here, or a tug of war on what ICANN wants to do, and
does it have the wherewithal to do it? It's kind of like,
showing up at a cowboy convention. There's nobody in charge.
You've just got a lot of cowboys.
[Laughter.]
Senator Burns. And everybody is an individual, and
everybody kind of wants to do it.
Now, before they can get some things done they have to be
empowered to set some rules, or standards, or a mechanism of
which to--if it takes--to rule is to guide, and to guide is to
rule, and I can see the internal struggle that would be, as the
Internet grows, could be a humongous job. It would be almost--
it would be the most difficult one could think.
How should they change? What would you recommend they
change to bring all this together and to bring some order to it
where they can write rules and regulations and then step back
and everybody would say, well, these are high-handed, hard-
headed, rules we don't like, and so we're not going to join.
What power has to be done and what power has to be
delegated in order to ensure legitimacy, international
acceptability, to ensure security, and all of these. How strong
does it have to be written? Does anybody want to comment on
that?
I mean, it looks like they're charged with a mission here
that says, OK, you go do that, but you don't have powers to
organize. Is that a wrong assumption? I may have the wrong
assumption.
Mr. Balogh. I think it is a tremendous challenge. The
constituencies are all over the place with their own needs and
interests and desires. I think the key insight into this is,
there are other models that actually do blend the interests of
many varying constituencies. The insight is that we need to
encourage the industry to regulate itself.
Effectively, the industry can work itself to deal with a
lot of these issues, with ICANN providing that umbrella
coordination. It gets very tricky to write regulations and
create regulatory processes on a medium that is so diverse, and
so fosters innovation, so I think that the key issue here is,
will ICANN be writing rules and regulations, or will it be
coordinating an industry that has that capacity to coordinate
itself in the first place, and fostering that coordination.
Mr. Davidson. I'll just add, I think, I mean, you've hit
the nail on the head in terms of, this is really where the
central question is. I think there are a bunch of things, and
some of them are the kinds of things that are on Paul Twomey's
to-do list in his testimony, or they are things that, you know,
amount to accountability methods.
We've got to get a good independent review process in ICANN
so people can trust that there's some recourse if the board
does the wrong thing, an ombudsman within ICANN to provide an
avenue for compliant, making sure that ICANN sticks to the
bottom-up processes, that it's not a board that just rules
imperiously from on high.
Coming up in all of this with a really clear sense that
there are times when ICANN is going to say no to things that
people will want it to do, like the fact that ICANN's got to
stick to a very narrow mission. The way that this works is,
this isn't a Government for the Internet. It's not capable of
it because we just don't have the legitimacy mechanisms to make
people feel comfortable, with it being a Government from the
Internet.
ICANN's board has said, we don't want to be it, and we want
to make sure that in the future it doesn't get pushed into that
role, and so there has to be a clear understanding that there
are some things that we just don't do, and there has to be a
way of communicating that, a prime directive that says, we
don't do this if it's not clearly in the scope of our mission,
and that we're not going to be overly regulatory.
I think a lot of people have had concerns because these
detailed contracts that have been set up between different
entities at ICANN worry people. They say, well, gosh, if you're
supposed to be the guy that's keeping the trains running on
time, why do I have to have a 4-inch thick contract to have a
registry.
And there are reasons why a lot of the things are in there,
but I think we've got to find ways to send a signal that says,
we are just as narrow a body as we possibly can be, the minimal
that needs to get done to make sure that these major, these
coordination functions happen, and we're going to stick to our
knitting and we're going to come up with these accountability
mechanisms, and I think it can be done. There's a path to doing
that at ICANN.
Senator Burns. Just as an outsider looking in, it looks
like we've got to have very high--the lines have to be defined,
and then we have to narrow our definitions, and that is a
terrifically big job.
I have no further questions. If any of you have a question
for each other, I'd entertain those.
[Laughter.]
Senator Burns. Usually that's when we get the best dialogue
here. We settle a lot of fights. We've started a couple that we
couldn't end.
But we look forward to working with each and every one of
you, and especially with the new president of ICANN, and I'm
very much supportive of their choice in you and what you're
trying to do, and we're going to try to set up some private
meetings, maybe one of your meetings one of these days. If we
can possibly attend we'd like to do that.
I think oversight is going to have to be a part of this,
transparency of the organization, but we have tremendous
challenges ahead, and I brought the one about the U.S.-Asia
network. It was pretty obvious to me that even the parliaments
of the countries involved in the Pacific Rim have not really
grasped how large this can be in that particular part of the
world. In fact, some cases, the Governments themselves are way
behind the curve on the importance and the role that the
Internet plays in their national life and their international
life.
So I look forward to working with you. I appreciate all of
your testimony. There will be some Senators probably that will
ask some questions later. They will do that in writing, and if
you would respond to them and to the Committee on the same
basis we would appreciate that, and the record will be left
open for another 2 weeks, or when we get back in September.
Thank you for coming today, and these hearings are closed.
[Whereupon, at 4:05 p.m., the Subcommittee adjourned.]
A P P E N D I X
Pool.com
August 2003
Competition, Antitrust and Trade Concerns Arising out of ICANN-VeriSign
Plans to Create a New Wait Listing Service (WLS)
This statement has been prepared by Pool.com. (www.pool.com), a
member the Momentous (www.Momentous.corn) group of companies that
serves consumers--including those in the United States--who want to
purchase expired and deleted domain names.
Summary
While it has been a divisive issue within the realm of the Internet
community, ICANN's proposed Wait Listing Service (WLS) has not been
thoroughly studied nor evaluated by those charged with monitoring
ICANN's transition into a private administrator of the Domain Name
System. Indeed, the issue at stake is one of competition and anti-
consumerism: Should ICANN allow a proposal that ensures that every name
be routed through a company that was the original DNS monopoly, or
should it maintain the system as it currently is--allowing consumers,
through a system made more consumer-friendly by the innovations forged
in a competitive marketplace, to purchase domain names on the backorder
market for a price cheaper than what WLS would promote? Moreover, the
WLS proposal would reverse the anti-monopolistic movement established
by ICANN in 1999, when it forced the domain name market itself to
introduce competition. The WLS proposal needs to be brought to a
permanent halt or at least delayed for six to twelve months pending a
thorough and independent review of the issues involved.
Background
Based on its knowledge of consumers in the domain name marketplace,
earlier this year Momentous.ca launched new venture Pool.com. Pool.com
is achieving a high level of success in what is known as the
``backordering'' market, where people compete for access to the roughly
22,000 .com and .net names which are ``deleted'' (the industry term for
non-renewals of registered names) each day. Unlike competitors,
Pool.com features a unique consumer offering, allowing consumers the
opportunity to backorder and register desired names on a risk-free
basis in which no charge is levied unless and until a deleted name is
successfully acquired for the customer. Pool.com is not a Registrar and
operates through a Network of accredited Registrars.
Currently, domain name registrars register names on behalf of
customers on a first-come, first-serve basis. This includes customers
seeking (i) previously-unregistered names, (ii) previously-registered
names that become freshly available through imminent or just-occurred
deletion, and (iii) previously registered names which have been deleted
and available for re-registration for longer periods.
With the maturing of the domain registration business, a thriving
``backorder'' market has evolved to serve customers seeking access to
the tens of thousands of previously-registered names which become
freshly available through ongoing deletions of over 22,000 names daily.
The re-entry of some of these names into the open marketplace meets
pent-up demand, and over the last 18 months, a number of service
providers have emerged to rapidly develop a highly competitive,
innovative and efficient marketplace. At least half a dozen major firms
participate as principals in this backorder marketplace, offering
services directly and through networks of dozens of resellers.
Prior to March 1, 2003, there were high barriers to entry for the
domain backorder business. Registrars had difficulty competing, due to
the lack of information available as to when a domain would delete.
On March 1, 2003, a Redemption Grace Period (``RGP'') was
implemented by theRegistry. As part of the RGP, the Registry was
required to publish the deletion date of a domain name.
As a result of this publication, the high barrier to entry into the
backorder space was removed for all Registrars. Immediately, over 60
Registrars began to enter this market and offer a wide variety of
services and models, where few existed before.
Competitive backorder service providers have developed at least
four basic business models to serve backorder customers:
The original--and until recently, dominant--business model
allows customers to backorder a name and pay an upfront fixed
fee, typically $69 per year (``normal'' brand new registrations
are typically retail at about $15 to $25 per year). Once a name
is backordered, no other customer can backorder it, at least
not from that vendor. There is no additional fee if and when
the name is actually registered. However, if the name is not
actually successfully registered on behalf of the customer
during the year, the customer loses the $69. Acquisition can
fail to occur, for instance, if the original name registrant
renews their registration, which approximately 60 percent of
name registrants do each year.
Another offering is a ``club'' model, whereby the vendor
devotes its resources to customers who pay a monthly
subscription fee (e.g., $100 per month) to be in the . . .
[Editor's note: missing the remainder of the document.]
______
Response to Written Questions Submitted by Hon. Ron Wyden to
Hon. Nancy J. Victory
Question 1. It seems that this hearing revisits some of the same
issues brought up at the hearing last year--the scope of ICANN's
mission, the transparency, of its processes, and so forth. So there
appears to be some agreement on what some of ICANN's chief challenges
are. Mr. Davidson of CDT has offered testimony recommending the
establishment of a set of metrics for measuring ICANN's progress in
addressing these challenges. Has NTIA given any thought to what sort of
concrete measurements could be used to follow ICANN's progress?
Question 2. In the last MOU extension it was stated that ICANN
would collaborate with the Department to complete development of a
proposal for enhanced root server security. Has such a proposal in fact
been developed? Is there any concrete evidence as to whether the root
servers are more secure, less secure, or about the same as compared to
a year ago? Going forward, what specifically do you see as the
Department's role in improving root server security, and what
specifically do you see as ICANN's? What do you think could be
accomplished, and how long might it take?
Answer. The Department believes that ICANN has made significant
strides this past year in developing into a more stable, transparent,
and responsive organization. We remain committed to working diligently
with ICANN and all Internet stakeholders to assist ICANN in its
evolution and to preserve and enhance the Internet/DNS. In reviewing
the Department's decision to extend and, if necessary, to modify the
MOU to better focus joint efforts going forward, ICANN and the
Department have discussed incorporating measurable objectives and time-
specific milestones as markers of progress over the next term.
Amendment 5 to the MOU provided that ICANN and the Department would
collaborate to complete development of a proposal for enhanced root
server security. The enhanced architecture proposal on root server
security was developed by ICANN and submitted to the Department in
December 2002. The Department reviewed and accepted the proposal, which
was followed by implementation of its recommendations. A public summary
of the proposal is available on the ICANN website at www.icann.org/
general/crada-report-summary-14mar03.htm.
While the root server operators have not developed specific metrics
to measure the security of their systems, they continue to deploy state
of the art software and hardware to ensure the highest levels of
protection. For example, the root server operators have all agreed to
employ a shared-secret Transaction Signature mechanism which supports
the ability to authenticate the transactions between the root
distribution source and each of the root nameservers.
The Department and ICANN play important roles in ensuring root
server security. The Department has established an intergovernmental
working group to discuss security and stability issues and to
facilitate policy development work in these areas. In addition, through
the working group, we continue to consult with the managers of root
name servers operated by the U.S. Government to address operational and
security matters. ICANN has established a Security and Stability
Advisory Committee on which the root server operators and various
industry experts participate. This committee advises both the ICANN
Board of Directors and the ICANN community concerning matters relating
to the security and integrity of the Internet's naming and addressing
allocation systems. Both the Department and ICANN continue to be active
participants in the Root Server Security Advisory Committee, which is
charged with, among other actions, considering and providing advice on
the operational requirements of root name servers, including host
hardware capacities, operating systems and name server software
versions, network connectivity and physical environment.
Root server security is an ongoing and ever-evolving process,
involving constant monitoring of possible threats and updating of
technologies designed to combat them. Through the continued cooperation
among the Department, ICANN, and the root server operators, we can be
assured of a secure and stable Internet infrastructure.
______
Response to Written Question Submitted by Hon. Maria Cantwell to
Hon. Nancy J. Victory
Question. Pursuant to ICANN's MOU with the Department of Commerce,
Department approval is required for any material amendment to
VeriSign's registry agreement. Is it the Department's position that the
WLS is a material amendment requiring approval and if not, why not?
If the Department believes that approval is required, what is the
current status of the approval process and when is it expected to be
complete?
Will an analysis or consideration of the competitive effects of the
WLS on existing wait-list type services be a consideration in the
approval process?
Answer. At present, the Wait List Service (WLS) is not before the
Department. I understand that ICANN and VeriSign are currently
conducting negotiations on how to implement the WLS to take into
account the modifications on which the ICANN Board of Directors
conditioned its approval last summer. Once ICANN and VeriSign conclude
negotiations and develop language to amend the .com registry agreement
to incorporate WLS, I would expect ICANN to submit that language to the
Department for approval, as this new service offering constitutes a
material amendment to the .com registry agreement. Once the WLS has
been submitted for approval, the Department would consult with
appropriate U.S. Government agencies to review this amendment in light
of competition concerns, among other issues.
______
Response to Written Questions Submitted by Hon. Ron Wyden to
Dr. Paul Twomey
Question 1. ``Whois'' information is needed for certain purposes,
such as addressing technical troubles or fighting fraud. But since the
information is globally and publicly available, it could also be used
by spammers, stalkers, and others. ICANN policies now require this
information to be accurate and updated at least annually, but do not
give any sort of privacy protection. Do you have any thoughts about
either what kind of privacy safeguards are needed, or about what kind
of process is needed to develop appropriate safeguards? Since ``Whois''
privacy is an issue that can have a direct impact on many ordinary
Internet users who do not attend ICANN meetings, how can the process
ensure that their privacy needs are addressed?
Answer. Registrants in generic top-level domains (such as .com,
.net and .org) have historically been required to provide contact
information associated with each registration. In the earlier days of
the Internet, including prior to ICANN's creation, this information was
used primarily for contacting operators of other Internet hosts to
resolve technical problems. Now that the Internet has grown to be an
important realm for commerce and other activities, Whois data also has
crucial importance for law enforcement officials who use the data to
trace criminal activity. Intellectual property holders use Whois data
to identify and pursue trademark infringers and cybersquatters.
Consumers also use Whois data to identify the source behind goods or
services being offered over the Internet.
Access to accurate contact data is important, however Internet
users might innocently desire use of an Internet domain name without
exposing personally identifiable information to the public. ICANN's
current policies do provide protections for privacy interests. One
example is Sec. 3.7.7.3 of ICANN's Registrar Accreditation Agreement,
which specifically makes provision for users who want to maintain their
privacy by allowing the registrant to elect to list a responsible third
party as the registrant of record in the Whois database. ICANN-
Accredited Registrars are making use of this ``proxy'' registration
provision today to offer privacy-protected domain registrations for as
little as $9.00 per year in addition to the regular registration rate,
which can be as low as $10.00 per year. (This is analogous to the
nominal fee one might pay for an unlisted telephone number.)
In addition, constituent groups within ICANN are involved in active
discussions per ICANN's open and bottom-up policy development process
for ways to further enhance safeguards for individuals while protecting
important uses of Whois data. ICANN's recent meeting in Montreal inc
luded a two-day ``Whois Workshop'' that was open to the public,
including live streaming audio and video over the Internet. Speakers
and panelists included law enforcement personnel (including
representatives of the U.S. Department of Justice and the Federal Trade
Commission), registries, registrars, ISPs, those representing
intellectual property interests, and advocates for strong privacy
safeguards (including Diana Alonso Blas of the Data Protection Unit of
the Directorate General Internal Market of the European Commission, and
also Alan Davidson from the Center for Democracy and Technology, a
Washington based non-profit group working to promote civil liberties
online.)
Question 2. Right now, the activities of registries are governed by
lengthy and complicated contracts with ICANN. If a registry wants to
add a new service, it needs to make changes to numerous contractual
appendices, which in turn requires ICANN approval. Please explain the
evolution in the relationship between ICANN and the registries that led
to such long and complex contracts. Should the contracts seek to set
forth in comprehensive fashion the specific and exclusive things a
registry is permitted to do, with anything outside the scope of the
contract assumed to be prohibited--or should the contracts generally
specify what registries may not do, so that any innovation or activity
that is not prohibited would be permitted?
Answer. At ICANN's meeting in Montreal, the ICANN board requested a
report from ICANN's President entailing a detailed plan and schedule
for development of an appropriate long-term policy for introduction of
new gTLDs into the domain name system. This report will present for
debate and community consideration a number of issues relating to the
creation of new TLDs, intended to be distilled into a set of core
principles. One of these issues is identifying the appropriate business
model for the relationships between ICANN and TLDs on a forward-looking
basis, and by relation the guiding principles for development of the
contractual relationships. Historically, registry agreements were
drafted conceptually within a start-up business model, and were
intended to protect against unforeseen events and circumstances in
light of the fledgling nature of the TLD industry. As the creation of
new TLDs moves beyond the original proof of concept phase launched in
2001, a re-examination of the structure of ICANN's relationships with
registries should be forth-coming. This re-examination may include,
following receipt of community input and expert analysis, a
liberalization of the relationships allowing for more flexibility to
registry operators.
Response to Written Question Submitted by Hon. Maria Cantwell to
Dr. Paul Twomey
Question. The Memorandum of Understanding between the Department of
Commerce and ICANN requires that ICANN must approve any amendments to
the VeriSign Registry agreement.
a. Is it ICANN's opinion that it must approve the VeriSign Wait
List Service proposal (WLS) as an amendment to the Registry agreement
before it can begin, and if not why not?
b. What is the status of this approval?
The ICANN Board at its most recent board meeting authorized the
ICANN staff to conduct final negotiations on the plan to implement WLS.
Please provide the status of those negotiations, the process of the
negotiations, and an expected completion date.
Answer. a.: Yes. The WLS requires ICANN's approval of the
amendments to the .com and .net registry agreements to implement the
WLS because: (i) WLS changes the functional specification under which
those two registries are to be operated (it involves a change in the
name-allocation algorithm) and (ii) WLS involves VGRS offering a new
registry (sole-source) service for a fee. In addition, as has been
previously stated, approval by the U.S. Department of Commerce is also
required, as Amendment no. 3 to ICANN's Memorandum of Understanding
with the DOC provides that ``ICANN will not enter into any material
amendment of, or substitution for, [The agreements entitled ``.com
Registry Agreement,'' [and] ``.net Registry Agreement,'' [. . .]
between ICANN and VeriSign, Inc.], nor will said agreements be assigned
by ICANN, without prior approval of the DOC.
b.: Negotiations between ICANN and VeriSign concerning the
definitive terms for VeriSign's implementation of the WLS service have
been ongoing, and it is ICANN's hope that final resolution will be
reached shortly. Under the conditions of ICANN's approval of the
service, the WLS cannot be launched any earlier than 25 July 2003, but
indications by VeriSign are to launch the service in October 2003. The
WLS will not be implemented until the amendments to the .com and .net
registry agreements that the ICANN Board's approval requires are
completed, and the amendments to the agreements have been approved by
the Department of Commerce, as required by the MOU between ICANN and
the DOC.
[all]