[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]




      EXPANSION OF TOP LEVEL DOMAINS AND ITS EFFECT ON COMPETITION

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

                                HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON COURTS AND
                           COMPETITION POLICY

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 23, 2009

                               __________

                           Serial No. 111-70

                               __________

         Printed for the use of the Committee on the Judiciary


      Available via the World Wide Web: http://judiciary.house.gov



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                       COMMITTEE ON THE JUDICIARY

                 JOHN CONYERS, Jr., Michigan, Chairman
HOWARD L. BERMAN, California         LAMAR SMITH, Texas
RICK BOUCHER, Virginia               F. JAMES SENSENBRENNER, Jr., 
JERROLD NADLER, New York                 Wisconsin
ROBERT C. ``BOBBY'' SCOTT, Virginia  HOWARD COBLE, North Carolina
MELVIN L. WATT, North Carolina       ELTON GALLEGLY, California
ZOE LOFGREN, California              BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas            DANIEL E. LUNGREN, California
MAXINE WATERS, California            DARRELL E. ISSA, California
WILLIAM D. DELAHUNT, Massachusetts   J. RANDY FORBES, Virginia
ROBERT WEXLER, Florida               STEVE KING, Iowa
STEVE COHEN, Tennessee               TRENT FRANKS, Arizona
HENRY C. ``HANK'' JOHNSON, Jr.,      LOUIE GOHMERT, Texas
  Georgia                            JIM JORDAN, Ohio
PEDRO PIERLUISI, Puerto Rico         TED POE, Texas
MIKE QUIGLEY, Illinois               JASON CHAFFETZ, Utah
LUIS V. GUTIERREZ, Illinois          TOM ROONEY, Florida
BRAD SHERMAN, California             GREGG HARPER, Mississippi
TAMMY BALDWIN, Wisconsin
CHARLES A. GONZALEZ, Texas
ANTHONY D. WEINER, New York
ADAM B. SCHIFF, California
LINDA T. SANCHEZ, California
DEBBIE WASSERMAN SCHULTZ, Florida
DANIEL MAFFEI, New York

       Perry Apelbaum, Majority Staff Director and Chief Counsel
      Sean McLaughlin, Minority Chief of Staff and General Counsel
                                 ------                                

             Subcommittee on Courts and Competition Policy

           HENRY C. ``HANK'' JOHNSON, Jr., Georgia, Chairman

JOHN CONYERS, Jr., Michigan          HOWARD COBLE, North Carolina
RICK BOUCHER, Virginia               JASON CHAFFETZ, Utah
ROBERT WEXLER, Florida               BOB GOODLATTE, Virginia
CHARLES A. GONZALEZ, Texas           F. JAMES SENSENBRENNER, Jr., 
SHEILA JACKSON LEE, Texas            Wisconsin
MELVIN L. WATT, North Carolina       DARRELL ISSA, California
BRAD SHERMAN, California             GREGG HARPER, Mississippi
MIKE QUIGLEY, Illinois

                    Christal Sheppard, Chief Counsel

                    Blaine Merritt, Minority Counsel










                            C O N T E N T S

                              ----------                              

                           SEPTEMBER 23, 2009

                                                                   Page

                           OPENING STATEMENTS

The Honorable Henry C. ``Hank'' Johnson, Jr., a Representative in 
  Congress from the State of Georgia, and Chairman, Subcommittee 
  on Courts and Competition Policy...............................     1
The Honorable Howard Coble, a Representative in Congress from the 
  State of North Carolina, and Ranking Member, Subcommittee on 
  Courts and Competition Policy..................................     2
The Honorable John Conyers, Jr., a Representative in Congress 
  from the State of Michigan, Chairman, Committee on the 
  Judiciary, and Member, Subcommittee on Courts and Competition 
  Policy.........................................................    22
The Honorable Jason Chaffetz, a Representative in Congress from 
  the State of Utah, and Member, Subcommittee on Courts and 
  Competition Policy.............................................    22

                               WITNESSES

Mr. Doug Brent, Chief Operating Officer, Internet Corporation for 
  Assigned Names and Numbers (ICANN), Washington, DC
  Oral Testimony.................................................    24
  Prepared Statement.............................................    26
Mr. Richard Heath, President, International Trademark Association 
  (INTA), New York, NY
  Oral Testimony.................................................    40
  Prepared Statement.............................................    42
Mr. Paul Stahura, Chief Executive Officer, President, eNOM, 
  Bellevue, WA
  Oral Testimony.................................................    69
  Prepared Statement.............................................    72
Mr. Steve DelBianco, Executive Director, NetChoice, Washington, 
  DC
  Oral Testimony.................................................   101
  Prepared Statement.............................................   103

                                APPENDIX

Material Submitted for the Hearing Record........................   131

 
      EXPANSION OF TOP LEVEL DOMAINS AND ITS EFFECT ON COMPETITION

                              ----------                              


                     WEDNESDAY, SEPTEMBER 23, 2009

              House of Representatives,    
                 Subcommittee on Courts and
                                 Competition Policy
                                Committee on the Judiciary,
                                                    Washington, DC.

    The Subcommittee met, pursuant to notice, at 10:04 a.m., in 
room 2141, Rayburn House Office Building, the Honorable Henry 
C. ``Hank'' Johnson, Jr. (Chairman of the Subcommittee) 
presiding.
    Present: Representatives Johnson, Conyers, Boucher, 
Quigley, Coble, Chaffetz, Sensenbrenner, Goodlatte, and Harper.
    Staff present: (Majority) Christal Sheppard, Subcommittee 
Chief Counsel; Eric Garduno, Counsel; Rosalind Jackson, 
Professional Staff Member; (Minority) Sean McLaughlin, Chief of 
Staff and General Counsel; and David Whitney, Counsel.
    Mr. Johnson. This hearing of the Subcommittee on Courts and 
Competition Policy will now come to order. Without objection, 
the Chair will be authorized to declare a recess of the 
hearing.
    And, ladies and gentlemen, good morning. I would like to 
welcome everyone to this hearing and offer my thanks to the 
panel members for being here with us.
    We meet today to discuss an important topic which has the 
potential to significantly impact consumers and trademark 
owners who use the Internet. In this hearing, we will address 
two main issues. The first is the proposal by ICANN that would 
allow an unlimited expansion of the top-level domain names. The 
second is the potential separation of ICANN into a fully 
independent entity.
    As for the expansion of GTLDs, the heart of this matter is 
an uncertainty of how these actions would affect competition 
and the rights of trademark owners who spend sizable sums and 
dedicate countless employee hours protecting their trademarks 
from cybersquatters. When ICANN revealed their expansion plans, 
a tremendous public outcry came from trademark owners, worried 
about the infinite cybersquatting possibilities for which this 
plan may allow.
    Through an ad hoc advisory body, ICANN has proposed certain 
trademark protections to assuage the trademark owners' 
concerns. However, such measures have not been formally 
adopted. And even if they were, some trademark owners feel such 
measures are not enough. And I know I butchered that word, 
``assuage.''
    Nevertheless, there is clearly some interest out there in 
expanding GTLDs beyond just cybersquatters and the pecuniary 
interest of registries and companies hoping to be registries.
    I note that entities like New York City and Al Gore's 
Alliance for Climate Protection are interested in securing 
domains like .nyc and .eco, respectively. I also note that the 
expansion of GTLDs will allow non-Roman script characters to be 
used in GTLDs. These efforts seem meritorious to me.
    However, what I don't understand is why ICANN is so 
committed to an unlimited expansion of GTLDs. Perhaps the ICANN 
witness can illuminate this for us.
    The second main issue addressed here today is the potential 
separation of ICANN into a fully independent entity. Since its 
inception, ICANN has been tied to the U.S. Department of 
Commerce through a series of memorandum of understandings and 
now through a joint project agreement. The impact of this union 
instilled in ICANN transparency standards and has provided 
privacy and security policies for domain name registrants.
    However, this union is set to expire on September the 30th 
of this year, and I do not believe that a continued 
relationship is necessary--excuse me, I do believe that a 
continued relationship is necessary to ensure transparency and 
pro-consumer benefits, especially as the expansion of GTLDs 
proceeds.
    I fully support renegotiation of the agreement. However, 
should ICANN decide not to continue in an agreement, I and the 
American public would need assurances of ICANN's dedication to 
maintaining transparency, privacy and security that is crucial 
to protecting consumers and trademark owners, as well as 
marketplace competition.
    Again, I thank the panel members for your testimony today 
and look forward to a lively discussion.
    I now recognize our Ranking minority Member, Lamar Smith, 
for an opening statement.
    I am sorry. Mr. Smith is not here. So Mr. Coble is the 
Ranking Member I will recognize for his opening statement.
    Mr. Coble. Thank you, Mr. Chairman. I was going to say, Mr. 
Smith has become invisible. I didn't see him up on the panel 
here.
    Good to have you all with us.
    And thank you, Mr. Chairman, for calling the hearing.
    In the 108th Congress, the predecessor of the 
Subcommittee--on this Subcommittee conducted much needed 
oversight over the Internet Corporation for Assigned Names and 
Numbers, ICANN, and the United States Department of Commerce. 
As a result, the Commerce Department for the first time 
included in its agreement with ICANN a series of requirements 
to report on and improve the accuracy of the WHOIS database.
    The accuracy of this database is critical to law 
enforcement, intellectual property owners, and the public who 
deserve truthful information about the identity of those who 
register a domain name. The then-chairman of the Subcommittee, 
Ranking Member Lamar Smith, also authored the Fraudulent Online 
Identity Sanctions Act, which the Congress enacted.
    This law provides serious civil and criminal penalties when 
someone willfully provides false domain name contact 
information in furtherance of a Federal crime or in violation 
of a federally protected intellectual property right.
    Notwithstanding this progress, ICANN confronts a number of 
key opportunities and challenges today. Several of these are 
referenced in a letter Ranking Member Smith and I sent to Rod 
Beckstrom, the new president and CEO of ICANN, on September the 
15.
    Without objection, Mr. Chairman, I ask that our letter and 
Mr. Beckstrom's response be placed in the hearing record.
    Mr. Johnson. Without objection.
    [The information referred to follows:]
    
    

                              ----------                              


    Mr. Coble. In a few minutes, we will receive testimony from 
the chief operating officer of ICANN and others with a 
substantial interest in the policies the organization adopts 
and the manner in which they are implemented.
    It is difficult to overstate the impact of the Internet as 
a transformative technology. ICANN bears a tremendous 
responsibility in managing the technical aspects of the 
Internet to ensure the public is able to quickly locate the 
information they seek.
    So, Mr. Chairman, I am not an engineer, nor am I a computer 
scientist. It seems to me that the safety and stability of the 
Internet must be the single most important focus of ICANN.
    This past Friday, Mr. Chairman, I am told that an ICANN 
contractor recommended the implementation of a vital new 
security technology to protect consumers from fraud and cyber 
crime instead of immediately moving forward with plans to roll 
out an unlimited number of top-level domains. This 
recommendation was in a report that ICANN's own government 
advisory committee, GAC, noted in August was essential in 
determining the appropriate timing and scope of an expansion of 
top-level domains.
    I might add, Mr. Chairman, that the GAC also expressed its 
concern as to why the proper analysis did not occur earlier. 
But unfortunately, this isn't the first time that ICANN appears 
to have neglected sound advice or failed to execute what one 
might think is a mandatory instruction.
    In 2006, I am advised that ICANN's board of directors 
called for a comprehensive economic study before determining 
whether new top-level domains should be introduced. To date, I 
understand that study has not been--has never been conducted.
    Just last month, a high-ranking Commerce Department 
official reiterated the need for such an objective study, 
writing, ``We continue to believe that a threshold question, 
whether the potential consumer benefits outweigh the potential 
costs, has yet to be adequately addressed. NTIA continues to 
urge ICANN to undertake a comprehensive economic study prior to 
moving forward with the introduction of the new GTLDs, and we 
share NTIA's perspective that the overreaching issue should be 
resolved prior to new GTLDs having--being introduced.''
    Mr. Chairman, I ask that this August 18, 2009, letter from 
Laurence E. Strickling be made a part of the record.
    Mr. Johnson. Without objection.
    [The information referred to follows:]
    

    
                               __________

    Mr. Coble. In closing, Mr. Chairman, I want to make a 
couple of final points, if I may. First, I have a great concern 
about what will follow an unprecedented rollout of unlimited 
top-level domains in terms of increasing the risk to the public 
of malicious behavior online, as well as imposing tremendous 
new costs on companies, manufacturers, and service providers, 
costs that, I might add, will be passed on to consumers in many 
instances.
    Secondly, I think there may be some who want to pit certain 
constituencies within ICANN against one another. That is not 
how I approach these issues, and I don't believe you do, Mr. 
Chairman. What ICANN does affects every Internet user. The 
processes they follow must be truly transparent and lead to 
full accountability.
    The quotes I cited earlier represent the views of the 
United States government and the key organization within ICANN 
and not private organizations. It is my hope, Mr. Chairman, 
that ICANN will take seriously these views and move forward 
with prudence and deliberation.
    It is also my hope that this hearing signals a renewed 
commitment on the part of this Subcommittee that we will 
redouble our efforts in oversight in this area, which affects 
every American consumer and business.
    This concludes my opening remarks, Mr. Chairman, and I 
yield back.
    Mr. Johnson. Thank you, Mr. Ranking Member. And you and I 
will certainly work together as we move forward on this very 
important issue.
    Are there any other Members who wish to make statements?
    With no one having--okay, we have Chairman of the full 
Committee, Mr. John Conyers, who is recognized.
    Mr. Conyers. Thank you, Chairman and Ranking Member, 
Members.
    We have in Judiciary more hearings than any other 
Committee, any other standing, or full Committee in the 
Congress. So, one of my goals is to reduce the number of 
hearings. And this is a hearing that we shouldn't have had to 
call, because if the parties had come together, I doubt if we 
would be here this morning.
    And so, although I am in my usual good, jovial mood, I 
mean, look, we have until September 30th when the joint 
agreement expires. Everybody here knows everybody else, been 
working with each other. But you guys made us come here today. 
Here we are. We have a health care bill. We have troop increase 
in Afghanistan. We have the economy going through the roof, 
Congressional Black Caucus week, and here we are talking with 
all of you about, can we meet the September 30th deadline?
    Well, if you don't meet the 30th deadline, you are going to 
all be sorry that you didn't make it, okay? So I have a lot of 
other things to say, but I want to continue the nice mood of 
the morning here and put the rest of my comments in the record.
    And thank you, Mr. Chairman.
    Mr. Johnson. Thank you, Mr. Chairman.
    And I understand that my good friend, Congressman Chaffetz 
from Utah, wishes to make a statement.
    You are recognized, sir.
    Mr. Chaffetz. Thank you, Mr. Chairman.
    And I will be very brief. I do appreciate you calling this 
hearing and appreciate you gentlemen for being here.
    Among the issues that I hope we are able to address along 
the way is just, how is this beneficial to competition? 
Obviously, we want the world to be competitive, but there are 
some negative things, unintended consequences that happen with, 
perhaps, some of these actions that I hope were thoroughly 
explored before we implement something new.
    Of particular concern is what would happen to companies and 
individuals, entrepreneurs and whatnot, who would need to 
potentially engage in defensive registration. How is that 
positive to the marketplace? Anything that happens that 
exacerbates fraud online is obviously of deep concern. It is 
used as such a tool in a positive way, but fraud is certainly 
an ongoing concern.
    And, finally, I will just mention, again, some of the key 
areas that I would like to--and appreciate you addressing are, 
of the 21 generic top-level domains, why the expansion from 
there? Are we not meeting the market's needs with 21 of those?
    And certainly, we have international demands, particularly 
in markets that use non-English characters and whatnot, and 
those need to be addressed, as well.
    But I know you are aware of all those topics. I just want 
you to be aware of it. Those are some of the issues, at least 
from my perspective, that I would hope would be addressed, and 
if not addressed in this Committee, then certainly in the 
follow up.
    But we appreciate your participation and your candor here 
and look forward to a productive meeting.
    Thank you, Mr. Chairman.
    Mr. Johnson. Thank you, Mr. Chaffetz. Or Chaffetz. I am 
sorry, Jason.
    Mr. Chaffetz. Close enough.
    Mr. Johnson. All right. Okay. Chaffetz. Okay.
    Any other Members wish to make opening statements?
    Without objection, other Members' opening statements will 
be included in the record.
    I am now pleased to introduce the witnesses for today's 
hearing. Our first panelist is Mr. Doug Brent, chief operating 
officer of the Internet Corporation for Assigned Names and 
Numbers, ICANN. Mr. Brent has executive oversight of 
operational services, including Internet assigned number 
authority, and contracted parties such as registries and 
registrars. He oversees policy development support, as well as 
major product initiatives and international business operations 
functions.
    Thank you for coming, Mr. Brent.
    Second will be Mr. Richard Heath, president of the 
International Trademark Association. He is also vice president, 
legal and global anti-counterfeiting council in the legal group 
of Unilever PLC based in the United Kingdom. He served as head 
of the Corporate Trademarks and General Trademark Council at 
Unilever from 1996 to 2005, and he also served on INTA's board 
of directors from 1999 to 2003.
    Third panelist is Mr. Stahura, Mr. Paul Stahura, founder of 
the registrar eNom and the chief strategy officer of Demand 
Media, the social media company which acquired eNom in 2006. 
ENom manages over 10 million domain names and connects Internet 
users to Web sites more than 2 billion times daily. Mr. Stahura 
has served for 8 years on the ICANN registrar constituency and 
has been active on the ICANN WHOIS task force for over 4 years.
    Welcome, sir.
    Our fourth panelist is Mr. Steve DelBianco. Mr. DelBianco 
is the executive director of NetChoice, which is a coalition of 
trade associations and e-commerce businesses that include Time 
Warner, News Corp., and Yahoo. He is a well-known expert on 
Internet governance and online consumer protection and has 
advocated for business interests at the Internet Governance 
Forum and ICANN.
    Thank you all. Thank you, sir. Thank you all for your 
willingness to participate in today's hearing.
    Without objection, your written statements will be placed 
in the record. And we would ask that you limit your oral 
remarks to 5 minutes. You will note that we have a lighting 
system on your table that starts with a green light. At 4 
minutes, it turns yellow, then red at 5 minutes. After each 
witness has presented his or her testimony, Subcommittee 
Members will be permitted to ask questions subject to the 5-
minute limit.
    Mr. Brent, please proceed with your testimony.

  TESTIMONY OF DOUG BRENT, CHIEF OPERATING OFFICER, INTERNET 
CORPORATION FOR ASSIGNED NAMES AND NUMBERS (ICANN), WASHINGTON, 
                               DC

    Mr. Brent. Thank you, Mr. Chairman. Can you hear me okay?
    Mr. Johnson. It seems like you probably need to cut that 
mic on.
    Mr. Brent. It is----
    Mr. Johnson. It is on, okay? We can hear you much better.
    Mr. Brent. Thank you very much.
    Mr. Johnson. Thank you.
    Mr. Brent. Mr. Chairman, Committee Members, thank you very 
much for the opportunity to come and talk with you today. My 
name is Doug Brent. I am chief operating officer of ICANN and 
have the day-to-day responsibility for much of the work that is 
under consideration by the Committee today.
    The ICANN organization is just over 10 years old. We are a 
bottom-up, multi-stakeholder entity that coordinates key 
technical functions of the global Internet. We were born from 
the United States government ``White Paper on the Management of 
Internet Domain Names and Addresses'' and have benefited from 
the assistance and support of the United States government 
across three presidential Administrations.
    ICANN stakeholders--many of whom are here today--range from 
governments to individual Internet users to businesses from the 
U.S. and around the globe.
    I want to go directly to the concerns that I think are most 
significant to the Committee today. As Members are aware, 
ICANN's community is working to complete a process to bring 
competition to top-level domains. TLDs--and we have lots of 
acronyms in this world--TLDs, as they are known, are the part 
of the domain name to the right of the dot. Common examples are 
.org, .com, .net.
    ICANN's work to increase competition is part of our 
history. In 1998, there was one business that registered domain 
names, and each name cost approximately $50 to register. ICANN 
has fostered an environment where hundreds of companies were 
created to register names, and the cost can be as low as $6 for 
individual registrants.
    But why apply this competitive mandate to new top-level 
domains? Why expand now? What good will it bring?
    Three reasons. First, the United States has encouraged 
ICANN to consider and implement new TLDs since ICANN was 
founded in 1998. It was part of the founding documents and part 
of the agreement since.
    Second, there is every reason to believe that the benefits 
offered by competition for virtually every other market also 
apply to TLDs. New TLDs don't just mean more .coms, but the 
opportunity for real innovation in how names are used to the 
general benefit of Internet users. Already, there are strong 
and public campaigns for new names. Multiple parties have 
expressed interest in .eco, with one supported by former Vice 
President Al Gore, .basketball has been promoted by Shaquille 
O'Neal, and there are proposals from all over the world, from 
New York to Sydney to Paris, to have their communities 
represented at the top level.
    Third, there are about 1.6 billion online around the world. 
Many of these Internet users aren't English-speakers, and their 
number is growing. As the domain name system presently 
operates, top-level domains can't be displayed in any character 
set other than that used for English. To break through that 
barrier, ICANN is working to introduce top-level domains in all 
of the languages of the world.
    Planning and thinking for new GTLDs has been going over a 
decade. This has been a thorough process. Policy development 
began in 2005 and took nearly 3 years of development from 
community members--again, many here--including the intellectual 
property constituency. The implementation planning has been 
actively underway for more than 2 years, with numerous 
opportunities for live participation, remote participation, and 
formal written comments.
    Importantly, the new GTLD work is not yet done. While 
numerous hard issues have been resolved along the way, some 
still remain. Intellectual property concerns are crucially 
important to ICANN. Even ICANN's chair is an intellectual 
property attorney. We have not and will not allow new TLD 
expansion that does not appropriately protect trademark 
holders.
    Trademark holders want more tools for enforcement and 
protection at the second level. So do we. In fact, we asked for 
a team of intellectual property experts from all over the world 
to provide advice on how protections could be strengthened. I 
personally participated in that discussion, hundreds of hours 
in the last 6 months, and recommendations are now being 
actively considered.
    In conclusion, ICANN did not casually think this plan up. 
This will not be an unbridled expansion. It is the work of many 
hands from a bottom-up process. There have been no fewer than 
20 papers and submissions on the expansion of new GTLDs. In 
just the last 12 months alone, there have been two versions of 
the applicant guidebook, thousands of pages of commentary, 
analysis, and revisions, with more to come.
    There is more work ahead of us, and that work will be and 
must be in the public interest. I thank Members for this 
opportunity and look forward to answering questions you have 
about ICANN.
    [The prepared statement of Mr. Brent follows:]
                    Prepared Statement of Doug Brent




                               __________

    Mr. Johnson. Thank you, Mr. Brent.
    Mr. Heath?

TESTIMONY OF RICHARD HEATH, PRESIDENT, INTERNATIONAL TRADEMARK 
                ASSOCIATION (INTA), NEW YORK, NY

    Mr. Heath. Thank you, Mr. Chairman. Can you all hear me?
    Chairman Johnson, Ranking Member Coble, Chairman Conyers, 
Members of the Subcommittee, thank you for the opportunity to 
offer the perspective of trademark owners on the introduction 
of new generic top-level domains, or GTLDs, to the Internet's 
domain name system.
    The International Trademark Association, or INTA, welcomes 
this Subcommittee's oversight of this important issue and 
appreciates initiatives such as this hearing and the September 
15th letter from Representatives Smith and Coble that posed 
several key questions to the Internet Corporation for Assigned 
Names and Numbers, otherwise known as ICANN. INTA actively 
participates within ICANN and contributes to its policy 
development process.
    Mr. Chairman, when a trademark is used as a domain name 
without the trademark owner's consent, consumers can become 
confused about the source of the goods and services being 
offered on the Internet. This confusion tarnishes and harms 
brands. It misleads consumers. And it results in decreased 
confidence in the Internet as an instrument of legitimate 
commerce.
    For example, in 2009, a Get Safe Online study undertaken by 
the British government found that 44 percent of small 
businesses have been the victim of online crime. And most 
alarmingly, the fear of online crime has deterred 14 percent of 
all British citizens from using the Internet altogether. That 
is a substantial number.
    Abuse of the domain name system has been a problem since 
the Internet was opened to commercial use, and the amount of 
abuse is steadily increasing, and the harm to trademark owners 
and consumers has been increasing, as well, both in scope and 
in severity.
    Despite the hard work of the ICANN board and its staff, Mr. 
Chairman, we see significant increases in abuses of the domain 
name system and inadequate management by ICANN to address the 
problems, including their inability to enforce contracts.
    The result in the current 21 GTLD space is at least the 
following issues: an increase in consumer confusion and 
decrease in confidence in the Internet; threats to public 
health, safety and security through Web sites selling 
counterfeit goods and services; propagation of malicious 
software that spreads viruses, spam, and leads to identity 
theft; tarnishment of brands and damage to the reputation of 
legitimate businesses; and, last but by no means least, an 
increase in business costs due defensive registrations, 
Internet monitoring, and expensive legal actions to enforce 
trademark rights, the costs of which are either passed on to 
consumers or absorbed by businesses, making them less 
competitive.
    It is against this background that ICANN now plans to 
introduce an unlimited number of new GTLDs, which will increase 
the harm to businesses and consumers. So why introduce this 
program of expansion at all?
    The key argument we have just heard from ICANN offers 
expanding the domain name space is the need to spur 
competition, but ICANN cannot assume without empirical support 
that simply adding unlimited GTLDs to a complex economic model 
like the domain name system will necessarily increase 
competition in a manner that best serves and improves public 
welfare.
    The critical issue for brand owners, consumers, and other 
Internet users is to ensure that the introduction of any new 
GTLDs is responsible, deliberate, and justified. We therefore 
believe that, before any additional GTLDs are introduced, ICANN 
should resolve what it has identified as the four overarching 
issues, namely trademark protection, the potential for 
malicious conduct, Internet security and stability, and top-
level domain demand and economic analysis.
    With respect to trademark protection, ICANN's board did 
create an implementation recommendation team--the IRT, as we 
have heard--to address new protection mechanisms in the face of 
a rollout of an unlimited number of GTLDs. The IRT, despite an 
extremely tight deadline, proposed some useful recommendations 
in its final report. But even if these recommendations are 
adopted by ICANN, they are untested, and they may not be 
adequate to address the unlimited expansion of new GTLDs 
proposed by ICANN.
    With respect to an economic analysis, ICANN, despite 
asserting in its testimony, has yet to conduct an independent, 
comprehensive economic study of the domain name marketplace. 
INTA believes that ICANN should not implement any program for 
the creation of new GTLDs without fully understanding the 
beneficial and harmful effects of such actions on consumers, 
competition and intellectual property rights.
    INTA is strongly critical of the process undertaken to date 
and of ICANN's decision to authorize an unlimited number of new 
GTLDs without prior economic study and without adequate 
protection for all Internet stakeholders.
    As a result, we welcome the involvement of the Judiciary 
Committee on this important matter, and we ask that the 
Committee continue to work with ICANN, the Department of 
Commerce, and others in Congress in developing sound policies 
that protect the legitimate interests of the public.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Heath follows:]
                  Prepared Statement of Richard Heath




                               EXHIBIT A




                               EXHIBIT B




                               EXHIBIT C




                               EXHIBIT D



                               __________

    Mr. Johnson. Thank you, Mr. Heath.
    Mr. Stahura?

TESTIMONY OF PAUL STAHURA, CHIEF EXECUTIVE OFFICER, PRESIDENT, 
                       eNOM, BELLEVUE, WA

    Mr. Stahura. Good morning. And thank you for inviting me to 
testify.
    My name is Paul Stahura, and I am the founder of eNom, a 
domain name registrar in Bellevue, Washington. Registrars sell 
domain names that they get from registries.
    I started eNom in my garage in 1997 before there was a 
competition in the registrar business. After ICANN introduced 
registrar competition, I was able to grow my business, and now 
eNom is the second-largest registrar in the world. It powers 
over 10 million domain names for consumers and businesses of 
all sizes and connects Internet users to Web sites 2 billion 
times a day. And I have been fighting for the last 12 years to 
bring competition to registries.
    I couldn't agree more with the following recent statement 
of President Obama. ``My guiding principle is and always has 
been that consumers do better when there is choice and 
competition. That is how the market works.''
    In my oral testimony today, I would like to make three 
points. One, there is high consumer demand for many new GTLDs. 
Two, there currently is little or no competition to satisfy 
this demand. And, three, we shouldn't prohibit competition 
because of trademark concerns. Instead, we should address these 
concerns.
    Firstly, regarding demand, when it comes to consumer 
opinions and studies of economic demand, actions speak louder 
than words. Actual consumer behavior that registrars like mine 
see every day is more meaningful than a study. As Henry Ford 
once said, ``If I asked my consumers what they wanted, they 
would have said a faster horse.''
    Name registrations worldwide are growing. And guess what? 
They are growing faster in the smaller, newer TLDs than the 
old, more established ones. This proves there is demand for 
names in new TLDs.
    Now, regarding competition, the biggest benefit these new 
TLDs bring is competition, and, through competition, lower 
prices, more choice, and more innovation for consumers. When 
ICANN brought competition to registrars, the price was cut by 
more than half. And today, consumers have over 100 choices as 
to where they register domains and what services they get from 
the registrar. Now is time--it is actually past time to bring 
this competition to registries.
    I want to talk about another kind of competition that TLDs 
will promote, not competition among domain name industry 
players, but competition among brand owners. Inter-brand 
competition is also good for consumers, but established brands 
don't like it.
    For example, imagine if you built up a tremendous local 
shoe business and your name was United Shoes. You may have a 
trademark on the word ``United'' for shoes. It is your name, 
but you cannot get united.com. United Airlines already has it. 
United Van Lines and UnitedHealthcare cannot get it, either. 
Most memorable, meaningful .com names with the word ``united'' 
in it are taken.
    But with new TLDs, each business could get a valuable name. 
You could get united.shoe, if ICANN made .shoe available. With 
united.shoe, among other things, consumers would be generally 
less confused about what this United does. Nike is probably 
happy that United Airlines is forcing United Shoes from getting 
united.com. Those established brands want those new brands to 
be unable to get their exact matching .com, and they don't want 
new TLDs, like .shoe.
    Incumbent brands don't want to make it easy for new 
entrants to brand their new products with names in appropriate, 
meaningful TLDs. It is like the earlier, bigger companies got 
all the picks and shovels to the Internet goldmine and the 
smaller, newer companies that come later have to settle for a 
toothpick and a spoon. Let's give them the same tools that the 
big guys have.
    Finally, regarding trademark concerns, the bottom line is, 
trademark concerns with new GTLDs are being addressed through a 
long and open process. For many years, government advisory 
committee, intellectual property constituency, the IRT, with 18 
intellectual property experts, the business constituency, the 
GNSO, non-commercial users, ISPs, and many other groups have 
been closely involved in this long process and have designed 
rights protection mechanisms that will be very effective and go 
far beyond what is currently in place in .com.
    In conclusion, the U.S. government has a history of 
allowing the Internet to flourish. The benefits to citizens 
around the globe have been immeasurable. We should not depart 
from this wise precedent now.
    Thank you.
    [The prepared statement of Mr. Stahura follows:]
                   Prepared Statement of Paul Stahura




                               __________

    Mr. Johnson. Thank you, Mr. Stahura.
    Mr. DelBianco?

 TESTIMONY OF STEVE DELBIANCO, EXECUTIVE DIRECTOR, NETCHOICE, 
                         WASHINGTON, DC

    Mr. Delbianco. Good morning.
    We are grateful to the Chairman and the Ranking Member for 
asking the question today: Is ICANN in its drive for new top-
level domains really sticking with its mission and is it truly 
being accountable to stakeholders?
    So let me start the same way I did in my written testimony: 
by apologizing to this Committee for dragging you into this 
food fight happening in the ICANN community. If ICANN really 
were accountable to the global stakeholders, we would have 
worked this out in our own bottom-up consensus process. But we 
got sidetracked along the road to new top-level domains.
    First, a little bit of context here. The hearing is about--
it is really about labels. And I think all of you have seen one 
of these before. It is a label maker. You punch in a label, hit 
the button, and it spits out one of these tags.
    And the thing about labels is, I can put them on anything. 
I can put them on my Web page. I can put them on this 
microphone, this table. I can put them on anything, and it 
helps me to identify it, show what it is. But it also tells 
others what it is. As Mark Twain once said, it is labels that 
let you tell the difference between German wine and vinegar.
    Advocates for new domains say that new labels are 
absolutely necessary for innovation and growth. But hang on. 
Every day, our industry and my members create new Web sites, 
applications, and services, like Twitter for messaging or Bing, 
the new search engine, and labels are just one of the ways that 
people find these new services far more than use search engines 
or links. The label is not the creation; it is just something 
we stick on it.
    Now, Paul's group wants ICANN to give him one of these, so 
that he can make his own labels. I can't fault Paul for that. 
Having your own label maker is like printing money, especially 
if brands and banks have to buy labels to stop cybersquatting 
and consumer fraud.
    I think it is time for an example. We are in a food fight 
today, so let's talk about .food, .food, a new top-level domain 
that is being proposed; .food won't create a single new 
restaurant. It won't create a new Web page. It won't create new 
restaurant reviews or online reservation sites for restaurants. 
They have already got those. All .food will be is another label 
that has to be purchased and stuck on to pages we already have 
on the Internet.
    I am not saying that labels aren't important. They are 
important. It is just that more labels alone will not drive 
innovation and growth.
    But new labels are hugely important to a segment of the 
population who don't have any labels at all. ICANN's label 
makers, the ones we have today, they print only in our Latin 
alphabet. ICANN doesn't have a label maker for over 56 percent 
of the people on this planet who don't use our alphabet at all 
for reading and writing. And that includes speakers of Arabic, 
Chinese, and a dozen languages in India alone.
    ICANN has been working on a label maker that will do these 
international characters for several years, but China actually 
got tired of waiting and just built their own a few years ago. 
Now, it shows that governments can and will splinter the 
Internet if ICANN doesn't deliver what they need, and that is 
not good.
    Since all of us at this table have been working so hard to 
make sure we have a single global addressing system so that you 
can publish or read a Web page or send and receive e-mail no 
matter where you are on the planet, we have to bring China back 
to the fold and stop other nations from following their 
example.
    ICANN was closing in on a label maker for these 
international characters, but then they opened things up for 
all kinds of new labels, even in our alphabet. That is what is 
created the land rush and the food fight that you are watching 
today.
    So a good outcome of today's hearing would be having ICANN 
refocus its attention and efforts on these international labels 
and not just government-controlled labels, right? People in 
China and India want to have access to their own language 
versions of things like .com and .org and .asia.
    Finally, today's hearing, I think, shows that ICANN needs 
better accountability to global users and to those who create 
the compelling content and services. It shouldn't take a 
congressional hearing to get ICANN to focus on fraud and abuse, 
but the U.S. government has given ICANN guidance like this in 
the past during our 10-year transition agreement.
    For instance, a December 2008 letter from Commerce and 
Justice is really what prompted the creation of the IRT. The 
thing is, though, our transition agreement expires next 
Wednesday. We need a new accountability mechanism, something 
that will work better for all of us.
    It is football season, so here is a football analogy. The 
coach's challenge and official review really works well. It 
lets you fix a bad call right there on the field when it 
happens, instead of waiting until after the game when it won't 
make a difference.
    Well, Internet stakeholders need a coach's challenge, too. 
We need a way to get an official review of an ICANN decision 
when it happens, and there are tough questions about this 
review, like how to call for a review, who gets the coach's 
challenge flag, who are the review officials, and would the 
review be binding or advisory on ICANN? And I know some 
governments really want to shrink the U.S. government role with 
respect to guiding ICANN.
    But here is why I think the rest of the world will welcome 
a continued defined role in--if the U.S. takes part of these 
reviews. First, the U.S. position on free expression and 
protection of human rights helps ICANN to push any censorship 
to the edge of the Internet and not in the core.
    And, second, today's hearing I think shows that we are 
being sensitive and attentive to the number-one priority for a 
global Internet. The fact is a billion of us are online today, 
but there are 7 billion people on Earth. ICANN needs to empower 
the next billion users before trying to build more label makers 
for those of us that are already online.
    So I will conclude just by saying that there is a lot that 
is right about ICANN. It is clearly the right model, and it is 
the way forward, but there is something missing. If I had to 
put a label on it, I would say it was accountability.
    Thank you. I look forward to your questions.
    [The prepared statement of Mr. DelBianco follows:]
                 Prepared Statement of Steve DelBianco



                               __________

    Mr. Johnson. Thank you, Mr. DelBianco. I always love it 
when demonstrative evidence is brought in. [Laughter.]
    I will now commence with the questions for 5 minutes. What 
is ICANN's position on the trademark protection proposals in 
the IRT report? And can we expect to see these proposals fully 
adopted by ICANN?
    Mr. Brent?
    Mr. Brent. Thank you very much, Mr. Chairman.
    As I mentioned earlier, I actually participated along with 
its IRT, another acronym, implementation recommendation team. 
The goal of that team was to come up with intellectual property 
protections that made sense in the intellectual property 
community for consideration inclusion in this new GTLD process.
    Part of that process has been the issuing of a number of 
what we call guidebooks. A guidebook is the big application 
with all the rules that someone would need to participate in, 
and that would actually talk about what these intellectual 
property protections are.
    There has been two issues of that guidebook, and a third is 
expected in the first week of October. That new guidebook will 
include at least two of these recommendations that have come up 
through this implementation recommendation team process.
    The first of those is what is called thick WHOIS. What does 
that mean? That each new registry would have to provide a 
central repository for WHOIS and make that publicly available 
on a 24-by-7 basis.
    The second one is, is what is called a post-resolution 
dispute mechanism. There is definitely concern by the 
intellectual property community that, with the creation of a 
new registry, that registry might engage in mal behavior. If it 
did, how would--you know, what would be the basis on which we 
would try to address that bad behavior? And that is called this 
post-resolution dispute mechanism.
    There are other recommendations that have come up through 
this IRT that are still under consideration. Some important 
ones of those are what--URS, which is a faster and cheaper way 
to address arbitration of disputes related to second-level 
domain names. And another one is an intellectual property 
clearinghouse. Those are still under consideration at this 
time.
    Mr. Johnson. Thank you.
    This question is for each panelist. I would like for you to 
respond. Two reports, one by OECD and the other by Summit 
Strategies International, examine the first round of domain 
name expansion. Those reports indicate that consumer demand for 
the new GTLDs were well below expectations and that a 
significant portion of the demand experienced was likely 
defensive registration.
    What are your thoughts on these reports, starting with Mr. 
Brent?
    Mr. Brent. Thank you again, Mr. Chairman.
    You know, with all due respect to Mr. DelBianco, I would 
describe these new TLDs differently. I don't think they are a 
label maker. And we caught up in these technical terms, so let 
me just quickly review.
    We talk about top-level domains and second-level domains. 
That is an entirely technically accurate way to describe how 
DNS works. But the way to really think about this is a top-
level domain is a business. A second-level domain is a customer 
of that business.
    So what do I mean? ICANN has registered the name icann.org 
to represent our organization; .org is company, public Internet 
registry, that runs about 10 million domain names at roughly 
$10 apiece, so you can see that there is real revenue 
associated with that. ICANN is a customer of that domain name.
    So the notion is that new TLDs are not about just new 
labels, new names. Obviously, brands are important. That is why 
we have these intellectual property concerns. But the notion of 
new TLDs is a lot more about new potential service models, new 
businesses coming up in use of the Internet.
    So in answer to your question, I think a lot of the early 
generic TLDs that were issued in the 2000 and 2003 rounds 
thought that their primary competition was, how do I become 
another .com? Probably what is of more value to consumers now 
and, you know, what I think most businesspeople would think of 
in a business plan is, how can I add value to end users, not 
how do I go compete with .com?
    So I think, in these early rounds, there was a lot of 
notion of land grab. ``I am going to, you know, have 80 million 
registrations and compete with .com.'' I think where we are 
today is, people are really realizing the opportunity for 
innovation. The financial industry, for example, is really 
looking at this in terms of innovation for secure, trusted 
financial domains.
    So I think that is really the difference between the old 
model of, ``I have just got to get a lot of numbers,'' versus 
this new model of creating real value added for end users.
    Mr. Johnson. Thank you, Mr. Brent.
    Mr. Heath?
    Mr. Heath. Thank you, Mr. Chairman.
    I think those reports provide some useful pointers. It is 
important to note that they were done, some of them, actually 
in the last decade.
    Mr. Johnson. They were done when, now?
    Mr. Heath. In the last decade. They are quite old. And I 
think they provide some useful pointers, but they were done at 
the time when the .com bubble was taking place in--at the turn 
of the century. And times have changed. The economic impacts 
have moved on completely from those days.
    And I think, if we were to do them again now, particularly 
through an independent body like the OECD, you may find 
different findings, but I think they do provide some useful 
pointers. But the overall assumption that it increases 
competition I think is just not there, because, in my view, it 
decreases competition, because if we have to fund an awful lot 
more defense, a lot more legal actions, and all this 
registration process, that money is diverted from true 
innovation and R&D and creativity, and it diverts resources 
from other areas that could benefit the community, such as 
corporate social responsibility and all the good stuff that 
companies do around the world, because there is no value added 
in having an unlimited number of domain names.
    And I think I would also say that if you were a company--
let's take as an example like IBM. I wonder what the value is--
the value difference is between ibm.com and .ibm. Now, I would 
wager there is no difference between those, but you would need 
a body like OECD or an independent analysis to determine that. 
And, frankly, that has not been done.
    So I think both studies are useful. They provide some 
useful pointers. They need to be updated and we could usefully 
use them again. And I think it would be worthwhile revisiting 
it now, and that is in my testimony.
    Mr. Stahura. I think there is a big difference between 
ibm.com and .ibm. I think .ibm is way more valuable than 
ibm.com to IBM.
    But to answer your questions, why were the registrations 
below expectations? I could tell you why. It was because, in 
that round, it was a beauty contest round. In order to get to 
TLD, you had to talk big. You had to say, ``I am going to get, 
you know, many, many registrations.'' You know, I applied for a 
name in that round. I said I was going to get X registrations. 
I lost to somebody who was going to get Y, a much bigger 
number.
    So in order to get to TLD, you had to say, ``I am going to 
register a lot of names.'' So it is no surprise to me that, 
when you actually got the TLD, that the number of names 
registered in it is a lot less than what you had expected. So 
that is why it was below expectations.
    And regarding the too much defensive registrations, first 
off, many millions of names were registered in those new TLDs. 
We did a study comparing those new TLDs to the old TLDs, like 
.com and .net, that you might have heard of, and that study 
said that the number of defensive registrations in .com was 
way, way more than the number of defensive registrations in the 
old set of new TLDs. So that is one reason why I think the 
number of registrations is low compared to .com and .net.
    Also, back then, nobody knew that there was going to be 
more TLDs. It turned out, there wasn't more TLDs. So people 
rushed into those new TLDs back then, thinking, ``You know, not 
sure that there is going to be a new one, so I would better 
defensively register everything I can think of.'' So that whole 
land rush mentality was another reason why the number of 
defensive registrations was high, even though it was low 
compared to .com.
    So that is the reasons.
    Mr. Delbianco. Thank you, Mr. Chairman.
    I think we have to remember that Web sites and applications 
are what drive visitors and customers. It isn't the label. It 
is great if you can get a label that is easy for people to 
remember, because they might just type it in if they saw it on 
the side of a truck or on a billboard or heard about it, but it 
is not essential to have that business be successful.
    I will give you an example. Right on the Hill here, we have 
a restaurant we all like to patronize, Bullfeathers, right? And 
if you wanted to find out whether they had a catering facility 
for tonight, we might jump on the Internet and type in 
``Bullfeathers.'' What would you put at the end? You would put 
.com. You would just sort of assume it is commercial and 
everybody remembers com.
    So you would type in bullfeathers.com. Well, right away you 
would see that that is not the restaurant. It is a telecom and 
car stereo installer on the eastern shore of Delaware. So they 
don't compete at all, but it is different.
    What would you do next? Would you guess at bullfeathers.biz 
or .us or, after Paul and ICANN launch thousands of new--
hundreds of new domains, maybe you will guess 
bullfeathers.food, bullfeathers.diner, bullfeathers.bars. I 
mean, sooner or later, you are going to stop guessing and do 
what? Use a search engine.
    And that is why I think the studies we are speaking about 
today in your question are hopelessly out of date. As we have a 
lot of domains today, and we are going to add many more, people 
will just use search engines, because they give you a reliable, 
context-based, page-ranked look at the sites you want to visit.
    And if we were going to do a study, Mr. Chairman, today, I 
would just look at what happened last week, right? We had a new 
TLD effectively launched when a country code, .cm for Cameroon, 
decided to open up their country code top-level domain for 
anyone to register. Well, they are breaking records. They are 
breaking records as people go to register names that end in 
.cm.
    And why is that? Well, because a lot of people, when they 
type in, guess what? They make a mistake. They leave out the O 
in ``com.'' And where does it take them? It takes them to 
Cameroon or .cm.
    This is about typographical errors that are driving demand 
for people to get into that area. So naturally, defensive 
registration are ringing the cash register for the companies 
running .cm. Maybe we don't need another study. Just take a 
look at what is happening there today.
    Mr. Johnson. Mr. Stahura, you wanted to respond to----
    Mr. Stahura. I mean, it is dot--Cameroon, a country. They 
can do what they want with their TLD, I believe. But there are 
provisions in the current version of the draft applicant 
guidebook that would prevent confusing, with another TLD that 
is confusingly similar to an existing TLD, like .com.
    So, for example, even if I wanted to, I could not get .com 
or, you know, .kom, for example. So the new--we are not talking 
about this new round of TLDs producing domain names like .cm 
that Mr. DelBianco was just talking about.
    Mr. Johnson. Thank you. I will now turn it over to the 
Ranking Member for questions.
    Mr. Coble. Thank you, Mr. Chairman.
    Mr. DelBianco, it may be a food fight, but at least it is a 
non-violent, orderly food fight, and I commend you all for your 
civility to that end.
    Mr. Brent, let me ask you, why was the comprehensive 
economic study recommended by the ICANN board in 2006 never 
been conducted?
    Mr. Brent. Thank you.
    There are clearly important economic issues associated with 
new GTLDs. But just to be clear, this 2006 study that has been 
referenced many times--and I re-read the board resolution last 
night before I testified in front of the Committee--that 2006 
resolution was not related to threshold questions of new GTLDs.
    There was an economic study requested at that time that 
related to contractual issues with three top-level domains. I 
would be happy to provide that resolution to the Committee 
here.
    But putting that aside for a second, that doesn't--there 
still are these open questions about, well, you know, what are 
the economic characteristics of new generic top-level domains? 
ICANN has actually, in the last 18 months, run three different 
economic studies. There are some important issues there that, 
you know, may come up today, for example, registry-registrar 
separation or integration, sort of the vertical structuring of 
the industry, price caps in new generic top-level domains or 
not, on registration or on renewal.
    So there are many of these important issues. ICANN has 
actually--because of the strong community interest in this area 
of economic analysis, we are going to take a further step, 
which is to bring on a new set of economists, different people 
entirely, have them review all the work done to date, put that 
work in the context of the questions that have been asked by 
various members of our community, and then assess have we 
answered the question at that time.
    Mr. Coble. Okay.
    Mr. Brent. I will say that--just to very quickly add on--I 
will say there is some concern, which I am sure you can 
understand--I know there are entrepreneurs on this panel, and 
my background was in venture-backed companies. And it is always 
difficult, at what point would you stop analyzing, do you stop 
studying?
    We have done three. I think we are going to review that 
work in the context of the questions that have been asked and 
then say, is that enough? Have we addressed that question?
    Mr. Coble. Thank you, Mr. Brent.
    Mr. Heath, is it your belief that ICANN did a sufficient 
job in seeking the views of trademark owners and consumers 
prior to the announcement of the proposed creation of an 
unlimited number of GTLDs?
    Mr. Heath. In a short word, no, I don't think they did, 
because I think they should have acted prospectively, rather 
than retrospectively, which would be a much more sensible way 
of doing it. And I think there is still a lot of work to be 
done, and we acknowledged what Mr. Brent said, that that work 
is still ongoing.
    The work--has been very useful and very valuable, but it is 
safe to say that those recommendations are untested. It is not 
an exhaustive list, either. And it was pulled together in a 
very, very short and, frankly, unrealistic timeframe of just 8 
weeks.
    If we had had more time and we were consulted at the 
appropriate moment, we could have come up with some more 
substantial recommendations. They are good ones. They may work; 
they may not. We don't know. But we need to do more, and we 
need to have done it earlier, so I think they could have done 
more.
    Mr. Coble. All right. Thank you, sir.
    Mr. DelBianco, although much of the testimony this morning 
has been about the protection of trademarks and other 
intellectual property, ICANN identified three other issues: 
potential for malicious conduct; security and stability of the 
Internet and top-level domain demand; and, finally, economic 
analysis.
    In your opinion, to what extent do you feel that these 
other issues have been adequately addressed?
    Mr. Delbianco. Thank you, Ranking Member Coble.
    The adequately addressed is not sufficient to simply say, 
as Doug Brent has, that those are ``under consideration.'' What 
will matter is seeing it--these requirements start to show up 
in the draft applicant guidebook, to where the minimum 
requirements that people that bid on these new top-level 
domains are more than just simply disclosing what they are 
going to do, but meeting minimum standards of rights 
protection.
    And as you go down that list of trademark protection, 
consumer protection, those are intertwined. The only reason 
these companies bother to protect brands and cybersquatting is 
to stop their customers from getting defrauded by visiting 
sites that are fraudulent, trying to steal their I.D. number 
for a bank site or an ISP or counterfeit goods.
    This is about helping people avoid fraud. It isn't 
protecting rich American companies who are sacredly guarding 
their trademarks. So those are tightly intertwined.
    And earlier, you asked a question about Mr. Brent, about 
why haven't studies been done? But I would remind you that the 
rest of the world is incredulous that we think we need to study 
whether they need the ability to type their domain names and e-
mail addresses in their own language and alphabet.
    Now, they need that now, and we ought to be focusing on 
that. Interesting that that didn't show up in that list of 
priorities, because ICANN has sort of smushed that in with the 
launching of all these new domains, like .web. We ought to be 
focusing on the rest of the world, because as the steward of 
the Internet, of a global Internet, that has been our mission.
    Mr. Coble. Thank you. Let me get to Mr. Stahura.
    Mr. Stahura, we have heard about proposals to address the 
concerns of trademark owners regarding the introduction of an 
unlimited number of new GTLDs. What role would a registry or 
registrar play in implementing these proposals or others that 
may be suggested, Mr. Stahura?
    Mr. Stahura. Speaking about the unlimited number idea, 
there has been a lot of ideas to limit not just the number, but 
other things. For example, the IDN idea that Mr. DelBianco was 
just saying, IDN meaning international domain names, let's--you 
know, it is pretty much indisputable that, yes, we should have 
new top-level domain names in Chinese, in Arabic, and so on.
    The question is, should we limit the rest of us so that we 
can't get our .blog. For example, in English and let the 
Chinese get .blog in Chinese first? It is back to competition. 
I think that they should--we should all go at the same time. 
They should be able to get .blog in Chinese or Arabic, and we 
should be able to get .blog in English. So that is one way of 
limiting it, letting them go first. Okay?
    Another way is, limit the number. You know, we don't limit 
the number of patents each year. It is an unlimited number. We 
could have a number--unlimited number of patents next year. We 
don't, but we could. But it is--every year, it is pretty much 
the same number of patents. We don't limit it.
    Another way to limit it is restricting the type of TLDs. 
For example, let's just have a TLD for the Lakota Indian tribe. 
And, yes, that is another way of limiting it, and maybe they 
will apply, this tribe will apply for .lakota. But that TLD--so 
one idea is to just limit it to restrict TLDs and not have any 
open TLDs, like .blog, for everyone else.
    The problem with that limitation is that .lakota is only 
useful and restricted--it is only restricted to that Lakota 
people. So it is another not good thing. Restricting TLDs makes 
it so that there is not as much benefit for everybody.
    Mr. Coble. Thank you.
    My time is expired, Mr. Chairman. I yield back.
    Mr. Johnson. Thank you, Mr. Ranking Member.
    Next, we will hear from the esteemed representative from 
Virginia, Mr. Rick Boucher.
    Mr. Boucher. Well, thank you very much, Mr. Chairman. I 
appreciate your having today's hearing relating to the 
management of the domain name system.
    And I have a number of questions of our witnesses about how 
some of the proposals that ICANN has made could affect 
competition and could either benefit or adversely affect 
consumers. And let me start with the settlement agreement that 
was entered into between ICANN and VeriSign in 2006.
    Excuse me. I have a terrible cold. I hope you can hear what 
I am saying.
    In that agreement, which was subsequently approved by the 
Department of Commerce, VeriSign, for all practical purposes, 
was granted what amounts to a perpetual monopoly in its 
management of the .com registry. And, obviously, any time you 
have a monopoly in operation, there is the potential for 
adverse affects on consumers.
    Now, we have had that agreement in place now for about 2 
years. Maybe it is too early to cast any judgments about its 
effect in the marketplace, but I would like to give our 
witnesses today an opportunity to comment on the fact that, 
under the terms of this agreement, we will not have what 
amounts to a re-competition for management of the .com 
registry, because that troubled you.
    Have you seen any problems so far? And do you have any 
suggestions for us as to how we might address whatever concern 
you have?
    Mr. DelBianco, your hand was up first.
    Mr. Delbianco. Thank you, Congressman Boucher.
    You made the statement that VeriSign has some sort of 
permanent lock, but I want to make it clear, ICANN owns the 
label maker for .com. ICANN owns it. ICANN has a contract where 
currently VeriSign is the one running and investing in cranking 
out the labels----
    Mr. Boucher. But under the terms of the settlement 
agreement that the Department of Commerce approved, there is 
the potential for what amounts to a perpetual re-award of that 
without competitive bidding.
    Mr. Delbianco. There is the potential for renewal of a 
contract because ICANN's standard contract, the same contract 
it does for all the folks that run the label makers, so that if 
they perform their duties well and don't have any material 
breaches of their duties, they are entitled to a renewal of 
that contract without necessarily having to re-bid it.
    Now, a lot of that has to do with the fact that they make 
massive investments, especially with the hundreds of millions 
of names that are in a registry like----
    Mr. Boucher. Well, I gather you are defending the terms of 
the agreement. That is fine.
    Mr. Delbianco. I am defending----
    Mr. Boucher. But let me just say that many observers have 
questioned the fact that determining whether or not VeriSign is 
performing properly and doing a good job and meeting quality 
standards can be very subjective. And the best way, in the 
minds of many, to address matters like that is to have a re-
competition with periodic recurrence. And that is not assured 
in this.
    Let me ask other members of the panel if they have any 
views. Yes, sir?
    Mr. Stahura. Obviously, you know, I am in business to make 
money. I would love to re-compete and, try to win the .com 
contract. And I am sure if all my competitors were sitting 
here, they would all be saying the same thing in unison. Of 
course, we would love to run .com.
    That contract is not going to come up for a while. I would 
also like to compete with them and get .web or .family. That is 
another way to compete and provide these benefits to the 
public.
    Mr. Boucher. All right, so you are not--you are not 
expressing direct objection to that agreement.
    Mr. Brent, do you want to be recognized? Nope? You have 
nothing say?
    All right. Mr. Heath, anything?
    Mr. Heath. I don't have too much to comment on. I would 
simply say that surely this boils down to accountability and 
normal business rules. If the relationship you have in your 
contract is working and you have performance indicators on that 
contract and they meet those, then you want to renew it, and--
that is fine. If you don't meet them and it doesn't work or 
there is a problem with it, then you terminate the contract and 
you go and look at somebody else.
    Mr. Boucher. So it may come down to just how adequate these 
performance standards really are? As they are stated, do you 
think they are adequate? You don't really--I am seeing people 
nod. All right.
    One further question, Mr. Chairman. I see my time is about 
to expire. One of the proposals that ICANN has put forward 
would allow the registries, such as VeriSign, that manage the 
top-level domains to begin to sell domain names directly to end 
users, in effect, going around the registrars, like GoDaddy, 
that carry that responsibility today.
    And under the current structure, that is not permitted. 
Effectively, VeriSign and other TLD administrators have to 
wholesale to the registrars, who then in turn sell to the end 
user. And that structure does encourage competition, because 
you have a variety of registrars competing with each other.
    It has been suggested that the managers of the top-level 
domain names might have information about end users that would 
enable them to obtain a marketing advantage, if they were given 
an opportunity to compete with the registrars in selling these 
domains directly to the end user. Does anyone on the panel 
share that concern or have any thoughts about it?
    Mr. Brent?
    Mr. Brent. Thank you. Thank you, Mr. Boucher.
    This is an active discussion going on within the ICANN 
community right now, and there is no resolution of this, but 
let me just quickly paint the picture, if I can.
    There are two very extreme views on this topic. One is that 
would mostly be held by incumbent registries that--to prevent 
registrars from essentially getting in a business that is 
called back-end registry services. If you--the best example of 
this today would be if you think about the .org registry, the 
public Internet registry, they have 10 million names, but it is 
actually a very small company, very few people, 10 or 20 
people. They outsource the running of that registry to another 
company.
    It is envisioned in this new GTLD round that that notion of 
backend registries will become a much more important aspect of 
the marketplace. And so there is a question from the incumbent 
registry point of view, should that be allowed for registrars 
to be in that business? Needless to say, the registrars have 
entirely the opposite view.
    What ICANN has done to try to answer that question is, 
first of all, go through a community consultation process, but 
get two eminent antitrust economist/lawyers involved, Salop and 
Wright, to analyze this question for us. We have further 
meetings planned on this particular topic, and I would say this 
is going to take some time to resolve.
    Mr. Boucher. Do you have a timeframe for resolving all of 
these various matters that are currently pending and--deciding 
when you are--whether or not you are going to have additional 
generic top-level domains and resolving issues like this, 
direct competition?
    Mr. Brent. Right, sir. I think this is probably something 
all the members here have more experience than I do. When it 
comes to a product launch or finishing a software product, I 
know how to put a date on that.
    And what we have found in this process is it is a little 
bit like a foot on the gas and a foot on the brake at the same 
time. On the one hand, our community is strongly telling us: 
Finish this process and, on the other hand, only finish it when 
all the questions have been thoroughly answered.
    Each time as we have approached this, each time we have 
approached a decision point, we have said the legitimate 
concerns must be answered before we can proceed. And this is 
another one of those that I could put a forecast up and say, 
``Perhaps it will take 3 or 4 months to resolve this registry-
registrar vertical integration.'' Certainly, the process can't 
proceed until that question is answered.
    Mr. Boucher. Mr. Chairman, with your indulgence, I would 
like to give some other panel members an opportunity to 
comment.
    Yes, sir. I can't pronounce your last name.
    Mr. Stahura. Oh, sorry. Stahura.
    Mr. Boucher. Thank you.
    Mr. Stahura. I am not sure I am pronouncing it right.
    Your question about, you know, registries selling directly 
to the public, well, it is already happening in some 
registries, like country code registries that, you know, 
various countries have their top-level domains, and they do 
sell direct to the public, as well as through resellers, which 
we call registrars. So it is already happening.
    Essentially, it is called vertical integration. You know, 
the sale--the source of the product acquiring or, you know, 
selling direct to the public and--well, acquiring their 
reseller channel. And vertical integration provides a lot of 
benefits to consumers because it makes two companies together 
more efficient than if they were separate.
    And, you know, I am not a competition expert, but it is 
usually allowed as long as there is not market power by one of 
the two that is acquiring each other.
    Mr. Boucher. Well, when you have one company that manages 
the entire top-level domain registry, that might be one 
indication of there being market power----
    Mr. Stahura. Correct.
    Mr. Boucher [continuing]. Particularly if they can use 
information unique to them to gain a marketing advantage.
    Mr. Stahura. Right. But it could also be that maybe there 
is a large registrar that is selling a small--you know, is 
acquiring a small registry. That is another indication of 
market power.
    So absent market power, I think vertical integration 
provides efficiencies that, you know, consumers benefit.
    Mr. Boucher. Okay.
    Mr. DelBianco?
    Mr. Delbianco. Thank you.
    The structural separation has long been a case at ICANN to 
where the registries can't own registrars and registrars can't 
own registries. And that is really what stimulated the 
competition that the white paper called for 10 years ago. We 
have seen markups on domain names go from, what, $75 down to 
just $5. That is what competition has generated.
    And that separation is a good thing, and many of us believe 
at ICANN, as I do, that we should maintain that separation. But 
in the new TLD contracts that are being anticipated, there is 
probably not going to be a separation between registrars being 
able to run their own registry.
    And I think you had your example maybe a little bit 
backwards. There is no concept of--VeriSign selling .com 
directly, because they are covered by an existing contract, and 
they are not allowed to sell direct and never will under that 
contract.
    Instead, it is the new contracts, like Paul's bidding on 
.web, I believe, and Paul is a registrar. He is the second 
biggest registrar on the planet. But he would also like to be a 
registry, so he would like to see that separation wall come 
down so that Paul can not only run the .web, but sell it, as 
well. And I believe that that has some concerns for a lot of us 
around the world because of insider trading--there is a phrase 
you would understand--insider trading.
    Paul is going to be able, by running the .web, to not only 
know what people are trying to access in the page, but he will 
be able to control the inventory of those names, as well as 
distribution. I think we should maintain that separation as we 
roll forward into the new top-level domain.
    Mr. Boucher. Thank you very much.
    Thank you for your indulgence, Mr. Chairman. A very helpful 
discussion.
    Mr. Johnson. Thank you, Mr. Boucher.
    Next, we will hear from Mr. Chaffetz, from Utah.
    Mr. Chaffetz. Thank you, Mr. Chairman.
    And, again, thank you to our panelists.
    One of my concerns is how we deal with the language issues, 
because that seems to me, from a global standpoint, a much 
bigger issue, particularly--you mentioned Japan, but obviously 
other countries that are using an alphabet that is perhaps 
different than ours.
    Go back and explain to me what we are doing or not doing to 
take care of that issue.
    Mr. Brent. There are really two tracks of this--what is 
called internationalized domain names, which is that, in the 
very last part of a name, where you would see .com or .org, it 
could say, for example, .china in Chinese or it could say, you 
know, .food in Arabic.
    So those names have undergone a lengthy technical 
development process--actually, not primarily managed by ICANN--
that is going through the IETF, Internet Engineering Task 
Force, that is now just at the very brink of conclusion. So 
there is a whole technical set of efforts going on.
    And then there are two ways that these internationalized 
names will show up. One is in what is called country code 
names, which we haven't spent a lot of time talking about, but 
that would be a .uk, .au, those--you know, those two-letter 
names. The countries that--particularly the ones that use non-
Latin characters, non-English language, there is what is called 
the fast-track process, which is anticipated to culminate this 
year, where country code names, .china in Chinese or 
.saudiarabia in Arabic, could be put in place.
    But, really, in the context of the generic names, which is 
more what we are talking about today, as several panelists have 
mentioned, we don't think that the notion of the government-run 
TLDs is all that people are looking for in other countries of 
the world and that part of this new GTLD process and what our 
policy development said from our bottom-up, multi-stakeholder 
world was to simultaneously launch new GTLDs, new top-level 
domains in international characters and in Latin characters at 
the same time.
    Mr. Chaffetz. And with this looming deadline, what is the 
plan, given that, you know, next week is next week? So----
    Mr. Brent. Right. So I should say that the timing of this 
new GTLD program, at least in the mind of ICANN, is completely 
independent of the timing of our arrangements with the U.S. 
government. This is a process that has been going on literally 
for 10 years, so we couldn't have timed it to get in front of 
you today.
    So, you know, the process has originally been targeted. We 
have passed original targets, in terms of delivery. The most 
recent delivery date we were aiming for was February of next 
year to launch the process. Based on where we are, we have a 
couple of outstanding issues, I am expecting that that date 
will likely be missed.
    But we are talking about, you know, that kind of a launch 
timeframe. It would be, you know, many months from now.
    Mr. Chaffetz. I don't know exactly how I feel about that 
answer, but if you--pattern of missing deadlines--yes, did you 
want to make a comment?
    Mr. Stahura. Yes, I would say there is--I thought that we 
would have new TLDs years ago. There has been pushback, 
pushback, pushback by forces. And so, you know, to say that 
somehow it was arranged that TLDs and the ending of the JPA 
would be kind of coincidental and one would be pushed back a 
week after the other one or a month or 2 months, that is just 
not true. We should have had TLDs a long time ago.
    Mr. Delbianco. Thank you, Congressman, for sharing the 
concern about making sure the next billion people around the 
planet can use their own alphabet. The notion that folks in the 
Arab world can't even type google.com to do a search in all 
Arabic, they can't do it. They have to turn their keyboard 
sideways and use three-fingered salutes to turn ``com'' on 
their keyboards. That is intolerable. And I share your concern 
that we need to roll that out.
    Mr. Brent has correctly said that we are giving governments 
a sort of fast-track on their country codes in native scripts, 
but think about it. A lot of those users want to use .asia in 
Chinese. I would like to be able to make netchoice.org 
accessible to people in Chinese. And I don't want to have to go 
to those countries and beg for their permission to host my 
domain in their particular script.
    There are 22 countries that use the Arabic language, so an 
Arabic user, which of the Googles would they have to go to, 
google.eg in Arabic for Egypt, .sa for Syria in Arabic? No, 
they want google.com in Arabic. And Google shouldn't have to 
try to secure its rights in those new versions of .com, either. 
If they own Google.com, they ought to have an opportunity to 
either guard or light up that domain when it goes to the Arabic 
world.
    And then, finally, you asked about timing. And there is one 
sort of coincidence of the timing, and that is, under this 
transition, we have exercised guidance and given guidance to 
ICANN on really thorny issues like this one, by refocusing 
their priorities, and that is what generated the IRT, frankly. 
That is what is causing them to pay a lot more attention to the 
economic studies.
    ICANN has a lot of people to answer to, so it is very tough 
to know where to listen. But as Samuel Johnson once said, 
nothing focuses the mind like the thought of a congressional 
hearing in the morning. [Laughter.]
    Mr. Chaffetz. Thank you. I see I am out of time here.
    Thank you, Mr. Chairman.
    Mr. Johnson. Thank you, Mr. Chaffetz.
    I would like to ask about ICANN, but first I would like to 
know, which countries are the biggest users of ICANN's 
services?
    Mr. Brent. I am trying to think of the right way to answer 
that.
    Mr. Johnson. Well, top three. I will limit it to that.
    Mr. Brent. There is the generic name space and the country 
code name space. In the country code name space, there is 
actually probably pretty even usage across the countries in the 
world and, in some sense, it is actually the least developed, 
least technically capable countries with whom we have to spend 
the most amount of time.
    So, for example, ICANN typically will run security-oriented 
training with small countries. And, you know, very small 
countries around the world all want to have their Internet 
presence. So it is actually interesting that, in the country 
code space, it is sort of the smallest, least technically 
advanced demand the most resource from ICANN.
    Mr. Johnson. Well, how prolific are the Chinese people at 
wanting to protect domain names within your registry that you 
control?
    Mr. Brent. Right, right. So, actually, as part of this 
implementation recommendation team process, the intellectual 
property interests within ICANN, we held a meeting in Hong Kong 
that I personally attended, specifically looking at these 
trademark interests.
    And I would say there is a very great--a very high interest 
both in new generic top-level domains in China--that is, the 
Chinese people would like to see new top-level domains--and 
that they have many common concerns with those that Mr. Heath 
has expressed, in terms of protecting their trademarks. There 
is no doubt about that.
    Mr. Johnson. So I take it that the Chinese use ICANN's 
services pretty frequently and to a great degree over other 
countries? Is that fair?
    Mr. Brent. Yes, I am not trying to be contradictory, but I 
don't think that is the right conclusion. I guess, really, as I 
said, it would be, you know, very small, you know, Mauritius 
or, you know, very small countries that tend to have not the 
technical expertise with whom we spend the most time.
    And that China, for example, has a very--you know, the way 
they run the .cn infrastructure is very professional, very high 
tech, and they don't--we don't really spend a lot of time 
supporting them.
    Mr. Johnson. Your board members, how many do you have? And 
how are they selected?
    Mr. Brent. Well, this is a little bit of a simplification. 
The ICANN board is almost legislative in nature, in the sense 
that it tries to be both representative of the various 
constituencies in ICANN, so contracted parties, registries and 
registrars. It tries to--and then there is also an independent 
nominating process, called the NomCom--again, another acronym--
but a nominating committee that is an independent committee of 
something like 21 people--I believe that is approximately 
correct--who has geographic quotas in terms of filling board 
positions from around the world.
    Our board is quite diverse. You know, obviously, we have 
people from North America, from the United States, and we have 
people from all over the world.
    Mr. Johnson. See, you mentioned or someone mentioned on the 
panel about the Chinese pulling out of some--Mr. DelBianco, you 
want to help me with that?
    Mr. Delbianco. In 2006, China lost patience with us and 
with ICANN, because we weren't able to deliver Chinese 
characters to the right of the dot. That is intolerable for 
them serving their own people to not be able to type an e-mail 
address or a domain name or a link on a Web page using their 
own characters.
    You would see Chinese Web pages, Mr. Chairman, where 
everything on the Web page was in Chinese, except for the 
domain name, except for the e-mail addresses that are on the 
page, or the links on the page. That was just intolerable that 
China decided to fork the Internet. They have their own mini-
ICANN running inside of China that sits on top of ours, and it 
allows people in China to type real Chinese characters for the 
.cn, and they have their own version of .com and .org.
    So that is what I mentioned in my testimony, that they have 
already splintered or forked the Internet.
    Mr. Johnson. Is that a good thing or is that a bad thing?
    Mr. Delbianco. It is a scary thing, because what it 
demonstrates is that we have lost our way at having one single, 
global Internet addressing system that works no matter where we 
are on the planet, the same security, stability, and 
reliability that, if you are flying on a mission to Shanghai, 
that your e-mails will reach you just as securely as ever, that 
you can send and retrieve your Web pages and e-mails without 
worrying about things being misdirected or going to the wrong 
page.
    We need one addressing system. This is one world, one 
Internet. So it is a very bad thing, Mr. Chairman.
    Mr. Johnson. All right. Have the Chinese ever been 
represented on ICANN's board?
    Mr. Brent. I have been with ICANN 3 years. During that 3-
year tenure, no, but I believe--and I am happy to get back with 
a specific answer--I believe in, prior to that time, there has 
been Chinese board members at ICANN.
    Mr. Johnson. All right. Thank you. My time has expired.
    Mr. Goodlatte, of Virginia?
    Mr. Goodlatte. Thank you, Mr. Chairman.
    Mr. Brent, there is a strong likelihood that hundreds of 
new generic top-level domains will be granted in the short term 
if this proposal is enacted. Can you guarantee us right now 
that ICANN has the resources to properly enforce the rules that 
we will establish for the registries under this proposal?
    Mr. Brent. You know, I think the short answer is--and I am 
sure you want a short answer--I think the short answer is yes, 
and I think the longer answer is that the key to achieving that 
goal is to have the right rules.
    You know, often what we find--and I think the reason why--
and, you know, my spending time with a lot of the trademark, 
intellectual property people over the last 6 months has been a 
deep frustration about the way things work today.
    Mr. Goodlatte. But let me interrupt. Do you agree, based on 
the testimony of Mr. DelBianco and Mr. Heath, that maybe you 
don't have the right rules ready to go yet, that there are 
still a lot of things that need to be worked out here before we 
move ahead?
    Mr. Brent. You know, we might question a lot, but I think, 
absolutely, we have more work to do, and we are actively 
considering additional rules, not only in intellectual property 
protection, but I think, importantly, I would be happy--if the 
panel is interested--to talk about this notion of malicious use 
of the Internet, as well.
    Mr. Goodlatte. And can you guarantee me that ICANN has the 
resources to continue to perform its core role of ensuring the 
stability of the domain name system after the rollout of this 
proposal?
    Mr. Brent. Right. And I think, again, the short answer is 
yes. And the absolute prime directive of ICANN is this notion 
of maintaining a single, global, interoperable and secure and 
stable route zone.
    Mr. Goodlatte. Okay. Well, if the rollout of the new GTLDs 
gets held up, would ICANN still move forward with the rollout 
of internationalized domain names for current top-level domains 
in order to help other countries from--in order to help deter 
other countries from setting up their own balkanized versions 
of the Internet, as was described by Mr. DelBianco with regard 
to China?
    Mr. Brent. Sir, I can't give you quite as short an answer 
to that one, but bear with me for a second. So, first of all, I 
would want to respectfully disagree with Mr. DelBianco. It is 
an overstatement to say there is a fractured Internet today.
    I certainly do agree that the goal--and extremely important 
to ICANN is this notion of a single, global, interoperable name 
space. We could have a technical debate about the state of 
China right now, but I don't think it would be of interest to 
the Committee. But that is, absolutely, the number-one goal.
    In the very short term, the intention is before the end of 
this year to--for key countries in the world that use non-Latin 
characters, non-English countries, to give them--to delegate 
these names in their own languages for their country code 
domains.
    So the easy example would be, for China, which today is 
.cn, to delegate a .china in Chinese characters.
    The third question you asked is a little bit harder for me. 
I am the chief operating officer----
    Mr. Goodlatte. Well, let me ask Mr. DelBianco if he wants 
to respond to that.
    Mr. Delbianco. You asked the question, Congressman 
Goodlatte, about current TLDs. And that means more than just 
the country codes. And as Mr. Brent indicated, a fast-track 
just for governments is not the track that Chinese users, 
Arabic users need. They want to get access to .org, .com, 
.asia, and all of those sites, not just the country codes.
    And so I truly believe that we need to expand that track. 
And given the resource constraints, this is a very complex 
thing that ICANN is trying to do. We have been working for 
several years on these IDNs, or internationalized domain names.
    So I think it is far better for ICANN to focus on getting 
that track out of IDN versions of top-level domains, work out 
the kinks in this system, and then, based on that, then let's 
move ahead for the Latin alphabet TLDs that are currently 
driving a lot of the food fight here today.
    Mr. Goodlatte. Okay. Now back to Mr. Brent.
    Mr. Brent. Yes, Mr. Goodlatte, I just didn't get a chance 
to answer--fully answer your question. The last part of your 
question was related to the launch of IDN separately from Latin 
character TLDs.
    ICANN is a bottom-up policy development process. We are a 
multi-stakeholder organization. I wish, as CEO sometimes--as 
COO--I could make these decisions on behalf of ICANN. That is 
not my role.
    The policy development--the policy work that went on for 3 
years that involved, you know, probably tens of thousands of 
person hours, what came out of that was a policy recommendation 
for simultaneous launch of IDN TLDs and generic TLDs, in part 
for competition reasons, in part because of all of the same 
rules that we are concerned with for intellectual property 
protections, malicious use protections, for string similarity, 
for all of the complexities of this process must be done before 
the IDNs can be launched, and actually, in the view of the 
policy developers, should be the same for both IDNs and----
    Mr. Goodlatte. Well, let me follow up on that, because 
studies have shown that consumers are increasingly worried 
about the safety and security of the Internet. How do you think 
this proposal will contribute to consumer confidence in using 
the Internet? And let me ask the other panelists to talk about 
your raising concerns regarding intellectual property 
protections, as well?
    Mr. Heath?
    Mr. Heath. Well, I think--I mean, what we have just been 
talking about, the international domain name system, there is 
clearly demand for that. And that probably is a parallel track 
from the opening up of GTLDs generally.
    But you have touched on the issue of consumer confidence 
and safety on the Internet generally. There is some in my 
testimony on it. And the fact is, it is not as secure as it 
should be now, just with the 21 GTLDs we have at the moment. 
And, in fact, it has got worse. The study I referred to in my 
testimony, the British government carried out this year, they 
also carried it out about 3 years ago, and that the confidence 
in security of the Internet 3 years ago was a lot stronger than 
it is now.
    And that is with the existing system. And our concern is 
that if an unliberated expansion of the GTLD space will just 
exacerbate that process and it will be orders of magnitude 
worse than it is now.
    So I think if we can get the governance right on the 
existing system, then you can consider a measured rollout of 
names that are required according to demand, rather than doing 
everything all at once or simultaneously, which strikes me as 
being a bit silly.
    Mr. Goodlatte. Mr. Chairman, I know my time is expired, but 
Mr. Heath raises a point that I would like to--back to----
    Mr. Johnson. Please.
    Mr. Goodlatte.--Mr. Brent to respond to.
    Mr. Johnson. Please proceed.
    Mr. Goodlatte. Thank you. And that is--you know, we do have 
enforcement problems right now. And what enforcement mechanisms 
will ICANN have to employ to ensure that applicants and--we are 
going to have a wide--you know, we are not just talking about, 
you know, a limited array of people who are going to have the 
ability to have a GTLD. You are going to have all kinds of 
people applying and receiving them, maybe hundreds, maybe 
thousands.
    How are you going to keep them--how are you going to have 
them comply with their own rules, once they have their own 
GTLD?
    Mr. Brent. Right. So it is sort of hard to--what level of 
detail to answer this question, but I think that there has been 
a couple of important areas where ICANN has been asked to 
develop--and, really, the ICANN community--to develop much more 
specific rules, intellectual property protections, which 
actually many are happy with at the top level, the sort of far-
right-hand name in this new GTLD proposal already.
    The big concern, as it is today, is around these second-
level names. So it is a question of people behaving according 
to their rules, making it easier and cheaper for intellectual 
property rights holders to dispute things, to make it easy and 
cheap.
    So there is a whole set of rules there around malicious 
conduct. You know, there are huge opportunities in these new 
TLDs to make rules that make malicious conduct harder for these 
new TLDs, make enforcement easier, and make it easier to manage 
a whole variety of TLDs on one contract, where today the 21 
TLDs that ICANN have are all on separate arrangements with 
ICANN.
    Mr. Goodlatte. Mr. Stahura has been chomping at the bit, 
and then Mr. DelBianco.
    Mr. Stahura. I have so much to say. It has been 12 years. 
Thanks for giving me the opportunity to speak.
    Regarding malicious conduct, it is sort of like we want to 
come out with new bank branches, but the number of bank 
robberies, because there are new bank branches, won't go up. 
The total number of bank robberies is probably going to be the 
same, even though we come out with more bank branches. And that 
is the first thing.
    The second thing is, these new bank branches are going to 
have better safes, more security, so like these--like the IRT 
rules to protect trademark holders and so on. So the existence 
of new TLDs does not increase the amount of bad stuff that 
happens on the Internet.
    Anybody could register a name right now in .com. There is a 
lot of--it is infinite name space in .com, okay? You could go 
in there and register a name now and do phishing with it. 
Coming out with .paul or .cool is not going to increase that.
    Mr. Goodlatte. Well, my debate coach in college said that 
analogy was the weakest form of argument, but I am not sure I 
see the analogy here, nor do I buy the argument that, if you 
have more bank branches, there won't be more bank robberies. It 
seems like there are more opportunities and there will be those 
who would be interested in breaking the law having more avenues 
to search out and find the weak spots where they could violate 
the law.
    And if you have more people enforcing rules and enforcing 
them in different ways, people are going to shop for those 
places where they get the best deal on violating the rules. So 
I am a little concerned about that analogy.
    And, Mr. Chairman, if you will allow, we will give Mr. 
DelBianco the last chance to answer, and then I will cease and 
desist.
    Mr. Delbianco. Thank you, Mr. Chairman.
    Mr. Brent talked about addressing Congressman Goodlatte's 
concerns by saying, well, yes, if you have the right rules, I 
think we could do it, if you have the right rules. And at the 
risk of using an analogy---- [Laughter.]
    Mr. Goodlatte. It is not easy.
    Mr. Delbianco. Those of us who live in the capital----
    Mr. Goodlatte. We are setting a high standard here for----
    Mr. Delbianco. Those of us who live in the capital region 
actually regard speed limit signs as merely advisory. You see, 
it is enforcement that matters. And that is where the rubber 
will meet the road at ICANN. Do we have the resources to do the 
enforcement of these new rules once we come up with them?
    And I would hasten to add that rules that are written once 
and put into contracts instantly become obsolete. We are in an 
arms race with the bad guys. And contracts that stipulate how 
one handles the WHOIS may not be any help at all with 
tomorrow's generation of how they do phishing or fast flux 
hosting or new areas that they come up with, like domain 
tasting was something we hadn't anticipated in the rules.
    So not only do we have to have enforcement, we have to be 
quick to adapt the rules we have to new threats to consumers 
and new threats for fraud on the Internet.
    Mr. Goodlatte. Well, I like that analogy better, but thank 
you, Mr. Chairman.
    Mr. Johnson. Thank you, Mr. Goodlatte.
    And, Mr. DelBianco, you will receive a reward that will be 
coming to you over the Internet for the dubious distinction of 
having made Mr. Goodlatte smile and laugh. [Laughter.]
    No response.
    Mr. Goodlatte. And I am still smiling, Mr. Chairman.
    Mr. Johnson. I would like to thank all the witnesses for 
their testimony today. Without objection, Members will have 5 
legislative days to submit any additional written questions, 
which we will forward to the witnesses and ask that you answer 
as promptly as you can to be made a part of the record.
    Without objection, the record will remain open for 5 
legislative days for the submission of any other additional 
materials.
    And with that, this hearing of the Subcommittee on Courts 
and Competition Policy is adjourned.
    [Whereupon, at 11:37 a.m., the Subcommittee was adjourned.]
                            A P P E N D I X

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               Material Submitted for the Hearing Record





                                 
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