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


 
 OVERSIGHT OF THE INTERNET CORPORATION FOR ASSIGNED NAMES AND NUMBERS 
                                (ICANN)

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

                                HEARING

                               BEFORE THE

      SUBCOMMITTEE ON COMMUNICATIONS, TECHNOLOGY, AND THE INTERNET

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                              JUNE 4, 2009

                               __________

                           Serial No. 111-42


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov



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                    COMMITTEE ON ENERGY AND COMMERCE

    HENRY A. WAXMAN, California      JOE BARTON, Texas
              Chairman                 Ranking Member
JOHN D. DINGELL, Michigan            RALPH M. HALL, Texas
  Chairman Emeritus                  FRED UPTON, Michigan
EDWARD J. MARKEY, Massachusetts      CLIFF STEARNS, Florida
RICK BOUCHER, Virginia               NATHAN DEAL, Georgia
FRANK PALLONE, Jr., New Jersey       ED WHITFIELD, Kentucky
BART GORDON, Tennessee               JOHN SHIMKUS, Illinois
BOBBY L. RUSH, Illinois              JOHN B. SHADEGG, Arizona
ANNA G. ESHOO, California            ROY BLUNT, Missouri
BART STUPAK, Michigan                STEVE BUYER, Indiana
ELIOT L. ENGEL, New York             GEORGE RADANOVICH, California
GENE GREEN, Texas                    JOSEPH R. PITTS, Pennsylvania
DIANA DeGETTE, Colorado              MARY BONO MACK, California
  Vice Chairman                      GREG WALDEN, Oregon
LOIS CAPPS, California               LEE TERRY, Nebraska
MICHAEL F. DOYLE, Pennsylvania       MIKE ROGERS, Michigan
JANE HARMAN, California              SUE WILKINS MYRICK, North Carolina
TOM ALLEN, Maine                     JOHN SULLIVAN, Oklahoma
JANICE D. SCHAKOWSKY, Illinois       TIM MURPHY, Pennsylvania
HILDA L. SOLIS, California           MICHAEL C. BURGESS, Texas
CHARLES A. GONZALEZ, Texas           MARSHA BLACKBURN, Tennessee
JAY INSLEE, Washington               PHIL GINGREY, Georgia
TAMMY BALDWIN, Wisconsin             STEVE SCALISE, Louisiana           
MIKE ROSS, Arkansas                  
ANTHONY D. WEINER, New York          
JIM MATHESON, Utah                   
G.K. BUTTERFIELD, North Carolina     
CHARLIE MELANCON, Louisiana          
JOHN BARROW, Georgia                 
BARON P. HILL, Indiana               
DORIS O. MATSUI, California          
DONNA M. CHRISTENSEN, Virgin         
    Islands                          
KATHY CASTOR, Florida                
JOHN P. SARBANES, Maryland           
CHRISTOPHER S. MURPHY, Connecticut   
ZACHARY T. SPACE, Ohio               
JERRY McNERNEY, California           
BETTY SUTTON, Ohio                   
BRUCE BRALEY, Iowa                   
PETER WELCH, Vermont                 
                                     
                                     
      Subcommittee on Communications, Technology, and the Internet

                         RICK BOUCHER, Virginia
                                 Chairman
EDWARD J. MARKEY, Massachusetts      FRED UPTON, Michigan
BART GORDON, Tennessee                 Ranking Member
BOBBY L. RUSH, Illinois              J. DENNIS HASTERT, Illinois
ANNA G. ESHOO, California            CLIFF STEARNS, Florida
BART STUPAK, Michigan                NATHAN DEAL, Georgia
DIANA DeGETTE, Colorado              BARBARA CUBIN, Wyoming
MICHAEL F. DOYLE, Pennsylvania       JOHN SHIMKUS, Illinois
JAY INSLEE, Washington               HEATHER WILSON, New Mexico
ANTHONY D. WEINER, New York          CHARLES W. ``CHIP'' PICKERING, 
G.K. BUTTERFIELD, North Carolina         Mississippi
CHARLIE MELANCON, Louisiana          VITO FOSELLA, New York
BARON P. HILL, Indiana               GEORGE RADANOVICH, California
DORIS O. MATSUI, California          MARY BONO MACK, California
DONNA M. CHRISTENSEN, Virgin         GREG WALDEN, Oregon
    Islands                          LEE TERRY, Nebraska
KATHY CASTOR, Florida                MIKE FERGUSON, New Jersey
CHRISTOPHER S. MURPHY, Connecticut
ZACHARY T. SPACE, Ohio
JERRY McNERNEY, California
PETER WELCH, Vermont
JOHN D. DINGELL, Michigan (ex 
    officio)
  

                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Rick Boucher, a Representative in Congress from the 
  Commonwealth of Virginia, opening statement....................     1
Hon. Cliff Stearns, a Representative in Congress from the State 
  of Florida, opening statement..................................     2
Hon. Michael F. Doyle, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................     4
Hon. Lee Terry, a Representative in Congress from the State of 
  Nebraska, opening statement....................................     5
Hon. Doris O. Matsui, a Representative in Congress from the State 
  of California, opening statement...............................     6
Hon. Anna G. Eshoo, a Representative in Congress from the State 
  of California, opening statement...............................     7
Hon. Marsha Blackburn, a Representative in Congress from the 
  State of Tennessee, opening statement..........................     8
Hon. John D. Dingell, a Representative in Congress from the State 
  of Michigan, opening statement.................................     9
Hon. John B. Shadegg, a Representative in Congress from the State 
  of Arizona, opening statement..................................    10
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, prepared statement..............................   140

                               Witnesses

Fiona Alexander, Associate Administrator, Office of International 
  Affairs, National Telecommunications and Information 
  Administration, U.S. Department of Commerce....................    12
    Prepared statement...........................................    15
    Answers to submitted questions...............................   155
Paul Twomey, President and CEO, ICANN............................    19
    Prepared statement...........................................    21
    Answers to submitted questions...............................   159
Kenneth J. Silva, Senior Vice President and Chief Technology 
  Officer, Verisign..............................................    30
    Prepared statement...........................................    32
Christine N. Jones, General Counsel and Corporate Secretary, The 
  Go Daddy Group, Inc............................................    37
    Prepared statement...........................................    39
Sarah Deutsch, Vice President and Associate General Counsel, 
  Verizon Communications.........................................    50
    Prepared statement...........................................    52
Thomas M. Lenard, Ph.D., President and Senior Fellow, Technology 
  Policy Institute...............................................    58
    Prepared statement...........................................    60

                           Submitted material

Letter of June 3, 2009, from eNom, Inc. to Subcommittee, 
  submitted by Mr. Boucher.......................................   142
Letter of June 3, 2009, from CADNA to Mr. Boucher, submitted by 
  Mr. Boucher....................................................   147
Prepared statement of Vince Cerf, former ICANN Chairman, 
  submitted by Mr. Boucher.......................................   151


 OVERSIGHT OF THE INTERNET CORPORATION FOR ASSIGNED NAMES AND NUMBERS 
                                (ICANN)

                              ----------                              


                         THURSDAY, JUNE 4, 2009

              House of Representatives,    
Subcommittee on Communications, Technology,
                                  and the Internet,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:07 a.m., in 
Room 2123 of the Rayburn House Office Building, Hon. Rick 
Boucher [chairman of the subcommittee] presiding.
    Present: Representatives Boucher, Eshoo, Doyle, Inslee, 
Matsui, Christensen, Castor, Space, McNerney, Dingell, Weiner, 
Stearns, Upton, Shimkus, Shadegg, Terry, and Blackburn.
    Staff Present: Amy Levine, Subcommittee Counsel; Roger 
Sherman, Chief Counsel; Shawn Chang, Counsel; Tim Powderly, 
Counsel; Greg Guice, Counsel; Sarah Fisher, Special Assistant; 
Liz Eralzer, Intern; Pat Delgado, Chief of Staff, Mr. Waxman; 
Amy Bender, Minority Counsel; Neil Fried, Minority Counsel; and 
Garrett Golding, Minority Legislative Analyst.

  OPENING STATEMENT OF HON. RICK BOUCHER, A REPRESENTATIVE IN 
           CONGRESS FROM THE COMMONWEALTH OF VIRGINIA

    Mr. Boucher. The subcommittee will come to order.
    Our discussion this morning focuses on the activities of 
the Internet Corporation for Assigned Names and Numbers, 
commonly referred to as ICANN.
    Since 1998, ICANN has managed the designation and 
allocation of Internet domain names and addresses under various 
contractual arrangements with the United States Department of 
Commerce. The original Memorandum of Understanding that was 
signed in November of 1998 has been renewed on several 
occasions, most recently as a Joint Project Agreement, which is 
now scheduled to expire on September 30 this year.
    One matter upon which we will focus this morning is whether 
Department of Commerce oversight should be retained through 
renewal of that agreement or, in the alternative, whether the 
time has come for that oversight to be relinquished, and for 
ICANN to operate, after September 30, without supervision, with 
respect to the allocation and designation of Internet domain 
names and addresses and associated functions. It should be 
noted that, under a separate contract, which is not scheduled 
to expire, the Department of Commerce has conferred upon ICANN 
the management of the master files of the domain name system, 
generally known as the root zone files. Under that non-expiring 
contract, ICANN also manages and coordinates the allocation of 
IP addresses.
    In considering whether the expiring contract should be 
renewed or should expire without renewal, key questions are 
whether ICANN's decision-making is sufficiently transparent, or 
whether improvements are needed, and whether, under its 
existing structure and practices, ICANN is sufficiently 
accountable to Internet stakeholders and the global community 
of Internet users. I am sure that today's witnesses and members 
of this panel will have a number of views to express, and the 
members will have questions about those key matters.
    A second focus of today's hearing is on ICANN's proposal to 
introduce new generic top-level domains, which could involve 
descriptions of various types of activities, locations, brands, 
or trademarked names. It is suggested that the creation of new 
top-level domains would promote competition among registry 
operators of the TLDs, and would enhance consumer choice.
    Among the concerns that have been raised about a 
proliferation of new TLDs is the cost to companies associated 
with protecting their brands, if they have to purchase 
additional second level domain registrations under the new top-
level domains. Not only do they purchase their exact brand 
names as a common practice under the various TLDs, but they 
generally also purchase common misspellings of their brand 
names in order to protect the brand name itself, so a buffer 
area, in effect, is acquired around the brand name, through the 
second level TLDs. So, as the number of top level TLDs grows, 
the cost to companies to protect their brand names grows 
exponentially. Does the added competition and consumer choice 
that would arise from the new TLDs offset that cost, as a 
matter of public policy, a key question for us to consider.
    Other questions relate to ICANN's capacity to manage all of 
the new top-level domains and assure the overall stability and 
security of the domain name system, and whether ICANN can 
assure that an adequate amount of competition would, in fact, 
arise in the bidding process for new TLDs.
    We will welcome our testimony this morning. We thank our 
witnesses for being with us, and sharing their views on these 
very important subjects, with regard to the future of Internet 
management and governance.
    Mr. Boucher. And at this time, I am pleased to recognize 
the ranking Republican on our subcommittee, the gentleman from 
Florida, Mr. Stearns.

 OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF FLORIDA

    Mr. Stearns. Good morning, and thank you, Mr. Chairman. For 
more than a decade, ICANN has played a vital role in 
maintaining a stable and reliable Internet, and I think that is 
a very high achievement.
    ICANN has the critically important responsibility for 
managing the domain name system, the hierarchy of IP addresses 
and associated domain names that enable Internet users around 
the globe to communicate with each other. ICANN has succeeded, 
both because it has been a private sector led effort, not 
controlled, for example, by the United Nations, or any other 
government, and thanks to the advice, guidance, and engagement 
of the United States through a series of arrangements, 
including the Joint Projects Agreement.
    The key question before this committee is will the 
expiration of the JPA in September put the stability and 
security of the Internet at risk. I have some concerns, and 
want to hear from the panel on this matter.
    The JPA with the Department of Commerce has played an 
important role in ensuring that ICANN is accountable for its 
decisions, and conducts its mission in a manner that provides 
for stakeholders' participation. The JPA should be extended, 
and the NTIA is in the process of seeking public comment on 
this issue.
    One major question for this hearing is whether there is a 
need to renew the JPA when it expires, and what the nature of 
U.S. engagement with ICANN would be in its absence. While it 
can never please all its stakeholders all the time, it needs 
appropriate governance mechanisms that will ensure its openness 
and accountability. Apart from ICANN's agreement with the 
Department of Commerce, what other external mechanisms are in 
place today to simply safeguard that accountability? If there 
are none, or if there are insufficient controls, perhaps 
ICANN's ongoing relationship with the Department of Commerce 
should then continue.
    Ultimately, though, through the global Internet community 
will need to develop an appropriate governance structure to 
ensure its accountability. One of its functions is to create 
generic top-level domains, or GTLDs, which is a unit of letters 
or words beyond the rightmost dot, such as .com or .gov or 
.net. Over time, the number of GTLDs has expanded to 21.
    Last June, ICANN proposed to further expand the number of 
GTLDs. Under the proposal, which was put out for public 
comment, and must be finalized and approved by the Board of 
Directors, new GTLDs could include the names of organizations, 
companies, locations, or additional generic words. However, 
before ICANN expands this list, it should address concerns 
about the proposed expansion, and provide further opportunity 
for comments by all the stakeholders.
    In a letter to ICANN last December, NTIA raised a number of 
questions regarding the way in which it was proposed to 
administer the rollouts of these new GTLDs. Specifically, NTIA 
wondered whether it is prepared to implement measures to 
promote competition on registry prices, terms, and conditions, 
ensure the application process will respect, with respect to 
national and international laws, including intellectual 
property rights, enforce contract compliance, and design a 
rational fee structure. NTIA recommended that ICANN can resolve 
a number of these issues before expanding the GTLDs.
    My colleagues' trade holders are concerned that without 
sufficient protection for intellectual property rights, they 
will have to engage in costly defensive registration of domains 
that are identical or similar to their trademarks across GTLDs 
to prevent others from registering them, or pursue costly and 
time-consuming administrative or legal processes against 
cybersquatters. I hope our witnesses will address these 
legitimate concerns also.
    Another and final point, that since ICANN is considered a 
not for profit organization, does a transparent mechanism exist 
to address any excess revenues. According to data from the 
Technology Policy Institute, its revenues have increased from 
$5 million in 2000 to over $60 million in 2009, while expenses 
have increased from under $3 million in 2000 to over $54 
million in 2009. Thus, it will have a surplus of close to $7 
million from Financial Year 2009.
    ICANN's largest expense is personnel, accounting for close 
to $20 million of the $54 million. According to its annual 
report, it employees 100 staff members. Although salary 
information and administrative costs were not available, I hope 
the witnesses today will address these issues on finance.
    Thank you, Mr. Chairman, for holding this hearing.
    Mr. Boucher. Thank you very much, Mr. Stearns. The 
gentleman from Pennsylvania, Mr. Doyle, is recognized for two 
minutes.

OPENING STATEMENT OF HON. MICHAEL F. DOYLE, A REPRESENTATIVE IN 
         CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

    Mr. Doyle. Thank you, Mr. Chairman, and I want to thank you 
for holding this important hearing.
    I own a few domains, and I have benefited from the 
competition among domains in who I can buy them from. I believe 
that because the Internet is truly global, significant input 
from around the world is important to its governance, which is 
why it pains me to say that I hope that the Department of 
Commerce continues the JPA with ICANN, and not relinquish 
control at this time.
    I am afraid ICANN seems better at furthering its own 
interests than those of the millions of Internet users that it 
is supposed to look out for. My constituents are still 
receiving misleading solicitations that look like invoices from 
a registrar, despite a court injunction and despite FTC 
intervention. Why does ICANN allow them to continue to sell 
domain names? This is domain slamming and it continues today. 
When ICANN attempted to curb the abuse of domain tasting, the 
five day window when purchased domains were able to be returned 
and refunded, their solution was to make their fee 
nonrefundable. Well, that helped curb the abuse, but the money 
didn't go for consumer protection or coordination towards IPv6, 
it went to the general budget, executive compensation, and 
cushioning ICANN's $4.6 million stock market loss last year. If 
they can afford to lose that much money in the market, why are 
they collecting the fees from us in the first place?
    I am glad to see witnesses talking about the GTLD issue 
today, which I have grave reservations. I fear that the primary 
beneficiary is not the consumer, who might suffer from 
increased confusion, or the businesses who would need to 
register new domains to defend their trademark across a near 
infinite number of top-level domains. On the other hand, it 
might act as a needed market-based solution to ensure that 
rates and fees for .com are kept low in this economic downturn.
    Small domain users like me and companies that need and use 
thousands of domain names to run their businesses, and the tens 
of millions of Internet users who place their trust in the 
Internet today, need assurance that someone is looking out for 
them. I don't see it from ICANN.
    Thank you, Mr. Chairman.
    Mr. Boucher. Thank you very much, Mr. Doyle. The gentleman 
from Illinois, Mr. Shimkus, is recognized for two minutes.
    Mr. Shimkus. Thank you, Mr. Chairman.
    We have a new Administration, everyone knows. We have a new 
individual getting close to being confirmed in NTIA. We have a 
change in the administration at the ICANN. This is now not a 
time to make changes. I would be supportive of extending the 
Joint Project Agreement.
    I look forward to the hearing, and I yield back my time.
    Mr. Boucher. Thank you very much, Mr. Shimkus. The 
gentlelady from the Virgin Islands, Mrs. Christensen, is 
recognized for two minutes.
    Mrs. Christensen. Thank you Mr. Chairman and the ranking 
member for this hearing, and for giving me yet another list of 
new acronyms to add to others that I still haven't committed to 
memory, but I am beginning to understand the concepts, and that 
is more important.
    We are here to review the progress ICANN has made, and 
whether it is ready for the Joint Project Agreement to expire 
on 9/30/09, and for the management of the DNS to transfer from 
the MOU with the U.S. Government to the global community. 
Whether it is fully able to meet its mandates and the goals of 
stability, competition, bottom-up coordination, security, and 
broad representation, as well as transparency. There seem to be 
many concerns that it is not ready, and we need to determine if 
this is just a fear of the risks that any change would bring, 
whether they are legitimate concerns that still need to be 
addressed first, as some panelists will suggest.
    I am particularly interested in the bottom-up coordination 
and, of course, security, as well as understanding whether the 
projected plans ICANN has are not only realistic, but 
responsible, and whether or not they jeopardize stability and 
security.
    I want to applaud our chair and ranking member once again 
for the excellent oversight on yet another pressing issue, and 
look forward to the testimony that will be presented.
    Thank you, everyone, for being here and sharing your views 
with us on this issue.
    Mr. Boucher. Thank you, Mrs. Christensen. The gentlelady 
from Tennessee, Mrs. Blackburn, is recognized for two minutes. 
She was here a moment ago. All right, we will await her arrival 
at a later time. The gentleman from Nebraska, Mr. Terry, is 
recognized for two minutes.

   OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF NEBRASKA

    Mr. Terry. Thank you, Mr. Chairman, and appreciate you 
holding this hearing on what I believe could actually be a 
matter of national security.
    ICANN serves a very important role in being responsible for 
managing the domain name system which, as you know, is the 
hierarchy of IP addresses and associated domain names that 
enable Internet users around the globe to communicate with each 
other.
    This interconnectedness that allows us to communicate with 
one another is the reason that ICANN should renew the Joint 
Project Agreement, or sign a similar agreement when the current 
agreement expires later this year. The goals of the JPA should 
continue to work towards increasing ICANN's transparency, 
accountability, and openness, while developing mechanisms and 
procedures to transition the domain name system functions to 
the private sector, in a manner that promotes stability, 
security, competition, bottom-up coordination, and 
representation.
    Should a rogue nation get the chance to control the DNS, it 
is a definite possibility that they could use it to harm the 
U.S., or to dismantle and interfere with our ability to 
communicate globally through the Internet. I would hope that my 
colleagues would join me in saying that, quite simply put, the 
United States Government created the Internet, and it needs to 
be in charge, as it could very well be vital to our Nation's 
security.
    Thank you, Mr. Chairman, and I yield back my time.
    Mr. Boucher. Thank you very much, Mr. Terry. The gentlelady 
from Florida, Ms. Castor, is recognized for two minutes.
    Ms. Castor. Well, thank you, Mr. Chairman, very much for 
calling this interesting hearing on the Internet Corporation 
for Assigned Names and Numbers.
    I appreciate the witnesses' willingness to be here today to 
discuss these important business issues and consumer issues, 
and how we continue to modernize the Internet. I yield back the 
rest of my time.
    Mr. Boucher. Thank you very much, Ms. Castor. The gentleman 
from Michigan, Mr. Upton, is recognized for two minutes.
    Mr. Upton. Thank you, Mr. Chairman. I would just like to 
say that I, too, join many of my colleagues, hoping that the 
JPA can be extended in a timely fashion, and I look forward to 
being a partner in that, and I believe that it will be 
certainly a bipartisan one as well.
    Since we have Ms. Alexander here, we have a pretty big date 
coming up, on a little bit more than a week away here, and you 
may expect to have some questions on the transition to digital, 
just to see where we are. I know a lot of Americans are 
concerned about that, and don't have quite the publicity we had 
back in February, but we all hope that it will be a pretty 
smooth transition, and we look forward to your thoughts about 
that as well.
    Mr. Chairman, I yield back.
    Mr. Boucher. Thank you very much, Mr. Upton. The gentlelady 
from California, Ms. Matsui, is recognized for two minutes.

OPENING STATEMENT OF HON. DORIS O. MATSUI, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Matsui. Thank you, Mr. Chairman. Thank you for calling 
today's hearing. I applaud your leadership in addressing this 
important issue. I would also like to thank our panelists for 
being with us here this morning.
    As we all know, ICANN was created in 1998 to govern the 
allocation and designation of Internet domain names and 
addresses. Although certain responsibilities for the domain 
name system were transferred from the Department of Commerce to 
ICANN, Department of Commerce continues to exercise limited 
oversight of ICANN, through the Joint Project Agreement. Under 
this Agreement, the Department of Commerce affirmed its policy 
goals of preserving the security and stability of the Internet 
domain name system. This agreement is now set to expire on 
September 30 of this year.
    While I understand some of the reasons that ICANN does not 
want to extend the JPA agreement, such as how the U.S. role is 
viewed abroad, now may not be the time to say that ICANN should 
be on its own. Just last year, NTIA initiated a review of the 
agreement, and found that although ICANN has made progress in 
key areas concerning security and stability of the domain name 
system, important work still remains. We must ensure the 
Internet domain system is transparent, accountable, and has a 
strong governance structure. Moving forward, I urge the 
Administration to carefully consider its agreement and 
partnership with ICANN.
    I thank you, Mr. Chairman, for holding this important 
hearing today, and I yield back the balance of my time.
    Mr. Boucher. Thank you very much, Ms. Matsui. Ms. Blackburn 
hasn't returned. The gentleman from the State of Washington, 
Mr. Inslee, is recognized for two minutes.
    Mr. Inslee. Thank you. I will reserve. Thank you, Mr. 
Chair.
    Mr. Boucher. Thank you, Mr. Inslee. You will have two 
minutes of time added to your questioning period.
    The gentleman from California, Mr. McNerney, is recognized 
for two minutes.
    Mr. McNerney. Thank you, Mr. Chairman.
    This is an interesting and important hearing, so I am 
looking forward to it. It is important that we work together, 
to ensure that we have a fair and transparent system, 
maintaining and improving the Internet, in order to avoid 
potential difficulties. It is essential that we keep the 
Internet accessible and easily navigated to all, and I look 
forward to the testimony this morning.
    Thank you.
    Mr. Boucher. Thank you, Mr. McNerney. The gentlelady from 
California, Ms. Eshoo, is recognized for two minutes.

 OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Eshoo. Thank you, Mr. Chairman, and good morning to all 
of the witnesses.
    Like any new organization, ICANN has gone through its share 
of growing pains, and since it was created 11 years ago, it has 
been a target for criticism among the global Internet 
community.
    I will have some questions today about the operation, and 
where you are right now, but I do think that progress has been 
made, and on the other hand, that many of the concerns, I 
think, have been appropriate, and ICANN continues to develop 
itself, and to do the thorough oversight over the technical and 
administrative functions under its jurisdiction, and that is a 
plus.
    I think that you have been successful in introducing 
competition to both the retail and the wholesale domain name 
business, added a whole new host of Internet domains, and 
stepped in to ensure that the country code top-level domains 
are properly designated.
    I think the most important and heavily trafficked domains, 
.com and .net, are operated by VeriSign, a company 
headquartered in my district in Mountain View, California, and 
I know that Mr. Silva is here today, and I welcome him. 
VeriSign has maintained a 100 percent uptime for .com. It has 
never failed. That is something in and of itself, so to be 
congratulated for that.
    It is important to remember that ICANN was founded in a 
response to growing concerns about U.S. domination of the 
Internet, and today, I think many countries believe the U.S. 
continues to exert undue influence over ICANN and the 
administrative functions of the Internet, and we can talk about 
that.
    But I understand the concerns about this whole issue of 
excessive U.S. control over Internet governance, but the 
alternative right now, I think is clearly unacceptable. ICANN 
doesn't have the independent authority and the governance 
structure to prevent other governments from using power over 
the DNS to interfere with innovation, competition, and freedom 
of expression.
    So, I look forward to the discussion and the questions that 
I will ask, as well as my colleagues, and welcome all of you 
here, and I thank the chairman for having you here today, 
because I think it is important that you are.
    Yield back.
    Mr. Boucher. Thank you very much, Ms. Eshoo. The gentlelady 
from Tennessee, Mrs. Blackburn, is recognized for two minutes.

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF TENNESSEE

    Ms. Blackburn. Thank you, Mr. Chairman. I do thank you for 
the hearing today, and for our witnesses, welcome. We are 
delighted that you are here with us, as we do have multiple 
hearings going on this morning. So, we are going to be jumping 
up and down and in and out, but please excuse us for that.
    Few international organizations quietly wield the power in 
the global community that ICANN currently wields. While most 
Americans have probably never heard of ICANN, it is this 
California-based organization, which is a nonprofit, and that 
is responsible for the management and the assignment of 
virtually IP address and domain name worldwide. Wow. That is 
the growing side of things. It is an enormous responsibility to 
be overseen by a nongovernmental organization. That reason 
alone necessitates this committee's time and attention to 
provide proper oversight, notwithstanding the fact that our 
government's only functional tool for overseeing ICANN 
activities stems from the JPA. And that does expire on 
September 30, which brings us to today.
    Now, there is a letter from Chairman Thrush, the January 25 
letter, in which he states that ICANN does not believe it 
should answer directly to the U.S. Government, and that the 
Memorandum of Understanding it signed in November '08 is no 
longer necessary, and I am quoting from that letter.
    Now, many disagree, and believe that additional oversight, 
not less, is necessary to provide a check and balance regarding 
decisions made by an international organization comprised of 
unelected officials. The Internet, and this is what is so 
interesting to me, and I think it is really exciting, when you 
look at commerce and the growth of, especially small business 
commerce. The Internet consists of 174 million Web sites, 570 
million computers, and more than 1.5 billion users. 
Coordination of this intricate web necessitates transparent 
decision-making, technical expertise, and evenhanded 
governance. Only U.S. sponsored oversight for a body tasked 
with overseeing the domain name and IP address system, for 
which ICANN is responsible, can ensure the Internet's continued 
viability and fairness, as Twenty First Century Internet 
architecture evolves.
    It is, therefore, imperative for the U.S. Government to 
remain integrally linked to the organization, thereby securing 
the historic role, American role in the development and 
commercial governance of the Internet architecture.
    So, we are looking forward to hearing from you, and working 
with you, and Mr. Chairman, I yield back.
    Mr. Boucher. Thank you very much, Mrs. Blackburn. The 
gentleman from Michigan, Mr. Dingell, Chairman Emeritus of the 
full committee, is recognized for five minutes.

OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Dingell. Mr. Chairman, I thank you for your courtesy. I 
comment your for this hearing. It is very much needed. It is 
not a new issue.
    At issue today are a number of matters related to oversight 
of the Internet Corporation for Assigned Names and Numbers, 
ICANN. In particular, we will examine the pending expiration of 
the Joint Project Agreement, JPA, between National 
Telecommunications and Information Agency, NTIA, and ICANN, 
ICANN's proposed plans to expand the number of available 
generic top-level domains, GTLDs, and the future of ICANN's 
contract with VeriSign for registration of the .com top-level 
domain.
    Each of these interesting issues requires a number of 
careful considerations and ample participations by all affected 
stakeholders, before any change in policy is either ratified or 
understood. I am not satisfied that this has been the case with 
the matters I have just mentioned, and this committee has had 
troubles with these matters before. And I intend to ask such 
questions of our witnesses as will enable us to get very frank 
answers about all of them, and I urge my colleagues to do like.
    Before, however, engaging in a substantive dialog with the 
witnesses today, I would like to note the following. First, 
with regard to the expiration of the JPA between NTIA and 
ICANN, I wish to reiterate my insistence that ICANN remains far 
from a model of effective and sustainable self-governance, and 
I hope they are listening to that comment.
    Legitimate concerns about the lack of fairness, 
transparency, and accountability in ICANN's functionings 
continue to be raised by stakeholders and the Internet 
community. Particularly, in a time of increased cyberattacks on 
the U.S. Government and domestic businesses, I find it wholly 
unwise to reduce further the participation of the Federal 
Government in determining the course of the Internet's future 
development.
    Similarly, and limited through the oversight NTIA exercises 
over ICANN may be, given the recent observable effects of 
deregulation and inadequate oversight on the economy, I believe 
that here, we have an analogy. The JPA between NTIA and ICANN 
should be extended.
    Second, concerning GTLDs. I consider ICANN's attention to 
the effect of dramatically increasing the number of available 
GTLDs on competition, pricing, and consumer choice clearly 
inadequate. Moreover, I have suspicions that expanding the 
number of top-level domains could, in fact, give rise to 
increased instances of fraud perpetrated on consumers, and the 
practice of cybersquatting, an unhealthy and dangerous 
situation.
    Finally, I continue to maintain that ICANN's contract with 
VeriSign for the registry of the ``.com'' domain is 
characterized by a deplorable lack of transparency. If this is 
not going to be a government undertaking, and is not going to 
be adequately regulated, it has to be transparent, which it 
clearly is not.
    In brief, I have grave misgivings about the wisdom of 
extending this contract after it expires in 2012, and I will 
expect this hearing to produce some answers as to whether or 
not that should be extended, and whether or not it needs to 
have additional safeguards to assure that it is properly 
extended, with proper transparency or, in the alternative, more 
regulation.
    Thank you for your courtesy, Mr. Chairman. I look forward 
to a constructive discussion with our witnesses today, and in 
answer to the questions which this committee has to ask.
    Thank you.
    Mr. Boucher. Thank you very much, Mr. Dingell. The 
gentleman from Arizona, Mr. Shadegg, is recognized for two 
minutes.

OPENING STATEMENT OF HON. JOHN B. SHADEGG, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF ARIZONA

    Mr. Shadegg. Thank you, Mr. Chairman, and thank you for 
holding this hearing today.
    I want to welcome all of our witnesses, but I particularly 
want to welcome to Washington the Go Daddy Group, and its 
representative, Christine Jones, whom I have known and worked 
with for many years. The Go Daddy Group plays an important role 
in the economy of Arizona. They are a key component of our 
business community, and they have, I think, great insight and 
perspective in this particular topic, about which we are 
discussing today. I welcome Ms. Jones, and look forward to her 
testimony, along with that of the other witnesses.
    ICANN has played a vital role in the development of the 
Internet, and has carried a huge burden, but as has been 
adequately expressed here, and I will be brief in my remarks, 
there are certainly problems, and it is apparent that a great 
deal of work needs to be done.
    With the looming expiration of the Joint Project Agreement, 
it is clear that a plan must be put in place to ensure the 
security, stability, and viability of the Internet remains 
intact. I applaud the work of ICANN to date, but I believe 
there are areas, indeed, significant areas, for improvement.
    Again, Mr. Chairman, I thank you for this hearing. I 
believe it is important that we learn more about how ICANN 
affects all of us, and both the key players in the Internet 
world, but all Americans, all people around the world who use 
the Internet, and I am interested in hearing how it affects the 
organizations that are represented here today.
    Again, I thank the witnesses, and I look forward to your 
testimony.
    Mr. Boucher. Thank you very much, Mr. Shadegg. The 
gentleman from New York, Mr. Weiner, is recognized for two 
minutes.
    Mr. Weiner. Mr. Chairman, in the interests of hearing from 
the panel, I will relinquish my time for opening statement.
    Mr. Boucher. Thank you very much, Mr. Weiner.
    We now turn to our panel of witnesses, and we welcome each 
of them to the subcommittee this morning. I will just say a 
brief word of introduction with respect to each.
    Ms. Fiona Alexander is Associate Administrator in the 
Office of International Affairs at the National 
Telecommunications and Information Administration. In that 
position, she is the primary liaison between the Department and 
ICANN.
    Dr. Paul Twomey is President and Chief Executive Officer of 
ICANN.
    Mr. Kenneth Silva is Senior Vice President and Chief 
Technology Officer for VeriSign, the registry for the .com top-
level domain.
    Ms. Christine Jones is the General Counsel and Corporate 
Secretary for Go Daddy.
    Ms. Sarah Deutsch is Vice President and Associate General 
Counsel for Verizon Communications.
    And Dr. Thomas Lenard is President and Senior Fellow of the 
Technology Policy Institute.
    We welcome each of our witnesses, and without objection, 
your prepared written statement will be made a part of the 
record. We will welcome your oral summaries, and we would ask 
that, in the interest of time and giving us plenty of 
opportunity to question you, that you keep those oral summaries 
to approximately five minutes.
    Ms. Alexander, we will be pleased to begin with you.

STATEMENTS OF FIONA ALEXANDER, ASSOCIATE ADMINISTRATOR, OFFICE 
   OF INTERNATIONAL AFFAIRS, NATIONAL TELECOMMUNICATIONS AND 
 INFORMATION ADMINISTRATION, U.S. DEPARTMENT OF COMMERCE; PAUL 
TWOMEY, PRESIDENT AND CEO, ICANN; KENNETH J. SILVA, SENIOR VICE 
PRESIDENT AND CHIEF TECHNOLOGY OFFICER, VERISIGN; CHRISTINE N. 
 JONES, GENERAL COUNSEL AND CORPORATE SECRETARY, THE GO DADDY 
   GROUP, INC.; SARAH DEUTSCH, VICE PRESIDENT AND ASSOCIATE 
GENERAL COUNSEL, VERIZON COMMUNICATIONS; AND THOMAS M. LENARD, 
PH.D., PRESIDENT AND SENIOR FELLOW, TECHNOLOGY POLICY INSTITUTE

                  STATEMENT OF FIONA ALEXANDER

    Ms. Alexander. Chairman Boucher, Ranking Member Stearns, 
and members of the committee, thank you for this opportunity to 
testify on behalf of the National----
    Mr. Boucher. Ms. Alexander, if you could pull that 
microphone slightly closer, and we can hear you better.
    Ms. Alexander. Better?
    Mr. Boucher. That is better, thank you.
    Ms. Alexander. Chairman Boucher, Ranking Member Stearns, 
and members of the subcommittee, thank you for this opportunity 
to testify on behalf of the National Telecommunications and 
Information Administration on issues related to the Internet's 
domain name and addressing system.
    The Internet has become a significant and important medium 
for conducting research, communicating with others, and 
conducting business. Given the Internet's importance in all of 
these facets of daily life and the country's general economic 
well being, it is essential that the Internet and its 
underlying infrastructure remain stable and secure. 
Consequently, the Department of Commerce takes very seriously 
its responsibilities with respect to the Internet DNS, 
including the Joint Project Agreement between the Department 
and ICANN.
    ICANN was created out of an effort to bring more 
coordination and sustainability to the management of the 
Internet DNS, as the Internet grew into a large scale global 
network. A 1997 Executive Memorandum directed the Secretary of 
Commerce to privatize Internet DNS in a manner that increases 
competition and facilitates international participation in its 
management.
    In June 1998, the Department issued a statement of policy 
on the privatization of the Internet DNS that concluded that 
the core functions should be primarily performed through 
private sector management. ICANN was formed by private sector 
interests for this purpose, and in the fall of 1998, the 
Department of Commerce entered into the Memorandum of 
Understanding, or MoU, with ICANN.
    The MoU did not simply turn over management of the DNS to 
ICANN. Rather, the purpose of this agreement was to design, 
develop, and test mechanisms, methods, and procedures to ensure 
that the private sector has the capability and the resources to 
assume important responsibilities related to the technical 
coordination and management of the DNS. This Agreement does not 
give the Department of Commerce the ability to exercise 
oversight in the traditional context of regulation, and we play 
no role in the internal governance or day to day operations of 
ICANN.
    Since 1998, the MoU has evolved through several iterations 
and revisions, as ICANN tested these principles, learned 
valuable lessons, and matured as an organization. In 2006, NTIA 
and ICANN signed a Joint Project Agreement extending the 
current MoU for three more years, until September 30 of this 
year. In anticipation of the September 30 expiration of the 
JPA, NTIA released a Notice of Inquiry on April 24, seeking 
comments regarding the progress of the transition, as well as a 
model of private sector leadership and bottom-up policy 
development which ICANN represents. The comment process for 
this docket closes on Monday, June 8.
    The Department's commitment to preserving the security and 
stability of the Internet DNS, and the public record developed 
as a result of this comment process, will inform any decision 
about the JPA's future. It is important to note, however, that 
regardless of whether the JPA is terminated, modified, or 
extended, the Department, through NTIA, will continue to be an 
active participant in ICANN, by representing the United States 
Government in ICANN's Governmental Advisory Committee, and by 
filing comments as appropriate in ICANN's various public 
consultation processes.
    In addition, the Department's relationship with ICANN will 
continue, as ICANN currently performs the Internet Assigned 
Numbers Authority functions under contract to the Department.
    In addition to important institutional confidence issues 
associated with the JPA, the Department is actively engaged in 
discussion with stakeholders related to the introduction of new 
generic top-level domain names, or GTLDs. The Department 
acknowledges that the introduction of new GTLDs has been a 
longstanding goal of the JPA relationship, and that, subject to 
ongoing public consultation process at ICANN. The Department, 
in coordination with an interagency group has, in fact, filed 
public comments in this consultation, asking the threshold 
question of whether the potential consumer benefits outweigh 
the potential costs as a result of this exercise, and have been 
adequately addressed and determined, and recommending further 
economic study of the issue is called for by the ICANN Board.
    The Department also identified a series of initial items 
that needed to be resolved prior to moving forward, including 
expanding the marketplace before effective and meaningful tools 
are in place to protect consumers and brand owners, as well as 
the need to preserve the security and stability of the DNS.
    The Department believes it is critical to keep in mind the 
core principle, as articulated in the very first MoU, of the 
need to manage the Internet DNS in a manner that permits market 
mechanisms to support competition and consumer choice, so that 
lower costs are realized, innovation is promoted, and user 
choice and satisfaction are enhanced.
    Lastly, I would like this opportunity to update the 
committee on our efforts to improve the security of the DNS. I 
am happy to report that NTIA and its roots and management 
partners, ICANN and VeriSign, recently reached agreement to 
move forward with an interim approach to the deployment of the 
security technology known as Domain Name System Security 
Extensions, or DNSSEC, at the root zone level. This action is 
an important step toward protecting the integrity of DNS data, 
and mitigating attacks such as cache poisoning or other data 
modification threats.
    Given the importance of the Internet as a global medium to 
support economic growth and innovation, continuing to preserve 
the security and stability of the Internet DNS will guide any 
decisions that the Department of Commerce makes with respect to 
its future relationship with ICANN.
    NTIA looks forward to working with you, members of the 
committee, and the Congress on this important issue, as the 
September 30, 2009 JPA expiration date approaches.
    Thank you again, Mr. Chairman, for this opportunity to 
testify this morning, and I will be happy to answer your 
questions.
    [The prepared statement of Ms. Alexander follows:]

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    Mr. Boucher. Thank you, Ms. Alexander. Dr. Twomey.

                    STATEMENT OF PAUL TWOMEY

    Mr. Twomey. Thank you, Chairman Boucher, Ranking Member 
Stearns, and esteemed members of the committee. Thank you for 
this opportunity to appear before you today, and to speak about 
the Joint Project Agreement conclusion and new generic top-
level domains.
    The Joint Project Agreement, Memorandum of Understanding 
process has helped to grow ICANN to be a remarkable success 
story. The unique U.S. Government/ICANN relationship has been, 
is, and will continue to be critically important to ICANN's 
success. The original Memorandum of Understanding used the word 
``test'' when it was commenced almost 11 years ago.
    It was a test of whether a multi-stakeholder, private 
sector-led, California-based not for profit corporation could 
perform a narrow but crucial technical coordination function. 
After those 11 years, ICANN is a success for U.S.-based 
organization with global support and participation. It has been 
key to supporting a single, interoperable Internet on which 1.5 
billion rely. In simple terms, it works. It has passed the 
test.
    Like other organizations, it must continually improve 
itself, but unlike many, this organization has continual 
improvement written into its bylaws. It also has an assertive 
community that keeps driving us to improve, and will never 
allow us to stop striving for the best that we can be. We are 
not seeking less accountability to this multi-stakeholder 
community. We want more.
    The question at hand is how to ensure that what works is 
made permanent. One thing the Joint Project Agreement is 
clearly not is an oversight mechanism. Now, Ms. Alexander has 
just pointed out again that the Department of Commerce has 
consistently said that the JPA is not an oversight agreement.
    Chairman Boucher, you made the point in your introductions 
about the IANA contract, the procurement contract. This is the 
key instrument for oversight from the United States Government, 
and I think you already, potentially, have some 
misapprehensions about the difference between the Joint Project 
Agreement and the IANA contract, is something we should 
explore.
    What we have been working together on for 11 years, with 
advice from the United States Government, is a model all about 
private sector bottom-up partnership with guidance from 
government. This is the time to have confidence to state this 
model works. Any new instrument, no matter how temporary, 
implicitly says that we, the United States Government and ICANN 
don't have the confidence in that model. That will cause the 
international community to continue to look for alternatives. 
Indeed, with the mere speculation as to the possibility of 
renewal, they already are.
    If the U.S. does not have the confidence in a private 
sector-led model, we should not expect other governments to 
have confidence in the model. If we continue to question the 
private sector-led community's ability to lead itself through 
the ICANN model, we should expect ongoing challenges and 
alternatives from others.
    A hypothetical eighth temporary agreement would suggest 
that the basic principles are open to debate. Across the global 
technical registry and governments community, the question I 
get posed regularly is does the United States Government agree 
with and have confidence in the private sector-led model? If 
the answer is yes, still yes, then let us confirm that and 
enshrine it.
    A more permanent approach, that enshrines what is working, 
is vital. As the JPA concludes, the Department of Commerce and 
ICANN should use that opportunity to commit ICANN to retain a 
narrow mission, remain based in the United States, remain a not 
for profit, remain an independent organization, as it has been 
for almost 11 years, remain private sector, multi-stakeholder 
led, with international support, remain committed to continuous 
improvement, reinforcing that the IANA contract is the source 
of oversight, where responsibility for the global coordination 
of the DNS root, IP addressing, and other resources is found. 
None of these should rely on any temporary agreement, and being 
a California-based organization ensures ICANN is subject to 
Congressional oversight and U.S. legal process.
    Let me speak briefly to the issues of generic top-level 
domains, that portion of an Internet address that is to right 
of the dots, such as .com or .org. Currently, there are 21 
GTLDs. ICANN is currently deciding how to lift that artificial 
limit. There are crucial concerns about trademark and 
intellectual property protections, once the expansion of GTLDs 
begins, if that is decided.
    We have heard those concerns, and we are acting to fix 
them. The ICANN Board has invited those who have voiced concern 
to give us solutions before we open up the application process. 
We have already received the recommendations. We are focusing 
on other concerns as well, to do with malicious behavior, 
security, and demand. And I can assure members of the committee 
that we will not move forward with any progress in 
implementation until we have addressed these issues. We will 
get it right. We will not rush the answer.
    We are often asked why are we expanding the top-level 
domain space. First, we were asked to by the community and the 
United States Government. It was called for in the white paper 
that foreshadowed ICANN, and it is in the JPA.
    Second, there is demand. Geographic names like .nyc and 
.berlin are being proposed, along with others like .sport, 
.eco, and .green. Finally, billions of non-English speakers 
want to see top-level domains look like their language. It is 
not ICANN's role to set artificial and arbitrary limits on 
innovation and community use of a public resource. Simply, 
competition in the domain space is embedded in our values and 
our bylaws.
    So, in conclusion, it is no surprise that the ICANN model 
is producing opportunities for choice, commerce, and individual 
expression, and doing so, while being attentive to our core 
mission, security, and stability.
    The United States Government has imbued these values into 
the ICANN model, and ICANN is made all the stronger for that.
    Thank you for inviting me, and I would be happy to take any 
questions.
    [The prepared statement of Dr. Twomey follows:]

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    Mr. Boucher. Thank you very much, Dr. Twomey. Mr. Silva.

                 STATEMENT OF KENNETH J. SILVA

    Mr. Silva. Good morning, Chairman Boucher, Ranking Member 
Stearns, and other distinguished members of the subcommittee. 
My name is Ken Silva, and I serve as the Chief Technology 
Officer for VeriSign.
    Thank you for the opportunity to testify today. VeriSign 
operates digital infrastructure that enables and protects 
billions of interactions every day across the world's voice and 
data networks. The company is headquartered in Mountain View, 
California. We have additional offices in Virginia, Delaware, 
and Massachusetts. Because our responsibility is global, we are 
also in 30 different countries.
    At a time of economic challenges and uncertainty, it would 
be easy to focus on the many pressing near-term issues that 
affect our Nation, but it is critical that we also focus on the 
Internet, because the infrastructure is not only integral to 
the economic recovery of our country, but our national security 
as well.
    As the operator of the .com and .net domain registries, as 
well as the steward for 2 of the 13 root servers that serve as 
the nerve center of the Internet, VeriSign understands what it 
is at stake. Over the last 10 years, VeriSign has operated its 
infrastructure with 100 percent uptime. In other words, the 
systems that ensure the Internet is functional have never gone 
down. But the Internet is not a static system. It is a dynamic 
network of networks that continues to change.
    It is growing dramatically overseas, raising questions 
about its future governance, and the role of nations who do not 
share our values about freedom of expression, content, and 
commerce. It is increasingly relied upon by citizens, 
businesses, organizations, and governments, raising questions 
about whether it can continue to scale to meet the needs of 
over 2 billion users in the future.
    It is a target of attacks that expand exponentially in 
volume, scope, and sophistication, raising questions about 
whether enough is being done to protect those critical networks 
that serve as the lifeline for commerce and communications. 
Recent incidents in China, India, Pakistan, and Estonia 
underscore that importance.
    I would like to address three challenges in my testimony: 
Internet governance, scaling of the Internet, securing the 
Internet.
    With respect to Internet governance, when it became clear 
that the Internet would have a profound impact on every facet 
of society, the Clinton Administration took the lead in 
establishing ICANN to serve as the technical coordinating body. 
The Department of Commerce was given the task of helping guide 
ICANN and provide a governmental backstop. We must consider how 
to ensure that the Internet and the community that guides it 
are insulated as much as possible from domestic political 
pressures, or the goals of those in the world who want to 
restrict what has made the Internet so dynamic, namely, its 
innovative force and capacity to create businesses and jobs.
    With that, we look forward to the outcome of the 
discussions between ICANN and the Department of Commerce over 
the JPA, particularly as it relates to its impact on the 
security and stability of the Internet and its responsible 
stewardship.
    From our point of view, while ICANN has continued to make 
progress in certain areas, the basic circumstances giving rise 
to widespread community concerns over an expiration of the JPA 
remain largely unanswered. The overall goal in this process 
must be the strengthening of the security and stability of the 
Internet.
    With respect to scaling the Internet, because .com and .net 
never go down, users and even some companies who rely on it for 
their business model take it for granted, but VeriSign, other 
private sector players, and government cannot. We must 
continually invest and work to improve in its capacity. To keep 
up with the demand, VeriSign systems that manage .com and .net 
traffic can now handle more than 10,000 times the query volume 
that they could handle in 2000. To put that in perspective, 
that increase is about 600 times greater than Moore's Law, the 
theory that computing power doubles every 18 months. VeriSign's 
systems handle more than 50 billion queries a day, and that is 
a 67 percent increase in just two years. Our investments 
include increasing capacity to support up to 4 trillion queries 
per day.
    We all know that the Internet that we use today is far 
different than it was 10 years ago, and we know that 10 years 
from now, it will be dramatically different than it is today. 
That is why VeriSign is continually investing and looking into 
strengthening that infrastructure that we all rely upon.
    With respect to securing the Internet, we are pleased that 
President Obama's cybersecurity czar will sit at the National 
Economic Council and the National Security Council, as it 
underscores the threat that cybersecurity attacks pose to our 
Nation. As CTO, I have had to identify and manage attacks every 
day. Cybercriminals cleverly manipulate the Internet's 
advances, and the increased bandwidth and computing power 
available to them literally gives hackers more ammunition to 
utilize against the infrastructure.
    There are many issues that we must address as an Internet 
community. We must continue to invest and deploy infrastructure 
upgrades such as DNSSEC and IP version 6, in a way that is 
least disruptive to Internet users, developers, businesses, and 
governments. We must continue to work together to invest and 
develop in the infrastructure, so that it can continue its role 
as a platform for commerce and communications.
    I know that VeriSign, ICANN, and the rest of the Internet 
community will work diligently to ensure that the 
infrastructure remains reliable and secure.
    I thank you very much for your time, Mr. Chairman.
    [The prepared statement of Mr. Silva follows:]

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    Mr. Boucher. Thank you very much, Mr. Silva. Ms. Jones.

                STATEMENT OF CHRISTINE N. JONES

    Ms. Jones. Chairman Boucher, Ranking Member Stearns, and 
members of the committee, I am Christine Jones. I am from Go 
Daddy.
    At the outset, I would like to thank you, Chairman Boucher, 
for all of your work, and the committee's work, and for holding 
this hearing. We are happy to be here with ICANN and VeriSign. 
We are ICANN's largest registrar benefactor and VeriSign's 
largest customer, so we are always happy to participate with 
them.
    As the world's largest registrar, Go Daddy works daily with 
ICANN, in its role as the coordinating body for the Internet. 
We believe it is essential for world commerce, as well as the 
security and the stability of the Internet, that the 
relationship between the NTIA and ICANN be continued, along 
with appropriate improvements in accountability, transparency, 
and democracy in governing principles.
    Continuing the JPA between ICANN and the NTIA will not only 
provide the framework for ensuring a continued focus on 
Internet security and stability issues, but will prevent ICANN 
from vulnerability to capture by another government, 
international organization, or business that does not have an 
open, secure and stable Internet as its top priority.
    On the renewal of the JPA, the DNS white paper, first 
published back in 1998, articulated that principles of 
accountability, competition, private bottom-up coordination and 
representation are necessary for guiding the transition to a 
private sector management of Internet DNS.
    We believe those principles, even 11 years later, remain 
relevant. ICANN has made great progress toward achieving some, 
but not all, of these goals. Specifically, ICANN has not yet 
achieved competition, nor the private bottom-up coordination 
and representation called for in the ICANN bylaws. We believe 
the renewed JPA must be revised to include openness and 
transparency as overall guiding principles, if we are ever to 
see an effective transition of Internet DNS management to the 
private sector through ICANN. And of course, we would be happy 
to be involved in the process of determining appropriate 
revisions to the JPA, if such assistance would be helpful.
    I want to talk about the extension of the JPA that you 
mentioned, Mr. Chairman, for a minute. I want to reiterate, we 
are in favor of renewal of the JPA between ICANN and the NTIA 
for a multitude of reasons, not the least of which are a 
failure to accomplish its mission and abide by its stated core 
values, we believe ICANN will benefit from continued 
relationship. But we are aware that both VeriSign's ex parte 
letter and the recent letter from Senators Nelson and Snow 
mention considering a one year extension of the current JPA. If 
that arrangement would provide time to consider new or 
additional terms of a renewed JPA, then we would support such 
an extension as well.
    On the new GTLDs, we are not opposed, Go Daddy is not 
opposed to the concept of introducing new GTLDs. In fact, as 
Mr. Twomey said, the community has been calling for that for 
quite some time, but we have taken exception to the methodology 
by which they have been introduced. Loud voices, from both the 
intellectual property community and the registrant community 
have been virtually ignored in this process, and ICANN can't 
seem to establish a guideline by which the new GTLDs will be 
chosen.
    In the interests of time, I am going to defer the IP expert 
on this panel to talk about GTLDs, but I would love to get back 
to this, if anybody has questions on it.
    I want to focus on security and stability, because like all 
of us at this table and in this room, Go Daddy believes that 
security and stability of the Internet is vital. Indeed, we 
devote a considerable amount of time and resources to working 
with law enforcement on preserving the integrity and safety of 
the Internet, by quickly closing down Web sites and domain 
names engaged in illegal activities. We work with law 
enforcement agencies at all levels, and routinely assist in a 
wide variety of criminal and civil investigations and, like our 
friends at VeriSign, we respond to and fight cyberattacks on 
our hosting, email, and domain name systems every single day. I 
personally, and this company in general, have made it a high 
priority to use our position as the world's largest registrar 
to make the Internet a better and safer place, and we could not 
agree more with President Obama's decision to make 
cybersecurity and Internet privacy issues a top priority in his 
Administration.
    As the President said on Friday: ``America's economic 
prosperity in the 21st century will depend on cybersecurity. 
This is also a matter of public safety and national security. 
It is now clear the cyberthreat is one of the most serious 
economic and national security challenges we face as a 
Nation.'' We wholeheartedly agree.
    So, thank you again, Mr. Chairman, for holding this 
hearing. We are in support, again, of the extension of the JPA.
    I would be happy to answer any questions for you or other 
members of the panel. Thank you.
    [The prepared statement of Ms. Jones follows:]

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    Mr. Boucher. Thank you very much, Ms. Jones. Ms. Deutsch, 
we will be happy to hear from you.

                   STATEMENT OF SARAH DEUTSCH

    Ms. Deutsch. Chairman Boucher, Ranking Member Stearns, and 
members of the subcommittee. Thanks for the opportunity to 
participate in this important hearing addressing issues related 
to ICANN.
    Verizon supports ICANN. We wish to see it succeed as an 
independent and accountable model of private sector leadership. 
ICANN must be given the time and support it needs to make that 
smooth transition.
    My focus today is on ICANN's plans to expand the existing 
domain name space. ICANN plans to accept as many as 500 initial 
applications for new generic top-level domains, or GTLDs. I 
will refer to GTLDs simply as names. In the future, there may 
be unlimited number of new names. Future names could include 
anything one could imagine, from .bank to .health to .congress. 
ICANN financially benefits from this expansion. It will bring 
in more than $90 million from the initial round of applications 
alone. It will also collect ongoing fees of $75,000 per 
applicant from manual renewals of each new name, and it 
collects a $0.25 transaction fee from every domain name 
registered.
    As a result, however, businesses and consumers will face 
higher costs. This isn't very helpful in the current economic 
climate. Hundreds of diverse parties, including consumer 
groups, business organizations, trademark owners, and Internet 
security experts, have raised concern. ICANN has acknowledged 
the many concerns, but it has not adequately addressed them. 
Nevertheless, it plans to begin accepting applications for the 
new TLDs starting in early 2010.
    Verizon believes there are four fundamental concerns that 
ICANN needs to address fully before commencing any introduction 
of new TLDs. First, ICANN must complete an impartial and 
comprehensive economic study of the domain name marketplace. 
That study must explore whether there is even a need for so 
many new names in the first place. ICANN's Board supported that 
study in 2007, yet it was never undertaken.
    Second, ICANN must ensure that consumers are adequately 
protected from online confusion and fraud. If, as predicted, 
there are more than 1,000 new names in the next three years, 
consumers will be the victims of more online confusion, more 
fraud, and more malicious activity. Consumers already have 
difficulty today finding the legitimate Web sites they want to 
reach, so consumers must be confident when they go to 
verizon.phone, for example, that they have reached an 
authorized Verizon Web site, versus one set up by a 
cybersquatter or an international phishing scam.
    Third, ICANN's rapid expansion may be at odds with its 
responsibility to increase the long-term safety and stability 
of the domain name system. ICANN may not have the ability to 
manage such a rapid expansion.
    Fourth, trademark and brand protection remain a critical 
concern. Trademark protection, of course, is directly tied to 
consumer protection. Trademarks help consumers reach the Web 
sites and brands they know and trust. When users go online, 
however, they can easily be confused or diverted, and 
unfortunately, brands like Verizon, household brands, have been 
targets for cybersquatters. Cybersquatters have registered tens 
of thousands of variations of our trademarks over the past few 
years, and here is a little stack.
    You need to know that many of these cybersquatters are 
ICANN-accredited registrars. They have set up large scale 
operations, earning millions of dollars a year from their 
illegal activities. To protect our customers, we have brought 
many high profile lawsuits against ICANN registrars in recent 
years. ICANN's registrars contractually agree to comply with 
all laws, yet we have observed little, if any enforcement by 
ICANN against registrars who are found to violate anti-
cybersquatting laws.
    We are very pleased that ICANN acknowledges the concerns 
raised by trademark owners, by convening a small group of 
experts to offer possible solutions to address cybersquatting 
in an expanding GTLD space. We urge ICANN to adopt all these 
proposals as a package, and continue to work with trademark 
owners on improving them. Verizon has specific ideas for such 
improvements, as discussed in our written statement.
    In sum, any new TLD rollout must be delayed until all 
threshold concerns are fully addressed. ICANN should proceed 
slowly and cautiously in expanding the domain name space, to 
protect the Internet and its users.
    Finally, one note on the JPA. Numerous thoughtful 
suggestions have been made to improve ICANN processes while 
still preserving the model of private sector leadership. It is 
important to allow sufficient time to consider and implement 
these suggestions as well.
    We commend the subcommittee for addressing this important 
subject. Thanks again for the opportunity to testify.
    [The prepared statement of Ms. Deutsch follows:]

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    Mr. Boucher. Thank you very much, Ms. Deutsch. Dr. Lenard.

                 STATEMENT OF THOMAS M. LENARD

    Mr. Lenard. Thank you, Chairman Boucher, Ranking Member 
Stearns.
    Mr. Boucher. And Dr. Lenard, if you could turn on your 
microphone and move it over, that would help us hear you.
    Mr. Lenard. Thank you, Chairman Boucher, Ranking Member 
Stearns, and members of the subcommittee. My name is Thomas 
Lenard, and I am President and Senior Fellow at the Technology 
Policy Institute.
    TPI is a nonpartisan, nonprofit think tank that focuses on 
the economics of innovation, technical change, and related 
regulation in the United States and around the world. I 
appreciate the opportunity to present my views on ICANN.
    The expiration of the JPA this September provides a much 
needed opportunity for a thorough evaluation of the structure, 
governance, and mission of ICANN, and the subcommittee's 
examination of these issues is very important.
    One of those issues is ICANN's lack of accountability, 
which is a recurring issue, and which is an issue that we 
recently addressed in a study that was published by TPI, that I 
co-authored with Professor Lawrence White of the NYU Stern 
School of Business.
    The problem of the lack of accountability is not an 
indictment of ICANN's staff or leadership. It is simply a 
function of ICANN's institutional design, its non-corporation 
status, combined with the way it is funded and governed. 
ICANN's customers have nowhere else to go. Its Board members 
are not answerable to any shareholders, and its decisions can't 
be appealed to any court in the way that regulatory decisions 
in the U.S. routinely are. ICANN's funders, the registries and 
the registrars, can't stop funding ICANN without going out of 
business themselves.
    To study ways in which ICANN could become more accountable, 
we examined the structures of a number of organizations that 
perform similar coordination and standard setting functions. We 
learned a couple of things. First, none of the organizations we 
considered operates with the independence that ICANN enjoys, 
even under the current nominal oversight by the Department of 
Commerce.
    In addition, virtually all of these other organizations are 
governed by their direct users, thereby building accountability 
into their structures. We believe this would be a good model 
for ICANN as well. The registries and the registrars have a 
strong incentive to assure that ICANN fulfills its 
responsibilities of managing the domain name system 
efficiently, and this is in the interests of the businesses and 
the consumers who are the Internet's end users. We recognize 
that this proposal may be viewed as radical, but it has already 
served to stimulate a discussion of ICANN governance issues 
that otherwise might not have taken place.
    Our study also addressed ICANN's mission. ICANN's scope 
should be clearly delineated. It should hew closely to the 
technical functions in administering the domain name system. 
ICANN also, we believe, should have a clear mission of 
encouraging competition and a minimal role as a regulator. This 
means allowing relatively free entry into the market for GTLDs, 
in order to bring the benefits of competition to consumers and, 
as we have heard, ICANN is moving in that direction currently.
    But as part of this, and in order for the, and really, for 
the free entry of GTLDs to work well, protections for incumbent 
domain name holders must be strengthened, so that they are not 
subject to nuisance or ransom demands from new registries. 
There needs to be a thorough examination of how this should be 
done and who should do it. As was alluded to, ICANN is doing 
that now, but ICANN is not particularly well equipped to be a 
regulator, and probably not particularly well equipped to be an 
adjudicator of intellectual property disputes.
    Issues as important and complex as these merit a thorough 
evaluation, which probably cannot be completed by September. 
Therefore, we believe that the agreement with the Department of 
Commerce should be extended in some form beyond its current 
expiration, while reforms are being considered and, hopefully, 
becoming established.
    Reforming ICANN in a way that makes it truly accountable 
and clearly defines its scope of operations will ultimately 
make it feasible to end the JPA and, more importantly, ensure a 
vibrant, innovative, and competitive Internet for the future.
    Thank you very much.
    [The prepared statement of Dr. Lenard follows:]

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    Mr. Boucher. Thank you very much, Dr. Lenard. Thanks to all 
of the witnesses for your informative comments this morning.
    Dr. Twomey, we are pleased to have you with us today, and 
thank you for taking the time to travel to Washington for 
purposes of this hearing. I know that many of the members in 
their questions are going to focus on the expiration of the 
Joint Project Agreement, which occurs this September. So, I am 
going to take my question time this morning to focus on some 
other matters.
    And the first thing I would like to ask you to do is 
comment on the concerns that were raised by Ms. Deutsch, when 
she talked about the tremendous volume of cybersquatting that 
occurring, and mentioned that some of the companies engaged in 
cybersquatting are actually accredited registrars, who have 
been accredited by you.
    And I would like to get your response to the concerns that 
she has received, and an indication of what you are doing to 
police that practice, and particularly, how you could propose 
to engage in effective oversight and policing, not only with 
regard to the existing top-level domains, but with the expanded 
responsibilities that would come for oversight and policing if 
you proliferate the number of TLDs, because that inevitably is 
going to mean that companies have to acquire more second level 
domains, and that incurs costs on their part, and the 
opportunity for cybersquatting simply increases.
    And so, according to Ms. Deutsch, today, cybersquatting is 
not effectively being policed, and that leads to an even 
heightened level of concern about how you would oversee and 
police if the number of TLDs increases.
    So, with that general question, we would welcome your 
answer.
    Mr. Twomey. Thank you, Mr. Chairman. We share the same 
general concerns Ms. Deutsch outlined. There is validity, we 
don't dispute the validity of some of these concerns, but we 
also think there are mechanisms in place and mechanisms being 
discussed to help address these issues.
    Let me come, quite specifically to enforcement mechanisms 
now. ICANN established and put in place now, I think eight 
years ago, nine years ago, a process called the Uniform Dispute 
Resolution Process, which is essentially a fairly cheap online 
arbitration mechanism to allow contesting parties to determine 
who should actually own a particular domain name.
    One of the problems with cybersquatting is one person's 
cybersquatter might be somebody else's true trademark, in the 
sense that there are 180 something regimes, jurisdictions in 
the world. There are some 48 trademark headings. I might be 
getting the exact numbers wrong, but the key point is that 
people can have multiple trademarks for different sorts of 
companies in different parts of the world, who have got a claim 
for a particular name. So, it is not ICANN's role to be an 
intellectual property arbitrator. But we have actually put in 
place a mechanism for that sort of arbitration, the World 
Intellectual Property Organization and other entities offer 
that arbitration, and I think so far, there has been some 
36,000 decisions made under that regime we have incorporated to 
help those issues presently at the second level.
    There is a similar issue applies, then, at top-level 
domains, and we have proposed that there would be a similar 
arbitration that people could object to when a first 
application was made, so that you could say no, I have got a 
claim on that name, or that is related to me. And so, there is 
an existing mechanism that is put forward for arbitration.
    Thirdly, we are very much interested in these proposals put 
forward recently by the intellectual property community at the 
request of the ICANN Board, for looking at variations of 
sunrise periods, single registration periods for companies who 
want to be clear their famous names, et cetera. So, we are 
actually looking to address this quite detailed. We would like 
to hear the response more in the community for the proposals 
they have put forward.
    When it comes to the issue of enforcement of registrars, 
which you have raised, we have significant resources dedicated 
to enforcement. We have been, I think, if you look at the last 
months, I think nearly every month, we have de-accredited 
registrars for various breaches of their agreements, and this 
issue of whether a registrar is actually performing blatant 
cybersecurity or blatant cybersquatting activities is a matter 
of, we would investigate quite closely.
    But I would make the point on some cybersquatting issues, 
that it is not our business to an arbitrator or an intellectual 
property contention. We actually have that, if you like, a set 
of independent arbitrators, for them to give us that advice.
    Mr. Boucher. Ms. Deutsch, would you like to respond to 
those comments, and I mean, you have heard how Dr. Twomey would 
address the issue of cybersquatting, and he has defined current 
practice.
    To what extent is current practice not adequate?
    Ms. Deutsch. First of all, we are not saying that it is 
ICANN's role to arbitrate the proceedings. On the other hand, 
it is its role to enforce against its registrars, and to my 
knowledge, they haven't brought any action against a registrar. 
These are registrars who have been found by federal courts, or 
by this same World Intellectual Property Organization, 
sometimes on hundreds of occasions, have been found to act in 
bad faith. So, they have taken no action against them.
    Mr. Boucher. Well, let me stop you at that point. Dr. 
Twomey, what is your reply to that? Have you ever proceeded 
against any of these certified registrars, because of their 
activities?
    Mr. Twomey. From my recollection, Chairman, we have 
proceeded against registrars for those activities. Often, we 
find, with a particular registrar, that if they are in breach 
along those lines, they are in breach in other ways. And 
sometimes, to move quickly on the de-accreditation process, we 
have publicly moved on another breach.
    If I can give you just a small example, and an easy example 
you would understand, often we find registrars who might be at 
the edge of such behavior, for instance, don't pay their fees. 
And sometimes, it is easier simply to move on the failure to 
pay a fee. We can clearly prove it very quickly, and move on 
de-accreditation.
    But I can report to you, in the compliance activity, this 
particular issue is often examined, and that in a lot of the 
conversations, communications with the registrars, particular 
issues that is raised.
    Mr. Boucher. Well, I find the issue of enforcement against 
cybersquatting to be particularly troubling, and I think it 
might be helpful to the subcommittee, because other members 
have raised this concern as well.
    If you would supply to us a letter that describes exactly 
what you are doing in this area and, perhaps, without naming 
particular registrars that you may have proceeded against, give 
us at least some quantitative sense of the extent to which you 
have addressed this concern. So, actual number of proceedings, 
perhaps numbers of registrars that have been decertified where 
cybersquatting, in fact, has been alleged. I think that would 
be helpful.
    My time has expired. We may, depending on how long this 
first round takes, have a second round of questions. I do have 
some additional ones.
    But at this time, I want to recognize the gentleman from 
Florida, Mr. Stearns, for five minutes.
    Mr. Stearns. Thank you, Mr. Chairman.
    Mr. Lenard, you had mentioned, in your opening statement, 
some fees. I see here that registrars pay an application fee of 
$2,500, annual accreditation fees of $4,000. You mentioned some 
$75,000 fee, I thought. Did you mention that in your statement, 
opening statement? Just put the mike on, if you would.
    Mr. Lenard. It is not in the opening statement. It could be 
in our report, but I would have to get back to you on that.
    Mr. Stearns. Yes, Ms. Deutsch.
    Ms. Deutsch. I mentioned it, I think.
    Mr. Stearns. Yes, what was that for?
    Ms. Deutsch. I think it is an annual renewal fee for the 
new TLD applicants, so once they get awarded one of these 
names, then every year thereafter, I understand they pay a 
$75,000.
    Mr. Stearns. That sounds pretty steep to me. Doesn't it 
sound to you, Ms. Deutsch?
    Now, Mr. Twomey, ICANN had a $7 million surplus in 2009, 
and you added these new TLDs, you could generate another $90 
million. Yet, you are a not for profit organization. Why don't 
you take less profit and these fees, bring these fees down for 
the registrars and for consumers, and operate as a not for 
profit? You are operating a for profit corporation, and your 
profits are going to balloon based upon these TLDs. So, why 
aren't you folding, I mean, you are not building automobiles 
here. You are trying to make it cheaper for people. Why aren't 
these fees coming down?
    Mr. Twomey. Thank you, Mr. Stearns. Perhaps I can clarify 
some of the issues raised here.
    ICANN is, as you said, a not for profit, and our focus is 
to----
    Mr. Stearns. No, you don't want to tell me that. Just tell 
me----
    Mr. Twomey. Sorry.
    Mr. Stearns. Why can't you bring your fees down, if you 
have got a $7 million profit?
    Mr. Twomey. That is fine. Let me just talk to the point.
    We are in the process of, our budgeting process is an open 
process. We do it through the community. It is a bottom-up----
    Mr. Stearns. What are you going to do with the $7 million 
profit?
    Mr. Twomey. And the $7 million process is a contribution to 
a reserve fund.
    Mr. Stearns. And why do you need a reserve fund if you are 
a not for profit?
    Mr. Twomey. We have taken advice from, if you look at most 
nonprofits, that they have, all have some reserve fund.
    Mr. Stearns. How big is your reserve fund going to be? How 
big is it today?
    Mr. Twomey. It is about $34 million.
    Mr. Stearns. So, you have got $34 million, and you are 
adding another $7 to it, that would bring it up to $41.
    Mr. Twomey. And our aim is to bring it to one year's 
operating expenses, and then stop the process of building the 
reserve fund. So, we are not, and I can make the further point 
that our, we have actually reduced our fees by 25 percent in 
the last three years, in applications, and the $75,000----
    Mr. Stearns. Ms. Deutsch, do you think their fees should be 
brought down?
    Ms. Deutsch. I do. I think they have----
    Mr. Stearns. Mr. Lenard, what do you think?
    Mr. Lenard. Yes. I mean, I think----
    Mr. Stearns. Do you think they want to have, they are now 
at $41 million surplus.
    Mr. Lenard. I think, you know, an organization with an 
assured source of income. It is not obvious to me why they need 
a full year's----
    Mr. Stearns. Now, Mr. Twomey, when I look at your annual 
report, it looks like your salary is, you don't even take a 
salary out of this. You arrange for Argo Pacific to be a 
consultant, so that ICANN pays Argo Pacific your salary, then 
you collect for them. Why do you do that? Why don't you collect 
money like the CFO and everyone else in ICANN gets directly 
from ICANN, but you seem to get it from a consultant. Why is 
that?
    Mr. Twomey. Congressman, I am an Australian citizen, and we 
have arrangements with various parts of our employees who have 
different mechanisms. When I was first asked to be President 
and CEO, via decision of the Board, this was all decided by the 
Board, not by me, was to contract with a company----
    Mr. Stearns. That was their recommendation, then?
    Mr. Twomey. That is right.
    Mr. Stearns. And do you live in Marina del Rey?
    Mr. Twomey. I live, my home is in Sydney, Australia.
    Mr. Stearns. So, do you ever show up in ICANN's 
headquarters?
    Mr. Twomey. Yes. We have offices----
    Mr. Stearns. I mean, do you work there 40 hours a week?
    Mr. Twomey. I work more than 40 hours a week in various 
ICANN offices.
    Mr. Stearns. In Australia. But I mean, are you actually----
    Mr. Twomey. No, I would in Australia less than one week out 
of every four.
    Mr. Stearns. When you do the exchange rate, what is the 
total salary, including the health, retirement, saving, and 
welfare benefits that you get when you do the exchange with 
Australia. What is, in an Australian dollar----
    Mr. Twomey. In Australian dollars, it is about $800,000 
total.
    Mr. Stearns. $800,000 is what you get. Well, my concern is, 
and I don't have a lot of time here, but it seems to me that if 
you are operating a not for profit, and you are paying a CEO, 
like you, and a subcontractor out of a corporation, that your 
job is to bring the cost down for the consumers and the 
registrars, and I just, in light of the fact that Mr. Boucher 
talked about the four things that Ms. Deutsch talked about, I 
don't see you attacking these. You should take that $7 million, 
and make sure these cybersquatters are gone. And she gives a 
list there, it looked like about 10,000 cybersquatters. I mean, 
why don't you take some of this surplus that you are getting 
and do the job?
    I think your job should be not just developing a surplus, 
but actually implementing, making it cheaper for consumers, and 
actually doing your mission, which is some of these four things 
that Verizon has talked about.
    Dr. Lenard, anything you would suggest more? I mean, this 
idea that he is developing this huge surplus in this not for 
profit organization. I mean, that just doesn't seem 
appropriate, considering Ms. Deutsch talked about $75,000 for a 
fee.
    Mr. Lenard. Yes. I mean, I think it is related to the 
general issue of accountability, and the fact that ICANN is 
largely accountable to itself.
    Mr. Stearns. So, it could make the surplus four times that 
if it wanted. Yes, thank you, Mr. Chairman.
    Mr. Boucher. Thank you very much, Mr. Stearns. The 
gentleman from Michigan, Mr. Dingell, is recognized for five 
minutes.
    Mr. Dingell. Mr. Chairman, thank you. This question to the 
panel, yes or no answer.
    Ladies and gentlemen, the results of the midterm review of 
the Joint Project Agreement between NTIA and ICANN, completed 
in February '08, indicated that further work was required to 
increase institutional confidence in ICANN. These areas 
included long-term stability, accountability, responsiveness, 
continued private sector leadership, stakeholder participation, 
increased contract compliance, and enhanced competition.
    Has ICANN, to date, adequately addressed these concerns? 
Starting with Ms. Alexander, yes or no.
    Ms. Alexander. Thank you very much, Congressman. Given that 
we have an open proceeding on this----
    Mr. Dingell. Just yes or no.
    Ms. Alexander [continuing]. Particular issue, I am not in a 
position to answer yes or no with the open proceeding.
    Mr. Dingell. Next panelist, yes or no.
    Mr. Twomey. I would say yes, in respect.
    Mr. Dingell. Next panelist.
    Mr. Silva. I would say no.
    Mr. Dingell. Next panelist.
    Ms. Jones. No, sir, Mr. Chairman.
    Mr. Dingell. Thank you. Next panelist.
    Ms. Deutsch. No, sir.
    Mr. Lenard. No, sir.
    Mr. Dingell. Ms. Alexander and the other panelists, again, 
if the JPA terminates and is not extended, does NTIA, do you 
have concerns about the ability of ICANN to ensure stability 
and security on the Internet. Yes or no.
    Ms. Alexander. Yes, thank you very much, Congressman. 
Again, given the fact that we have an open proceeding----
    Mr. Dingell. I am sorry, but my time is limited, and I have 
got a pile of questions here.
    Ms. Alexander. Thank you.
    Mr. Dingell. Sir. Question.
    Mr. Twomey. No, I think it has little impact.
    Mr. Dingell. Next panelist.
    Mr. Silva. I would say that I have concerns about the 
security and stability.
    Mr. Dingell. Next panelist.
    Ms. Jones. Yes.
    Mr. Dingell. Next panelist.
    Ms. Deutsch. Yes.
    Mr. Dingell. Next panelist.
    Mr. Lenard. Yes.
    Mr. Dingell. Now, recently, in view of reports that the 
U.S. Government has been subject to cyberattacks from abroad, 
do you believe that upon expiration of the JPA, the U.S. 
Government will have adequate input into ICANN's efforts to 
ensure the stability and the security of the Internet? Again, 
yes or no, if you please.
    Ms. Alexander. Thank you very much. Security and stability 
will guide the Department of Commerce in all of these areas.
    Mr. Dingell. Next panelist.
    Mr. Twomey. Yes, comprehensively, because it is not covered 
within the JPA details to start with.
    Mr. Dingell. Thank you. Next panelist.
    Mr. Silva. I don't know the answer to that definitively, 
but I would share those concerns.
    Mr. Dingell. Next panelist.
    Ms. Jones. Yes, we would continue to have concerns there.
    Mr. Dingell. Thank you. Next panelist.
    Ms. Deutsch. We would, as well.
    Mr. Lenard. I agree. We would have concerns.
    Mr. Dingell. Now, NTIA, oh. This to Mr. Silva. As permitted 
under its contract with ICANN, VeriSign raises prices that it 
charged for the .com registry in 2007 and 2008.
    For what reason did VeriSign do so?
    Mr. Silva. Sir, specifically, these fee increases were used 
to invest in the infrastructure, and to build that out. As a 
matter of fact, we have publicly stated we created a project 
called Project Titan, for which we are investing over $100 
million and fortifying that infrastructure globally, not just 
adding dots on a map, if you will, but also, increasing the 
capacity to each of those locations.
    When you look at some recent events, such as what happened 
to Estonia, what has happened recently in China, specifically, 
those were, part of those were DNS attacks, which were designed 
specifically to take the entire country's economic system down. 
We want to make sure that that doesn't happen to .com.
    Mr. Dingell. Thank you. Similarly, does VeriSign plan to 
raise its prices again in 2009? Yes or no.
    Mr. Silva. That is, I am not in a position in the company 
to answer that question yes or no.
    Mr. Dingell. You can't.
    Mr. Silva. That is not my role in the company.
    Mr. Dingell. All right. Ms. Alexander, allegations have 
been made that the six year contracts agreed upon in 2006, 
between ICANN and VeriSign, for the registry of the domain 
.com, suffers from lack of transparency.
    Upon review, does the Department of Commerce share this 
view? Yes or no.
    Ms. Alexander. Thank you very much, Mr. Congressman. The 
Department did, in fact, approve this agreement in 2006, after 
consultation with the Department of Justice and other national 
security agencies, and also, registrars, ISPs, and trade 
associations.
    Based on those consultations, we actually amended our 
cooperative agreement with VeriSign, to retain the right to 
approve any substantial modifications to those contracts going 
forward.
    Mr. Dingell. All right. Mr. Chairman, I have two more 
questions I think are very useful here. Ms. Alexander, given 
these allegations, does the Department intend to ratify another 
agreement between ICANN and VeriSign on the expiration of the 
current agreement? Yes or no.
    Ms. Alexander. The agreement expires in 2012, and at that 
time, when the information is furnished to the Department, we 
will again, once again, conduct a fulsome review of that, 
discussing it with the Department of Justice, other 
stakeholders, and figuring out the best way forward.
    Mr. Dingell. Thank you. Now, other panelists, if you 
please. Let us return to the earlier question. Allegations have 
been made that the six year contract agreed upon between ICANN 
and VeriSign in 2006 lacks transparency.
    Do you agree with that statement? Yes or no.
    Mr. Twomey. The contract is on public record, so I don't 
agree with it.
    Mr. Silva. I don't agree with that statement.
    Ms. Jones. We agree that the manner in which the contract 
was negotiated lacks transparency, but inasmuch as the contract 
has now been published and we know what it says, I guess it is 
transparent now. We don't necessarily agree with the outcome.
    Mr. Dingell. But it wasn't transparent earlier.
    Ms. Jones. I am sorry.
    Mr. Dingell. It wasn't transparent earlier.
    Ms. Jones. That is correct.
    Mr. Dingell. Next panelist.
    Ms. Deutsch. I am unfortunately not an expert on that 
particular question, so I don't know the answer.
    Mr. Dingell. Next panelist, please.
    Mr. Lenard. I am not an expert on that contract, either, 
so----
    Mr. Dingell. Mr. Chairman, I ask unanimous consent that I 
be permitted to write a letter to the panelists, making further 
inquiries, and that the record remain open, so that both that 
letter and their response can be included in the record of the 
day.
    Mr. Boucher. Without objection.
    Mr. Dingell. Thank you.
    Mr. Boucher. And other members, I am sure, are going to 
want to propound questions to you, as well. So, as you receive 
those inquiries, making a prompt reply would be very helpful to 
us.
    And without objection, the record shall remain open until 
replies are received.
    The gentleman from Arizona, Mr. Shadegg, is recognized for 
five minutes.
    Mr. Shadegg. Thank you, Mr. Chairman.
    Ms. Jones, I would like to begin with you. I believe you 
testified that Go Daddy would like ICANN to operate in a more 
transparent and accountable manner. How would you like to see 
that happen, and do you believe the JPA can be strengthened to 
achieve that goal?
    Ms. Jones. I will answer your second question first. Yes.
    Mr. Shadegg. OK.
    Ms. Jones. There are a multitude of ways in which we think 
accountability can be improved. I will give you an example. 
ICANN holds three open board meetings a year. The rest of their 
meetings of the Board are done in private.
    We have repeatedly asked for those meetings to produce 
transcripts. It is a very simple, black and white request. We 
can't get it. A couple of days after they happen, we can get an 
agenda, and a couple of days after that, we can get minutes, 
but we would actually like to know what is going on in those 
meetings. That would be an example.
    The way they negotiate contracts with registries. We would 
love to know what is going on in those meetings. Let us make 
them accountable for the decisions they make, particularly as 
they relate to the questions that Mr. Stearns asked about 
prices, what they are doing with their money, line items in 
their budget. I mean, we make requests for information, we 
basically get stonewalled.
    I could go on and on, but there are some basic, fundamental 
things that we would like to see. All of that can be and will 
be, if we have any input, written into the JPA in its new 
version.
    Mr. Shadegg. Does ICANN set the standards by which you 
operate when you issue a name?
    Ms. Jones. Generally. We are accredited by ICANN and then, 
we operate with a contract with, for example, VeriSign, on a 
.com. And ICANN, I think its mission is to be a coordinating 
body. We don't expect them to issue rules, for example, about 
what we would do with Internet content or domain name disputes, 
because we don't decide the outcome of those disputes, but we 
operate at their luxury. So, inasmuch as they are our 
accrediting body, yes. They make the rules for us.
    Mr. Shadegg. Dr. Twomey, can you tell me what steps ICANN 
has taken to address the concerns raised during the JPA midterm 
review that further work was needed to increase institutional 
confidence in ICANN?
    Mr. Twomey. Thank you, Congressman, and I appreciate your 
question.
    I have to say, in response to the last answer you heard, I 
have got to be quite clear. It was just wrong. ICANN publishes 
its agendas for all meetings, seven days before the meetings. 
The Board meetings, their decisions are released within three 
days, and within a couple of days after that, a full transcript 
of the Board is released.
    Mr. Shadegg. A full transcript of the Board meeting?
    Mr. Twomey. A full transcript of the Board discussions. 
Transcript of how, full details of the Board discussion.
    Mr. Shadegg. Well, wait, wait. There is a difference 
details and transcript. Is it a transcript, taken like a court 
report, the gentleman here is taking right now, or is it a----
    Mr. Twomey. It is a comprehensive set of minutes.
    Mr. Shadegg. It is a set of minutes.
    Mr. Twomey. It is a comprehensive set of minutes.
    Mr. Shadegg. But it is not a transcript.
    Mr. Twomey. But it is not this decision and that decision. 
It is a full description of the----
    Mr. Shadegg. I think we are familiar----
    Mr. Twomey [continuing]. Of each Board member, so----
    Mr. Shadegg. I think we are familiar with Board minutes 
versus a transcript.
    Mr. Twomey. No, I think----
    Mr. Shadegg. And what Ms. Jones said was they would like a 
transcript of the discussions that occurred, and the reasoning 
that occurred, Board minutes summarize that, rather than 
produce it in a word for word discussion.
    Mr. Twomey. Congressman, I will be happy to share with you 
examples, and I will send them to you for you to make that 
judgment.
    In terms of transparency, we have three minutes a year. We 
have public meetings. We have the fully minute and posted Board 
meetings. We translate all our documentation into the five of 
the UN languages. We transcribe discussions at our meetings, 
full transcripts at the meetings. We have 53 public 
consultations in 2008. We had one every week.
    We have an independent ombudsman. We have corporate blogs. 
We have full public comment, to come to your question of 
transparency. I think it is----
    Mr. Shadegg. I think you are still trying to respond to my 
question to Ms. Jones, and I asked you if ICANN had taken work, 
or taken steps to increase confidence in, institutional 
confidence in ICANN. I was asking you what steps you have 
taken, and I don't believe--well, are these all steps you have 
taken since that midterm review?
    Mr. Twomey. Well, no, they are not. Many of these we had in 
place, but we have taken more steps on transparency. We have 
taken, we have produced in more detail our accountability, a 
full description of our accountability processes. We have 
improved, extensively, the participation, openness and 
participation in meetings, to full online participation in all 
meetings. We have, in, we have proposed now to amend our bylaws 
to further expand our Internet, independent review mechanisms, 
including basically setting up, expanding our Review Panel 
processes.
    So, there has been a series of steps. Again, I, they are 
actually quite comprehensive, so I would be happy to respond to 
those more in detail with you in writing.
    Mr. Shadegg. Mr. Chairman, my time has expired, but I would 
like to hear, I would like to allow the other panelists to 
comment on the steps that ICANN has taken since the midterm 
review. If there is anyone on the panel that would like to 
comment on those steps.
    Ms. Jones. I will comment.
    So, again, we commend the progress that they have made. We 
don't disagree that he is sitting on top of a numerous page 
document that describes their accountability functions. That 
they publish minutes, detailed minutes from their Board 
meetings. I think I said that in my answer before, but we still 
think, and we know from the current version of the JPA, that 
there are goals articulated in that document that they have yet 
to fulfill.
    Has progress been made in the last 18 months? Is there more 
room for progress to be made in the next 18 months? Absolutely. 
And that is why we feel like an extension today and a renewed 
version in the future will help define the progress that is yet 
to be made in the future.
    Mr. Shadegg. Anybody else like to comment? Yes, Doctor.
    Mr. Lenard. The only thing I would observe is that I think, 
although they get conflated in this discussion, I think there 
is a big difference between transparency and accountability. 
You can be very transparent and be totally unaccountable, and--
--
    Mr. Shadegg. Excellent point.
    Mr. Lenard. The way we have viewed accountability in the 
work we have done is basically accountability to some external 
party, which you can be very transparent, and still not have 
that, so----
    Mr. Shadegg. Thank you very much.
    Mr. Boucher. Thank you very much, Mr. Shadegg.
    Mr. Shadegg. Thank you, Mr. Chairman.
    Mr. Boucher. The gentlelady from the Virgin Islands, Mrs. 
Christensen, is recognized for five minutes.
    Mrs. Christensen. Thank you, Mr. Chairman.
    My first question would be to you, Ms. Alexander. Do you, 
on the fees, in 2000, GAO conducted a review on the Department 
of Commerce's relationship with ICANN, and noted that, as a 
project partner with the Department under the Memorandum of 
Understanding, ICANN is allowed to collect fees, but is limited 
to recovering only the actual cost.
    Does NTIA believe that the fees being charged by ICANN are 
consistent with the Department's policy to allow project 
partners to cover only actual project costs, and are you 
concerned that the potential revenue to be generated by ICANN's 
proposal, which may exceed $100 million, do you believe that 
those fees should be limited to the actual costs of managing 
the new GTLDs?
    Ms. Alexander. Thank you very much, Congresswoman, for the 
question.
    There are a variety of different fees that ICANN charges, 
and it is very difficult, in the panel discussions, everyone is 
talking about different fees. But to the extent the question 
you are raising, yes. The Department still believes that ICANN, 
as a nonprofit, should be charging fees that are consistent 
with what their costs are.
    And in our letter that we filed last year, in the GTLD 
public consultation process, we actually raised the issue, with 
the actual better explanation of the fee structure and 
disposition of excess revenues, if there were to be any.
    Mrs. Christensen. Thank you. Mr. Twomey, Dr. Twomey, on the 
accountability issue.
    You mentioned that just recently, ICANN released proposals 
to establish a new independent review tribunal, to review 
ICANN's Board decisions. And one, I am wondering why it took so 
long to recognize that need, but doesn't ICANN also, don't your 
bylaws already provide an independent review mechanism to 
review ICANN's Board action, and has it ever been used?
    Mr. Twomey. Thank you, Congresswoman. And you are quite 
right. We actually have a series of existing mechanisms for, 
multiple series of accountabilities. On the particular one 
about appeals, we have an independent ombudsman. We have a 
Board review process. We have an Independent Review Panel, 
which is an independent arbitration mechanism, that is 
presently being utilized by one particular party. So we are 
actually presently, that is presently being utilized by one 
party.
    I should reinforce for all the members, we are under U.S. 
law, and we have been accountable before the U.S. courts on 
many occasions. So, we get sued under U.S. courts. The 
provisions I have pointed to were further consultations with 
our community since the midterm review, with some further 
things we were putting into the accountability process.
    But I would also recommend to you and other members of the 
panel, to the committee, that as being a not for profit under 
the Californian law, we are also accountable to the California 
Attorney General. So, we have multiple legal accountabilities 
already under the California Code, as well as under courts. So, 
there is a range of those ways of being accountable.
    Mrs. Christensen. Ms. Jones, how would you respond to 
ICANN's argument that as a California-based not for profit, it 
is bound by state and federal laws concerning contract, tort, 
and antitrust?
    Ms. Jones. Well, I think every organization that is 
organized in any state is accountable to its state's attorney 
general. I don't think that is the point we are making here.
    And by the way, if I could respond to your earlier point 
about the Independent Review Board.
    Mrs. Christensen. The tribunal, sure.
    Ms. Jones. Just, we could throw in another acronym, but I 
will try to forego that for your purposes.
    Mrs. Christensen. OK.
    Ms. Jones. If the ICANN Board appoints the members of the 
Review Board, it is, by definition, not independent, and 
therefore, not accountable. All of the review mechanisms we 
have in place right now, the ombudsman, the re-review, they are 
all reviewing ICANN. What we are saying is we want them to be 
accountable to the community. If we are going to have a 
community-based Review Board, that is an actual international 
organization that can say, the ICANN Board made a decision, and 
we are going to take a look at it, and determine if it was 
appropriate or not. That is accountability, right?
    We shouldn't have to have somebody go to the Attorney 
General and make a complaint. They shouldn't have to go to the 
court and file a lawsuit. Why do we have to go there? Why do we 
have to have Verizon spending millions upon millions of dollars 
in litigation every year? It is not necessary.
    That Board should be independent. It should be appointed by 
independent constituents, and review the decisions without 
input from the Board itself.
    Mrs. Christensen. I tend to agree, but Dr. Twomey, do you 
think it is independent? I see you shaking your head. I will 
give you a chance to respond.
    Mr. Twomey. Well, I just want to, again, one of the 
statements is just wrong. The Independent Review Panel is not 
set by the ICANN Board. The Independent Review Panel's members 
are drawn by the International Center for Dispute Resolution, 
an international arbitration body, and we follow traditional 
international arbitration mechanisms, so that we don't set the 
panel members whatsoever. The independent review arbitration 
body is the one who puts forward panel members. We don't.
    Mrs. Christensen. Go ahead.
    Ms. Jones. I just wonder if he can give us an example of 
one that has been used. And I know I am not allowed to ask 
questions.
    Mrs. Christensen. Well, I think at the end of one of my 
questions, I asked that the Independent Review Board that 
already exists has ever been utilized, and that will be my last 
question.
    Mr. Twomey. Thank you, Congresswoman.
    As I said before, it is actually being utilized at the 
moment. We are actually actively in an arbitration in that 
Review Panel at the moment.
    Mr. Boucher. Thank you very much, Mrs. Christensen. The 
gentlelady from California, Ms. Matsui, is recognized for five 
minutes.
    Ms. Matsui. Thank you, Mr. Chairman.
    Under the Joint Partnership Agreement, the U.S. Government 
affirmed its goals of preserving the security and stability of 
the Internet domain system. I want to focus on cyberattacks, 
mostly initiated abroad. They continue to pose a threat to 
consumers, businesses, and to government.
    Mr. Silva, in your oral testimony, you mentioned that a 
number of cyberattacks are initiated by individuals or groups 
in foreign countries, like Estonia and Russia. Given the 
increase we are witnessing in cyberattacks globally and, I 
guess, the United States, critical infrastructure, it seems to 
me, that many of our cybersecurity efforts tend to be more 
reactive and not proactive enough.
    The President's announcement this week of a newly created 
National Cybersecurity Advisor will certainly bring renewed 
focus and coordination on this issue. Is there anything the 
government can be doing, as well as consumers, to stay ahead of 
the latest techniques used by today's organized and 
sophisticated cybercriminals?
    Mr. Silva. Thank you. I believe that in concert with the 
announcement that the President made was also a report that was 
published, which was the result of a 60 day review by Dr. 
Hathaway and her term.
    I believe that that outlined some very positive steps that 
the government can take, and there were some good 
recommendations, which I certainly support in that document. As 
for consumers, I believe that consumers first need to be 
educated on the issue.
    Unfortunately, cybercrime is something that always seems to 
happen to someone else until it happens to them. And it is 
unfortunate, because they have probably already been a victim 
of it and don't even know it. In the confiscated machines of 
the attackers who have conducted phishing attacks, or attacks 
where they have attempted to steal credit cards, the contents 
of those machines don't have tens of thousands of numbers. They 
have millions of numbers.
    Ms. Matsui. OK.
    Mr. Silva. So, as far as consumers go, and what they can do 
better, I think that will be the result, the outcome of that 
will be the result of a broader educational campaign, either 
through public awareness or through our education system.
    Ms. Matsui. OK. Ms. Jones, in your testimony, you state 
that one of your major concerns is that ICANN is not adequately 
prepared to defend itself against cyberattack. What are some of 
your specific concerns about this?
    Ms. Jones. The type of attack that we are talking about is 
the entire organization being taken over by another entity, and 
that could come in the form of an international organization, 
another government, some kind of other business, and that is 
not to say that they can't ever build a protection against 
being taken over, but we are just concerned that today, and I 
think even Dr. Twomey said this in his testimony, they need to 
establish a permanent, long lasting set of principles upon 
which we can prevent them from being taken over.
    Now, I can tell you, if you take a look at the record from 
the WSNS round of talks, conversations about the UN or the ITU 
taking over ICANN, there are plenty of countries that aren't 
necessarily friendly to the open exchange of ideas, shall we 
say, to put it delicately, that would be very happy to take 
over this function.
    Ms. Matsui. Then let me follow up here. Dr. Twomey, what 
assurances could you provide us that the United States will 
always play a critical role with the organization, let us say, 
if the JPA is allowed to expire in September?
    Mr. Twomey. Excellent question. First and foremost, and 
very importantly, is the IANA contract. The procurement 
contract is at the core of the link with the United States 
Government with ICANN. Because the actual operation of IANA 
functions is at the core of what ICANN does. So, that is the 
first and foremost instrument.
    Secondly, as I said before, we are based in the United 
States, covered by United States law, covered by the purview of 
people like this committee, as well. Thirdly, is that we have 
quite comprehensive interactions with the United States 
Government as part of its leading place in the ICANN Government 
Committee, and fourthly, because like any leading government, 
we need to be closely engaged. We have been heavily engaged, 
for instance, on cybersecurity issues, but also, on other 
issues, competition, choice, and whatever.
    So, there is multiple layers of that engagement. I have to 
say, that is one of the reasons why I actually make the point 
about the Joint Project Agreement, which I think is a very 
different type of instrument, that if the Joint Project 
Agreement expires, nothing changes. I think that is the key 
point we are trying to make, and I am concerned by some of the 
statements made today, is that if the Joint Project Agreement 
expires, nothing changes in the way in which ICANN interacts 
and continues its role, or the importance of the link with the 
United States Government.
    Ms. Matsui. OK. I see my time has expired. I probably have 
some other questions in the second round. Thank you very much, 
Mr. Chairman.
    Mr. Boucher. Thank you very much, Ms. Matsui. We have a 
series of three recorded votes pending on the floor of the 
House, and additional members who have questions they want to 
propound to you.
    We also probably will find the need to engage in a second 
round of questions propounded by the members who are here. And 
so, pending all of that, we are going to recess, while these 
recorded votes are completed. We will ask for your patience. 
Please remain in the room or nearby, and the subcommittee will 
reconvene shortly.
    [Recess.]
    Mr. Boucher. The subcommittee will reconvene, and at this 
time, I am pleased to recognize the gentlelady from California, 
Ms. Eshoo, for her questions, and she is recognized for five 
minutes.
    Ms. Eshoo. Thank you, Mr. Chairman, for continuing this 
important hearing, and I do support having more on this, 
because I think there is work for the committee to do.
    I want to thank the witnesses for your testimony today, and 
first, I want to start out with a few observations, and then 
ask a couple of questions. I will go as quickly as possible, 
because we only have five minutes.
    In my opening statement, I thought it was important to 
acknowledge that ICANN, as an organization, has had several 
noteworthy accomplishments, and I mentioned some of those. And 
so, I want to be fair in acknowledging that. That is one side 
of the ledger, and it is an important side, and I salute you 
for the accomplishments that you have achieved.
    On the other side of the page, I think that there is some 
work to be done. I think that to allow the spinning off of 
ICANN at the end of this timeframe is not the right way to go, 
and I just don't. I hope that the committee comes to the same 
conclusion. What is troubling to me are the following things.
    First of all, it is with much curiosity to me that, as the 
United States of America is the mother, the father of the 
Internet, and that its ultimate trademark, so to speak, 
imprimatur, is that it is open. And we have had many debates, 
many fights, to define what is open, how to keep it open, 
because it is democratizing. It is all of these things and so 
much more.
    And yet, it seems to me, from some of the testimony today, 
that the way ICANN operates does not match that. And I don't 
think that is healthy. And I don't think it really promotes 
what the Internet is about. If ICANN were spun off, how do we 
guarantee an open future, relative to the Internet? Who would? 
Who would they be accountable to? How do we have any kind of 
say-so in this?
    I know that Iran, Cuba, China, are interested. They would 
love to take it over. And hey, God bless them. They have got 
good taste. They know something good when they see it. But I am 
troubled by the lack of accountability. I believe that we need 
to be thinking about a new set of rules, that would be part of 
the Agreement in the JPA.
    It is my understanding, Mr. Twomey, that in 2003, that 
there were public members, and they were voted off the Board. 
Is that correct, or is it incorrect?
    Mr. Twomey. There was a round of Board members who were 
elected worldwide. It was much earlier than that. It was in 
1999 and 2000.
    Ms. Eshoo. I don't know what you are saying. Were they 
public members, or just regular members, and then, they rotated 
off the Board?
    Mr. Twomey. These were Board members. Some--the Board----
    Ms. Eshoo. Are there any public members?
    Mr. Twomey. There is--members--even you mean consumers, 
representing consumers, yes, there are.
    Ms. Eshoo. And who are they? And how many are there?
    Mr. Twomey. There is one member on the Board now, Wendy 
Seltzer, and she is a member of the Board, and we are looking 
at, potentially looking at increasing those numbers.
    Ms. Eshoo. Looking at increasing. So, one out of how many?
    Mr. Twomey. Well, that is out of 21.
    Ms. Eshoo. That is a pretty lousy ratio, if I might say so 
myself.
    Mr. Twomey. But I would say that the same group helped 
select nearly half of the Board members in terms of our 
nominating committee, so the same group of people, the same 
consumer voices involved in that----
    Ms. Eshoo. Well, I think I have gotten my answer. It is not 
very good.
    Let me ask you this, Dr. Twomey. What are the specific 
problems that you are trying to address, by seeking complete 
independence from the Commerce Department? In other words, what 
breakdowns have occurred? Why do you want to break? What are 
you going to go off and do? It seems to me that the Commerce 
Department and NTIA have a very loose affiliation with you. I 
mean, this is not a heavy hand, and I am not suggesting it 
should be. But what do you want to accomplish by spinning off? 
What is in your way now? What is in the way?
    Mr. Twomey. Congresswoman, let me be very clear. We are not 
looking for independence. I mean, there is----
    Ms. Eshoo. What are you looking for, then?
    Mr. Twomey. We are looking for the continuation of the 
model.
    Ms. Eshoo. Do you want the JPA? You want to continue in it?
    Mr. Twomey. We think the JPA should come to its conclusion, 
because it has completed its task.
    Ms. Eshoo. What does that mean? You want it to come to a 
conclusion? What does that mean, it comes to an end, and there 
isn't any JPA anymore?
    Mr. Twomey. Well, what we think is we should move away from 
temporary, these sort of temporary documents. The JPA, at the 
moment, is a two page document, two pages.
    Ms. Eshoo. Well, why is it so menacing to you, then, if it 
is only two pages.
    Mr. Twomey. And so, what we are suggesting is, what we are 
actually suggesting is that we should actually put in place 
some of the principles that the members of the committee think 
are important, we should put them into a more permanent 
statement at the end of the JPA process.
    Ms. Eshoo. You know what I think this is, and I hope I am 
wrong, but this is the impression that I am getting, is that 
there is disdain for any U.S. authority in this. And while we 
have to have very strong partners throughout the world, our 
role, you know, can't be and should not be, in my view, 
leapfrogged over. Is that----
    Mr. Twomey. That is not the intention at all.
    Ms. Eshoo. That is not the intention.
    Mr. Twomey. Not at all.
    Ms. Eshoo. Is there any sensibility around that, or is it 
totally false?
    Mr. Twomey. There is a balance, right, in this broad 
debate, of how to have an organization that is accountable to 
the United States, in the way you are putting forward, and at 
the same time, engages all of the country code operators of the 
world, all of the governments who are in our Government 
Committee, all of the people who make the system work.
    And so, we are not looking to----
    Ms. Eshoo. Well, I don't know whether you have told us what 
the problem with the JPA arrangement is, which is a mystery to 
me that you want out of it, but it seems to me, Mr. Twomey, 
that you have been saying to us that stakeholders want to be 
independent, and we have stakeholders that are testifying, that 
are saying absolutely not.
    So, there is a division of approach here, and that is why I 
think we have some more work to do on it, and I hope that what 
we can count on, when we get to a rewrite or an extension of 
the JPA, is that we get some very good ideas from stakeholders' 
suggestions about some of the rules of the road.
    I don't pretend to know what all of them might be, but it 
seems to me that we have got some experts here today, and 
plenty of others, but I really do not believe that this thing 
should just be spun off. I don't think A, it is necessary, B, 
putting on my hat, and I know I am going over time, but I think 
I am the only other one here, as a member of the House 
Intelligence Committee, how important the Internet is to our 
country, in our national security, in the role that it plays.
    And so, I think just allowing ICANN to go off, to spin off, 
to become I don't know what, is deeply concerning to me, when I 
put that hat on.
    So, I want to thank all of you, and I look forward to 
working some more on this, Mr. Chairman, and I appreciate the 
extra time and your patience.
    Mr. Boucher. Thank you very much, Ms. Eshoo.
    I am going to ask unanimous consent, at this point, to 
insert three statements in the record that have been submitted 
to the subcommittee, commenting on the general subject matter 
before us today. These have been reviewed by the minority. 
Without objection, these will be inserted in the record.
    [The information appears at the conclusion of the hearing.]
    Mr. Boucher. Mr. Stearns and I both have some additional 
questions we would like to propound, and so, we are going to 
open a second round of questioning for such members of the 
subcommittee as desire to propound additional questions.
    And Mr. Twomey, let me continue the questioning of you, and 
return to the subject of the proposal that you have to issue 
additional top-level domains.
    What assurance do you have, and can we take, that if 
additional top-level domains are authorized, that real 
competition will emerge in the bidding for these domains? Have 
you taken any kind of survey of potential bidders?
    As a related question, will you have any kind of bar on 
existing registrars being able to bid for these domains? In 
other words, registrars who currently administer other top-
level domains?
    And what other assurances can you put in place that there 
will be real competition, in the event that new top-levels are 
authorized?
    Mr. Twomey. Well, thank you, Chairman. From all of the 
feedback we have received in the process, which has been going, 
this discussion of new GTLDs has been going for ten years. The 
policy process took five years, with all of the stakeholders 
involved. We are now going through this how do you implement 18 
month discussion.
    In that process, it has been clear to us that there is a 
range of people who are very interested in applying. Some are 
in pretty general terms, they are looking for general terms in 
English, .shops and .webs, that sort of thing. Quite a lot of 
people interested in geographic terms. As I mentioned before, 
some of those cities, Berlin, New York City, Paris.
    Interest from indigenous communities. There is some talk 
about potentially a .maori or a .sami, so people are looking to 
represent that. There is clearly interest from some companies 
for brand names, and you wouldn't be surprised, Chairman, to 
know that companies are not monolithic. So, not only will be 
hear from intellectual property lawyers from inside the company 
that is concerned. We also hear from their marketing 
departments and the product development departments that they 
are really interested in having a top-level domain. So, we are 
hearing that difference. And I think the----
    Mr. Boucher. Well, you have talked about areas where you 
might have one bidder. If it is an indigenous tribe, for 
example, potentially, you would have that tribe bidding to 
operate, or someone associated with it, I don't know. But do 
you think you would have real competition in the bidding for 
such a top-level domain? Would you have a variety of bidders 
seeking----
    Mr. Twomey. The process would be fully open, so if other 
bidders wished to bid----
    Mr. Boucher. Well, I understand the process would be open, 
but to what extent do you have confidence that there would be 
real competition in the bidding, through that open process?
    Mr. Twomey. We are trying to make the process as open, as 
transparent, and as----
    Mr. Boucher. Well, you are answering my question with a 
process answer, and I am really asking a more fundamental 
question. It is almost an empirical question. Have you actually 
done a survey, and identified, within these various TLDs that 
you might issue, more than one bidder, or any bidders for some 
of them?
    Mr. Twomey. We are expecting, for some of them, there will 
be multiple bidders. It has been quite clear, some of the 
people have made clear that there would be multiple bidders, 
and we see----
    Mr. Boucher. Would you demand that assurance, that there 
will be multiple bidders, before you would authorize a 
particular new top-level domain?
    Mr. Twomey. The policy process to date is not prescriptive 
on that, because we would think there would be instances where 
people would like to have a top-level domain, for instance, if 
it was a company brand name, where that company itself would 
want to have the brand, and not want to have to bid to another 
person. I mean, that would go to the very heart of the issue we 
said before about cybersquatting.
    Mr. Boucher. Well, fair enough, but if your top-level 
domain is more generic. In other words, if it is .phone, you 
would certainly want more than one bidder. You would anticipate 
multiple bidders for such a top-level domain, would you not?
    And my question is, would you conduct some sort of 
empirical survey in advance, just to be sure that there 
actually would be a sufficient level of competition in the 
bidding for administering that TLD?
    Mr. Twomey. One of the things we are putting forward is to 
have an extensive, is to have an extensive promotion of the 
process, before it would open. So that people were aware the 
process was available.
    To come to the specific question you are asking, we are not 
putting forward that we choose the string, and then say, who 
wants to bid for this. We are actually saying it is not 
appropriate for us to decide what string people should bid for, 
but the process should be open and flat, and that it is up to 
people who think there is an opportunity to put forward a 
string.
    Mr. Boucher. Well, the reason I am pursuing this at some 
length is because the public policy justification for putting 
companies to the additional costs associated with protecting 
their brand, that will come from them having to acquire buffers 
around that brand, not under just the existing TLDs, but 
potentially, multiple new TLDs as well, is the new competition 
that comes, and the choice that comes from that.
    And if you really don't get a level of competition in the 
bidding for those TLDs, then that public policy justification 
seems to me to be diminished substantially. So, I think it is a 
legitimate are.
    Let me ask if anyone else on the panel wants to comment on 
that question. Ms. Deutsch.
    Ms. Deutsch. Yes, I would just raise, I guess three points. 
First of all, I don't think you got a clear answer, but to our 
knowledge, there has never been that empirical study on the 
need for new TLDs.
    Second, we already think, you know, there are 21 GTLDs 
today. We think there is sufficient competition in the market 
today. Maybe there, you know, could be a few more slowly 
released, or the international domain names might be something 
to think about, but 88 percent of all Internet traffic goes to 
.com. That is still the premier piece of real estate, so there 
is nothing to say that the addition of all these new ones still 
won't leave .com in that dominant space. And third, we think, 
you know, there is not that bidding process. It is more like 
speculating. People can bid, but you are not going to know who 
else is bidding for what names. If you happen to bid for the 
same name, maybe there will be some competition.
    Mr. Boucher. OK. Mr. Stearns.
    Mr. Stearns. Thank you, Mr. Chairman.
    Mr. Twomey, I think you mentioned to the gentlelady from 
California that you have 21 Board members. How many of those 
are U.S. citizens? I was told by staff that two thirds are not.
    Mr. Twomey. Board members are required to come from one of 
five regions in the world.
    Mr. Stearns. OK.
    Mr. Twomey. And North America is one of those regions.
    Mr. Stearns. Right.
    Mr. Twomey. And each region has to be represented on the 
Board.
    Mr. Stearns. Yes.
    Mr. Twomey. As it does on each of the Councils of our 
supporting organizations. The present number, I think, is seven 
or eight. I will have to check the specific----
    Mr. Stearns. OK. But roughly, I'm right. Two thirds are 
from other countries, which--and of the 100 employees you have, 
how many are from the United States? Is it the same ratio? 
About two thirds are from other countries?
    Mr. Twomey. No, it is much more from the United States.
    Mr. Stearns. OK, 50/50, you think?
    Mr. Twomey. It is well over 50 percent. It is over 50 
percent.
    Mr. Stearns. So, 50 percent are from other countries. Yes. 
In looking through your P&L statement, just going back to this 
net cash reserve, you are up to about $46 million, 425, and you 
indicated that if you go ahead with these TLDs, it could 
generate another $90 million.
    So, does that mean if you were at $150 million in revenue, 
that you would try to get this cash reserve up to $150 million? 
Was that your statement?
    Mr. Twomey. No, that is not the statement.
    Mr. Stearns. OK.
    Mr. Twomey. And if I can be quite clear on the budget. The 
reason the budget has increased is because the very things that 
some of the members, the committee have raised, or those 
concerns we have, about 20 percent of our budget is dedicated 
to security and stability issues.
    We have increased quite significantly our allocations to 
compliance work, and we are now looking at allocating more 
money to the compliance work. The issues with GTLD funding is 
that we are required by the community to be cost recovery only 
for that, that there be no cross-subsidy for anybody who is 
applying for a new GTLD.
    We expect that the fees you are referring are one-off 
application fees to be dealt with only in that year, and that 
the actual revenues would come down.
    Mr. Stearns. But you still indicated you, earlier, that you 
want to have a reserve fund equal to your revenues.
    Mr. Twomey. I am on public record of saying that they 
should be equal to about one year of the present operational 
basis.
    Mr. Stearns. Yes, so, if you are doing $61 million, you 
want to do $61 million in reserve.
    Mr. Twomey. It is around--I am on public record as saying I 
think the number should be around $50 million.
    Mr. Stearns. So, it is not what you said earlier, that it 
will be equivalent to one year's revenue.
    Mr. Twomey. That was the advice we had received, but I 
think it should be--about the one. I have to reinforce why that 
is important. It is important for security and stability. In 
the early days of ICANN, we received multiple lawsuits, which 
we defended quite correctly.
    Mr. Stearns. Don't you have insurance to cover a lot of 
those multiple lawsuits?
    Mr. Twomey. We had some insurance, but we have no 
confidence that would cover all the process.
    Mr. Stearns. Yes. OK, I understand that.
    Ms. Alexander, I mean frankly, they are an international 
organization. They don't necessarily want to be in the United 
States. I mean, maybe Mr. Twomey wants to take them to 
Australia. I mean, if they wanted to leave, what could we do to 
stop them, after the contract expires in September? What could 
we, what legal things could we do?
    You might not be able to answer this, because you are not, 
I don't know. What legal things could we do?
    Ms. Alexander. Thank you very much, Mr. Stearns.
    I think, with respect to JPA, I am not in a position to 
answer those questions. But to the extent that ICANN remains 
the IANA functions contractor, that needs to be located in the 
United States.
    Mr. Stearns. There is a legal contract, a need to be in the 
United States.
    Ms. Alexander. Yes, sir.
    Mr. Stearns. OK. Now, Mr. Twomey, let us say, you know, you 
wanted to be free from the contract with the Commerce 
Department, and you wanted to be separate and independent, and 
that is what you and the people would do.
    Would you be willing to have competition, have some, 
another agency set up and compete with you?
    Mr. Twomey. The functions that are being, well, there is a 
couple of propositions there. We are not looking to be more 
independent than we are now. So, I want to keep reinforcing 
that. We are an independent organization under the law.
    Mr. Stearns. No, I understand.
    Mr. Twomey. But the actual functions are, in the original 
design work, functions that needed to be essentially 
coordinated across the global Internet. This is the allocation 
of this coordination of domain names and IP addressing.
    And in the original analysis, which was done back in the 
1990s, as to how to bring that forward. It was seen that they 
were functions that were unique, that needed to be coordinated 
at one place. That is why the original white paper called for 
such an organization, and the Internet community responded to 
it.
    I think the analysis at the technical level remains that is 
the case. So, we are very carefully structured to try to deal 
with many antitrust issues, and have, the antitrust issues 
inside ICANN have been tested and tried several times in U.S. 
courts, which have confirmed the model.
    If the technical analysis were to say that you could have 
multiple mechanisms of doing that coordination, then 
potentially, you know, we wouldn't stand against it, but the 
technical analysis does not support it.
    Mr. Stearns. Ms. Alexander, this is my last question. This 
is changing the subject totally here. I am going back to the 
DTV transition.
    About 725,000 more households have to prepare themselves 
for the DTV transition, using the stimulus money. Based upon 
the Nielsen Rating data, and information from the NTIA itself, 
at that pace, about 900,000 will have used the money to prepare 
by June 12. That means we will have spent more than $700 per 
household for a $50 device. Does that make sense? Assuming my 
mathematics is correct.
    Ms. Alexander. Thank you very much, Congressman. I just 
want to reassure you that the DTV transition is a high priority 
for the Secretary of Commerce.
    Mr. Stearns. I notice you are reading that, so that is what 
they told you to tell me.
    Ms. Alexander. And acting Assistant Secretary Anna Gomez. I 
am not the subject matter expert on this area. We would be 
happy to provide further answers to these questions, for the 
committee.
    Mr. Stearns. Yes. All right. Thank you, Mr. Chairman.
    Mr. Boucher. Thank you very much, Mr. Stearns.
    The thanks of the subcommittee to our panel of witnesses. 
You have been here for a long time. This has been, I think, a 
very interesting and informative discussion, and we appreciate 
your contributions to it.
    I am sure that members of the subcommittee are going to 
have additional questions, and some members who were not able 
to attend the hearing today, because of conflicts will also 
have questions.
    Those will be propounded to you, over a period of the 
coming weeks, and when you receive those inquiries, to the 
extent that you can make rapid replies, that will be helpful to 
us.
    We are going to keep the record open from this hearing to 
receive those replies for a period of about one month, so 
please be prompt in getting those responses back.
    We appreciate very much your attendance this morning, and 
your informative presentations, and this hearing stands 
adjourned.
    [Whereupon, at 1:00 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

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