[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
ICANN'S TOP-LEVEL DOMAIN NAME PROGRAM
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
DECEMBER 14, 2011
__________
Serial No. 112-107
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
JOE BARTON, Texas HENRY A. WAXMAN, California
Chairman Emeritus Ranking Member
CLIFF STEARNS, Florida JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky Chairman Emeritus
JOHN SHIMKUS, Illinois EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania EDOLPHUS TOWNS, New York
MARY BONO MACK, California FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska ANNA G. ESHOO, California
MIKE ROGERS, Michigan ELIOT L. ENGEL, New York
SUE WILKINS MYRICK, North Carolina GENE GREEN, Texas
Vice Chairman DIANA DeGETTE, Colorado
JOHN SULLIVAN, Oklahoma LOIS CAPPS, California
TIM MURPHY, Pennsylvania MICHAEL F. DOYLE, Pennsylvania
MICHAEL C. BURGESS, Texas JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee CHARLES A. GONZALEZ, Texas
BRIAN P. BILBRAY, California JAY INSLEE, Washington
CHARLES F. BASS, New Hampshire TAMMY BALDWIN, Wisconsin
PHIL GINGREY, Georgia MIKE ROSS, Arkansas
STEVE SCALISE, Louisiana JIM MATHESON, Utah
ROBERT E. LATTA, Ohio G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington JOHN BARROW, Georgia
GREGG HARPER, Mississippi DORIS O. MATSUI, California
LEONARD LANCE, New Jersey DONNA M. CHRISTENSEN, Virgin
BILL CASSIDY, Louisiana Islands
BRETT GUTHRIE, Kentucky KATHY CASTOR, Florida
PETE OLSON, Texas
DAVID B. McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia
_____
Subcommittee on Communications and Technology
GREG WALDEN, Oregon
Chairman
LEE TERRY, Nebraska ANNA G. ESHOO, California
Vice Chairman Ranking Member
CLIFF STEARNS, Florida EDWARD J. MARKEY, Massachusetts
JOHN SHIMKUS, Illinois MICHAEL F. DOYLE, Pennsylvania
MARY BONO MACK, California DORIS O. MATSUI, California
MIKE ROGERS, Michigan JOHN BARROW, Georgia
MARSHA BLACKBURN, Tennessee DONNA M. CHRISTENSEN, Virgin
BRIAN P. BILBRAY, California Islands
CHARLES F. BASS, New Hampshire EDOLPHUS TOWNS, New York
PHIL GINGREY, Georgia FRANK PALLONE, Jr., New Jersey
STEVE SCALISE, Louisiana BOBBY L. RUSH, Illinois
ROBERT E. LATTA, Ohio DIANA DeGETTE, Colorado
BRETT GUTHRIE, Kentucky JOHN D. DINGELL, Michigan
ADAM KINZINGER, Illinois HENRY A. WAXMAN, California (ex
JOE BARTON, Texas officio)
FRED UPTON, Michigan (ex officio)
(ii)
C O N T E N T S
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Page
Hon. Greg Walden, a Representative in Congress from the State of
Oregon, opening statement...................................... 1
Prepared statement........................................... 3
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, prepared statement................................... 6
Hon. Lee Terry, a Representative in Congress from the State of
Nebraska, opening statement.................................... 8
Hon. Anna G. Eshoo, a Representative in Congress from the State
of California, opening statement............................... 8
Hon. Doris O. Matsui, a Representative in Congress from the State
of California, opening statement............................... 9
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 10
Witnesses
Fiona M. Alexander, Associate Administrator, Office of
International Affairs, National Telecommunications and
Information Administration, Department of Commerce............. 11
Prepared statement........................................... 14
Answers to submitted questions............................... 176
Kurt Pritz, Senior Vice President, Stakeholder Relations,
International Corporation for Assigned Names and Numbers
(ICANN)........................................................ 22
Prepared statement........................................... 24
Answers to submitted questions............................... 185
Daniel L. Jaffe, Executive Vice President, Government Relations,
Association of National Advertisers, on behalf of Coalition for
Responsible Internet Domain Oversight.......................... 62
Prepared statement........................................... 64
Answers to submitted questions............................... 212
Thomas Embrescia, Chief Executive Officer, Employ Media.......... 107
Prepared statement........................................... 109
Anjali K. Hansen, Intellectual Property Attorney, Council of
Better Business Bureaus........................................ 119
Prepared statement........................................... 121
Joshua S. Bourne, President, The Coalition Against Domain Name
Abuse.......................................................... 128
Prepared statement........................................... 131
Answers to submitted questions............................... 222
Submitted Material
Statement, dated December 13, 2011, of ASAE, The Center for
Association Leadership......................................... 142
Statement, dated December 14, 2011, of Name.Space, Inc........... 144
Letter, dated December 13, 2011, from Rebecca M.J. Gould, Vice
President, Global Government Relations and Public Policy, Dell,
Inc., to Mr. Walden and Ms. Eshoo.............................. 155
Statement, dated December 14, 2011, of the National Restaurant
Association.................................................... 167
Statement, dated December 3, 2011, of Rod Beckstrom, Chief
Executive Officer and President, International Corporation for
Assigned Names and Numbers (ICANN), et al...................... 171
ICANN'S TOP-LEVEL DOMAIN NAME PROGRAM
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WEDNESDAY, DECEMBER 14, 2011
House of Representatives,
Subcommittee on Communications and Technology,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to notice, at 9:04 a.m., in
room 2123, Rayburn House Office Building, Hon. Greg Walden
(chairman of the subcommittee) presiding.
Members present: Representatives Walden, Terry, Stearns,
Shimkus, Bono Mack, Blackburn, Bilbray, Bass, Gingrey, Scalise,
Latta, Guthrie, Kinzinger, Barton, Upton (ex officio), Eshoo,
Markey, Matsui, Barrow, Christensen, and Waxman (ex officio).
Staff present: Ray Baum, Senior Policy Advisor/Director of
Coalitions; Allison Busbee, Legislative Clerk; Neil Fried,
Chief Counsel, C&T; Debbee Keller, Press Secretary; Gib Mullan,
Chief Counsel, CMT; David Redl, Counsel, C&T; Roger Sherman,
Democratic Chief Counsel, Communications and Technology; Shawn
Chang, Democratic Counsel; Kara Van Stralen, Democratic Special
Assistant; Jeff Cohen, Democratic Counsel, FCC Detailee; and
Phil Barnett, Democratic Staff Director.
OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON
Mr. Walden. Call to order the Subcommittee on
Communications and Technology for the purpose of a hearing on
ICANN's top-level domain name program. I welcome our witnesses
here today, and we look forward to your testimony.
Although most Americans probably have never heard of the
Internet Corporation for Assigned Names and Numbers, sorry,
ICANN, the California not-for-profit manages the top-level
domains, that part that comes after the dot in, for example, a
.com, .net and .gov. Today's hearing focuses on how to balance
ICANN's plans to expand the level of top-level domains with
safeguards to ensure businesses are not forced to expend
extraordinary sums to guard against fraud, trademark abuse, or
dilution of their brands.
For several years ICANN has considered the expansion of
top-level domains. Reasonable people can differ on the process
that ICANN has followed leading to this point, but we now stand
at the threshold of implementation, and the question before us
today is what is the best path forward?
To illustrate concerns of critics, consider the number of
domains a company may be faced with registering. Apple, for
example, has Apple.com, iPhone.com, iCloud.com, and iChat.com.
iPad.com, however, displays nothing more than a splash page
that says it is a site that is soon coming, likely meaning
someone bought the domain name in anticipation of selling it to
Apple. The House of Representatives Information Security Group
has flagged Facetime.com as a malicious site that may attempt
to install rogue scripts on your computer if you visit it.
These are just a few examples of the issues that arise every
day on the Internet between cybersquatters, criminals, and
legitimate businesses.
Now, bear in mind that all these examples are in the .com
top-level domain. To protect against mischief, Apple also owns
domain names in other top-level domains like Apple.info, to say
nothing of the more than 200 country code top-level domains and
the international domain names that use non-Latin alphabets.
Under the expansion that ICANN will begin this January,
trademark holders are concerned that not only will each new
top-level domain present a new chance for bad actors to
purchase second-level domains for nefarious or illegitimate
purposes, but that the top-level domains themselves could
become fertile ground for cybersquatters. This is particularly
concerning to trademark holders because each application for a
top-level domain carries a $185,000 price tag.
To try to protect business interests in this new world of
nearly unlimited top-level domains, ICANN has instituted a 7-
month objection period for each new top-level domain
application. One of the objections available to companies is
that a new top-level domain infringes on another's legal
rights. To address second-level domain issues, ICANN has
required a trademark clearinghouse and sunrise periods during
which trademark holders can preregister for domain names.
Nonetheless, the success or failure of even the best
planned processes comes down to execution. How can ICANN
implement these processes? What lessons can be learned early in
the process to prevent failure? Are there additional safeguards
in the event this process doesn't work as advertised?
These and other questions are the reason for today's
hearing, and I look forward to the testimony of ICANN, the
NTIA, and those who have had good experiences with the limited
expansion of top-level domain names to date, and those who are
still concerned that their valuable brands stand to be
tarnished by this process. So I thank the witnesses for being
here today to share their insight.
[The prepared statement of Mr. Walden follows:]
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Mr. Walden. At this point I have 1 \1/2\ minutes left, and
I would yield to the chairman of the full committee, who has a
statement he wants to put in the record.
Mr. Upton. I am just going to insert it in the record.
[The prepared statement of Mr. Upton follows:]
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Mr. Walden. And then I would yield to Mr. Terry for the
remainder of my time.
OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEBRASKA
Mr. Terry. Thank you, Mr. Chairman, for holding today's
hearing to discuss this very important topic. I appreciate our
witnesses joining us here today and look forward to listening
to all of your testimony.
I am primarily interested in hearing Mr. Pritz explain the
benefits of expanding the number of top-level domain names. I
am told that this expansion could promote competition and
choice in domain address and market, while providing new
opportunities for organizing information on the Internet or for
marketing and services. But how will the Internet users
ultimately be affected is the ultimate question.
The Justice Department's Antitrust Division has raised
concerns that new top-level domains could, quote, ``impose
substantial additional domain registration costs on many
consumers.'' Others are concerned that an increase in the
number of top-level domains will exacerbate the potential for
abuse of the domain name system. In my opinion, these concerns
should not be taken lightly. The consumer benefits of this
proposed expansion should far outweigh any potential harms it
may cause.
Mr. Chairman, I again thank you and our expert witnesses
here today for joining us, and I yield back.
Mr. Walden. The gentleman yields back the balance of his
time.
The chair now recognizes the ranking member of the
subcommittee, Ms. Eshoo from California, for 5 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
Members and the witnesses.
I welcome today's hearing to examine ICANN's proposed
rollout of new generic top-level domains. This is an exciting
time in the evolution of the Internet. Domain name
registrations across all TLDs increased by 2.5 percent between
the first and the second quarters of this year. And all signs
point to continued growth, as over 40 percent of the world's
population is expected to come online by 2015. That is quite
extraordinary, that figure, just in and of itself.
When this subcommittee last examined the issue in June of
2009, ICANN's CEO acknowledged the concerns about trademark and
intellectual property protections, and promised that the new
rollout of new TLDs would not move forward until these concerns
had been addressed.
I am not opposed to the expansion of new gTLDs. I believe,
in fact, with the right process in place, this program could
enable new, innovative business models that expand user choice
and make it easier to find Web sites within a particular
category such as hotels, restaurants, drug stores, and other
sites. But the written testimony before us suggests that many
businesses continue to have significant concerns regarding the
economic impact, the potential for consumer confusion, and
increased cybersquatting that could occur without proper checks
and balances. Our hearing today will enable us to explore these
issues and determine what steps ICANN has taken since our
hearing more than 2 years ago.
The potential rollout of thousands of new gTLDs requires a
clear understanding of the safeguards being put in place to
protect trademarks and copyrights, how disputes between common
brand names will be addressed, and what costs businesses will
incur in defending their brand. Forcing small businesses,
nonprofits, and other organizations with limited resources to
spend $185,000 per domain name just to protect their brands I
don't think is sustainable.
And despite the enactment of the Anticybersquatting
Consumer Protection Act in 1999, cybersquatting remains a
serious problem. In fact, one form of cybersquatting, in which
malicious actors register domain names with common misspellings
of popular Web sites, is particularly pervasive. Collectively,
these domain name typos receive at least 68.2 million daily
visitors, leading to consumer confusion and even fraudulent
activity.
I hope today's hearing will enable ICANN to find solutions
that strengthen the gTLD program and address many of the
legitimate concerns raised by the business community. These
include the problem of cybersquatting, the potential for
consumer confusion, and addressing the costs associated with
the program.
So I would like to thank all the witnesses for being here
today, and I will yield the balance of my time to Ms. Matsui
for her opening statement.
OPENING STATEMENT OF HON. DORIS O. MATSUI, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Ms. Matsui. Thank you, Ranking Member Eshoo, for yielding
me time. I am pleased that we are here today, and I would like
to thank the witnesses for joining us.
As we all know, next month ICANN plans to begin the process
of applying for and introducing new gTLDs. I am concerned about
the impact and potential unintended consequences that this
proposal might pose on nonprofits, small businesses, American
innovators, and consumers. There may also be practical impacts
such as privacy and cybersecurity that will need consideration.
Right now there are a number of unanswered questions that
remain. We need answers to fundamental questions like will this
policy create additional financial burden on brand owners? I am
mostly concerned about expansion of second-level domain names,
which has the potential to dramatically increases costs for
rights holders for the rising costs associated with defensive
registrations and guarding against cybersquatting.
Mr. Chairman, I believe ICANN needs to take a step back,
slow down, and reexamine this proposal. The Internet is just
too valuable an asset for consumers, for businesses, and for
the economy as a whole. I believe there is a way to get this
right, and I encourage all stakeholders to work together to
properly address the outstanding concerns.
I thank you, Mr. Chairman, for holding this important
hearing today, and I yield back the balance of my time.
Mr. Walden. The gentlelady yields back the balance of her
time. The gentlelady's time has expired.
Are there any members on the Republican side seeking
recognition for opening comments? If not, I would turn then to
the gentleman from California, Mr. Waxman, for 5 minutes.
OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Waxman. Thank you, Mr. Chairman. I am pleased that the
subcommittee is holding this timely hearing on the Internet
Corporation for Assigned Names and Numbers, or ICANN.
Two years ago, the Democratic members of this subcommittee
sent a letter to then-Commerce Secretary Locke supporting the
creation of a permanent instrument to replace the Joint Project
Agreement between ICANN and the Department of Commerce. At the
time, we stated that any such instrument must include a
mechanism for the implementation of new generic top-level
domains to ensure, quote, ``an appropriate consultation with
stakeholders,'' as well as periodic reviews. Today we face the
first real test of the new instrument known as, quote,
``Affirmation of Commitments,'' which was signed by ICANN and
the Department of Commerce in September 2009. And I want to
make sure that the process for the upcoming expansion of new
gTLDs fully reflects the goals of transparency and
accountability called for in the Affirmation of Commitments.
I have three concerns that I hope today's panel will
address. First, cost. It has been estimated that the new gTLD
application program will bring in $92.5 million in revenue for
ICANN, but only $36 million of that will be spent on the launch
of the program. An additional $31 million will be set aside for
a contingency reserve for litigation and other potential costs.
I would like to hear more about how ICANN plans to utilize the
substantial revenues coming in from this program.
Second, accountability. ICANN has created several new
processes to address trademark protection concerns with the new
gTLDs, such as a rapid system to take down infringing domain
names and a one-stop clearinghouse to allow trademark holders
to register and protect their marks. Nevertheless, ICANN has
not yet selected the entities that will run these crucial new
programs. With the new gTLD program scheduled to launch next
month, I am interested to learn what ICANN plans to do about
this critical challenge.
And finally, timing. I understand that the development of
the new gTLD program has gone through a 7-year process
involving thousands of stakeholders. It is not clear to me,
however, why there is the urgency to launch up to 500 new gTLDs
during the first round. I would like to hear today's witnesses
discuss whether it makes more sense to consider a phased launch
to ensure that ICANN has the appropriate resources and
procedures in place to react to actual demand. A phase-in might
also give the global community more time to understand and
absorb the impact of the program.
I am not opposed to the creation of new gTLDs. Expanding
the number of gTLDs is consistent with ICANN's mission to
promote competition and consumer choice. NTIA deserves credit
for its diligent work with ICANN through the Government
Advisory Committee, and I know the agency will continue to
monitor this issue closely.
Thank you again, Mr. Chairman, for holding today's hearing.
I look forward to the testimony of our expert panel. Yield back
the balance of my time.
Mr. Walden. The gentleman yields back the balance of his
time. No other Members seeking recognition, we will move on to
the panel.
We appreciate all of you being here today, and your
testimony, which I have read, it is very informative and
helpful.
We will lead off with Ms. Fiona Alexander, Associate
Administrator, Office of International Affairs, National
Telecommunications and Information Administration. I am
delighted to have you here this morning.
One thing just for all the witnesses, you have to push the
little button to turn the microphone on when it comes your
time. And you also want to get pretty close to these
microphones, or we can't hear you as well.
So, Ms. Alexander, please go ahead.
STATEMENTS OF FIONA M. ALEXANDER, ASSOCIATE ADMINISTRATOR,
OFFICE OF INTERNATIONAL AFFAIRS, NATIONAL TELECOMMUNICATIONS
AND INFORMATION ADMINISTRATION, DEPARTMENT OF COMMERCE; KURT
PRITZ, SENIOR VICE PRESIDENT, STAKEHOLDER RELATIONS,
INTERNATIONAL CORPORATION FOR ASSIGNED NAMES AND NUMBERS
(ICANN); DANIEL L. JAFFE, EXECUTIVE VICE PRESIDENT, GOVERNMENT
RELATIONS, ASSOCIATION OF NATIONAL ADVERTISERS, ON BEHALF OF
COALITION FOR RESPONSIBLE INTERNET DOMAIN OVERSIGHT; THOMAS
EMBRESCIA, CHIEF EXECUTIVE OFFICER, EMPLOY MEDIA; ANJALI K.
HANSEN, INTELLECTUAL PROPERTY ATTORNEY, COUNCIL OF BETTER
BUSINESS BUREAUS; AND JOSHUA S. BOURNE, PRESIDENT, THE
COALITION AGAINST DOMAIN NAME ABUSE
STATEMENT OF FIONA M. ALEXANDER
Ms. Alexander. Thank you very much.
Good morning, Chairman Walden, Ranking Member Eshoo, and
members of the committee. I appreciate the opportunity to talk
to you today on behalf of NTIA regarding ICANN's planned
expansion of the Internet domain name system through the
introduction of new generic top-level domain names, or new
gTLDs.
Since its inception in 1998, ICANN has been charged with
promoting competition in the registration of domain names,
while ensuring the security and stability of the DNS. In 2000
and 2003, ICANN conducted a limited expansion of gTLDs. In
2005, it initiated the process we are discussing today. After 6
years of multistakeholder discussion, including input from
governments through the GAC, ICANN approved the rules for the
new gTLD program in the form of an applicant guidebook.
Expansion of the gTLD space is expected to provide a
platform for city, geographic, and internationalized domain
names, among other things. This type of change to the DNS is
expected to enhance consumer trust and choice, and reinforce
the global nature of the Internet. It is also expected that a
portion of applications will be either generic words or brand-
focused as part of business development, investment, and start-
up plans.
Within ICANN, the GAC provides governments a meaningful
opportunity to participate in the development of policies
related to DNS issues. Over the last 6 years, NTIA has actively
engaged with its counterparts in the GAC in developing advice
to inform this program. In December 2010, the GAC developed a
scorecard of the outstanding issues governments had with the
program. Between February and June of this year, GAC
representatives from around the world met with the ICANN board
and extended face-to-face discussions to review the GAC
scorecard and to identify specific differences between GAC
advice and the existing version of the applicant guidebook.
These unprecedented exchanges resulted in the adoption of a
number of changes to the program.
NTIA believes that ICANN improved the new gTLD program by
incorporating a significant number of proposals from the GAC,
including providing law enforcement and consumer protection
authorities with more tools than those available in existing
gTLDs. The fact that not all of the GAC's proposals were
adopted as originally offered does not represent a failure of
the process or a setback to governments. Rather, it reflects
the reality of a multistakeholder model.
As a member of the GAC, NTIA will continue to actively
monitor and participate in discussions relating to the
expansion of new gTLDs. NTIA appreciates that certain trademark
owners and other stakeholders have expressed concerns regarding
this program. Safeguarding the rights of trademark owners and
ensuring appropriate consumer protections as this process moves
forward remains a priority. As such, NTIA is committed to
working with U.S. industry and other stakeholders as the new
gTLD program unfolds to mitigate any unintended consequences.
In addition, NTIA intends to continue to collaborate with
U.S. Government agencies to track their experiences and to
coordinate the collection of data regarding the effect on
consumers and business users. In particular, NTIA, working with
other agencies, will focus on ensuring that law enforcement
concerns are addressed through strength in registry and
registrar accreditation agreements and enhanced contract
compliance.
NTIA will also be encouraging all interested parties to
collaborate in the development of metrics to facilitate the
review of the new gTLD program. We feel strongly that the
review must be informed by fact-based, real-time experiences
that can be captured by data from a variety of sources.
NTIA is dedicated to maintaining an open, global Internet
that remains a valuable tool for economic growth, innovation,
and the free flow of information, goods, and services online.
We believe the best way to achieve this goal is to continue to
actively support and participate in multistakeholder Internet
governance processes such as ICANN.
Thank you again, Mr. Chairman, for the opportunity to
testify this morning. NTIA looks forward to working with
Congress, U.S. businesses, individuals, and other stakeholders
to preserve and enhance the multistakeholder model. It has been
a hallmark feature of the global Internet institutions that
have been responsible for the success of the Internet.
I will be happy to answer any questions. Thank you.
[The prepared statement of Ms. Alexander follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Walden. Ms. Alexander, thank you very much for your
testimony and your work at NTIA.
We are now appreciative of Mr. Kurt Pritz, who is going to
testify. He is the senior vice president of ICANN.
So, Mr. Pritz, thank you for being here, and we look
forward to your comments.
STATEMENT OF KURT PRITZ
Mr. Pritz. Thank you, Mr. Chairman, Ranking Member, and
members of the subcommittee. I am Kurt Pritz, senior vice
president for stakeholder relations for ICANN, the Internet
Corporation for Assigned Names and Numbers. I am very pleased
to be testifying before you today.
After more than 7 years of policy development and
implementation planning, on January 12 next year ICANN will
start receiving applications for new top-level domains, TLDs,
such as today's .com, .org, and .edu. ICANN carefully and
cautiously developed the requirements for the new gTLD program.
And by ICANN, I mean the global multistakeholder community made
up of governments, intellectual property experts, consumers,
large and small businesses, not-for-profit organizations,
Internet security experts, and Internet users.
The launch of the new gTLD program was part of ICANN's
founding mandate when it was formed by the U.S. Government over
12 years ago. The implementation of the new gTLD program under
discussion today is the result of a cautious, deliberative,
multiyear process on how ICANN will execute on its promise to
the NTIA to facilitate competition in the domain name system
while protecting vital security, consumer and business
interests.
Today's program was refined through thousands of comments
in no less than 47 extended comment periods, 1,400 pages of
comment summaries and analysis. Every comment was carefully
considered and analyzed and addressed over seven versions of
the Applicant Guidebook. The program, including enhancements
and new protections, was created by over 10 independent expert
working groups and described through 59 explanatory memoranda
and independent reports and 5 independent economic reports.
The new gTLD program will be implemented in a measured,
limited manner. After the 90-day application window for the
first round closes, a stringent evaluation process limits new
gTLD registries to those entities with the ability to meet the
high technical and operational requirements with a capacity to
responsibly operate parts of the Internet infrastructure.
That careful review means that the new TLDs, the first new
TLDs, will not be operational until early 2013, and delegations
will be spread over time after that. The new TLDs that will
come in under this program will have significantly increased
safeguards compared to TLD registries that exist today. ICANN
formed teams of world-class experts who worked to ensure that
new TLDs offer more protection for trademark holders and
consumers than today's. New trademark protections include a
universal trademark clearinghouse, a rapid take-down process,
and new methods of recourse against wrongdoers. The new
safeguards will sharply reduce the need for defensive
registrations.
New TLDs will also bring better consumer and security
protections. Domain name abuse experts have developed specific
measures to combat malicious conduct and provide law
enforcement authorities with more tools to fight malfeasance.
These include criminal background checks on all applicants, a
requirement for DNSSEC deployment, maintenance of a thick WHOIS
database, and centralized access to TLD data.
In the last decade the number of domain name registrations
has increased tenfold, enabling more than $3 trillion of
commerce annually.
As with the introduction of any innovation, new TLDs will
generate interest and excitement and require a period of
learning. Internet users have already shown great adaptability,
and they will find value when it is created as a result of this
program.
What type of innovation is waiting? Dot-brand TLDs are in
planning, similar to .gov today that can give consumers
immediate trust of the site they are visiting. Your
constituents know that when they type a House.gov address, they
are reaching the domain managed for the U.S. House of
Representatives. Financial industry participants are
considering financial services TLDs, where banks and financial
institutions can offer their customers greater trust, more
secure transactions, and control of the flow of their data.
Brand managers see a world of creative opportunity, including
TLDs providing dedicated registrations tailored to meet their
customers' needs. American jobs are already being created to
explore the benefits and opportunities of new TLDs.
The important areas under discussion before the committee
today have been the subject of debate and compromise for many
years. Together, the Internet community, hearing all the
concerns raised at the table today, designed a program where
new TLDs will be more secure; offer greater protections for
trademark holders; reduce the need for defensive registrations;
more effectively combat malicious conduct; and provide
competition, innovation, and consumer choice.
Thank you for inviting me to testify. I am happy to answer
any questions you have afterward.
[The prepared statement of Mr. Pritz follows:]
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Mr. Walden. All right, Mr. Pritz. Thank you very much for
your testimony.
Now we are going to hear from Mr. Daniel L. Jaffe,
executive vice president, National Association of Advertisers,
on behalf of the Coalition for Responsible Internet Domain
Oversight.
Mr. Jaffe, thank you very much for your very detailed
testimony. We look forward to your comments.
Mr. Jaffe. Good morning. Thank you.
Mr. Walden. And be sure to turn on the microphone and pull
it uncomfortably close to your mouth.
STATEMENT OF DANIEL L. JAFFE
Mr. Jaffe. Good morning. Thank you very much for having me
here today. We really appreciate the opportunity to discuss
what we think is one of the most important issues facing the
whole of the brand community throughout the world.
My name, as you stated, is Dan Jaffe, and I am executive
vice president, government relations, for the Association of
National Advertisers. I am also appearing on behalf of CRIDO,
the Coalition for Responsible Internet Domain Oversight.
CRIDO represents 159 major national and international
companies and trade associations that have joined together to
oppose the virtually unlimited rollout of ICANN's new top-level
domain program. There simply is not widespread support or
consensus in favor of ICANN's proposal. Law enforcement
agencies, business, consumers, nonprofit groups,
nongovernmental organizations, and even the founding chair of
the ICANN Board all have expressed very serious reservations
about this plan.
This concern cuts through a diverse and wide swath of major
participants in the U.S. and the international economy:
restaurants like Dunkin' Brands, Burger King, and Papa John's--
and all of these are just examples, they don't cover the whole
list--broadcasters, advertisers in 52 countries around the
world; financial entities such as American Express and Visa;
high-tech companies like Dell, HP and 3M; manufacturers such as
Kraft Foods, the Kellogg Company, and Procter & Gamble and
Whirlpool; retailers like Walmart, Costco, and many small
businesses; automobile manufacturers such as Ford, Chrysler
Group, and Toyota, and the list goes on and on and on and
continues to grow every day.
There are numerous other entities who are very concerned,
including 100 major trade associations representing other wide
sectors of the economy and 1.5 million nonprofit organizations
like the YMCA. And a diverse group of 28 public IGOs, ranging
from the IMF and OECD to NATO, all believe ICANN's program is
severely flawed. Many of them believe that it would impose
extraordinary costs on the whole global brand community. It is
flawed because it threatens severe economic harms.
ICANN's own studies demonstrate that the program will force
companies and even individuals, yes, including Members of
Congress, to engage in widespread defensive registrations to
protect their names and reduce capital investment. Companies
will have to divert major multibillions of dollars' worth of
resources from job creation and product development.
The plan is flawed because consumers will be significantly
harmed. Vastly increased domain names will cause consumer
confusion. The cybersquatting, malware, phishing, and other
cyber harms that already occur today will only increase
exponentially.
It is flawed because law enforcement officials have said
that this expansion will make it far more difficult to enforce
cybersecurity laws. The chair of the Federal Trade Commission
just last week said this plan would be a, quote, ``disaster''
for both consumers and businesses. The OECD also has just
raised serious issues with the rollout.
ICANN has not achieved consensus among stakeholders,
something it is required do under its own code of conduct. And
there are many serious conflict of interest concerns. ANA, and
many of the members of CRIDO and others objected throughout the
ICANN process, but ICANN hasn't listened.
Recently, NTIA Administrator Strickling made several points
with which we agree. Consumer trust in the Internet is vitally
important. The Internet should not be controlled by any one
nation or group. And a valid multistakeholder process could
result in an environment that encourages creativity and
innovation. However, unfortunately, that is clearly not what is
happening today. ICANN's expansion dramatically increases the
risk for consumer mistrust generated by cyber harms.
Some try to use scare tactics to claim that we seek to
abolish ICANN or to have the U.S. Government run the Internet.
That is totally false. We believe the greatest danger to ICANN
is to launch headlong into this ill-conceived program without
first developing the important protections that Chairman
Leibowitz, the Government Advisory Committee, the OECD, and
other law enforcement officials are calling for.
Members of the subcommittee, there is nothing sacred about
the January 12 ICANN top-level domain rollout. Before ICANN
proceeds, it should step back, conduct real and careful studies
and analysis to justify the expansion. It should then, in an
extremely detailed and analytical manner, explain to the
Department of Commerce, the Congress, and the entire online
community how this plan will benefit the public interest, both
here and abroad, as is required under the Affirmation of
Commitments between ICANN and the DOC.
Thank you very much.
[The prepared statement of Mr. Jaffe follows:]
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Mr. Walden. Mr. Jaffe, thank you very much for your very
thorough testimony. We are pleased to have you here.
Now we are going to turn to Mr. Thomas Embrescia, CEO of
Employ Media.
Mr. Embrescia, thank you for your testimony as an Internet
domain manager and registrar. So we thank you for being here.
We look forward to your comments.
STATEMENT OF THOMAS EMBRESCIA
Mr. Embrescia. Thank you, Chairman Walden and Ranking
Member Eshoo and members of the distinguished subcommittee. I
am happy to be here today with you. I am going to talk about
myself as a current registry operator, one of the 22 that exist
running .jobs. I am also going to talk to you about--and I
don't want to date myself--my history as a licensed broadcast
holder, radio and television stations over the past 40 years,
right here.
I woke up this morning in my hotel, and on the hotel
television channel they were talking about the things that you
should see while you are in Washington, D.C. And one of the
things that caught my attention was a statue of someone sitting
in front of an old radio listening to Franklin Delano Roosevelt
talking, these family talks on a weekly basis. So I am not
quite that old, but I do go back to being raised when AM radio
was the be-all/end-all on what was happening.
When I came out of college in Ohio, I got a job on an FM
radio station when no one even knew what that was. The
frequency wasn't around. And thanks to the wiseness of
Congress, they mandated that automobile dealers put FM
frequencies in the cars, and FM flourished. It took off. It
gave me an opportunity to start on an FM band, create a
channel. We narrowcasted where AM stations were all things to
all people, they provided service for everyone; where FM
stations went and suddenly became all rock or all country, soft
AC.
In the 1980s, I see Congressman Latta just walked out of
the room, from Ohio, but in his district, in Toledo, Ohio, the
big television stations were VHF channels 2 through 13. You, in
your wiseness, had created a UHF band, but no one knew what to
do with it. But entrepreneurism and job opportunity created
guys like me who created a television station in Toledo, Ohio,
in 1985, built it from scratch, put it on the air. And suddenly
the Fox Network flourished and took off and created jobs and
opportunities and businesses.
Then I saw the same thing happen with cable, which at one
time was strictly designed to fill in holes in rural areas in
Tennessee and surrounding communities. But suddenly they
decided content was important, and they started to create
channels by narrowcasting again. And who thought 24-7 CNN,
ESPN, MTV, and my favorite, the Food Channel, that I watch all
the time and what I am doing.
And suddenly in 2000 this opportunity arose when ICANN came
back and created a proof of concept round in 2004. And we were
offered the opportunity to create a trusted valued source on
the Internet for content. Ours happens to be HR-related. We
superserve that community and do it well. And that is what we
do. And we see this expansion, quite frankly, as history
repeating itself.
You have been wise in what you have allowed in the spectrum
allocation, and people being creative and being able to use
their initiative to create jobs, better consumer opportunities,
better information on a consistent basis. I firmly believe in
what we have created here in the U.S. in opportunity and the
wisdom of people to be smart about how to do this. And sure,
could there be bad operators? Could there be people that have
some problems? I am confident that ICANN's multistakeholder
model can serve that purpose.
And so I am here today to support that expansion as an
existing operator, looking back at history and watching my own
history of how spectrum, broadband width has created
opportunity, jobs, better opportunities for consumers. So I
thank you for that, and I welcome any comments you have.
[The prepared statement of Mr. Embrescia follows:]
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Mr. Walden. Mr. Embrescia, thank you very much. And some of
us actually remember AM radio as well.
Ms. Hansen, we are delighted to have you here as well. Ms.
Anjali Hansen, intellectual property attorney for the Council
of Better Business Bureaus. Ms. Hansen, thank you for your
testimony, and please go ahead.
STATEMENT OF ANJALI K. HANSEN
Ms. Hansen. Good morning. My name is Anjali Hansen. I am
the intellectual property attorney of the Council of Better
Business Bureaus, which is the umbrella organization for the
116 Better Business Bureaus across North America.
The Better Business Bureaus are a network of nonprofit
organizations. For the past 100 years, our mission has been to
build trust between consumers and businesses in the
marketplace. Thank you, Mr. Chairman, Ranking Member Eshoo, and
members of the subcommittee. Our organization greatly
appreciates this opportunity to testify and tell you about the
challenges that we face every day to keep our brand and logos
out of the hands of fraudulent and criminal elements that run
rampant on the Internet. The new top-level domains will
increase these threats exponentially if ICANN does not put
additional protective measures in first.
Today I am going to focus my testimony on three grave
problems that I face every day protecting our trusted marks on
the Internet. The first problem is the massive abuse of our
marks on third-party Web sites. Every day I am bombarded with
reports and links to Web sites that display our BBB torch logo
and our accredited business seals without authorization.
Fraudulently operated businesses copy the logos to defraud
consumers into thinking that they are dealing with a reliable
source. Combating these infringements takes a great deal of
time. It can be difficult to shut down Web sites if the Web
hosting company or registrar is not cooperative, and it is very
costly to our organization.
In addition, our organization is routinely subject to
sophisticated phishing attacks that defraud consumers into
believing that BBB is sending them an email, but which instead,
upon clicking on the Web link within the email, infects their
computers with viruses. The architects of these phishing scams
have used the very symbol of trust, our BBB name and logo, to
victimize unsuspecting businesses and consumers.
ICANN needs to come up with better controls over fraud at
this level. Frauds and criminals can currently easily purchase
domain names and Web sites from registrars and Web hosting
companies and then use them for illicit purposes with impunity.
The third and final major problem that I face in protecting
our trusted marks on the Internet is cybersquatting.
Cybersquatters register brand owners' trademarks as their own
domain names. For example, they will register BBB.net, BBB.com,
BBB.info. So most brand owners have adopted the costly practice
of purchasing their own domain names and trademarks in all of
the major top-level domains. This is called defensive
registration, as you noted earlier. BBB has over 300 domain
names, most of which are defensive registrations, and there are
currently only 22 top-level domains. So with the expansion,
there will be hundreds, and the cost to defensively register
will quickly become prohibitive.
Under ICANN's proposed framework of trademark protections,
it will have a centralized trademark clearinghouse which each
brand owner can register their trademark in for a fee. But
registering our trademarks in this clearinghouse only
guarantees us the first right to buy or block our trademarks in
domains in each of the new top-level domains. Instead, ICANN
should ensure that trademarks registered in the trademark
clearinghouse cannot be sold to anyone other than the trademark
owner in any of these new registries.
The practice of having to defensively register our
trademarks in each top-level domains needs to stop. This
practice simply provides an unjustified windfall of profits to
registries and registrars, and takes resources away from brand
holders. The most recent top-level domain to be brought online,
the now famous .xxx, just profited enormously from the over
90,000 domains paid to be blocked by trademark owners who do
not want their names associated with that registry. In
conclusion, even more astounding was the fact that the .xxx
registry refused to accept registration of our most famous
mark, BBB, because it was allowed by ICANN to reserve BBB.xxx
as a premium name that it can later auction off to the highest
bidder.
Thank you again for taking the time to listen to the issues
I and many other brand owners face, which include small
businesses and nonprofits. These practices have the net effect
of imposing major consumer harm. If ICANN does not address
these issues, it should not set forth on its plans to increase
the number of top-level domains. Thank you.
[The prepared statement of Ms. Hansen follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Walden. Ms. Hansen, thank you for the good work of the
Better Business Bureau and for being here today and sharing
your concerns.
We will go now to Mr. Joshua S. Bourne, president of the
Coalition against Domain Name Abuse.
Mr. Bourne, we are delighted to have you here today. Pull
that microphone close, and we look forward to your testimony.
STATEMENT OF JOSHUA S. BOURNE
Mr. Bourne. It is uncomfortably close, as you said.
Well, thank you very much. Good morning, Chairman Walden.
Good morning, Ranking Member Eshoo and distinguished members of
the committee. Thank you for convening this hearing on the
intention of ICANN to expand the number of new gTLDs that will
be made available to the public. As you know, ICANN's Board
approved this policy on June 20 of this year, and ICANN plans
to open the first and only announced application period on
January 12.
Given the significant impact that this policy will have on
the Internet and the recent dialogue about it, CADNA truly
appreciates the chairman's decision to hold this hearing today.
As you said, my name is Josh Bourne, and I am the president of
CADNA. Over 4 years ago, with the help of leading brand owners,
we founded CADNA, which is a 501(c)(6) nonprofit association,
to combat a variety of abuses on the Internet. CADNA represents
businesses vital to the American and global economies from a
wide range of commercial industries, and our members include
companies such as Dell, DirecTV, Eli Lilly, Hewlett-Packard,
HSBC, LEGO, Marriott, New York Life, and Wells Fargo.
Our mission is more relevant today than it has ever been as
we look for solutions to reduce or eliminate cybersquatting and
to work constructively with ICANN, the U.S. Congress, the
Department of Commerce, and all other stakeholders to improve
the gTLD policy, ultimately supporting all who agree that this
policy has flaws and should not move forward without further
refinement.
Our current recommendations are a result of a long process
that started after the ICANN Board approved the gTLD policy
back in June. Through countless calls and meetings with brand
owners, public and private Internet governance experts, trade
associations, and the U.S. Government, we identified several
aspects of the policy that were driving the majority of anxiety
in the business community that would lead to unacceptable costs
for businesses and open the door to new opportunities for
cybercriminals.
Fortunately, according to Module 6, Term and Condition
Number 14 in ICANN's Applicant Guidebook, quote, ``ICANN
reserves the right to make reasonable updates and changes to
this Applicant Guidebook and to the application process at any
time.'' ICANN's recent change to include a provision for
applicants to file for financial support is an example of how
the organization can still introduce productive improvements
into the new gTLD program. If ICANN needs more time to get
these items done, then it should strongly consider delaying the
application period or commit to acting upon these
recommendations.
Our research efforts and conversations with hundreds of
potential participants in the application process have resulted
in several recommendations. I will be the first to admit that
they need further refinement and development, and there may be
more adjustments necessary; however, CADNA believes that they
can serve as the basis for further dialogue with the Internet
community and ICANN.
If the new gTLD policy moves forward, here are some
concrete steps that can be taken to improve the conditions
surrounding it. First, a declaration by ICANN of when the next
applicant round will take place would relieve much of the
anxiety surrounding the first application period. CADNA has
found that businesses feel forced into applying for new gTLDs
in this first round lest they be put at a disadvantage relative
to their competitors, who may gain an edge by acquiring their
own gTLDs.
Second, businesses are worrying about dealing with
cybersquatting that will occur to the left of the dot in the
new space. In other words, they are worried about the abuse and
defensive registrations that they will need to pay for in open-
registry-model new gTLDs in order to reduce the impact
cybersquatting will have on their businesses and customers. To
alleviate this issue, ICANN should require open registries to
give brand owners the option to buy low-cost blocks on their
trademarks before any registration period opens. This could be
offered at a lower cost than sunrise registrations have been
priced at in the past. And this precedent has been set with the
blocks offered by ICM registry in .xxx, where the blocks are
made in perpetuity for a single nonrecurring fee.
Third, if ICANN is awarded a new IANA contract, NTIA should
consider awarding it for a short period of time, perhaps only 1
or 2 years, and during that time there should be an evaluation
of whether ICANN followed through on its commitments with
regard to the gTLD process, and an extension of the contract
should be contingent on conducting internal reforms to improve
governance and transparency.
I see that I am running out of time. May I have a little
bit of additional time? I have only got one more page.
Mr. Walden. Finish your testimony, yes, sir, please.
Mr. Bourne. Thank you.
Fourth, the U.S. Congress should immediately update the
Anticybersquatting Consumer Protection Act, or ACPA, in such a
way that not only curbs and deters cybersquatting in the
existing TLDs, what we have today, but anything that might come
in the future.
To ease the cost on private enterprises and nonprofits
alike, to ease the anxiety on the business community, and to
ensure that consumers are shielded from chaos and fraud as much
as possible, we need to identify and prioritize achievable
solutions. Commitments from ICANN, Congress, and the
administration that they will implement these proposals would
go a long way, but, in the end, more time and a formal process
to review the policy may be necessary.
Mr. Chairman, you have been an outspoken leader on Internet
issues and on Internet governance. CADNA would like to seize
this opportunity with you and your committee to constructively
improve the current policy to the benefit of all Internet
users. We should harness the renewed attention that CADNA's
colleagues in the association, corporate and nonprofit worlds,
as well as Members of the U.S. Congress and the administration
have given the new gTLD program lately by pursuing necessary
and achievable fixes such as those we have laid out. Thank you
for this time and this opportunity to speak before you and your
distinguished committee this morning.
[The prepared statement of Mr. Bourne follows:]
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Mr. Walden. Mr. Bourne, thank you very much for coming
today.
And to all our witnesses, thank you very much for your
enlightening testimony.
Mr. Pritz, I want to start with you. At the Senate Commerce
hearing last week on the issue, you announced that ICANN would
reduce the fee for a new gTLD to $47,000 for applicants in the
need of financial assistance. So I have a couple of questions
here. How can ICANN determine what constitutes an applicant in
need of financial assistance? Will lowering the fee ironically
make it more affordable for individuals with bad intent to
engage in cybersquatting? And does ICANN have the ability to
delay?
Mr. Pritz. The criteria for awarding financial assistance,
as all things, was developed by the ICANN community. And so
seeing this issue, a cross-constituency group was formed to
consider this issue and develop the criteria by which
applications for financial aid would be considered. And they
are, one----
Mr. Walden. Can you make that available to us then,
whatever those criteria are that would meet this?
Mr. Pritz. I certainly can, both the working group report
and then the staff embodiment of that that was passed by the
ICANN Board, which are operation in the public interest, a TLD
operating in the public interest; an applicant that is truly
needy that can demonstrate it in some way. But to address your
second question really, an applicant that demonstrates some
financial and operational wherewithal, either managing big
projects in the past or some financial backing from other
sources. And so under each of those criteria there are
subcriteria to measure each of the applicants.
Mr. Walden. Mr. Pritz, you have heard the testimony. I
mean, you are involved in this very, very deeply. It seems like
there is concern pretty strongly expressed, representing a
pretty broad-based set of organizations, that this may not be
quite ready for prime time. Do you have the ability to delay?
And what would that entail?
Mr. Pritz. So we are really responsive to the broad
Internet community, and so here is why we think the solutions
that we have in place for protections are good, and here is why
we think the process is done. We think they are good--one of
the hallmarks of the ICANN model is that when we are faced with
creating a set of trademark protections, we can get a bunch of
world-class IP experts in a room from all over the world and
have an extended meeting over a period of months and have real
experts in those fields develop protections. You know, how
would you go about it? You would get experts in trademark
protection. We got experts in malicious conduct mitigation,
such as the head of the Anti-Phishing Working Group and other
first responders. They are the ones we rely on to develop these
solutions.
Mr. Walden. So I guess one of the suggestions involved some
sort of trademark clearinghouse, where if you registered your
trademark there, then you wouldn't have go pay the registrars
to protect it defensively everywhere else. Is that something
that is reasonable? Is that something that could be done? Was
it recommended in the process?
Mr. Pritz. Yes. So the trademark clearinghouse exists. And
the purpose of the clearinghouse is that so that trademark
holders don't have to register with each new TLD for
protections. They only have to register once, and all TLDs are
obligated to utilize that clearinghouse in providing services.
And the details behind how that operates was developed by this
set of 18 intellectual property experts that over a period of
months developed the details behind it.
Mr. Walden. Let me go to maybe Mr. Bourne or Mr. Jaffe to
comment on does that process work? Is it as recommended? Mr.
Jaffe?
Mr. Jaffe. We don't believe so. And I think this is a
classic example of how what is called consensus really is not.
What ICANN did is they created a group, which is called the
Implementation Recommendation Team, which was a group of 18
experts in trademark protection on the Internet. In the
statement presented to ICANN and the public at large, the IRT
noted that a sizable--I emphasize a sizable--number of our team
would have preferred status quo, with no new gTLDs until better
rights protection mechanisms are in place for the existing
gTLDs.
In addition, the IRT emphasized that others in the IRT
group favored only the measured introduction of community-based
gTLDs. While it was true that a few of the members thought that
it should go forward, that is far from consensus. The broader
group said don't do anything, or if you are going to do
something, do it in a very small rollout, just as Congressman
Waxman was talking about.
So you can't just claim that there is consensus; you have
got to actually look and see how it works within their
organization. And there wasn't consensus there or in many other
areas.
Mr. Walden. With the indulgence of the committee, Mr.
Bourne, could you comment on this?
Mr. Bourne. Yes. Thank you.
Two things that I want to say about that. One is 2 weeks
ago I was on-site with a pharmaceutical company. They are in
consumer health, they are in many areas. They have amassed tens
of thousands of domain names that they registered. And I
thought to ask them, I said, how many .xxx blocks did you buy?
They immediately answered, over 100. And they said it was
probably the best investment that they have made in a long
time, though, because they never have to pay for them again.
So this is a really smart and innovative idea of ICM
registry, whereas other registries and registrars typically
charge a rent or a tax annually on all those BBB domains and
everything else. And it is a painful, forever, ongoing process
to secure and maintain a portfolio of those clearly descriptive
domain names. So that is something that ICANN, I think, should
make mandatory if this thing moves forward, to require all
registries to make it more cost-effective for businesses.
And the second thing that occurs to me is that today we
have got 200 million domains, give or take. We have 22 gTLDs,
this is true, but we also have hundreds of country code domains
around the world. About half of them are in .com, about 100
million. And there are probably tens of millions of
cybersquatted domain names.
We have a serious problem in the traditional space with
respect to cybersquatting. I think that if Congress has one in
a most outstanding role in all of this, it is to pursue
updating a 1999 law that has not led to any deterrence
whatsoever, the ACPA. And it is something that the Judiciary
Committees are looking at now.
Mr. Walden. All right. I am going to have to cut you off.
The committee has been very indulgent. I went about a minute
and a half over.
Before I recognize my friend, the ranking member, I would
like to insert in the record letters from the Center for
Association Leadership and from Name.Space, Inc., who have
written the committee with comments as well. Without objection,
they will be entered into the record.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Walden. And I now recognize the gentlelady from
California, Ms. Eshoo.
Ms. Eshoo. Thank you, Mr. Chairman. And thank you to all of
the witnesses today. I think this is an excellent panel.
Let me start out with my impression. I don't think this is
ready for prime time. You have been at this for 6 years. And I
am not suggesting that people haven't put in, obviously, a good
amount of time, but it seems to me that during this time, that
the opportunity with that time was to work out the differences
and I think the legitimate concerns that we are hearing today.
So it is ICANN, but then I think it is turning into ``I
can't.''
So I think that the suggestion that this be delayed, and
that consensus is developed by the various stakeholders, is a
very reasonable one and a very important one, because I fear
that if we go ahead, if you go ahead with this, this is
extraordinarily costly, number one. I mean, I always look at
the nonprofit world first, and it is my understanding that the
application fee, Mr. Pritz, to obtain a top-level domain name
is approximately $185,000--that is a lot of money for a small
business, for nonprofits--with an annual cost following that of
$25,000. And you stated that it is a cost-based fee.
How did you come up with this? Can you deconstruct it for
me just rather quickly, because I have a whole series of
questions on what the fee covers, what the money goes toward in
the gTLD process. Just very quickly.
Mr. Pritz. Yes. Certainly. So the fee covers the cost of
the evaluation. The evaluation is extensive.
Ms. Eshoo. How did you come up with that? How did you
evaluate the evaluation? Who is doing what that they need to be
paid this kind of money, and where does it go? Is it salaries?
What is it?
Mr. Pritz. Yes. There is six different evaluations provided
by independent evaluators, and we have hired multiple firms to
do that. They will evaluate each application that they have,
the technical and operational----
Ms. Eshoo. Did you shop it or----
Mr. Pritz. We certainly shopped it. We did a public request
for proposals, we interviewed applicants, and we negotiated
fees.
So the other part of this is we want to be very careful how
we delegate these TLDs. We want to delegate them only to those
entities that have the financial and operational wherewithal to
operate a register----
Ms. Eshoo. I understand that there is a subsidy of some--a
pot of, what, $2 million? Is it 2 million?
Mr. Pritz. The ICANN Board made--that is sort of a
different issue. The ICANN Board made a $2 million set-aside as
a seed fund----
Ms. Eshoo. For the whole wide world to----
Mr. Pritz. For helping needy applicants.
Ms. Eshoo. I mean, that is a pittance. I mean, once that is
used by a handful of organizations, then what happens?
Mr. Pritz. Then there will be second rounds, and there will
be----
Ms. Eshoo. Second rounds of how much and by when?
Mr. Pritz. The second round? The second round of new TLDs
will occur after ICANN has met its obligations to the NTIA, the
U.S. Government, other governments and trademark holders to
test the efficacy of its protections and to ensure that roots
own operation remains stable.
Ms. Eshoo. What kind of mechanisms are in place to ensure
that there won't be a proliferation of phishing? This has been
mentioned by more than one person today and other scams in this
new space.
Mr. Pritz. We are sure at the end of the day we are
creating a safer environment for----
Ms. Eshoo. How are you sure? How?
Mr. Pritz [continuing]. And trademark owners.
Two ways. One is that the new TLDs will have trademark
protections and malicious conduct mitigations, very specific
tools that existing TLDs don't have.
Ms. Eshoo. You know what I am struck by? I am struck by the
following, and that is that major issues are left to after you
begin rather than developing the consensus before we move
forward, and I think that that is really what has risen up in
the testimony today. And that is what I think is really
troubling.
Let me read this to you. It is from a constituent. Dear
Congresswoman Anna Eshoo, you are a member of the Committee on
Energy and Commerce and will be holding a hearing on ICANN's
new gTLD program Wednesday, December 14th. For those of us in
the IT business who are swimming in spam, please ask ICANN why
the law enforcement amendments to the registrar contract have
not been adopted, and why that process is not occurring with
full disclosure. My personal sense is that ICANN is more
interested in protecting spammers than they are in protecting
the public. Regards, Lyle.
So how would you respond to Lyle?
Mr. Pritz. Of course ICANN is not interested in protecting
spammers.
Ms. Eshoo. But what are you doing----
Mr. Pritz. ICANN is in active face-to-face negotiations
with registrars to implement those 12 law enforcement
recommendations into the registrar accreditation agreement. The
fastest way to implement them is in this face-to-face
negotiation. We publish the results of each meeting on our Web
site so that the community can be kept up to date with the
status of the negotiations and the implementations that are----
Ms. Eshoo. Who is negotiating, though? Who is negotiating
with whom?
Mr. Pritz. This is a bilateral agreement that ICANN has
with each of the registrars that sell domain names like Go
Daddy and NSI. So it is a bilateral agreement. So it is a
bilateral----
Ms. Eshoo. And how many of them have been struck?
Mr. Pritz. How many----
Ms. Eshoo. How many have been struck, bilateral agreements
that you are talking about? Or is this after the fact?
Mr. Pritz. Because there are 900 registrars, we are
negotiating with a representative group of registrars so that
we can reach agreement that these law enforcement protections
will be implemented in all of the agreements simultaneously.
Ms. Eshoo. I have gone way over my time, and I thank the
chairman for his patience. If I could just ask this, and you
can answer it. If this subcommittee were to ask you to delay,
what would your response be?
Mr. Pritz. I would say that this process has not been
rushed. It is 7 years in the making. It is well thought out.
How do we know we are done? Every issue has been discussed. No
new issues have been raised. The trademark protections that are
in place were developed by experts. At the end we were debating
nuances of those. The people at this table participated in that
debate and helped craft those RPMs as they were made.
Ms. Eshoo. Thank you, Mr. Chairman.
Mr. Walden. I thank the gentlelady from California.
I now recognize the vice chairman of the Subcommittee on
Communications and Technology, Mr. Terry.
Mr. Terry. Thank you, Mr. Chairman.
And, Ms. Alexander, you look bored. Nobody is asking you
questions, so I am going to step up to the plate. Last
December, the Department of Commerce sent a letter to ICANN's
former president Rod Beckstrom expressing concern about ICANN's
apparent failure to carry out its obligations as specified in
the Affirmation of Commitments. In particular the Department of
Commerce was troubled that ICANN was moving forward with the
gTLD expansion without having proven that the benefits of
expansion outweighed the costs. It seems to be the fundamental
question here today in our discussion. So what has changed
since last year?
Ms. Alexander. Thank you very much for the question. We
did, in fact, send a letter last December, and as a result of
that letter, we then worked with colleagues from around the
world and the Governmental Advisory Committee and developed a
scorecard of 81 different pieces of advice the government and
even ICANN in this program. The Board then sat in very
extensive face-to-face negotiations and deliberations with the
group of governments to resolve all of these issues, and from
our perspective, many, if not all, of those issues have been
addressed.
I think what we are seeing here today is the fact that a
multistakeholder, consensus-based process doesn't mean every
stakeholder agrees or unanimity in the process. Until we
actually--the program unrolls and we see effective
implementation of the safeguards that have been described,
there will be predictions of those that want this and those
that don't.
So we are very--at this point I think we are looking for
facts, and facts based on what actually happens going forward.
And again, it is really key that there be effective
implementation of the safeguards that the GAC was able to get
through this process.
Mr. Terry. You said in your answer that they adopted most
of the recommendations. In the grouping of ``not accepted,''
are there any of those that are of concern to you?
Ms. Alexander. Not to the United States. There was a set of
recommendations that the Board didn't agree to. The Board
action is consistent with U.S. law. It was European colleagues
that were concerned that this sets up a different set of
trademarks. But what was adopted and agreed to in the Board is
consistent with U.S. law, so we were happy with the response.
Mr. Jaffe. Congressman, can I just say one thing in regard
to that?
Mr. Terry. Yes, sir.
Mr. Jaffe. There is this Government Advisory Committee that
works with ICANN. There were 12 issues that they had put
forward to--and this was already mentioned by Mr. Pritz--as
very fundamental to the protection of the registrars and
registries from being infiltrated by criminal activities. Of
those 12, only 3 have even been examined by ICANN, and none of
them, none of them, have been actually acted upon.
I would think that those would be somewhat important things
still standing out there when the Chairman of the FTC says that
this proposal would be a disaster both to business and
consumers, not the kind of language that he uses usually. That
would be very serious. I could show you a chart that shows that
there are serious holes in the protections that ICANN claims to
put forward, if that would be all right with the committee.
Mr. Terry. I would ask you to do that.
Mr. Jaffe. Can I put up the posterboard with the--I would
call it the so-called Mickey Mouse posterboard.
Mr. Terry. OK. I won't ask why.
Mr. Pritz. Congressman, can I make a correction while the
board gets put up?
Mr. Terry. Sure. I will give you 15 seconds.
Mr. Pritz. The Government Advisory Committee and ICANN
examined 12 issues and 80 subissues regarding trademark
protections and malicious conduct measures, and got to
agreement on 90 percent of them. What Mr. Jaffe is talking
about are the 12 coincidentally law enforcement recommendations
that we are seeking to----
Mr. Terry. OK. I appreciate that clarification.
Mr. Jaffe. And by the way, though, those discussions have
been going on for a number of years now.
What you see over here is the key--one of the key aspects
of protecting the Internet is actually being able to know who
stands behind an IP address. This is very important for
companies and consumers if they are being somehow harmed on the
Internet.
What you see here is that when you actually go to existing
registrars and to what is called the thicker WHOIS, which is
one of the things that ICANN has particularly stressed as a
protection, you find that you have people who are registered as
Mickey Mouse--and this is literal--Donald Duck. If you look--I
don't know if you can see it here----
Mr. Terry. I wish I could.
Mr. Jaffe. But the addresses are clearly fraudulent.
Anybody would see that immediately, and yet they have not acted
on this. And this is not just--we have some examples, but they
could be multiplied many times.
If you can't tell who is causing the harms on the
Internet--and there is, by the way, no requirement that there
be a thicker WHOIS. ICANN recommends it, but doesn't demand it.
But even if they demand it, and it is not actually carried out,
this creates a massive hole in their protection system. And to
roll out a new supertanker with a clear hole in the hull is not
something that we would want to put much of the business and
brand community, and most of the consumer community, and much
of the not-for-profit community on board until it has been
tested out.
This seems to me these problems should be solved first, and
then we should go forward with a major rollout. And we are
talking about 1,000 potential names. Mr. Pritz in the last
hearing specifically went from 300 to 500, which we said was a
1,200 to 2,300 percent increase, and saying that they might
even go to 1,000 names in the first----
Mr. Terry. My time is gone. And hopefully, Mr. Pritz,
someone will ask you to reply to that so we can get the point,
counterpoint.
Mr. Walden. I now recognize the gentlelady from California,
Ms. Matsui.
Ms. Matsui. Thank you, Mr. Chairman.
And I only have 5 minutes, so if you can be as crisp as
possible.
Mr. Jaffe, in your testimony you noted the proliferation of
domain names that would raise costs for domain name owners for
things like defensive registrations and monitoring. Can you
summarize these costs briefly?
Mr. Jaffe. Yes, I can. And I will try to be brief. But it
is important to understand that for our members, they often
have hundreds, even thousands, of brands. So these numbers
have--you first get the numbers, and then you have to figure
out how it might multiply through the process. There is a
$185,000 registration fee. That doesn't mean that you get the
registration. That is just to get into the game. Then if you
get the registration, it is $25,000 per year, and you have to
keep the registration for 10 years. This basically wipes out
all medium-sized and small groups.
That is not all the costs. There is diversion of Internet-
using consumers to other sites, lost sales, damaged reputation,
goodwill, and the cost to monitor the Internet for such abusive
conduct, the cost of UDRP actions, anywhere from $5,000 to
$15,000. And the list goes on and on. It is an extraordinarily
expensive program for the business community.
Ms. Matsui. Ms. Hansen, would you agree with that?
Ms. Hansen. Definitely.
Ms. Matsui. OK. I have a series of other questions, but I
must say that I want to get to the point here of the hearing, I
believe.
I really don't believe this is ready for prime time. I
agree with my colleague Ms. Eshoo on this. My concern is, yes,
you have got 6, 7 years they have been working on this, but
there are many issues that we have been working on for 6 or 7
years that we just don't know where to go because you can be
talking--every issue can be out there, every fact can be out
there. But quite frankly, it is who emphasizes these issues
that are really very important.
This is not at all related to what is happening here today,
but we have a huge water issue in California. We have been
working on that for decades, and we know about every single
fact and issue there is, but we still can't get to a situation
where we have the right transparency, accountability and
governance. And I think this is what this is all about. You
seem to believe that this has to be done, the implementation
has to go forward, and you have already talked about it for
years or discussed it. So therefore, 6, 7 years should be
enough. We will just call it, we will go ahead with it.
I believe at the very beginning ICANN had a certain
mission, and I think we have gone off track here. So what I am
saying, if ICANN is--as you are saying, can't delay its
implementation, would you consider a pilot project? I mean, we
are looking at this right now of let us say no more than 50
total domain names to see how it works, and then see its
benefits before rolling out the full program, because once it
takes off, I don't know how we will deal with this.
Mr. Pritz.
Mr. Pritz. ICANN does have a mission to increase
competition and choice, It is baked into our DNA, to create
competition in the Internet. It has done that since the very
beginning. This committee chided ICANN in 2001 for moving too
slowly on new TLDs when it made a very limited round, an
introduction. The title of the hearing included ``Is ICANN
Thwarting Competition?'' Our mission is to create competition
but in a safe and stable way. And what we want to do, what I am
as passionate about, or more passionate about, than people here
are launching new TLDs to improve the environment for consumers
and trademark holders.
Ms. Matsui. Let me say this, Mr. Pritz. We know a lot more
now about cybersquatting and all the nefarious things that can
happen on the Internet. We are dealing with it every single
day. I mean, let us face it, we are dealing with the Internet
much more frequently than we did before.
And this is like--we are trying to do something on a
worldwide basis now. I don't know where the governance of this
comes in. It is a private non-profit, and it seems to have
morphed into a lucrative business. And we may not have
nefarious motives, but we don't know what would happen once it
takes off, especially if it is international. There are
countries around the world who don't have the same standards we
have, and even though you might be dealing with people who are
very intelligent, the governance, the accountability, the
transparency is not apparent to me. And I truly believe that
there is a way to delay this that would be most helpful so we
can have a discussion about some of these governance things
that I think are very important.
Do you have a comment on that at all, Mr. Pritz?
Mr. Pritz. Certainly ICANN is one of the most transparent,
accountable organizations there is, as has been measured by
others. And I just want to talk specifically about
cybersquatting.
Cybersquatting will be reduced in new TLDs, one, because
there is new protections; and two is cybersquatting occurs in
the great big TLDs like COM and the others. That is where it
pays off. That is where malicious conduct pays off. By
distributing names in more TLDs, it will serve to reduce the
amount of cybersquatting. There is no incentive----
Ms. Matsui. I see where my time is--I am sure it is gone.
But I must say this right now, that our constituents are
telling us they use the Internet, and they are very concerned.
And, you know, I look at things at the granular level, at the
ground level, and quite frankly, it has caught their attention,
it has caught our attention. I think we need to look at ways to
delay this.
I thank you for your patience, Mr. Chairman.
Mr. Walden. Thank you for your participation and good
questions.
We have a letter here from Rebecca M.J. Gould, vice
president of global government relations and public policy from
Dell, Inc., which we would like to submit in the record.
Without objection.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Walden. Now I turn to the gentleman from Georgia, Mr.
Gingrey, for 5 minutes for questions. We welcome your comments.
Mr. Gingrey. Mr. Chairman, thank you. And I really thank
the witnesses. I think we have excellent witnesses on both
sides of this issue.
And speaking of issue, I would like to go back to the line
of questioning that my friend, the gentlelady from California,
had in regard to the cost. And I want to continue along that
line, Mr. Pritz. This ICANN or ``I can't,'' but ICANN is a
nonprofit--or not-for-profit organization. And you set a fee of
$185,000. And, of course, I think you did describe in your
dialogue with Congresswoman Eshoo, the ranking member, where
some of those funds went or how you arrived at the number, the
top number. But it seems to me that in a nonprofit situation
you could have picked any number.
If you can afford to allow people who are in need, whatever
that definition is, to get this domain for $47,000, then it
seems to me that the markup--it almost sounds like a Joseph A.
Banks twofer sale--that maybe the price of 185- is a little bit
overpricing it.
And what is the salaries of those people like yourself and
others who are top-level management of ICANN? You know,
nonprofits are really bad about that; not necessarily ICANN,
but a lot of nonprofits. So naturally we would be a little bit
concerned about that. And maybe you could elaborate a little
bit more on that.
Mr. Pritz. Sure. I wish ICANN was bad about overpaying its
staff. The 185,000--so as an operational manager, I will tell
you that it is spent. And ICANN has published memos outlining
where the costs will go. Most of it goes to the evaluation
itself. There are six different evaluations that----
Mr. Gingrey. Let me interrupt you right there because that
raises a red flag for me. Why do you have to have six different
evaluations? Why not two or three?
Mr. Pritz. Because we have been talking about protecting
consumers and trademark owners, and we want to----
Mr. Gingrey. Why not 12?
Mr. Pritz. So again, what is great about ICANN is it gets
to rely on experts in Internet security and trademark
protection. And we ask them what evaluations should be done on
these applicants in order to ensure improved safety and
security in the Internet and these--these evaluations to ensure
they have the economic and operational wherewithal to run a
registry? We do criminal background checks. We do background
checks to ensure they are not involved in domain name
misappropriations in the past. We want to make sure that
domain--the top-level domain won't result in consumer
confusion. And so these are most of the checks we are doing to
ensure that only those that will operate the registry in a
responsible way will be awarded these things, because we want
to improve the environment for consumers.
Mr. Gingrey. I think you have done a pretty good job in
responding to me on justification of the cost. Some of my
colleagues on the other side of the dais have expressed their
feeling that they don't think this is ready for prime time. I
will have to admit to you I am not sure whether or not it is
ready for prime time, and I guess that remains to be seen.
In the remaining minute and a half, let me move to Mr.
Jaffe and ask him this question. Mr. Jaffe, within the
nonprofit world, how might this expansion increase incidents of
online predator crimes where, for example, the Girl Scouts or
the Boy Scouts have to keep their name off either this new .xxx
or something worse that we haven't seen yet? How big a problem?
Mr. Jaffe. It is an enormous problem. The Red Cross was--
and the Olympics got an exemption out of this program, as did,
by the way, ICANN. When the Red Cross asked for this exemption,
they said it was absolutely essential that they have it,
because every time there is a natural disaster, that they have
people stealing, pretending to be one of their affiliates; and
that if they did not have this exemption, that that would be a
very serious problem.
That is the same problem that the Council of Better
Business Bureaus has just discussed with you today. There was a
witness in the Senate hearings last week from the YMCA
representing a consortium of 38 other not-for-profits. All of
them said this would be an extraordinarily serious danger for
them, and that they did not feel protected, and that to have to
be able to spend the kind of money that we are talking about to
reserve their names was going to severely undermine their own
programs.
Mr. Gingrey. Well, I have got 11 seconds left. Let me go
back to Ms. Alexander and then ask again about this .xxx. What
was the purpose of that, that domain name, creating it?
Ms. Alexander. Thank you very much for the question. The
Department was not the applicant for the domain. It is probably
a better question to put to Mr. Pritz.
Mr. Gingrey. OK. Mr. Pritz.
Mr. Pritz. The application was put in as part of the 2003
round of new TLDs where seven were implemented that were
restricted to certain types of communities. Dot-xxx submitted
an application and filled out the technical and operational and
community information. The ICANN Board decided not to award XXX
a TLD. ICANN has independent review processes, and ICANN went
through that independent review process, and in arbitration it
was determined that the ICANN Board didn't follow its processes
properly, and the decision was made to delegate XXX. And I
would say based on some of the other comments here, there is
significant safeguards in XXX for users and trademark holders
that some of the panelists have deemed to be effective.
Mr. Gingrey. OK. Mr. Chairman, thank you. I yield back.
Mr. Walden. The gentleman yields back his time.
The chair recognizes the gentlelady from the Virgin
Islands, Dr. Christensen, for 5 minutes.
Mrs. Christensen. Thank you, Mr. Chairman.
Mr. Pritz, three out of four of your fellow panelists are
not supportive of the January rollout. Could you tell us the
names of some groups that are supportive of the January--just a
few.
Mr. Pritz. Right. So this consensus is built out of ICANN's
communities. So for the group that makes the policy to initiate
this program, there is counsel with representatives from
intellectual property, a business constituency, Internet
service providers, noncommercial groups, registries and
registrars. They all represent their constituency groups and
come to the policy discussions with their viewpoints, and they
work over a period of time to develop a consensus. Several
multinational--not several, many multinational corporations
participated in that debate. Also there is governments that Ms.
Alexander described that play a very key role in developing
ICANN's policy.
Mrs. Christensen. OK. It still seems to me that details
about the top-level domain expansion are still being worked
out, including protections to trademark holders, as well as
enforcement of various new mechanisms. You are still
negotiating, for example, on the law enforcement
recommendations. So I, too, have some concerns about moving
forward with that January rollout while significant portions of
the plans are still being worked out.
Also, there are already examples of ICANN's inability to
implement internal policy. For example, ICANN is currently in
arbitration with Mr. Embrescia's organization, Employ Media.
The arbitration in the job space has been stalled because of
ICANN's inability to meet arbitration deadlines. So how will
ICANN ensure that these mistakes and delays won't happen in the
gTLD expansion?
Mr. Pritz. So there is a very detailed project plan to
which ICANN is managing to ensure that the program is
implemented in a timely, transparent and predictable manner.
Evaluation panelists have already been retained. They are being
trained. The trademark protection mechanisms, the details of
those are very well settled as determined by expert groups that
are determining them. And the implementation of those measures,
such as the trademark clearinghouse and a rapid take-down
process, are well underway, according to a timetable. Remember,
we are not going to see any new TLDs until 2013 at the
earliest.
Mrs. Christensen. Do you have a plan in place to ensure
that ICANN is adequately staffed to review applications and
implement all parts of the gTLD program? And do you have
adequate staff to execute the appeals process and avoid
internal process breakdown?
Mr. Pritz. Yes. We have--it is published on ICANN's Web
site, but we have agreements with very well-known firms, both
in the United States and internationally, to perform the
evaluations and also perform any necessary arbitrations. We
have developed processes for independent arbitration. So if
there is a dispute, it goes outside ICANN, it gets settled and
comes back. So the process itself is well thought out and
managed.
Mrs. Christensen. And staffed?
Mr. Pritz. Oh, yes. And certainly staff. There is staffing
plans for the next year not only in evaluating these
applications, but also in increases to our compliance program,
our financial staff, our staff that administers the contracts
are all well planned.
Mrs. Christensen. This question is both to you and to Ms.
Alexander. To you, Mr. Pritz, what mechanisms are in place to
ensure that ICANN's own procedures and rules are followed? And
who will enforce those rules when the process breaks down?
And, Ms. Alexander, what role, if any, will NTIA or the
Department of Commerce play in ensuring ICANN adequately
implements guidelines in the procedures it has set?
Ms. Alexander. Thank you very much.
So NTIA will continue to play a very active role as it does
within the Governmental Advisory Committee in working with
colleagues around the world to make sure that these key
safeguards are actually put into place. The other safeguard
that we have is the Affirmation of Commitments that was
referred to earlier, I think, by Ms. Eshoo. It actually calls
for a multistakeholder review of this program a year after the
first TLD is in the root, similar to what we have done with the
Accountability and Transparency Review Team. We will be very
actively participating in that process.
Mrs. Christensen. What recourse will NTIA or other
stakeholders have if the gTLD program is not rolled out in a
satisfactory fashion?
Ms. Alexander. So we believe our current safeguards in the
process and through the GAC--we can actually ask for additional
changes if they are needed. This will require us to work very
actively and closely with stakeholders, including those at the
table. We take very seriously the concerns people are raising
and want to work actively with them to make sure those are
taken into account and addressed going forward.
Mrs. Christensen. Thank you, Mr. Chairman.
Mr. Walden. The gentlelady's time has expired.
The chair now recognizes the gentleman from Florida, Mr.
Stearns, chairman of the Oversight and Investigations
subcommittee.
Mr. Stearns. Thank you, Mr. Chairman. And thank you for
having this hearing.
We have had hearings like this before, and I think one of
the concerns a lot of us have, which I could hear when I was
watching in my office, is the amount of money as a not-for-
profit that you folks are going to make. Do you think you will
sell 500, Mr. Pritz, 1,000 new addresses? How many do you think
you will sell?
Mr. Pritz. Sir, we are not selling them, but we are
providing them and have the zero-cost fee. So the latest
testaments are that we hear from the outside----
Mr. Stearns. Of the 185,000 cost-recovery fee, how many of
these do you think you will get?
Mr. Pritz. We think--so this is hearsay. The latest
estimates are over 500.
Mr. Stearns. So you could have 1,000?
Mr. Pritz. Yes.
Mr. Stearns. So you think 2,000 is a fair estimate?
Mr. Pritz. I don't think so. I think it is much less than
that.
Mr. Stearns. If you do 500, it is roughly $92-million-500.
Mr. Pritz. Yes, I know exactly----
Mr. Stearns. So if it is 1,000, then you will have $185
million. If you do 2,000, you will have $360 million. Is all of
this money going into a surplus, or where is it going?
Mr. Pritz. Sir, if there is--ICANN is a not-for-profit, and
if there is a surplus at the end----
Mr. Stearns. There should be a surplus at----
Mr. Pritz [continuing]. It will be identified and
segregated and put into a fund to help applicants in future
rounds.
Mr. Stearns. Do you have a surplus now?
Mr. Pritz. We have an operating reserve fund of about 9
months' worth of operations.
Mr. Stearns. So you have no large surplus at this point?
Mr. Pritz. No. We have a reserve fund of 9 to 12 months of
operating----
Mr. Stearns. And how much is that?
Mr. Pritz. It is $50 million.
Mr. Stearns. Fifty million?
Mr. Pritz. It is about that. I would have to consult with
our CEO what it is exactly.
Mr. Stearns. So it appears you have $50 million in surplus
right now, and you are adding anywhere from $100 million to
$200 million. It seems you will be overly supplied in your
surplus. Wouldn't you think that? In other words, if $50
million takes you to 9 months, then if you add another $200
million, that is going to take you to 3 \1/2\-plus years--you
will be over 4 years surplus. Do you think you need that much?
Mr. Pritz. No. And I don't think that--there is not
intended to be an increase in the reserve fund based on the new
gTLD, the program where the costs and fees received are
segregated and handled separately.
Mr. Stearns. Well, I think what you judge here--we just
think you are charging too much money. Is it possible when you
do these cost-recovery fees that you could stipulate in the
contract--and you are trying to prevent Internet squatters.
Couldn't you say that if the person doesn't do something with
it in a certain amount of time, they will forfeit, and that way
you wouldn't have to charge so much money? If the reason you
are charging so much money is to discourage people that are
just going to sit on the domain, why couldn't you stipulate in
a contract, like they do in a franchise for Burger King and
McDonald's, you have got to do X, Y, Z to your property; if you
don't do it, you lose your franchise? Couldn't you do something
like that and then drop the fee?
Mr. Pritz. So----
Mr. Stearns. Just yes or no.
Mr. Pritz. Yes. We are intending to encourage applicants to
bring new businesses and innovation. This is all about bringing
innovation----
Mr. Stearns. I mean, to bring the cost down, couldn't you
stipulate in language that they have to do something in a
certain amount of time, and that way you prevent squatters?
Mr. Pritz. We do that. We have new protections that are
built into the program, that are built into the new agreement
that new registries have to comply with to combat squatters. So
it is really a separate issue than the fee, which is really
targeted at evaluating the applications. And think about----
Mr. Stearns. Mr. Pritz, how much do you make a year? What
is your salary?
Mr. Pritz. Well, I was making $248,000 a year, and I got
two 15 percent raises in the last several years.
Mr. Stearns. How much total salary today?
Mr. Pritz. Including bonuses, about $395,000.
Mr. Stearns. You are making $400,000 a year. And what is
the CEO making?
Mr. Pritz. I am not sure.
Mr. Stearns. Well, I think it is public knowledge. So you
must know. What is it?
Mr. Pritz. I think it is over $800,000.
Mr. Stearns. Because when we testified--I was chairing a
committee, and we had this testimony--anyway, it was up about
that 2 or 3 years ago. Does that include all the fringe
benefits, this $850,000 he makes?
Mr. Pritz. I am not sure. I am sure that it is competitive
with other similarly situated CEOs, because ICANN strives to
have----
Mr. Stearns. Well, I think in light of the fact that the
salaries are pretty generous, it seems, and you are going to
potentially have $200 million added to your surplus with your
$50 million, you will have reserves for 3-1/2, 4 years of
operating, I think you folks should take to advice here and not
charge so much here.
Mr. Pritz. And I wish we could. And we will look at the
actual costs after the first round. But we have made a very
good-faith attempt to identify the costs with great
specificity, and our prediction is that is what it is going to
cost. And we think we are right in the middle. It could be--the
actual costs could be greater, or it could be less. If it is
less, that money is going to go back to the Internet community
in some form. It is not going to go into salaries, and it is
not going to go into the ICANN reserve fund.
Mr. Stearns. Thank you, Mr. Chairman.
Mr. Walden. I thank the gentleman from Florida, and I
recognize the gentleman from Massachusetts, Mr. Markey, for 5.
Mr. Markey. Thank you, Mr. Chairman.
I believe that ICANN's proposed changes need to be closely
scrutinized. And I thank the gentleman from Oregon for holding
this important hearing this morning.
My concerns with ICANN's proposal to expand the amount of
generic top-level domains or the words to the right of the dot
in a Web site address are twofold. One, I am concerned that
ICANN has not sufficiently proven that any problem exists. Is
there a shortage of Web site addresses? Why does this change
have to occur right now?
Two, I am also concerned that ICANN's proposal could burden
both consumers and businesses. For example, the proliferation
of gTLDs could hurt consumers by increasing the risk of fraud.
A consumer may have problems distinguishing a legitimate Web
site from a fake one. As a result, a consumer may disclose her
personal or her financial information to an imposter posing as
a legitimate business.
Before making a sweeping change to the Internet, we must
ask who really stands to benefit from the change. Any proposal
that would fundamentally alter the Internet must first ensure
that consumers and businesses alike are protected.
Mr. Jaffe, if this proposal were implemented, and analysis
then demonstrates that the costs of the new gTLD program exceed
the benefits, isn't it true that the damage from the new gTLDs
would already have taken place, and that there is no provision
to undo these decisions once the damage has been done?
Mr. Jaffe. That is absolutely correct. And this is why we
think it is particularly premature to do this kind of a
rollout. Just last week there was a letter written to the
Department of Commerce by Robert Hall, who is the Robert and
Carole McNeil joint professor of economics at Stanford
University, the senior fellow at Stanford's Hoover Institution.
He served as president of the American Economic Association for
the year 2010. Speaking about the cost-benefit issues, he said,
our analysis today shows that an unlimited expansion of gTLDs
would not add anything material to the product variety facing
Internet users. It would merely create a costly nuisance for
those users. ICANN is sponsoring a perversion of the economic
analysis that a commission--by even suggesting that this
nuisance has net benefits for the Internet community. We
therefore urge you to take action to block the unlimited
expansion of gTLDs unless it is satisfactorily and
transparently demonstrated that any such expansion or a limited
expansion on a case-by-case basis would be in the public----
Mr. Markey. What would the impact be on ICANN's credibility
with the public and with governments?
Mr. Jaffe. Well, we think there is going to be an
enormous--despite what has been said at this hearing, an
enormous further proliferation of cybersquatting, phishing
because they have not been able to control the 22 top-level
domains. And so why do you think that they can control 300,
500, 1,000 more domains?
And understand something that is very important to
understand in this process. The top-level domains, which will
be going up enormously, proliferate everything to the left side
of the dot, the secondary domains. Right now with 22 top-level
domains, there is more than 100 million secondary domains. Just
think what will happen here. In the XXX area, almost every
college and university in this country felt it was necessary,
to protect their good name, to buy a name on the XXX area.
Mr. Markey. Let me ask Mr. Bourne a quick question if I
may.
In your testimony, you emphasize that ICANN should change
its proposal to make it less harmful to consumers. As you know,
the Federal Trade Commission Chairman Jon Leibowitz has called
ICANN's proposal, quote, ``a disaster for consumers.'' In your
view, what risks does the current ICANN proposal pose to
consumers?
Mr. Bourne. Thank you for your question, Congressman. My
estimate today is that maybe there will be 800 applications,
right, for new gTLDs. Probably two-thirds to three-quarters are
coming from brands. So that number is artificially high because
brand owners are unsure when this could be available to them
again. So ICANN in a way has created a condition of scarcity
there. So by illuminating when the next round could be, maybe
fewer applicants will apply. Right? So lowering the stack,
reducing it.
Furthermore, this point about cybersquatting, consumer
harm, it is bad out there today, right? The existing space is a
mess. Will the new space be worse? Maybe. It will be bigger,
that is for sure. There are things that we can do, that ICANN
can do, that all the different stakeholders in this can do to
affect cybercrime, and the most important thing to do is to
establish a deterrent. These people are undeterred. The 1999
ACPA has basically done nothing. Cybersquatting has increased
dramatically since it was introduced. So that is something that
we can do to fix this space. And God forbid this space gets
much bigger, it will affect that space positively as well.
Mr. Markey. Mr. Chairman, thank you very much. And I think
this is a very important hearing. Thank you.
Mr. Walden. We do as well. Thank you for your participation
and your questions.
We will now go to Mr. Shimkus from Illinois for 5 minutes.
Mr. Shimkus. Thank you, Mr. Chairman. I appreciate the
panel being here today.
I would like to first turn to Mr. Bourne. And you suggested
that a second round of general top-level domain applications
would alleviate some of the concerns with the problems. And I
would like to put it in this perspective, if I understand the
testimony. We deal a lot with spectrum here, and if you know
spectrum, it is really a finite entity. We know what has been
sold. We know what has been auctioned. We know what is
available. It does provide some certainty to people who are
then going to eventually get into the market and bid for a
slice of it because they know what is out there.
The concern with what ICANN is doing is we may not know
what the top and the level is of what is out there, and I think
your testimony tried to address that. Am I right?
Mr. Bourne. It did. It did. I talk to hundreds of
businesses and have talked to hundreds of global enterprises
since this policy was initiated back in June. We even hosted an
event in New York City called ``What is At Stake: The Reality
of the New GTLD Program for Brands.'' Eighty-five participants
were there discussing the way they felt about this policy. And
there was a great deal of anxiety. In fact, I would say that
80, 90 percent of the companies I know who are applying for a
gTLD are doing so mainly to gain rights to an option of
hypothetical future value mainly because they don't know if
they will have another shot at it.
So coming out of this event on November 1st where the
founding chairman of ICANN, Ms. Esther Dyson, was our keynote
speaker, we sent a letter to ICANN asking them just to shine
some light. And the answer could be in 3 years, it could be in
4 years, it could be in 5 years. Whatever it is right now, we
don't know if there will ever be another program.
So I mentioned this to Congressman Markey. I will say it
again. Intentionally or unintentionally, ICANN has created a
condition of scarcity around these gTLDs, and that should be
alleviated before this moves forward so that companies can make
a realistic decision if this thing proceeds: Can I afford to
wait this out? Do I want to sideline, or do I want to be a
pioneer?
Mr. Shimkus. Ms. Hansen, I saw you kind of agree. Do you
want to weigh in on this?
Ms. Hansen. Yes, definitely. I think your points are very
good. And we also considered whether or not we should get a
.bbb. I think everyone has been undergoing that analysis.
Mr. Shimkus. And that would be just to protect your brand
name, not knowing what future offers, if ever, will be on the
table?
Ms. Hansen. Exactly. We don't want somebody else to get
that, because our brand is so well-known, and it has been used
and abused relentlessly already on the Internet. We would
rather have it and not let it get in the hands of someone else.
Mr. Shimkus. Mr. Pritz, how do you respond to these two
concerns?
Mr. Pritz. Well, that we take the concerns very seriously.
There is over 50 trademarks that are registered for BBB. And so
what is required to be put in place is a set of rules that
protect each of those trademark holders to allow them to object
if anybody were to attempt to register BBB that would infringe
their interests.
Mr. Shimkus. Let us segue right into that. This whole
debate on string confusion, I mean, I am kind of now moving,
but I do have you. How do you keep proprietary trademark data
when someone could, in the purchasing of a gTLD, marry together
a name that could break copyright identification? Why does
ICANN permit this as an objection to the TLD, yet still allow a
registry to reserve domain names for auction that are
confusingly similar or identical to trademarks; in other words,
take a Google and then place in an additional G? Why do you let
them reserve that?
Mr. Pritz. Each registry develops its own rules. So if
somebody applies for a trademark name, that trademark holder
can object to that application for a new gTLD. At the second
level, there is a set of protections that have been put in
place by trademark experts to allow trademark owners to have
first dibs at buying a name; to put a registrant on notice that
they are registering a trademark name; or, if they are abusing
a trademark after the fact, take it down in a rapid,
inexpensive way. So the protections for trademark holders are
based on existing protections. We don't make stuff up. And
then----
Mr. Shimkus. My time has expired. I think we are raising
some great questions of concern. And since my time has expired,
I am just going to throw this out. No one needs to answer. Law
enforcement has concerns on the WHOIS type of information.
Obviously we don't want criminal elements that now have
activity--I am not sure what legislative action we can do in
the oversight hearing. This hearing is very, very important.
Mr. Chairman, I would request that we continue our discussions
on this and what we may or may not be able to do. And I yield
back my time.
Mr. Walden. I appreciate that. And we will continue the
discussions.
Let us go now to the gentleman from Texas, Mr. Barton, for
5 minutes.
Mr. Barton. No thanks.
Mr. Walden. He does not have questions.
Mr. Scalise from Louisiana, you are on for 5.
Mr. Scalise. Thank you, Mr. Chairman. I appreciate you
holding this hearing.
There are a lot of questions as we look at this, and I
guess I will start with Mr. Pritz. You all are rolling this out
starting in January. So you have a 3-month period where you
would take applications for various top-level domain names. And
then at that point do you have a process, a timeline, for when
you will start authorizing it at some point? You have got 50
applicants or whatever the number is going to be. When do you
actually start issuing those TLDs?
Mr. Pritz. The evaluation process and then the ensuing
negotiations are expected to take place over about 9 months. So
the first TLDs, the first new registries would be operational
in early 2013.
Mr. Scalise. OK. Was there any consideration of doing some
kind of pilot program first? Since this is a kind of new area,
a lot of questions, whether it is companies that are concerned
about copyright issues or just the complications that already
exist with existing TLDs just get carried over and then maybe
exponentially expanded. Was there the thought of doing that
before, just kind of opening it wide up?
Mr. Pritz. Yes. We conducted two pilot programs in the
past, one in 2000 and one in 2004.
Mr. Scalise. With what?
Mr. Pritz. In the 2000 round, new TLDs such as .business
and .info and .museum were introduced. In 2004, we had--that
round, we had the introduction of .jobs, Mr. Embrescia's TLD,
.UPU, for the university----
Mr. Scalise. Were there any things learned from previous
problems? Because, I mean, some of the same problems we heard
today we heard back in 2000. Were any of those problems worked
out if this was a so-called pilot program?
Mr. Pritz. Right. Plenty of problems were identified and
addressed in this program. One had to do with how to limit the
round. And so this isn't ICANN, me talking, this is--the
greater Internet community discussed this issue in great depth
and decided not to limit the round by type of TLD or numbers of
TLD where ICANN would determine winners and losers in the
program and put itself in the same position where this
committee was fairly critical of it in 2001, but rather to
limit the program first by an open and closed application
window, and then by setting a high bar to determine only those
who implement protections and have the wherewithal to operate a
registry in a responsible way and can be monitored.
Mr. Scalise. I am going to jump in. Mr. Jaffe, I saw you
kind of shaking your head. I don't know if you wanted to
comment on----
Mr. Jaffe. I would, because what certainly has not
happened--and we have heard in this hearing several times that
they have put in a whole series of new types of protections
because they felt that the existing protections were
inadequate. They have certainly not tested that out. And I
would like to show you how--if you would be willing to allow me
to put a couple more posters up just to see----
Mr. Scalise. If we can do it in about 40 seconds or so.
Mr. Jaffe. Put up the poster for the subcommittee members
who have sites. I will try and do this very quickly. And we
could obviously have--and this was certainly true for Senators.
It is also true for the President of the United States. If you
could then put up the posterboard for the chick.xxx. This is
just one site. You hear about some of these numbers I have been
talking about. Here they are talking about selling this for $5
million. The numbers that we were talking about are actually
low.
If you could put up the security warnings for the
FederalTradeCommission.org.
What happens here is that if you come to thinking that you
are going to the Federal Trade Commission, you will be spammed,
and that this--it looks like it is a safe site, but it, in
fact, would allow you to have your keystrokes taken.
So there is a tremendous danger already. Why would we think
that with these dangers that are already out there, why would
we do 1,000 more?
Mr. Scalise. I have time limitations because these are some
of the problems that I was referring to that have been around
well before 2000. I know when we dealt with this when I was in
the State legislature, the issue of cybersquatting on, for
example, high school athletes or even a college athlete, by the
time you are maybe a senior in high school, if you are a blue-
chip recruit, somebody bought your name, they took it, it is
gone. So if you are fortunate enough to make it into the NFL or
the NBA or Major League Baseball, somebody else owned your
name. I don't even think that problem has been resolved.
So the final two questions as my time is expiring are,
number one, Mr. Pritz, how are you all already dealing with
that serious problem? And then what happens, then, if you
somehow create an authorized .athlete, for example, and then
somebody goes out and now all of those athletes are--somebody
is going to buy their name and squat on their name? Do you have
any mechanism--if a name is--a new top-level domain name is
issued, and then you find problems with it, is there a method
you have in place to pull that back in your plan that you have
already drawn up? So if you could answer those two questions.
Mr. Pritz. One reason for that problem today is scarcity,
that all of the .com names are gone, every English word is
registered there. How do we address the needs of--there is 2
billion Internet users. How do we address the needs of the next
billion----
Mr. Scalise. No, no. If there is a John Smith, and if
another John Smith gets it, first come, first serve. But if Bob
Dole goes and gets John Smith's name because he wants to take
advantage of that person, that still exists today. I haven't
seen you all come up with any mechanism to resolve those
blatant disputes, and there are too many examples of them.
Mr. Pritz. That is right. And the new TLDs have to comply
with a set of protections that will exist for them that don't
exist now. So if your rights are being infringed, you can
register a complaint, you can register an objection to have
that name taken down in a rapid style. But think about the
architecture of the domain name system and the ability to make
those registrations more diverse so it is not so important to
have a registration in that TLD.
Mr. Scalise. Is there a mechanism to pull one back if you
do find there are real problems as you issue a new TLD?
Mr. Pritz. Yep. There is mechanisms against TLD owners
called the post-delegation dispute resolution process where
claims can be made to take TLDs down. And there is dispute
resolution procedures on second-level names, too, where if a
name is registered that is infringing your rights, you can take
it down in a rapid, cheap style.
Mr. Scalise. Thank you, Mr. Chairman. I yield back.
Mr. Walden. I thank the gentleman for his questions and the
panel for their answers. We have a letter from the National
Restaurant Association that we will enter into the record.
Without objection.
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Mr. Walden. The ranking member and I wondered, Mr. Jaffe,
if only esteemed Members, if there--this just being we covered
ourselves better than our colleagues.
Mr. Jaffe. It is open to all comers.
Mr. Walden. Hopefully we are protected.
Ms. Eshoo. Esteemed and----
Mr. Walden. Then I am going to recognize the gentlelady
from California for another letter and comment.
Ms. Eshoo. Yes, thank you, Mr. Chairman. I would like to
place into the record a letter that was received yesterday to
ICANN, the United Nations, the International Monetary Fund and
26 other international organizations, which raise concerns
about cybersquatting under ICANN's planned expansion of top-
level domain names.
Mr. Walden. Without objection, it will be entered into the
record.
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Mr. Walden. I want to thank all of our participants today
for your testimony, your work, and your comments and your
counsel. We will continue to pursue this issue in the weeks and
months ahead and review the cybersquatting legislation, I
think, as well and other issues attendant to this. So thank you
for your participation.
This subcommittee stands adjourned.
[Whereupon, at 10:54 a.m., the subcommittee was adjourned.]
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