[Senate Hearing 112-394]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 112-394

                 ICANN'S EXPANSION OF TOP LEVEL DOMAINS

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

                                HEARING

                               before the

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                            DECEMBER 8, 2011

                               __________

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













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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

            JOHN D. ROCKEFELLER IV, West Virginia, Chairman
DANIEL K. INOUYE, Hawaii             KAY BAILEY HUTCHISON, Texas, 
JOHN F. KERRY, Massachusetts             Ranking
BARBARA BOXER, California            OLYMPIA J. SNOWE, Maine
BILL NELSON, Florida                 JIM DeMINT, South Carolina
MARIA CANTWELL, Washington           JOHN THUNE, South Dakota
FRANK R. LAUTENBERG, New Jersey      ROGER F. WICKER, Mississippi
MARK PRYOR, Arkansas                 JOHNNY ISAKSON, Georgia
CLAIRE McCASKILL, Missouri           ROY BLUNT, Missouri
AMY KLOBUCHAR, Minnesota             JOHN BOOZMAN, Arkansas
TOM UDALL, New Mexico                PATRICK J. TOOMEY, Pennsylvania
MARK WARNER, Virginia                MARCO RUBIO, Florida
MARK BEGICH, Alaska                  KELLY AYOTTE, New Hampshire
                                     DEAN HELLER, Nevada
                    Ellen L. Doneski, Staff Director
                   James Reid, Deputy Staff Director
                Todd Bertoson, Republican Staff Director
           Jarrod Thompson, Republican Deputy Staff Director
   Rebecca Seidel, Republican General Counsel and Chief Investigator















                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on December 8, 2011.................................     1
Statement of Senator Klobuchar...................................     1
Statement of Senator Rockefeller.................................    46
Statement of Senator Boozman.....................................    48
Statement of Senator Cantwell....................................    50
Statement of Senator Ayotte......................................    53

                               Witnesses

Fiona M. Alexander, Associate Administrator, Office of 
  International Affairs, National Telecommunications and 
  Information Administration, U.S. Department of Commerce........     1
    Prepared statement...........................................     3
Kurt Pritz, Senior Vice President, Stakeholder Relations, 
  Internet Corporation for Assigned Names and Numbers (ICANN)....     6
    Prepared statement...........................................     7
Angela F. Williams, General Counsel, YMCA of the USA.............    21
    Prepared statement...........................................    22
Daniel L. Jaffe, Executive Vice President, Government Relations, 
  Association of National Advertisers (ANA)......................    25
    Prepared statement...........................................    26
Esther Dyson, Founding Chairman of ICANN, 1998-2000; currently an 
  Independent Angel Investor.....................................    42
    Prepared statement...........................................    44

                                Appendix

Response to written questions submitted to Fiona Alexander by:
    Hon. Maria Cantwell..........................................    69
    Hon. Olympia J. Snowe........................................    70
Response to written questions submitted to Kurt Pritz by:
    Hon. Barbara Boxer...........................................    72
    Hon. Maria Cantwell..........................................    75
    Hon. Claire McCaskill........................................    78
    Hon. Mark Warner.............................................    82
    Hon. Olympia J. Snowe........................................    89
Response to written questions submitted by Hon. Olympia J. Snowe 
  to Angela Williams.............................................    96
Response to written question submitted to Daniel L. Jaffe by:
    Hon. Maria Cantwell..........................................    98
    Hon. Claire McCaskill........................................    99
    Hon. Olympia J. Snowe........................................    99
Response to written question submitted to Esther Dyson by:
    Hon. Maria Cantwell..........................................   103
    Hon. Olympia J. Snowe........................................   104
Paul Garrin, Founder, Name.Space, Inc., prepared statement.......   106
Letter dated December 14, 2011 from Beau Brender, Chair, North 
  American Regional At-Large Organization (NARALO) and Dr. Oliver 
  MJ Crepin-Leblond, Chair, At-Large Advisory Committee, ICANN to 
  Hon. John D. (Jay) Rockefeller IV..............................   108
Letter dated December 8, 2011 from Stephen A. Cox, President and 
  CEO, Council of Better Business Bureaus (CBBB) to Hon. Jay 
  Rockefeller IV and Hon. Kay Bailey Hutchison...................   109
Letter dated December 7, 2011 from Rebecca MJ Gould, Vice 
  President, Global Government Relations and Public Policy, Dell, 
  Inc. to Senator Jay Rockefeller and Senator Kay Bailey 
  Hutchison......................................................   110
Jim Gibbons, President and CEO, Goodwill Industries 
  International, prepared statement..............................   111
Letter dated December 12, 2011 to Hon. John D. Rockefeller IV 
  from Jennifer Dexter, Assistant Vice President, Government 
  Relations, Easter Seals........................................   113
National Restaurant Association, prepared statement..............   113
Josh Bourne, President, Coalition Against Domain Name Abuse 
  (CADNA), prepared statement....................................   114
Letter to Hon. John D. Rockefeller IV and Hon. Kay Bailey 
  Hutchison from Alexa Raad, Chief Executive Officer, Architelos; 
  Alexander Siffrin, Chief Executive Officer, Key Systems GmbH; 
  Andreas Schreiner, Chief Executive Officer, lnterNetWire 
  Communications; GmbH Angie D. Graves, President, WEB Group, 
  Inc.; Antony Van Couvering, Chief Executive Officer, Minds + 
  Machines; Bhavin Turakhia, Chief Executive Officer and Founder, 
  Directi; Bret Fausett, President and Founder, Internet Pro APC; 
  Clyde Beattie, Principal, The Yorkland Group; Dr. Liz Williams, 
  Chief Executive Officer, Sedari; Elliot Ness, Chief Executive 
  Officer, Tucows; John Styli, Chief Operating Officer, Far 
  Further; Jonathon Nevett, President, Domain Dimensions, LLC; 
  Kevin Saimon, President, Urban Brain; Krista Papac, Chief 
  Strategy Officer, ARI Registry Services; Loren Salman, Chief 
  Executive Officer, Far Further; Mason Cole, Principal, 5x5 
  Communications; Michael Berkens, Director, RightOfTheDot LLC; 
  Mike Rodenbaugh, Founder, Rodenbaugh Law; Monte Cahn, 
  President/Director, RightOfTheDot LLC; Nacho Amadoz, Legal & 
  Policy Director, Fundacio PuntCAT; Paul Stahura, Chief 
  Executive Officer, Donuts Inc.; Richard Wilhelm, Principal, RJW 
  Partners, LLC; Robert Connelly, President, Domains Only; Robin 
  Gross, Executive Director, IP Justice; Steve Miholovich, Sr. 
  Vice President Sales & Marketing, Safenames Ltd.; Susan 
  Prosser, Vice President, Marketing, Domain Tools; Tad Yokoyama, 
  President, Interlink Co., Ltd.; William Mushkin, Chief 
  Executive Officer and Founder, Name.com........................   116

 
                 ICANN'S EXPANSION OF TOP LEVEL DOMAINS

                              ----------                              


                       THURSDAY, DECEMBER 8, 2011

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:48 a.m. in 
room SR-253, Russell Senate Office Building, Hon. Amy 
Klobuchar, presiding.

           OPENING STATEMENT OF HON. AMY KLOBUCHAR, 
                  U.S. SENATOR FROM MINNESOTA

    Senator Klobuchar. The Committee will come to order. We 
have all our witnesses here. Thank you very much. We're in a 
time crunch and I know that Senator Rockefeller's going to be 
joining us shortly, as well as some other Senators. But I 
wanted to get this going, in the interest of time, because 
we're going to have to end at 10 minutes to twelve o'clock.
    This is a very important hearing and I wanted to first 
introduce our witnesses. We first have Ms. Fiona Alexander. 
She's the Associate Administrator for the Office of 
International Affairs in the National Telecommunications and 
Information Administration.
    We also have Ms. Angela Williams. Ms. Williams is the 
General Counsel for the YMCA of the U.S.A. and is also speaking 
on behalf of the Not-for-Profit Operational Concerns 
Constituency.
    We have Mr. Daniel Jaffe. Mr. Jaffe is an Executive Vice 
President for Government Relations for the Association of 
National Advertisers. He's also speaking on behalf of the 
Coalition for Responsible Internet Domain Oversight.
    We also have Ms. Esther Dyson. Ms. Dyson was the Founding 
Chairman of the ICANN's board of directors. She served in that 
role from 1998 to 2000.
    Then we also have with us Mr. Kurt Pritz. Mr. Pritz is 
Senior Vice President for Stakeholder Relations for the 
Internet Corporation for Assigned Names and Numbers, also known 
as ICANN.
    Do you want to begin? Each witness has 5 minutes, and we 
will start with Ms. Alexander.

           STATEMENT OF FIONA M. ALEXANDER, ASSOCIATE

         ADMINISTRATOR, OFFICE OF INTERNATIONAL AFFAIRS

          NATIONAL TELECOMMUNICATIONS AND INFORMATION

          ADMINISTRATION, U.S. DEPARTMENT OF COMMERCE

    Ms. Alexander. Good morning, Senator Klobuchar. I 
appreciate the opportunity to talk to you today on behalf of 
NTIA regarding ICANN's planned expansion of the Internet's 
domain name system through the introduction of new generic top-
level domains, 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 
multi-stakeholder discussion, including input from governments 
through the governmental advisory committee, 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 either be generic words or brand- 
focused as part of business development, investment, and 
startup 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 in extended face-to- face 
discussions to review the GAC scorecard and identify specific 
differences between GAC advice and existing versions of the 
applicant guidebook. These unprecedented exchanges resulted in 
the adoption of a significant 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 significantly more tools than those available 
in existing gTLDs. The fact that not all of 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 multi-stakeholder model.
    As a member of the GAC, NTIA will continue to actively 
monitor and participate in discussions related to the expansion 
of new gTLDs. NTIA appreciates that certain trademark owners 
and other stakeholders have expressed concerns regarding the 
program. Safeguarding the rights of trademark owners and 
ensuring appropriate consumer protections as this process moves 
forward remains a top 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 effects on 
consumers and business users. In particular, NTIA, working with 
other agencies, will focus on ensuring that law enforcement 
concerns are addressed through strengthened registry and 
registrar accreditation agreements and enhanced contract 
compliance.
    NTIA will also be encouraging 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 on line. 
We believe the best way to achieve this goal is to continue to 
actively support and participate in multi-stakeholder Internet 
governance processes such as ICANN.
    Thank you again 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 multi-stakeholder model that has been the hallmark 
feature of global Internet institutions that have truly been 
responsible for the success of the Internet.
    I'll be happy to answer any questions.
    [The prepared statement of Ms. Alexander follows:]

  Prepared Statement of Fiona M. Alexander, Associate Administrator, 
   Office of International Affairs, National Telecommunications and 
        Information Administration, U.S. Department of Commerce
Introduction
    Good morning, Chairman Rockefeller and members of the Committee. I 
appreciate the opportunity to talk to you today on behalf of the 
National Telecommunications and Information Administration (NTIA) 
regarding the planned expansion of the Internet's domain name system 
(DNS) by the Internet Corporation for Assigned Names and Numbers 
(ICANN). NTIA is the Executive Branch expert on issues relating to the 
DNS and supports a multi-stakeholder approach to the coordination of 
the DNS to ensure the long-term viability of the Internet as a force 
for innovation and economic growth. Working with other stakeholders, 
NTIA is developing policies to preserve an open, interconnected global 
Internet that supports continued innovation and economic growth, 
investment, and the trust of its users. This multi-stakeholder model of 
Internet policymaking--convening the private sector, civil society as 
well as governments to address issues in a timely and flexible manner--
has been responsible for the past success of the Internet and is 
critical to its future.
    I will begin today by providing context for the announced expansion 
of generic top level domains (gTLDs) used on the Internet, detail the 
specific efforts of NTIA as the U.S. Government representative to the 
Governmental Advisory Committee (GAC) to improve the ICANN program, and 
then describe the tools available to NTIA and the global community to 
manage any challenges that may arise.
Context for Planned Expansion of the Domain Name System
    ICANN is a not-for-profit corporation based in California that is 
responsible for coordinating the Internet's DNS. The DNS is a critical 
component of the Internet infrastructure. It works like a telephone 
directory, allowing users to reach websites using easy-to-understand 
domain names (e.g., http://www.commerce.gov) rather than the numeric 
network server addresses (e.g., http://170.110.225.163) necessary to 
retrieve information on the Internet. ICANN develops policies through a 
bottom-up, multi-stakeholder led process with an international 
community of stakeholders that mirrors the global nature of the 
Internet. On September 30, 2009, NTIA, on behalf of the Department of 
Commerce, entered into an Affirmation of Commitments (Affirmation) with 
ICANN that established ICANN's multi-stakeholder, private-sector led 
model as the long-lasting framework for the technical coordination of 
the Internet DNS.\1\ The Affirmation completed the transition begun in 
1998 by a Memorandum of Understanding (MOU) between the Department and 
ICANN that was amended several times.
---------------------------------------------------------------------------
    \1\ See http://www.ntia.doc.gov/files/ntia/publications/
affirmation_of_commitments_2009
.pdf.
---------------------------------------------------------------------------
    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. The goal to establish new gTLDs 
beyond .com, .edu, .gov, .int, .mil, .net, and .org began over a decade 
ago. In 2000 and 2003, ICANN conducted a limited expansion of generic 
top level domain names. Resulting in the addition of .biz, .info, 
.name, .pro, .aero, .coop, .museum, .asia, .cat, .jobs, .mobi, .tel, 
and .travel gTLDs to the DNS. In 2005, it initiated a process to 
develop the policies and procedures necessary to introduce an unlimited 
number of new gTLDs. After six years of multi-stakeholder policy 
development and implementation planning, including input from 
governments through the GAC, the ICANN Board of Directors (Board) 
approved the rules for the new gTLD program in June 2011, publishing 
the rules in the form of an Applicant Guidebook.\2\
---------------------------------------------------------------------------
    \2\ See http://newgtlds.icann.org/applicants/agb.
---------------------------------------------------------------------------
    Expansion of the gTLD space is expected to provide a platform for 
city, geographic, and internationalized domain names, among other 
possible top level domain strings. Expansion of the new gTLD space has, 
since its inclusion in the original MOU with ICANN, been intended to 
allow new TLD operators to create and provide content in native 
languages and scripts, otherwise known as Internationalized Domain 
Names or IDN, in addition to new gTLDs in ASCII or Latin scripts. 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 startup 
plans.
NTIA as a Member of the Governmental Advisory Committee (GAC)
    The multi-stakeholder policymaking process seeks to involve all 
stakeholders, including governments, to achieve policy outcomes with 
greater speed and flexibility than traditional regulatory structures. 
Within ICANN, the GAC provides governments a meaningful opportunity to 
participate in the development of policies related to DNS issues. NTIA 
represents the U.S. Government in the GAC, which currently has over 100 
members.
    Over the last six years, NTIA has actively engaged with its 
counterparts in the GAC in developing consensus advice to inform 
ICANN's policy development and implementation program for the 
introduction of new gTLDs. This included the adoption by the GAC in 
March 2007 of ``GAC Principles Regarding New gTLDs'' that were intended 
to inform the on-going policy development process underway in ICANN's 
Generic Names Supporting Organization (GNSO).\3\ The GAC progressively 
refined its advice to the ICANN Board and community through a series of 
communiques issued at the close of each of its meetings between March 
2007 and December 2010. This occurred as the new gTLD program advanced 
from the GNSO policy recommendations that were adopted by the ICANN 
Board in June 2008 to the implementation proposals developed by ICANN 
staff and posted serially for public comment.
---------------------------------------------------------------------------
    \3\ See http://www.icann.org/en/topics/new-gtlds/gac-principles-
regarding-new-gtlds-28mar07-en.pdf.
---------------------------------------------------------------------------
    In December 2010, the GAC developed a ``Scorecard'' of these 
outstanding issues governments had with the pending Draft Applicant 
Guidebook and requested direct discussions between the GAC and the 
ICANN Board to resolve them.\4\ Among these issues were:
---------------------------------------------------------------------------
    \4\ See http://www.icann.org/en/topics/new-gtlds/gac-scorecard-
23feb11-en.pdf.

---------------------------------------------------------------------------
   objection procedures for governments,

   procedures for the review of sensitive strings,

   root zone scaling,

   market and economic impacts,

   registry-registrar separation,

   protection of trademark rights and other intellectual 
        property owners,

   consumer protection issues,

   post-delegation disputes with governments,

   use and protection of geographic names,

   legal recourse for applicants,

   providing opportunities for stakeholders from developing 
        countries,

   law enforcement due diligence recommendations, and

   the need for an early warning mechanism for applicants to 
        identify whether a proposed string would be considered 
        controversial or to raise sensitivities.

    Between February 2011 and June 2011, GAC representatives from 
around the world met with the ICANN Board in 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. The purposes of the sessions were to promote joint 
understanding of the issues and arrive at an agreed-upon resolution of 
those differences wherever possible. These unprecedented GAC-ICANN 
Board exchanges resulted in the adoption by the ICANN Board of a 
significant number of GAC recommendations in the final Applicant 
Guidebook. Equally importantly, the GAC's advice established a solid 
foundation for the subsequent review of the new gTLD program by 
identifying markers or guideposts of government expectations that the 
benefits must not be outweighed by risks to users of the DNS.
    NTIA believes that ICANN improved the new gTLD program by 
incorporating a significant number of proposals from the GAC. ICANN's 
new gTLD program also now provides law enforcement and consumer 
protection authorities with significantly more tools than those 
available in existing gTLDs to address malicious conduct. 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 multi-stakeholder model.
Going Forward
    As a member of the GAC, NTIA will continue to actively monitor and 
participate in discussions related to the expansion of new gTLDs within 
the ICANN process. NTIA appreciates that certain trademark owners and 
other stakeholders have expressed concerns regarding the new gTLD 
program. Safeguarding the rights of trademark owners and ensuring 
appropriate consumer protections as this process moves forward remains 
apriorit. As applications for strings that are identifiable brands, 
products, or companies are introduced it will be important to ensure 
that trademark owners are properly protected. NTIA is committed to 
working with the U.S. industry and other stakeholders as the new gTLD 
program unfolds to mitigate any unintended consequences. The 
Affirmation sets up continuous multi-stakeholder review teams to 
evaluate ICANN's performance, including a review of the new gTLD 
program. This review will examine the extent to which the introduction 
or expansion of gTLDs has promoted competition, consumer trust and 
consumer choice, as well as effectiveness of the application and 
evaluation process, and the safeguards put in place to mitigate issues 
involved in the introduction or expansion. NTIA believes the review 
provides an opportunity for stakeholders to further refine the new gTLD 
program and make adjustments, as needed.
    In addition, NTIA intends to collaborate with U.S. Government 
agencies responsible for consumer and intellectual property protection, 
competition policy, and law enforcement to track their experiences and 
to coordinate the collection of data regarding the effects on consumers 
and business users of the domain name system. In particular, NTIA, 
working with other agencies, will focus on ensuring that law 
enforcement concerns are addressed through strengthened 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 to which ICANN has committed. 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.
Conclusion
    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 multi-stakeholder Internet governance processes such as 
ICANN. This is in stark contrast to some countries that are actively 
seeking to move Internet policy to the United Nations. If we are to 
combat the proposals put forward by others we need to ensure that our 
multi-stakeholder institutions have provided a meaningful role for 
governments as stakeholders. NTIA believes that the strength of the 
multi-stakeholder approach to Internet policy-making is that it allows 
for speed, flexibility, and decentralized problem-solving and stands in 
stark contrast to a more traditional, top-down regulatory model 
characterized by rigid processes, political capture by incumbents, and 
in so many cases, impasse or stalemate.
    Thank you again, Mr. Chairman for the opportunity to testify this 
morning. NTIA looks forward to working with Congress, U.S. business, 
individuals, and other stakeholders to preserve and enhance the 
multistakeholder model that has been a hallmark feature of global 
Internet institutions that have been responsible for the success of the 
Internet.
    I will be happy to answer any questions.

    Senator Klobuchar. Thank you very much.
    Mr. Pritz.

  STATEMENT OF KURT PRITZ, SENIOR VICE PRESIDENT, STAKEHOLDER 
RELATIONS, INTERNET CORPORATION FOR ASSIGNED NAMES AND NUMBERS 
                            (ICANN)

    Mr. Pritz. Good morning, Senator. I am Kurt Pritz, the 
Senior Vice President of Stakeholder Relations for ICANN, the 
Internet Corporation for Assigned Names and Numbers, and I'm 
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, known 
as TLDs or gTLDs. TLDs are the names to the right of the dot, 
such as .com or .org. ICANN carefully and cautiously developed 
the requirements for the new gTLD program. And by ICANN, I mean 
the global multi-stakeholder community made up of governments, 
intellectual property experts, consumers, large and small 
businesses, not-for-profit organizations, Internet security 
experts, registrants, 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. That mandate is to introduce competition and 
choice into the domain name system in a stable and secure 
manner. There is every reason to believe that the benefits 
offered by competition in virtually every other market will 
apply to the introduction of new gTLDs.
    Expanding the number of TLDs will encourage innovation and 
result in competition and increased choice for Internet users. 
The 7 years of policy work that led to the formation of the new 
gTLD program was based upon this principle.
    In the last decade, the number of domain name registrations 
has increased nearly tenfold, enabling more than $3 trillion of 
commerce annually. As with the introduction of any innovation, 
new gTLDs will generate interest, excitement, and, yes, require 
a period of learning. Internet users have already shown a great 
adaptability and they will find value wherever it is created as 
a result of this program.
    The new TLDs that will come in under this program have 
significantly increased safeguards compared to TLD registries 
that exist today. There will be new and extensive protections 
to trademark holders, including a universal trademark 
clearinghouse, a rapid takedown process, and new methods of 
recourse for law enforcement agencies. These new protections, 
when combined with the distribution of domain names into many 
new registries, will sharply reduce pressure for defensive 
registrations.
    New TLDs will also bring better consumer and security 
protections. Security protection experts developed specific 
measures to combat malicious conduct and provide law 
enforcement authorities with more tools to fight malfeasance. 
These include criminal background checks on applicants, a 
requirement for DNSSEC deployment, the requirement for 
maintenance of a thick WHOIS data base, and centralized access 
to all TLD data.
    What are some of these potential innovations? Here are some 
published examples. Dot-brand type TLDs can diminish consumer 
confusion and develop consumer awareness around the reliability 
of the website. This is similar to the trust that your 
constituents have today when visiting a dot-gov website. 
Consumers know when they type in ``Senate.gov'' they are 
reaching the domain of the U.S. Senate.
    Financial industry participants are considering a financial 
services TLD where banks and financial institutions can offer 
greater trust to their customers, more secure transactions, and 
control the data flow for those transactions. There are new 
jobs already created and likely more to come. In preparation 
for the launch of new TLDs, dozens of small businesses have 
sprung up to help TLD applicants understand the opportunities 
and potential benefits of new TLDs.
    Lately, innovation has been limited to country code TLDs, 
such as dot-co and dot-ly, that are developing business models 
to meet world demand. These TLDs are not under contract with 
ICANN and not required to offer the protections available in 
the new gTLD program.
    The important issues under discussion before this committee 
have been the subject of discussion, debate, and compromise for 
the past 7 years. Not-for-profit organization and trademark 
holders, along with the rest of the ICANN community, provide 
the focused and targeted input into the design of this program. 
Their input has yielded significant improvements through seven 
versions of the applicant guidebook. Consensus has been reached 
across the spectrum of participants and the program is better 
for it. Many stakeholders not represented at this table have 
also participated in the program and are awaiting their 
opportunity to take part.
    Thanks for inviting me to testify. I'd be happy to answer 
any questions you might have.
    [The prepared statement of Mr. Pritz follows:]

 Prepared Statement of Kurt Pritz, Senior Vice President, Stakeholder 
 Relations, Internet Corporation for Assigned Names and Numbers (ICANN)
    Chairman, Ranking Member and members of the Committee, thank you 
for the opportunity to address you today. I am here today representing 
the Internet Corporation for Assigned Names and Numbers (ICANN). I am 
Kurt Pritz, ICANN's Senior Vice President for Stakeholder Relations. 
Among other responsibilities at ICANN, I manage the Program to 
implement new Top-Level Domains (also referred to as new gTLDs), which 
is the subject of this hearing.
I. New gTLDs: Safely Bringing Competition and Choice to the Internet
    On June 20, 2011, the ICANN Board of Directors approved the 
implementation of the New gTLD Program, the culmination of years of 
policy development by the broad Internet community.\1\
---------------------------------------------------------------------------
    \1\ ICANN Board Resolution 2011.06.20.01, at http://www.icann.org/
en/minutes/resolutions-20jun11-en.htm.
---------------------------------------------------------------------------
    Now is the time for launching that program. It is the product of 
well thought out, thoroughly debated policies that are designed to 
benefit the billions of Internet users through increased competition, 
choice and innovation. It is also designed to provide a safer, stable 
marketplace through the implementation of rights protection mechanisms, 
malicious conduct mitigation measures and other registrant protections. 
ICANN extended the discussion to hear all those that wished to 
participate, to all geographies and all stakeholders. Each issue was 
thoroughly discussed, there have been no new issues raised. Now is the 
time to realize the benefits of an expanded and safer marketplace.
    The New gTLD Program was created through input across all sectors, 
including Internet end users, global Fortune 500 businesses, small 
businesses, trade associations, governments, non-commercial interests, 
intellectual property experts, brand holders, Internet security 
experts, ICANN registries and registrars, domain name registrants, 
Internet service providers, technical experts, not-for-profit 
organizations and more.
    The planning for the New gTLD Program started in 2005 within 
ICANN's consensus-based policy development process. Since 2008, the New 
gTLD Program has been shaped through:

   Seven versions of the Applicant Guidebook;

   At least 59 explanatory memoranda and independent reports, 
        including 5 economic studies;

   47 separate, extended public comment periods;\2\
---------------------------------------------------------------------------
    \2\ Comments came from multiple sources, including: NGOs and not-
for-profit organizations, such as the Red Cross and the International 
Olympic Committee (IOC); governments, through the GAC and individually; 
ICANN's constituencies, Supporting Organizations and Advisory 
Committees; brand/mark holders, such as Microsoft, Yahoo, Time Warner, 
AT&T, BBC, and IBM; industry associations, such as International 
Trademark Association (INTA), World Intellectual Property Organization 
(WIPO), European Communities Trademark Association (ECTA), and the 
American Banking Association (ABA); individuals; small businesses/
entrepreneurs and many other groups.

   Over 1450 pages of summary and analysis on public comments 
---------------------------------------------------------------------------
        received; and

   Input from no less than ten independent expert and community 
        working groups.
Extensive Protections Will Be Introduced
    The New gTLD Program today includes significant protections beyond 
those that exist in current TLDs, including new mandatory intellectual 
property rights protection mechanisms and heightened measures to 
mitigate against malicious conduct. These new protections are intended 
to provide a safe, stable Internet, and include:

   New Trademark protections:

     Uniform Rapid Suspension: A rapid, inexpensive way to 
            take down infringing domain names

     Trademark Clearinghouse: a one-stop shop so that 
            trademark holders can protect their property rights in ALL 
            new TLDs with one registration

     Mandatory sunrise and Trademark Claims processes for 
            all new gTLDs

     The requirement to maintain thick Whois information, 
            the provision of centralized access to zone file data, and 
            a strong incentive to provide a searchable Whois database--
            all to make it easier for rights holders to identify and 
            locate infringing parties

     A post-delegation dispute procedure under which rights 
            holders can assert claims directly against TLD registry 
            operators that play an active role in facilitating domain 
            name abuse.

   Measures to mitigate malicious conduct:

     Background reviews of applicants, including reviews 
            for past criminal history (including the use of 
            telecommunications or the Internet to facilitate crimes, 
            illegal sale of drugs, and others);

     Rejection of applications where the applicant has a 
            pattern of adverse decisions under the UDRP (Uniform Domain 
            Name Dispute Resolution Policy), or has been found to act 
            in bad faith or reckless disregard under cybersquatting 
            legislation;

     A requirement to have a plan to implement domain name 
            system security extensions (DNSSEC), reducing the risk of 
            ``man-in-the-middle'' attacks and spoofed DNS records;

     A requirement to maintain enhanced, or ``thick'', 
            WHOIS records at the registry level to allow more rapid 
            search capabilities, facilitating efficient resolution of 
            malicious conduct activities;

     A centralized zone file access system to allow for 
            more accurate and rapid identification of key points of 
            contact for the domains within each gTLD. This reduces the 
            time necessary to take corrective action within TLDs 
            experiencing malicious activity;

     A requirement to establish a single point of contact 
            responsible for the handling of abuse complaints (as 
            requested by law enforcement authorities);

     Requirements that New gTLD Registry Operators must:

    Maintain a Continued Operations Instrument sufficient to 
        fund basic registry operations for a period of three years in 
        case of business failure, to protect consumers and registrants 
        within that gTLD in the event of registry failure.

   Maintain continuity and transition plans, including regular 
        failover testing.

   Cooperate with ICANN In the event transition to a new 
        registry operator is necessary. ICANN will identify an 
        Emergency Back-End Registry Operator to assist in the registry 
        transition process and provide emergency registry services as 
        needed.
Objection Processes
    The New gTLD Program includes robust processes to assure that 
stakeholders generally, and governments and rights holders in 
particular, have the opportunity to raise objections that could lead to 
the rejection of applications that may cause:

   User Confusion;

   Infringement of legal rights, particularly intellectual 
        property rights;

   Introduction of TLD strings that are contrary to generally 
        accepted legal norms of morality and public order as recognized 
        under principles of international law; and

   Misappropriation of community names or labels.

    In addition, there will be a specialized function, an ``Independent 
Objector'' that will act solely in the best interest of the public, and 
may file an objection to an application that may give rise to the 
concerns raised above.
Rights and Protections Mitigate Costs
    The existence of objection processes and enhanced rights protection 
mechanisms were adopted to mitigate the concerns of trademark holders 
regarding increased costs. With these objection rights, trademark 
holders have the opportunity to consider whether to apply for a new 
gTLD based on business needs rather than defensive considerations. 
These measures greatly reduce the chance that another entity will 
succeed in applying for the trademarked name. The new rights 
protections mechanisms also reduce the need for trademark holders to 
defensively register names across new gTLDs. Further, we've learned 
from prior rounds that trademark holders often do not engage defensive 
registrations outside of the most popular TLDs.
    Additional detail on all of these new protections is provided 
below.
Competition and Consumer Choice
    The Board's approval of a program carefully crafted by the global 
Internet community is consistent with ICANN's mission to increase 
consumer choice, competition and innovation. Organizations will now 
have the opportunity to apply for gTLDs in the scripts of the world's 
languages, to open the world's marketplace further and to welcome the 
next billion non-English speaking users to the Internet.
    The opening of new gTLDs will be limited by round and by demand. 
Two prior rounds of new TLDs have been limited by size or type--and the 
restrictions hobbled the realization of benefits. Competition results 
from opening, not limiting markets, and encouraging investment and 
innovation.
    After years of policy and implementation work, the Internet 
community and Board determined that the launch of the new gTLD program 
was necessary and important in order to increase competition and 
innovation in the DNS--and I strongly believe this remains the right 
decision.
    This testimony provides information on how and why the New gTLD 
Program was formed and how it serves the public interest to act now.\3\
---------------------------------------------------------------------------
    \3\ ICANN has had the opportunity to testify before the House 
Committee on the Judiciary, Subcommittee on Intellectual Property, 
Competition and the Internet in September 2009 and May 2011 regarding 
the New gTLD Program. Information on those proceedings are available at 
http://judiciary.house.gov/hearings/hear_090923.html and http://
judiciary.house.gov/hearings/hear_05022011.html.
---------------------------------------------------------------------------
II. Introduction of New Top Level Domains Is One of ICANN's Founding 
        Mandates
    ICANN is recognized by the world community as the authoritative 
body for technical coordination and policy development regarding the 
security, stability and interoperability of the Domain Name System, or 
DNS, and we work to maintain a single global Internet. ICANN is 
organized as a California, public benefit, non-profit corporation. We 
serve this public benefit through a bottom-up, consensus-based, multi-
stakeholder model.
    A founding mandate for ICANN, included within the United States 
Government's ``White Paper on the Management of Internet Domain Names 
and Addresses'',\4\ is to create competition in the domain name market 
and specifically, to ``oversee policy for determining the circumstances 
under which new TLDs are added to the root system.'' \5\ The 
introduction of new gTLDs ``has been a longstanding goal'' of the 
relationship between the Department of Commerce and ICANN.\6\ The 
relationship formed with the United States Government in 1998, and set 
out in the many Memoranda of Understanding between the Department of 
Commerce and ICANN, included a core objective to ``Define and implement 
a predictable strategy for selecting new TLDs.'' \7\ This fundamental 
assumption that increasing the number of gTLDs will increase 
competition resulted in the House Committee on Energy and Commerce 
initiating a 2001 hearing regarding the potential detrimental effects 
to competition when ICANN approved only seven of 200 applied-for TLDs 
in an earlier application round. \8\
---------------------------------------------------------------------------
    \4\ United States Department of Commerce, White Paper on the 
Management of Internet Domain Names and Addresses (``White Paper''), at 
http://www.ntia.doc.gov/ntiahome/domainname/6_5_98dns.htm (June 6, 
1998).
    \5\ Id.
    \6\ Testimony of Fiona Alexander, Associate Administrator, National 
Telecommunications and Information Administration, June 4, 2009, before 
the Subcommittee on Communications, Technology, and the Internet, 
Committee on Energy and Commerce, United States House of 
Representatives, available at http://www.ntia.doc.gov/speechtestimony/
2009/testimony-associate-administrator-fiona-alexander-issues-
concerning-internet-co.
    \7\ See, e.g., Amendment 6 to Memorandum of Understanding Between 
the U.S. Department of Commerce and The Internet Corporation For 
Assigned Names And Numbers, at http://www.ntia.doc.gov/ntiahome/
domainname/agreements/amendment6_09162003.htm (Sept. 16, 2003).
    \8\ See Transcript of February 8, 2001 Hearing before the 
Subcommittee on Telecommunications and the Internet of the Committee on 
Energy and Commerce, House of Representatives, On Hundred Seventh 
Congress, First Session, available at http://
archives.energycommerce.house
.gov/reparchives/107/hearings/02082001Hearing37/print.htm (``some view 
ICANN's approval of only a limited number of names as thwarting 
competition'').
---------------------------------------------------------------------------
III. The ICANN Model At Work: How ICANN Approved the Expansion of New 
        gTLDs
A. ICANN's Multi-Stakeholder Model
    ICANN's processes and policy development depend on the engagement 
of stakeholders around the world. Stakeholders participate in many 
ways, including participation in the policy development processes, in 
public comment processes, on advisory committees, and in ICANN's public 
meetings.
    ICANN's model is based on the principle of reaching consensus 
solutions to difficult problems.\9\ Consensus within ICANN does not 
mean unanimous community support on every issue. The Internet community 
brings a wide range of viewpoints to the discussions, often with 
diverging interests. Reaching a thoughtful, negotiated solution that is 
acceptable to most, and ensures that all viewpoints are considered--
that is what ICANN strives to do and has done with this program.
---------------------------------------------------------------------------
    \9\ While my testimony today focuses on implementation of 
community-driven policy recommendations, the ICANN model is also used 
in non-policy matters.
---------------------------------------------------------------------------
    As part of this process, ICANN brings together working groups of 
experts to recommend solutions for further community review. ICANN 
works closely with all stakeholders to form consensus-based and 
community-vetted solutions.
    These vital discussions give all interests--including those 
representative of my fellow panelists--a seat at the table.
    ICANN has noted the PR campaign driven by industry groups against 
the New gTLD Program, and the revisionist history they present.
    The six-year inclusive policy development process that led to 
approval of this Program gave all sectors and industries ample 
opportunity to contribute their thoughts and convey their concerns. The 
concerns raised by this group of stakeholders were considered, debated 
and addressed along with those of many other stakeholders. The record 
is clear that changes have been made based upon their input.\10\
---------------------------------------------------------------------------
    \10\ For example, the Association of National Advertisers twice 
provided comments on the New gTLD Program, on December 15, 2008 and 
April 12, 2009. In 2008, the ANA provided ICANN with a list of five 
specific proposals for ICANN's consideration within the program. All 
five of its proposals have been addressed in the current design: 
trademark protections have been strengthened; there will be greater 
transparency of applicant data and more consistent information 
available on registrants; registration fees have been studied; 
objection processes have been clarified and strengthened; and 
provisions have been made for attaching higher security requirements 
based upon the nature of the string (e.g., an applicant for a 
financially-related string should have high security capabilities).
---------------------------------------------------------------------------
    They are now forum shopping and asking Congress to give them 
another bite at the apple. After working for years within ICANN's 
multistakeholder framework to obtain significant concessions for 
intellectual property rights holders, they now seek to upset the 
carefully crafted compromise which they helped create. They now want 
ICANN to restart the clock, at the expense of the other important 
participants who negotiated in good faith and who are eager for the 
program to launch.
B. New Generic Top Level Domains--The ICANN Model at Work
    The New gTLD Program demonstrates the strength of the bottom-up, 
multi-stakeholder process: The New gTLD Program under discussion today 
is the implementation of an ICANN-community policy recommendation to 
achieve one of ICANN's foundational mandates.\11\ ICANN has worked 
closely with the community in building policy and an implementation 
plan.
---------------------------------------------------------------------------
    \11\ In addition to the White Paper, the introduction of New gTLDs 
was consistently identified as a core objective in each of ICANN's 
Memoranda of Understanding with the U.S. Department of Commerce (1998--
2006) and the Joint Project Agreement, calling for ICANN to ``[d]efine 
and implement a predictable strategy for selecting new TLDs.'' See 
Amendment 6 to Memorandum of Understanding Between the U.S. Department 
of Commerce and The Internet Corporation For Assigned Names And 
Numbers, at http://www.ntia.doc.gov/ntiahome/domainname/agreements/
amendment6_09162003.htm (Sept. 16, 2003). The study and planning 
stages, extending back several years, include two trial rounds of top-
level domain applications held in 2000 and 2003. The experience of 
those rounds was used to shape the current process.
---------------------------------------------------------------------------
The New gTLD Program: Formed through Community Engagement
    From 2005-2007, business and commercial users, contracted 
registries and registrars, intellectual property interests, non-
commercial users and the at-large Internet community conducted an 
intensive formal, Bylaws-defined policy development process on the 
addition of new gTLDs. After intensive policy discussion, all those 
constituency groups concluded that new gTLDs should be made available.
    The principles guiding the new gTLD policy development process 
included that:

   New gTLDs will benefit consumer choice and competition;

   The implementation plan should also allow for 
        Internationalized Domain Names (domain names that are written 
        solely in a non-ASCII script, such as Chinese or Cyrillic) at 
        the top level;

   The introduction of new gTLDs should not cause security or 
        stability issues;

   Applications must be assessed in rounds until the scale of 
        demand is clear; and

   Protection of various appropriate interests requires 
        objection and dispute resolution processes.

    In 2008, the ICANN Board approved the policy on the introduction of 
new gTLDs \12\ and directed its implementation. Since October 2008, 
ICANN has produced all of the documentation cited above--seven versions 
of the Applicant Guidebook (detailing the guidelines and requirements 
for the evaluation process) as well as numerous report and memoranda. 
All have been the subject of public comment and vigorous debate. Anyone 
and everyone can join in; indeed, the process at times has been noisy 
given the numbers of contributors and divergent views.
---------------------------------------------------------------------------
    \12\ GNSO Final Report on the Introduction of New Top Level Domains 
(``Final Report''), at http://gnso.icann.org/issues/new-gtlds/pdp-
dec05-fr-parta-08aug07.htm (Aug. 8, 2007); ICANN Board resolution, 
http://www.icann.org/en/minutes/resolutions-26jun08.htm (June 26, 
2008); GNSO Minutes, http://gnso.icann.org/meetings/minutes-gnso-
29oct03.html (Oct. 29, 2003).
    One of the foundational documents influencing the GNSO Final Report 
and the community's implementation work is the GAC Principles Regarding 
New gTLDs, at http://gac.icann.org/system/files/gTLD_principles_0.pdf 
(Mar. 28, 2007).
---------------------------------------------------------------------------
    Nearly every ICANN Supporting Organization and Advisory Committee 
was represented in targeted community-based working groups or expert 
teams formed to address implementation issues, as were representatives 
from all sectors of society.
    The gTLD policy-making body, the Generic Names Supporting 
Organization, and its component stakeholder groups and constituencies 
participated in all aspects of the implementation work arising out of 
its policy recommendations. The Country Code Names Supporting 
Organization, representing ccTLD operators, was particularly active on 
issues relating to internationalized domain names in the New gTLD 
Program.
    ICANN's technical Advisory Committees provided direct input into 
the implementation work. For example, Root Server System operators and 
Security and Stability Advisory Group members provided information that 
there is no expected significant negative impact of new gTLDs on the 
stability and scalability of the root server system.
    Members of the At-Large Advisory Committee--the home within ICANN 
for individual Internet users--served on nearly every working group and 
team, giving the world's Internet users a voice in implementation 
discussions. The At-Large Advisory Committee has been an active 
participant in the formal public comment process.
(a) Governments Provided Advice and Engaged In Broad, Substantive 
        Consultations on New gTLDs
    ICANN's Governmental Advisory Committee, made up of over 110 of the 
world's governments, including the United States of America, has been 
deeply and effectively involved in the development of the New gTLD 
Program. The Governmental Advisory Committee also coordinated 
information exchanges between law enforcement and ICANN.
    The ICANN Board and the Governmental Advisory Committee held a 
series of landmark consultations on the New gTLD Program.
    Through accommodations made by both sides,\13\ changes were made to 
the New gTLD Program in each of twelve identified areas including:
---------------------------------------------------------------------------
    \13\ The final points of discussion between the Governmental 
Advisory Committee and the Board are collected at http://www.icann.org/
en/minutes/rationale-gac-response-new-gtld-20jun
11-en.pdf, beginning at page 52.

   More rigorous trademark protections (making them mandatory 
---------------------------------------------------------------------------
        and transferring costs to wrongdoers),

   Providing an objection path for governments to avoid 
        delegation of sensitive TLD applications,

   Agreement on a post-delegation economic study to test the 
        results of first set of new gTLDs,

   Agreement that a post-launch study should be conducted on 
        the effectiveness of new trademark protections and any effects 
        on root zone operations, and

   Development of a process for assistance for needy 
        applicants.

    Ultimately, mutual agreement among the Board and the Governmental 
Advisory Committee was reached that, subject to Board approval, the New 
gTLD Program would proceed to launch, and the process would be self-
improving through subsequent studies.\14\
---------------------------------------------------------------------------
    \14\ The Board's Rationale regarding potential areas of difference 
with the Governmental Advisory Committee is available at http://
www.icann.org/en/minutes/rationale-gac-response-new-gtld-20jun11-
en.pdf.
---------------------------------------------------------------------------
(b) Law Enforcement Agencies Are Active Contributors to the New gTLD 
        Program Work
    Law enforcement agencies worldwide have worked closely with ICANN 
in the new gTLD implementation process, with a goal of reducing domain 
name abuses. Representatives of U.S. law enforcement agencies played a 
critical role in proposing standards for background screening for 
applicants. Law enforcement agencies worldwide, including the FBI, the 
UK Serious Organized Crimes Agency (SOCA) and the Royal Canadian 
Mounted Police, supported proposals to aid in the prevention and 
disruption of efforts to exploit domain name registration procedures 
for criminal purposes. DNS abuse and security are regularly the subject 
of collaborative meetings between ICANN and the US law enforcement 
community, as well as representatives of international agencies.\15\ 
ICANN expects this successful collaboration to continue. To that end, 
there are formal DNS Abuse sessions at every ICANN public meeting where 
ICANN and law enforcement representatives come together to advance this 
important work.
---------------------------------------------------------------------------
    \15\ ICANN's relationships with law enforcement are not limited to 
the New gTLD Program; ICANN coordinates regularly on security-related 
issues and to address threats to the DNS.
---------------------------------------------------------------------------
(c) Large and Small Businesses and Corporations Have Helped Shape the 
        Program
    Business and industry representatives have participated in the new 
gTLD implementation process from the beginning, through the GNSO's 
Business and Commercial Users Constituency, through trade organizations 
and individually, and remain involved today. Participation cuts across 
business size and geography. Many global trade associations and 
corporations have participated in the online comment forums, either 
individually or through coordinated responses; similarly, great numbers 
of small businesses have been active. And the involvement continues.
    For example, representatives of Microsoft, Google, Time Warner and 
the BBC are active members of a current community group working to 
refine the implementation of the Trademark Clearinghouse, one of the 
new rights protection mechanisms being launched. Representatives of 
large and small business have been integral in forming the heightened 
rights protection mechanisms described above, and have contributed to 
the development of other portions of the program, including 
participation in many community working groups.
(d) Intellectual Property Owners/Brandholder Experts have been Involved 
        at Every Step
    Members of ICANN's Intellectual Property Constituency actively 
participated in the policy development concerning the introduction of 
new gTLDs, including the recommendation that new gTLD ``strings must 
not infringe the existing legal rights of others that are recognized or 
enforceable under generally accepted and internationally recognized 
principles of law'' that was included in the 2007 Final Report approved 
by the Board.
    In March 2009 ICANN formed a team of 18 intellectual property 
experts from around the world representing the interests of trademark 
holders, business and trade associations \16\--the Implementation 
Recommendation Team (IRT).\17\ The IRT's work led to the identification 
of specific rights protection mechanisms that are now included in the 
Applicant Guidebook based on the community and the Governmental 
Advisory Committee's further input and guidance.
---------------------------------------------------------------------------
    \16\ IRT Membership Directory, at https://st.icann.org/data/
workspaces/new-gtld-overarching-issues/attachments/
trademark_protection:20090407232008-0-9336/original/IRT-Directory.pdf.
    \17\ IRT Resolution, at http://www.icann.org/en/minutes/
resolutions-06mar09.htm#07 (Mar. 6, 2009).
---------------------------------------------------------------------------
(e) Additional Subject Matter Experts Formed Teams to Combat Malicious 
        Conduct and Strengthen Registrant Protections
    In addition to the regular participants in its processes, the ICANN 
model affords opportunities for experts to provide assistance on 
particularly challenging topics. ICANN has access to and the ability to 
form world-class expert groups, for example:

   The Implementation Recommendation Team and Special Trademark 
        Issues team created rights protection mechanisms;

   A Zone File Access Advisory group set out standardized 
        access zone file information to simplify access for those 
        investigating abuses;\18\
---------------------------------------------------------------------------
    \18\ Zone File Access Advisory Group information and documents are 
available at http://www.icann.org/en/topics/new-gtlds/zone-file-access-
en.htm.

   The Security and Stability Advisory Committee discussed 
        tools to mitigate the potential for malicious conduct. Its 
---------------------------------------------------------------------------
        report provided guidance into the management of glue records;

   A High-Security Zone TLD Advisory Group was formed within 
        ICANN in response to requests from governments and the 
        financial services sector to create higher security 
        requirements for TLDs where users have expectations of higher 
        security;

   The Joint Applicant Support Working Group addressed support 
        for needy applicants, and ICANN is currently considering how to 
        implement the recommendations into the first round of the New 
        gTLD Program;

   The Joint ccNSO-GNSO IDN Working Team discussed issues 
        related to Internationalized Domain Names;

   The Vertical Integration Working Group addressed community 
        solutions to the issue of Registry-Registrar cross ownership;

   The Temporary Drafting Group recommended enhancements to the 
        new gTLD Registry Agreement and post-delegation dispute 
        resolution procedures; and

   The Implementation Assistance Group, comprised of over 50 
        members representing various perspectives such as intellectual 
        property interests and Registry Operations, are assisting ICANN 
        in implementing specified Clearinghouse processes.

    Each group worked openly and transparently, and produced reports 
available for public comment.
    Importantly, ICANN listened to and acted on all work produced by 
the experts and the more general community and modified Applicant 
Guidebook sections to implement the results of this work.
(f) Economic Studies Confirm Overall Benefits of Opening the DNS; 
        Further Studies Would Offer No Benefit
    Several expert economic studies have recognized that the 
fundamental benefits of increased competition (that apply in almost all 
markets) will also benefit Internet users through enhanced service 
offerings, competition, innovation and consumer choice in the domain 
name market.
    As the new gTLDs moved closer to launch, there were calls for 
economic studies to better document the fundamental assumption that 
increasing the number of gTLDs will increase competition. In response, 
ICANN commissioned five economic studies that examined anticipated 
benefits and costs of the New gTLD Program, the effects of price 
constraints, and the benefits of vertical integration. All support a 
conclusion that Internet users stand to benefit from the introduction 
of new gTLDs.
    Those studies are:

   Dr. Dennis Carlton, Report Regarding ICANN's Proposed 
        Mechanism for Introducing New gTLDs, at http://www.icann.org/
        en/topics/new-gtlds/carlton-re-proposed-mechanism-05jun09-
        en.pdf (``Carlton I'');

   Dr. Dennis Carlton, Preliminary Analysis Regarding Price 
        Caps for New gTLD Internet Registries, at http://www.icann.org/
        en/topics/new-gtlds/prelim-report-registry-price-caps-04mar09-
        en.pdf (``Carlton II'');

   CRA International, Revisiting Vertical Separation of 
        Registries and Registrars, at http://www.icann.org/en/topics/
        new-gtld-crai-report-24oct08-en.pdf;

   Michael Katz, Gregory Rosston and Theresa Sullivan, An 
        Economic Framework for the Analysis of the Expansion of Generic 
        Top-Level Domain Names, at http://www.icann.org/en/topics/new-
        gtlds/economic-analysis-of-new-gtlds-16jun10-en.pdf (``Katz/
        Rosston Phase I''); and

   Michael Katz, Gregory Rosston and Theresa Sullivan, Economic 
        Considerations in the Expansion of Generic Top-Level Domain 
        Names, at http://www.icann.org/en/topics/new-gtlds/phase-two-
        economic-considerations-03dec10-en.pdf (Katz/Rosston Phase II).

    The two Katz/Rosston reports were commissioned by ICANN to directly 
address remaining community questions on the potential costs and 
benefits of the expansion of the gTLD space. Performed in two phases, 
Phase I provided a survey of published studies and resources on the 
potential impacts of new gTLD introduction and examined theoretical 
arguments on the benefits and costs of increased numbers of TLDs. Phase 
II provided reports of empirical studies proposed in Phase I, to help 
assess costs and benefits of new gTLDs.
    Katz's and Rosston's work was consistent with the basic findings of 
the three previous reports, and supported an open approach in which new 
gTLDs are added to the root, subject to appropriate restrictions and 
mechanisms (such as rights protection mechanisms) designed to minimize 
potential costs to trademark holders and others. As discussed above--
and as referenced in Katz's and Rosston's work--ICANN has adopted these 
restrictions, as seen in the inclusion of significant rights protection 
mechanisms.
    What remains clear, as stated by Dr. Carlton, a noted economics 
professor and former Deputy Assistant Attorney General for Economic 
Analysis, Antitrust Division, U.S. Department of Justice, from October 
2006 through January 2008, is that any resultant delay of the launch of 
the New gTLD Program ``is likely inconsistent with consumer interests'' 
and could ``substantially reduce [consumer] welfare.'' [Emphasis 
added.] \19\
---------------------------------------------------------------------------
    \19\ Carlton I, paragraphs 23, 39 passim.
---------------------------------------------------------------------------
    Dr. Carlton explained, ``ICANN's plan to introduce new gTLDs is 
likely to benefit consumers by facilitating entry which would be 
expected both to bring new services to consumers and mitigate market 
power associated with .com and other major TLDs and to increase 
innovation.'' \20\ Delay will inhibit competition in the use of 
generic, non-trademarked terms, and runs counter to the generally 
accepted view that market entry benefits consumers by expanding output 
and lowering price. Potential innovations in the new gTLD namespace 
will be stifled if limitations to entry are imposed, which would 
``essentially freeze the number of TLDs fifteen years after the first 
commercial development of the Internet.'' \21\
---------------------------------------------------------------------------
    \20\ Id. at paragraph 23.
    \21\ Id.
---------------------------------------------------------------------------
    Calling for a delay in the entry of new gTLDs serves to perpetuate 
existing market conditions: concentration within some existing 
registries, most generic strings unavailable, and those that trade on 
the value of the current marketplace holding portfolios based upon the 
value of current .COM names.\22\
---------------------------------------------------------------------------
    \22\ Katz/Rosston Phase II, at paragraphs 75-76.
---------------------------------------------------------------------------
    ICANN's Board and the Governmental Advisory Committee agreed that 
further economic study would not be beneficial.\23\ Instead, the focus 
turned to the collection of information that will inform the analysis 
of the effects of the introduction of new gTLDs after the first round. 
The Applicant Guidebook now includes application questions to collect 
information relating to the stated purposes and anticipated outcomes of 
each application, for use in later studies.
---------------------------------------------------------------------------
    \23\ Rationale for the Board's decision that no further economic 
studies would be beneficial at this time is available at http://
www.icann.org/en/minutes/rationale-economic-studies-21mar11-en.pdf.
---------------------------------------------------------------------------
IV. The Protections In the New gTLD Program are Substantial
    The implementation of the community's policy for the New gTLD 
Program looks entirely different today than in October 2008. The many 
revisions to the Applicant Guidebook incorporated recommendations and 
addressed concerns raised by intellectual property holders, 
governments, law enforcement and security experts, technical experts, 
business interests, non-commercial interests, individual Internet 
users, and others.
    Below are highlights of the results of the community's work.
A. Trademark Protection: New gTLDs Will Have Robust Rights Protection 
        Mechanisms (RPMs) to Protect Marks and Combat Cybersquatting
    New gTLDs will have significant RPMs that don't exist in current 
gTLDs.
    The RPMs will help rights holders protect trademarks efficiently, 
in terms of both time and money. When new gTLDs launch, trademark 
holders will have the opportunity to register their trademarks in a 
single repository that will serve all new gTLDs, the Trademark 
Clearinghouse. (Currently, trademark holders go through similar rights 
authentication processes for each separate top-level domain that 
launches.)
    New gTLD registries are required to use the Trademark Clearinghouse 
in two ways. First, they must offer a ``sunrise'' period--a pre-launch 
opportunity for rights holders to register names in the new gTLD prior 
to general registration. Second, a Trademark Claims service will notify 
rights holders (``Trademark Claims'') of domain name registrations that 
match records in the Clearinghouse for a period of time at the 
beginning of general registration.
    The Trademark Clearinghouse will increase protections, as well as 
reduce costs for trademark holders and start-up registries.
    Also with new gTLDs comes the advent of the Uniform Rapid 
Suspension system (URS), a streamlined version of the Uniform Domain 
Name Dispute Resolution Policy (UDRP) process, allowing trademark 
holders a quicker and simpler process through which clear-cut cases of 
infringing registrations can be ``taken down.'' The URS and the current 
UDRP will remain mandatory within new gTLDs.
    New gTLDs offer protections to trademark holders in the event a 
registry is actively involved in domain name abuse. The Post-Delegation 
Dispute Resolution Procedure (PDDRP) provides a mechanism to make 
claims directly against registries affirmatively involved in abuses 
involving domain name registrations.
    These RPMs are contemplated to address the issues raised in the 
economic studies as a means of reducing the potential costs associated 
with the introduction of new gTLDs.\24\ Opponents of the new gTLD 
process have mischaracterized the fact that economists identified 
specific areas of risk that could be mitigated (such as intellectual 
property protection costs) as a conclusion that the New gTLD Program 
will result in net economic harm. As ICANN has explained previously, 
that is an unsupported reading of the economic studies. The economists 
noted the benefits of innovation, competition and choice, and concluded 
that risks and costs could be mitigated through the implementation of 
RPMs and other mechanisms such as malicious conduct mitigation 
measures.
---------------------------------------------------------------------------
    \24\ See, e.g., Katz/Rosston Phase II at paras 64-65, 120.
---------------------------------------------------------------------------
    The rights protection mechanisms in the Applicant Guidebook provide 
trademark holders with an alternative to engaging in defensive 
registrations.\25\ The provision of effective rights protection 
mechanisms is shown to reduce the need for trademark holders to engage 
in defensive registrations--but the rights protection mechanisms cannot 
be too strict, or the growth of a new TLD may be impaired.\26\ 
Unsubstantiated fear of forced defensive registrations is not 
sufficient reason to stall new gTLDs and delay the benefits of 
introducing competition into the DNS.
---------------------------------------------------------------------------
    \25\ See Dr. Dennis Carlton, ``Comments on Michael Kende's 
Assessment of Preliminary Reports on Competition and Pricing'', at 
https://st.icann.org/data/workspaces/new-gtld-overarching-issues/
attachments/tld_demand_and_economic_analysis:20091007232802-2-13939/
original/carlton-re-kende-assessment-05jun09-en.pdf (June 5, 2009).
    \26\ Katz/Rosston Phase II, at page 52.
---------------------------------------------------------------------------
    In addition, Economic studies refuted the claims that costs of 
defensive registrations in new gTLDs will be prohibitive. Independent 
studies support the conclusion that as defensive registrations are made 
in proportion to the popularity of the gTLD, the large majority of 
defensive registrations are in .COM and .NET.\27\ Only if a new gTLD is 
very popular will there be a significant need for defensive 
registrations. But, it also follows that if a new gTLD is popular, then 
it likely is delivering high benefits. Thus, the dual claims of low 
benefits and high defensive registration costs are unlikely to be 
simultaneously true.
---------------------------------------------------------------------------
    \27\ See http://www.circleid.com/posts/
20090202_analysis_domain_names_registered_new
_gtlds/.
---------------------------------------------------------------------------
B. Consumers Will Be Protected Through Efforts to Mitigate Malicious 
        Conduct
    The expert and community work to address the potential for 
increased malicious conduct in new gTLDs has generated many enhanced 
protections in the Applicant Guidebook. With the assistance and 
involvement of external experts such as the Anti-Phishing Working 
Group, the Registry Internet Safety Group, members of the Forum of 
Incident Response and Security Teams (FIRST), and others from the 
Internet security first responder community, nine specific mechanisms 
were developed that will improve consumer protection \28\ and enhance 
the public interest. They include:
---------------------------------------------------------------------------
    \28\ While not related to mitigating malicious conduct, consumers 
and registrants will also be protected due to the work done on registry 
continuity and the creation of new transition procedures for use in the 
event of registry failure.

   Prospective registry operators will be appropriately 
        reviewed for criminal history according to established 
        criteria, including the use of telecommunications or the 
        Internet to facilitate crimes, illegal sale of drugs, violation 
        of the UN Convention against Transnational Organized Crime and 
        others. Where the applicant has a pattern of adverse decisions 
        under the UDRP (Uniform Domain Name Dispute Resolution Policy), 
        or has been found to act in bad faith or with reckless 
        disregard under the US Anti-cybersquatting Consumer Protection 
        Act (ACPA) or equivalent legislation, applications will be 
---------------------------------------------------------------------------
        rejected.

   Each new gTLD will be required to have a plan to implement 
        domain name system security extensions (DNSSEC), reducing the 
        risk of ``man-in-the-middle'' attacks and spoofed DNS records.

   Enhanced, or ``thick'' WHOIS records at the registry level 
        will allow more rapid search capabilities to facilitate 
        efficient resolution of malicious conduct activities.

   A centralized zone file access system allows for easier 
        dissemination of registrant data, reducing the time necessary 
        to take corrective action against registrants.

   All new gTLD operators are required to establish a single 
        point of contact responsible for the handling of abuse 
        complaints. This requirement is a fundamental step in 
        successfully combating malicious conduct within new gTLDs.

    Mitigating malicious conduct is and will continue to be an 
overarching issue within the new gTLD space. The participation of 
experts has produced mechanisms to benefit all Internet users, 
providing means for safer online interactions. The contributions of the 
Governmental Advisory Committee and law enforcement representatives 
broadened the scope of these protections.
C. Registrant Protections Regarding Registry Operator Continuity and 
        Compliance
    In addition to the protections in existing gTLDs, such as data 
escrow provisions, and participation in Contractual Compliance 
investigations, there are notable new protections in the New gTLD 
Program regarding the activities of Registry Operators. New gTLD 
Registry Operators must:

   Maintain a Continued Operations Instrument sufficient to 
        fund basic registry operations for three years in case of 
        business failure, to protect consumers and registrants within 
        that gTLD in the event of registry failure.

   Maintain continuity and transition plans, including regular 
        failover testing. In the event transition to a new registry 
        operator is necessary, the registrar is obligated to cooperate 
        with ICANN. ICANN is working to identify an Emergency Back-End 
        Registry Operator to assist in the registry transition process 
        and provide emergency registry services as needed. The 
        continuity and transition planning mitigates the potential risk 
        of consumer losses due to registry failure raised within the 
        economic studies.\29\
---------------------------------------------------------------------------
    \29\ As a companion protection for registry operators that maintain 
exclusive use over all registrations within a TLD--such as brand 
holder--in the event of registry failure, ICANN may not transfer 
registry operations without the consent of the registry operator.
---------------------------------------------------------------------------
D. Objection Processes Empower the Public and Governments
    After the application round closes, information on applied-for 
gTLDs will be made public. At that time, entities and individuals can 
review the list of strings and consider if they wish to object to any 
individual application.
    The New gTLD Program allows the Governmental Advisory Committee to 
inform ICANN that there are concerns with an application. Depending on 
the level of support within the GAC, the advice may result in a 
presumption that the Board should not approve the application.
    There are also four formal objection processes that can be 
initiated by the public, each administered by a well-known 
international dispute resolution service provider and protecting 
against:

   Internet User Confusion;

   Infringement of legal rights, particularly intellectual 
        property rights;

   Approval of new TLDs that are contrary to generally accepted 
        legal norms of morality and public order as recognized under 
        principles of international law; and

   Misappropriation of community names or labels

    In addition, an Independent Objector will be appointed with the 
ability to file objections in certain cases where an objection has not 
already been made to an application that will infringe the interests 
listed above. The Independent Objector will act solely in the best 
interest of the public.
V. ICANN is Committed to an Orderly Implementation of the First Round 
        of the New gTLD Program
    ICANN's role in the New gTLD Program is to ensure that the program 
is fairly, objectively and successfully implemented.
A. ICANN Is Operationally Ready to Administer the New gTLD Program
    ICANN's New gTLD Program Office: ICANN will operate a timely, 
predictable, transparent, consistent program. ICANN is working to 
ensure operational readiness for an orderly implementation, including 
enhanced security for the application and evaluation systems to prevent 
inappropriate access to the infrastructure or data.
    Evaluation service providers have been selected: Each has the 
global and technical knowledge and resources to accomplish the planned 
work. The gTLD Program Office includes separate quality assurance, 
governance, systems and customer service functions. Evaluation service 
providers are completing training to normalize scoring procedures.
    ICANN-Provided Services: ICANN has developed detailed staffing 
plans for all services to ensure adequate administration and 
enforcement of its agreements, and for addressing needs the new 
environment. Particular focus is being paid to contractual compliance, 
IANA and other functions that formally interface with gTLD registries 
and registrars.
    Creation of new systems: ICANN is creating new business systems 
that will contribute to its ability to administer this program. 
Examples include the TLD Application System, contractual compliance 
tracking, and root zone management automation.
B. The First Round is Limited in Delegation Rate And Incorporates Other 
        Measures to Assure Root Zone Security and Stability
    ICANN's paramount mission is to ensure the security, stability and 
resiliency of the Domain Name System. ICANN's technical community has 
reported that new gTLDs, in the numbers contemplated, represent no risk 
to the safe, stable operation of the Internet's root zone. In 
furtherance of its mission, ICANN has made commitments regarding the 
size and staging of the first round. \30\ ICANN also makes the 
following commitments:
---------------------------------------------------------------------------
    \30\ While rates of 215-240 new gTLDs are expected over a one-to-
two year period, it has been determined that the root zone servers can 
readily accommodate maximum rates of 1000 delegations per year. See 
October 2010 Root Zone Scaling reports are available at http://
www.icann.org/en/announcements/announcement-2-06oct10-en.htm, and the 
public comment fora can be accessed from there as well. See also Letter 
from Jun Murai, Chair of RSSAC, http://www.icann.org/en/correspondence/
murai-to-board-25nov10-en.pdf (25 November 2010).

   The impact of first round delegations on root zone stability 
---------------------------------------------------------------------------
        will be studied.

   Although extremely unlikely, if the root server system shows 
        signs of stress, the process can quickly be halted to preserve 
        stability, using dedicated communications and monitoring 
        systems.
C. ICANN is Committed to a Second Round of the New gTLD Program, Taking 
        into Account Community Comment
    One of the initial policy recommendations arising out of the 
Generic Names Supporting Organization is that, ``[t]his policy 
development process has been designed to produce a systemised and 
ongoing mechanism for applicants to propose new top-level domains. The 
Request for Proposals (RFP) for the first round will include scheduling 
information for the subsequent rounds to occur within one year. 
[Emphasis added.]'' \31\
---------------------------------------------------------------------------
    \31\ GNSO Summary of Policy Recommendations, at http://
gnso.icann.org/issues/new-gtlds/summary-principles-recommendations-
implementation-guidelines-22oct08.doc.pdf.
---------------------------------------------------------------------------
    The application round opening on January 12, 2012 is for those 
entities that are ready to participate in the expansion of choice and 
innovation in the DNS. There are many who may not be ready, or want to 
view the progress of the first round prior to taking a decision. They 
should not feel compelled to participate in the first round--future 
opportunities will exist.
    ICANN is working to identify a clearer timeline for the second 
round. We have heard the calls from many in the community that 
certainty in the timing of the second round will reduce some of the 
pressure to apply in the first. ICANN has agreed with governments and 
trademarks holders that a second round should occur only after:

   Studying the impact of first round delegations on root zone 
        stability.

   Conducting a post-first round study on whether new trademark 
        protections should be adjusted.

    The first new gTLDs are expected to be operational in early 2013 
and ICANN will undertake these studies at the earliest opportunity as 
is practicable--as soon as meaningful data is available.
D. Innovation and Jobs are Waiting
    Many new businesses have been formed based on progress in 
implementing this Internet community-developed program. Some are 
potential applicants; some will ``provision'' applicants. For at least 
the past two years, future applicants have attended ICANN meetings, 
passing out marketing materials with their ``dot-NEWDOMAIN'' 
prominently displayed. Consulting businesses to advise applicants have 
arisen. Over 120 persons or entities have publicly announced their 
intention to apply for new gTLDs. Nearly 90 declared applicants have 
active websites marketing their new gTLD idea proposing all types of 
gTLDs--city names, community ideas, branding opportunities for 
internationally known corporations and others. American jobs are 
already being created, and more will be when the program becomes a 
reality.
    We will never know the opportunities and creativity that will come 
through the introduction of new gTLDs will produce until we move 
forward. When ICANN was in its infancy, who could have predicted the 
online possibilities we take for granted today? Since 1999, the 
Internet has generated new companies and innovative ideas including 
marketplaces for commerce, communications and social networking: 
Facebook, Google and Twitter. New gTLDs hold that same potential for 
innovation.
VI. ICANN Is a Reliable Steward of the DNS
    ICANN continues to accomplish much for the benefit of the global 
Internet community beyond the New gTLD Program. Recent achievements 
include:
A. Fulfilling the Affirmation of Commitments
    On September 30, 2009, ICANN and the US Department of Commerce 
executed the Affirmation of Commitments, a landmark agreement. The 
Affirmation institutionalizes ICANN's technical coordination role and 
the US Government's commitment to the multi-stakeholder model. The 
Affirmation also sets out specific commitments on accountability, 
transparency and the interests of global Internet users; preservation 
of DNS security, stability and resiliency; promotion of competition, 
consumer trust and consumer choice; and enforcement of Whois policies. 
These commitments are woven into ICANN's ongoing work.
    ICANN dedicates significant time and resources to meeting its 
commitments under the Affirmation and continues to build on the 
significant progress it has already made. The Affirmation is not just a 
reflection of the Department of Commerce's commitment to the multi-
stakeholder model; it is ICANN's commitment to the global Internet 
community to operate with greater accountability and transparency.
    What has ICANN achieved to date?

   In coordination with the community, ICANN has initiated the 
        three reviews called for in the Affirmation: Accountability and 
        Transparency; Security and Stability; and Whois.

   Within weeks of completion of the public comment period on 
        the Final Report of the Accountability and Transparency Review 
        Team (ATRT),\32\ staff completed detailed implementation plans 
        to meet the recommendations. The Board has decided that all 
        recommendations should proceed to implementation, and the 
        committees of the Board have been active in oversight of ATRT 
        implementation.
---------------------------------------------------------------------------
    \32\ The ATRT Report is available at http://www.icann.org/en/
reviews/affirmation/activities-1-en.htm.

---------------------------------------------------------------------------
   ICANN is now:

     Publishing translations of Approved Resolutions for 
            all Board meetings and of the Minutes of Board meetings.

     Developing and posting the rationale for Board 
            actions. This includes rationales for all new gTLD-related 
            actions in 2011, including the Board's decisions on 
            Registry-Registrar Cross Ownership, and the Completion of 
            Economic Studies, and eight additional rationale papers 
            produced to accompany approval of the New gTLD Program.

     Posting Board Briefing Materials along with the 
            Minutes of each Board meeting, as well as Guidelines for 
            the Posting of Board Briefing Materials to better explain 
            the redaction process.

     Using a standardized public comment template to allow 
            for easier understanding and identification of the items 
            posted for comment.

     Refining the public comment process to allow for 
            comment and reply cycles.

     Consulting with the Governmental Advisory Committee on 
            implementation of GAC-related ATRT recommendations, 
            including work to create a publicly-accessible registry of 
            GAC advice.

     Including a template for the submission of 
            Reconsideration Requests, as well as maintaining clearer 
            status of Reconsideration Request ICANN's website.

     Continuing to evaluate the work of an Independent 
            Valuation Expert regarding Board-member compensation (an 
            ATRT recommendation).

     Designing the appropriate scope of an independent 
            expert review of ICANN's accountability mechanisms.

    ICANN is committed to meeting all of its commitments under the 
Affirmation of Commitments, and will continue to report on the status 
of that work through the ICANN website.
B. Conflicts of Interest Policy Refinements and Enhancing ICANN's 
        Ethical 
        Culture--Towards a Gold Standard
    ICANN maintains a strong policy regarding the identification and 
handling of Board member conflicts of interest, as well as a Code of 
Conduct setting out the ethical standards to which Board members are 
expected to adhere.\33\ In addition, all ICANN staff are bound by a 
conflicts of interest policy. Prior to the June 2011 approval of the 
New gTLD Program, ICANN's President and CEO issued a public call that 
the era of New gTLDs requires ICANN to be even more vigilant in 
addressing conflict of interest issues.
---------------------------------------------------------------------------
    \33\ For an example of the application of the Conflict of Interest 
policy within the New gTLD Program deliberations, Board members and 
Liaisons regularly identify particular areas of interest that require 
the members to refrain from voting on issues, or refrain from 
participating in deliberations, as reported at http://www.icann.org/en/
minutes/minutes-25sep10-en.htm.
---------------------------------------------------------------------------
    Work is now well underway with towards strengthening conflicts and 
ethics practices. ICANN intends to meet or create a gold standard for 
not-for-profit organizations. This work includes: (1) review of 
Conflicts of Interest Policy and Code of Conduct by one of ICANN's main 
outside counsel, to identify proposed revisions; (2) a review of 
ICANN's Conflicts of Interest Policy, Code of Conduct and other 
governance documents by new counsel who are expert in governance 
issues; and (3) compiling a panel of international ethics experts to 
recommend enhancements to ICANN's ethical culture after a review a of 
standards from similar organizations from around the world.
    The ICANN Board is also voluntarily adopting a stricter conflicts 
of interest practice for New gTLD-related decisions, and staff are 
subject to restrictions regarding contact with potential New gTLD 
applicants. They are prohibited from accepting any gifts, meals or 
entertainment from potential New gTLD applicants.
C. Registrar Accreditation Agreement Amendments
    ICANN and its accredited registrars are currently negotiating a 
series of amendments, many addressing concerns raised by law 
enforcement authorities from around the world. The negotiation team has 
agreed to a demanding schedule to achieve a set of amendments for 
consideration at ICANN's next public meeting in March 2012. The team 
has already agreed in principle to the incorporation of some of the 
heightened protections that will be imposed on registry operators 
within the New gTLD Program, such as the maintenance of an abuse point 
of contact. All of the newly adopted and heightened consumer and law 
enforcement protections will be in place in time for the launch of the 
first new gTLDs.
    The negotiations team is providing regular updates on the status of 
negotiations, available at https://community.icann.org/display/RAA/
Home.
D. Internationalized Domain Names
    In October 2009, ICANN approved the IDN ccTLD Fast Track Process 
through which countries and territories around the world can apply for 
TLDs in character sets other than Latin-based script.\34\ Through this 
process, 30 IDN ccTLDs are now available on the Internet \35\ with more 
on the way. This has opened the Internet to additional billions in 
China and India alone.
---------------------------------------------------------------------------
    \34\ The IDN ccTLD Process was created after consultation and 
planning with the ccNSO (Country Code Names Supporting Organization) 
and the GAC.
    \35\ These IDN ccTLDs represent 20 countries and territories. Due 
to language difference in country, for example, India has IDN ccTLDs 
delegated in seven separate scripts.
---------------------------------------------------------------------------
E. DNSSEC
    The Internet is becoming more secure. Following years of 
development and testing, on July 15, 2010, ICANN, in partnership with 
VeriSign and the US Department of Commerce, published the root zone 
trust anchor and a signed root zone became available.\36\ The 
implementation of DNSSEC (or DNS Security Extensions) will allow 
Internet users to know with certainty that they have been directed to 
the website they intended. This technology will help eliminate a whole 
class of security threats to the Internet.
---------------------------------------------------------------------------
    \36\ Information on DNSSEC deployment can be found at http://
www.root-dnssec.org/.
---------------------------------------------------------------------------
    ICANN is in active engagement with all registry operators to 
encourage adoption. As a result, over 75 gTLDs and ccTLDs now deploy 
DNSSEC; most significantly, the .COM registry adopted DNSSEC on March 
31, 2011. DNSSEC will be mandatory in all new gTLDs.
    ICANN's work as the DNSSEC Root Zone Key Signing Key (RZ KSK) 
Manager recently achieved an unqualified SysTrust Certification 
following an audit to ensure appropriate internal controls are in place 
to meet the availability, processing integrity and security objectives 
for the RZ KSK System. ICANN will renew its certification annually.
F. Root Zone Management Automation
    In performance of the IANA Function Contract, ICANN has partnered 
with VeriSign and the Department of Commerce to automate changes to the 
root zone. The root zone holds the authoritative directory of top-level 
domains. This automation will make the processing of change requests 
more efficient, and will enable all who participate in the change 
process to be better prepared for the increase in root zone changes 
that will occur through the New gTLD Program.
G. Continued Enforcement of Registrant Protections
    Another achievement for the benefit of the global Internet 
community is the continuous improvement in contractual compliance work. 
ICANN remains vigilant in its contractually-based consumer protection 
work and has strengthened the compliance team. The contractual 
compliance team is now comprised of 8 members, proficient in multiple 
languages, which has increased capacity as well as ICANN's ability to 
communicate with its diverse group of contracted parties on compliance-
related matters.
    Since 2008, ICANN has either terminated or denied renewal of 43 
accredited registrars, and issued thousands of compliance notices. 
Other significant progress includes the relatively recent 
implementation of registrar data escrow where all registrar data is 
escrowed by ICANN so that in the event of a registrar failure or 
termination, the data can be transferred to a successor registrar in 
order to protect registrants and their web sites. Over 99% of gTLD 
registrations are covered by ICANN's registrar data escrow agreements.
    ICANN continues to explore ways to identify registrar noncompliance 
early, take action swiftly to bring registrars back into compliance and 
terminate those that undermine the domain name registration process. 
This compliance activity helps ensure a healthy Internet ecosystem.
    In early 2011, ICANN enhanced its Whois Data Problem Report System 
(WDPRS), a system that contributes to Whois accuracy.
VII. Conclusion
    The ICANN community has worked tirelessly to create a New gTLD 
Program that will introduce competition and innovation at the top level 
of the DNS. Thousands of pages have been carefully written, balancing 
expert analyses, independent study, and thousands of comments. 
Governments have provided advice; professionals have weighed in. The 
new gTLD implementation program represents opportunities for innovation 
and enhanced competition, with a future of stronger rights protections, 
stronger consumer protections, and measured paths forward to future 
rounds.
    Thank you for the opportunity to address this Committee. I look 
forward to answering any questions that you have during the hearing.

    Senator Klobuchar. Thank you very much.
    Ms. Williams.

 STATEMENT OF ANGELA F. WILLIAMS, GENERAL COUNSEL, YMCA OF THE 
                              USA

    Ms. Williams. Good morning, Senator Klobuchar. Thank you so 
much for having us testify this morning. I'm Angela Williams, 
General Counsel of YMCA of the USA. As you know, the YMCA is 
the nation's leading nonprofit committed to strengthening 
communities through youth development, healthy living, and 
social responsibility. Last year, in 10,000 communities our Ys 
served 21 million people, of whom 9 million were young people, 
and we serve them in every Congressional district in this great 
country. Thank you all for your many years of support to our 
local Ys.
    I'm here today to speak on behalf of the Not-for-Profit 
Operational Concerns Constituency, known as NPOC, which is the 
newest constituency formed under ICANN to give not-for-profits 
and NGO's a voice in Internet governance. Our diverse 
membership includes groups within the United States, such as 
American Red Cross, St. Jude's Children's Hospital, Church of 
God in Christ, World Wildlife Federation, Human Rights 
Campaign, and Goodwill Industries International. 
Internationally, our members range from the Association of 
NGO's in Gambia to the International Baccalaureate Organization 
in Switzerland and many others.
    The NPOC members, like most not-for-profits, increasingly 
rely on the Internet to fulfil our missions a well as to raise 
funds. We share a growing concern that our ability to carry out 
our collective missions due to the enormous cost and financial 
burdens of the proposed structure of the new Generic Top-Level 
Domain Name Program will pose severe hardship and burdens on 
each of us.
    The new gTLD program compromises use of the Internet by 
increasing the risk of fraud, cybersquatting, and trademark 
infringement, and by significantly escalating the cost to 
protect against such unlawful activities. I know firsthand at 
the Y that our local organizations have been hit hard by the 
economy. Our name and reputation is priceless. Yet these 
additional costs to protect them are now out of financial 
reach.
    It is the goal of our organizations to educate all those 
responsible for implementation of the new gTLD program about 
unintended consequences. There is no doubt it will have a 
crippling effect upon my organization and most other not-for-
profit organizations here and around the globe in its current 
form.
    Let me speak to our budgetary concerns. The ultimate cost 
in proceeding through the entire application process alone 
could reach several hundred thousands of dollars. Currently the 
ICANN website quotes costs for one new gTLD application to be 
approximately $185,000, with an annual cost thereafter of at 
least $25,000 for a required 10-year term. This does not 
include the legal fees required to prepare the application and 
certain amounts required to be in escrow.
    If the Y or another NPOC member chooses not to participate 
in the new gTLD program, it runs the risk that another entity 
will apply for use of its name or one that is confusingly 
similar. The costs for filing an objection are expected to be 
approximately $30,000 to $50,000.
    ICANN's new gTLD program does not provide special or 
discounted protection measures for not-for-profit organizations 
to protect their brands and avoid the public confusion that 
results from their unauthorized use. YMCA of the USA currently 
employs 1.5 full-time employees at a cost of $225,000 annually, 
in addition to external legal expertise at a cost of over 
$100,000 just this year, in an effort to monitor and protect 
the use of its trademarks. Many other not-for-profit 
organizations cannot afford this expense to protect their name 
and goodwill. The increase of new gTLDs will further exacerbate 
this problem.
    If not-for-profit organizations cannot afford to register 
the domain names in the first place, they certainly will not 
have the means to take legal action, nor should they, as their 
funds are better served fulfilling their mission. Our country's 
diverse 1.5 million not-for-profits share one central 
commitment: improving lives. I ask each of you to think about 
the small and large not-for-profits that work alongside 
government, our work on most, if not all, of our nation's 
greatest problems. I ask you to look at this issue through the 
lens of the not-for-profit organizations who are using limited 
resources to do much good.
    Thank you.
    [The prepared statement of Ms. Williams follows:]

      Prepared Statement of Angela F. Williams, General Counsel, 
                            YMCA of the USA
    Good morning Chairman Rockefeller and Ranking Member Hutchison and 
Committee Members. I'm Angela Williams, General Counsel for the YMCA of 
the USA. As each of you know, the YMCA is the Nation's leading 
nonprofit committed to strengthening communities through youth 
development, healthy living and social responsibility. We work side-by-
side with our neighbors in more than 10,000 communities to make sure 
that everyone, regardless of age, income or background, has the 
opportunity to learn, grow and thrive. Last year, our Ys served 21 
million people--about 9 million were youth--and we serve them in every 
congressional district in this great country. Thank you all for your 
many years of support of local Ys in your district. I know you all have 
a long history with the Y!
    I'm here today to speak on behalf of the Not-for-Profit Operational 
Concerns Constituency known as NPOC, which is the newest constituency 
formed under ICANN to give not-for-profits and NGOs a voice in Internet 
governance. Our diverse membership includes groups within the United 
States such as American Red Cross, St. Jude's Children's Research 
Hospital, World Wildlife Federation, Church of God in Christ, Human 
Rights Campaign and Goodwill Industries International. Internationally, 
our members range from the Association of NGOs in Gambia to the 
International Baccalaureate Organization in Switzerland and many 
others.
    The NPOC members, like most not-for-profits, increasingly rely on 
the Internet to fulfill our missions as well as to raise funds. We 
share a growing concern that our ability to carry out our collective 
missions due to the enormous cost and financial burdens of the proposed 
structure of the new Generic Top-Level Domain Name Program (``new gTLD 
Program'') will pose severe hardship and burdens on each of us. We also 
share concern about the increased risk of public confusion, often 
unique to not-for-profit organizations, resulting from unauthorized use 
of organizational trademarks. I know firsthand at the Y that our local 
organizations have been hit hard in this economy. Our name and 
reputation are priceless, yet these additional costs to protect them 
are now out of financial reach.
    The new gTLD Program compromises use of the Internet by increasing 
the risk of fraud, cybersquatting, and trademark infringement and by 
significantly escalating the cost to protect against such unlawful 
activities. The following are areas of particular concern:

   domain name registration

   the introduction of new top level and second level domain 
        names into the DNS (Domain Name System)

   fraud and abuse, and

   using the Internet platform to distribute and collect 
        mission-related information for our members and the communities 
        we serve.

    It is the goal of our organizations to educate all those 
responsible for implementation of the new gTLD program about unintended 
consequences. There is no doubt it will have a crippling effect upon my 
organization and most other not-for-profit organizations here and 
around the globe in its current form.
Budgetary Concerns
    I'd like to begin with our budgetary concerns.
    The ultimate cost in proceeding through the entire application 
process alone could reach several hundred thousands of dollars. 
Currently, the ICANN website quotes costs for one new gTLD to be 
approximately $185,000 to file an application, with an annual cost 
thereafter of at least $25,000 for a required ten-year term. This does 
not include the legal fees required to prepare the application and 
certain amounts required to be in escrow. Moreover, there are many 
additional potential costs. For example, if an application is filed and 
then placed into an extended evaluation by ICANN, the applicant may 
have to pay an additional $50,000. An applicant may be required to 
defend its application against objections, which range from $1,000 to 
$5,000 in filing fees per party per proceeding, and an additional 
$3,000 to $20,000 in costs per proceeding, which must be paid up front.
    If the Y or another NPOC member chooses not to participate in the 
new gTLD program, it runs the risk that another entity will apply for 
use of its name or one that is confusingly similar. In the event 
another entity applies for a top-level domain that contains the 
organization's name, the costs for filing an objection are expected to 
be approximately $30,000-$50,000.
    While processes such as these may be useful in the commercial 
space, not-for-profits simply do not have the resources to participate, 
and will certainly not be able to compete against for-profit 
organizations with large budgets and reserves for intellectual property 
protection. Our sector not only prefers to, but must, use our monies to 
provide critical services to our communities. We simply cannot afford 
thousands of dollars to become a domain name registry solely to ensure 
brand protection. Becoming a domain name registry is not part of the 
mission of any not-for-profit organization, yet protection of its 
reputation is critical. ICANN's new gTLD Program does not provide 
special or discounted protection measures for not-for-profit 
organizations to protect their brands and avoid the public confusion 
that results from their unauthorized use. YMCA of the USA currently 
employs 1.5 full-time employees at a cost of $225,000 annually, in 
addition to external legal expertise at a cost of over $100,000 this 
year alone, in an effort to monitor and protect the use of its 
trademarks. Many other not-for-profits cannot afford this expense to 
protect their name and goodwill. The increase of new gTLDs will further 
exacerbate this problem.
    The primary enforcement mechanism of the new gTLD Program is the 
Trademark Clearinghouse, where trademark owners can protect their 
registered trademark rights. The new gTLD Program is due to be rolled 
out in less than 40 days. At this point, the cost of listing marks in 
the Clearinghouse has not been set, creating more uncertainty about the 
actual costs associated with the new gTLD Program.
    This process will only apply to exact matches of trademarks, rather 
than common misspellings, etc. that fraudsters and cybersquatters often 
use to deceive and confuse Internet users attempting to locate a 
particular not-for-profit. Not-for-profits are not in a financial 
position to register their marks using hundreds of additional gTLDs, 
particularly at premium prices. Trademark owners will not be allowed to 
preemptively register marks that are nearly identical.
    If not-for-profit organizations cannot afford to register the 
domain names in the first place, they certainly will not have the means 
to take legal action, nor should they, as these funds are better served 
fulfilling their humanitarian, philanthropic, education, academic, 
religious, community-based, promotion of the arts, public interest 
policy advocacy, health-related services and social inclusion missions.
Public Confusion and Cybersquatting Concerns
    Our ability to ensure that the public knows and trusts the public 
face of the Internet for all of our organizations is paramount. The 
public trusts the high-quality, reliable services they have come to 
associate with these organizations.
    Bad actors in the domain name space such as cybersquatters, 
fraudsters, and others, who register and use domain names in bad faith 
to profit off of the goodwill of well-known entities, have existed for 
many years in the existing domain name space. Recently one of our 
organizations, a large and historic organization, learned that an 
unauthorized entity was using its name to fundraise online and in the 
community. The result was confusion by potential funders about which 
organization was seeking donations. This is a common example of how our 
organizations are impacted by trademark infringement.
    The likely increased public confusion and fraud that will occur in 
the new gTLD space will be particularly devastating for not-for-profit 
organizations. If not-for-profit organizations are not able to 
adequately protect their names and trademarks in the new gTLDs, bad-
faith domain name registrants will be able to register and make use of 
hundreds of domain names that are identical or similar, and to 
disseminate dangerously false information to
    Internet users. This will greatly increase the likelihood that the 
public will be misled in a manner that is both financially devastating 
and dangerous to the reputation of those organizations--making it 
difficult for them to achieve their worthy missions.
    Our country's diverse 1.5 million not-for-profits share one central 
commitment: improving lives. The ability to fund and focus on this 
important work will be diverted, and the public will suffer as a result 
of the new gTLD Program. Current protection mechanisms built into the 
new gTLD Program are not adequate and are expensive for those not-for-
profits that wish to take advantage of them. The NPOC is understandably 
concerned about the impact on not-for-profit organizations that do not 
have the budget to enforce their rights in the current space, much less 
if that space were to increase ten-fold. The expense of the new gTLD 
Program would greatly divert funds from our central commitment to 
improve lives.
Recommendations
    Our fears are not alone. There has been a ground-swell of Internet 
stakeholders, including the largest for-profit companies that have 
repeatedly expressed concerns about the program beginning in January 
2012 when so many vital issues remain unresolved.
    Therefore, we ask that there continue to be input from 
stakeholders, and careful consideration of the impact of this program 
on the Internet, and particularly on not-for-profits. Among the 
numerous requests the NPOC has made to ICANN, we bring the following to 
your attention:

   That verified not-for-profit organizations be permitted to 
        exempt their trademarks from any other applicant in the new 
        gTLD Program at no cost, or if that is not possible, then at a 
        drastically reduced fee;

   That the mechanisms for trademark protection be 
        significantly strengthened, with the ability to proactively 
        protect trademark owners before any application is accepted; 
        and

   That the costs to participate in the new gTLD Program for 
        verified not-for-profit organizations be eliminated, or if not 
        possible, then at a drastically reduced fee.

    In summary, thank you for your time and attention. I know that in 
Health Care Reform you heard the concerns of small not-for-profits and 
provided the same ``claw back'' for health insurance premiums for small 
not-for-profits as you have for small business. Time and again this 
committee has shown interest and common sense in protecting our 
precious not-for-profit sector from tremendous financial burden that 
will inhibit our ability to achieve our missions. I ask each of you to 
think about all the small and large not-for-profits that make our 
country and our world a better place to call home; our work alongside 
government; our work on most, if not all, of our nation's greatest 
problems. I ask you to look at this issue through the lens of the not-
for-profit organizations in this country who are using limited 
resources to do much good.

    Chairman Rockefeller. You're still Chairman.
    Senator Klobuchar. Mr. Jaffe.

          STATEMENT OF DANIEL L. JAFFE, EXECUTIVE VICE

                PRESIDENT, GOVERNMENT RELATIONS,

           ASSOCIATION OF NATIONAL ADVERTISERS (ANA)

    Mr. Jaffe. Mr. Chairman, Senator Klobuchar: I am Dan Jaffe 
and I am Executive Vice President, Government Relations, for 
the Association of National Advertisers, and we very much 
appreciate the opportunity to testify on behalf of ANA and 
CRIDO, the Coalition for Responsible Internet Domain Oversight. 
CRIDO is a coalition of 152 major national and international 
companies and trade associations united in opposing the 
virtually unlimited rollout of ICANN's new generic Top-Level 
Domain name (gTLD) program.
    The members of the coalition, CRIDO, include many of the 
world's largest companies, with thousands of brands that 
consumers know and trust. They represent virtually every sector 
of the American and international economies. These are the 
companies which provide the economic foundation for the global 
marketplace we all use and enjoy.
    ICANN's decision to embark on an explosive expansion of 
top-level domains is a very significant and fundamental 
decision, with implications for everyone in the entire Internet 
ecosystem, from marketers, to consumers, to charities, NGO's, 
law enforcement agencies, even politicians, and in fact anyone 
who has brand names to protect.
    The ICANN program is not merely a bad policy choice, but a 
serious threat to the legitimate interests of both companies 
and consumers on the Internet. We believe both the decision and 
the process ICANN followed are fundamentally flawed, and here 
are the reasons.
    First, the immediate costs imposed on business is likely to 
be in the multi billions of dollars. Some of that is estimated 
that for a typical company the cost of acquiring a single new 
gTLD and managing it could easily exceed $2 million. Companies 
that are forced into an auction with another interested 
applicant will potentially face far higher costs. As many 
companies have hundreds or even thousands of brands to defend, 
it's easy to see how these costs will spiral upward.
    Even ICANN's own economists recognize that an unlimited 
expansion of gTLDs could cause serious economic harm to 
marketers. For example, ICANN's own Phase Two Report noted that 
brand owners may be compelled to file, ``numerous defensive 
registrations to protect trademarks or intellectual property 
rights from misuse.'' These resources could be far more 
effectively used for job creation and productive capital 
investment.
    Second, ICANN's protections for consumers in the gTLDs 
program are woefully inadequate. Again, ICANN's own economic 
experts know that one of the most serious and costly challenges 
to the unlimited expansion of gTLDs was the harm to consumers 
from increased cybersquatting and related malware, phishing, 
and the unknowing purchase of counterfeit goods. In 2009 a 
coalition of law enforcement agencies including the U.S. 
Department of Justice and the FBI issued a set of law 
enforcement due diligence recommendations for ICANN. These 
recommendations were intended to help prevent against cyber 
security threats. However, according to a communique from 
ICANN's own governmental advisory committee dated October 27, 
2011, not one of law enforcement's 12 recommendations has been 
adopted. And yesterday FTC Chairman Jon Leibowitz, testifying 
before a House Judiciary subcommittee, stated that the 
unlimited gTLDs rollout could be a ``disaster for business and 
consumers,'' and could dramatically increase problems for law 
enforcement.
    Third, we have serious concerns about the potential major 
conflicts of interest involving both the board and staff of 
ICANN. It is very troubling that many of the same individuals 
who approved the unlimited rollout of the gTLD program, 
including ICANN's former chairman, now stand to benefit 
substantially from the expansion program.
    These are not just our concerns. The full European 
Commission and ICANN's own governmental advisory committee have 
expressed, ``extreme concern about the inadequacy of the 
existing rules of ethics and conflicts of interest.''
    We believe that the Affirmation of Commitments that ICANN 
agreed to in order to obtain the freedom to manage major 
functions of the Internet from the Department of Commerce are 
real commitments. They must not be allowed to become merely 
meaningless high-sounding platitudes. This means that all 
Internet participants, and in particular the Department of 
Commerce, must take whatever steps are necessary to assure that 
the Top-Level Domain policy is fully justified on a cost-
benefit basis and provides strong and adequate protections for 
businesses, NGO's, and consumers, thereby furthering the public 
interest. That is simply not the case today.
    We hope that this hearing places a spotlight on these 
issues and will help to begin the process of careful 
reevaluation of this misguided ICANN Top-Level Domain 
initiative.
    Thank you very much for your attention.
    [The prepared statement of Mr. Jaffe follows:]

   Prepared Statement of Daniel L. Jaffe, Executive Vice President, 
    Government Relations, Association of National Advertisers (ANA)
    The Association of National Advertisers (ANA) appreciates the 
opportunity to present our serious concerns about the new generic Top-
Level Domain Name (gTLD) Program that was approved last June by the 
Internet Corporation for Assigned Names and Numbers (ICANN).
    ANA is the advertising industry's oldest trade association, founded 
in 1910. Our membership includes 400 companies with 10,000 brands that 
collectively spend over $250 billion in marketing communications and 
advertising. More information about our association is available at 
http://www.ana.net.
    I am also appearing on behalf of CRIDO, the Coalition for 
Responsible Internet Domain Oversight. CRIDO represents 152 major 
national and international companies and trade associations that have 
joined together to oppose the roll-out of ICANN's new gTLD Program. A 
list of all of the members of CRIDO, which represent virtually every 
sector of the American economy and many important international 
companies, associations and federations, is attached to this 
statement.\1\ CRIDO members represent some 90 percent of global 
marketing communications spending, equivalent to $700 billion annually. 
While CRIDO members may follow different approaches to domain name 
activity, they are all united in the belief that the proposed 
unfettered expansion of generic Top Level Domains is both dangerous and 
misguided. This proposed ICANN initiative is not merely a bad policy 
choice but a serious threat to the legitimate interests of business and 
consumers on the Internet.
---------------------------------------------------------------------------
    \1\ See Exhibit A.
---------------------------------------------------------------------------
    On November 10, 2011, ANA and the other members of CRIDO sent a 
Petition to Commerce Secretary John Bryson outlining our serious 
concerns about the new gTLD Program approved last June by ICANN despite 
significant objections from many global Internet stakeholder groups. 
The CRIDO Petition called on the Department of Commerce, and 
specifically the National Telecommunications and Information 
Administration (NTIA), ``to use its best efforts to persuade ICANN to 
stop or postpone the opening of the gTLD application window,'' which is 
currently scheduled to begin on January 12, 2012.\2\
---------------------------------------------------------------------------
    \2\ The Petition is attached as Exhibit B.
---------------------------------------------------------------------------
    Other important groups have also independently spoken out against 
ICANN's gTLD Program, including the National Retail Federation (NRF), 
the Screen Actors Guild (SAG) and the American Federation of Television 
and Radio Actors (AFTRA). Their letters to the Secretary are available 
at http://www.ana.net/getfile/16997 (NRF), http://www.ana.net/getfile/
16998 (SAG) and http://www.ana.net/getfile/17000 (AFTRA).
    We commend the Committee for holding this hearing on this critical 
issue which could impact the shape of the Internet for decades, and 
perhaps in perpetuity. In the past twenty years, the Internet has grown 
from being used by a limited number of engineering and academic elite 
to being relied on every day by over 2 billion people worldwide. 
According to a May 2011 report from the McKinsey Global Institute, 
nearly $8 trillion are exchanged annually through e-commerce. The 
former Secretary of Commerce, Gary Locke, emphasized that ``[t]he 
Internet is becoming the central nervous system of our information 
economy and society.'' \3\ Since the Internet serves as a recognized 
catalyst for global economic growth, there is far too much at stake, 
particularly in today's economic climate, not to ensure that ICANN's 
policies are fair and impartial. This is in keeping with the promises 
that ICANN made in the Affirmation of Commitments between ICANN and the 
NTIA, in exchange for the considerable power to oversee the Internet 
that was delegated to ICANN by the U.S. government.
---------------------------------------------------------------------------
    \3\ Commercial Data Privacy and Innovation in the Internet Economy: 
a Dynamic Policy Framework, Department of Commerce (2010), Message from 
Secretary of Commerce Gary Locke at 1, available at: http://
www.commerce.gov/sites/default/files/documents/2010/december/iptf-
privacy-green-paper.pdf.
---------------------------------------------------------------------------
    We believe the new gTLD Program is bad for marketers, consumers and 
the entire online marketplace. Consistent with the Affirmation of 
Commitments, ICANN has a responsibility to ensure that its actions 
further the public interest, promote consumer trust and the burgeoning 
Internet domain.\4\
---------------------------------------------------------------------------
    \4\ See http://www.icann.org/en/documents/affirmation-of-
commitments-30sep09-en.htm. (In relevant part,

     Section 3(a) requires ICANN to ``ensure that decisions 
made related to the global technical coordination of the DNS are made 
in the public interest and are accountable and transparent'';

     Section 3(c) requires ICANN to ``promote . . . consumer 
trust . . . in the DNS marketplace'' and Section 8(c) commits ICANN to 
operating ``as a multi-stakeholder, private sector led organization 
with

     input from the public, for whose benefit ICANN shall in 
all events act.'').
---------------------------------------------------------------------------
    We strongly believe that ICANN's new gTLD Program fails all of 
these standards.
    This Program in aggregate has multi-billion dollar implications for 
all marketers, both in the commercial and the nonprofit sectors, and 
their brands. It would cause irreparable harm and damage to the entire 
online business community. It would throw the domain name universe into 
substantial confusion for both marketers and consumers.
    ICANN has been considering this Program for several years. ANA 
objected to these proposals as did many other industry groups and 
companies. Even important governmental entities, including 
international law enforcement organizations,\5\ expressed deep 
misgivings about ICANN's proposed gTLD Program. Unfortunately these 
strong objections have largely fallen on deaf ears.
---------------------------------------------------------------------------
    \5\ In 2009, a coalition of law enforcement agencies including the 
Australian Federal Police; the U.S. Department of Justice; the U.S. 
Federal Bureau of Investigation; the New Zealand Police; the Royal 
Canadian Mounted Police and the United Kingdom's Serious Organized 
Crime Agency issued ``Law Enforcement Due Diligence Recommendations for 
ICANN.'' It is our understanding from the GAC Communique at Dakar, 
dated October 27, 2011, that none of law enforcement's recommendations 
has been adopted; in fact of the 12 recommendations registrars were 
only able to report on their consideration of three of the twelve law 
enforcement recommendations. GAC Communique--Dakar attached hereto as 
Exhibit C.
---------------------------------------------------------------------------
    ICANN consistently states that it is a multi-sectoral, bottom-up 
policy development organization. However, the creation of a massive 
bureaucratic labyrinth and process does not mean that ICANN is, in 
fact, representing the views of the majority of the Internet community. 
There clearly is not ``consensus'' support for the ICANN gTLD 
proposals. We cannot let the repetitive mantra that ICANN is a ``multi-
sectoral organization'' camouflage or mask ICANN's lack of 
responsiveness to the real concerns of a very broad cross-section of 
the business community, and a growing group of non-governmental 
organizations, consumer groups and other Internet users.
Key Reasons Why the ICANN Program Must Be Stopped or Delayed
    For a variety of reasons, we believe it is critical that the roll-
out of the new gTLD Program be delayed.
    Flawed Justification: ICANN justifies the Program on grounds that 
it: ``might'' or ``may'' (1) spur competition, (2) relieve scarcity in 
domain name space and (3) support differentiated services and new 
products. Yet evidence is sorely lacking that the introduction of new 
TLDs will actually achieve any of these goals. The very reports relied 
upon by ICANN to buttress its gTLD proposal prove that such 
justifications are unsupportable.

        Competition. Regarding competition, in the December 2010 report 
        commissioned by ICANN, entitled ``Economic Considerations in 
        the Expansion of Generic Top-Level Domain Names, Phase II 
        Report: Case Studies'' (``Phase II Report''),\6\ the authors of 
        the Phase II Report clearly conclude that the introduction of 
        new undifferentiated gTLDs is not likely to have a 
        ``significant competitive impact'' in the market for registry 
        services (Phase II Report, para. 12).
---------------------------------------------------------------------------
    \6\ Michael L. Katz et al., Economic Considerations in the 
Expansion of Generic Top-Level Domain Names Phase II Report: Case 
Studies (2010) http://www.icann.org/en/topics/new-gtlds/phase-two-
economic-considerations-03dec10-en.pdf. See also, Michael L. Katz et 
al., An Economic Framework for the Analysis of Expansion of Generic 
Top-Level Domain Names (2010), http://www.icann.org/en/topics/new-
gtlds/economic-analysis-of-new-gtlds-16jun10-en.pdf; Michael L. Katz et 
al., Reply to Comments on An Economic Framework for the Analysis of the 
Expansion of Generic Top-Level Domain Names (2010 [sic]) http://
www.icann.org/en/topics/new-gtlds/analysis-response-economic-framework-
21feb11-en.pdf; Michael L. Katz et al., Reply to Comments on Economic 
Considerations in the Expansion of Generic Top-Level Domain Names Phase 
II Report: Case Studies (2011) http://www.icann.org/en/topics/new-
gtlds/analysis-response-phase-ii-report-21feb11-en.pdf.

        Scarcity. It is equally clear that scarcity is not a current 
        problem. As the Phase II Report concludes, ``. . . [T]he relief 
        of name scarcity is unlikely to be the principal source of 
        social benefits derived from new gTLDs'' (Phase II Report, 
---------------------------------------------------------------------------
        para. 20).

        Differentiated Services and New Products. The Phase II Report 
        notes new domain uses that are possible with TLDs, comparing 
        such prospects to existing TLDs, e.g., domains that are 
        restricted to particular functions or applications (such as 
        existing TLD .mobi), domains that restrict second level 
        registration to a particular class of owners (such as existing 
        TLDs .museum, and .aero), and domains that restrict second-
        level registration to presenting a certain type of content 
        (such as current domains relating to a specific geographic 
        area). However, in each case, the experts conclude that the 
        benefits were little more than speculative and that many of the 
        TLDs adopted by ICANN in the last expansion round have been 
        practical failures (Phase II Report, para.para. 39, 50, 58, 59, 
        62).

    There is no demonstrable need to increase generic Top Level Domain 
names on an unlimited basis, and no likely benefit that would result 
from such an unrestricted increase.
    A wide array of 22 suffixes such as ``.biz,'' ``.info,'' ``.jobs,'' 
``.travel'' and ``.museum'' currently exist, not including the country 
codes. Most of those gTLD names are minimally used, but nonetheless 
actively policed by brand owners concerned about trademark dilution, 
cybersquatting and the online sale of pirated or counterfeited 
products.\7\ The gains assumed by ICANN are completely unsubstantiated. 
In contrast, the new Program will throw the domain name universe into 
widespread confusion, impose major costs on marketers and cause harm to 
consumers. If there is no scarcity of space within the existing domain 
name system, the ICANN Program appears to be a solution in search of a 
problem. Even more seriously, the ``solution'' proposed by ICANN is 
likely to impose enormous costs on the Internet and divert productive 
resources at a time where these dollars could be far more effectively 
used for job creation and productive capital investment.
---------------------------------------------------------------------------
    \7\ For further background on the online piracy and counterfeiting 
arguments, see Mark Monitor, Traffic Report: Online Piracy and 
Counterfeiting (January 2011) (The study used only 22 brands and found 
that for those brands online distribution of pirated digital content 
and e-commerce sales of counterfeit goods were rampant).
---------------------------------------------------------------------------
Serious Economic Impact if the Program is Adopted
    These are not just our views. The studies ICANN initiated itself 
recognize that the Program may cause several severe economic harms. As 
set forth in Paragraph 63 of the Phase II Report, the costs of the 
Program may include the following:

        Misappropriation of Intellectual Property. The experts cite a 
        key concern of misappropriation of intellectual property 
        rights, including the ``costs of domain watching, defensive 
        registrations, litigation or other measures to end 
        misappropriation, and costs due to misappropriation that is not 
        blocked (e.g., lost profits due to sales of counterfeit goods 
        or brand dilution).'' \8\
---------------------------------------------------------------------------
    \8\ Michael L. Katz et al., Economic Considerations in the 
Expansion of Generic Top-Level Domain Names Phase II Report: Case 
Studies (2010) at para. 63, http://www.icann.org/en/topics/new-gtlds/
phase-two-economic-considerations-03dec10-en.pdf.

        Defensive Registrations. As noted, brand owners may be 
        compelled to file defensive registrations, i.e., 
        ``registrations undertaken to protect legitimate trademark or 
        intellectual property rights from misuse, not registrations 
        undertaken as the `defense' of one's business against increased 
        competition on the merits.'' \9\ This cost alone could be in 
        the hundreds of thousands of dollars per brand name, creating a 
        multi-million dollar liability for major corporations and a 
        multi-billion dollar cost to the industry.
---------------------------------------------------------------------------
    \9\ Id.

        Several Internet Domain name sellers have estimated the range 
        of costs for gTLD applications alone. For example, in an 
        article entitled, ``Sweeping Away Confusion Regarding gTLD's,'' 
        Gretchen Olive stated that, ``Those applying will need a 
        minimum of $800,000 to $1 million to not only submit the 
        application, but also to defend it against objections lodged by 
        third parties and to get through the contract process with 
        ICANN and set up the registry technical infrastructure 
        (emphasis added).'' \10\ The article further noted that, 
        ``Monitoring for infringement and submission of objections will 
        likely run most organizations between $25,000 and $50,000 in 
        2012.'' \11\
---------------------------------------------------------------------------
    \10\ Gretchen Olive, Sweeping Away Confusion Regarding gTLDs, 
ADOTAS (Nov. 8, 2011) available at: http://www.adotas.com/2011/11/
sweeping-away-confusion-regarding-gtlds/.
    \11\ Id.

        Domain Navigation Dilution because Consumers have More Places 
        to Look. The experts note that the ``introduction of additional 
        gTLDs may increase the costs of Internet navigation by 
        increasing the number of potential domains over which a user 
        may search. To the extent that such effects arise, they can 
        dilute the value of existing domain names as navigation 
        devices. The costs associated with such dilution include the 
        costs of defensive registrations. . .and the costs due to 
        dilution that cannot be mitigated.'' \12\
---------------------------------------------------------------------------
    \12\ Id. at note 6, supra (Phase II Report).

        Harm to Internet Users from Increased Cybersquatting. One of 
        the most incipient and costly challenges to the adoption of any 
        new gTLD is the prospect of cybersquatting and the substantial 
        costs associated with preventing and policing it, which are 
        already well into the billions of dollars. With respect to 
        cybersquatting, the experts note, ``In addition to harm in the 
        form of increased search costs consumers may suffer more direct 
        harm from increased cybersquatting. This direct harm may result 
        from malware, phishing, and the unknowing purchase of 
        counterfeit goods.'' \13\ While the experts opine that such a 
        result ``may'' occur, history proves that cybersquatting will 
        occur, just as it has with every TLD that has ever been 
        administered by ICANN.
---------------------------------------------------------------------------
    \13\ Id.

        Reduced Investment by Intellectual Property Owners. The 
        protection and development of intellectual property is a core 
        value for the global economy, particularly given the world's 
        reliance on technology. As ICANN's own experts conclude, the 
        Program seriously undermines intellectual property rights--
        ``There may also be indirect harms from the loss of 
        intellectual property owners' incentives to invest in that 
        intellectual property due to concerns that some of the benefits 
        of that investment would be misappropriated.'' \14\
---------------------------------------------------------------------------
    \14\ Id.

    Losses from Failed TLDs. History itself discredits ICANN's position 
that the introduction of new TLDs will increase innovation and 
competition. One need only look at the dismal financial registration 
and track record of TLDs like .museum and .aero to prove the point. 
Such failures are very disruptive and costly to companies that have 
registered. This reality is borne out by the authors of the Phase II 
Report, who conclude that ``[i]f a new gTLD failed and ceased 
operation, external costs might be imposed on the Internet community. 
Registrants in a failed gTLD might be stranded, unable easily to move 
their websites (on which they may have based their business) to other 
TLDs due to embedded links. More generally, Internet users might face 
increased clutter on the Internet if links fail to resolve.'' \15\ 
Clearly, these types of dangers are likely to be substantially 
magnified by allowing an unrestricted proliferation and explosive 
growth of domains.
---------------------------------------------------------------------------
    \15\ Id.

    ICANN has in effect dismissed these concerns in reliance on what 
its own experts have noted as ``speculative'' competitive benefits of 
the Program. However, is it really credible that the broad group 
represented by the CRIDO membership--that includes some of the largest 
national and international advertisers, brand holders and associations 
in the world, with representation cutting across a vast range of 
industry sectors--can all be unable to foresee what are their true 
competitive interests?
ICANN's Deliberation Process is Flawed
    Nevertheless, ICANN is now moving forward with the Program. ICANN 
justifies ignoring these studies in its report entitled, ``Rationale 
for Board Decision on Economic Studies Associated with the New gTLD 
Program.'' \16\ With all due respect, the ``Rationale'' is nothing 
short of a nullification of ICANN's own mandate to conduct economic 
studies. Rather than calling for further expert analysis, ICANN 
dismisses the very economic evidence derived from the studies and opts 
for a default justification of ``competition'' in which any TLDs may be 
adopted. Furthermore, ICANN minimizes the Phase II Report's conclusion 
that registry competition will not be significantly affected by the 
Program; ICANN says its real interest is competition in business 
generally, and claims that any additional economic study on that 
subject would be futile.\17\ We understand that ICANN contemplates 
further studies once the new gTLD Program is underway,\18\ but at that 
point, the damage will have been done. Once new gTLDs are deployed, 
there is no turning back.
---------------------------------------------------------------------------
    \16\ Available at www.icann.org/en/minutes/rationale-economic-
studies-21mar11-en.pdf. See also ICANN Board Rationales for the 
Approval of the Launch of the New gTLD Program, available at 
www.icann.org/en/minutes/rationale-board-approval-new-gtld-program-
launch-20jun11-en.pdf. Even in its final rationales, ICANN acknowledges 
that no determination could be made that the benefits of the new gTLD 
program will outweigh the costs.
    \17\ See ICANN, Minutes of Board Meeting 25 January 2011, Economic 
Studies--http://www.icann.org/en/minutes/minutes-25jan11-en.htm 
(``[T]he Board has determined that no further commissioned economic 
studies could better inform the Board's decision.'' Id. at 8). See also 
ICANN, Rationale for Resolution 2011.01.25.22 (2011) at 1, http://
www.icann.org/en/minutes/rationale-economic-studies-21mar11-en.pdf; see 
also Anthony Van Couvering, ICANN's Economic Study--It Depends, Minds + 
Machines Blog (Jul 21, 2010)(Commenting on the June 2010 Katz economic 
study Mr. Van Couvering said, ``Should observers of ICANN lend any 
credence to this study? If your goal is to advocate a position without 
any empirical evidence, it is an excellent tool. If your goal is to 
understand what the new gTLD program will produce, it will, if printed 
out and bound, make a splendid paperweight'').
    \18\ http://www.icann.org/en/minutes/minutes-25jan11-en.htm.
---------------------------------------------------------------------------
    If this Program, in fact, were likely to enhance competition and 
the Internet marketplace, one would expect broad statements of support 
for it. This support would come from many Internet and governmental 
sources. Instead, the voices that are speaking in favor of the Program 
appear to come almost exclusively from registrars, registries and 
others who will directly profit from facilitating the gTLD roll out--
not those whom ICANN says will benefit. The broader Internet business 
community is clearly rejecting the proposal.
    This scant and conflicting economic analysis is one of many 
examples in which ICANN has disregarded its own requirements and 
unilaterally issued an edict. ICANN's own Code of Conduct \19\ mandates 
that ICANN will ``[w]ork to build consensus with other stakeholders in 
order to find solutions to the issues that fall within the areas of 
ICANN's responsibility. The ICANN model is based on a bottom-up, 
consensus driven approach to policy development.'' Its undertakings 
with the U.S. Department of Commerce additionally require that ICANN 
act rationally and transparently.\20\ Clearly, the legal and due 
diligence requirements of ICANN's own mandates have not been met here. 
An effort to foist on the world community and markets a change of this 
magnitude is not the measured ``bottom up'' approach described in the 
Code of Conduct. Moreover, it is impossible to describe the decision to 
adopt the Program as a decision based upon consensus where the 
research, comments and reports submitted to ICANN clearly show that 
there was and still is no consensus on the purported benefits of the 
Program.
---------------------------------------------------------------------------
    \19\ http://www.icann.org/en/documents/code-of-conduct-10jan08-
en.pdf.
    \20\ ICANN's Code of Conduct at http://www.icann.org/en/documents/
code-of-conduct-10jan08-en.pdf; see also, Affirmation of Commitments by 
the United States Department of Commerce and the Internet Corporation 
for Assigned Names and Numbers (September 30, 2009) at http://
www.icann.org/en/documents/affirmation-of-commitments-30sep09-en.htm 
(``ICANN commits to maintain and improve robust mechanisms for public 
input, accountability, and transparency so as to ensure that the 
outcomes of its decisionmaking will reflect the public interest and be 
accountable to all stakeholders by: . . . (c) continually assessing and 
improving the processes by which ICANN receives public input (including 
adequate explanation of decisions taken and the rationale thereof); (d) 
continually assessing the extent to which ICANN's decisions are 
embraced, supported and accepted by the public and the Internet 
community; and (e) assessing the policy development process to 
facilitate enhanced cross community deliberations, and effective and 
timely policy development'').
---------------------------------------------------------------------------
Excessive Costs and Harms to Brands
    The immediate cost imposed on businesses is likely to be in the 
billions of dollars. Applying for a new Top Level Domain name will 
require an extraordinarily expensive registration fee of $185,000 as 
well as a minimum cost of $25,000 paid annually to ICANN over the ten-
year contractual commitment that successful applicants must make. Costs 
will further escalate at the second level of naming--the word to the 
left of the ``dot''--as brand owners will have to consider registering 
each of their brand-related terms, for either commercial or defensive 
purposes.
    Some have estimated that, for a typical company, the cost of 
acquiring a single gTLD and managing it over the initial commitment of 
ten years could easily exceed $2 million, including expenses for the 
application process, operations, disputes, and related legal services. 
The costs associated with trademark monitoring and protection in all 
the new gTLD spaces will run even higher. Some CRIDO members spend over 
$1 million a year today to enforce against cybersquatting and fraud in 
the existing 22 gTLD spaces. These numbers will clearly escalate if 
ICANN's proposal goes forward. In addition, many companies may face an 
auction for a generic Topic Level Domain, which will result in higher 
costs to ICANN's benefit. Many companies have hundreds or even 
thousands of brands to defend. Brand owners will face a Hobson's choice 
of either being compelled to spend substantial resources to acquire and 
manage new gTLDs or risk the harm to their brands that could occur if 
they take no action. This has certainly been the message spoken loud 
and clear to us from our members and the many groups within CRIDO.
Following the Money
    Existing and prospective Internet registries and registrars stand 
to be the primary beneficiaries of the new gTLD Program. Just examining 
ICANN's own financial statements, it would appear that registries and 
registrars pay fees that comprise the lion's share of ICANN's budget. 
According to ICANN's own audit reports for the Fiscal Year 2011, 
ICANN's primary source of revenue comes from Internet registries and 
registrars. In fact, of ICANN's $69.3 million in revenue for Fiscal 
Year 2011, $64.5 million came from fees paid by registries and 
registrars.\21\ That is 93 percent of ICANN's 2011 revenue. In 2010, 
that same figure was 94 percent.\22\ Looking ahead to this new gTLD 
program, more TLDs mean new business for registries and registrars and 
greater numbers of registries and registrars, which in turn creates 
more fees for ICANN.
---------------------------------------------------------------------------
    \21\ See Report of Independent Auditors and Financial Statements 
for the Internet Corporation for Assigned Names and Numbers, prepared 
by Moss-Adams LLP June 30, 2011 and 2010, available at: http://
www.icann.org/en/financials/financial-report-fye-30jun11-en.pdf.
    \22\ Id at 2.
---------------------------------------------------------------------------
    However, ICANN's budget incentive for new gTLDs will be more than 
increased registry and registrar fees. The initial application fees 
expected in FY 2012 and 2013 will provide the organization with a 
considerable boost to its budget--a $92.5 million dollar boost in fact 
(which could be quite conservative because it only projects 500 
applications; in some of ICANN's earlier delegation scenarios they have 
projected 1,000 or more applications as the high end).\23\ In the 
Fiscal Year 2012 budget projections for new gTLD revenues are expected 
to add another $27.8 million to ICANN's revenue--or adding another 40 
percent to its budget.\24\ Likewise, in draft Fiscal Year 2013 new gTLD 
revenues are expected to add another $64.8 million--that is nearly a 94 
percent increase in revenues above the 2011 Fiscal Year figures 
mentioned above.\25\
---------------------------------------------------------------------------
    \23\ New gTLD Program Cash Flow and P&L by Fiscal Year, ICANN.org, 
(September 9, 2011) (showing the gTLD financial projections) available 
at: http://www.icann.org/en/financials/new-gtld-program-cash-flow-
09sep11-en.pdf (``gTLD Cash Flows Projections''); Delegation Rate 
Scenarios for New gTLDs, ICANN.org, (Oct. 2010) at p 6 (showing 1000 
applications as extremely high activity and 1000s of applications as 
the maximum throughput) available at: http://www.icann.org/en/topics/
new-gtlds/delegation-rate-scenarios-new-gtlds-06oct10-en.pdf.
    \24\ gTLD Cash Flow Projections at 2.
    \25\ Id.
---------------------------------------------------------------------------
    ICANN says that it will use these revenues for intensive 
application review processes, but we would be remiss if we did not add 
that $30 million or nearly one-third of all expected gTLD application 
revenues will be earmarked for a litigation risk fund. ICANN is clearly 
expecting many problems with this application window given the large 
litigation budget anticipated.\26\
---------------------------------------------------------------------------
    \26\ Id.
---------------------------------------------------------------------------
Lack of Consensus
    It is true that ICANN spent a number of years considering this 
Program at meetings around the world. However, the 152 members of 
CRIDO, representing major global companies and business groups, are 
living proof that the objections of industry sectors most affected by 
this Program have not been adequately considered or addressed by ICANN. 
A number of CRIDO members have actively voiced objections to the new 
gTLD process and the lack of adequate trademark protection mechanisms, 
yet their concerns have fallen on deaf ears. This entire constituency--
the one required to fund the new names and maintain the Internet's 
economic model--has been largely ignored. On the other hand, we do not 
hear any clamor for the Program. ICANN has failed to reach stakeholder 
consensus, a specific requirement of its contract with the NTIA.
Conflict of Interest Concerns
    We are very concerned about potential conflicts of interest that 
may be present in this expansion proposal, for both the Board and staff 
of ICANN. It is very troubling that many of the same individuals who 
approved this expansion, including ICANN's former Chairman, now stand 
to benefit substantially from companies that will register applicants 
and manage the expansion. For example, within one month after the vote 
of the ICANN Board to approve the new gTLD expansion, former ICANN 
Chairman Peter Dengate Thrush had joined a London company called Top 
Level Domain Holdings, a company that will directly profit from the 
decision.
    These events have cast a serious cloud over the legitimacy of the 
vote to approve the new gTLD Program. ICANN serves as a quasi-governing 
body for the day-to-day operations of the Internet. It is absolutely 
critical that all decisions are made in the public interest, not in the 
best interest of the closely-knit ICANN family.
    We believe that ICANN can reclaim its legitimacy as an Internet 
governance body only by conducting a thorough and proactive review of 
both the gTLD expansion and the broader conflict of interest and ethics 
policies for the organization. We expressed these concerns in a letter 
to ICANN on October 2, 2011, which is available at http://www.ana.net/
getfile/16766. Our letter notes that serious concerns about the 
inadequacy of the ICANN conflict of interest policies have been 
expressed by Senator Ron Wyden (D-OR), by Lawrence Strickling, 
Assistant Secretary for Communications and Information at the U.S. 
Department of Commerce, and by the full European Commission.
    At its October meeting in Dakar, ICANN's Governmental Advisory 
Committee (GAC) expressed ``extreme concern about the inadequacy of the 
existing rules of ethics and conflict of interest'' in ICANN.\27\ The 
conflict of interest issues threaten to undermine confidence in ICANN's 
decision-making. Obviously, if ICANN merely adopts prospective conflict 
of interest corrections they will not undo harms that have already 
occurred. Attention must be paid to the effects of conflicts on ICANN's 
deliberations and the legitimacy of the gTLD roll out proposal.
---------------------------------------------------------------------------
    \27\ GAC Communique--Dakar, October 27, 2011 (attached as Exhibit 
D).
---------------------------------------------------------------------------
Exemptions to the Program
    Three groups were exempted or exempted themselves from the new gTLD 
Program: the Red Cross, the Olympics and ICANN itself. In letters to 
ICANN, both the Red Cross and the Olympics stated that they needed this 
type of protection to assure that the public who trust their brand 
identities would not fall victim to typosquatting, cybersquatting and 
phishing. The Red Cross noted that a substantial portion of their 
resources are used to counteract ``fraudulent websites containing Red 
Cross names to solicit donations routinely after virtually every 
newsworthy disaster.'' \28\
---------------------------------------------------------------------------
    \28\ David Meltzer, Senior Vice President International Services, 
Peggy Dyer, Chief Marketing Officer and Mary S. Elcano, General Counsel 
and Corporate Secretary, American Red Cross, to Kurt Pritz, Senior Vice 
President, Stakeholder Relations and Amy Stathos, Deputy General 
Counsel, ICANN, June 16, 2011, page 2.
---------------------------------------------------------------------------
    While these exemptions may be appropriate, no other exemptions were 
extended to the thousands of other charities and foundations that 
similarly use the Internet to foster their public interest activities--
yet they surely face the same kinds of harms.
    The fact that ICANN exempted itself is even more informative. ICANN 
not only exempted its own name from the gTLD process, but several other 
names as well. But the protections for ICANN will not end at the top 
level. ICANN will have the opportunity to negotiate more protections 
for itself at the second level once new gTLD registries are selected. 
Take for example, the many reservations that ICANN made for itself on 
the new .xxx domain. In the .xxx registry, ICANN was even able to 
protect names of some of its leadership.\29\ No other groups received 
the same protection. Major universities across the country, for 
example, have recently found it necessary to purchase multiple .xxx 
domain names to protect against links of their names to porn sites. The 
Ohio State University purchased a total of 19 domains, including 
buckeyeblitz.xxx and goldpants.xxx.\30\ The cost for each of these 
domain name purchases was $200 for a purely defensive purpose. These 
costs could be substantially higher if an auction is required to 
protect a name.
---------------------------------------------------------------------------
    \29\ Kevin Murphy, RodBeckstrom.xxx Will Never See the Light of 
Day, Domain Incite (Sept. 14, 2011) available at: http://
domainincite.com/rodbeckstrom-xxx-will-never-see-the-light-of-day/.
    \30\ FoxNews.com, Penn State Bought Adult .XXX Domain Names to 
Block Usage Prior to Sex Abuse Scandal (Nov. 30, 2011) available at 
http://www.foxnews.com/us/2011/11/30/penn-state-buys-adult-domain-
names-to-block-usage/.
---------------------------------------------------------------------------
    These exemptions explode the argument that ICANN makes that it has 
developed adequate protections against cybersquatting, typosquatting 
and phishing. These charitable and other NGO groups will face the same 
dangers that the Red Cross and the Olympics highlighted, and many of 
them will not have the financial wherewithal to defend and protect 
their good name in the Internet marketplace.
Not All TLDs Are Alike
    Our concerns primarily focus on generic Top Level Domains (gTLDs). 
These concerns do not generally extend to so-called ccTLDs dealing with 
country designators such as .co, .cn, .eu, and .de. Nor are we opposed 
to the use of other languages and character sets in the Domain system, 
although we believe that the public interest requires that all Top 
Level Domains be cost beneficial and not impose undue burdens on the 
Internet or undermine consumer trust. Neither do we believe that there 
is something sacrosanct about maintaining the existing 22 gTLD system 
unaltered. However, all of our companies, associations and groups 
believe the unrestricted and unlimited expansion of gTLDs is a reckless 
experiment that needs to be halted and reassessed before it damages the 
very positive growth of consumer trust that is fundamental to the 
Internet marketplace.
Conclusion
    We commend the Committee for holding this important hearing. 
Examining the membership list of CRIDO demonstrates that the concerns 
of the worldwide business community are extraordinarily widespread. The 
issues that we raise will fall even harder on consumer groups, 
charities, foundations, and myriad other entities that have even less 
financial ability to protect their institutional interests and that 
will be impacted by the rapid, unlimited opening of the generic Top 
Level Domain space.
    We reject the argument of those who say that it is too late for 
ICANN to step back and reevaluate or for NTIA, the Governmental 
Advisory Committee and other key Internet participants to try to make 
one last major effort to forestall this potentially severely damaging 
initiative. There is absolutely nothing sacred about the January 2012 
implementation date. Given the serious concerns expressed by a broad 
and growing cross-section of the entire American and global business 
community, the companies which provide the economic foundation of the 
Internet, and the potential dangers to consumers, we believe it would 
be irresponsible for ICANN to proceed full-speed ahead with the roll-
out next month.
    We are sensitive to the U.S. government's concern that by acting, 
in any capacity, it could fracture the voluntary domain name system, 
which is embedded in the authoritative root. Or, alternatively, that 
control of the ICANN Internet governance function could be relinquished 
to the International Telecommunications Union. However, given the 
potential harms that we have identified from this Program: consumer 
harm, cybersquatting, typosquatting, Internet piracy and product 
counterfeiting, inaction could be far more destabilizing to ICANN as a 
governance body. If the new gTLDs launch and such problems occur en 
masse, then foreign governments will have no choice other than to call 
for the dismantling of ICANN. No one here at this hearing wants to see 
ICANN dismantled. We would like to buttress its authority by ensuring 
that the gTLD Program is maintained and developed appropriately in the 
public interest and promotes consumer trust.
    We very much appreciate this opportunity to testify and the careful 
consideration of our and the other members of CRIDO's views.
                               Exhibit A
             Association Signatories to the ICANN Petition
    AAF-Amarillo
    AAF-Dallas
    AAF-Fort Worth
    AAF Hampton Roads
    AdClub Cincinnati
    Advertisers Association of Guatemala (Guatemala)
    Advertisers Association of Nigeria (Nigeria)
    Advertisers Association of Turkey (Turkey)
    Advertisers Business Group (United Arab Emirates)
    Agrupacion Nacional de Anunciantes de Mexico (Mexico)
    American Advertising Federation (AAF)
    American Advertising Federation Baltimore, Inc.
    American Advertising Federation of Des Moines
    American Apparel & Footwear Association (AAFA)
    American Association of Advertising Agencies (4As)
    American Beverage Association (ABA)
    American Council of Life Insurers (ACLI)
    American Health Care Association (AHCA)
    American Insurance Association (AIA)
    American Intellectual Property Law Association (AIPLA)
    American Society of Association Executives (ASAE)
    Asociacion Espanola de Anunciantes (Spain)
    Asociacion Nacional de Anunciantes de Colombia (Colombia)
    Asociacion Nacional de Anunciantes Peru (Peru)
    Asociacion Nacional de Anunciantes Venezuela (Venezuela)
    Asociacian Nacional de Avisadores Chile (Chile)
    Associacao Brasileira de Anunciantes (Brazil)
    Associacao Portuguesa de Anunciantes (Portugal)
    Association of Advertisers in Ireland (Ireland)
    Association of Canadian Advertisers (Canada)
    Association of National Advertisers (ANA)
    Association of New Zealand Advertisers (New Zealand)
    Association of Swiss Advertisers (Switzerland)
    Austin Advertising Federation
    Australian Association of National Advertisers (Australia)
    Boise Advertising Federation
    Bond van Adverteerders (The Netherlands)
    Bulgarian Association of Advertisers (Bulgaria)
    Cable Advertising Bureau (CAB)
    Camara Argentina de Anunciantes (Argentina)
    Camara de Anunciantes del Paraguay (Paraguay)
    Camara de Anunciantes de Uruguay (Uruguay)
    China Association of National Advertisers (China)
    Consumer Electronics Association (CEA)
    Czech Association for Branded Products (Czech Republic)
    Cyprus Advertisers Association (Cyprus)
    Dansk Annoncoerforening (Denmark)
    Direct Marketing Association (DMA)
    European Association of Communications Agencies (EACA)
    European Publishers Council (EPC)
    Food Marketing Institute (FMI)
    Grocery Manufacturers Association (GMA)
    Groupement des Annonceurs du Maroc (Morocco)
    Hellenic Advertisers Association (Greece)
    Hungarian Branded Goods Association (Hungary)
    Idaho Advertising Federation
    Idaho Falls Advertising Federation
    Incorporated Society of British Advertisers (United Kingdom)
    Indian Society of Advertisers (India)
    Indonesia Advertisers Association (Indonesia)
    Intellectual Property Owners Association (IPO)
    Interactive Advertising Bureau (IAB)
    IAB Europe
    The Israel Marketing Association (Israel)
    Japan Advertisers Association (Japan)
    Lebanese Association of Advertisers (Lebanon)
    Lewis-Clark Valley Advertising Federation
    Magic Valley Advertising Federation
    Mainostajien Liitto (Finland)
    Malaysian Advertisers Association (Malaysia)
    The Marketing Association of South Africa (South Africa)
    Mobile Marketing Association (MMA)
    MPA--the Association of Magazine Media
    National Association of Broadcasters (NAB)
    National Association of Manufacturers (NAM)
    National Confectioners Association
    National Council of Chain Restaurants (NCCR)
    National Restaurant Association (NRA)
    Norwegian Association of Advertisers (Norway)
    Organisation Werbungtreibende im Markenverband (Germany)
    Pakistan Advertisers Society (Pakistan)
    Philippine Association of National Advertisers (The Philippines)
    Pocatello Advertising Federation
    Promotion Marketing Association (PMA)
    Property Casualty Insurers Association of America
    Radio Advertising Bureau (RAB)
    Retail Industry Leaders Association (RILA)
    Russian Association of Advertisers (Russia)
    Singapore Advertisers Association (Singapore)
    Slovak Association for Branded Products (Slovakia)
    Slovenian Advertising Chamber (Slovenia)
    Sveriges Annonsorer (Sweden)
    Television Bureau of Advertising (TVB)
    Union Belge des Annonceurs (Belgium)
    Union des Annonceurs (France)
    U.S. Chamber of Commerce
    Utenti Pubblicita Associati (Italy)
    World Federation of Advertisers (WFA)
               Company Signatories to the ICANN Petition
    Acxiom
    adidas
    Adobe Systems Incorporated
    Allstate Insurance Company
    American Express
    Autodesk, Inc.
    Brinker International
    Burger King Corporation
    The Coca-Cola Company
    Chrysler Group LLC
    Church's Chicken
    Combe Incorporated
    ConAgra Foods
    Costco Wholesale Corporation
    Darden Restaurants, Inc.
    Dell Inc.
    Dunkin' Brands, Inc.
    Educational Testing Service (ETS)
    Fidelity Investments
    Ford Motor Company
    General Electric Company
    GroupM
    Hack Creative
    Havas
    Hewlett-Packard Company
    Hunter Douglas NA
    J.C. Penney Company, Inc.
    Johnson & Johnson
    Kellogg Company
    Kraft Foods
    La Quinta
    Liberty Mutual
    MillerCoors
    Money Mailer of Amarillo
    Nationwide Mutual Insurance Company
    Neon Sun Tanning Salon
    Nestle USA
    ORCI
    OSI Restaurant Partners, LLC
    Papa John's
    Procter & Gamble
    Publicis Groupe
    Pulte Group
    Reebok
    Rollins, Inc.
    Samsung
    Siemens AG
    Siemens Corporation
    The J.M. Smucker Company
    Toyota
    US Bank
    Vanguard
    Verge
    Walmart
                               Exhibit B
                 Coalition for Responsible Domain Oversight
                                                  November 10, 2011
Hon. John Bryson,
Secretary,
U.S. Department of Commerce,
Washington, DC.

Dear Secretary Bryson:

    We, the undersigned, representing large and small business, in 
virtually every industry sector, in the United States and around the 
world, are writing to express our strong concern with respect to the 
June 2011 decision by the Internet Corporation for Assigned Names and 
Numbers (ICANN) to approve the top-level domain (gTLD) Applicant 
Guidebook and to move forward with plans to open the new gTLD 
application window on January 12, 2012 (the ICANN plan, decision or 
ICANN Proposal) on a virtually unlimited basis.
    ICANN's action was taken despite widespread and significant 
objections raised throughout the process by many in the global 
community of Internet users. ICANN's decision was not made in the 
public interest, does not promote consumer trust, and does not benefit 
the public, as required in the Affirmation of Commitments between ICANN 
and the National Telecommunications and Information Administration 
(NTIA).
    Moreover, additional facts have come to light since ICANN announced 
the most recent iteration of the Applicant Guidebook--including rounds 
of troubling conflict of interest questions--which cast a shadow over 
the entire process leading up to ICANN's decision. Those facts, 
combined with the current state of the global economy, raise 
substantial issues regarding the wisdom of moving forward with ICANN's 
plan, given its undisputed costs and its merely putative benefits.
    The ICANN Proposal would unduly burden a diverse range of public 
and private brand holders, as they would be forced to spend ever-
greater amounts of time and resources simply to protect their brands. 
In addition, there is an unacceptably high risk that the ICANN plan 
would confuse consumers, increase the already unacceptable level of 
fraud and identity theft on the Internet, create new opportunities for 
Internet crime, and jeopardize cyber security. Businesses and not-for-
profits alike have repeatedly raised these issues with ICANN over the 
last four years, with no acceptable resolution.
    For these reasons, we respectfully call on the Department of 
Commerce and, specifically the NTIA, to persuade ICANN to postpone the 
opening of the top-level domain application window unless or until such 
time as ICANN convincingly demonstrates that unlimited TLD name 
expansion would:

   Promote consumer trust;

   Enhance Internet security;

   Promote widespread economic benefits across diverse economic 
        sectors and stakeholders; and

   Demonstrate that these benefits will exceed the costs that 
        such gTLD expansion would inevitably impose on the global 
        Internet community.

    Respectfully submitted,
Organizations
AdClub Cincinnati
American Advertising Federation (AAF)
AAF-Amarillo
AAF-Dallas
AAF-Fort Worth
AAF Hampton Roads
American Advertising Federation Baltimore, Inc.
American Advertising Federation of Des Moines
American Apparel & Footwear Association (AAFA)
American Association of Advertising Agencies (4As)
American Beverage Association (ABA)
American Council of Life Insurers (ACLI)
American Health Care Association (AHCA)
American Insurance Association (AIA)
American Intellectual Property Law Association (AIPLA)
American Society of Association Executives (ASAE)
Association of Canadian Advertisers (ACA)
Association of National Advertisers (ANA)
Austin Advertising Federation
Boise Advertising Federation
Cable Advertising Bureau (CAB)
Consumer Electronics Association (CEA)
Direct Marketing Association (DMA)
European Association of Communications Agencies (EACA)
European Publishers Council (EPC)
Food Marketing Institute (FMI)
Grocery Manufacturers Association (GMA)
Idaho Advertising Federation
Idaho Falls Advertising Federation
Intellectual Property Owners Association (IPO)
Interactive Advertising Bureau (IAB)
IAB Europe
Lewis-Clark Valley Advertising Federation
Magic Valley Advertising Federation
Mobile Marketing Association (MMA)
MPA--the Association of Magazine Media
National Association of Broadcasters (NAB)
National Association of Manufacturers (NAM)
National Confectioners Association
National Council of Chain Restaurants (NCCR)
National Restaurant Association (NRA)
Pocatello Advertising Federation
Promotion Marketing Association (PMA)
Radio Advertising Bureau (RAB)
Retail Industry Leaders Association (RILA)
Television Bureau of Advertising (TVB)
U.S. Chamber of Commerce
World Federation of Advertisers (WFA)
Corporations
Acxiom
Adobe Systems Incorporated
Allstate Insurance Company
American Express
Brinker International
Burger King Corporation
The Coca-Cola Company
Combe Incorporated
ConAgra Foods
Costco Wholesale Corporation
Darden Restaurants, Inc.
Dell Inc.
Dunkin' Brands, Inc.
Educational Testing Service (ETS)
Fidelity Investments
Ford Motor Company
General Electric Company
Hack Creative
Hewlett-Packard Company
Hunter Douglas NA
J.C. Penney Company, Inc.
Johnson & Johnson
Kellogg Company
La Quinta
Liberty Mutual
MillerCoors
Money Mailer of Amarillo
Nationwide Mutual Insurance Company
Neon Sun Tanning Salon
Nestle USA
ORCI
OSI Restaurant Partners, LLC
Papa John's
Procter & Gamble
Publicis Groupe
Pulte Group
Samsung
US Bank
Vanguard
Verge

    cc: Lawrence E. Strickling, Assistant Secretary for Communications 
and Information and Administrator, National Telecommunications and 
Information Administration, U.S. Department of Commerce

    Fiona Alexander, Associate Administrator, National 
Telecommunications and Information Administration, U.S. Department of 
Commerce

    Vernita Harris, Deputy Associate Administrator of the Office of 
International Affairs, National Telecommunications and Information 
Administration, U.S. Department of Commerce

    Suzanne Murray Radell, Senior Policy Advisor, National 
Telecommunications and Information Administration, U.S. Department of 
Commerce

    Elizabeth Bacon, Telecommunications Policy Specialist, National 
Telecommunications and Information Administration, U.S. Department of 
Commerce

    Cameron F. Kerry, General Counsel, U.S. Department of Commerce

    Daniel K. Inouye, Chairman, Committee on Appropriations, U.S. 
Senate

    John D. Rockefeller IV, Chairman, Committee on Commerce, Science 
and Transportation, U.S. Senate

    Patrick J. Leahy, Chairman, Committee on the Judiciary, U.S. Senate

    Thad Cochran, Ranking Member, Committee on Appropriations, U.S. 
Senate

    Kay Bailey Hutchison, Ranking Member, Committee on Commerce, 
Science and Transportation, U.S. Senate

    Charles E. Grassley, Ranking Member, Committee on the Judiciary, 
U.S. Senate

    Barbara Mikulski, Chair, Subcommittee on Commerce, Justice, Science 
and Related Agencies, Committee on Appropriations, U.S. Senate

    Al Franken, Chairman, Subcommittee on Privacy, Technology and the 
Law, Committee on the Judiciary, U.S. Senate

    Tom Coburn, Ranking Member, Subcommittee on Privacy, Technology and 
the Law, Committee on the Judiciary, U.S. Senate

    Ron Wyden, Chairman, Subcommittee on International Trade, Customs, 
and Global Competitiveness, Committee on Finance, U.S. Senate

    Harold Rogers, Chairman, Committee on Appropriations, U.S. House of 
Representatives

    Fred Upton, Chairman, Committee on Energy and Commerce, U.S. House 
of Representatives

    Lamar Smith, Chairman, Committee on the Judiciary, U.S. House of 
Representatives

    Norm Dicks, Ranking Member, Committee on Appropriations, U.S. House 
of Representatives

    Henry A. Waxman, Ranking Member, Committee on Energy and Commerce, 
U.S. House of Representatives

    John Conyers, Ranking Member, Committee on the Judiciary, U.S. 
House of Representatives

    Bob Goodlatte, Chairman, Subcommittee on Intellectual Property, 
Competition and the Internet, Committee on the Judiciary, U.S. House of 
Representatives

    Frank Wolf, Chairman, Subcommittee on Commerce, Justice, Science 
and Related Agencies, Committee on Appropriations, U.S. House of 
Representatives

    Mel Watt, Ranking Member, Subcommittee on Intellectual Property, 
Competition and the Internet, Committee on the Judiciary, U.S. House of 
Representatives

    Chaka Fattah, Ranking Member, Subcommittee on Commerce, Justice, 
Science and Related Agencies, Committee on Appropriations, U.S. House 
of Representatives
                               Exhibit C
                            Governmental Advisory Committee
                                             Dakar, 27 October 2011
                         GAC Communique--Dakar
I. Introduction
    The Governmental Advisory Committee (GAC) of the Internet 
Corporation for Assigned Names and Numbers (ICANN) met in Dakar, 
Senegal during the week of October 22-27, 2011. Forty-nine Governments 
participated in the meeting: 46 present and 3 by remote participation 
and six Observers. The GAC expresses warm thanks to the local hosts, 
The Ministry of Communication, Telecommunications and Information 
Technology (MICOMTELTIC) and the Regulatory Authority for 
Telecommunications and Post (ARTP) for their hospitality in organizing 
the meeting and ICANN for supporting the GAC during the meeting.
II. New gTLDs
    The GAC further discussed and decided on the formulation of GAC 
advice for inclusion in Module 3 of the Applicant Guidebook [Annex I].
    During the discussion ICANN Staff underlined their understanding 
that advice regarding the definition of Geographic Names should be 
adopted by the GAC.
    The GAC congratulates the JAS working group on the final report and 
recommendations, which are consistent with GAC advice. The GAC looks 
forward to the Board providing clear timelines for implementation of 
the recommendations to enable needy applicants to join in full and 
meaningfully in the first round.
    The GAC raised concern about the unpredictability of the actual 
number of applications that governments would have to digest to proceed 
after the end of the application period. The GAC made clear, that if 
the number of applications published by ICANN significantly exceeds 
500, GAC members might not be able to process a very large number of 
applications in the very short early warning procedure and in the 
limited time for issuing GAC advice on all these strings.
    Further, the GAC asked ICANN for clarification about its intention 
to process these applications in batches of 500, in the case that there 
are more than SOD applications. The GAC urges ICANN to clarify the 
procedures and implications for applicants being processed in different 
batches, as this might have implications for competition and 
applicants' business models.
    Following presentations by the ICANN staff and the Security and 
Stability Advisory Committee, the GAC took note of the SSAC 
consideration of the combined impact of new gTLDs and other changes 
such as the introduction of 1Pv6, DNSSEC and IDNs to the root. The GAC 
welcomes the confirmation of the commitment by the ICANN Board to 
provide a full report with a complete analysis, including all 
underlying data, of the root system scalability well before the opening 
of the new gTLDs application round. The GAC further welcomes the 
confirmation of the commitment by the Board to evaluate the impact on 
the system after the 1st round, with the understanding that the launch 
of a second round is contingent on the outcome of this evaluation, in 
particular the absence of negative effects on the root system. The GAC 
believes that in order for this evaluation to be effective, an 
appropriate and trustable monitoring system needs to be in place.
    In its discussions with the Board regarding the Communication Plan 
for new gTLDs, the GAC emphasised the importance of promoting the gTLDs 
application round in all countries, including developing countries. The 
GAC suggested that levels of awareness be continually assessed and 
reviewed, and priorities and target areas under the Plan be adjusted 
accordingly in the run up to the launch of the round.
    The GAC welcomed the assurances received from the Board and staff 
that the evaluation of applications will ensure a level playing field 
for applicants and that any conflicts of interest will be identified 
and avoided accordingly.
III. Law Enforcement (LEA) Recommendations
    In recent years, the Internet has grown to have over two billion 
users and be a significant contributor to the global economy.
    Cyber-crime is a growing threat to the security and stability of 
the Internet, with broad and direct public policy impacts. Recent 
estimates suggest that the direct financial impact of cyber-crime is 
extremely significant.
    Law enforcement agencies have identified a series of specific 
problems which are limiting their ability to address this growing 
problem.
    As part of this, law enforcement agencies have identified specific 
areas of concern in the ICANN context, relating to contractual 
weaknesses and a lack of necessary due diligence.
    To address these urgent problems, in 2009 law enforcement agencies 
made 12 concrete recommendations to reduce the risk of criminal abuse 
of the domain name system.
    These recommendations were informally socialized with the registrar 
community, the GAC, and with ICANN compliance staff over the course of 
several months, before the GAC advised the Board in its Brussels 
communique that it formally endorsed the recommendations.
    Direct exchanges between law enforcement agencies and registrars 
continued in September 2010 in Washington D.C., in February 2011 in 
Brussels, and during the March and June 2011 ICANN meetings.
    As a complement to the June exchanges in Singapore, the GAC urged 
the Board to support actions necessary to implement those 
recommendations as a matter of urgency.
    To date, none of the recommendations have been implemented, and the 
risks remain. The GAC therefore advises the ICANN Board to take the 
necessary steps to ensure that ICANN's multistakeholder process 
effectively addresses these GAC-endorsed proposals as a matter of 
extreme urgency.
IV. Accountability and Transparency Review Team Recommendations (ATRT)
    The GAC welcomes the update provided by ICANN staff on the ATRT 
Recommendations progress and the suggestions presented with regards to 
the implementation of recommendations 9 through 14 on the GAC role, 
effectiveness and interaction with the Board.
    The GAC looks forward to an expedited implementation of the Joint 
Working Group and ATRT recommendations and is keen to continue working 
with the Board on the Recommendations related to the GAC.
V. Conflict of interest
    The GAC expresses extreme concern about the inadequacy of the 
existing rules of ethics and conflict of interest in the light of 
recent events and therefore welcomes the approval of the motion by the 
Board Governance Committee on 1S September 2011concerning ``ethics and 
conflicts of interest''. The GAC looks forward to the publication of a 
timeline with clear and effective actions as a conclusion of the Dakar 
meeting or shortly thereafter. In order to ensure the legitimacy and 
sustainability of the multi stakeholder model as enshrined in ICANN, 
the GAC underlines the extreme urgency of putting in place effective 
and enforceable rules on conflicts of interest.
    The GAC will keep this important issue under review and may come 
forward with further advice before the Costa Rica GAC meetings.
VI. Meeting with the Generic Names Supporting Organisation (GNSO)
    The GAC and the GNSO exchanged views on a number of issues, 
beginning with an overview by ICANN staff of the GNSO policy 
development process. Consistent with the recommendations of the 
Accountability and Transparency Review Team and the related GAC-Board 
Joint Working Group, the GAC stressed its interest in ensuring that GAC 
views are provided and taken into account at early stages in the policy 
development process.
    The meeting also discussed the implementation of the Law 
Enforcement Agency (LEA) recommendations to mitigate Domain Name System 
abuse, which were endorsed by the GAC in June 2010. The GAC expressed 
its disappointment that registrars were only able to report on their 
consideration of three of the twelve LEA Recommendations. Further, the 
reported progress fell substantially short of what GAC members believed 
had been achieved during its meetings with registrars in Singapore in 
June 2011. The GAC also expressed concern that there was no clarity on 
how the other nine recommendations were being progressed, despite the 
registrars' agreement at the Singapore meeting to provide regular 
status
    reports. The GAC informed the GNSO Council of its intention to 
request the ICANN Board to take prompt and concrete action to implement 
the GAC/LEA recommendations.
    The meeting also addressed the GAC's proposal to the GNSO on the 
protection mechanism for the International Olympic Committee and Red 
Cross/Red Crescent names at the top and second levels. The GAC 
requested feedback from the GNSO on the proposal as a first step in 
collaborating on advice for the ICANN Board in this regard, consistent 
with the ICANN Board Resolution in Singapore.
    The GAC looks forward to further engagement with the GNSO to work 
more effectively within the ICANN processes and reinforce the 
sustainability of the multi-stakeholder model.
VII. Meeting with the At-Large Advisory Group (ALAC)
    The GAC met with the ALAC to discuss Conflict of Interest issues 
within the ICANN Board and staff. The GAC agrees that this is a 
critical matter that needs to be addressed as a high priority within 
the community.
    The GAC and ALAC also discussed the Joint Applicant Support (JAS) 
Working Group as well as the ALAC and GAC Joint Statement. The GAC 
expects a decision to be taken for implementation in time for the 
opening of the first new gTLD round.
    In light of the common interest of advancing improvements in the 
ICANN model, the GAC and ALAC also discussed the ongoing work of the 
Accountability and Transparency Review Team (ATRT). The GAC shared the 
areas identified as a priority in the framework of the ATRT and the 
Joint Working Group recommendations, looking forward to an expedited 
implementation.
VIII. GAC Operating Principles
    The GAC amended Principle 47 of its Operating Principles clarifying 
its understanding of consensus. The definition now introduced derives 
from United Nations practice and understands consensus as adopting 
decisions by general agreement in the absence of formal objections. The 
GAC noted that according to UN practice individual members may make 
reservations, declarations, statements of interpretation and/or 
statements of position regarding a consensus decision, provided such 
texts do not represent an objection to the consensus [Annex II].
IX. Joint session with the Country Code Names Supporting Organization 
        (ccNSO)
    The GAC met with the ccNSO to discuss the progress and ongoing work 
of the Framework of Interpretation cross-community Working Group (Fol) 
on delegation and redelegation, and the mechanisms for the GAC to 
provide feedback and contribute to this work within a timeline that the 
ccNSO has provided. In addition, the ccNSO shared an update of its 
current work areas and its organisational structure.
    The GAC is eager to further engage with the ccNSO to provide timely 
inputs on the different stages of the Fol work.
X. Meeting with the Security and Stability Advisory Committee (SSAC)
    The GAC thanks the SSAC for providing an update on its work 
including blocking and reputation systems, WHOIS matters and single 
label domain names. Further, the GAC thanks the SSAC Chair for 
discussions on Root Zone Scaling and Resource Public Key Infrastructure 
(RPKI).
    The GAC looks forward to receiving further updates on DNS blocking 
matters and other relevant security and stability related matters.
XI. Meeting with the Nominating Committee (NomCom)
    The GAC met with the Nominating Committee and discussed the skill-
sets needed of an ICANN Director, as outlined in the Accountability and 
Transparency Review Team (ATRT) recommendations to improve the 
selection process. The NomCom invited individual GAC members to provide 
further inputs.
XII. Election of Vice-Chairs
    The GAC has reelected the current vice-chairs, Choon-Sai Lim 
(Singapore), Maria Hall (Sweden) and Alice
    Munyua (Kenya) to continue their mandate for another year.
                                *  *  *
    The GAC warmly thanks all those among the ICANN community who have 
contributed to the dialogue with the GAC in Dakar.
    The GAC will meet during the period of the 43''ICANN meeting in San 
Jose, Costa Rica.
                                Annex I
        Applicant Guidebook Module 3.1: GAC Advice on New gTLDs
    ICANN's Governmental Advisory Committee was formed to consider and 
provide advice on the activities of ICANN as they relate to concerns of 
governments, particularly matters where there may be an interaction 
between ICANN's policies and various laws and international agreements 
or where they may affect public policy issues.
    The process for GAC Advice on new gTLDs is intended to address 
applications that are identified by governments to be problematic, 
e.g., that potentially violate national law or raise sensitivities.
    GAC members can raise concerns about any application to the GAC. 
The GAC as a whole will consider concerns raised by GAC members, and 
agree on GAC advice to forward to the ICANN Board of Directors.
    The GAC can provide advice on any application. For the Board to be 
able to consider the GAC advice during the evaluation process, the GAC 
advice would have to be submitted by the close of the Objection Filing 
Period (see Module 1).
    GAC Advice may take one of the following forms:

    I. The GAC advises ICANN that it is the consensus of the GAC that a 
particular application should not proceed. This will create a strong 
presumption for the ICANN Board that the application should not be 
approved.

    II. The GAC advises ICANN that there are concerns about a 
particular application ``dot-example''. The ICANN Board is expected to 
enter into dialogue with the GAC to understand the scope of concerns. 
The ICANN Board is also expected to provide a rationale for its 
decision.

    III. The GAC advises ICANN that a particular application should not 
proceed unless remediated. This will raise o strong presumption for the 
Board that the application should not proceed unless there is a 
remediation method available in the Guidebook (such as securing one or 
more government's approval) that is implemented by the applicant.
                                Annex II
             Operating Principles Article XII Principle 47
    The GAC works on the basis of seeking consensus among its 
membership. Consistent with United Nations practice,\1\ consensus is 
understood to mean the practice of adopting decisions by general 
agreement in the absence of any formal objection. Where consensus is 
not possible, the Chair shall convey the full range of views expressed 
by members to the ICANN Board.
---------------------------------------------------------------------------
    \1\ Statements by GAC members related to such advice will be posted 
on the GAC website.

    Senator Klobuchar. Thank you, Mr. Chairman.
    Ms. Dyson.

  STATEMENT OF ESTHER DYSON, FOUNDING CHAIRMAN OF ICANN, 1998-
         2000; CURRENTLY AN INDEPENDENT ANGEL INVESTOR

    Ms. Dyson. Good morning, Chairman, Senator Klobuchar, 
Senator Cantwell. I'm Esther Dyson. I'm honored to be here.
    I was the founding chairman of ICANN from 1998 to 2000. In 
fact, the first and only time I testified previously in 
Congress I was defending ICANN against charges that it was 
imposing a tax on the Internet. At the time, I believe, those 
charges weren't true. We were charging sensible, realistic 
costs to maintain a system that already existed.
    At that time, I also believed that adding new TLDs to the 
domain name system would be a good idea. However, over time and 
in the face of continuing disappointments with what ICANN did 
and became, I've changed my mind, and that's why I'm here 
today.
    First of all, ICANN's process of consulting with the public 
hasn't really worked. I'm the only person here talking on 
behalf of the real public, not on behalf of large trademark 
owners, not on behalf of big businesses, not on behalf of 
governments, not on behalf of nonprofits, but actually on 
behalf of the users, who I think stand to be extremely confused 
if there's a proliferation of top-level domain names.
    Either marriott.com and marriott.hotel are the same, in 
which case marriott.hotel is simply redundant; or they're 
different, in which case it's simply confusing. Then add dot-
hotel, and then hotel.marriott, residenceinn.marriott, and so 
on. Now multiply that by hundreds or thousands of different 
top-level domains. It will create a profusion of new names for 
Marriott to protect without creating any additional value, 
because there remains only one Marriott.
    That's why I think this whole idea is fundamentally 
misguided. It's akin to derivatives, which also create great 
complexity and new opportunities for transactions and, yes, 
both derivatives and domain names create opportunities for 
entrepreneurs. But they don't really create any value for the 
economy. That's my problem with this. I don't think any 
particular domain name is evil or should be illegal, but it's a 
big waste.
    Finally, you could ask, what should ICANN do and what will 
happen if we have a lot of new domain names? I studied 
economics in college and I didn't learn a whole lot there, to 
be honest, but I did learn how to think. Fundamentally, 
economics is about math and common sense. Right now what we 
have is an artificially restricted scarcity of domain names. We 
can enlarge the group of domain names, in which case it will be 
artificial and somewhat enlarged, but the same issues will 
happen. Or we can say: We really believe in no scarcity at all; 
let's have as many domain names as anybody wants. And then you 
don't really need ICANN because there's nothing to protect. Or 
we can stick with the current situation and perhaps some 
measured expansion to accommodate non-Latin alphabets and the 
like.
    In the long run, probably people will start looking for 
everything through the search engines and so domain names won't 
matter. But with ICANN's current plan, there's going to be a 
period to great confusion in the meantime. I don't think it 
makes sense to go through a period of several years where 
there's a profusion of domain names, a proliferation of the 
kinds of costs and abuse Angela Williams and Dan Jaffe talked 
about. It just doesn't make sense.
    I understand ICANN is not responsible to Congress. I'm not 
suggesting that you in this room do much, other than what you 
are doing here, which is to raise the public's awareness of 
this issue. And then I hope that ICANN will go back and 
reconsider and somehow figure out how to actually get real 
consumers involved and maybe just stick to the international 
domain names which do make sense and which with luck will be 
properly regulated, largely by other governments.
    But in general, I don't see the point of this program.
    Thank you very much.
    [The prepared statement of Ms. Dyson follows:]

 Prepared Statement of Esther Dyson, Founding Chairman of ICANN, 1998-
             2000; Ccurrently an Independent Angel Investor
    Thank you, Chairman Rockefeller, Ranking Member Hutchison, esteemed 
Senators, Committee staff and others, for your attention to this 
important issue. As a private citizen with a variety of affiliations 
but beholden to no single employer or institution, I am honored to be 
here today.
    My name is Esther Dyson. I assume that I was invited to testify 
before this Committee primarily because I was the founding chairman of 
ICANN's board, from its inception in September 1998 until late in 2000. 
I continued as a member of the ICANN At-Large Advisory Committee for a 
year or two after that, and subsequently went on with the rest of my 
life. I am a casual user of domain names; I have a couple registered 
that I don't use, and then I have owned and used edventure.com since 
before my ICANN tenure. As an investor, a board member of non-profit 
and for-profit companies and as a user of the Internet, I do have a 
substantial interest in freedom of speech and freedom to innovate.
    Other than that, I have no particular business interests in the 
domain name system, and I paid my own way here today. Moreover, unlike 
most of the public, I have the private resources, the time and the 
insider knowledge to come here to give you what I hope you will find to 
be an informed and useful perspective.
    I come as a loving critic to improve ICANN, not to bury it.
Some Brief History
    When I joined the board of ICANN back in 1998, the majority of its 
members had almost no experience with the Internet and attempted to 
serve the interests of a broad public. At the time, our primary mission 
was to break the monopoly of Network Solutions (which managed .com 
among other registries), first by separating the functions of registry 
(which manages the list of names in a particular top-level domain) and 
registrar (which resells second-level domain names to the public).
    We succeeded in that, and we also managed to launch a few new TLDs, 
including .biz, .info, .museum and .coop. Of those, only .biz and .info 
have had much success. Separately, a number of creative people--whose 
initiative I sincerely applaud--made special-purpose TLDs out of 
country codes (ccTLDs) such as .tv (Tuvalu), .md (Moldova), .ly (Libya) 
and most recently .co (Colombia).
    At the same time, it's fair to say that .com retained its first-
mover advantage as by far the leading TLD. Users instinctively type 
COMPANYNAME.com into their browsers.
    I myself was a big fan of the concept of new TLDs. I believed that 
it would broaden the market, encourage innovation (as with the 
repurposed ccTLDs I mentioned above). . .and besides, why should ICANN 
enforce artificial scarcity?
    But I have since changed my mind. Now I would like to explain why, 
and finally to suggest some paths forward.
Why I Changed My Mind--Confusing to the Public
    After my two-year term as chairman of ICANN expired in 2000, I 
joined the At-Large Advisory Committee. Our mission was to make sure 
the voice of the ultimate users--not just the sellers, resellers and 
buyers of domain names--was heard. That turned out to be an almost 
impossible task. Naturally enough, normal members of the public did not 
have the time or interest (or funds) to involve themselves in ICANN's 
business. Despite numerous attempts, we failed to atttract more than a 
few thousand people at best to our various meetings, online 
conversations, requests for comment and the like. Our online message 
board was mostly painful to read. When I finally resigned from the 
ALAC, I too found ICANN too removed from my daily interests to pay much 
attention to its activities.
Why I Changed My Mind--Lack of Oversight
    Our premise for new TLDs was that we would select registry managers 
who would add value to their TLDs and monitor the behavior of their 
registrars, who would in turn make sure that the registrants followed 
whatever requirements the registries imposed. In fact, the business 
overall has become one of sleazy marketing practices, front-running 
(where registrars or related parties buy names for their own accounts, 
competing unfairly with their customers) and a high proportion of 
spammy domains. Unfortunately, the ease and lack of accountability with 
which someone can buy a domain name has led to a profusion of spam, 
phishing and other nefarious sites. There's no reason to think the 
situation would be any better with the next set of new TLDs; there 
would simply be more of them.
    And as the case of .xxx shows, many of the second-level domain-name 
purchasers who do have honest intentions will probably be more 
interested in defensive registrations rather than adding value to the 
system. (One such case is that of Meetup.com, out of whose office I 
work and on whose board I sit. Meetup has attempted to register 
Meetup.xxx, but has been told the name has been reserved on the 
``premium queue'' to be auctioned off to the highest bidder. Even more 
perversely, Meetup cannot even bid at auction for its own trademarked 
name unless it somehow becomes registered as a member of the ``adult 
community,'' which is at odds with the very nature of its business and 
the very reason it sought to reserve the name. Meetup's only remedy 
ultimately will be to file an expensive and time-consuming trademark 
lawsuit.)
    Why I Changed My Mind--Misallocation of Resources
    Our initial assumption was that new TLDs would be relatively cheap. 
But ICANN's current plan envisions an expensive application process and 
expensive registrations.
    The amount of money likely to be spent on these new TLDs--both by 
new applicants and registrants, and by incumbents protecting their 
names--is huge, at a time when businesses and consumers are just 
scraping by. I believe in innovation, but only if it adds value. In 
this case, most of the new domains would simply add friction.
    As with .xxx, where many of the registrants are actually companies 
who want to make sure their name is not used in .xxx, I predict that 
many or most of the new registrations will be defensive. Marriott.com, 
for example, works fine; why do they need marriott.hotels except 
defensively? (Or why do they need to own .marriott?)
    The rationale is that there's a shortage of domain names . . . but 
actually, there's a shortage of space in people's heads. When you add, 
for example, .hotel, you are not creating new space; you are carving up 
the «hotel» space in people's heads into .com and .hotel. 
So was that Marriott.com or Marriott.hotel? or dyson.com or 
dyson.hotel? if I decide to rent out my apartment. Consumers will 
inevitably be confused, and the primary beneficiaries will be Google, 
trademark lawyers. . .and of course the registries and registrars.
    In short, it's as if you owned a field, and you paid a border 
guard. Now the border guards want you to pay separately for each little 
chunk in your field; it's still the same field, but now it's carved 
into ever-smaller pieces. To use my own small field as an example, the 
field was originally called edventure.com. Now the new chunks could be 
labeled edventure.angel, edventure.blog, edventure.nyc, edventure.post, 
edventure.fin . . . and perhaps I'll also be solicited to buy the TLD 
.edventure so that some educational or editorial group won't get hold 
of it.
    In the end, new domain names are somewhat like derivatives: They 
add complexity and transactions and lots of rights and obligations 
without actually creating anything of value.
Context: Innovation Can Happen Without New TLDs
    I have heard from people who say that the new TLDs will lead to 
great innovation. I once thought so too. I had visions of .fin for For 
example, there are people who want to launch .eco and .green as the 
foundation of a «green» marketing campaign that would 
purportedly do untold good for the world at large. But what's wrong 
with edventure.com/green?
    Meanwhile, there is innovation in namespaces, but it comes with 
overall innovation. One of the best and simplest examples I can think 
of is twitter, where I am @edyson or http://twitter.com/#!/edyson--a 
fine use of an existing TLD.
Remedies . . .
    Of course, my task here does not end with complaining. What should 
be done? First of all, it is not the role of Congress to tell ICANN 
what to do. ICANN is accountable to the worldwide public, not to the 
U.S. Government (except through one limited contract). But it is the 
role of Congress to shed light on issues of public interest, and to 
suggest politely that ICANN follow through more fully on its 
acknowledged obligation to solicit public feedback. As I discovered 
during my time at ICANN, it's hard to get the public interested in 
these matters. (In that respect too, domain names are like 
derivatives.)
    As I mentioned, ICANN has indeed followed the process of soliciting 
public opinion, but I do not believe they have obtained «informed 
consent,» in the sense that people actually understand the 
issues.
Much Broader Consultation With the Public
    Therefore, although personally I would like to see ICANN simply 
abandon this program, I have been told again and again that this is not 
«realistic.» If that is indeed the case, I would recommend 
that ICANN rapidly re-launch its consultation process with much broader 
outreach. Perhaps these hearings and the subsequent press coverage will 
help to inform the broader public and shade ICANN's approach to new 
TLDs.
Much Stronger Front-End Protection
    At the same time, ICANN could offer much broader and easier 
protection (from similar-sounding TLDs) to existing registrants, akin 
to what ICANN itself has and what the Red Cross is asking for. Of 
course, this would obviate much of the interest in the new domain 
names, but it is a proper obligation for ICANN to undertake, in my 
opinion.
Conclusion
    The current domain name system in some ways is an accident of 
history. ICANN was created to regulate it, independently of any 
government and on behalf of the Internet--and world--community as a 
whole. Just as with fishing rights, communications spectra, taxi 
medallions and other «commons,» there's a delicate balance 
between too few and too many domain names, which this new initiative 
may well upset if it goes forward without more serious study. As the 
old saying goes: If it ain't broke, don't fix it!
    I would welcome any questions.

    Senator Klobuchar. Thank you very much.
    We'll now turn it over to Chairman Rockefeller.

           STATEMENT OF HON. JOHN D. ROCKEFELLER IV, 
                U.S. SENATOR FROM WEST VIRGINIA

    Senator Rockefeller. I went to college and I didn't learn 
very much either, so don't feel badly about it.
    This hearing is interesting because--and I missed the first 
part and I have to leave after I make a couple of remarks, 
because I have the worst schedule in the history of the whole 
week.
    [Laughter.]
    Economists I think are not entirely in agreement as to 
whether this is a good thing or a bad thing. So to declare it a 
bad thing--trying to be a neutral chair as we look at this 
whole thing--is a point of view, but it's a point of view which 
I also recognize has some people on the other side of it.
    Cybersquatters are an abomination. So are people who abuse 
children through websites on Facebook and all the rest of it. 
Lots of abominable people around. But the question is are we 
going to have hundreds, are we going to have thousands of new 
names? If you look at dot-com, dot-net, dot-org, and then you 
sort of go to dot-hotel, dot-baseball, dot whatever it is, how 
long does that extend out? How much actual difference does that 
actually make?
    I have to be very sensitive to the question of the money 
that you feel you're going to have to spend to protect yourself 
against cybersquatters, and I think they're going to be 
endless. They will go on as long as the Internet goes on. 
Hopefully they won't blow us up altogether on a worldwide 
basis, because they can do that, they can shut us down, the 
Internet can. But that's not the point.
    I think we have to get used to dot-hotels, I think we have 
to get used to dot-auto. I start from that position, but I 
listen. And I think a surge of new names and addresses can 
create opportunities. Whether they will or not or whether they 
will at such a cost-inefficient ratio, I do not yet know. And 
that's part of what we're discussing today.
    If ICANN is determined to move forward, it surely better do 
so slowly and cautiously, not try to do this in a tranche or 
two. The potential for fraud, the potential for consumer 
confusion can lead to fraud without a knowing act, 
cybersquatting, all of these are massive. Scaling back the 
initial round of top new-level domains introduced in 2013 may 
be a prudent approach if that's the way we're going to go.
    Companies, nonprofit organizations, and others are rightly 
concerned that this new landscape will require them to spend 
money. You have said that. I didn't hear the first three, but 
karma told me you said that.
    So it is my hope that we can phase this expansion over 
time. If we're going to do it, we should phase it over time, 
not be regretful after the fact that it was done too hastily. 
That's the point. If we can make sure that we don't have to 
look back with regret, then we will have not been too hasty.
    You know, that said, there are exciting new possibilities 
out there. This is intriguing in many ways. Companies and 
others will be able to place their name. You can get dot-
search, dot-banks. I mentioned dot-baseball. I care about that 
more than I should. And with the current plan, the sky is the 
limit. That's both the challenge and the threat, from your 
point of view, and maybe mine.
    So as the Senate committee tasked with examining issues 
related to the Internet, we have to understand what this really 
will mean for the people you purport to represent, but we all 
feel that we represent, too, for the millions of Americans who 
use the Internet on a daily basis and the thousands of 
businesses and organizations who do exactly the same.
    So the matter of unintended consequences strikes me as a 
very important subject for today. One cannot--if they're 
unintended, by sort of definition one can assume that they will 
happen, but one cannot predict absolutely they will happen. An 
unintended consequence is something which has not yet happened, 
and it could be a good consequence, it could be a bad 
consequence, usually bad.
    I know ICANN has undergone a very lengthy process on the 
top-level domain expansion. The decisions will hopefully spur 
additional competition and innovation on the Internet. I tend 
to look upon that as a good thing. However, many in the 
Internet community--witness what you were saying--don't like 
the unintended consequences and the manner in which this 
expansion is being conducted.
    So today what we're going to do is discuss those 
opportunities. It's important to remember that ICANN is 
nonprofit, and it was established in 1998 at the behest of 
Department of Commerce. The U.S. Government rightly decided 
that a private entity representing the interests of the entire 
Internet community should administer the critical 
infrastructure of the Internet.
    So let us go forward. The multi-stakeholder approach will 
not work without all of you and without us. We need to have a 
constructive attitude within ICANN, within NTIA, and the 
Internet community. So here we are launching on something new. 
Those who are satisfied with what is the current situation are 
almost necessarily nervous about a different future. Is it 
necessary to be nervous about an unknown future when economists 
cannot agree whether it will be a good thing or a bad thing? I 
think it's a natural thing, and that's the way you feel and 
therefore that's what counts. That's what we have to hear.
    I remain open to the discussion and grateful to Senator 
Klobuchar.
    Senator Klobuchar. Chairman Rockefeller, in light of time 
do you want to do your questions now?
    Senator Rockefeller. No, thank you.
    Senator Klobuchar. OK, very good. And I know Senator 
Boozman's going to make a few comments here.

                STATEMENT OF HON. JOHN BOOZMAN, 
                   U.S. SENATOR FROM ARKANSAS

    Senator Boozman. Thank you, Senator. I think, in the 
interest of time, as the Chairman mentioned there's just so 
much going on, that I will hold off for now.
    Senator Klobuchar. OK, very good. And if my other two 
colleagues don't mind, I think we'll just get started with the 
questions, and if there is time remaining before we have to end 
at ten minutes to twelve o'clock, then we'll do some statements 
at that time, and there may be.
    I'm going to get started here. Mr. Pritz, I have some 
questions about the funds that ICANN will generate through this 
proposed program for expanding top-level domains. As I 
understand it, ICANN is charging $185,000 for each top-level 
domain application; is that right?
    Mr. Pritz. That's correct.
    Senator Klobuchar. OK. And then how many applications do 
you expect to receive? I've heard there could be hundreds. Is 
that right?
    Mr. Pritz. That's right. That number is a matter of great 
speculation. When we first started making estimates, the number 
was thought to be 300 to 500. Over time and as interest is 
generated, I think the number is greater than that now. But 
that's sort of rumor. We're kind of----
    Senator Klobuchar. You thought it was going to be 3 to 5 
and it went up to hundreds?
    Mr. Pritz. No. We thought it was going to be 300 to 500. 
I'm sorry.
    Senator Klobuchar. 300 to 500. And now----
    Mr. Pritz. Now it's greater than that.
    Senator Klobuchar. You think it might be thousands now?
    Mr. Pritz. Not thousands, but 500 to 1,000 or maybe 
slightly over 1,000. And that's based on hearsay. A lot of 
companies that are planning for this are keeping their plans 
close to the vest, which makes a lot of sense because it's a 
business strategy. But I know that a lot of large corporations 
are developing different strategies for taking advantage of the 
opportunities, and that other segments that are interested are 
small communities. There is interest in internationalized 
domain names, which are names in other languages than English 
to the right of the dot, which will open up some additional 
opportunities; and also there is----
    Senator Klobuchar. What if more than one entity bids for 
one of these? Then what are you going to do? Like one hotel 
chain wants to be dot-hotel and another hotel chain wants to be 
dot-hotel?
    Mr. Pritz. That's a really interesting question. It was the 
matter of a great amount of work. There's really three steps in 
what we call a contention resolution process, if two entities 
apply for the same name. First, the entities are encouraged to 
work it out between themselves. So rather than other arenas, we 
encourage them to get together and try to come to some 
solution, either by combining their efforts or having some 
other sort of accommodation.
    There's also an accommodation for certain types of TLDs 
that are labeled community TLDs. So recognizing the value that 
communities bring to the DNS, the policy is to encourage the 
development of community-type TLDs. TLD applicants that can 
establish that they are in fact community TLDs by being weighed 
against certain criteria will be given a preference. So a 
community TLD would be awarded the TLD before a non- community 
TLD. And then finally----
    Senator Klobuchar. Are you talking like NYC or something 
like that?
    Mr. Pritz. It could. There's criteria in the guidebook that 
says you have to be part of a longstanding community, that the 
name you are applying for is really closely related to the 
community, that you have the support of the community, that 
there's not--there's not any contradiction from that community. 
So it's a set of criteria that are really scored.
    Senator Klobuchar. What about Ms. Williams' concerns about 
nonprofits and how difficult it would be for them to compete in 
this auction process?
    Mr. Pritz. So one answer to that is if YMCA qualifies as a 
community then they would get a preference.
    Senator Klobuchar. But do they still have to pay that much 
money?
    Mr. Pritz. Yes, so the $185,000 is--well, there's two 
answers to that question. One is the $185,000 is a cost-based 
fee, and we've been public about our calculations for how much 
it costs to receive a top-level domain. They're not to be 
awarded lightly. You have to meet financial and technical 
criteria and show you have the wherewithal to actually operate 
a registry, which is a piece of Internet infrastructure.
    But also, ICANN has a support program that the board just 
recently approved, that for certain deserving candidates the 
application fee will be lowered from $185,000 to $47,000. But 
admittedly there's a limited amount of funding for this and 
we're trying to generate more funding, and that's another 
avenue.
    Senator Klobuchar. So if you have these auctions, it could 
go above $185,000 if different companies are vying for this 
name?
    Mr. Pritz. So----
    Senator Klobuchar. And then what happens with that money if 
you end up having a big surplus?
    Mr. Pritz. So the answer to the first question is, yes. 
There's a market theory that funds flow to the most efficient 
use in the market and so the company that bids the highest in 
the auction would pay a higher price. But we also recognize 
that by encouraging the entities to negotiate it's more 
economical for them to arrive at an accommodation than pay an 
auction fee.
    Second, ICANN's been very public about any fees received 
from auction will be put into a separate fund and the whole 
Internet community gets to discuss the use to which those funds 
are put. So ICANN's a not-for-profit, right, so it's a zero-sum 
game. So those funds might go to fund Internet security 
projects or combat cybersquatting or other crime or fund other 
needy applicants, something like that. Those are the things 
that have been discussed.
    Senator Klobuchar. Last question I have. I'm sure you're 
aware there's been a lot of discussion over the past few months 
related to potential conflict of interest at ICANN with the 
departure of a former chair, not Ms. Dyson. What are you doing 
to respond to those concerns?
    Mr. Pritz. Well, first, again two things--and I usually 
speak in threes. First, ICANN has a very robust conflicts 
policy. I sit in board meetings. Board members that are 
conflicted must make a statement of interest and they're often 
excused from the room in the instances of many discussions. 
There's a training class for all board members and officers to 
go through regarding conflicts of interest. So if you were to 
read the conflicts of interest policy ICANN has, you would find 
it to be very robust.
    Additionally, the ICANN board recently approved an 
enhancement to that policy where any board member who votes on 
or discusses a potential new gTLD application cannot be hired 
by that gTLD for a period of 12 months after leaving the board. 
There's also new rules around declaring interest and being 
excused from conversations and votes.
    So in my opinion we're already at a gold standard, but I 
was recently hired by the board recognizing the concern over 
that issue.
    Senator Klobuchar. And----
    Mr. Pritz. Just--I'm really sorry. I also want to say--I'll 
talk in threes--that there's no evidence that the former 
chairman had discussions about future employment before he left 
ICANN. That's sort of the test, that he was exploring that 
while he was undertaking this policy discussion.
    Senator Klobuchar. OK. Well, I want to turn it over next to 
Senator Boozman, and then I will go to maybe some follow up 
with the rest of the witnesses. Thank you.
    Senator Boozman. Thank you, Madam Chair. With your 
permission, I would like to defer to Senator Ayotte.
    Senator Klobuchar. OK. Senator Cantwell was actually next 
and I was trying to defer to you as the Co-Chair.
    But do you have a time conflict?
    Senator Boozman. No, no. Go to her and then come back.
    Senator Klobuchar. OK, all right. Then we'll go to Senator 
Cantwell and Senator Ayotte.
    Senator Boozman. I'm sorry. I was just doing time and time.

               STATEMENT OF HON. MARIA CANTWELL, 
                  U.S. SENATOR FROM WASHINGTON

    Senator Cantwell. Thank you, Madam Chair, and thank you for 
holding this important hearing.
    I guess my questions are a little bit broader than just the 
subject at hand, although I certainly appreciate everyone's 
testimony this morning and the policy issues that are at 
discussion. But I have a broader question about authentication 
and integrity, because that to me is the issue that we're 
dealing with at the broadest level, and the new DNS security 
system and the implementation of that security system seems to 
me to be a pretty big priority if we want to continue to 
protect and identify authentication in ways that will help the 
Internet continue to be the robust vehicle that it is.
    Yet some of our colleagues over on the--over on the--it's 
not ``the other side''--maybe it is from the Commerce 
perspective--on the Judiciary Committee side are looking at 
Protect IP. So I wanted to ask, Mr. Jaffe, do you believe that 
the objectives of Protect IP--or maybe even Ms. Dyson. The 
problem is is that the objectives of Protect IP are counter to 
the objectives of the DNS security system. And it seems to me 
if we're always playing whack-a-mole at trying to find out 
who's doing what, then if you have more domain names you're 
going to be playing whack-a-mole even more greatly, and the 
objective here should be enforcing security and implementation.
    Is that right, Ms. Dyson? Do I have that right?
    Ms. Dyson. Well, fundamentally, there's a bunch of issues 
here. One is simply for any particular domain name can you find 
the person or entity who has the economic interest in it and 
controls it. If the records are not kept properly--and in many 
cases they're not, and there's no reason to suspect they'd be 
kept better and a lot of reasons to suspect they'd be kept 
worse if the system got enlarged--you can't find that person, 
whether it's a question of fraud and misrepresentation or IP 
stuff or pedophiles or whatever.
    Whatever your opinions on SOPA, these are just orthogonal 
issues. The challenge with new domain names is there's probably 
going to be even laxer oversight, because ICANN's resources are 
already stretched. You've heard that. And in this case this, we 
really are talking about a tax on the Internet, a tax to 
support protections against a whole bunch of so-called 
attractive nuisances that can be created at will.
    We have some domain names because it's valuable to have a 
registration system for the Internet. But creating a whole new 
set of redundant names isn't useful and leads to people coming 
in who are not in fact redundant, but are just stealing brand 
value, trademarks, and all kinds of other value from the 
rightful owners.
    Mr. Jaffe. Senator Cantwell, if I could also interject. 
Yesterday, as I mentioned, the chairman of the FTC said that 
this program would be a disaster both for business and 
consumers. That's a very much stronger statement than he 
usually makes in these areas. One of the reasons that he was so 
concerned is just because of the subject that we're talking 
about, which is the whole question of authentication.
    I'd like to put a chart up just to show you some of the 
problems that this causes, because there are some technical 
issues here that need to be understood, but once understood you 
get the clear view as to why law enforcement groups are truly 
deeply concerned.
    The papers were handed to the staff earlier; if they could 
provide them to the Senators so that they can actually see, 
just in case. This is an eye chart and if you could put that 
up. Yes.
    What happens is there's something called the thicker WHOIS 
program, and that is to let you know who is lying behind the IP 
addresses. So somebody may be doing things that are causing 
harm. This certainly happens to many of the companies that we 
represent, and they spend millions of dollars now to fight this 
problem.
    But when they go to the thicker WHOIS they often find that 
the names that are there don't lead you anywhere, and 
therefore, you cannot really resolve the problem. What I'm 
showing here is not just a picture of Mickey Mouse and Donald 
Duck, but those are the actual names that as you dug into the 
thicker WHOIS, you would find. We don't believe that Donald 
Duck and Mickey Mouse are the ones who are causing the 
cybercrimes, the cybersquatting, typo squatting, phishing.
    So if you don't know that it's somebody other than Mickey 
Mouse or Donald Duck, then you can't really solve this problem. 
Despite the fact that ICANN claims that it is going to be 
tightening up all of these restrictions, as I mentioned in my 
testimony, of the 12 specific recommendations of the law 
enforcement community that were given to them to make sure that 
the registrars and registries were operating appropriately, 
only three were being even considered and none of them have 
been acted on.
    This is a really serious issue that is going to multiply 
enormously. You're talking about an exponential increase. You 
have a terrible problem right now with 22 domains. There are 
millions, hundreds of millions, of secondary domains. Once you 
start going to 300 or 500--now we're hearing that it may go 
much higher. I don't know whether it's going to be a thousand. 
But whatever that number is, it is an extraordinary increase. 
If they can't take care of it under the existing situation, why 
would anybody be able to think that they would?
    This is putting an enormous cost on the business community, 
on the not-for-profit community, and at a terrible time in our 
economy, where this money should be better used for jobs. 
That's why we are saying that there should be a pause, that 
there is not, there is not a consensus. They are supposed to 
under the Affirmation of Commitments to have a consensus of 
agreement. If so many people in the business community feel so 
strongly, the not-for-profit community feel so strongly, if the 
FTC and other law enforcement groups all feel so strongly, 
where is this consensus? Who is it that's calling for this?
    There is nothing sacrosanct about this January 12 date. We 
should not leap out at this time in the economy's situation to 
take this kind of experiment with no reason to believe--their 
own economists say that the benefits are speculative. But I can 
tell you from talking to hundreds of our members, hundreds of 
our members, that they're saying that there's no value here for 
them.
    So there are billions of dollars that are going to be spent 
and it's not going to be providing a use for the economy.
    Senator Cantwell. Thank you, Mr. Jaffe. I know my time has 
expired, Mr. Jaffe's time, on that question. But I hope that we 
do make this issue of authentication and the DNS security the 
number one priority here, because that is what's really, the 
integrity of the Internet, we need to continue to protect.
    So I do look at it in the lens that you just described.
    So thank you, Madam Chair.
    Senator Klobuchar. Thank you very much, Senator Cantwell.

                STATEMENT OF HON. KELLY AYOTTE, 
                U.S. SENATOR FROM NEW HAMPSHIRE

    Senator Ayotte. Thank you, Madam Chair.
    I want to follow up with what Senator Cantwell asked about, 
because I think this is a real deep concern. Mr. Pritz, how do 
you respond to Chairman Leibowitz's comments he made yesterday 
that it would be a disaster for the business and consumer. From 
my background as the Attorney General of our state, I know what 
a challenge it is for law enforcement to investigate these 
types of crimes. It really makes me concerned when I hear 
things like 12 recommendations made by the law enforcement 
community to address concerns related to the action you're 
about to take and only 3 were even considered.
    So can you please address these deep concerns that we all 
have?
    Mr. Pritz. Certainly, because we share the same concerns 
and want to launch this program and create an Internet that's 
safe, stable, and secure. So there's really several answers. 
I'm going to just start at the last one. There are 12 law 
enforcement recommendations that they developed in consultation 
with ICANN-accredited registrars and right now ICANN is 
renegotiating the contract it has with registrars to adopt as 
many of those recommendations as possible.
    In fact, since I'm in Washington, D.C., I'm going to leave 
here and this afternoon the ICANN staff is meeting with 
registrars, and have our third meeting to discuss not only the 
12 law enforcement recommendations, but also recommendations 
from ICANN's policymaking body for improving registrant 
protections by changing the contract we have with registrars.
    So the number of three is sort of incorrect. Our GNSO is 
considering three of those recommendations, but in fact in a 
face-to-face bilateral negotiation ICANN is working with 
registrars to adopt as many as possible.
    Senator Ayotte. One thing that leaps out at me is that we 
are talking about a January rollout and you're negotiating 
things that are incredibly important when we think about 
protecting consumers from fraudulent actions. The Internet is a 
wonderful tool, but also has been used by predators and other 
bad actors with ill intent.
    So when I hear ``negotiations ongoing'' for something 
that's a January rollout, I am concerned why are we rushing 
into this. So how do you respond to that? And then also I would 
like to hear you respond to Chairman Leibowitz's comments.
    Mr. Pritz. And I will. So the negotiations are targeted at 
delivering a new registrar accreditation agreement by the 
springtime. I forget when the ICANN meeting is, but I think 
it's in March or April. So the timetable for delivering a set 
of amendments for that is then.
    I think the job of improving the safety and security of the 
DNS, the domain name system, never stops. It's ongoing. Part of 
what's in our testimony is that many new protections for 
registrants and for Internet users are embedded in the new gTLD 
process. So there's a series of trademark protection mechanisms 
that have been developed by--the great thing about ICANN is if 
you have a hard problem to solve you can get world-class 
experts to sit around the table.
    So for trademark protections, we sat with 18 well- 
recognized IP attorneys and developed trademark protections. We 
also developed a set of malicious conduct mitigation measures 
that each new TLD will be required to adopt. How did we develop 
them? We get Internet security experts from the anti-phishing 
working group and other groups called the Registry Internet 
Security Group, and FIRST is another one.
    So we called experts together, and embedded in this process 
are substantial protections for trademark holders and then 
measures to mitigate malicious conduct. Some of those measures 
are the requirement to adopt this DNSSEC that we talked about 
earlier, stringent criminal background checks, checks to 
determine if a new gTLD applicant has had a history with UDRP 
where he's been taken to arbitration over domain name abuse.
    There's an elective security program for institutions, such 
as maybe a dot-bank that wants to provide higher security. 
There's a strong incentive for registries to provide searchable 
WHOIS and a requirement to provide a centralized zone access 
and I say those two things together because that makes it 
easier for law enforcement to search data bases and hook up 
criminal activity.
    So all these were meant to provide protections and provide 
new tools for law enforcement. So that was a great big of work. 
But I agree with you that the work is ongoing, and that's why 
we've accelerated. We have these recommendations from law 
enforcement and we're accelerating this negotiation with 
registrars and want to bring to you and the rest of the 
Internet community some results on it.
    Senator Ayotte. Well, appreciate results on that, except it 
seems to me that these are inherently very, very important 
issues and it doesn't make sense to me that you'd have a 
January 12 rollout with outstanding issues that are as 
important as you describe with respect to the negotiations that 
will impact important protections for consumers and the law 
enforcement community.
    I would just say it is very challenging for a member of law 
enforcement to investigate these kinds of cases. As I hear your 
testimony, you're not even sure how many applications you will 
have at the end of the day when you open this up. So that is 
really going to be a challenge when you go from 22 to, who 
knows, a thousand. And it seems to me that that in and of 
itself is going to be a huge challenge for law enforcement. It 
seems to me that caution should be used to make sure that we 
don't rush into this.
    So I appreciate you all coming to testify today on this 
very important issue.
    Mr. Pritz. I didn't answer your last question.
    Senator Ayotte. Well, my time is up.
    Senator Klobuchar. If you want to, that's fine, if you want 
to answer it.
    Mr. Pritz. Sorry. So we take the comments of Mr. Leibowitz 
very, very seriously. We've received--as we developed this 
program, we received comments from representatives from other 
governments along the same line, and have worked very closely 
with governments to develop the protections that are here, and 
intend to monitor.
    There's an automatic break in the process. It's slowed down 
after the first round so that we can measure the effectiveness 
of the trademark protection mechanisms and the sorts of things 
that Mr. Leibowitz was talking about. Particularly I know he's 
talking about improving the accuracy of the WHOIS data, and 
ICANN has a four-pronged approach to that.
    So anyway, we take his comments very seriously. We've heard 
them from others throughout the development of the program and 
we pledged to him, and want to have further conversations with 
him, but to everyone, to monitor this program as it goes to 
make sure that improvement for law enforcement and for 
everybody is a continual improvement process and not a one-step 
process.
    Senator Klobuchar. Thank you very much, Senator Ayotte.
    I think you've heard today, Mr. Pritz, from--and I have 
some additional questions--from someone, Senator Cantwell, who 
spent her life working on protecting the Internet, and now you 
have two prosecutors up here, who focused very much on consumer 
issues and crimes. I think you've heard some of our concerns.
    I know we don't have--Congress may not be able to stop 
this, but I think that there are some concerns with this 
process and what's happened here that are worth listening to.
    I wanted to follow up, and I also realize that the three of 
us also have had the experience--I can say I have--where people 
try to register your own name, as elected officials. Right now, 
I don't know how much it costs to get those. It costs us 
something. This is everything to the left of dot-com. If we had 
to start paying $185,000 and get in an auction, Senator Ayotte 
and me, that would be a whole other problem.
    So I think you're hearing some of the concerns that you are 
going to hear from the public. One of these is this defensive 
registration idea. Companies, universities, and nonprofit 
organizations, as I've mentioned, have spent a lot of time and 
money over the last decade on so-called defensive 
registrations, registering their names in top-level domains 
that they never have any intention of using, but because they 
don't want someone who's committing fraud or someone who's 
trying to use their name in any way to use it.
    For example, Indiana University recently said they are 
buying 11 names. These include hoosiers.xxx, Indiana 
University, just to give you a few of them.
    I'll start with you, Ms. Williams. Ms. Williams, have the 
YMCA and other nonprofits felt the need to engage in defensive 
registration?
    Ms. Williams. Yes, Senator, we have. And the question is 
can we really afford it? When you look at cost and capacity, 
there is just not a connection in how we can defensively 
maintain the value of our brand. Our brand is everything. 
There's the issue of public confusion. In fact, one of our 
large not-for-profits was recently involved in an issue where 
another organization registered with their same name, received 
an Internet domain name, and began raising funds under that 
large not-for-profit's name. There was public confusion.
    Imagine when this new gTLD program goes into effect, how 
that could really impact us. So there is absolutely some 
concern.
    The YMCA, we did register ymca.xxx to protect ourselves. 
But we can't afford to continue to keep trying to do this in 
order to protect our brand. And when I mentioned capacity, when 
you think that there are over 1.5 million nonprofits in the 
United States alone and most of those nonprofits are very, very 
small, do not have the expertise or the intellectual capacity 
to even address an exponential growth in the Internet, it's 
just incredible and, quite frankly, scary.
    Senator Klobuchar. Mr. Jaffe, have your companies--I know 
I've heard from a few, so I think they have. But have they felt 
forced to make defensive registrations like Ms. Williams 
mentioned in the nonprofit sector, like we have seen in the 
government sector?
    Mr. Jaffe. Absolutely. And this will, as I said before, 
will be exponentially increased over time. It just never ends, 
because we're now hearing that this may be a thousand names. 
Every time there's a new top-level domain, it generates 
thousands and thousands and thousands, and maybe even hundreds 
of thousands of secondary domains. There's 22 top-level 
domains. There are more than 100 million secondary domains. So 
if you start to multiply this up, just start to imagine what 
this means, what do you think this is going to mean for 
consumers?
    I would like to at least respond to something that Mr. 
Pritz said. The whole effort in regard to these legal issues 
has been going on for years. Chairman Leibowitz had asked for 
better WHOIS data since 2003. The GAC proposals have been 
pending for more than 2 years. Nothing has happened. Why do we 
think that suddenly we are going to get all of these problems 
resolved?
    I'd like to put up, if I could, one more chart that just 
shows you how defensive domains work.
    Mr. Jaffe. I would put up the pictures. I'm sorry that I 
don't have a picture of the Senators who are here, but you can 
be assured that you also are honored by those who have----
    Senator Klobuchar. I see you have more senior Senators up 
there, yes. Senator Ayotte and I note that.
    [Laughter.]
    Mr. Jaffe. You are also honored by this same effort.
    Senator Ayotte. I can assure you we've been subject to it.
    Mr. Jaffe. There are people who are out there buying names 
on the hope that you will be in campaigns or otherwise will 
want to have the ability to buy your name back, just as 
companies are going to have to buy their name back. That's what 
we're talking about here. To protect themselves, they're going 
to have to take the brands that they have spent billions of 
dollars to develop and then, so that somebody else will not 
take those from them, they're going to have to register them, 
they're going to have to pursue across the whole of the 
Internet, or they're going to have to buy a Top-Level Domain.
    I have been told by a number of companies that they 
absolutely do not want to do this, they see no value in it, but 
that they may be forced to do it. And when we're talking about 
billions of dollars here, when we're talking about companies 
with 3,000 or more brands, even big companies will be facing 
really large expenses.
    So this is a very, very significant economic issue for this 
country and for the world. And as you can see----
    Senator Klobuchar. And that's FrankLautenberg.com waiting 
to be adopted? They're just suggesting this could be bought by 
anyone?
    Mr. Jaffe. Yes. It exists, but they're offering it for sale 
to anybody who wants it, and that doesn't have to be Frank 
Lautenberg. That doesn't have to be Senator Klobuchar, or that 
doesn't have to be Senator Ayotte.
    Senator Klobuchar. I understand that. That didn't look like 
Frank Lautenberg.
    Mr. Jaffe. Whoever has it, if you want it back I'm sure 
they'll be willing to sell it to you for a very high price.
    Senator Klobuchar. Yes.
    Mr. Pritz--do you have any other questions, Senator Ayotte?
    Senator Ayotte. No, thank you.
    Senator Klobuchar. Mr. Pritz, do you want to respond to 
this cost of defensive registrations, what this could mean if 
you start opening up the right side of the dot to even more 
names, and the multiple names that you may have to buy to 
defend yourself?
    Mr. Pritz. Surely. It's a very, very important issue and 
it's taken up a lot of time over the last several years. 
There's--and we've undertaken economic studies and those 
studies indicate and all the evidence indicates that there's 
not going to be a dramatic increase in the need for defensive 
registrations, and I'll try to explain why.
    First--again, it's two-pronged. First, there's a set of 
trademark protections that have been developed by IP experts, 
all targeted at providing relief for people that have an 
interest or a property right in a name, making it possible for 
them to protect their name without a defensive registration. So 
there is a notice to anybody who tries to register a registered 
trademark. There is a rapid takedown system that's cheaper and 
faster than the current UDRP system for taking down trademarks. 
There's a post-delegation, it's called, post-delegation dispute 
resolution process, where property owners can go directly after 
registries, not after the registrants, if the registries are 
actively involved in cybersquatting or some other crime.
    And there's others. So there's a set of trademark 
protections that, again the beauty of ICANN, developed by 
experts, to target this problem.
    The other part of it, though, really is the architecture of 
the Internet. Where does this abuse take place? It takes place 
in the very largest registries, because that's where the abuse 
pays off. Typo squatting occurs because people type in--people 
still type in addresses into their browser, and they type in 
``ymcaboys.com'' or ``ymcacamp.com,'' and so those are names 
registered by typo squatters. But that occurs only in common.
    Historically, property owners, property rights owners, have 
not registered those types of defensive registrations in 
smaller new TLDs or new TLDs simply because it doesn't pay off.
    Senator Klobuchar. OK. I'm just trying to picture this. 
Maybe if you're a Hilton or Marriott or you're 3M and you get 
this notice that someone's using your name-dot, you're going to 
be able to respond. But I'm picturing--my fear on those domain 
names, when we bought a bunch of them defensively, was that 
somehow we'd miss them in the post office box. And I'm just 
trying to picture small businesses or nonprofits that wouldn't 
get this notice and someone just buys the name for $185,000.
    Ms. Dyson.
    Ms. Dyson. So I'd like to tell very briefly the story of 
meetup.com. We have about 60 employees. We tried to register 
meetup.xxx for precisely all these reasons. We were told that 
``meetup'' was such an attractive name for dot-xxx that it was 
on some kind of reserved list, so we can't even register it 
defensively. We can wait for someone to buy it and then we can 
file a trademark lawsuit. That to me is not a satisfactory 
approach, and that's for the existing dot-xxx, not even for the 
new ones.
    Senator Klobuchar. All right. In June of 2010 three 
economists from Berkeley, Stanford, and the private sector 
submitted a study to ICANN--we've been talking about studies 
here--that a slower rollout of Top-Level Domains would help 
address concerns about this new application window. They said, 
in their words: ``By proceeding with multiple rounds of 
application, the biggest likely cost, consumer confusion, and 
trademark protection can be evaluated in the earlier rounds to 
make more accurate prediction about later rounds.''
    I think Senator Ayotte was talking about waiting until some 
of these, at least these law enforcement and other things, 
resolve. But what about this idea of doing this in rounds or 
trying as you've expanded? I think my staff told me in the year 
2000 and the year 2004 to get to your total of 22--to seem to 
go up to thousands of names before you have even these 
agreements worked out--you can understand why you're hearing 
concerns from these Senators.
    Mr. Pritz, what is ICANN's response to the analysis from 
2010?
    Mr. Pritz. We fully commit to evaluating the effectiveness 
of trademark protections after an initial round, and in fact 
have committed to that with our governmental advisory 
committee.
    Senator Klobuchar. What would the initial round be when 
you're talking about over a thousand now?
    Mr. Pritz. No. So the initial round--so the new gTLD 
introduction is limited by rounds. So we will have--and it's 
also limited by demand. So an application window will open on 
January 12 and it will close on March 12. During that time 
period we will receive applications for which there is demand.
    Then after that we'll process those applications, do 
studies, and feed that back.
    Senator Klobuchar. So you don't have a number limit on it?
    Mr. Pritz. That's correct. So we did a round in 2000 and in 
2004. The 2000 round was limited by number. We chose 7 out of 
200 applications. The round in 2004 was limited by type. They 
were limited to like a community type of TLD.
    Senator Klobuchar. What's this limited by?
    Mr. Pritz. In those two rounds, we found that the benefits 
expected were not realized because those rounds were curtailed. 
It also put ICANN in the position of being a decisionmaker, 
making it sort of a beauty contest and ICANN deciding between 
winners or losers.
    So this time we want to allow all TLD applicants who apply 
that meet very stringent criteria. So our limitation is a very 
high bar. They have to meet stringent technical and financial 
criteria to show, like I said before, the wherewithal to run a 
registry. So it's a significant undertaking. And we've sought, 
through this big fat applicant guidebook, to educate potential 
applicants into all the requirements that they have to meet, in 
addition to the new--in addition to the new protections.
    Senator Klobuchar. Do you want to respond to this idea, Mr. 
Jaffe, Ms. Dyson, Ms. Alexander, about the rounds?
    Mr. Jaffe. I would just like to draw the Committee's 
attention to a letter that was sent last night to the 
Department of Commerce. It was from the renowned economist Dr. 
Robert E. Hall, who's the Joint Professor of Economics at 
Stanford University and Senior Fellow at Stanford's Hoover 
Institution, and he was the 2010 President of the American 
Economic Association. He did this in conjunction with Michael 
A. Flynn, another expert economist.
    This is what their conclusion was: ``An unlimited expansion 
of gTLDs would not add anything material to 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 it commissioned by even suggesting that 
this nuisance has net benefits for the Internet community.''
    Doctors Hall and Flynn then go on to urge the Secretary of 
Commerce, ``to take action to block the unlimited expansion of 
gTLDs'' unless and until ICANN can demonstrate, ``that any such 
expansion or a limited expansion on a case by case basis would 
be in the public interest and that the benefits to any 
expansion would exceed the clear costs that the expansion would 
impose on the global multi- stakeholder community that ICANN 
serves.''
    [The material referred to follows:]

                                             AFE Consulting
                                      Oakland, CA, December 7, 2011
Hon. John Bryson,
Secretary,
U.S. Department of Commerce,
Washington, DC.

Dear Secretary Bryson:

    AFE Consulting, at the request of the Association of National 
Advertisers (ANA), is carrying out an economic analysis of ICANN's 
announced intention to allow and encourage a virtually unlimited 
expansion of the Domain Name System (DNS) by adding many hundreds of 
new generic Top Level Domains (gTLDs) to the 22 already in existence 
and to continue to expand the number of gTLDs by the thousands in later 
years. The authors of this letter are professional economists leading 
the AFE study. We have reached the conclusion that this dramatic 
alteration in the landscape of the Internet would be contrary to the 
interests of both consumers and businesses. Our brief biographies are 
attached at the end of this letter.
    ICANN's authority to consider the possible expansion of the number 
of gTLDs dates back to the November 25, 1998 Joint Memorandum of 
Understanding between the U.S. Department of Commerce and ICANN. We 
believe it is critical to keep in mind this foundational document, 
which, among other provisions, requires ICANN to:

        Collaborate on the design, development and testing of a plan 
        for creating a process that will consider the possible 
        expansion of the number of gTLDs. The designed process should 
        consider and take into account . . . potential consumer 
        benefits/costs associated with establishing a competitive 
        environment for gTLD registries.\1\
---------------------------------------------------------------------------
    \1\ Memorandum of Understanding Between the U.S. Department of 
Commerce and Internet Corporation for Assigned Names and Numbers, 
November 25, 1998.

    In December 2008, as ICANN proceeded with its plans for the 
introduction of new gTLDs, the U.S. Department of Commerce wrote to 
---------------------------------------------------------------------------
ICANN's Chairman Peter Dengate Thrush:

        [I]t is unclear that the threshold question of whether the 
        potential consumer benefits outweigh the potential costs has 
        been adequately addressed and determined. In that regard, we 
        would like to call to your attention a decision of the ICANN 
        Board on October 18, 2006, that called for an economic study to 
        address [this and related questions] . . . ICANN needs to 
        complete this economic study and the results should be 
        considered by the community before new gTLDs are introduced.\2\
---------------------------------------------------------------------------
    \2\ Letter to Peter Dengate-Thrush from Meredith A. Baker, December 
18, 2008.

    Following its receipt of that December 2008 letter, ICANN 
---------------------------------------------------------------------------
acknowledged that:

        [S]everal members of the ICANN community requested that ICANN 
        commission economic studies that would specifically address the 
        possible economic consequences of new gTLDs. . .Accordingly, 
        ICANN retained the services of economist Dennis Carlton, who 
        recently had served as the chief economist to the United States 
        Department of Justice Antitrust Division.\3\
---------------------------------------------------------------------------
    \3\ ICANN, Rationale for Board Decision on Economic Studies 
Associated with the New gTLD Program, March 21, 2011, at page 3.

    Thereafter, in March 2009, Carlton issued a report in which he 
---------------------------------------------------------------------------
concluded, generally, that:

        ICANN's proposed framework for introducing new TLDs is likely 
        to improve consumer welfare by facilitating entry and creating 
        new competition to the major gTLDs such as .com, .net, and 
        .org. Like other actions that remove artificial restrictions on 
        entry, the likely effect of ICANN's proposal is to increase 
        output, lower price and increase innovation. This conclusion is 
        based on the fundamental principles that competition promotes 
        consumer welfare and restrictions on entry impede 
        competition.\4\
---------------------------------------------------------------------------
    \4\ Preliminary Report of Dennis Carlton Regarding Impact of New 
gTLDs on Consumer Welfare, March 2009, at pages 2-3, available at 
http://www.icann.org/en/topics/new-gtlds/prelim-report-consumer-
welfare-04mar09-en.pdf.

    But in his series of reports, Carlton never squarely addressed or 
analyzed whether or not the potential future benefits of ICANN's gTLD 
expansion would outweigh the future costs.
    To remedy this shortcoming (of which many took notice), ICANN 
turned to Michael Katz \5\ and Gregory Rosston for additional economic 
analyses. They submitted a series of three reports in June 2010, 
December 2010 and February 2011. In their third report--the final 
economic analysis of the new gTLDs received by ICANN--Katz and Rosston 
conceded:
---------------------------------------------------------------------------
    \5\ Katz had also served as the chief economist of the Justice 
Department's Antitrust Division.

        [O]ur report does not conclude that benefits will exceed costs 
        for new gTLDs as a whole. . . . The purpose of [our report] is 
        to lay out a structure within which to think about the benefits 
        and costs of new gTLDs.\6\
---------------------------------------------------------------------------
    \6\ Michael L. Katz, Gregory L. Rosston and Theresa Sullivan, Reply 
to Comments on An Economic Framework for the Analysis of the Expansion 
of Generic Top-Level Domain Names, February 21, 2011, at page 3 
(emphasis added), available at http://www.icann.org/en/topics/new-
gtlds/analysis-response-phase-ii-report-21feb11-en.pdf.

---------------------------------------------------------------------------
    They added:

        [Our report] summarized prior studies on issues relevant to the 
        introduction of new gTLDs. The report identified shortcomings 
        of specific studies and concluded that existing studies were 
        incomplete. The central finding was that additional information 
        should be collected.\7\
---------------------------------------------------------------------------
    \7\ Id. at page 4 (emphasis added).

    At the end of this series of economic reports that ICANN itself had 
---------------------------------------------------------------------------
commissioned, ICANN reported:

        Ultimately, ICANN obtained reports from several economists, 
        including some of the world's leading economists who specialize 
        in competition issues. . .[T]he studies made clear that the 
        economists did not anticipate that the costs that might be 
        associated with new gTLDs would outweigh the overall benefits 
        of their introduction, and determined that it was too difficult 
        to predict. . .As a result, ICANN's Board has concluded that 
        there is no economic basis that would justify stopping the New 
        gTLD Program from proceeding and no further economic analysis 
        will prove to be any more informative in that regard than those 
        that have already been conducted.\8\
---------------------------------------------------------------------------
    \8\ ICANN Rationale at page 1.

    The Carlton and Katz-Rosston reports reflect almost no actual 
investigation of the practical effects of the huge expansion of gTLDs 
that ICANN plans. It is an axiom of competition analysis that any such 
analysis must rest on a factual background. Moreover, these reports do 
nothing to demonstrate that general principles that apply in many 
markets actually apply to the unique nature of gTLDs and the scale of 
ICANN's planned increase in their number. A new gTLD is not a product 
in the sense that a new electric car is a product.
    Domain names like NYTimes.com are essentially trademarks. They are 
small fragments of text that consumers associate with the products and 
services of businesses and organizations on the Internet. By 
convention, Internet domain names (``trademarks'') have two parts 
separated by a period. On the left is a brief version of a product or 
business name and on the right is the gTLD (or non-generic TLDs such as 
country codes that are not at issue today).
    From the perspective of the consumer, a second-level domain, such 
as NYTimes, connected to a given gTLD, such as .com, is essentially the 
same as NYTimes.info or NYTimes.biz. Competition based on 
differentiation of only the gTLD is expressly prohibited by trademark 
law and by the rules of ICANN, which has procedures that can lead to 
cancellation of such registrations by a non-owner of the left side of a 
domain name, but only after the owner successfully brings a legal 
action against the registrant of the infringing domain name. This key, 
undisputed principle of the Internet--essential to its usefulness to 
Internet users--refutes the simplistic Carlton claim that adding gTLDs, 
ipso facto, increases competition, improves product variety and 
provides more choice to consumers.
    As the ICANN economists noted, the gTLDs added by ICANN in the last 
decade have attracted relatively few registrations, and the 
overwhelming majority of these merely duplicate second-level domain 
names already registered under .com. They add little or nothing to the 
benefits that brand owners and consumer achieve from the Internet. 
Today, many Internet users find desired websites by running searches on 
Bing, Google, or other search engines. They don't type in NYTimes.com, 
they just type in ``NYTimes'', or ``New York Times'' or ``NY times'' or 
even just ``times'' (try it--on Google, NYTimes.com is the second 
search result for a search on ``times''). It adds absolutely nothing if 
the search engine then offers them a choice between NYTimes.com and 
NYTimes.biz.
    An analogy to printed brand names may be useful in explaining why 
the extreme proliferation of gTLDs is contrary to the interests of 
Internet users. Under existing trademark law, a registration of a brand 
name, say ``Tide'', also protects the name in other type fonts, such as 
``Tide'' and ``Tide'' and ``TIDE'' and ``Tide''. The differences in 
type fonts are analogous to the gTLD name after the dot in a domain 
name. They are differentiating markers that do not alter the sense of 
the brand name and mean almost nothing to the consumer.
    The addition of gTLDs is as if a company other than Procter & 
Gamble could register ``Tide'' as a trademark and use it until Procter 
& Gamble discovered the misuse and filed a legal proceeding against it. 
Under ICANN's plan to expand the number of gTLDs, Procter & Gamble 
would either need to preempt such misuse by paying to register ``Tide'' 
defensively under these new gTLDs, or it could elect to spend the time 
and resources needed to detect such registrations after the fact and 
then incur the expense of dealing with them individually as they are 
discovered. And even this assumes that it is possible to determine 
ultimately who the registrant is, something that is not always possible 
with the Who-Is databases available today.
    Of course, it is true, as ICANN has said, that both trademark law 
and ICANN's procedures for dealing with cybersquatting would be 
available to domain-name registrants. But the proliferation of gTLDs 
would raise the monitoring costs of domain-name owners. ICANN has 
acknowledged that such proliferation would raise costs, but 
nevertheless maintains--without any quantification of either costs or 
user benefits--that the benefits would exceed these costs.
    In fact, the benefits, as we have demonstrated above, are 
negligible. The costs are not. Of course, the proliferation of gTLDs 
will create profit opportunities for companies that offer domain name 
registration and consulting services as they process defensive 
registrations under the additional gTLDs. The revenue these companies 
will derive from either defensive or infringing domain registrations--
and the motivation behind these registrations would appear to be a 
matter of indifference to such companies--is a cost to legitimate 
domain-name owners.
    Our analysis to date 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 analyses that it 
commissioned 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 interest and 
that the benefits to any expansion would exceed the clear costs that 
the expansion would impose on the global multi-stakeholder community 
that ICANN serves.
            Respectfully submitted,
                                             Robert E. Hall
                                           Michael A. Flynn

    cc: Lawrence E. Strickling, Assistant Secretary for Communications 
and Information and Administrator, National Telecommunications and 
Information Administration, U.S. Department of Commerce

    Fiona Alexander, Associate Administrator, National 
Telecommunications and Information Administration, U.S. Department of 
Commerce

    Vernita Harris, Deputy Associate Administrator of the Office of 
International Affairs, National Telecommunications and Information 
Administration, U.S. Department of Commerce

    Suzanne Murray Radell, Senior Policy Advisor, National 
Telecommunications and Information Administration, U.S. Department of 
Commerce

    Elizabeth Bacon, Telecommunications Policy Specialist, National 
Telecommunications and Information Administration, U.S. Department of 
Commerce

    Cameron F. Kerry, General Counsel, U.S. Department of Commerce

    John D. Rockefeller IV, Chairman, Committee on Commerce, Science 
and Transportation, U.S. Senate

    Kay Bailey Hutchison, Ranking Member, Committee on Commerce, 
Science and Transportation, U.S. Senate

    Amy Klobuchar, Chair, Subcommittee on Competitiveness, Innovation 
and Export Promotion, Committee on Commerce, Science and 
Transportation, U.S. Senate

    Daniel K. Inouye, Chairman, Committee on Appropriations, U.S. 
Senate

    Thad Cochran, Ranking Member, Committee on Appropriations, U.S. 
Senate

    Patrick J. Leahy, Chairman, Committee on the Judiciary, U.S. Senate

    Charles E. Grassley, Ranking Member, Committee on the Judiciary, 
U.S. Senate

    Barbara Mikulski, Chair, Subcommittee on Commerce, Justice, Science 
and Related Agencies, Committee on Appropriations, U.S. Senate

    Al Franken, Chairman, Subcommittee on Privacy, Technology and the 
Law, Committee on the Judiciary, U.S. Senate

    Tom Coburn, Ranking Member, Subcommittee on Privacy, Technology and 
the Law, Committee on the Judiciary, U.S. Senate

    Ron Wyden, Chairman, Subcommittee on International Trade, Customs, 
and Global Competitiveness, Committee on Finance, U.S. Senate

    Harold Rogers, Chairman, Committee on Appropriations, U.S. House of 
Representatives

    Fred Upton, Chairman, Committee on Energy and Commerce, U.S. House 
of Representatives

    Henry A. Waxman, Ranking Member, Committee on Energy and Commerce, 
U.S. House of Representatives

    Greg Walden, Chairman, Subcommittee on Communications and 
Technology, and Technology, Committee on Energy and Commerce, U.S. 
House of Representatives

    Anna Eshoo, Ranking Member, Subcommittee on Communications and 
Technology, Committee on Energy and Commerce, U.S. House of 
Representatives

    Lamar Smith, Chairman, Committee on the Judiciary, U.S. House of 
Representatives

    Norm Dicks, Ranking Member, Committee on Appropriations, U.S. House 
of Representatives

    John Conyers, Ranking Member, Committee on the Judiciary, U.S. 
House of Representatives

    Bob Goodlatte, Chairman, Subcommittee on Intellectual Property, 
Competition and the Internet, Committee on the Judiciary, U.S. House of 
Representatives

    Frank Wolf, Chairman, Subcommittee on Commerce, Justice, Science 
and Related Agencies, Committee on Appropriations, U.S. House of 
Representatives

    Mel Watt, Ranking Member, Subcommittee on Intellectual Property, 
Competition and the Internet, Committee on the Judiciary, U.S. House of 
Representatives

    Chaka Fattah, Ranking Member, Subcommittee on Commerce, Justice, 
Science and Related Agencies, Committee on Appropriations, U.S. House 
of Representatives
                             Robert E. Hall
    Robert E. Hall is the Robert and Carole McNeil Joint Professor of 
Economics at Stanford University and Senior Fellow at Stanford's Hoover 
Institution. He served as President of the American Economic 
Association for the year 2010, served earlier as the Association's Vice 
President and Ely Lecturer, and is now a Distinguished Fellow of the 
Association. He is an elected member of the National Academy of 
Sciences and Fellow of the American Academy of Arts and Sciences, the 
Society of Labor Economists, and the Econometric Society, the 
professional organization of economists specializing in measurement 
issues. He is Director of the Research Program on Economic Fluctuations 
and Growth of the National Bureau of Economic Research. He was a member 
of the National Presidential Advisory Committee on Productivity. For 
further information about his academic activities, see Stanford.edu/
rehall . He received his Ph.D. in economics from MIT and his BA from 
the University of California, Berkeley.
    Professor Hall is co-author of the college textbook Economics: 
Principles and Applications, now in its fifth edition, and author or 
co-author of numerous articles in the American Economic Review, the 
Journal of Political Economy, and other academic journals.
    Professor Hall has advised a number of government agencies on 
national economic policy, including the Treasury Department, the 
Federal Reserve Board, and the Justice Department, and has testified on 
numerous occasions before congressional committees.
                            Michael A. Flynn
    Mr. Flynn is a consulting and testifying expert economist, 
specializing in antitrust, economic damages, intellectual property and 
other complex business litigation and consulting engagements. He has 
extensive case experience in a broad range of industries, markets and 
products. Mr. Flynn studied in the PhD Program in Economics of the 
Massachusetts Institute of Technology, Cambridge, Massachusetts, from 
1971 to 1974, where he was a National Science Foundation Fellow. He 
completed his general and field examinations for the PhD degree in 
1974. Mr. Flynn was awarded his AB degree from the University of 
California, Berkeley, where he was the 1971 recipient of the Department 
of Economics Citation as the Outstanding Graduating Senior.

    Mr. Jaffe. I'd like to add just one point. It seems to me 
incredible that they are suggesting that the failure of their 
earlier proposals where they did a beauty contest, where they 
tried to select what they thought were going to be the most 
economically viable programs, and that they failed, then argues 
for us blowing open the doors, while we still do not have the 
protections that we need to fight against some of these 
cybercrimes, and say that this will then be looked at after we 
find whatever damage has been caused.
    Senator Klobuchar. Ms. Alexander, can the Secretary of 
Commerce stop ICANN from doing this?
    Ms. Alexander. Thank you very much.
    Senator Klobuchar. That's what this quote was.
    Ms. Alexander. Thank you very much, Senator. I haven't seen 
the letter if it arrived last night.
    I think the role of the Department of Commerce is not to 
substitute our judgment for ICANN's. We've tried to very 
actively participate in the process. I think it's important to 
understand, though, too, while the application window starts in 
January and closes in April, then there's going to be a 
processing of the applications. We've read the applicant 
guidebook and we've mapped out eight or nine different 
scenarios of the paths an application could take.
    An application with no problems and no objections will 
still take 9 months to process. So the earliest any new TLD 
will actually be operational on the root will be January of 
2013.
    Senator Klobuchar. Yes, but you're having people put in 
$185,000 and at least spend all this money on applications. Are 
you implying like we'd stop in the middle, that you'd stop in 
the middle?
    Ms. Williams. I think there's going to be--there's going to 
be a natural evolutionary, slow introduction of them anyway. 
And while ICANN has committed to do a review of their program 
with the GAC, they're also required under agreement with the 
Department of Commerce to do a review of the entire program a 
year after the first TLD's in the root. So there will be this 
process where we can have checks and balances to make sure.
    We obviously take very seriously the concerns expressed by 
Mr. Jaffe and others.
    Senator Klobuchar. Also, the other thing we've heard is the 
FTC Chairman and others as well. So I'm just trying to figure 
out if this gets started, I'm not sure you're going to be able 
to stop it in the middle. Maybe you can.
    Ms. Williams. Mr. Leibowitz's comments yesterday are very 
consistent with the comments we've been raising inside the GAC. 
In fact, Mr. Leibowitz's staff is very much involved with us in 
the process. That's in fact why many of the changes were made 
to the ICANN program.
    I think what we're looking at really is effective 
implementation and monitoring of this effort, and we think it's 
wholly appropriate for Mr. Leibowitz going forward to make sure 
that ICANN lives up to these things to protect consumers. For 
our part, that's what we'll be doing, working with consumers 
and law enforcement to make that happen.
    Senator Klobuchar. My original question, though, was about 
this, this way of rolling it out slowly. Ms. Dyson, did you 
want to answer that?
    Ms. Dyson. Sure. As the founding chairman of this 
organization, I'm extremely disappointed in its inability to do 
what we set out to do, which was to have a clean and open and 
transparent market for a limited, valid set of domain names. 
The slow-rolling expansion, as Mr. Jaffe just said, showed it 
wasn't working, and I don't think it's going to work better 
whether we do it fast or slow.
    The problem is, you've heard Mr. Pritz describe all these 
elegant processes and all these policies, but they haven't 
resulted in a clean and open market and I don't see why 
anything different is going to happen if we have more such 
TLDs.
    And I want to address one other issue, which is the talk 
about innovation, that we need more domain names to innovate. 
I'm in the venture capital community. There's huge amounts of 
innovation. There are new name spaces. Twitter.com has a new 
name space. Federal Express has a name space of packages IDs. 
Amazon has a name space for books. You don't need to pervert 
the domain name system, which is an artificially scarce 
resource controlled by ICANN, in order to innovate elsewhere. 
People like Twitter and Amazon earn those rights through value 
creation. This is what I like to see: real innovation, where 
you don't buy a name for $200,000 and then spend a few millions 
defending it, where you actually create something new. And for 
that you don't need a new TLD.
    Senator Klobuchar. Mr. Pritz, obviously a lot of people, 
we're on the Commerce Committee, we like innovation. But I'm 
just trying to figure out. Clearly, there are many that are 
concerned in the nonprofit community about the cost of this, as 
Ms. Williams has articulated. And we've also heard from 
businesses that are concerned. Who's really pushing for this? 
Is there division in the nonprofit community? Is there division 
in the business community? Is it people who are focused on a 
free and open Internet, which we all are up here?
    I just want to--I want to understand the motivation. Who 
are the groups pushing for this?
    Mr. Pritz. A point I wanted to make at the end and I missed 
making earlier is, in our testimony when we talk about a 
consensus-based process and that there's a consensus for 
launching this program in this manner, those consensus opinions 
are hard-fought and hard-won. ICANN is a very noisy environment 
and it's all those groups you mentioned--IT attorneys, 
corporations, not-for-profits, noncommercials----
    Senator Klobuchar. They have said they want to expand to 
over a thousand? I'm just trying to understand how we got where 
we are, because obviously Congress, for a change, didn't get us 
exactly here. And I want to know how we got where we are and 
who's been pushing it, because it didn't come through the 
political process so I'm somewhat naive about how you got where 
you are.
    Mr. Pritz. So it came through the ICANN political process.
    Senator Klobuchar. Yes.
    Mr. Pritz. But that policymaking body, it's a bottom-up 
policymaking process. That policymaking body has 
representatives that are appointed by all those stakeholder 
groups or constituency groups. I could list them: IP, business, 
noncommercial, not-for-profit, Internet service providers, 
registries and registrars. Each one of those stakeholder groups 
appoint representatives to those policymaking bodies, where in 
this particular instance they undertook this formal bylaw-
regulated policymaking process, and over a period of 19 months 
developed, ironically, 19 policy recommendations.
    The most highly debated one was the answer to the first 
question: Should there be new TLDs and, if so, how should they 
be restricted? What you see in front of you is the opinion to 
restrict them by rounds, set a high bar, make sure they have 
the wherewithal. Those policymakers have discussions at ICANN 
meetings and in teleconferences that occur once a month, and 
then they go back to their constituency groups and meet with 
them and bring back opinions.
    You know, many of the corporations that we're talking about 
today, they're also represented in those policymaking bodies 
and took part in this.
    Senator Klobuchar. And how about the non-profits and groups 
that are very focused on a free and open Internet?
    Mr. Pritz. The not-for-profit constituency group that we're 
really pleased to have and have some of the most dynamic people 
in ICANN is new, but the noncommercial constituency is very 
much for an open Internet and for the introduction of new 
gTLDs. In fact, the sole dissenting voice in the final 
consensus opinion was from the noncommercials that said it's 
not open enough, we're being too restrictive with our 
limitations and protection of rights of others.
    So really it was a broad-based, hard-fought battle, if you 
can imagine, by a very noisy group of stakeholders that are--
anybody can come to the microphone at an ICANN meeting and talk 
directly to the Chair, and the Chair sits there and responds in 
a dignified way.
    Senator Klobuchar. I think sometimes what happens, just 
from judging what happens around here, everyone works on it in 
a room, people do come, and then all of a sudden they get the 
final product and then everyone steps back and looks at it a 
little bit. That's probably what you're hearing today from the 
Senators up here, who have been really exposed to this outcome 
for the first time, and what you'll probably hear in the weeks 
to come from some of the groups, is my prediction, and the 
public, and I think there's going to be an additional hearing 
as well.
    So I just hope, given that I think there's issues about 
what the Congress or anyone could do about your group, which 
has been set up to do this to begin with, but I'm hopeful that 
you will listen to these concerns as we move forward. Will you? 
Will you listen to the concerns as we go forward?
    Mr. Pritz. I certainly will. And I want to tell you how 
passionate everyone is at ICANN, and when I talk about ICANN 
it's the big ICANN with all its stakeholders, are concerned 
about this issue and have worked very hard on it.
    Senator Klobuchar. OK.
    Ms. Williams.
    Ms. Williams. Senator, I just wanted to point out that, to 
ICANN's credit, they did recognize that the not-for-profit 
arena's voice had not been heard. But we weren't officially 
recognized until June of this year. June of this year, the 
train had already left the station, and there are several 
iterations of the applicant guide and we weren't allowed to be 
able to contribute to having the not-for-profit world 
recognized, the issues around cost, the issues around defensive 
registrations.
    In fact, if you take a look at what ICANN has put forward 
in terms of being able to protect one's brand, there are 
still--it's still fuzzy. There are still some incredible gaps. 
There are still opportunities for cybersquatters to come in 
that have the funds to be able to take the venerable names of 
not-for-profits, and we will be stuck.
    For example, if--there is a rapid takedown process that 
ICANN has discussed. If someone comes in and takes a dot-ymca 
something, that can be taken down and then it sits dormant. But 
then it goes back out into the public for purchase again by 
another cybersquatter. So it doesn't even allow nonprofits to 
reserve their name and not have someone come in and take it.
    I can't tell you what the specific answer is, but there has 
to be something done on behalf of our sector to protect us. We 
do not have the funds to be able to do this.
    Senator Klobuchar. OK. I'm going to--OK, the last two 
comments here briefly and then we're going to conclude.
    Ms. Dyson. Just finally, in all this process the end-users, 
the billions of people, not the thousands and millions of 
companies, but the billions of end-users who stand to gain 
nothing from being confused, haven't been heard.
    Senator Klobuchar. Thank you. I think that's the beginning 
of this process.
    Mr. Pritz. Right.
    Senator Klobuchar. All right.
    Mr. Pritz. What is required of ICANN under its affirmation 
of commitments is a consensus. What you're hearing here is that 
a very, very broad representation of the business community and 
the international business community is concerned. You've just 
heard that the not-for-profits are concerned. They have stated 
that they have talked to all sorts of groups. I'd just like to 
quote one more thing into the record to show that this is--and 
it is short, Senator, I understand the time circumstance--but 
to show that there is is not the consensus, there is no 
consensus behind this proposal, which is a radical proposal.
    This is from the IRT, which deals with the trademark 
issues, and they were asked to look into this issue, which was 
a good thing. But they wanted to make very clear with the 
report: ``Was it because we support the concept of the 
expansion of the gTLD space unreservedly? Hardly. The views of 
the IRT reflect the views of business and trademark interests 
in general. A sizable number''--let me emphasize that--``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. Others favored the 
measured''--what you were talking about--``measured 
introduction of sponsored or community-based gTLDs.''
    And then they said: ``Some support the current expansion, 
seeing the advantages for commerce and the consumer for open 
competition and innovation.''
    That is not consensus. ICANN then decides among all these 
different groups who have different views who wins, and guess 
who always wins? It is always the group that wants expansion. 
That is what drives the whole system. That's what the 
registrars and registries get almost all of their money from. 
That's where almost all the money for ICANN comes from.
    So we think there's a very strong bias to always expand and 
always say the consensus is here. We don't see any consensus of 
the community.
    Thank you very much.
    Senator Klobuchar. All right. Well, this has been an 
incredibly good discussion. I want to thank you all for being 
here. I have to say, I raised this issue this morning with my 
attendees at my Minnesota breakfast that we have every 
Thursday. I thought I'd get something of a yawn, but actually 
some of them showed up at the hearing, and then also a number 
of them came up to me and asked questions, making me think that 
the public actually would be interested in this issue, and I 
think it's something that they understand.
    We all know that the Internet is one of the great American 
success stories. Its beginnings can be traced to a program at 
the U.S. Department of Defense. In only a few short decades the 
network of networks has expanded in leaps and bounds, reaching 
people around the globe. The Internet has transformed not only 
how we communicate with friends and family, but also the way 
companies do business, how consumers buy goods and services, 
how we educate our children. It's a powerful engine for 
economic growth and a great democratic tool that citizens 
everywhere are using to empower their communities.
    And I believe the job of ICANN and the job of the 
administration, the job of this Congress, is to make sure that 
we protect that Internet so it can be used by all.
    So I want to thank you so much. We look forward to working 
with you. We may have some follow up questions in writing to 
follow up on some of the answers that we got today, so we will 
leave the record open for a week. Thank you.
    This hearing is adjourned.
    [Whereupon, at 12:10 p.m., the hearing was adjourned.]
                            A P P E N D I X

   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                            Fiona Alexander
    Question 1. Ms. Alexander, one of the purposes for DNSSEC is to 
ensure that the recipient can validate that the data from any domain 
name comes from the owner of that name and that it arrived at its 
destination unchanged from end-to-end. The recipient should be assured 
he or she is going to Internet site they are seeking to go to and not 
being re-directed to another site.
    There is legislation reported out of the Judiciary Committee called 
the PROTECT IP Act that requires the use of filtering to re-direct end 
users who want to reach blacklisted Internet sites that are ``dedicated 
to infringing activity'' to a site that includes a statement by 
Department of Justice that the site was determined to be dedicated to 
infringing activity plus pointers to some to be determined information 
and resources.
    Does the Administration have a position on whether it believes that 
the re-direction required under the PROTECT IP Act as reported by the 
Senate Judiciary Committee is incompatible with how DNS SEC is 
currently designed to authenticate domain names?
    Answer. The Administration believes that online piracy by foreign 
websites is a serious problem that requires a serious legislative 
response, but will not support legislation that reduces freedom of 
expression, increases cybersecurity risk, or undermines the dynamic, 
innovative global Internet. Legislation must avoid creating new 
cybersecurity risks or disrupting the underlying architecture of the 
Internet. In addition, proposed laws must not tamper with the technical 
architecture of the Internet through manipulation of the Domain Name 
System (DNS), a foundation of Internet security. The Administration's 
analysis of the DNS filtering provisions in some proposed legislation 
suggests that they pose a real risk to cybersecurity and yet leave 
contraband goods and services accessible online. Legislation must avoid 
driving users to dangerous, unreliable DNS servers and puts next-
generation security policies, such as the deployment of DNSSEC, at 
risk.

    Question 2. Given that many of the expected hundred of new domains 
created will be owned and operated by non-domestic entities, does the 
Administration believe that PROTECT IP Act as reported by the Senate 
Judiciary Committee will be effective in stopping non-domestic Internet 
sites dedicated to infringing activities?
    Answer. Please see response to Question 1.

    Question 3. Does the Administration have a position on whether it 
believes that PROTECT IP as reported by the Senate Judiciary Committee 
will strengthen, weaken, or have no change on efforts to make the DNS 
more secure for consumers and business?
    Answer. Please see response to Question 1.

    Question 4. What is the status of DNS SEC implementation for the 
Federal government?
    Answer. The Department of Commerce's long-running effort to support 
the deployment of DNSSEC has included NTIA's work with ICANN and 
VeriSign in signing the authoritative root zone file which has 
facilitated broader DNSSEC deployment. The Federal Information Security 
Management Act (FISMA) guidelines require all Federal agencies to 
deploy DNSSEC. The Department of Commerce's National Institute of 
Standards and Technology (NIST) and the Department of Homeland Security 
(DHS) regularly measure DNSSEC deployment within the Executive Branch 
of the Federal government and their compliance with FISMA. According to 
their data, 35 agencies have fully implemented DNSSEC and 23 agencies 
have partially implemented. Fifty-one agencies are not yet compliant. 
The Department is currently 78 percent compliant with FISMA 
requirements and is working towards full compliance.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                            Fiona Alexander
United Nations Model
    Question 1. There has been a growing contingency of other countries 
critical of the ICANN multi-stakeholder model and about the U.S.' 
involvement and influence with ICANN. Some governments, not necessarily 
friendly to the U.S., are seeking to increase their power over the 
Internet and its governance.
    Russia and China (with Tajikistan and Uzbekistan) have proposed to 
the United Nations an Internet ``Code of Conduct,'' to which a senior 
State Department official stated ``they seek to justify the 
establishment of sovereign government control over Internet resources 
and over freedom of expression in order to maintain the security of 
their state.'' \1\ Even Russian Prime Minister Vladimir Putin remarked 
recently his desire of ``establishing international control over the 
Internet using the monitoring and supervisory capabilities of the 
International Telecommunication Union (ITU).'' \2\
---------------------------------------------------------------------------
    \1\ http://www.huffingtonpost.com/2011/09/27/russia-china-internet-
control_n_984223.html.
    \2\ http://premier.gov.ru/eng/events/news/15601/.
---------------------------------------------------------------------------
    The other proposal by India, Brazil, and South Africa calls for the 
creation of a new body within the United Nations to oversee Internet 
policy. As a result, ICANN as well as the Internet Governance Forum 
(IGF) could be significantly marginalized or hijacked by this new UN 
entity.
    These proposals seem to be in direct conflict with our Nation's 
effort to privatize the Internet through transferring the authority of 
the DNS to the private sector and for the Internet governance model to 
be private-sector led.
    If the U.S. Government followed the advice to unilaterally delay 
the gTLD expansion, what do you believe the impact would be globally 
and do you believe this would fan the flames of anti-U.S. government 
sentiment with respect to Internet governance? Could it give more 
momentum to other governments' calls to have the United Nations assert 
oversight over ICANN or replace it altogether?
    Answer. NTIA recognizes that the new gTLD program is the product of 
a six-year, international multistakeholder process and has no intention 
of interfering with the decisions and compromises reached during that 
process. Doing so would provide ammunition to those governments seeking 
to exert top-down, government-led control over the Internet, which NTIA 
believes is inimical to the future growth of the Internet.

    Question 2. If the U.N. did take control or governments had greater 
involvement, what impact would that have on American businesses and 
citizens that utilize the Internet? What impact could it have on 
Freedom of Speech?
    Answer. It is NTIA's view that the Internet we enjoy today--a major 
engine of economic growth and innovation--did not develop by 
happenstance. It emerged as the result of the hard work of 
multistakeholder organizations such as the Internet Society, the 
Internet Engineering Task Force, and the World Wide Web Consortium. The 
United States is opposed to establishing a governance structure for the 
Internet that would be managed and controlled by nation-states. Such a 
structure could lead to the imposition of heavy-handed and economically 
misguided regulation and the loss of flexibility the current system 
allows today, all of which would jeopardize the growth, innovation and 
freedom of expression on the Internet we have enjoyed these past years.
Growth of the Internet and Expansion of the Domain Name System
    Question 3. The Internet has been so amazingly beneficial to small 
businesses because it allows them to globally expand their local 
markets and enables them to compete with Fortune 100 companies because 
the size of the computer screen is the same for a small business in 
Bangor as it is for a multi-national corporation like Wall-mart. Small 
businesses are the anchor to not only Maine's economy but to our 
Nation's and the Internet has been invaluable to them.
    Supporters of the expansion have stated it will bring new 
competition and choice to the Internet space and allow the Internet to 
continue to grow in the number of websites, content, applications, and 
online services. It also presents businesses new models to harness the 
boundless benefits of the Internet.
    There have already been expansions to top level domains in the past 
to accommodate for the growth of the Internet, with the intro of gTLDs 
like .biz, .info, .museum, .mobi, etc.
    If the Internet is going to continue to grow, shouldn't the domain 
name system?
    Answer. The goal to establish new gTLDs beyond the original seven 
(.com, .edu, .gov, .int, .mil, .net, and .org) began over a decade ago 
when ICANN was charged in 1998 by the Department of Commerce with 
promoting competition in the registration of domain names. The current 
round of expansion of the gTLD space is a continuation of that effort.
White Paper
    Question 4. In the ``White Paper,'' which was released in 1998 and 
led to the formation of ICANN is competition, has as one of its core 
principles is competition--that competition and consumer choice should 
drive the management of the Internet because they will lower costs, 
promote innovation, encourage diversity, and enhance user choice and 
satisfaction.
    Comments in the White Paper \3\ on the issue of new generic top 
level domains showed ``very strong support for limiting government 
involvement during the transition period on the matter of adding new 
gTLDs. Specifically, most commenters--both U.S. and non-U.S.--suggested 
that it would be more appropriate for the new, globally representative, 
corporation to decide these issues once it is up and running.'' Also, 
commenters noted that ``there are no artificial or arbitrary limits in 
other media on the number of places in which trademark holders must 
defend against dilution.''
---------------------------------------------------------------------------
    \3\ http://www.ntia.doc.gov/federal-register-notice/1998/statement-
policy-management-internet-names-and-addresses.
---------------------------------------------------------------------------
    Isn't the expansion of gTLD a form of competition, where .hotels or 
.cars could compete against .com or .biz? If not, why?
    Answer. As NTIA noted in our testimony, the development and 
deployment of the new gTLD program is consistent with ICANN's agreement 
to promote competition in the gTLD environment as outlined in the 
Affirmation of Commitments. In addition, the current round of expansion 
of the gTLD space is expected to provide a platform for city, 
geographic, and internationalized domain names, among other things. We 
expect this type of change to the DNS 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 startup 
plans.
    Some companies, however, have expressed concern that ICANN's 
process for expanding gTLDs may lead to the filing of defensive 
registrations. On December 21, 2011, Administrator Strickling and other 
Department of Commerce leadership met with various stakeholders to hear 
these concerns and, on January 3, 2012, Administrator Strickling sent a 
letter to ICANN's Chairman of the Board, Stephen Crocker, raising this 
and other issues. NTIA will continue to monitor stakeholder concerns 
and raise issues as appropriate. A copy of his letter is attached.

    Question 5. Several commenters also stated ``the market will decide 
which TLDs succeed and which do not.'' What is wrong with allowing the 
market to continue to decide with new gTLDs from the expansion?
    Answer. NTIA agrees that the market will be a key determinant in 
the success of new gTLDs and continues to be an active participant in 
the multistakeholder process related to the gTLD program.

    Question 6. If commenters are correct that ``there are no 
artificial or arbitrary limits in other media on the number of places 
in which trademark holders must defend against dilution'' then why 
should we place ``artificial or arbitrary'' limits on the Internet?
    Answer. In NTIA's recent discussions with stakeholders, it has 
become clear that many organizations, particularly trademark owners, 
believe they need to file defensive applications at the top level. It 
appears that this possibility might not have been fully appreciated 
during the multistakeholder process on the belief that the cost and 
difficulty of operating a top-level registry would constrain companies 
from filing defensive registrations. NTIA believes that it would not be 
healthy for the expansion program if a large number of companies file 
defensive top-level applications when they have no interest in 
operating a registry. Accordingly, NTIA suggested in a January 3, 2012, 
letter to ICANN that it consider taking measures to mitigate against 
this possibility.
    In addition, NTIA's letter cited an immediate need to improve 
communication with stakeholders and potential new gTLD applicants prior 
to the launch of the program. NTIA also advocated that following the 
application period, ICANN use the data that will then be available to 
examine the potential scope of the program and consider if there is a 
need for a phased implementation of new gTLDs. Using that data, ICANN 
can also explore the possibility of implementing additional protections 
by new TLD operators at the second-level. In addition to addressing 
these program-specific concerns, NTIA also reiterated the importance of 
implementing a stronger registrar accreditation agreement; improving 
current WHOIS policy; and dedicating resources to fully staff and equip 
the contract compliance department, including creating a centralized 
and automated complaint process. A copy of the January 3, 2012, letter 
to ICANN is enclosed.
    ICANN has now taken steps to enhance its outreach in the United 
States, including holding an information session on January 11, 2012, 
in Washington, D.C. In addition, NTIA was encouraged by ICANN's January 
11, 2012, written response in which ICANN commits to review possible 
improvements to the program, specifically to deal with the perceived 
need for defensive registrations at the top-level, as well as to 
complete a series of work streams that will facilitate more effective 
tools for law enforcement and consumer protection. As is necessary in a 
multistakeholder process, all of these efforts will require active 
engagement by all parties prior to adoption.
Expansion of Internet Addresses
    Question 7. The Internet has revolutionized some many different 
areas of society and the economy. The innovation, adoption, and sheer 
size of the Internet are simply unparalleled. The Internet currently 
comprises of approximately 2 billion users and more than five billion 
devices. Cisco estimates there will be more than 50 billion Internet 
connected devices by 2020.
    However, we have for the most part exhausted the existing pool of 
Internet address--IPv4 provides for approximately 4.3 billion 
addresses. The shortage has been the driving factor in creating and 
adopting several new technologies as well as new and larger addressing 
system, known as IP version 6. This migration from a 32-bit addressing 
space to a 128-bit addressing, will provide 340 trillion, trillion, 
trillion separate addresses--enough for every human bring to use many 
trillions of address. With IPv6, there will be approximately 670,000 IP 
addresses for every squared nanometer of the earth's service. To put 
that into perspective, a human hair is 100,000 nanometers wide.
    However, the implementation of IPv6 has been somewhat slow. Last 
year, I read only about 20 percent of the Internet was IPv6 compatible 
and while a recent survey shows adoption of IPv6 grew by 1,900 percent 
over the past 12 months that results in only about 25 percent of .com, 
.net, and .org Internet subdomains.
    What is the status of the migration to IPv6 and what will it mean 
for Internet users and businesses, domestic and globally?
    Answer. Stakeholders are in varying stages of IPv6 deployment 
depending on individual budgets, technological coordination, and 
management. The Office of Management and Budget (OMB) has established 
IPv6 transition deadlines for U.S. agencies, and the National Institute 
for Standards and Technology (NIST) has begun tracking Federal agency 
deployment. A set of industry-wide metrics related to IPv6 deployment 
is lacking, however. This is one of the topics NTIA plans to address in 
a multistakeholder workshop planned for the first quarter of 2012. For 
Internet users, IPv6 will enable innovative new technologies and allow 
the Internet to continue to grow and expand. IPv6 is increasingly being 
integrated into equipment and services. There are some computer 
operating systems that already include IPv6 and use IPv6 automatically 
if it is available. Applications will follow as demand increases. For 
domestic businesses, operational costs (e.g., staff training, 
administrative costs) may constitute additional costs outside of normal 
equipment refresh cycles.

    Question 8. Is there anything governments can do to encourage 
faster adoption of IPv6 as well as increase awareness to businesses and 
citizens about the migration?
    Answer. Government can continue to increase awareness about the 
need to adopt IPv6 by convening public workshops and conducting 
outreach. Government as a user can ensure that IPv6 is integrated and 
deployed in its own networks through better coordination of its 
acquisition and procurement activities across management, legal, 
policy, and technical teams.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Barbara Boxer to 
                               Kurt Pritz
    Question 1. Intellectual property rights holders have expressed 
some concerns about the possibility of ICANN granting generic top-level 
domain names (gTLDs) that could lead to consumer confusion, or 
violations of trademark or other intellectual property rights. Could 
you describe, in detail, the pre-grant procedures by which ICANN will 
act to prevent gTLDs that could cause consumer confusion and/or 
violation of intellectual property rights?
    Answer. The New gTLD Program contains a suite of new, mandatory 
intellectual property rights protection mechanisms, both at the first 
level (for the top-level domains, or names to the right of the dot such 
as .org) and at the second level (second-level domains, like 
icann.org). The first level protections mitigate against applications 
for and the approval of new TLDs that may infringe on the legal rights 
of others or cause consumer confusion.
    First, there is a high bar to participation in the Program. The 
$185,000 evaluation fee itself is a bar to potential wrongdoing at the 
top-level.\1\ In today's environment, second-level domain names are 
available for $10. Wrongdoers easily leave them behind when the site is 
exposed. The higher evaluation fee for top-level names in itself will 
discourage abuse.
---------------------------------------------------------------------------
    \1\ The fee was calculated based on a cost recovery model but the 
amount has the side benefit of deterring frivolous or malicious 
applications.
---------------------------------------------------------------------------
    Second, the stringent reviews include measures specifically 
targeted to identify--and reject--applicants that are bad actors or 
have already demonstrated a history of cybersquatting. ICANN requires 
background reviews of TLD applicants, including reviews for criminal 
history (including the use of telecommunications or the Internet to 
facilitate crimes, illegal sale of drugs, and others). In addition, 
ICANN will reject applications where the applicant has a pattern of 
adverse decisions under the UDRP (Uniform Domain Name Dispute 
Resolution Policy), or has been found to act in bad faith or with 
reckless disregard to their obligations under cybersquatting 
legislation.
    Third, the Program offers public review of the applied-for strings 
and the opportunity to state an objection to any string. After the 
April 12, 2012 close of the application window, ICANN will publish a 
list of all applied-for gTLDs. (That publication will occur around May 
1, 2012.) At that time, entities, individuals and governments can 
review the list of strings and consider if they wish to object to any 
individual application. In addition, the New gTLD Program allows 
ICANN's Governmental Advisory Committee, comprised of representatives 
of over 120 governments, to inform ICANN that there are concerns with 
an application--concerns that may include issues of consumer confusion 
or harm. If the Governmental Advisory Committee provides consensus 
advice to the Board not to approve and application, that advice creates 
a presumption in favor of denying the application.
    There are four formal objection processes that can be initiated by 
the public, each administered by a well-known international dispute 
resolution service provider. Types of objections that can be lodged 
are:

   String Confusion Objection--The applied-for gTLD string is 
        confusingly similar to an existing TLD or to another applied 
        for gTLD string in the same round of applications.

   Legal Rights Objection--The applied-for gTLD string 
        infringes the existing legal rights of the objector.

   Limited Public Interest Objection--The applied-for gTLD 
        string is contrary to generally accepted legal norms of 
        morality and public order that are recognized under principles 
        of international law.

   Community Objection--There is substantial opposition to the 
        gTLD application from a significant portion of the community to 
        which the gTLD string may be explicitly or implicitly targeted.

    To avoid frivolous objections, parties must have standing to 
object. For example, legal rights objectors must be the right holder or 
intergovernmental organization whose rights are being infringed.
    Objections lead to independent dispute resolution proceedings. 
Parties are the objector and the gTLD applicant.

   The International Centre for Dispute Resolution has agreed 
        to administer disputes brought pursuant to string confusion 
        objections.

   The Arbitration and Mediation Center of the World 
        Intellectual Property Organization has agreed to administer 
        disputes brought pursuant to legal rights objections.

   The International Center of Expertise of the International 
        Chamber of Commerce has agreed to administer disputes brought 
        pursuant to Limited Public Interest and Community Objections.

    Standards of review for each of the objections have been carefully 
crafted through reviews by intellectual property holders and the 
Internet community. For example, in the case of rights infringement 
objections, ``Strings'' must not infringe the existing legal rights of 
others that are recognized or enforceable under generally accepted and 
internationally recognized principles of law. A Dispute Resolution 
Service Provider panel of experts presiding over a legal rights 
objection will determine whether the potential use of the applied-for 
gTLD by the applicant takes unfair advantage of the distinctive 
character or the reputation of the objector's registered or 
unregistered trademark or service mark (``mark'') or IGO name or 
acronym (as identified in the treaty establishing the organization), or 
unjustifiably impairs the distinctive character or the reputation of 
the objector's mark or IGO name or acronym, or otherwise creates an 
impermissible likelihood of confusion between the applied-for gTLD and 
the objector's mark or IGO name or acronym.
    In the case where the objection is based on trademark rights, the 
panel will consider the following non-exclusive factors:

        1. Whether the applied-for gTLD is identical or similar, 
        including in appearance, phonetic sound, or meaning, to the 
        objector's existing mark.

        2. Whether the objector's acquisition and use of rights in the 
        mark has been bona fide.

        3. Whether and to what extent there is recognition in the 
        relevant sector of the public of the sign corresponding to the 
        gTLD, as the mark of the objector, of the applicant or of a 
        third party.

        4. Applicant's intent in applying for the gTLD, including 
        whether the applicant, at the time of application for the gTLD, 
        had knowledge of the objector's mark, or could not have 
        reasonably been unaware of that mark, and including whether the 
        applicant has engaged in a pattern of conduct whereby it 
        applied for or operates TLDs or registrations in TLDs which are 
        identical or confusingly similar to the marks of others.

        5. Whether and to what extent the applicant has used, or has 
        made demonstrable preparations to use, the sign corresponding 
        to the gTLD in connection with a bona fide offering of goods or 
        services or a bona fide provision of information in a way that 
        does not interfere with the legitimate exercise by the objector 
        of its mark rights.

        6. Whether the applicant has marks or other intellectual 
        property rights in the sign corresponding to the gTLD, and, if 
        so, whether any acquisition of such a right in the sign, and 
        use of the sign, has been bona fide, and whether the purported 
        or likely use of the gTLD by the applicant is consistent with 
        such acquisition or use.

        7. Whether and to what extent the applicant has been commonly 
        known by the sign corresponding to the gTLD, and if so, whether 
        any purported or likely use of the gTLD by the applicant is 
        consistent therewith and bona fide.

        8. Whether the applicant's intended use of the gTLD would 
        create a likelihood of confusion with the objector's mark as to 
        the source, sponsorship, affiliation, or endorsement of the 
        gTLD.

    For a complete description of the standards and rules for the 
objection and dispute resolution processes, see Module 3 of the 
Applicant Guidebook, http://newgtlds.icann.org/en/applicants/agb/
objection-procedures-11jan12-en.pdf.
    In addition, there will be a specialized function, an ``Independent 
Objector'' that will act solely in the best interest of the public, and 
may file an objection to an application that may give rise to the 
concerns raised above.
    As noted at the Subcommittee hearing, some trademark holders 
continue to voice concern that the New gTLD Program does not offer 
sufficient protections to reduce the need to submit defensive 
applications for top-level domains. Detailed discussions with 
intellectual property experts that participate actively in ICANN policy 
development indicate that those experts who are knowledgeable of the 
TLD marketplace are most comfortable with protections for top-level 
names. In regards to the perceived need for defensive registrations at 
the top-level by trademark holders, ICANN has already committed to 
solicit information as expeditiously as possible from the intellectual 
property community. This commitment, set out in a January 11, 2012 
letter to Assistant Secretary for Communications and Information, 
Lawrence Strickling, also committed ICANN to submit any new proposals 
or recommendations arising out of that work for evaluation and comment 
from the ICANN stakeholder community.

    Question 2. It is my understanding that in previous expansions of 
domain names, ICANN has allowed a ``sunrise'' period, prior to 
considering applications, in order to allow rights holders to submit 
information regarding their protected names and uses. The ``sunrise'' 
submissions by rights holders could act as a resource for ICANN to help 
prevent consumer confusion and/or intellectual property rights 
violations. Does ICANN plan to allow ``sunrise'' submissions by rights 
holders, and if not, why?
    Answer. Yes, a ``sunrise'' period is mandated for each new TLD 
approved under the New gTLD Program.
    ICANN is in the process of selecting providers for a Trademark 
Clearinghouse, a central repository for information to be 
authenticated, stored, and disseminated pertaining to the rights of 
trademark holders. Trademark holders will have the opportunity to 
record (i) Nationally or multi-nationally registered word marks from 
all jurisdictions; (ii) Any word mark that has been validated through a 
court of law or other judicial proceeding; (iii) Any word mark 
protected by a statute or treaty in effect at the time the mark is 
submitted to the Clearinghouse for inclusion; and (iv) other marks that 
constitute intellectual property, all subject to the specific criteria 
of the Clearinghouse.
    The authenticated rights data in the Trademark Clearinghouse will 
be used to support pre-launch Sunrise and Trademark Claims services. 
All new gTLD registries will be required to use the Trademark 
Clearinghouse to support the required pre-launch and initial launch 
period rights protection mechanisms that must include, at minimum, a 
Trademark Claims service and a Sunrise process.
    The Trademark Clearinghouse is expected to create efficiencies and 
for trademark holders. Instead of requiring trademark holders to 
authenticate mark information for each separate new registry, the 
authentication and validation processes can be completed once through 
submission to the Trademark Clearinghouse.
    Through the Sunrise process, trademark holders will have the 
opportunity to register desired second-level domain names before a new 
gTLD opens for general registration. Rights holders who have recorded 
their data in the Trademark Clearinghouse will receive notice if a 
third party registers a domain name matching the Clearinghouse record 
during the sunrise period.
    After the gTLD is accepting general registrations, ICANN requires 
that each new TLD offer a Trademark Claims service to provide real-time 
notices to prospective registrants where a domain name matches a 
Clearinghouse record, and provide notice to trademark holders in cases 
where domain names matching a Clearinghouse record are registered. 
Information on the additional intellectual property protections 
required under the New gTLD Program is detailed in my written 
testimony.\2\
---------------------------------------------------------------------------
    \2\ A summary of the trademark protections is available at http://
www.icann.org/en/topics/
new-gtlds/rights-holders-with-insert-02sep11-en.pdf and http://
www.icann.org/en/topics/new-
gtlds/trademark-factsheet-insert-02sep11-en.pdf.
---------------------------------------------------------------------------
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                               Kurt Pritz
DNS Security
    Question 1. Mr. Pritz, my understanding is that all of the new 
domains that will be selected by ICANN must agree to use the Domain 
Name System Security Extensions, known as DNS SEC. DNS SEC uses public 
key cryptographic digital signatures to authenticate the origin of the 
DNS data and assure the integrity of the DNS data.

   Currently, are DNS servers and DNS server software targeted 
        for attack by hackers?

   Why is DNS SEC important to any broader global cyber-
        security effort?

   Does DNS SEC allow for any re-direction in its current 
        implementation? Could it be made to? What would be some of the 
        potential security vulnerabilities if DNS SEC were to allow any 
        redirection?

   What is the status of DNS SEC implementation with respect to 
        existing domains? Is it realistic to expect that the new 
        domains will be compliant right from the start?
    Answer. Today, DNS servers and server software are targeted for 
attack by hackers. There are recent examples of incidents in which 
hackers were able to impersonate DNS server responses, or feed false 
data to the servers, ultimately redirecting end users to rogue sites to 
install malware. For example, the ``DNS Charger'' case--recently the 
subject of an indictment in the Southern District of New York, infected 
over 4 million computers worldwide through this type of attack.
    Coordinated deployment of DNSSEC is important in many respects. 
First, it will protect against attacks on DNS servers and software. 
Possibly even more important, however, the borderless nature of DNSSEC 
deployment has--for the first time--created a global, cross-
organizational, trans-national platform for authentication, cyber 
security innovation and international cooperation. This will make 
DNSSEC a critical tool in combating the global nature of cyber crime.
    DNSSEC does not allow for re-direction in its current 
implementation. Re-direction requires a change to the original record 
by a third party. With DNSSEC, any changes to the original record from 
the domain name owner's servers will be detected and flagged as an 
error or dropped. The validation occurs on the end user's machine to 
provide true end-to-end security.
    Any change to DNSSEC to allow for re-direction would defeat its 
purpose. The purpose of DNSSEC is to use digital signatures to ensure 
records do not get changed ``in flight.'' An alternative could be to 
put full trust in your Internet service provider (ISP) to perform the 
validation and enter manual re-direction entries, however this appears 
to be an inadequate level of security. For example, in late 2011, an 
attack on servers at multiple Brazilian ISPs caused redirection to 
malware-infected sites before connecting the ISP's customers to popular 
Internet sites. \3\ This affected millions of users, and demonstrates 
that leaving validation to the ISP level is insufficient to protect 
against attacks.
---------------------------------------------------------------------------
    \3\ See e.g., ``Hackers poison Brazilian ISP DNS to infect users 
with banking Trojan,'' TECHWORLD, Nov. 9, 2011 at http://
news.techworld.com/security/3317148/hackers-poison
-brazilian-isp-dns-to-infect-users-with-banking-trojan/.
---------------------------------------------------------------------------
    If DNSSEC were to allow re-direction or filtering, that would make 
the system again vulnerable to insider attacks. In addition, re-
direction could lead to poor performance due to the processing of large 
re-direction lookup tables for the billions of DNS queries that happen 
each day, as well as undesired responses. Re-direction could result--
with one click--permanently leading the end user to use alternate, 
unfiltered and insecure non-DNSSEC validating servers.
    DNSSEC adoption is growing. Today, 82 top-level domain name 
registries (covering 82 percent of existing domain names), including 
.COM and .ORG, have DNSSEC deployed. The new gTLD Program requires that 
all new registries deploy DNSSEC. In the United States, Comcast has 
begun rolling out DNSSEC to all 17.8 million of its Internet customers 
\4\, and internationally, we've seen adoption by network carriers such 
as Vodafone and Telefonica. It is realistic that new TLDs will be 
compliant from their introduction, as required in the Program. It is 
not a difficult requirement to meet, and current products, including 
hardware have DNSSEC support built in. ICANN and other organizations 
are regularly running training and awareness sessions to increase 
DNSSEC adoption.
---------------------------------------------------------------------------
    \4\ See, ``Comcast Completes DNSSEC Deployment,'' by Jason 
Livingood, Vice President, Internet Systems, January 10, 2012 at http:/
/blog.comcast.com/2012/01/comcast-completes-dns
sec-deployment.html.
---------------------------------------------------------------------------
Cracking Down on Rogue Websites
    Question 2. Mr. Pritz, do you believe that the increase in top 
level domains combined with all the requirements ICANN is putting in 
place will make its easier, more difficult, or not change the ability 
of U.S authorities to crack down on Internet sites--to use the phase--
that are dedicated to infringing activity?
    Answer . The New gTLD Program includes protections (not required in 
today's TLD), designed to prevent malfeasance and to make it easier to 
crack down on malicious conduct where it occurs. Some of the tools 
directly relating to increased law enforcement access to information 
and ability to combat malicious conduct in new TLDs include:

   A requirement to maintain enhanced, or ``thick'', WHOIS 
        records at the registry level to allow more rapid search 
        capabilities, facilitating efficient resolution of malicious 
        conduct activities;

   A centralized zone file access system to allow for more 
        accurate and rapid identification of key points of contact 
        within each gTLD. This reduces the time necessary to take 
        corrective action within TLDs experiencing malicious activity; 
        and

   A requirement to establish a single point of contact 
        responsible for the handling of abuse complaints (as requested 
        by law enforcement authorities).

   Background reviews of TLD applicants, including reviews for 
        criminal history (including the use of telecommunications or 
        the Internet to facilitate crimes, illegal sale of drugs, and 
        others);

   Rejection of applications where the applicant has a pattern 
        of adverse decisions under the UDRP (Uniform Domain Name 
        Dispute Resolution Policy), or has been found to act in bad 
        faith or with reckless disregard to their obligations under 
        cybersquatting legislation;

   The requirement to have a plan to implement domain name 
        system security extensions (DNSSEC), reducing the risk of 
        ``man-in-the-middle'' attacks and spoofed DNS records; and

   Requirements that New gTLD Registry Operators must:

     Maintain a Continued Operations Instrument sufficient 
            to fund basic registry operations for a period of three 
            years in case of business failure, to protect consumers and 
            registrants within that gTLD in the event of registry 
            failure.

     Maintain continuity and transition plans, including 
            regular failover testing.

     Cooperate with ICANN In the event transition to a new 
            registry operator is necessary. ICANN will identify an 
            Emergency Back-End Registry Operator to assist in the 
            registry transition process and provide emergency registry 
            services as needed.

    In addition, ICANN is actively working to address 12 
recommendations made by law enforcement regarding strengthening ICANN's 
contracts with its accredited registrars. Specifically, as directed by 
the Board, ICANN is currently in negotiations with its accredited 
registrars to amend the Registrar Accreditation Agreement (RAA) to meet 
the recommendations raised by law enforcement authorities. Amendments 
are expected to be in force prior to the entry of the first new gTLD in 
2013.
    These negotiations include face-to-face meetings with law 
enforcement agencies to ensure understanding of law enforcement 
requirements. The negotiation anticipates substantial and unprecedented 
steps to improve the accuracy of Whois data. ICANN is taking a strong 
stand in regard to issues relating to the verification of Whois data 
and expects the accredited registrars to take action to address the 
demands of governments and law enforcement worldwide. Updates on the 
negotiations are available at https://community.icann.org/display/RAA/
Negotiations+Between+ICANN+and+
Registrars+to+Amend+the+Registrar+Accreditation+Agreement.

    Question 3.

   Mr. Pritz, how many new gTLD and other domains does ICANN 
        estimate will be created?

   What is the process by which ICANN will award the new gTLD 
        and other domains? Will it be just a matter of who can bid the 
        most?

   How much money is expected to be raised from the new gTLDs 
        and other domains?

   What does ICANN intend to do with the funds? What are the 
        mechanisms in place to assure accountability?
    Answer. The number of new gTLDs that will be created through this 
first application round is still a matter of speculation. Early 
estimates coming from the community postulated that there would be 500 
or more applications. Recently, some have estimated that 1000 or more 
applications will be made in the current round, opened on January 12, 
2012. Once the application window closes on April 12, 2012, the 
speculation will come to an end and the full number of applications 
will be known. Not surprisingly, many companies are remaining quiet 
about their business strategies regarding plans to establish new gTLDs, 
making true estimates difficult.
    If significantly more than 500 applications are received, the 
applications will be processed in batches of 500. In addition, on the 
advice of root server stability experts, ICANN has committed to limit 
the number of new TLD entered into the root in any one year to 1,000.
    The extensive application and evaluation process is set out in the 
Applicant Guidebook, with over 300 pages of detail. Applicants must 
meet all of the application criteria, pass the rigorous evaluations, as 
well as pass through any of the four objection processes that may be 
used against the application. The key to the application process, 
however, is that it does not create a beauty contest among applicants 
or impose arbitrary limitations such as type of application that 
existed in two prior pilot rounds on new gTLDs. These pilot rounds are 
described in detail in response to Senator McCaskill's question 2.
    All applicants are expected to pay the $185,000 evaluation fee to 
ICANN, unless the applicants qualify for financial support. If an 
applicant qualifies for the available financial support, it will only 
pay $47,000 towards the application fee. The $185,000 application fee 
is calculated on a cost-recovery model, and was determined through a 
comprehensive and complex process that included identifying over 100 
separate tasks required for the evaluation of a new gTLD application 
and seeking guidance from experts. The fee includes development costs 
($26,950 per application); application processing and evaluation costs 
($97,800 per application); and costs for risk mitigation steps, 
including allowance for unanticipated costs and variations between 
estimates and actual costs incurred ($60,000 per application). A 14-
page document setting out the methodology and further breakdown of the 
fee component is available at http://www.icann.org/en/topics/new-gtlds/
cost-considerations-04oct
09-en.pdf. This document is an update to the earlier ``Cost 
Considerations of the New gTLD Program'', published in October 2008, 
available at http://www.icann
.org/en/topics/new-gtlds/cost-considerations-23oct08-en.pdf.
    While there is a possibility that multiple applicants for the same 
TLD could proceed to an auction to operate the TLD, ICANN intends the 
auction process as a last-resort method. ICANN encourages applicants to 
work together to arrive at a mutually-agreeable solution instead of 
allowing the competing applications to proceed to an auction. To the 
extent that a TLD proceeds to auction and generates additional funds, I 
discuss below ICANN's commitments to using these funds towards its not-
for-profit mission.
    As a Not-for-Profit Public Benefit Corporation, ICANN is committed 
to its not-for-profit mission. For ICANN, that commitment requires us 
to assure that excess funds generated through the New gTLD Program 
(i.e., those that exceed the costs incurred for the processing, 
evaluation and other components of the New gTLD Program) are used in 
furtherance of ICANN's mission. The evaluation fee has been calculated 
to recover costs and not exceed those costs. If evaluation fees exceed 
actual costs, future evaluation fees will be reduced. If costs exceed 
fees, then ICANN will absorb that and future fees will be increased to 
meet the actual costs. For additional funds accruing to ICANN other 
than evaluation fees, such as the auction proceeds mentioned, the 
Applicant Guidebook addresses the issue in this way:\5\
---------------------------------------------------------------------------
    \5\ See Module 4, Page 19 of the Applicant Guidebook, version 2010-
01-11.

        It is planned that costs of the new gTLD program will offset by 
        fees, so any funds coming from a last resort contention 
        resolution mechanism such as auctions would result (after 
        paying for the auction process) in additional funding. Any 
        proceeds from auctions will be reserved and earmarked until the 
        uses of funds are determined. Funds must be used in a manner 
        that supports directly ICANN's Mission and Core Values and also 
---------------------------------------------------------------------------
        allows ICANN to maintain its not for profit status.

        Possible uses of auction funds include formation of a 
        foundation with a clear mission and a transparent way to 
        allocate funds to projects that are of interest to the greater 
        Internet community, such as grants to support new gTLD 
        applications or registry operators from communities in 
        subsequent gTLD rounds, the creation of an ICANN-administered/
        community-based fund for specific projects for the benefit of 
        the Internet community, the creation of a registry continuity 
        fund for the protection of registrants (ensuring that funds 
        would be in place to support the operation of a gTLD registry 
        until a successor could be found), or establishment of a 
        security fund to expand use of secure protocols, conduct 
        research, and support standards development organizations in 
        accordance with ICANN's security and stability mission.

    ICANN handles its budgeting processes in an open and transparent 
manner. Not only will the community discussion regarding the use of 
excess funds be the subject of community consultation, but the funds 
will also be tracked and accounted for within ICANN's publicly-posted 
financial documents.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Claire McCaskill to 
                               Kurt Pritz
    Question 1. I recognize that ICANN has put a tremendous amount of 
work and study into the planned expansion of top-level domain names. 
There have been a number of economic studies, dozens of comment periods 
and seven versions of the Applicant Guidebook before the final one was 
issued. ICANN clearly views the expansion of gTLDs as vital to the 
growth and viability of the Internet.
    Given how much time, effort and study has been put into this 
decision, I find it disturbing that there is still so much dispute 
about expansion. There is clearly a lack of consensus about these 
changes in the business and non-profit industries as well as concerns 
from law enforcement. This is not a decision to be taken lightly and I 
believe there needs to be better agreement on the outstanding issues 
from all interested parties.
    Both of you have very differing opinions about the implications of 
the gTLD expansion. Why has it taken this long to get this out in the 
open?
    Mr. Jaffe, there was an extensive comment period before the 
guidelines were issued, which I'm sure you were aware of--did you and 
other industries fully participate in the process? Do you disagree with 
the economic studies that ICANN has cited saying this would increase 
competition and innovation? If so, why?
    Mr. Pritz, how much weight was given to the concerns raised by Mr. 
Jaffe and others with his viewpoints? The danger of increased copyright 
infringement appears to be a legitimate issue--do you agree?
    Answer. Formation of rights protection mechanisms for the new gTLDs 
has been an important, legitimate concern throughout the development of 
the New gTLD Program.
    The years of policy and implementation design work that have gone 
into the New gTLD Program have formed a program that will result in 
TLDs that are required to offer more protections than TLDs that have 
already been introduced into the Domain Name System. The program was 
designed over more than six years, with input from no less than ten 
independent expert and community working groups addressing the issues 
that ANA continues to raise outside of the multi-stakeholder process. 
There are significant trademark protections designed by intellectual 
property experts. There are substantial protections against registry 
failure, including requirements for registry transition planning and 
designation of emergency registry operators, so that even in the event 
of registry failure, consumers will have a period of three to five 
years until basic registry operations are concluded.
    One of the hallmarks of ICANN is its ability to call together 
world-class experts to consider issues facing the ongoing stability and 
security of the Internet. For the new gTLD program, ICANN formed teams 
of: intellectual property experts to develop trademark protection 
mechanisms; Internet security experts to develop consumer protections; 
registry operators to creates mechanisms to access registry data; 
financial services providers to develop thresholds for ``secure'' TLDs; 
and linguists to avoid user confusion.
    In addition to those ten independent expert working groups formed, 
ICANN published, 59 explanatory memoranda and independent reports, 
thousands of comments in no fewer than 47 extended public comment 
periods, and 1,400 pages of comment summary and analysis as part of the 
community formation of the New gTLD Program. All comments were listened 
to and taken into account across the eight versions of the Applicant 
Guidebook. All of the rights protection mechanisms were borne of these 
community consultations.
    The Association of National Advertisers is just one of the hundreds 
of voices that participated in the formation of the New gTLD Program. 
The ANA provided feedback using ICANN's public comment process, and its 
suggestions have been carefully considered as described below. 
Referring to the comment submitted by the ANA on 15 December 2008, that 
letter stated:

        ``Although ANA would have preferred ICANN to have decided 
        against introducing the gTLD proposal, we urge, at a minimum, 
        that ICANN move cautiously and consider points carefully before 
        embarking on this potentially seismic shift in domain 
        availability.''

    The letter suggested five specific proposals that ICANN should, at 
a minimum, consider:

        1. Protections for Trademarks. ICANN should explore additional 
        application restrictions, processes and technologies to 
        insulate brand owners from the costs and burdens of chasing and 
        prosecuting squatters and others for violation of their 
        trademark rights.

    In response to this and similar comments, ICANN convened the 
Implementation Response Team (comprised of 18 intellectual property 
experts) to recommend additional trademark protections, as discussed 
within my testimony. The majority of those recommendations have been 
incorporated, many in a stronger form than was originally proposed by 
the IRT.

        2. Transparency of Applications and Registration Information. 
        Some comments suggest transparency in the application process 
        (e.g., elimination of proxy registrations, heightened emphasis 
        on the provision of complete ``whois'' information, and posting 
        all gTLD applications) will lead to less abuse. ICANN should 
        examine these proposals as well.

    In response to this and other comments: (1) more application 
information will be made public in the process of publishing 
information about the applied-for strings (personally identifiable 
information and sensitive security or proprietary information are not 
published), (2) background checks on applicants have been deepened, and 
(3) all new gTLD registries are required to maintain a ``complete'' or 
``thick'' Whois model. As discussed in response to Senator Cantwell's 
Question 1, work to require verification of Whois information is 
underway through ICANN's negotiations with its registrars on the 
Registrar Accreditation Agreement. Those verification requirements are 
expected to be in place prior to the entry of the first new gTLD.

        3. Fees. ICANN should study the various issues raised 
        concerning fees, including those questions relating to how the 
        new proposed fee structure might impact fee structures with 
        existing gTLDs.

    In response to this and other comments, fee structures have been 
extensively studied. The process used for estimating fees has been 
available since October 2008 and was iterated in response to public 
comment, and an economic study was undertaken on registry competition 
and price caps, which supported that price caps should not be 
introduced within new TLDs absence a showing of market power. A 
detailed discussion regarding the fee structure is provided in response 
to Senator Cantwell's Question 2.

        4. General Process Issues. ANA notes several application and 
        adjudication process issues that should be analyzed, including 
        ICANN's right to ``overrule'' the determination of a Dispute 
        Resolution Provider, the apparent absence of judicial remedy 
        and how allowing public comments on the application process 
        impacts it as a whole and, particularly, the objection process.

    In response to this and other comments, elaborations were made to 
the objection processes, and the roles of the Board, governments, and 
public comment have been clarified. As discussed in my response to 
Senator Boxer's Question 1, the objection processes are robust and 
well-defined.

        5. ``Generic'' gTLDs (e.g.,.bank, .insurance, .securities, 
        .medicine, etc.) have a unique social and commercial value as 
        they are broadly descriptive of industries and other unifying 
        activities. Under the terms of the Draft RFP, anyone can apply 
        for these ``generic'' gTLDs, including a single member of the 
        applicable industry. ANA suggests that ICANN thoroughly review 
        the uses and standing requirements for these gTLDs.

    In response to this and other comments, and in particular working 
with BITS (the policy division of The Financial Services Roundtable) 
and the financial services industry, a requirement was added that 
security capabilities should be commensurate with the nature of the 
string, i.e., applications for strings with unique trust implications 
are expected to provide a commensurate level of security. Applicants 
are also given incentive to incorporate security levels that exceed the 
baseline requirements. The gTLD criteria also references work 
independently published by the American Bankers Association and The 
Financial Services Roundtable as an illustrative example of how the 
criteria for a high-security TLD could be satisfied. In the event that 
a string is applied for and does not include appropriate security 
measures, that could serve as the basis for objection or an issuance of 
a GAC Early Warning regarding the string (a process where governments, 
through the Governmental Advisory Committee, provides notice regarding 
potential sensitivities with an application).
    As seen from ICANN's responses, all of the ANA's comments were 
considered, responded to, and, as is clear from the above, largely 
accepted. This is indicative of the process that was followed with all 
stakeholder comment on the New gTLD Program to arrive at a balanced 
outcome.
    The broad consensus work that went into the development of this 
program does not mean that everyone is satisfied with the result. There 
are some who wish for more restrictions; some for less. Lawrence 
Strickling, Assistant Secretary of Commerce for Communications and 
Information of the National Telecommunications and Information Agency, 
U.S. Department of Commerce, recently described the process of building 
consensus in ICANN's multistakeholder model, as well as the importance 
of respecting the outcomes reached, noted that while the 
multistakeholder process does not guarantee that everyone will be 
satisfied with the outcome, it is critical to respect the process and 
accept the outcome reached.\6\
---------------------------------------------------------------------------
    \6\ Remarks of Assistant Secretary Strickling at the Practising Law 
Institute's 29th Annual Telecommunications Policy & Regulation 
Conference, December 8, 2011, available at http://www.ntia.doc.gov/
speechtestimony/2011/remarks-assistant-secretary-strickling-practising-
law-in
stitutes-29th-annual-te.
---------------------------------------------------------------------------
    ICANN's opening of the application window for new TLDs is in 
fulfillment of ICANN's role of accountability to the outcomes of the 
multistakeholder model. ICANN remains accountable to evaluation of the 
expansion and implementing refinements to the New gTLD Program that may 
arise through the multistakeholder model.
    With the opening of the application window, ICANN's work continues. 
ICANN has already committed to solicit information as expeditiously as 
possible from the intellectual property community. This commitment, set 
out in a January 11, 2012 letter to Assistant Secretary for 
Communications and Information, Lawrence Strickling, also committed 
ICANN to submit any new proposals or recommendations arising out of 
that work for evaluation and comment from the ICANN stakeholder 
community.
    ICANN has already committed to review the impacts of the rollout of 
the New gTLD Program, including a post-launch study on the 
effectiveness of the new trademark protections and any effects on root 
zone operations, and a post-delegation economic study on the results of 
the first set of new gTLDs. ICANN has also committed to undertake 
reviews in accordance with the Affirmation of Commitments between the 
United States Department of Commerce and ICANN, including a review 
``that will examine the extent to which the introduction or expansion 
of gTLDs has promoted competition, consumer trust and consumer choice, 
as well as effectiveness of (a) the application and evaluation process, 
and (b) safeguards put in place to mitigate issues involved in the 
introduction or expansion.'' There will be opportunities for public 
input regarding all of this post-launch work.
    ICANN looks forward to ICANN and Internet community members 
continuing their involvement within the multi-stakeholder model and 
bringing their proposals for discussion among all of the Internet's 
stakeholders.

    Question 2. I know that ICANN is resistant to limiting the number 
of new gTLDs because it does want to pick winners and losers about 
which gTLDs should be added. But prior expansions have been limited. 
What are the concerns now of trying a pilot or more limited expansion 
to examine problems that may occur in the process?
    Answer. ICANN has operated three pilot programs on the introduction 
of new TLDs into the DNS. In 2000, ICANN launched a ``Proof of 
Concept'' round, through which seven new TLDs were selected out of 44 
applicants who proposed over 200 different potential TLDs. In 2004, 
ICANN accepted applications for Sponsored Top-Level Domains (sTLDs), 
specialized TLDs that are tied to defined sponsor communities (such as 
.CAT for the Catalan-speaking community). Finally, ICANN launched the 
Internationalized Domain Name country code TLD (IDN ccTLD) Fast Track 
process in 2009 that, to date had resulted in the delegation of 30 IDN 
TLDs, enabling countries and territories that use languages based on 
scripts other than Latin to offer users domain names in non-Latin 
characters (e.g., Arabic, Chinese, Devanagari, Russian, Thai scripts).
    Through these pilot rounds, important lessons were learned. First, 
new TLDs can safely be added to the DNS. Second, the imposition of 
artificial restrictions on the rounds, such as the numerical 
restriction imposed in 2000 and the type-restriction imposed in 2004 
place ICANN in the position of picking winners and losers, as opposed 
to fulfilling its mission of facilitating competition in the DNS. 
Artificial restrictions also create incentives for applicants to work 
to fit their TLD ideas into categories that may not be a true fit. The 
outcomes of the pilot rounds also helped inform the heightened 
protections in place for the New gTLD Program. The pilot programs 
informed the creation of independent dispute resolution programs that 
anticipate points of contention and provide paths for addressing 
potential abuses, controversies and sensitivities. The Fast Track 
program (and the IDN test bed before that) demonstrates that IDNs can 
be safely delegated into the root zone. These lessons learned will 
enable the realization of anticipated benefit in a safer environment.
    The New gTLD Program will be implemented in a measured and limited 
manner. Rather than limiting by number or type, the round is limited by 
a high bar of required competencies and protections, and a limited 
application period. There is a 90-day application window, followed by a 
stringent evaluation process through which ICANN's expert evaluation 
panels will evaluate registry abilities to meet the high technical and 
operational requirements. The rollout of new gTLDs will be distributed 
over time--no TLDs are expected to be operational prior to early 2013; 
delegations of additional TLDs will be distributed after that, as the 
applications pass through the evaluation and dispute resolution 
processes. The imposition of otherwise artificial limitations on 
today's New gTLD Program would only create incentives for the bad-
acting applicants to seek advantages in a subjective evaluation 
process. The Program in place today allows applicants to be evaluated 
against objective standards.
    As part of the consensus-building process, ICANN has agreed with 
governments and trademark holders that the next round of new TLD 
applications should occur after studying the impact of this round `s 
delegations on root zone stability and conducting a study on whether 
new trademark protections should be adjusted. ICANN will undertake 
these studies as soon as is practicable, in consultation with 
stakeholders. ICANN will also provide public updates on the ongoing 
process to determine the timing of the next round.
    ICANN is also mindful of its commitments set forth in the 
Affirmation of Commitments to, ``organize a review that will examine 
the extent to which the introduction or expansion of gTLDs has promoted 
competition, consumer trust and consumer choice, as well as 
effectiveness of (a) the application and evaluation process, and (b) 
safeguards put in place to mitigate issues involved in the introduction 
or expansion.'' \7\
---------------------------------------------------------------------------
    \7\ See http://www.icann.org/en/documents/affirmation-of-
commitments-30sep09-en.htm.

    Question 3. I recognize that ICANN believes all of the issues have 
been fully vetted and that everyone has had ample time to state their 
views. But given the major disagreements that are still occurring, what 
is the harm in delaying implementation to further work through these 
issues in the hope of coming to a better consensus? In your view, what 
would happen if ICANN does not start the expansion process in January?
    Answer. On January 12, 2012, ICANN opened the first application 
window for new gTLDs. As discussed within my written testimony, the 
opening of the application window is only the first step to rolling out 
new gTLDs, with the first new gTLD expected to be operational until 
2013.
    ICANN's opening of the application window in accordance with the 
time-frame committed to in June 2011 was an important step in remaining 
accountable to the Internet community. As noted above, work is still 
ongoing--the Program will be subject to continued reviews and 
refinements. However, with the years' worth of work already completed, 
the ten independent expert working groups, 59 explanatory memoranda and 
independent reports, thousands of comments in no fewer than 47 extended 
public comment periods, and 1,400 pages of comment summary and 
analysis, it was time for the Program to move into implementation so 
that the Internet community can start analyzing its effects using true 
data and experience.
    Delaying the process serves those seeking to upset the multi-
stakeholder model, designed by the U.S. Government to ensure an open 
Internet. Assistant Secretary Lawrence Strickling, recently stated:

        The multistakeholder process does not guarantee that everyone 
        will be satisfied with the outcome. But it is critical to 
        preserving the model of Internet governance that has been so 
        successful to date that all parties respect and work through 
        the process and accept the outcome once a decision is reached. 
        When parties ask us to overturn the outcomes of these 
        processes, no matter how well-intentioned the request, they are 
        providing ``ammunition'' to other countries who attempt to 
        justify their unilateral actions to deny their citizens the 
        free flow of information on the Internet. This we will not do. 
        There is too much at stake here. [Emphasis added.] \8\
---------------------------------------------------------------------------
    \8\ Remarks of Assistant Secretary Strickling at the Practising Law 
Institute's 29th Annual Telecommunications Policy & Regulation 
Conference, December 8, 2011, available at http://www.ntia.doc.gov/
speechtestimony/2011/remarks-assistant-secretary-strickling-practising-
law-in
stitutes-29th-annual-te.
---------------------------------------------------------------------------
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Mark Warner to 
                               Kurt Pritz
    Question 1. I understand the reasoning behind the high price of a 
new top level domain. It is important to me that the new gTLDs are only 
available to legitimate and serious organizations. However, up to 1,000 
new TLD names at $185,000 a piece is a considerable increase in income 
for ICANN. How will this money be used to regulate the expansive space 
new gTLDs will create? What are your plans for excess revenue? Will 
ICANN retain any revenue from the creation of new gTLDs? If so, how 
much revenue do you anticipate ICANN will receive over the next five 
years?
    Answer. ICANN shares your concern that a high bar is created to 
apply for a new gTLD, to help assure that new gTLDs are available to 
organizations that are serious in commitment to operate a portion of 
the Internet infrastructure. As discussed in response to Senator 
Cantwell's Question 3, the New gTLD Program fee is operated on a cost-
recovery basis. As provided to Senator Cantwell:

    The $185,000 application fee is calculated on a cost-recovery 
model, and was determined through a comprehensive and complex process 
that included identifying over 100 separate tasks required for the 
evaluation of a new gTLD application and seeking guidance from experts. 
The fee includes development costs ($26,950 per application); 
application processing and evaluation costs ($97,800 per application); 
and costs for expected contingencies, including allowance for 
unanticipated costs and variations between estimates and actual costs 
incurred ($60,000 per application). A 14-page document setting out the 
methodology and further breakdown of the fee component is available at 
http://www.icann.org/en/topics/new-gtlds/cost-consid
erations-04oct09-en.pdf. This document is an update to the earlier 
``Cost Considerations of the New gTLD Program'', published in October 
2008, available at http://www.icann.org/en/topics/new-gtlds/cost-
considerations-23oct08-en.pdf.

    While there is a possibility that multiple applicants for the same 
TLD could proceed to an auction to operate the TLD, ICANN intends the 
auction process as a last-resort method. ICANN encourages applicants to 
work together to arrive at a mutually-agreeable solution instead of 
allowing the competing applications to proceed to an auction. To the 
extent that a TLD proceeds to auction and generates additional funds, I 
discuss below ICANN's commitments to using these funds towards its not-
for-profit mission.
    As a Not-for-Profit Public Benefit Corporation, ICANN is committed 
to its not-for-profit mission. For ICANN, that commitment requires us 
to assure that excess funds generated through the New gTLD Program 
(i.e., those that exceed the costs incurred for the processing, 
evaluation and other components of the New gTLD Program) are used in 
furtherance of ICANN's mission. The evaluation fee has been calculated 
to recover costs and not exceed those costs. If evaluation fees exceed 
actual costs, future evaluation fees will be reduced. If costs exceed 
fees, then ICANN will absorb that and future fees will be increased to 
meet the actual costs. For additional funds accruing to ICANN other 
than evaluation fees, such as the auction proceeds mentioned, the 
Applicant Guidebook addresses the issue in this way:\9\
---------------------------------------------------------------------------
    \9\ See Module 4, Page 19 of the Applicant Guidebook, version 2010-
01-11.

    It is planned that costs of the new gTLD program will offset by 
fees, so any funds coming from a last resort contention resolution 
mechanism such as auctions would result (after paying for the auction 
process) in additional funding. Any proceeds from auctions will be 
reserved and earmarked until the uses of funds are determined. Funds 
must be used in a manner that supports directly ICANN's Mission and 
Core Values and also allows ICANN to maintain its not for profit 
---------------------------------------------------------------------------
status.

    Possible uses of auction funds include formation of a foundation 
with a clear mission and a transparent way to allocate funds to 
projects that are of interest to the greater Internet community, such 
as grants to support new gTLD applications or registry operators from 
communities in subsequent gTLD rounds, the creation of an ICANN-
administered/community-based fund for specific projects for the benefit 
of the Internet community, the creation of a registry continuity fund 
for the protection of registrants (ensuring that funds would be in 
place to support the operation of a gTLD registry until a successor 
could be found), or establishment of a security fund to expand use of 
secure protocols, conduct research, and support standards development 
organizations in accordance with ICANN's security and stability 
mission.

    In addition to evaluation fees, each registry will contribute 
$25,000 annually to ICANN operations, policy development and community 
outreach activities. (If some registries become very large, they will 
pay greater fees.) That fee will cover contractual compliance, registry 
and IANA services for that registry, as well as contribute to the 
general ICANN activities described here. It has been urged by the 
community that ICANN ``staff-up'' to meet compliance, IANA function and 
other needs to adequately serve the new environment. If these revenues 
exceed needs, fees will be reduced.
    ICANN handles its budgeting processes in an open and transparent 
manner. Not only will the community discussion regarding the use of 
funds be the subject of community consultation, but the funds will also 
be tracked and accounted for within ICANN's publicly-posted financial 
documents.

    Question 2. Federal Trade Commission Chairman Leibowitz recently 
stated that ``a rapid, exponential expansion of generic TLDs has the 
potential to magnify both the abuse of the domain name system and the 
corresponding challenges we encounter in tracking down Internet 
fraudsters.'' His statement echoes the concerns of many that this 
expansion may be necessary, but the expansion from 21 gTLDs to up to 
1000 gTLDs sounds extreme.
    a. Why did ICANN choose to go from twenty-one top level domains up 
to over 500 in the first wave, or 1000 overall, instead of a more 
gradual increase over a set period of years? Can you please explain why 
this particular expansion program is the best plan for industry and 
consumers?
    Answer. The domain name system (DNS) today includes over 300 TLDs: 
249 ccTLDs, 30 IDN ccTLDs, and 21 gTLDs. None of those 300 existing 
TLDs are required to include the standard protections that new TLDs 
must offer. The protections of the New gTLD Program were formed through 
ICANN's multi-stakeholder model.
    ICANN has operated three pilot programs on the introduction of new 
TLDs into the DNS. In 2000, ICANN launched a ``Proof of Concept'' 
round, through which seven new TLDs were selected out of 44 applicants 
(proposing over 200 different potential TLDs). In 2004, ICANN accepted 
applications for Sponsored Top-Level Domains (sTLDs), specialized TLDs 
that are tied to defined sponsor communities (such as .CAT for the 
Catalan-speaking community). Finally, ICANN launched the IDN ccTLD Fast 
Track process in 2009 that, to date had resulted in the delegation of 
30 IDN TLDs.
    Through these pilot rounds, important lessons were learned. First, 
new TLDs can safely be added to the DNS. Second, the imposition of 
artificial restrictions on the rounds, such as the numerical 
restriction imposed in 2000 and the type-restriction imposed in 2004 
place ICANN in the position of picking winners and losers, as opposed 
to fulfilling its mission of facilitating competition in the DNS. 
Artificial restrictions also create incentives for applicants to work 
to fit their TLD ideas into categories that may not be a true fit. The 
outcomes of the pilot rounds also helped inform the heightened 
protections in place for the New gTLD Program.
    The gTLDs approved under this program will be introduced in a 
measured, limited manner. Rather than limiting by number or type, the 
round is limited by a high bar of required competencies and 
protections, and a limited application period. There is a 90-day 
application window, followed by a stringent evaluation process through 
which ICANN's expert evaluation panels will evaluate registry abilities 
to meet the high technical and operational requirements. The rollout of 
new gTLDs will be distributed over time--no TLDs are expected to be 
operational prior to early 2013; delegations of additional TLDs will be 
distributed after that, as the applications pass through the evaluation 
and dispute resolution processes. The imposition of otherwise 
artificial limitations on today's New gTLD Program would only create 
incentives for the bad-acting applicants to seek advantages in a 
subjective evaluation process. The Program in place today allows 
applicants to be evaluated against objective standards.
    As part of the consensus-building process, ICANN has agreed with 
governments and trademark holders that the next round of new TLD 
applications should occur after studying the impact of this round `s 
delegations on root zone stability and conducting a study on whether 
new trademark protections should be adjusted. ICANN will undertake 
these studies as soon as is practicable, in consultation with 
stakeholders. ICANN will also provide public updates on the ongoing 
process to determine the timing of the next round.
    ICANN is also mindful of its commitment in the Affirmation of 
Commitments to, ``organize a review that will examine the extent to 
which the introduction or expansion of gTLDs has promoted competition, 
consumer trust and consumer choice, as well as effectiveness of (a) the 
application and evaluation process, and (b) safeguards put in place to 
mitigate issues involved in the introduction or expansion.'' \10\
---------------------------------------------------------------------------
    \10\ See http://www.icann.org/en/documents/affirmation-of-
commitments-30sep09-en.htm.
---------------------------------------------------------------------------
    As discussed previously, the New gTLD Program today is created 
through over six years of policy and implementation work. The policy 
recommendations to guide the introduction of new gTLDs were created by 
the ICANN's Generic Names Supporting Organization (GNSO) over a two-
year effort through its bottom-up, multi-stakeholder policy development 
process. The GNSO Council is comprised of all facets of the Internet 
community: Intellectual Property interests; business and commercial 
users; ISPs; non-commercial institutions, and ICANN's contracted 
registries and registrars.
    In 2005, the GNSO initiated a formal, Bylaws-defined policy 
development process on the addition of new gTLDs. Policy 
recommendations are formed through consensus building among stakeholder 
groups representing: intellectual property, business, non-commercial 
interest, Internet service providers, registries and registrars. In the 
case of this program and the release of gTLDs in this manner, the GNSO 
approved the policy recommendations in 2007 by a bylaw described 19-1 
vote in favor of the new gTLD Policy (the lone dissenting vote by a 
non-commercial interest found that the approved model had too many 
restrictions). The policy recommendations were submitted to ICANN's 
Board of Directors. In 2008, the ICANN Board approved the 
recommendations \11\ and directed ICANN staff to commence the 
implementation phase.
---------------------------------------------------------------------------
    \11\ GNSO Final Report on the Introduction of New Top Level Domains 
(``Final Report''), at http://gnso.icann.org/issues/new-gtlds/pdp-
dec05-fr-parta-08aug07.htm (Aug. 8, 2007); ICANN Board resolution, 
http://www.icann.org/en/minutes/resolutions-26jun08.htm (June 26, 
2008); GNSO Minutes, http://gnso.icann.org/meetings/minutes-gnso-
29oct03.html (Oct. 29, 2003).
    Also see The GAC Principles Regarding New gTLDs, at http://
gac.icann.org/system/files
/gTLD_principles_0.pdf (Mar. 28, 2007).
---------------------------------------------------------------------------
    After the directive to implement, ICANN continued working with the 
community on the design of the New gTLD Program to meet the policy 
recommendations. Since 2008, the New gTLD Program has been refined 
through ten independent expert working groups, 59 explanatory memoranda 
and independent reports, thousands of comments in no fewer than 47 
extended public comment periods, and 1400 pages of comment summary and 
analysis. All comments were listened to and taken into account across 
eight versions of the Applicant Guidebook. The Applicant Guidebook 
implements the consensus polices developed by ICANN's multi-stakeholder 
community.

    Question 3. Cyber-crime is a growing threat to the security and 
stability of the Internet, with broad and direct public policy and 
financial impacts. Law enforcement agencies, which have experience 
combating cyber-crime, have identified a series of specific problems 
which are limiting their ability to address this growing threat. In 
2009, these law enforcement agencies made 12 concrete recommendations 
to reduce the risk of criminal abuse of the domain name system. It is 
my understanding that none of the recommendations offered by law 
enforcement were included in the gTLD expansion program.
    a. Can you please explain why ICANN chose not to include these 
recommendations?
    b. How will ICANN cooperate with law enforcement moving forward to 
make sure that safety concerns are properly addressed?
    c. How does ICANN plan to review applications from state-owned 
enterprises?
    d. If problems develop in any of the new gTLDs, how will ICANN be 
able to adequately monitor and police any abuses or mismanagement?
    Answer.
Law Enforcement Recommendations are Being Addressed
    As mentioned in response to Senator's Cantwell's Question 2, ICANN 
is actively working to address all twelve of the law enforcement 
recommendations referenced in the GAC's October 27, 2011 communication. 
Specifically, as directed by the Board, ICANN is currently in 
negotiations with its accredited registrars on amending the Registrar 
Accreditation Agreement (RAA) to meet the recommendations raised by law 
enforcement authorities. Amendments are expected to be in force prior 
to the entry of the first new TLD in 2013.
    These negotiations include face-to-face meetings with law 
enforcement agencies to ensure understanding of law enforcement 
requirements. The negotiation anticipates substantial and unprecedented 
steps to improve the accuracy of Whois data. ICANN is taking a strong 
stand in regard to issues relating to the verification of Whois data 
and expects the accredited registrars to take action to address the 
demands of governments and law enforcement worldwide. Updates on the 
negotiations are available at https://community.icann.org/display/RAA/
Negotiations+Between+ICANN+and+
Registrars+to+Amend+the+Registrar+Accreditation+Agreement.
    By February 20, 2012, proposed amendments to address the law 
enforcement recommendations (and more) will be posted for public 
comment. One important aspect of the negotiations focuses on the 
verification of Whois data, and work is underway to plan a targeted 
forum, including representatives of law enforcement and experts in 
verification. This forum would be open to the public and is expected to 
take place before the ICANN meeting in Costa Rica.
Law Enforcement Helped Design New gTLD Protections
    Addressing the 12 law enforcement recommendations for improvement 
to the gTLD registrars is just one part of how ICANN remains responsive 
to law enforcement. In fact, law enforcement agencies worldwide have 
worked closely with ICANN in the new gTLD implementation process, with 
a goal of reducing domain name abuses. Representatives of U.S. law 
enforcement agencies played a critical role in proposing standards for 
background screening for applicants. Law enforcement agencies 
worldwide, including the FBI, the UK Serious Organized Crimes Agency 
(SOCA) and the Royal Canadian Mounted Police, supported proposals to 
aid in the prevention and disruption of efforts to exploit domain name 
registration procedures for criminal purposes. ICANN has built a 
relationship with Interpol and discussed safeguards and, in particular, 
the implementation of meaningful background checks.
    My testimony outlined a series of measures to mitigate against 
malicious conduct in new gTLDs, formed in part through law enforcement 
recommendation and involvement. Those measures include:

   Background reviews of TLD applicants, including reviews for 
        criminal history (including the use of telecommunications or 
        the Internet to facilitate crimes, illegal sale of drugs, and 
        others);

   Rejection of applications where the applicant has a pattern 
        of adverse decisions under the UDRP (Uniform Domain Name 
        Dispute Resolution Policy), or has been found to act in bad 
        faith or reckless disregard under cybersquatting legislation;

   The requirement to have a plan to implement domain name 
        system security extensions (DNSSEC), reducing the risk of 
        ``man-in-the-middle'' attacks and spoofed DNS records;

   A requirement to maintain enhanced, or ``thick'', WHOIS 
        records at the registry level to allow more rapid search 
        capabilities, facilitating efficient resolution of malicious 
        conduct activities;

   A centralized zone file access system to allow for more 
        accurate and rapid identification of key points of contact 
        within each gTLD. This reduces the time necessary to take 
        corrective action within TLDs experiencing malicious activity;

   A requirement to establish a single point of contact 
        responsible for the handling of abuse complaints (as requested 
        by law enforcement authorities);

   Requirements that New gTLD Registry Operators must:

     Maintain a Continued Operations Instrument sufficient to 
            fund basic registry operations for a period of three years 
            in case of business failure, to protect consumers and 
            registrants within that gTLD in the event of registry 
            failure.

     Maintain continuity and transition plans, including 
            regular failover testing.

     Cooperate with ICANN In the event transition to a new 
            registry operator is necessary. ICANN will identify an 
            Emergency Back-End Registry Operator to assist in the 
            registry transition process and provide emergency registry 
            services as needed.

    DNS abuse and security are regularly the subject of collaborative 
meetings between ICANN and the U.S. law enforcement community, as well 
as representatives of international agencies.\12\ ICANN expects this 
successful collaboration to continue. To that end, there are formal 
``DNS Abuse'' sessions at every ICANN public meeting where ICANN and 
law enforcement representatives come together to advance this important 
work.
---------------------------------------------------------------------------
    \12\ ICANN's relationships with law enforcement are not limited to 
the New gTLD Program; ICANN coordinates regularly on security-related 
issues and to address threats to the DNS.
---------------------------------------------------------------------------
Applications from State-Owned Enterprises
    All applications under the New gTLD Program are subject to the same 
application and evaluation process as laid out in the Applicant 
Guidebook. As part of the application process, ICANN acts in compliance 
with all U.S. laws, rules and regulation. This includes the economic 
and trade sanctions program administered by the Office of Foreign 
Assets Control (OFAC) of the U.S. Department of the Treasury. ICANN is 
prohibited from providing most goods or services to residents of 
sanctioned countries or their governmental entities or to specially 
designated nationals and blocked person without an applicable U.S. 
government authorization or exemption. ICANN generally will not seek a 
license to provide services (through the gTLD Program or elsewhere) to 
an individual or entity on the SDN list.
ICANN Commits to Continued Monitoring of New gTLDs
    In response to your Question 1, we identify the reviews that ICANN 
has committed to undertake to assist in identifying the results of this 
first round. In addition to these reviews, ICANN is committed to a 
continued monitoring of the effects of the measured rollout of new 
TLDs, as well as working with law enforcement and the Internet 
community as a whole to identify new areas of concern and to be 
proactive in determining how to address new issues as they arise.

    Question 4. There are a number of failed top-level domain names 
from previous ICANN expansions--``.museum'' for instance. 
Unfortunately, such failures can be costly for companies that have 
registered and they can be disruptive to users. Further, I understand 
that ICANN's own reports indicate that ``if a new gTLD failed and 
ceased operation, external costs might be imposed on the Internet 
community. Registrants . . . might be stranded. . . . Internet users 
might face increased clutter on the Internet if links fail to 
resolve.''
    a. The high-tech companies in Virginia- not to mention Internet 
users generally--would not welcome such volatility. What, if anything, 
has been done to address this concern?
    Answer. While the .museum registry may not have achieved a level of 
desired success or adoption, the .museum registry is still operational. 
No gTLD registries have failed during ICANN's existence. However, the 
risk of potential failure for a new gTLD registry is an understandable 
and valid concern. Among other safeguards, ICANN has in place provision 
for an ``Emergency Back End Registry Provider'' to take over operations 
for a failed registry to ensure the interests of registrants are 
protected and domain names continue to resolve.
    The issue of registry failure has been considered in detail through 
the work on the New gTLD Program. First, the extensive evaluation 
process will help assure that only companies that meet the stringent 
financial requirements are able to operate new TLDs. Of course, this 
pre-emptive evaluation process may not fully protect against future 
registry failure, and ICANN has included multiple additional 
protections within the New gTLD Program to address potential failure.
    During the application process, applicants are required to provide 
evidence that critical functions of the registry will continue to be 
performed even if the registry fails. This includes a requirement that 
the costs for maintaining critical registry functions over an extended 
period of time (between three to five years) be estimated as part of 
the application process, and registries must have available a 
Continuing Operations Instrument (funded through a letter of credit or 
an escrow account) that ICANN may invoke to pay an third party to 
maintain the critical registry functions.
    ICANN is currently working to identify the entity that will serve 
as an Emergency Back End Registry Operator (EBERO), which will step in 
to perform the critical registry functions during the three-to-five 
year period. These provisions are expected to protect registrants 
against the risk of immediate registry failure.
    To facilitate any need for emergency transition, ICANN also 
requires the escrow of registry data that the EBERO would be allowed to 
access for the purpose of providing the registry services.
    In the event of a termination of a Registry Agreement, and in 
consultation with the registry operator, ICANN maintains the right to 
determine whether to transition the operation of a TLD to a successor 
registry operator as is necessary to protect the public interest. 
Transition is not required, however, if a registry operator's use of 
the TLD is for its own exclusive use and all names are registered and 
maintained by the registry operator.

    Question 5. The protection and development of intellectual property 
is essential to economic growth in technology, and especially important 
to high-tech entities in Virginia. I am told that ICANN's own experts 
have said the following: ``There may also be indirect harm from the 
loss of intellectual property owners' incentives to invest in that 
intellectual property due to concerns that some of the benefits of that 
investment would be misappropriated.''
    a. Is this an accurate statement?

    b. Has anything been done to address this issue? If not, why is 
this expansion going forward in the face of such risks?
    Answer. Prior to this rollout, ICANN commissioned five economic 
studies that examined anticipated benefits and costs of the new gTLD 
program, the effects of price constraints, and the benefits of vertical 
integration. All support a conclusion that Internet users stand to 
benefit from the introduction of new gTLDs and that potential costs 
should be mitigated with the introduction of new safeguards.
    As part of this work, economists did note that one of the potential 
external costs that may be imposed through new gTLDs is the impact on 
investments in intellectual property. However, in the same report, the 
economists clarified that these external costs can be reduced through 
the institution of ``rules and procedure to protect companies' 
intellectual property rights.'' The economists noted that there are a 
range of effective rights protection mechanisms that balance 
intellectual property protections against the interests of those with 
legitimate interests in registering a domain name, including watch 
lists and sunrise periods. This is discussed in Michael Katz, Gregory 
Rosston and Theresa Sullivan's report entitled Economic Considerations 
in the Expansion of Generic Top-Level Domain Names--Phase II Report: 
Case Studies, available at http://www.icann.org/en/topics/new-gtlds/
phase-two
-economic-considerations-03dec10-en.pdf.
    ICANN, with experts from the intellectual property community, 
addressed this cost/benefit concern. Trademark experts created rights 
protection mechanisms that exceed the bar suggested by the economists. 
The new trademark protection that help protect intellectual property 
rights and combat abuses include:

   Uniform Rapid Suspension: A rapid, inexpensive way to take 
        down infringing domain names;

   Trademark Clearinghouse: a one-stop shop so that trademark 
        holders can protect their property right in ALL new TLDs with 
        one registration;

   Mandatory sunrise and Trademark Claims processes for all new 
        gTLDs;

   The requirement to maintain thick Whois information, 
        provision of centralized access to zone data, and a strong 
        incentive to provide a searchable Whois database--all to make 
        it easier to find infringing parties; and

   A post-delegation dispute procedure where rights holders can 
        assert claims directly against TLD registry operators for 
        domain name abuse if the registry has played an active role.

    The implementation work to create the New gTLD Program carefully 
identified risks such as the one raised in your question, and created 
expert-informed solutions to address those risks. The Katz/Rosston 
report is just one of five economic studies performed in consideration 
of the New gTLD Program. All supported a conclusion that Internet users 
stand to benefit from the introduction of new gTLDs.
    The four additional reports are:

   Dr. Dennis Carlton, Report Regarding ICANN's Proposed 
        Mechanism for Introducing New gTLDs, at http://www.icann.org/
        en/topics/new-gtlds/carlton-re-
        proposed-mechanism-05jun09-en.pdf (``Carlton I'');

   Dr. Dennis Carlton, Preliminary Analysis Regarding Price 
        Caps for New gTLD Internet Registries, at http://www.icann.org/
        en/topics/new-gtlds/prelim-report
        -registry-price-caps-04mar09-en.pdf (``Carlton II'');

   CRA International, Revisiting Vertical Separation of 
        Registries and Registrars, at http://www.icann.org/en/topics/
        new-gtld-crai-report-24oct08-en.pdf;

   Michael Katz, Gregory Rosston and Theresa Sullivan, An 
        Economic Framework for the Analysis of the Expansion of Generic 
        Top-Level Domain Names, at http://www.icann.org/en/topics/new-
        gtlds/economic-analysis-of-new-gtlds-16ju
        n10-en.pdf (``Katz/Rosston Phase I''); and

    The reports are detailed. Briefly summarized, the reports indicate 
that: benefits will accrue from the opening of this market in a way 
similar to other markets; innovation (and thus benefit) is difficult/
impossible to quantify; and costs should be mitigated through the 
adoption of new trademark and consumer protections.
    This work followed the careful consideration of the Internet 
community through ICANN's bottom-up process.
    Given the scope of the economic study already undertaken, as well 
as the commitment to measuring the effects of new gTLDs once there is 
actual data to inform that assessment, the Board and the Governmental 
Advisory Committee agree that further economic study would not be 
beneficial prior to the opening of the application round. Instead, the 
Board and the GAC focused on the collection of information that will 
inform the analysis of the effects of the introduction of new gTLDs 
after this first round. The Applicant Guidebook now includes 
application questions that are specifically targeted to collect 
information relating to stated purposes and anticipated outcomes of 
each application, for use in later studies.

    Question 6. I've heard a number of questions from industry 
regarding their concerns with the new TLD system. However, these 
changes will also impact Internet users. I am concerned that some of my 
constituents will be confused by the new TLD program at the least and 
could be exposed to additional consumer harm such as cybersquatting, 
typosquatting, phishing, malware, etc. If it is more difficult for 
Internet users to determine whether a website is legitimate, it will be 
easier for criminals to lure Internet users to fake websites that 
include malicious content.
    a. Can you please explain how the new program will change the 
Internet for consumers?
    b. How will ICANN work to make sure users are aware a coming 
changes and know how to navigate the new landscape?
    What specific safeguards will be put into place to prevent 
cybersquatting and typosquatting?
    Answer. The protections within the New gTLD Program will create 
TLDs that are more secure for Internet users. For example, all new TLDs 
are required to implement domain name security extensions (DNSSEC), 
reducing the risk of ``man-in-the-middle'' attacks and spoofed DNS 
records. In terms of user confusion as a result of cybersquatting, the 
new protections for intellectual property and to mitigate malicious 
conduct all work to reduce cybersquatting activities in the expanded 
space. We expect that new TLDs will be a less fertile ground for 
wrongdoing and, as a result, the Domain Name System, as a whole will be 
improved. Abuses are prevalent in the larger TLDs, not within the 
smaller, more differentiated registries.
    While there is always some uncertainty and concern with change, 
Internet users have always proved adept at adapting to change and 
taking advantage of new, value-added services. In the case of new 
gTLDs, it is thought that the new landscape will reduce confusion. TLDs 
that are clearly tied to brands or communities will create consumer 
awareness and result in more certainty. Also, that brand awareness will 
build certainty that a domain is what it purports to be--that is, 
reduce the risks of cybersquatting. As an example, take senate.gov 
names: users have great certainty that use of a .gov name will reliably 
lead to a U.S. Government site.
    The New gTLD Program allows for community-based TLDs, as well as 
other TLDs that will have special attributes that may make them 
attractive to users. For example, work has been conducted towards 
creating a higher security TLD for the financial services industry, 
where the registry operator would commit to additional protections for 
the development of a TLD where consumers know they are making financial 
transactions in a trusted space. The opportunities that may be 
available in new gTLDs are endless--the opening of the new gTLD space 
will allow for creativity and innovation that follows the opening of 
other markets.
    ICANN and the Internet community recognize that there will be a 
need to educate consumers about the changing landscape of the Internet, 
and ICANN understands that communication and education is a necessary 
component of any rollout. ICANN is working with its stakeholder 
community to plan for this educational work.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                               Kurt Pritz
United Nations Model
    Question 1. There has been a growing contingency of other countries 
critical of the ICANN multi-stakeholder model and about the US' 
involvement and influence with ICANN. Some governments, not necessarily 
friendly to the U.S., are seeking to increase their power over the 
Internet and its governance.
    Russia and China (with Tajikistan and Uzbekistan) have proposed to 
the United Nations an Internet ``Code of Conduct,'' which a senior 
State Department official stated ``they seek to justify the 
establishment of sovereign government control over Internet resources 
and over freedom of expression in order to maintain the security of 
their state.\13\'' Even Russian Prime Minister Vladimir Putin remarked 
recently his desire of ``establishing international control over the 
Internet using the monitoring and supervisory capabilities of the 
International Telecommunication Union (ITU).\14\''
---------------------------------------------------------------------------
    \13\ http://www.huffingtonpost.com/2011/09/27/russia-china-
internet-control_n_984223.html.
    \14\ http://premier.gov.ru/eng/events/news/15601/.
---------------------------------------------------------------------------
    The other proposal by India, Brazil and South Africa calls for the 
creation of a new body within the United Nations to oversee Internet 
policy. As a result, ICANN as well as the Internet Governance Forum 
(IGF) could be significantly marginalized or hijacked by this new U.N. 
entity.
    These proposals seem to be in direct conflict with our Nation's 
effort to privatize the Internet through transferring the authority of 
the DNS to the private sector and for the Internet governance model to 
be private-sector led.
    If the U.S. Government followed the advice to unilaterally delay 
the gTLD expansion, what do you believe the impact would be globally 
and do you believe this would fan the flames of anti-U.S. government 
sentiment with respect to Internet governance? Could it give more 
momentum to other governments' calls to have the United Nations assert 
oversight over ICANN or replace it altogether?
    Answer. If the U.S. Government or any entity unilaterally modified 
a decision by ICANN's multistakeholder community, it would undermine if 
not decimate the legitimacy and credibility of the multistakeholder 
model. Lawrence Strickling, Assistant Secretary of Commerce for 
Communications and Information, has spoken forcefully on two recent 
occasions in support of the multistakeholder model and the danger 
presented by requests for the U.S. Government to unilaterally modify 
the new gTLD program. On December 8, 2011,\15\ he addressed these 
points as follows:
---------------------------------------------------------------------------
    \15\ Remarks of Assistant Secretary Strickling at the Practising 
Law Institute's 29th Annual Telecommunications Policy & Regulation 
Conference on December 8, 2011, (available at http://www.ntia.doc.gov/
speechtestimony/2011/remarks-assistant-secretary-strickling-practising-
law-in
stitutes-29th-annual-te).

        [W]e are now seeing parties that did not like the outcome of 
        that multistakeholder process trying to collaterally attack the 
        outcome and seek unilateral action by the U.S. government to 
        overturn or delay the product of a six-year multistakeholder 
        process that engaged folks from all over the world. The 
        multistakeholder process does not guarantee that everyone will 
        be satisfied with the outcome. But it is critical to preserving 
        the model of Internet governance that has been so successful to 
        date that all parties respect and work through the process and 
        accept the outcome once a decision is reached. When parties ask 
        us to overturn the outcomes of these processes, no matter how 
        well intentioned the request, they are providing ``ammunition'' 
        to other countries who attempt to justify their unilateral 
        actions to deny their citizens the free flow of information on 
        the Internet. This we will not do. There is too much at stake 
---------------------------------------------------------------------------
        here. [Emphasis added.]

    On January 11, 2012 \16\ he stated:
---------------------------------------------------------------------------
    \16\ Remarks by Assistant Secretary Strickling at the Brookings 
Institution's Center for Technology Innovation, January 11, 2012 
(available at http://www.ntia.doc.gov/speechtestimony
/2012/remarks-assistant-secretary-strickling-brookings-institutions-
center-technology).

        [M]ultistakeholder processes have succeeded by their very 
        nature of openness and inclusiveness. They are most capable of 
        attacking issues with the speed and flexibility required in 
---------------------------------------------------------------------------
        this rapidly changing Internet environment.

        Nonetheless, we face challenges to this model even in our own 
        country.

        . . .

        For the last six years, ICANN and its many stakeholders have 
        debated the rules for expanding of the domain name system 
        (DNS)--essentially the Internet's address book--through the 
        introduction of new generic top-level domain names (gTLDs). 
        ICANN's process involved global stakeholders from the business 
        community, civil society, registries, registrars, and 
        governments. Nonetheless, in December we saw parties that did 
        not like the outcome of that multistakeholder process trying to 
        bypass ICANN by seeking unilateral action by the U.S. 
        government to overturn or delay the product of a six-year 
        multistakeholder process that engaged folks from all over the 
        world.

        . . .

        Each challenge to the multistakeholder model has implications 
        for Internet governance throughout the world. When parties ask 
        us to overturn the outcomes of these processes, no matter how 
        well-intentioned the request, they are providing ``ammunition'' 
        to other countries who would like to see governments take 
        control of the Internet.

    Question 2. If the U.N. did take control or governments had greater 
involvement, what impact would that have on American businesses and 
citizens that utilize the Internet? What impact could it have on 
Freedom of Speech?
    Answer. The Affirmation of Commitments between the U.S. Department 
of Commerce and ICANN sets out landmark commitments to ``(a) ensure 
that decisions made related to the global technical coordination of the 
DNS are made in the public interest and are accountable and 
transparent; (b) preserve the security, stability and resiliency of the 
DNS; (c) promote competition, consumer trust, and consumer choice in 
the DNS marketplace; and (d) facilitate international participation in 
DNS technical coordination.''
    Some of the commitments that ICANN undertakes include ``commitments 
to: (a) maintain the capacity and ability to coordinate the Internet 
DNS at the overall level and to work for the maintenance of a single, 
interoperable Internet; (b) remain a not for profit corporation, 
headquartered in the United States of America with offices around the 
world to meet the needs of a global community; and (c) to operate as a 
multi-stakeholder, private sector led organization with input from the 
public, for whose benefit ICANN shall in all events act.''
    While the ICANN model is not perfect, it has shown to be a 
powerful, dynamic model that is capable of reaching consensus positions 
on extremely difficult issues. The multistakeholder model that is ICANN 
is at risk if there is a heightened level of governmental involvement 
above that exercised today through the Governmental Advisory Committee 
(GAC). American businesses and citizens are very active in the ICANN 
model, and continuing to remain accountable to them--along with the 
global Internet community--is essential to ICANN's mission.
    Moving to a U.N. model pushes those stakeholders outside government 
to an inconsequential role. U.S. businesses would be reduced to 
influencing the U.S. vote in a one country--one vote model.
    Assistant Secretary Strickling and former Ambassador David Gross 
have spoken eloquently on the negative impact of abandoning the 
multistakeholder approach to Internet governance issues. In the 
following excerpts, each describes proposals to give governmental 
bodies such as the UN's International Telecommunications Union (ITU) 
exclusive responsibility for Internet governance and standards 
development. Assistant Secretary Strickling recently described \17\ the 
proposals and their potential impact as follows:
---------------------------------------------------------------------------
    \17\ Id.

        Each challenge to the multistakeholder model has implications 
---------------------------------------------------------------------------
        for Internet governance throughout the world.

        . . .

        As many of you are aware, this is precisely the challenge we 
        face this December in Dubai, at the World Conference on 
        International Telecommunications (WCIT). This conference, which 
        is hosted by the International Telecommunication Union (ITU), 
        attracts delegates from the ITU's 193 member countries.

        . . .

        [S]ome countries have submitted proposals to make ITU standards 
        recommendations mandatory and thus enforceable by treaty, a 
        drastic departure from their current voluntary nature. Some 
        countries have proposed moving oversight of critical Internet 
        resources into the ITU, including naming and numbering 
        authority from multistakeholder institutions such as ICANN. 
        Many governments have called for the ITU to play a greater role 
        in regulating peering and termination charges in order to 
        compensate for lost telecommunication fees, the so called 
        ``bypass phenomenon''. Also, in an effort to establish the ITU 
        as an operational authority on international cybersecurity, 
        some more authoritarian countries have proposed to include 
        cybersecurity and cybercrime provisions into the ITRs.

        . . .

        The challenge before us is clear. We must continue to make the 
        case that an Internet guided by the open and inclusive 
        processes as articulated in the OECD Policymaking Principles 
        will encourage the rapid economic growth and wealth creation 
        that the Internet has made possible.

        It is incumbent upon us to convince other nations that 
        enshrining the Internet in an international treaty will not 
        accomplish these goals. The framework simply will not fit. An 
        Internet constrained by an international treaty will stifle the 
        innovators and entrepreneurs who are responsible for its 
        awesome growth. As FCC Commissioner Robert McDowell recently 
        said, ``upending the fundamentals of the multistakeholder model 
        is likely to Balkanize the Internet at best, suffocate it at 
        worst''. The states who seek to impose their control over the 
        Internet will only be further removed from its awesome 
        potential.

    Former Ambassador David Gross described \18\ the proposals and 
their potential impact as follows:
---------------------------------------------------------------------------
    \18\ ``The 2012 World Conference On International 
Telecommunications: Another Brewing Storm Over Potential UN Regulation 
Of The Internet,'' November 2011 (available at http://
www.whoswholegal.com/news/features/article/29378/the-2012-world-
conference-international
-telecommunications-brewing-storm-potential-un-regulation-internet/). 
See also, ``Governments vie for control of the Web,'' by Eliza Krigman, 
POLITICO Pro, January 18, 2012 (available at https://
www.politicopro.com/story/tech/?id=8499; subscription required) (``The 
end result [of adoption of some proposals at the WCIT], American 
officials warn, would be an Internet more susceptible to censorship and 
less potent as a tool to foster democracy.'')

        Once again, many companies in the telecoms and information and 
        communications technology (ICT) sector are facing the spectre 
        of a United Nations agency (in this case the International 
        Telecommunication Union (ITU)) regulating critically important 
        aspects of the Internet as well as substantially expanding its 
---------------------------------------------------------------------------
        jurisdiction over the telecoms and ICT industries.

        . . .

        Some within the ITU and among its 193 member states would like 
        to see major changes to the treaty, particularly with respect 
        to the Internet as well as wireless, IP-based, and next-
        generation networks, which have historically been mostly free 
        of intrusive economic and other regulation.

        . . .

        The WCIT could lead to new regulations governing how these 
        businesses are run and how such businesses may interact with 
        their customers, partners, and vendors, as well as how they can 
        innovate and provide new and improved services. Moreover, 
        because of the implicit attacks on established mechanisms of 
        Internet governance, the WCIT has the potential to destabilise 
        and politicise standardisation processes and the management of 
        the Internet architecture in a way that could also hinder 
        innovation and efficiency.
Growth of the Internet and expansion of the domain name system
    Question 3. The Internet has been so amazingly beneficial to small 
businesses because it allows them to globally expand their local 
markets and enables them to compete with Fortune 100 companies because 
the size of the computer screen is the same for a small business in 
Bangor as it is for a multi-national corporation like Wal-mart. Small 
businesses are the anchor to not only Maine's economy but to our 
Nation's and the Internet has been invaluable to them.
    Supporters of the expansion have stated it will bring new 
competition and choice to the Internet space and allow the Internet to 
continue to grow in the number of websites, content, applications, and 
online services. It also presents businesses new models to harness the 
boundless benefits of the Internet.
    There have already been expansions to top level domains in the past 
to accommodate for the growth of the Internet, with the intro of gTLDs 
like .biz, .info, .museum, .mobi, etc.
    If the Internet is going to continue to grow shouldn't the domain 
name system?
    Answer. Yes. Since 1998, ICANN has been working to execute on its 
promise to facilitate competition in the Domain Name System while 
protecting vital security, consumer and business interests. The New 
gTLD Program has been carefully crafted over the past six years to 
achieve this goal. As stated in my written testimony,

        A founding mandate for ICANN, included within the United States 
        Government's ``White Paper on the Management of Internet Domain 
        Names and Addresses'',\19\ is to create competition in the 
        domain name market and specifically, to ``oversee policy for 
        determining the circumstances under which new TLDs are added to 
        the root system.'' \20\ The introduction of new gTLDs ``has 
        been a longstanding goal'' of the relationship between the 
        Department of Commerce and ICANN.\21\ The relationship formed 
        with the United States Government in 1998, and set out in the 
        many Memoranda of Understanding between the Department of 
        Commerce and ICANN, included a core objective to ``Define and 
        implement a predictable strategy for selecting new TLDs.'' \22\ 
        This fundamental assumption that increasing the number of gTLDs 
        will increase competition resulted in the House Committee on 
        Energy and Commerce initiating a 2001 hearing regarding the 
        potential detrimental effects to competition when ICANN 
        approved only seven of 200 applied-for TLDs in an earlier 
        application round. \23\
---------------------------------------------------------------------------
    \19\ United States Department of Commerce, White Paper on the 
Management of Internet Domain Names and Addresses (``White Paper''), at 
http://www.ntia.doc.gov/ntiahome/domain
name/6_5_98dns.htm (June 6, 1998)
    \20\ Id.
    \21\ Testimony of Fiona Alexander, Associate Administrator, 
National Telecommunications and Information Administration, June 4, 
2009, before the Subcommittee on Communications, Technology, and the 
Internet, Committee on Energy and Commerce, United States House of 
Representatives, available at http://www.ntia.doc.gov/speechtestimony/
2009/testimony-associate
-administrator-fiona-alexander-issues-concerning-internet-co.
    \22\ See, e.g., Amendment 6 to Memorandum of Understanding Between 
the U.S. Department of Commerce and The Internet Corporation For 
Assigned Names And Numbers, at http://www.ntia.doc.gov/ntiahome/
domainname/agreements/amendment6_09162003.htm (Sept. 16, 2003).
    \23\ See Transcript of February 8, 2001 Hearing before the 
Subcommittee on Telecommunications and the Internet of the Committee on 
Energy and Commerce, House of Representatives, On Hundred Seventh 
Congress, First Session, available at http://archives.energycommerce
.house.gov/reparchives/107/hearings/02082001Hearing37/print.htm (``some 
view ICANN's approval of only a limited number of names as thwarting 
competition'').

    Today, the DNS is continues to grow. The next billion Internet 
users will be from outside the U.S. but their participation represents 
opportunity for all businesses and communities. Since 2010, 30 new 
country code top-level domains in non-Latin scripts have been added to 
the DNS. These internationalized domain names, or IDN ccTLDs, help 
bring the Internet to the next billion people. We've seen innovation in 
the business models for existing country code TLDs, such as .CO 
(Colombia) and .ME (Macedonia) to take advantage of commercial 
opportunities waiting in the U.S. and beyond. But only TLDs introduced 
under the New gTLD Program will provide the significant, mandatory 
protections I describe in my testimony. The introduction of the New 
gTLD Program is therefore not just fulfilling a mandate to add 
competition through the introduction of more TLDs, but also represents 
the creation of a new, more secure baseline for the expansion of the 
Domain Name System.
White Paper
    Question 4. In the ``White Paper,'' which was released in 1998 and 
led to the formation of ICANN is competition, has as one of its core 
principles is competition--that competition and consumer choice should 
drive the management of the Internet because they will lower costs, 
promote innovation, encourage diversity, and enhance user choice and 
satisfaction.
    Comments in the White Paper \24\ on the issue of new generic top 
level domains showed ``very strong support for limiting government 
involvement during the transition period on the matter of adding new 
gTLDs. Specifically, most commenters--both U.S. and non-U.S.--suggested 
that it would be more appropriate for the new, globally representative, 
corporation to decide these issues once it is up and running.'' Also, 
commenters noted that ``there are no artificial or arbitrary limits in 
other media on the number of places in which trademark holders must 
defend against dilution.''
---------------------------------------------------------------------------
    \24\ http://www.ntia.doc.gov/federal-register-notice/1998/
statement-policy-management-internet
-names-and-addresses.
---------------------------------------------------------------------------
    Isn't the expansion of gTLD a form of competition, where .hotels or 
.cars could compete against .com or .biz? If not, why?
    Answer. Yes. In response to your Question 3 under the ``Growth of 
the Internet and expansion of the domain name system'' heading, it is 
noted that the introduction of the New gTLD Program is expected to 
fulfill ICANN's mandate to introduce competition in the DNS. ICANN does 
not know all of the potential business models that are contemplated, 
nor is ICANN in a position to judge or foretell which business models 
may succeed. That is the role of the market. ICANN's role is to allow 
for the creation of opportunities in the DNS for marketplace 
participants to compete, to innovate and to offer users new products 
and services.
    For at least the past two years, future applicants have attended 
ICANN meetings, passing out marketing materials with their ``dot-
NEWDOMAIN'' prominently displayed. Consulting businesses to advise 
applicants have arisen. Over 120 persons or entities have publicly 
announced their intention to apply for new gTLDs. Nearly 90 declared 
applicants have active websites marketing their new gTLD idea proposing 
all types of gTLDs--city names, community ideas, branding opportunities 
for internationally known corporations and others.
    There are other forms of competition in addition to new gTLDs, for 
example, the introduction of services provided by Twitter and Facebook, 
and also the increased use of ``apps.'' However, one form of 
introducing competition should not foreclose another. The formation of 
ICANN in 1998 and the potential introduction of new gTLDs have been 
clearly described as an opportunity for increasing competition, choice 
and innovation. That introduction has taken place in a careful way, 
including two limited rounds in 2000 and 2004, the limited introduction 
of IDNs starting in 2010.
    There is tremendous opportunity for innovation, competition and 
consumer choice within the New gTLD Program.

    Question 5. Several commenters also stated ``the market will decide 
which TLDs succeed and which do not.'' What is wrong with allowing the 
market to continue to decide with new gTLDs from the expansion?
    Answer. Allowing the market to determine the success of new gTLD 
offerings is one of the fundamental tenets of the introduction of the 
New gTLD Program. One of the policy recommendations that serves as the 
basis for this program is that the introduction of TLDs should only be 
limited by round, and not by subjective and arbitrary factors. In 
addition, the economic studies, described in response to Senator 
Warner's Question 5, support that competition results from the opening 
of markets--not by imposing artificial limitations such as number or 
type.
    One of those economists, Dr. Dennis Carlton, Deputy Assistant 
Attorney General for Economic Analysis, Antitrust Division, U.S. 
Department of Justice from October 2006 through January 2008, 
explained: ``ICANN's plan to introduce new gTLDs is likely to benefit 
consumers by facilitating entry which would be expected both to bring 
new services to consumers and mitigate market power associated with 
.com and other major TLDs and to increase innovation.'' \25\ Delay will 
inhibit competition in the use of generic, non-trademarked terms, and 
runs counter to the generally accepted view that market entry benefits 
consumers by expanding output and lowering price. Potential innovations 
in the new gTLD namespace will be stifled if limitations to entry are 
imposed, which would ``essentially freeze the number of TLDs fifteen 
years after the first commercial development of the Internet.'' \26\
---------------------------------------------------------------------------
    \25\ Dr. Dennis Carlton, Report Regarding ICANN's Proposed 
Mechanism for Introducing New gTLDs, at http://www.icann.org/en/topics/
new-gtlds/carlton-re-proposed-mechanism-05jun09-
en.pdf at paragraph 23.
    \26\ Id.
---------------------------------------------------------------------------
    The introduction of new gTLDs will also serve to alleviate issues 
in existing market conditions: concentration within some existing 
registries, most generic strings unavailable, and those that trade on 
the value of the current marketplace holding portfolios based upon the 
value of current .COM names.\27\
---------------------------------------------------------------------------
    \27\ Katz/Rosston Phase II, at paragraphs 75-76.
---------------------------------------------------------------------------
    While the market should decide which TLDs succeed and which do not, 
we understand the valid concerns associated with registry failure and 
ICANN has put into place consumer interest protections.
    Among other safeguards, ICANN has in place provision for an 
``Emergency Back End Registry Provider'' to take over operations for a 
failed registry to ensure the interests of registrants are protected 
and domain names continue to resolve.
    The issue of registry failure has been considered in detail through 
the work on the New gTLD Program. First, the extensive evaluation 
process will help assure that only companies that meet the stringent 
financial requirements are able to operate new TLDs. Of course, this 
pre-emptive evaluation process may not fully protect against future 
registry failure, and ICANN has included multiple additional 
protections within the New gTLD Program to address potential failure.
    During the application process, applicants are required to provide 
evidence that critical functions of the registry will continue to be 
performed even if the registry fails. This includes a requirement that 
the costs for maintaining critical registry functions over an extended 
period of time (between three to five years) be estimated as part of 
the application process, and registries must have available a 
Continuing Operations Instrument (funded through a letter of credit or 
an escrow account) that ICANN may invoke to pay an third party to 
maintain the critical registry functions.
    ICANN is currently working to identify the entity that will serve 
as an Emergency Back End Registry Operator (EBERO), which will step in 
to perform the critical registry functions during the three-to-five 
year period. These provisions are expected to protect registrants 
against the risk of immediate registry failure.
    To facilitate any need for emergency transition, ICANN also 
requires the escrow of registry data that the EBERO would be allowed to 
access for the purpose of providing the registry services.
    In the event of a termination of a Registry Agreement, and in 
consultation with the registry operator, ICANN maintains the right to 
determine whether to transition the operation of a TLD to a successor 
registry operator as is necessary to protect the public interest. 
Transition is not required, however, if a registry operator's use of 
the TLD is for its own exclusive use and all names are registered and 
maintained by the registry operator.
    ICANN's past experience with its 2000 and 2004 pilot programs on 
the introduction of new gTLDs, described in response to Senator 
McCaskill's Question 2, represent limited expansion. ICANN learned 
valuable lessons from each of these rounds: First, new TLDs can safely 
be added to the DNS. Second, the imposition of artificial restrictions 
on the rounds, such as the numerical restriction imposed in 2000 and 
the type-restriction imposed in 2004 place ICANN in the position of 
picking winners and losers, as opposed to fulfilling its mission of 
facilitating competition in the DNS. Artificial restrictions also 
create incentives for applicants to work to fit their TLD ideas into 
categories that may not be a true fit.
    Today's New gTLD Program instead allows for competition tempered by 
the suite of new protections for trademark owners and Internet users. 
Choice and competition will be introduced in a more secure environment 
than ever before.

    Question 6. If commenters are correct that ``there are no 
artificial or arbitrary limits in other media on the number of places 
in which trademark holders must defend against dilution'' then why 
should we place ``artificial or arbitrary'' limits on the Internet?
    Answer. Today's New gTLD Program is balanced so as not to impose 
artificial or arbitrary limits of any kind. Limits on the Program were 
created to safeguard specific, important interests, for example, 
property rights and community interests. The mandatory rights 
protection mechanisms in place for the New gTLD Program are broader 
than the protections offered to trademark holders in the rollout of any 
other media of which I am aware. However, the rights protection 
mechanisms were carefully crafted, balancing the input of trademark 
experts against third parties with legitimate rights to register domain 
names. To that end, including the suite of trademark protections in the 
New gTLD Program is not an ``artificial or arbitrary'' limit on the 
Internet and ICANN is committed to enforce the mandatory requirements. 
The creation of trademark protections is also supported by the economic 
analysis described in response to Senator Warner's Question 5.
    The protections that exist are careful and balanced. Further, ICANN 
has agreed to undertake studies of a post-launch review on the 
feasibility of enhancing both the scope of the words registered within 
the Trademark Clearinghouse and the length of the Trademark Claims 
notification process. If further protection is warranted and feasible, 
these enhanced protections could be included in future gTLD application 
rounds. Imposition of drastic limitations--and creating rights that are 
neither justified on the basis of experience nor recognized in other 
areas--could impair the ability for competition to flourish in new 
gTLDs.
Expansion of Internet Addresses
    Question 7. The Internet has revolutionized some many different 
areas of society and the economy. The innovation, adoption, and sheer 
size of the Internet are simply unparalleled. The Internet currently 
comprises of approximately 2 billion users and more than five billion 
devices. Cisco estimates there will be more than 50 billion Internet 
connected devices by 2020.
    However, we have for the most part exhausted the existing pool of 
Internet address--IPv4 provides for approximately 4.3 billion 
addresses. The shortage has been the driving factor in creating and 
adopting several new technologies as well as new and larger addressing 
system, known as IP version 6. This migration from a 32-bit addressing 
space to a 128-bit addressing, will provide 340 trillion, trillion, 
trillion separate addresses--enough for every human bring to use many 
trillions of address. With IPv6, there will be approximately 670,000 IP 
addresses for every squared nanometer of the earth's service. To put 
that into perspective, a human hair is 100,000 nanometers wide.
    However, the implementation of IPv6 has been somewhat slow. Last 
year, I read only about 20 percent of the Internet was IPv6 compatible 
and while a recent survey shows adoption of IPv6 grew by 1,900 percent 
over the past 12 months that results in only about 25 percent of .com, 
.net, and .org Internet subdomains.
    What is the status of the migration to IPv6 and what will it mean 
for Internet users and businesses, domestic and globally?
    Answer. While universal IPv6 deployment is likely to obviate the 
need for IPv4 deployments in the long-term, the short and medium-term 
is likely to see Internet networks running both protocols side-by-side 
for years to come. As such, migration away from IPv4 is a less 
important goal than the widespread deployment of IPv6.
    The status of IPv6 deployment can be measured both quantitatively 
and qualitatively. Quantitatively, over 7,500 IPv6 address blocks had 
been allocated to network operators around the globe by the end of 
September 2011 \28\ and by January 2012, the American Registry for 
Internet Numbers (ARIN) allocated IPv6 address blocks to over 2,300 
networks in the USA \29\ alone. Almost 6,700 \30\ IPv6 networks were 
publicly routed on the Internet in January 2012, which is approximately 
17 percent \31\ of Internet networks.
---------------------------------------------------------------------------
    \28\ http://www.nro.net/wp-content/uploads/nro_stats_2011_q3.pdf.
    \29\ ftp://ftp.arin.net/pub/stats/arin/
    \30\ http://www.cidr-report.org/v6/as6447/index.html.
    \31\ http://www.cidr-report.org/as2.0/.
---------------------------------------------------------------------------
    Qualitatively, IPv6 deployments have undergone testing and are now 
being made as part of ISPs and content providers' standard services. 
World IPv6 Day \32\ in June 2011 was a coordinated test of IPv6 by 
including Google, Facebook, Yahoo!, Akamai and Limelight Networks, 
together with over 1,000 website operators. It was a success, and June 
6, 2012 will see the World IPv6 Launch, in which major ISPs, home 
networking equipment manufacturers and web companies around the world 
are coming together to permanently enable IPv6 for their products and 
services.
---------------------------------------------------------------------------
    \32\ http://www.worldipv6day.org/.
---------------------------------------------------------------------------
    While June's World IPv6 Launch is not a flag day, the combination 
of successful testing and market leading deployment is expected to 
provide an incentive to other Internet businesses and help raise 
awareness with non-Internet businesses. Some businesses may note that 
they need to update systems to allow for IPv6 deployment, though 
regular updating of systems to meet with technological advances is a 
normal cost of business. However, successful IPv6 deployment should be 
seamless for Internet users, whose computer operating systems have been 
IPv6 capable for some years already.

    Question 8. Is there anything governments can do to encourage 
faster adoption of IPv6 as well as increase awareness to businesses and 
citizens about the migration?
    Answer. From ICANN's perspective, public support for adoption of 
IPv6 can help increase awareness of the deployment of IPv6, as well as 
provide incentives for Internet-related businesses to engineer products 
that are capable of IPv6 deployment. For example, in 2005, the United 
States Office of Management and Budget (OMB) mandated \33\ that Federal 
agencies initiate the transition to IPv6. The target readiness date was 
June 2008. In September 2010 the OMB released a further memorandum \34\ 
setting out additional deadlines for the Federal IPv6 transition. Other 
national governments have introduced similar roadmaps. Examples include 
Australia's 2009 Strategy for the Implementation of IPv6 in Australian 
Government Agencies \35\ and the European Commission's Action Plan for 
the deployment of Internet Protocol version 6 (IPv6) in Europe.\36\ The 
latter has guided deployment in governments throughout Europe, 
including Germany.\37\
---------------------------------------------------------------------------
    \33\ http://www.cio.gov/documents/Transition_Planning_for_IPv6.pdf.
    \34\ http://www.cio.gov/Documents/IPv6MemoFINAL.pdf.
    \35\ http://www.finance.gov.au/e-government/infrastructure/docs/
Endorsed_Strategy_for_
the_Transition_to_IPv6_for_Australian_Government_agencies.pdf.
    \36\ http://ec.europa.eu/information_society/policy/ipv6/docs/
european_day/communication_final_27052008_en.pdf.
    \37\ http://ripe58.ripe.net/content/presentations/ipv6-in-
germany.pdf.
---------------------------------------------------------------------------
    Mandates such as OMB's 2005 timeline have helped establish demand 
for IPv6 feature sets, as customers now require those features in 
equipment purchases. As such, governments have contributed to the 
success of World IPv6 Day in 2011, which readied the stage for this 
year's World IPv6 Launch.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                            Angela Williams
United Nations Model
    Question 1. There has been a growing contingency of other countries 
critical of the ICANN multi-stakeholder model and about the US' 
involvement and influence with ICANN. Some governments, not necessarily 
friendly to the U.S., are seeking to increase their power over the 
Internet and its governance.
    Russia and China (with Tajikistan and Uzbekistan) have proposed to 
the United Nations an Internet ``Code of Conduct,'' which a senior 
State Department official stated ``they seek to justify the 
establishment of sovereign government control over Internet resources 
and over freedom of expression in order to maintain the security of 
their state.\1\'' Even Russian Prime Minister Vladimir Putin remarked 
recently his desire of ``establishing international control over the 
Internet using the monitoring and supervisory capabilities of the 
International Telecommunication Union (ITU).\2\''
---------------------------------------------------------------------------
    \1\ http://www.huffingtonpost.com/2011/09/27/russia-china-internet-
control_n_984223.html.
    \2\ http://premier.gov.ru/eng/events/news/15601/.
---------------------------------------------------------------------------
    The other proposal by India, Brazil and South Africa calls for the 
creation of a new body within the United Nations to oversee Internet 
policy. As a result, ICANN as well as the Internet Governance Forum 
(IGF) could be significantly marginalized or hijacked by this new UN 
entity.
    These proposals seem to be in direct conflict with our Nation's 
effort to privatize the Internet through transferring the authority of 
the DNS to the private sector and for the Internet governance model to 
be private-sector led.
    If the U.S. Government followed the advice to unilaterally delay 
the gTLD expansion, what do you believe the impact would be globally 
and do you believe this would fan the flames of anti-U.S. government 
sentiment with respect to Internet governance? Could it give more 
momentum to other governments' calls to have the United Nations assert 
oversight over ICANN or replace it altogether?
    Answer. The YMCA of the USA (``Y-USA'') did not enter testimony 
requesting that ICANN delay its new gTLD Program. Our testimony 
primarily focused on the financial impact the new gTLD Program would 
have on the not-for-profit sector. It is hard for us to predict what 
the global impact would be or whether it would give other countries 
momentum to call for the United Nation's involvement in Internet 
governance if the new gTLD Program were to be delayed. Nevertheless, 
ICANN's irresponsible launch of the new gTLD Program with an 
implementation plan that does not adequately address consumer 
protection or the financial burdens for our organizations could have a 
negative impact on the not-for-profit sector. Further, we suspect that 
anti-government sentiments will continue to be prevalent regardless of 
ICANN's decision.

    Question 2. If the U.N. did take control or governments had greater 
involvement, what impact would that have on American businesses and 
citizens that utilizes the Internet? What impact could it have on 
Freedom of Speech?
    Answer. Based on U.S. laws, American citizens, companies and not-
for-profit organizations are able to fully engage in ecommerce, 
humanitarian and educational pursuits and commentary and free 
expression on the Internet. The Y-USA does not believe that ICANN's new 
gTLD Program will affect these protections. Furthermore, the Y-USA is 
unaware of any data, studies or research that analyze the potential 
effect the United Nations or government would have on businesses or 
citizens should they take control of the Internet.
Growth of the Internet and expansion of the domain name system
    Question 3. The Internet has been so amazingly beneficial to small 
businesses because it allows them to globally expand their local 
markets and enables them to compete with Fortune 100 companies because 
the size of the computer screen is the same for a small business in 
Bangor as it is for a multi-national corporation like Wal-mart. [sic] 
Small businesses are the anchor to not only Maine's economy but to our 
Nation's and the Internet has been invaluable to them.
    Supporters of the expansion have stated it will bring new 
competition and choice to the Internet space and allow the Internet to 
continue to grow in the number of websites, content, applications, and 
online services. It also presents businesses new models to harness the 
boundless benefits of the Internet.
    There have already been expansions to top level domains in the past 
to accommodate for the growth of the Internet, with the intro of gTLDs 
like .biz, .info, .museum, .mobi, etc. Given that there have already 
been two expansions of top level domains, it seems difficult to simply 
state that there shouldn't be any additional top-level domains for the 
Internet. The Internet is all about expansion and innovation, after 
all. Are you really saying we already have all the top-level domains 
the Internet will ever need?
    Answer. Y-USA did not enter testimony suggesting that the Internet 
should not be expanded. Again, our testimony primarily focused on the 
financial impact the new gTLD Program would have on the not-for-profit 
sector. It is our assertion that not-for-profits (for those that can 
afford to) should not be required to use the humanitarian contributions 
it receives to (1) change its business model to operate as a domain 
name registry; and/or (2) file countless defensive top level and second 
level domain name registrations to protect its intellectual property 
against cyber squatters seeking profit off their names.

    Question 4. If the Internet is going to continue to grow shouldn't 
the domain name system?
    Answer. The domain name system can grow, but in a way that protects 
businesses, and affords the not-for-profit sector meaningful input and 
access as global stakeholders.

    Question 5. Putting aside your request for delay, are there 
specific improvements you would recommend in the gTLD program that 
would address your concerns?
    Answer. Y-USA testified as a not-for-profit organization and as a 
member of ICANN's newly-formed Not-for-Profit Operational Concerns 
Constituency (``NPOC''). We did not request that the new gTLD Program 
be delayed. Instead we offered the following recommendations:

   That verified not-for-profit organizations be permitted to 
        exempt their trademarks from any other applicant in the new 
        gTLD program at no cost, or if that is not possible, then at a 
        drastically reduced fee;

   That the mechanisms for trademark protection be 
        significantly strengthened, with the ability to proactively 
        protect trademark owners before any application is accepted; 
        and

   That the costs to participate in the new gTLD program for 
        verified not-for-profit organizations be eliminated.
White Paper
    Question 6. In the ``White Paper,'' which was released in 1998 and 
led to the formation of ICANN is competition, has as one of its core 
principles is competition--that competition and consumer choice should 
drive the management of the Internet because they will lower costs, 
promote innovation, encourage diversity, and enhance user choice and 
satisfaction.
    Comments in the White Paper \3\ on the issue of new generic top 
level domains showed ``very strong support for limiting government 
involvement during the transition period on the matter of adding new 
gTLDs. Specifically, most commenters--both U.S. and non-U.S.--suggested 
that it would be more appropriate for the new, globally representative, 
corporation to decide these issues once it is up and running.'' Also, 
commenters noted that ``there are no artificial or arbitrary limits in 
other media on the number of places in which trademark holders must 
defend against dilution.'' Isn't the expansion of gTLD a form of 
competition, where .hotels or .cars could compete against .com or .biz? 
If not, why?
---------------------------------------------------------------------------
    \3\ http://www.ntia.doc.gov/federal-register-notice/1998/statement-
policy-management-internet-names-and-addresses.
---------------------------------------------------------------------------
    Answer. Y-USA is of the opinion that expansion of the gTLD program 
could be a form of healthy competition if there is a demonstrated need 
for the expansion and an articulated rationale supporting the scope of 
the expansion (e.g., the number of new TLDs to be introduced). ICANN 
has estimated 200-1000 new gTLDs within the first launch phase. 
Rollouts of new gTLDs such as .biz, .mobi, etc., were staggered. Y-USA 
and we suspect many other not-for-profits and businesses, filed 
defensive domain name registrations during these expansions, rather 
than using the new domain names to support an innovative business plan, 
or to offer new content or services for our communities. For example, a 
new gTLD for ``.xxx'' was recently launched for the adult entertainment 
industry. We filed a defensive registration for ``ymca.xxx'' at the 
cost of $300. Should there be a need for our organization and/or other 
not-for-profits organizations to file hundreds of defensive 
registrations with no plans to actually use them or incorporate them in 
our business plans, the costs and impact to do so could be staggering. 
Our sector not only prefers to, but must, use our monies to provide 
critical services to our communities.

    Question 7. As stated the white paper hightlighted that ``most 
commenters--both U.S. and non-U.S.--suggested that it would be more 
appropriate for the new, globally representative, corporation to decide 
these issues once it is up and running.'' What has happened since the 
inception of ICANN that warrants the United States Government from 
ignoring these initially comments from U.S. and non-U.S. stakeholders 
that ICANN should decide the issue of new gTLDs?
    Answer. Y-USA is not well versed in the nuances of the evolution of 
Internet governance.

    Question 8. Several commenters also stated ``the market will decide 
which TLDs succeed and which do not.'' What is wrong with allowing the 
market to continue to decide with new gTLDs from the expansion?
    Answer. Y-USA is in favor of the market deciding which new gTLDs 
will succeed. However, what concerns us are the costs for not-for-
profits to participate in the expansion (including defending its 
intellectual property rights) of the Internet with humanitarian monies 
donated for our worthy causes. Unfortunately, not-for profit 
organizations will have to allocate financial and human resources to 
defend their brand and intellectual property early in the process and 
long before the market determines whether these new gTLDs are 
successful. Our sector not only prefers to, but must, use our monies to 
provide critical services to our communities.

    Question 9. If commenters are correct that ``there are no 
artificial or arbitrary limits in other media on the number of places 
in which trademark holders must defend against dilution'' then why 
should we place ``artificial or arbitrary'' limits on the Internet?
    Answer. Y-USA does not favor restricting or limiting the internet. 
Again, what concerns us is the costs for not-for-profits to participate 
in the expansion (and defend its brand and intellectual property 
rights) of the Internet with humanitarian monies donated for our worthy 
causes. Unfortunately, expansion without limits will place not-for 
profit organizations in the position to allocate financial and human 
resources to defend their brand and intellectual property, well before 
these new top level domains are proven successful. For some new 
domains, if history is a predictor, most of the registrations for 
second level domain names will come from companies and organizations 
defensively registering their names.
                                 ______
                                 
   Response to Written Question Submitted by Hon. Maria Cantwell to 
                            Daniel L. Jaffe
Cracking down on rogue websites
    Question. Mr. Jaffe, do you believe that the increase in top level 
domains combined with all the requirements ICANN is putting in place 
will make its easier, more difficult, or not change the ability of U.S 
authorities to crack down on Internet sites--to use the phase--that are 
dedicated to infringing activity?
    Answer: We believe an unlimited expansion of the TLDs would make it 
much more difficult for U.S. authorities to crack down on ``rogue'' 
Internet sites. This is a serious challenge in today's environment with 
22 TLDs so an unlimited expansion would increase the problem 
exponentially. In 2009, an international coalition of law enforcement 
agencies including the U.S. Department of Justice and the FBI issued a 
set of 12 specific law enforcement recommendations to ICANN. None of 
those recommendations has been adopted. In a very detailed letter to 
ICANN dated December 16, 2011, the Federal Trade Commission (FTC) 
stated that the TLD expansion presented a ``dramatically increased 
opportunity for consumer fraud, distribution of malware, and 
proliferation of other malicious activity. . .'' The Commission made 
five specific recommendations to ICANN to address before any new TLDs 
are approved. We believe it is critical that ICANN fully implement the 
recommendations of the FTC and other law enforcement agencies from 
around the world.
                                 ______
                                 
  Response to Written Question Submitted by Hon. Claire McCaskill to 
                            Daniel L. Jaffe
    Question. I recognize that ICANN has put a tremendous amount of 
work and study into the planned expansion of top-level domain names. 
There have been a number of economic studies, dozens of comment periods 
and seven versions of the Applicant Guidebook before the final one was 
issued. ICANN clearly views the expansion of gTLDs as vital to the 
growth and viability of the Internet.
    Given how much time, effort and study has been put into this 
decision, I find it disturbing that there is still so much dispute 
about expansion. There is clearly a lack of consensus about these 
changes in the business and non-profit industries as well as concerns 
from law enforcement. This is not a decision to be taken lightly and I 
believe there needs to be better agreement on the outstanding issues 
from all interested parties.
    Both of you have very differing opinions about the implications of 
the gTLD expansion. Why has it taken this long to get this out in the 
open?
    Mr. Jaffe, there was an extensive comment period before the 
guidelines were issued, which I'm sure you were aware of--did you and 
other industries fully participate in the process? Do you disagree with 
the economic studies that ICANN has cited saying this would increase 
competition and innovation? If so, why?
    Mr. Fritz, how much weight was given to the concerns raised by Mr. 
Jaffe and others with his viewpoints? The danger of increased copyright 
infringement appears to be a legitimate issue--do you agree?
    Answer. ANA and many other business groups and companies have been 
actively participating in the ICANN process for several years. We filed 
detailed comments with ICANN in 2008 and 2009 expressing our serious 
concerns about the unlimited TLD expansion. Many companies have 
attended the numerous meetings around the world of the ICANN board to 
express similar concerns. Unfortunately, the strong objections raised 
by ANA and a very broad cross-section of the international business 
community have largely fallen on deaf ears with ICANN. We seriously 
challenge the economic analysis that has been put forward by ICANN. An 
unlimited expansion of the TLDs will cost the business community 
billions of dollars. The only voices speaking in favor of the expansion 
are registrars, registries and others who will directly profit from the 
roll-out. The broader Internet business community, including the 161 
members of the Coalition for Responsible Internet Domain Oversight 
(CRIDO) is strongly opposed to the current program.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                            Daniel L. Jaffe
United Nations Model
    Question 1. There has been a growing contingency of other countries 
critical of the ICANN multi-stakeholder model and about the US' 
involvement and influence with ICANN. Some governments, not necessarily 
friendly to the U.S., are seeking to increase their power over the 
Internet and its governance.
    Russia and China (with Tajikistan and Uzbekistan) have proposed to 
the United Nations an Internet ``Code of Conduct,'' which a senior 
State Department official stated ``they seek to justify the 
establishment of sovereign government control over Internet resources 
and over freedom of expression in order to maintain the security of 
their state.\1\'' Even Russian Prime Minister Vladimir Putin remarked 
recently his desire of ``establishing international control over the 
Internet using the monitoring and supervisory capabilities of the 
International Telecommunication Union (ITU).\2\''
---------------------------------------------------------------------------
    \1\ http://www.huffingtonpost.com/2011/09/27/russia-china-internet-
control_n_984223.html.
    \2\ http://premier.gov.ru/eng/events/news/15601/.
---------------------------------------------------------------------------
    The other proposal by India, Brazil and South Africa calls for the 
creation of a new body within the United Nations to oversee Internet 
policy. As a result, ICANN as well as the Internet Governance Forum 
(IGF) could be significantly marginalized or hijacked by this new UN 
entity.
    These proposals seem to be in direct conflict with our Nation's 
effort to privatize the Internet through transferring the authority of 
the DNS to the private sector and for the Internet governance model to 
be private-sector led.
    If the U.S. Government followed the advice to unilaterally delay 
the gTLD expansion, what do you believe the impact would be globally 
and do you believe this would fan the flames of anti-U.S. government 
sentiment with respect to Internet governance? Could it give more 
momentum to other governments' calls to have the United Nations assert 
oversight over ICANN or replace it altogether?
    Answer. We do not believe that a delay in the TLD expansion or a 
pilot project involving a smaller number of new TLDs would have 
negative implications for the role of ICANN in Internet governance. 
Indeed, given the serious concerns that have been expressed by the 
international law enforcement community, more than 30 IGOs and a broad 
cross-section of the international business community, it would be a 
reckless experiment for ICANN to proceed full speed ahead with the 
unlimited expansion. A failed and costly program that hurts both 
consumers and businesses could drastically undermine the foundations of 
ICANN and its supervisory role over TLDs.

    Question 2. If the U.N. did take control or governments had greater 
involvement, what impact would that have on American businesses and 
citizens that utilize the Internet? What impact could it have on 
Freedom of Speech?
    Answer. We do not advocate that the U.S. government or any other 
government control the Internet. We also do not seek the abolition of 
ICANN. A private sector led multi-stakeholder process that truly 
achieves consensus will result in an online environment that encourages 
creativity and innovation for all the citizens of the world. 
Unfortunately, we do not believe that these goals have been fostered by 
ICANN's current TLD program.
Self-Regulation vs. Government Intervention
    Question 3. In a letter and petition, submitted by the Association 
of National Advertisers and other organizations to Commerce Secretary 
Bryson, on November 10, 2011, you express your ``strong opposition to 
the new Top Level Domain (TLD) program that was approved by the 
Internet Corporation for Assigned Names and Numbers (ICANN) on June 20, 
2011.'' The petition then calls for the Department of Commerce and NTIA 
to use all of its best efforts to persuade ICANN to postpone the 
opening of the Top Level Domain application window. The ANA and the 
other petitioners are basically calling for the government 
intervention.
    However, in comments the filed, in June 2010, with respect to the 
Department of Commerce's Notice of Inquiry on information privacy and 
innovation in the Internet economy, ANA and some of the same 
organizations that voiced for government intervention on ICANN, praised 
the virtues of self-regulation and that ``existing and emerging robust 
self-regulatory principles address privacy concerns while ensuring that 
the Internet can thrive, thereby benefiting consumers and the U.S. 
economy.'' The petition went on to state that self-regulation ensures 
``the marketplace is not stifled or smothered by overreaching and rigid 
regulation.'' So you all are warning against government intervention 
with respect to online privacy.
    These petitions seem in direct conflict with each other--on one 
issue you want the government to intervene but on another you don't. 
Can you provide clarity as to why this is because it doesn't seem 
consistent?
    Answer. We do not believe that industry self-regulation and 
reasonable regulation by the government in certain areas are mutually 
exclusive. For example, in the privacy arena, we have always agreed 
that there are certain sensitive areas (health and financial 
information and children) where there is a legitimate interest for 
reasonable government regulation. Thus, we have supported the privacy 
regimes of Gramm-Leach-Bliley, HIPPA and the Children's Online Privacy 
Protection Act (COPPA). However, for non-sensitive information, we 
continue to believe that the privacy interests of consumers can be best 
protected through strong, effective industry self-regulation. For that 
reason, we were one of the founding partners of the Self-Regulatory 
Program for Online Behavioral Advertising (OBA).
    With regard to ICANN, we have never sought direct government 
intervention by the Department of Commerce. We support the role that 
ICANN plays as part of a multi-stakeholder approach. However, it is 
critical that the various requirements regarding the public interest, 
consumer trust and public benefits that are contained in the 
Affirmation of Commitments between ICANN and the Department of Commerce 
are being adequately fulfilled. ICANN was provided authority over key 
functions of the Internet under the Affirmation of Commitments with the 
Department of Commerce. If ICANN fails to uphold these commitments, 
then the DOC must provide assurance that the legitimate concerns of 
businesses and consumers will be met.

    Question 4. Do you believe this intervention you request is counter 
to the ``Framework for Global Electronic Commerce'' working paper, 
which its first principle is ``the private sector should lead'' and 
that ``governments should encourage industry self-regulation wherever 
appropriate and support the efforts of private sector organizations to 
develop mechanisms to facilitate the successful operation of the 
Internet?''
    This intervention also seems in direct conflict with the Commerce 
Department's Commitments in the Affirmation of Commitments (AoC), where 
it is written the Commerce Department ``affirms its commitment to a 
multi-stakeholder, private sector led, bottom-up policy development 
model.'' Could Commerce's involvement in delaying the gTLD expansion be 
perceived as reneging on this commitment within the AoC?
    Answer. We do not believe that our request to the Department of 
Commerce is inconsistent with either the ``Framework for Global 
Electronic Commerce'' or the Affirmation of Commitments. We do not 
advocate that the U.S. government or any government control the 
Internet. However, that does not mean that the Commerce Department has 
no role to play in the broad governance of the Internet. Indeed, as a 
member of ICANN's Governmental Advisory Committee (GAC), the Commerce 
Department is a vital part of the multi-stakeholder global community. 
In addition, ICANN made a number of specific promises in the 
Affirmation of Commitments between ICANN and the NTIA, in exchange for 
the considerable power to oversee the Internet that was delegated to 
ICANN by the U.S. government. It has become very clear over the last 
several months that the process followed by ICANN on the TLD proposal 
has not achieved consensus among all of the stakeholders. If ICANN is 
to maintain the trust in its ability to act for the public benefit that 
is critical to its continued success as a private, not-for-profit 
Internet governance body, the Commerce Department has a vital role to 
play to protect the interest of American consumers and businesses.
Growth of the Internet and expansion of the domain name system
    Question 5. The Internet has been so amazingly beneficial to small 
businesses because it allows them to globally expand their local 
markets and enables them to compete with Fortune 100 companies because 
the size of the computer screen is the same for a small business in 
Bangor as it is for a multi-national corporation like Wall-mart. Small 
businesses are the anchor to not only Maine's economy but to our 
Nation's and the Internet has been invaluable to them.
    Supporters of the expansion have stated it will bring new 
competition and choice to the Internet space and allow the Internet to 
continue to grow in the number of websites, content, applications, and 
online services. It also presents businesses new models to harness the 
boundless benefits of the Internet.
    There have already been expansions to top level domains in the past 
to accommodate for the growth of the Internet, with the intro of gTLDs 
like .biz, .info, .museum, .mobi, etc.
    Given that there have already been two expansions of top level 
domains, it seems difficult to simply state that there shouldn't be any 
additional top-level domains for the Internet. The Internet is all 
about expansion and innovation, after all. Are you really saying we 
already have all the top-level domains the Internet will ever need?
    Answer. We have never said that there is something sacrosanct about 
maintaining the existing 22 TLDs unaltered. However, it has become 
clear over the past several months that there is serious opposition to 
the unlimited expansion that ICANN has proposed. That opposition comes 
not just from the business community, but also from law enforcement and 
consumer protections agencies, IGOs, and the non-profit community.
    Furthermore, the proposed added protections that ICANN states will 
provide protection for the Top Level Domain system have never been 
tested in a pilot project. It is reckless to have such a broad 
expansion of the Domain Name System without this more limited test.

    Question 6. If the Internet is going to continue to grow shouldn't 
the domain name system?
    Answer. There is no scarcity of space within the existing domain 
name system, so the ICANN program seems to be a solution in search of a 
problem. Most of the current TLD names are minimally used, but brand 
owners nevertheless spend millions of dollars policing them to protect 
against trademark dilution, cybersquatting and the online sale of 
pirated or counterfeit products. Those costs and dangers would expand 
exponentially under the ICANN program. The broad Internet business 
community is not calling for this unlimited expansion. The expansion of 
domains should be based on a careful analysis of costs and benefits, 
and we do not believe that ICANN's analysis has been adequate to date.

    Question 7. Putting aside your request for delay, are there 
specific improvements you would recommend in the gTLD program that 
would address your concerns?
    Answer. In a very detailed letter to ICANN dated December 16, 2011, 
the Federal Trade Commission (FTC) stated that the TLD expansion 
presented a ``dramatically increased opportunity for consumer fraud, 
distribution of malware, and proliferation of other malicious activity. 
. .'' The Commission made five specific recommendations for ICANN to 
responsibly address before any new TLD applications are approved. The 
FTC letter is available at: www.ftc.gov/os/closings/publicltrs/
111216letter-to-icann.pdf.
    We believe it is critical that ICANN fully implements the consumer 
protection recommendations of the FTC. ANA recently wrote to Assistant 
Secretary Lawrence Strickling at the NTIA, urging the Commerce 
Department to ensure that ICANN adopts those recommendations. We 
believe it is critical that NTIA play a more proactive role in this 
area by providing specific timetables and benchmarks for ICANN to meet 
as well as specific consequences if they fall short. We also have 
recommended a ``Do Not Sell'' list that would allow companies to 
temporarily protect their trademarks from registration without paying 
registration fees. A copy of our letter is attached for your 
information.
White Paper
    Question 8. In the ``White Paper,'' which was released in 1998 and 
led to the formation of ICANN is competition, has as one of its core 
principles is competition--that competition and consumer choice should 
drive the management of the Internet because they will lower costs, 
promote innovation, encourage diversity, and enhance user choice and 
satisfaction.
    Comments in the White Paper \3\ on the issue of new generic top 
level domains showed ``very strong support for limiting government 
involvement during the transition period on the matter of adding new 
gTLDs. Specifically, most commenters--both U.S. and non-U.S.--suggested 
that it would be more appropriate for the new, globally representative, 
corporation to decide these issues once it is up and running.'' Also, 
commenters noted that ``there are no artificial or arbitrary limits in 
other media on the number of places in which trademark holders must 
defend against dilution.''
---------------------------------------------------------------------------
    \3\ http://www.ntia.doc.gov/federal-register-notice/1998/statement-
policy-management-internet-names-and-addresses.
---------------------------------------------------------------------------
    Isn't the expansion of gTLD a form of competition, where .hotels or 
.cars could compete against .com or .biz? If not, why?
    Answer. ANA's member companies operate in very competitive markets 
and strongly support free, fair and open competition. There may be 
situations where individual companies or a specific industry (such as 
the hotel or automobile industry) decide there are significant benefits 
to be gained through new TLDs. However, that is not the case we have 
with the current ICANN program. Rather than a targeted or limited 
expansion based on specific demand from companies or industries or 
consumers, ICANN has decided to embark on a veritable names rush, an 
unlimited expansion that will impose enormous costs on brand owners.

    Question 9. As stated the white paper hightlighted that ``most 
commenters--both U.S. and non-U.S.--suggested that it would be more 
appropriate for the new, globally representative, corporation to decide 
these issues once it is up and running.'' What has happened since the 
inception of ICANN that warrants the United States Government from 
ignoring these initially comments from U.S. and non-U.S. stakeholders 
that ICANN should decide the issue of new gTLDs?
    Answer. We agree that the decision about expanding TLDs must 
ultimately be made by ICANN. However, the decision-making process must 
be fair, open and impartial and consistent with the promises ICANN has 
made with the Department of Commerce in the Affirmation of Commitments. 
ICANN has been considering this program for several years, but has 
largely ignored the serious concerns expressed by the business 
community as well as the international law enforcement community during 
that time period. Even now, after two Congressional hearings and a 
growing chorus of opposition from across the Internet community, 
ICANN's response is ``pay now and trust us to make changes later.'' 
There must be some mechanism to hold ICANN accountable and NTIA and the 
other members of the Governmental Advisory Committee must occupy that 
role.

    Question 10. Several commenters also stated ``the market will 
decide which TLDs succeed and which do not.'' What is wrong with 
allowing the market to continue to decide with new gTLDs from the 
expansion?
    Answer. If ICANN's program was likely to enhance competition and 
expand the Internet marketplace, you would expect broad statements of 
support for it from multiple stakeholders. That is most certainly not 
the case here. The more scrutiny it has received, the more groups have 
strongly concluded that the program is not ready to be rolled out. This 
program has multi-billion dollar implications for all marketers and 
consumers. For example, in a December 16, 2011 letter to ICANN, the 
Federal Trade Commission (FTC) noted that ICANN has failed for over a 
decade to address serious issues with the WHOIS database, which is 
critical to protecting consumers in cyberspace. The Commission also 
noted the serious conflict of interest issues that have been raised 
about ICANN's vote to approve the TLD expansion. Those issues raise 
fundamental concerns about whether the program is truly a fair and open 
marketplace.

    Question 11. If commenters are correct that ``there are no 
artificial or arbitrary limits in other media on the number of places 
in which trademark holders must defend against dilution'' then why 
should we place ``artificial or arbitrary'' limits on the Internet?
    Answer. The unlimited expansion of TLDs would dramatically increase 
the cost and complexity for trademark holders to protect their rights. 
The immediate cost imposed on businesses is likely to be in the 
billions of dollars. Applying for a new Top Level Domain name will 
require an extraordinarily expensive registration fee of $185,000 as 
well as a minimum cost of $25,000 paid annually to ICANN over the ten-
year contractual commitment that successful applicants must make. Costs 
will further escalate at the second level of naming--the word to the 
left of the ``dot''--as brand owners will have to consider registering 
each of their brand-related terms, for either commercial or defensive 
purposes.
    Some have estimated that, for a typical company, the cost of 
acquiring a single gTLD and managing it over the initial commitment of 
ten years could easily exceed $2 million, including expenses for the 
application process, operations, disputes, and related legal services. 
The costs associated with trademark monitoring and protection in all 
the new gTLD spaces will run even higher. Some members of ANA and the 
Coalition for Responsible Internet Domain oversight (CRIDO) spend over 
$1 million a year today to enforce against cybersquatting and fraud in 
the existing 22 gTLD spaces. These numbers will clearly escalate if 
ICANN's proposal goes forward. In addition, many companies may face an 
auction for a generic Topic Level Domain, which will result in higher 
costs to ICANN's benefit. Many companies have hundreds or even 
thousands of brands to defend. Brand owners will face a Hobson's choice 
of either being compelled to spend substantial resources to acquire and 
manage new gTLDs or risk the harm to their brands that could occur if 
they take no action. This has certainly been the message spoken loud 
and clear to us from our members and the many groups within CRIDO.
                                 ______
                                 
   Response to Written Question Submitted by Hon. Maria Cantwell to 
                              Esther Dyson
Cracking down on rogue websites
    Question. Ms. Dyson, do you believe that the increase in top level 
domains combined with all the requirements ICANN is putting in place 
will make its easier, more difficult, or not change the ability of U.S 
authorities to crack down on Internet sites--to use the phase--that are 
dedicated to infringing activity?
    Answer. I believe that the increase in volume is likely to make the 
task more difficult and reduce the US's ability to effectively stop 
illegal activity because it will be easier to create and exploit new 
websites . . . and consumers are likely to be even more confused than 
now when they try to figure out what's legitimate and what's not. 
Unfortunately, ICANN does not have a very good record of properly 
enforcing its own requirements, so I'm not inclined to believe its 
promises as the opportunities for abuse proliferate.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                              Esther Dyson
United Nations Model
    Question 1. There has been a growing contingency of other countries 
critical of the ICANN multi-stakeholder model and about the US' 
involvement and influence with ICANN. Some governments, not necessarily 
friendly to the U.S., are seeking to increase their power over the 
Internet and its governance.
    Russia and China (with Tajikistan and Uzbekistan) have proposed to 
the United Nations an Internet ``Code of Conduct,'' which a senior 
State Department official stated ``they seek to justify the 
establishment of sovereign government control over Internet resources 
and over freedom of expression in order to maintain the security of 
their state.\1\'' Even Russian Prime Minister Vladimir Putin remarked 
recently his desire of ``establishing international control over the 
Internet using the monitoring and supervisory capabilities of the 
International Telecommunication Union (ITU).\2\''
---------------------------------------------------------------------------
    \1\ http://www.huffingtonpost.com/2011/09/27/russia-china-internet-
control_n_984223.html.
    \2\ http://premier.gov.ru/eng/events/news/15601/.
---------------------------------------------------------------------------
    The other proposal by India, Brazil and South Africa calls for the 
creation of a new body within the United Nations to oversee Internet 
policy. As a result, ICANN as well as the Internet Governance Forum 
(IGF) could be significantly marginalized or hijacked by this new UN 
entity.
    These proposals seem to be in direct conflict with our Nation's 
effort to privatize the Internet through transferring the authority of 
the DNS to the private sector and for the Internet governance model to 
be private-sector led.
    If the U.S. Government followed the advice to unilaterally delay 
the gTLD expansion, what do you believe the impact would be globally 
and do you believe this would fan the flames of anti-U.S. government 
sentiment with respect to Internet governance? Could it give more 
momentum to other governments' calls to have the United Nations assert 
oversight over ICANN or replace it altogether?
    Answer. Basically, it is up to ICANN itself whether to delay the 
GTLD expansion. If they do it the right way--genuinely soliciting input 
from all over the world--then I think that would in fact reduce other 
governments' standing to take over ICANN. It needs to reach out beyond 
governments and domain-name interests to see whether the public itself 
wants new domain names. . .and make sure its board represents those 
diverse interests.

    Question 2. If the U.N. did take control or governments had greater 
involvement, what impact would that have on American businesses and 
citizens that utilize the Internet? What impact could it have on 
Freedom of Speech?
    Answer. It's hard to predict exactly, but I think it would be 
likely to reduce freedom of speech and freedom of association in 
general.
Growth of the Internet and expansion of the domain name system
    Question 3. The Internet has been so amazingly beneficial to small 
businesses because it allows them to globally expand their local 
markets and enables them to compete with Fortune 100 companies because 
the size of the computer screen is the same for a small business in 
Bangor as it is for a multi-national corporation like Wall-mart. Small 
businesses are the anchor to not only Maine's economy but to our 
Nation's and the Internet has been invaluable to them.
    Supporters of the expansion have stated it will bring new 
competition and choice to the Internet space and allow the Internet to 
continue to grow in the number of websites, content, applications, and 
online services. It also presents businesses new models to harness the 
boundless benefits of the Internet.
    There have already been expansions to top level domains in the past 
to accommodate for the growth of the Internet, with the intro of gTLDs 
like .biz, .info, .museum, .mobi, etc.
    Given that there have already been two expansions of top level 
domains, it seems difficult to simply state that there shouldn't be any 
additional top-level domains for the Internet. The Internet is all 
about expansion and innovation, after all. Are you really saying we 
already have all the top-level domains the Internet will ever need?
    Answer. In extremis, any new name you can dream up--such as 
ANYNAME--can either be represented as ANYNAME.com or it's redundant to 
an existing ANYNAME.com. If you actually look at most of what's in the 
new TLDs, you will find huge amounts of redundancy and conflicts. Most 
companies I talk to register their names in .com, .net, .org and a 
variety of other TLDs. . . . So, again, it's redundancy rather than 
expansion.
    And meanwhile, any new business model can work with the existing 
domain name system. . . . Such as all the names that come after the 
slash as in twitter.com/edyson.

    Question 4. If the Internet is going to continue to grow shouldn't 
the domain name system?
    Answer. It can expand within the current structure. The shortage is 
not of domain names; it's of space in people's heads to remember all 
the names.

    Question 5. Putting aside your request for delay, are there 
specific improvements you would recommend in the gTLD program that 
would address your concerns?
    Answer. The obvious answer is stronger upfront protection for 
trademarks, but all this will come at tremendous legal cost with very 
few benefits. And of course, more attention to the legal protections 
suggested by CRIDO and actual enforcement of ICANN's requirements. And 
finally, a change in who is represented on ICANN's board and other 
decision-making bodies.
White Paper
    Question 6. In the ``White Paper,'' which was released in 1998 and 
led to the formation of ICANN is competition, has as one of its core 
principles is competition--that competition and consumer choice should 
drive the management of the Internet because they will lower costs, 
promote innovation, encourage diversity, and enhance user choice and 
satisfaction.
    Comments in the White Paper \3\ on the issue of new generic top 
level domains showed ``very strong support for limiting government 
involvement during the transition period on the matter of adding new 
gTLDs. Specifically, most commenters--both U.S. and non-U.S.--suggested 
that it would be more appropriate for the new, globally representative, 
corporation to decide these issues once it is up and running.'' Also, 
commenters noted that ``there are no artificial or arbitrary limits in 
other media on the number of places in which trademark holders must 
defend against dilution.''
---------------------------------------------------------------------------
    \3\ http://www.ntia.doc.gov/federal-register-notice/1998/statement-
policy-management-internet-names-and-addresses.
---------------------------------------------------------------------------
    Isn't the expansion of gTLD a form of competition, where .hotels or 
.cars could compete against .com or .biz? If not, why?
    Answer. In theory it is, but in practice it is more a way of 
eroding the value of existing names.

    Question 7. As stated the white paper highlighted that ``most 
commenters--both U.S. and non-U.S.--suggested that it would be more 
appropriate for the new, globally representative, corporation to decide 
these issues once it is up and running.'' What has happened since the 
inception of ICANN that warrants the United States Government from 
ignoring these initially comments from U.S. and non-U.S. stakeholders 
that ICANN should decide the issue of new gTLDs?
    Answer. Yes, I do think it's appropriate for ICANN to make these 
decisions, but they should consider the public interest more thoroughly 
when they do so. As it is, the major benefits will go to insiders--
people in the business of selling and managing domain names--rather 
than to the owners or users of the names.

    Question 8. Several commenters also stated ``the market will decide 
which TLDs succeed and which do not.'' What is wrong with allowing the 
market to continue to decide with new gTLDs from the expansion?
    Answer. In principle, there's nothing wrong with this . . . but the 
domain-name market seems stacked to the benefit of insiders. The 
reality is that there is no competition for ICANN itself.. That's not 
necessarily a problem, but it means that ICANN and the entities that 
control it should be held to a high standard of accountability to the 
public interest.

    Question 9. If commenters are correct that ``there are no 
artificial or arbitrary limits in other media on the number of places 
in which trademark holders must defend against dilution'' then why 
should we place ``artificial or arbitrary'' limits on the Internet?
    Answer. Because the benefits of the expansion go to third parties 
rather than to the participants. De facto, ICANN and its stakeholders 
are creating dilutive property rights out of thin air and then 
auctioning many of them to the highest bidders.
                                 ______
                                 
                                           Name.Space, inc.
                                                       New York, NY
    Thank you this opportunity to present the views of Name.Space and 
its board of directors to the Committee on Commerce's hearing on ICANN 
and the expansion of Top Level Domains.
    I am Paul Garrin, the founder of Name.Space, a first mover in the 
Internet Top Level Domain registry field, working to bring our original 
generic TLDs to market since 1996, predating ICANN by two years.
    Name.Space recognizes the concerns of intellectual property 
holders, and we believe that we have a constructive and workable 
solution for policy and practice that will satisfy all parties, and 
welcome this opportunity to present our views to the Committee on 
Commerce at this December 8, 2011 hearing.
    This testimony is intended to serve the Committee members and 
parties concerned about the positive impact of new generic Top Level 
Domains by raising awareness of our position and vision for a 
constructive approach to bringing generic Top Level Domains to market 
in a way that protects intellectual property owners, and creates new 
opportunities for branding, consumer choice and confidence, and free 
expression.
    Historically, the commercialization of the Domain Name System has 
been plagued with ill-will. Cyber-squatting, domain name speculation, 
and fraud cost legitimate publishers, content creators, and brand 
owners millions of dollars in settling disputes, paying inflated prices 
from domain auctioneers and speculators, and in defensive domain name 
registrations. There are many conditions that led to this cascade of 
malfeasance resulting in defensive actions, un-budgeted costs, and 
damages to intellectual property and brand owners, and consumers. 
Foremost, is the lack of competition in the commercial TLD registry 
space. The incumbent registries, through their aggressive practices 
have done nothing but fuel the feeding frenzy on unmitigated domain 
name speculation in order to maximize their profits without regard to 
the negative consequences against brand owners and the overall utility 
of the DNS. ICANN's own policies only partially address brand 
protection through the (optional) sunrise period that precedes the 
launch of a new gTLD to the general public, and the trademark and brand 
clearing house.
    Name.Space, in its year 2000 application to ICANN, presented its 
policy and business practices that we believe are the most equitable in 
protecting the interests of intellectual property and brand owners, and 
free speech. Our business model is based not on exuberance over a 
particular string, but on a balanced portfolio of gTLDs that represents 
opportunities to create strong new brands, essential for new businesses 
and products, as well as for less popular community, cultural, and free 
expression purposes. Our model establishes an economy of scale that 
supports both commercially valuable gTLDs, and less-profitable gTLDs 
that serve smaller communities, and free expression, at a stable and 
affordable price point.
    In the upcoming 2012 gTLD round, Name.Space will re-assert its 
policies and responsible business practices for the fair delegation of 
domain names under its gTLDs, as well as work with IP interests and 
ICANN to develop new methods that better serve the proactive and 
preemptive protections necessary for the protection of intellectual 
property and brands in all of the gTLDs that we own and operate.
    Some of Name.Space's IP protections include:

        (1) Registered trademark name clearing house and preemptive 
        famous names filter.

        (2) Sunrise period reserved for registered brands and 
        intellectual property at a fixed wholesale cost.

        (3) Whois ``lockout'' that prevents registered brands from 
        becoming available to the general public.

        (4) Wholesale registrar access with volume discounts to 
        associations who serve intellectual property constituents.

        (5) Full cooperation with organizations such as the ANA, IPO, 
        WIPO, INTA, MPAA, and others to develop technologies, policies, 
        and business practices for operating our gTLDs that protect 
        existing brands, and develop new opportunities to use gTLDs to 
        create strong new brands, and to present owners with innovative 
        ways to protect and serve their content online.

        (6) Restrictions on registering domain names for the sole 
        purpose of resale.

    Name.Space had applied for 118 of its original generic Top Level 
Domains (including such gTLDs as .ART, .BOOKS, .MUSIC, .NOW, .SHOP, 
.SPACE, .SUCKS) in the first gTLD round held by ICANN in 2000. Although 
our application was accepted under ICANN's rules, and selected in the 
top 10 picks of ``strong candidates'', it was not advanced toward 
delegation, and thus remains pending. Our year 2000 ICANN application 
had the support of then Chair Esther Dyson, who stated that Name.Space 
represents diversity, free speech, and is likely to be a successful 
business that supports both commerce and free expression.
    Name.Space, whose business has a potential value of over 1 billion 
dollars, has been deprived the opportunity to fully launch and operate 
its portfolio of gTLD properties under what we believe is the most 
responsible, fair, and ethical practices yet to be employed in the 
commercial domain name industry. ICANN's approval of Name.Space's gTLDs 
will increase competition and diversity in the TLD registry space, and 
assure that our exemplary practices will best serve the public by 
providing the new gTLDs and the opportunities they present for new 
brands, small businesses, individual publishers and content creators, 
and for all owners of content libraries and new services in all media. 
The Internet is evolving and new gTLDs are an essential part of 
Internet infrastructure, and its evolution.
    The 2012 ICANN round is the first opportunity for gTLD selection 
since 2000, and we have very patiently been waiting for this time to 
arrive so that our business can reach its full potential. We don't 
believe that our responsible and ethical approach to operating our 
gTLDs will harm intellectual property and brand owners, but will in 
fact protect them and offer new opportunities. Any further delay in 
launching our business will do nothing but cause further distress to my 
struggling business, and prevent us from creating jobs and contributing 
to the economy. We ask that there be no delay in the ICANN 2012 gTLD 
round, and that ICANN honor our year 2000 application for the portfolio 
of gTLDs that Name.Space originated since
    1996, operated in commerce, and that we reserve our rights to. 
Name.Space is committed to the principles and practices stated here, 
and we believe that our gTLD policies are fair and exemplary, and 
welcome the cooperation of ICANN and the intellectual property 
associations to work with us in the most constructive and reasonable 
way so that our gTLDs become available on the global Internet without 
further delay.
    I look forward to questions from the members of this committee, and 
to the beginning of a constructive dialogue with constituencies 
affected by the introduction of new gTLDs to the global Internet.
            Sincerely,
                                               Paul Garrin,
                                                           Founder,
                                                            Name.Space.
                               Appendix:
    Name.Space has testimony on the record from hearings held by both 
Senate and House Commerce Committees on the subject of Top Level 
Domains submitted between 1997-2001. Name.Space is an early advocate of 
the shared registry system, and an advocate of a neutral non-profit 
organization to oversee the framework for introducing new gTLDs to the 
Internet, and was a participant in the IFWP process from which ICANN 
emerged.
Brief history:
    1996--Name.Space launched real time domain name registry service 
publishing its original generic TLDs
    1997--March 11, Name.Space requested Network Solutions add our gTLD 
data to the global root.zone file.
    1997--March 12, Network Solutions refuses to add our gTLDs to 
root.zone
    1997--March 20, Name.Space files antitrust suit against Network 
Solutions in Federal Court, Southern District NY
    1997--September 25 House Commerce Committee hearing on Internet 
Domains Pt 1 (Name.Space testimony on record)
    1997--September 30 House Commerce Committee hearing on Internet 
Domains Pt 2 (Name.Space testimony on record)
    1997--National Science Foundation joined to lawsuit on First 
Amendment grounds
    1998--Commerce Dept. NTIA releases ``Green Paper'' (Name.Space 
comments on record)
    1998--Commerce Dept. NTIA releases ``White Paper'' (Name.Space 
comments on record)
    1998--Commerce Dept. NTIA IFWP process (Name.Space participates)
    1998--NTIA takes over contract between NSF and NSI, and amends it 
(amendment 11)
    1998--Commerce Dept. NTIA contracts Internet Corporation for 
Assigned Names and Numbers
    1999--NTIA creates separation of TLD ``registry'' (wholesale) and 
domain name ``registrar'' (retail) using shared registry system. Prices 
drop from $100 per 2 year registration to $30 per year.
    1999--ICANN accredits 30 companies to serve as domain name 
registrars (reselling .COM); Name.Space accredited
    2000--February, Second Circuit Court of Appeals decision--immunity 
for Network Solutions
    2000--November--Name.Space participates in ICANN gTLD round, 
submits 118 gTLDs, pays $50,000 application fee; is picked in top 10 
strong applicants; support from chair Esther Dyson, opposed by other 
board members; application unresolved, still pending. *several ICANN 
board members recused themselves in connection with TLD applications 
that were selected.
    2001--February 8 House Commerce Committe ICANN hearing (Name.Space 
testimony on record)
    2001--February 14 Senate Commerce Committee ICANN hearing 
(Name.Space testimony on record)
    2000--Present--Name.Space business severely impacted by non-global 
access for its gTLDs, struggles to stay afloat. New investment enables 
us to participate in the 2012 round with our standing application from 
2000.
Links to view video from ICANN's 2000 gTLD round:
    Paul Garrin presents Name.Space to ICANN board, answers board's 
questions (Nov. 15, 2000): http://replace.tv/vid/2000-icann1115-pg-
presents.mov (approx. 8 min.)
    ICANN board (sans recused members) discusses the Name.Space gTLD 
application: http://replace.tv/vid/2000-icann1116-pt02-ns-
discussion.mov (approx. 28 min.)
For more information, history, press highlights links, please see:
    http://about.namespace.org.
Select press links: 
    http://www.nytimes.com/library/cyber/week/032297domain.html 
(Name.Space formerly known as PGP Media) http://timeto.freethe.net/pg/
media/washpost
19970706.txt

    http://news.cnet.com/2100-1023-203408.html (Name.Space formerly 
known as PG Media)

    http://timeto.freethe.net/pg/media/dot-monopoly1.jpg http://
timeto.freethe.net/pg/media/dot-monopoly2.jpg

    http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/
2000/12/03/BU113071.DTL

    http://www.thevillager.com/villager_314/thebattleofnyc.html
Attachments:
    (1) Name.Space ICANN application from the 2000 gTLD round
    (2) Questions and answers from ICANN to Name.Space on the 2000 
application
    (3) Name.Space business plan (2000 version as submitted to ICANN)
    [Attachments not inserted into the record.]
                                 ______
                                 
                                                      ICANN
                                                   14 December 2011
At-Large Advisory Committee
Att:
Hon. John D. (Jay) Rockefeller IV,
Chairman, Senate Committee on Commerce, Science, and Transportation
United States Senate,
Washington, DC.

Dear Chairman Rockefeller,

    We are following up on the discussions which took place during the 
8 December 2011 hearing of the United States Senate Committee on 
Commerce, Science and Transportation about ICANN's expansion of generic 
Top Level Domains.
    As current chairs of ICANN's At-Large Advisory Committee (ALAC) and 
North American Regional At-Large Organization (NARALO), we found Ms. 
Esther Dyson's description of the ALAC circa 2003 extremely out-of-
date. Her testimony depicted the ALAC prior to the establishment of the 
five Regional At-Large Organizations (RALOs) which are designed to 
provide a structured input first to the ALAC and then to ICANN from 
Internet end-users around the world. However, we fully support her 
overall message for the public to pay attention to the workings of 
ICANN, and that ICANN's door is open.
    Today, the ALAC is able to comment on any aspect of the new gTLD 
program, which it has on several occasions, as well as any other 
program or process at ICANN. It carries much more ``weight'' within 
ICANN's multi-stakeholder, bottom-up model, than it had in the past, 
thanks to the hard, relentless work of many end-user volunteers who are 
fighting in the ``trenches'' to bring the public interest to the ICANN 
table. We have nearly 140 At-Large Structures (acronym ALS--any formal 
commercial or non commercial organization having established a process 
to collect member input at a country level, whether a local non-profit 
computer club, or a charity bringing computing to the disadvantaged) 
worldwide and are increasing our membership on a monthly basis.
    We believe it is the duty of ICANN, and of the ALAC, to impress 
upon legislators and the Executive Branch in all countries that the 
touchstone of future Internet development is, and should remain, in the 
public interest. In parallel, we wish to draw the attention of 
legislators in the United States to the fact that, because their 
conclusions and choices regarding the Internet have the potential to 
affect Internet end-users elsewhere, United States' initiatives and 
laws should seek to be compatible with the public interest 
internationally.
    Active At-Large members cannot purport to ``represent'' the 2.1 
billion global Internet users, but they can try to act in what they 
honestly believe is in the best interests of the Internet's end users. 
Do we have enough members? Probably not--our aim is to have at least 
one At-Large Structure (ALS) in every country around the world. We need 
more volunteers. We need more input from global Internet end-users.
    The vehicle for this input is here. It is already used and has 
produced dozens of statements every year, which you and your honorable 
colleagues can consult on: http://www.atlarge.icann.org/correspondence
    However, this vehicle needs to be more advertised. We are doing our 
part to raise awareness of ALAC and the issues of interest to global 
Internet end-users.
    We ask that you share the information of this vehicle as outlined 
above with your colleagues.
            Yours sincerely,
                                      Beau Brendler, Chair,
            North American Regional At-Large Organization (NARALO),
                              http://www.naralo.org/ Yonkers, New York.
                      Dr. Olivier MJ Crepin-Leblond, Chair,
                                       At-Large Advisory Committee,
                                 http://www.alac.icann.org/ London, UK.
                                 ______
                                 
                   Council of Better Business Bureaus, Inc.
                                                   December 8, 2011
Hon. Jay Rockefeller IV,
Hon. Kay Bailey Hutchinson,
Committee on Commerce, Science, and Transportation,
United States Senate,
Washington, DC.

Dear Chairman Rockefeller and Senator Hutchinson:

    The Council of Better Business Bureaus (CBBB) would like to thank 
you for holding a hearing on the important topic of Internet domain 
expansion.
    CBBB concurs with the concerns expressed by the Association of 
National Advertisers and the nonprofit constituency of the Internet 
Corporation for Assigned Names and Numbers (ICANN). Currently, there is 
insufficient control over the rampant crime that takes place via the 
Internet in the form of pirating of intellectual property, identity 
theft, phishing scams and other types of brand infringement and 
consumer fraud. CBBB and its constituents--small and medium business, 
nonprofits and consumers--are victimized by Internet crime on a daily 
basis.
    Before ICANN undertakes a mass expansion of potential websites, it 
needs to come up with a workable solution, in conjunction with 
international crime fighting organizations and victims of crime, to 
improve the ability of law enforcement to track and shut down illicit 
activities on currently registered Internet websites.
    As a not-for-profit trade association with famous and well-
recognized trademarks, CBBB has to devote considerable resources to 
tracking and taking action against illicit use of its trademarks on the 
Internet. We also have to spend scarce financial resources each year 
purchasing domain names in all of the different top level domains 
corresponding to all of our trademarks and programs to keep 
illegitimate users from purchasing our name and diverting traffic to 
their fraudulent websites. An increase in the top level domains will 
exponentially increase these costs.
    ICANN's current proposal requires trademark holders to register 
their trademarks in a Trademark Clearinghouse and then purchase or 
block each trademark in each new top level domain (an expense that most 
non-profits and small businesses cannot afford). Instead of the current 
proposal, ICANN should block the new TLD registries from selling 
domains that belong to trademark holders and have been properly 
registered in the Trademark Clearinghouse.
    As an example of the backward manner in which ICANN ``protects'' 
trademarks, it is notable to consider the experience the CBBB had in 
the most recently opened top level domain, the .xxx TLD operated by ICM 
Registry for the adult entertainment industry. Any trademark holder 
that wanted to ensure that its trademark was not sold in that registry 
had to block it during the ``sunrise'' period. Otherwise, ICM could 
sell the trademark as domain names, a common practice. In all, ICM and 
the registrars selling to .xxx made approximately $23 million from this 
type of defensive registration by trademark holders who simply wanted 
to protect their good names from abuse.
    Even more astounding was the fact that ICM Registry refused to 
accept CBBB's registration of its most famous trademark (``BBB,'' one 
of the most recognized trademarks in North America) because ICANN 
allowed ICM to reserved bbb.xxx as a premium name that it can later 
auction off to the highest bidder.
    Another type of Internet crime and organizational identity theft 
occurred just yesterday when the BBB network e-mail and registered 
torch logo were used as tools in a widespread phishing scam that sent 
e-mails to thousands of people across North America and victimized 
unsuspecting e-mail recipients who believed these e-mails came from 
BBB. Despite best efforts, long hours and wasted resources, it is 
difficult to identify the perpetrators of phishing scams such as this.
    ICANN was authorized to operate the domain naming and addressing 
system under the condition that it act in the public interest, per the 
terms of its Memorandum of Understanding with the Department of 
Commerce and its subsequent Affirmation of Commitments. To fulfill this 
public interest requirement, ICANN must balance the desire for greater 
competition on the Internet with suitable protections for legitimate 
organizations and hard working business owners. That is essential to 
fulfilling its public interest commitment.
    Without more controls on Internet registries and registrars, the 
Internet will increasingly serve criminal interests over the public 
interest. More resources must be made available to combatting Internet 
crime. We recommend that these strong actions be taken before ICANN 
expands top level domains, an expansion that will only exacerbate these 
grave problems.
    The Council of Better Business Bureaus and our entire BBB network 
appreciate the work of the Committee in helping solve these issues that 
impact large and small companies, nonprofits, charities and, 
ultimately, consumers.
            Sincerely,
                                            Stephen A. Cox,
                                                 President and CEO,
                               Council of Better Business Bureaus, Inc.
                                 ______
                                 
                                                 Dell, Inc.
                                   Washington, DC, December 7, 2011

Senator Jay Rockefeller IV,
Chairman
Committee on Commerce, Science, and Transportation
Washington, DC.
Senator Kay Bailey Hutchison,
Ranking Member
Committee on Commerce, Science, and Transportation
Washington, DC.

Dear Chairman Rockefeller and Ranking Member Hutchison:

    Thank you for committing your and the Committee's time and 
resources toward exploring the implications of the International 
Corporation for Assigned Names and Numbers' (ICANN) generic top-level 
domain (gTLD) expansion plan. This proposal is of great concern to Dell 
and our many online customers.
    As a company that transacts significant business online, Dell is 
already a major target of online criminals who fraudulently incorporate 
our trademark into domain names in attempts to steal individuals' 
private information, sell dangerous counterfeit products, or otherwise 
defraud consumers. Dell expends significant resources, in the form of 
litigation and defensive domain name procurement, to counter these 
threats to consumer welfare in the existing universe of domain names. 
ICANN's plan to multiply the size of that universe will both multiply 
the expenses required to undertake those defenses, as well as multiply 
the potential online threats to consumers. We believe that the 
inevitable result of ICANN's current plan will be erosion of consumer 
trust in ecommerce, along with significant new expenses on all honest 
companies that transact business online--expenses that are particularly 
undesirable during a time when our economy needs companies to invest 
instead in innovation and job creation.
    ICANN's multi-stakeholder process did not adequately address the 
concerns of stakeholders in the domain name system, and Dell believes 
it imperative for the U.S. Government to now take steps to ensure that 
ICANN fulfills its obligations to resolve these serious issues. We 
respectfully request that you and your colleagues encourage the 
Department of Commerce to ask ICANN, under the Affirmation of 
Commitments Agreement, to delay implementation to fully review and work 
to resolve stakeholder concerns, particularly those that threaten the 
consumer trust that currently enables ecommerce to thrive.
            Respectfully,
                                          Rebecca MJ Gould,
                                                    Vice President,
                                           Global Government Relations 
                                                     and Public Policy.
                                 ______
                                 
         Prepared Statement of Jim Gibbons, President and CEO, 
                Goodwill Industries International, Inc.
    Mr. Chairman, Ranking Member, and members of the Committee, on 
behalf of Goodwill Industries International, Inc., I appreciate this 
opportunity to submit written testimony on the Internet Corporation for 
Assigned Names and Numbers (ICANN) expansion of new generic top level 
domains (new gTLD program).
    Goodwill Industries is comprised of 165 independent, community-
based Goodwill agencies in the United States and Canada and 14 
international affiliates. Collectively, Goodwill's network of local 
agencies provides employment training, job placement services and other 
community services to nearly 2.5 million people annually. In addition, 
170,000 people obtain meaningful employment as a result of Goodwill 
career services programs. These employees earn $2.7 billion in salaries 
and wages and contribute to their communities as productive, taxpaying 
citizens.
    Goodwill Industries is one of the early organizational members of 
the Not-for-Profit Operational Concerns Constituency (NPOC). After 
several years of discussing the new gTLD program, the ICANN board 
identified the nonprofit sector as an under-represented voice within 
the ICANN community and Internet governance, thus appointing a new 
councilor to represent and promote the needs of nonprofits in the fall 
of 2009. In June, 2010 the nonprofit voice had increased sufficiently 
and warranted the formation of a new constituency. NPOC was formally 
approved by the ICANN board on June 24, 2011. Unfortunately by the time 
the nonprofit sector was recognized and able to raise valid concerns, 
the proposed guidelines for the new gTLD program has undergone many 
revisions. NPOC currently represents 23 nonprofits from around the 
word, 11 of which are based in the United States including the YMCA. 
Many other applications are pending membership, demonstrating the 
increased interest by nonprofits of this issue. Goodwill Industries 
supports the testimony provided by Angela Williams, General Counsel, 
YMCA of the USA on behalf of her agency and NPOC.
    As a member of NPOC and one of the five most valuable and 
recognized nonprofit brands as well as a leading social services 
enterprise, Goodwill Industries has several concerns with the new gTLD 
program, including: budgetary concerns; the increased risks of fraud, 
cybersquatting, and trademark infringement; and public confusion.
Budgetary Concerns
    The ultimate cost in proceeding through the entire process of 
applying for a gTLD could reach several hundred thousand dollars. The 
initial application cost is to be approximately $185,000 plus an 
additional annual cost thereafter of at least $25,000 for a required 
ten-year term. This does not include the legal fees required to prepare 
the application and certain amounts required to be in escrow. 
Furthermore, additional costs can be incurred if an applicant is 
required to defend the application. For example, if ICANN requires an 
extended evaluation of an application, the applicant may have to pay an 
additional $50,000 including fees to defend the application which range 
from $1,000 to $5,000 in filing fees per party per proceeding, and an 
additional $3,000 to $20,000 in costs per proceeding, which must be 
paid up front.
    Should Goodwill choose not to participate in the new gTLD program, 
there is a great risk that another entity will apply for the use of the 
name ``goodwill'' or one that is similar--such as a misspelling of the 
word ``goodwill''. In the likely event that another entity applies for 
a top-level domain that contains ``goodwill'', the costs for filing an 
objection are expected to be $30,000 to $50,000.
    As a nonprofit social enterprise committed to its mission of 
eliminating barriers to opportunity and helping people in need reach 
their fullest potential through the power of work, Goodwill Industries 
and its local members simply do not have the resources to participate 
in the new gTLD and will certainly not be able to compete against for-
profit organizations with resources and reserves available for 
intellectual property protection. In these tough economic times when 
faced with decreased donations and increases in the number of people 
seeking services, Goodwill and other nonprofits must continue to use 
funds to provide critical services to our communities. Goodwill simply 
cannot afford thousands of dollars to become a domain name registry 
solely to ensure brand protection. Becoming a domain name registry is 
not part of Goodwill's mission, yet protection of its reputation and 
brand is critical. Founded in 1902, Goodwill has a long history and a 
solid reputation with the millions of shoppers, donors, and people who 
use our services. Last year Goodwill earned the trust of 74 million 
donors and provided job-training and employment services to nearly 2.5 
million people.
Risk of Fraud and Public Confusion
    The primary enforcement mechanism of the new gTLD program is the 
Trademark Clearinghouse where registered trademark owners can protect 
their registered trademark rights. Many of the costs of listing marks 
in the Trademark Clearinghouse are still unclear, creating uncertainly 
as to whether this is a viable option for nonprofits to protect their 
brands.
    The Trademark Clearinghouse will only apply to exact matches of 
trademarks, rather than common misspellings, etc. that fraudsters and 
cybersquatters often use to deceive and confuse Internet users 
attempting to locate a particular nonprofit. Nonprofits are not in a 
position to register their marks using hundreds of additional gTLDS, 
particularly at premium prices.
    Bad actors such as fraudsters and cybersquatters who register and 
use domain names in bad faith to take advantage of the established 
trust between nonprofits and the public and the brand reputation of 
other well-known entities have existed for many years. Goodwill 
Industries recently learned of an unauthorized entity using its name to 
fundraise online and in a local community. Potential funders were 
confused about which organization was seeking donations and for what 
purpose. Unfortunately this is a common occurrence as trademark 
infringement is becoming more rampant.
    The likely increased public confusion and fraud that will occur in 
the new gTLD space will be particularly devastating for nonprofits. If 
nonprofits, including Goodwill and our members, are not able to 
adequately protect names and trademarks, bad-faith domain name 
registrants will be able to inappropriately profit from hundreds of 
domain names that are identical or similar. In addition, those bad 
actors may disseminate dangerously false information to Internet users, 
greatly increasing the likelihood that the public will be misled.
Conclusion
    Goodwill Industries believes ICANN should eliminate the costs--or 
at a minimum, drastically reduce the costs--for verified nonprofits to 
participate in the new gTLD program. Furthermore, verified nonprofit 
trademarks should be exempt from the new gTLD program at little-to-no 
cost and mechanisms for trademark protection within the new gTLD 
program should be significantly strengthened.
    Goodwill is an innovative social enterprise and as such has 
expanded its presence on the Internet and increased its mobile 
accessibility to meet the needs of its shoppers, donors, and program 
participants. The zip code locator is the most popular feature of 
www.goodwill.org where one can find the nearest Goodwill to shop, 
donate, volunteer, and/or receive job-training and employment services. 
Like many nonprofits, Goodwill is also increasing its online 
fundraising capacity. As Goodwill continues to see growth in these 
areas, protecting our brand, reputation, and the nonprofit sector as a 
whole is more important than ever. However, these protections should 
not come at the expense of the critical services that nonprofits 
provide.
    Thank you for taking the time to consider these consequences of the 
new gTLD program. We look forward to continuing our work with ICANN via 
our participation in NPOC to ensure the voice of the nonprofit sector 
and the people we serve is heard.
                                 ______
                                 
                                               Easter Seals
                                                  December 12, 2011
Hon. John D. Rockefeller IV,
Chair,
Committee on Commerce, Science, and Transportation,
United States Senate,
Washington, DC.

Dear Senator Rockefeller:

    Easter Seals is pleased to endorse the testimony of the Not-for-
Profit Operational Concerns Constituency (NPOC) before the United 
States Senate Committee on Commerce, Science, & Transportation on the 
issue of the Internet Corporation for Assigned Names and Numbers' 
(ICANN) new Generic Top-Level Domain Name Program (new gTLD Program)..
    Easter Seals, like many non-profit organizations, increasingly 
relies on the Internet for communicating and fulfilling our mission to 
provide services and supports to people with disabilities and other 
special needs. The potential for cybersquating and fraud could be 
greatly increased under the gTLD Program and groups like Easter Seals 
would need to divert greatly needed resources away from services to 
protect ourselves. We believe that the new gTLD Program, as currently 
defined, will ultimately create unintended, and costly, consequences 
for not-for-profit organizations.
    Thank you for your consideration.
            Sincerely,
                                           Jennifer Dexter,
                                         Assistant Vice President, 
                                              Government Relations.
                                 ______
                                 
       Prepared Statement of the National Restaurant Association
    The National Restaurant Association appreciates the opportunity to 
register the U.S. restaurant industry's strong opposition to the 
January 2012 roll-out of the new generic top-level domain (gTLD) 
program approved by the Internet Corporation for Assigned Names and 
Numbers (ICANN) in June 2011.
    The Association is the leading business association for the 
restaurant and foodservice industry. Our industry is comprised of 
960,000 restaurant and foodservice locations. These nearly 1 million 
restaurant locations serve more than 130 million Americans every day. 
Our members include multi-state, multi-unit restaurant brands with 
thousands of locations worldwide and small independent businesses with 
a single location.
    The restaurant industry plays a significant role in our Nation's 
economy. Restaurants will generate an estimated $604 billion in sales 
this year, with an overall economic impact of more than $1.7 trillion. 
The restaurant industry is one of the Nation's largest private-sector 
job creators, employing about 12.8 million people, representing nearly 
10 percent of the U.S. workforce.
    The Association joins more than I 00 other major business 
associations and companies in the Coalition for Responsible Internet 
Domain Oversight (CRIDO) in urging the Department of Commerce to stop 
or delay ICANN's new gTLD program. We were part of CRIDO's petition to 
U.S. Department of Commerce Secretary John Bryson in November urging 
the Department to work with ICANN on delaying and reconsidering the 
program.
    We believe ICANN's gTLD program would impose billions of dollars in 
unnecessary costs on the restaurant industry at a time when restaurant 
operators are looking forward to investing in their businesses and 
hiring employees after the worst recession in decades. Profit margins 
in restaurants are notoriously slim, with restaurants averaging about 4 
percent in pre-tax profits on every dollar in sales. The ICANN program 
will divert scarce restaurant resources away from job creating, 
business-building activities. These are dollars far better spent 
reinvesting in our businesses.
    If ICANN proceeds as planned, the organization will start accepting 
applications next month for hundreds and ultimately thousands of new 
top-level domains. Restaurants of all sizes will be forced to apply for 
new domains to protect their brands and trademarks. Costs include a 
$185,000 application fee for each new top-level domain. Restaurants and 
other companies also likely would be forced to register numerous 
second-level domains--the words to the left of the ``dot'' in Internet 
addresses--within the new top-level domains. Costs would be driven 
higher by legal, marketing and other costs. Some businesses have put 
the cost of registering a single top level domain at $2 million or more 
over the initial 10-year contract as companies submit applications, 
watch and defend their domains, monitor for infringement and litigate 
to block abuse. Costs could run higher if businesses are forced to buy 
their own Internet names in auctions.
    The Internet is increasingly central to restaurateurs' efforts to 
attract guests and grow their businesses. This is true for both major 
restaurant brands and independent restaurants. Association research 
shows that Americans increasingly go online for information about 
restaurant menus, specials, nutrition facts and more. Restaurants rely 
on the Internet to reach guests. Our members would have little choice 
but to apply for domain names for both commercial and defensive 
reasons. For our largest restaurant-member brands, the price tag is 
exorbitant. For the hundreds of thousands of smaller restaurant 
operators who depend on the Internet to communicate with guests, the 
costs and confusion could be insurmountable.
    Even beyond the financial toll the gTLD program will exact on 
millions of U.S. businesses, the Association believes that ICANN's 
program will confuse consumers by spreading Internet searches across 
hundreds or even thousands of new top-level domains. As confusion 
grows, each domain name becomes less valuable. This could undermine 
consumer trust in the system and make it harder for the Internet to 
serve as the efficient conduit for business activity that it does 
today.
    The U.S. government has delegated powers to ICANN to govern the 
domain-name process. ICANN is responsible for ensuring its actions 
further the public interest and promote consumer trust. ICANN says it 
has built consensus on its recommendations; indeed, its contract with 
the Department of Commerce requires this consensus. Yet the Association 
believes ICANN has failed to justify the need for the potentially 
explosive expansion in top-level domains or to get consensus from the 
millions of business stakeholders who will be affected by the program.
    Finally, we believe ICANN has taken only minimal steps to educate 
and inform the business community and consumers about the new top-level 
domain process. If ICANN proceeds with the January roll-out of its gTLD 
program, businesses and non-profit organizations will be immediately 
affected. Yet even given the reaction of the business and non-profit 
communities to the ICANN program, there has been little education and 
information to help businesses and consumers understand the scope of 
what is about to happen. Millions of American business owners know 
nothing about the gTLD expansion. Information has filtered out slowly 
and sporadically since ICANN approved the program in June, leaving 
businesses and consumers in the dark about one of the biggest shake-ups 
in Internet marketing in decades.
    The Association asks Congress and the Commerce Department to urge a 
reassessment of the gTLD program before its planned roll-out in 
January. We thank the Committee for holding this hearing to air the 
serious concerns of America's business community with ICANN's domain 
name expansion program.
                                 ______
                                 
             Prepared Statement of Josh Bourne, President, 
              Coalition Against Domain Name Abuse (CADNA)
    Chairman Rockefeller, Senator Klobuchar and distinguished members 
of the Committee, thank you for convening this hearing on the Internet 
Corporation for Assigned Names and Numbers (ICANN) and its program to 
expand the number of new generic top-level domains (gTLDs) in the 
domain name space. This is a drastic change that ICANN is about to 
implement. It will dramatically impact the space, and given the 
commercial significance of the Internet, it is critical that the United 
States Congress involve itself in matters of domain name space policy 
and regulation.
    My name is Josh Bourne and I am the president of the Coalition 
Against Domain Name Abuse (CADNA). Over four years ago with the help of 
leading brand owners we founded CADNA, a 501(c)(6) non-profit 
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 including financial services, 
manufacturing, pharmaceutical, leisure, high technology, and 
manufacturing. Our members include companies such as: Dell, DIRECTV, 
Lilly, Hewlett-Packard, Hilton, HSBC, LEGO, Marriott, Nationwide, New 
York Life Wells Fargo, and Wyndham.
    CADNA was founded in response to the growing international problem 
of cybersquatting, which is the bad faith registration of domain names 
that include or are confusingly similar to existing trademarks. In 
addition to the mounting legal costs that companies now face in defense 
of their own trademarks in the domain space, this infringement costs 
organizations billions of dollars in lost or misdirected revenue. CADNA 
works to decrease instances of cybersquatting in all forms by 
facilitating dialogue, effecting change, and spurring action on the 
part of policymakers in the national and international arenas. CADNA 
also aims to build awareness about illegal and unethical infringement 
of brands and trademarks online. In the four years since its inception, 
CADNA has generated valuable new intelligence to help inform and 
expertly guide its members and increase awareness of CADNA's mission. 
CADNA seeks to make the Internet a safer and less confusing place for 
consumers and businesses alike.
    Thank you very much for the opportunity to present the views of our 
organization on this very important topic.
    CADNA looks at the way that the New gTLD Program was developed as 
the product of a flawed system. CADNA believes that the goal of 
fostering innovation and competition through the expansion of the 
domain name space is not inherently objectionable, but rather, that the 
policy development process that ICANN conducted created a problematic 
program.
    Since ICANN's June 20 decision to approve the Applicant Guidebook, 
CADNA has continued to promote changes in ICANN to improve governance, 
policy making, and to increase transparency. In addition, we have 
looked to find ways to ensure that ICANN follows through on its 
commitments with respect to the implementation of the gTLD policy and 
to develop recommendations that may improve the policy going forward.
    CADNA's aim is to be a constructive partner in the Internet 
governance process. We have always supported ICANN's multi stakeholder 
system and strongly believe that, with some reforms, ICANN can better 
fulfill its designated mission. 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 development, but CADNA believes that they can serve 
as the basis of further dialogue with the Internet community and ICANN.
    Here are some concrete steps that can be taken to immediately 
improve the implementation of the gTLD policy:

   A declaration by ICANN of when the next applicant round will 
        take place would relieve much of the anxiety surrounding the 
        first round. CADNA has found that businesses feel forced into 
        applying for new gTLDs in the first round, lest they be put at 
        a disadvantage relative to their competitors who may gain an 
        edge by acquiring their own new gTLDs.

   Businesses are worried about dealing with the cybersquatting 
        that will occur to the ``left of the dot'' in the new space--in 
        other words, they are worried about the defensive registrations 
        that they will need to pay for in others' new gTLDs and the 
        infringing domains that ultimately get registered by 
        cybersquatters. To alleviate this issue, ICANN should require 
        registries to give brand owners the option to buy a block on 
        their trademark before any registration period (sunrise or 
        land-rush) opens. This can be offered at a lower cost than 
        sunrise registrations have been priced at in the past--this 
        precedent has been set with the blocks offered in .XXX, where 
        the blocks are made in perpetuity for one, non-recurring fee.

   If ICANN is awarded a renewed IANA contract, the National 
        Telecommunications and Information Administration (NTIA) should 
        renew the IANA contract for one year. In this one year, there 
        should be an evaluation of whether ICANN followed through on 
        its commitments with regard to the gTLD process and any 
        extension of the contract should be contingent on conducting 
        internal reforms to improve governance and transparency.

    As the process moves forward, CADNA believes there will be many 
more improvements that can be made. In the coming months, CADNA intends 
to monitor progress and to research and develop other recommendations.
    Mr. Chairman, you have been an outspoken leader on Internet issues 
and on Internet governance. The exponential expansion of the Internet 
created by ICANN's gTLD policy holds tremendous opportunities for 
innovation and for improving the lives of many. At the same time, the 
new policy creates many challenges in regard to the enforcement of 
individual rights, intellectual property protection, and consumer 
fraud.
    CADNA would like to seize this opportunity with you and your 
Committee, the Obama Administration, and other private and public 
partners to develop an ICANN policy making process that will not repeat 
the mistakes of this gTLD policy, but one that will produce policies 
that will improve the Internet experience for all Internet users.
                                 ______
                                 
Hon. John D. Rockefeller IV,
Chairman,
Commerce, Science, and Transportation Committee,
United States Senate,
Washington, DC.

Hon. Kay Bailey Hutchinson,
Ranking Member,
Commerce, Science, and Transportation Committee,
United States Senate,
Washington, DC.

Dear Chairman Rockefeller and Ranking Member Hutchinson:

    In response to the December 8 hearing regarding new generic top-
level domains (gTLDs), we write to register our concern with the 
mischaracterization of elements of the gTLD program, and to communicate 
our support for new gTLDs.
    The organizations signing this letter believe the introduction of 
new gTLDs will be innovative and economically beneficial, that the 
Internet Corporation for Assigned Names and Numbers (ICANN) has 
conducted an inclusive and well-handled review of the program, and that 
preparations for gTLD introduction are sufficient to ensure Internet 
security and stability and to protect rights holders.
    ICANN, along with multiple relevant stakeholders and policy 
organizations, including the Generic Names Supporting Organization, 
undertook a very lengthy, comprehensive and transparent process that 
led to the approaching application for and introduction of new gTLDs. 
Since the formation of the multi-stakeholder Internet governance, no 
process has been as inclusive, and no level of outreach has been as 
far-reaching as the one facilitating discussion of namespace expansion. 
ICANN, its stakeholders, the intellectual property community, and 
governments are to be applauded for actively seeking, welcoming and 
incorporating the input of so many.
    As undeniably inclusive as this process has been, however, we 
believe it is even more important to recognize the significant social 
and economic opportunities new gTLDs will provide, particularly in a 
fragile global economy. Since ICANN's establishment in 1998, a key 
element of its mandate has been not only to ensure the secure and 
stable operation of a global domain name system, but to promote the 
competition and consumer choice that contributes to global economic 
growth. Established and developing economies are anticipating the new 
opportunities afforded by new gTLDs and it is noteworthy that this 
expansion will include internationalized domain names (IONs), TLDs that 
permit Internet users, for the first time, to access domain names in 
their native languages and character sets.
    Innovation and expansion into new areas of technology always bring 
questions and concerns-further development of the namespace is no 
exception. Since ICANN's inception in 1998, it has successfully managed 
careful generic namespace expansion while addressing the well-known 
concerns of many, including cybersecurity experts, government 
representatives, intellectual property rights holders, and others. 
Since the process for the current round of expansion was introduced in 
2005, more than six years ago, all interested stakeholders took 
unprecedented steps-well in advance-that provide further protections 
against infringement, damage or harm to national interests. More than a 
dozen open-to-the-public global meetings, nearly fifty public comment 
periods, a dedicated meeting between the ICANN Board and its 
Governmental Advisory Committee, and the exchange and discussion of 
tens of thousands of documents confirm that the decision in favor of 
new gTLDs can't be logically characterized as sudden.
    These painstaking deliberations have involved some of us more than 
others. However, we each equally respect and support the efforts and 
the intentions of ICANN in this beneficial endeavor. We are confident 
the evaluation process for applicants, including the stringent 
attention to DNS stability and security, will allow for a safe and 
productive new gTLD introduction.
    While new gTLDs will experience different levels of end-user 
adoption, we optimistically anticipate the useful possibilities for new 
services and applications from the namespace, the positive economic 
impact in the United States and globally, the inclusion of developing 
nations in Internet growth and development, and the realization of the 
hard work and preparation of the thousands of interested stakeholders 
dedicated not only to their own interests, but that of the global 
Internet.
            Sincerely:

Alexa Raad, Chief Executive Officer, Architelos
Alexander Siffrin, Chief Executive Officer, Key Systems GmbH
Andreas Schreiner, Chief Executive Officer, lnterNetWire Communications
GmbH Angie D. Graves, President, WEB Group, Inc.
Antony Van Couvering, Chief Executive Officer, Minds + Machines
Bhavin Turakhia, Chief Executive Officer and Founder, Directi
Bret Fausett, President and Founder, Internet Pro APC
Clyde Beattie, Principal, The Yorkland Group
Dr. Liz Williams, Chief Executive Officer, Sedari
Elliot Ness, Chief Executive Officer, Tucows
John Styli, Chief Operating Officer, Far Further
Jonathon Nevett, President, Domain Dimensions, LLC
Kevin Saimon, President, Urban Brain
Krista Papac, Chief Strategy Officer, ARI Registry Services
Loren Salman, Chief Executive Officer, Far Further
Mason Cole, Principal, 5x5 Communications
Michael Berkens, Director, RightOfTheDot LLC
Mike Rodenbaugh, Founder, Rodenbaugh Law
Monte Cahn, President/Director, RightOfTheDot LLC
Nacho Amadoz, Legal & Policy Director, Fundacio PuntCAT
Paul Stahura, Chief Executive Officer, Donuts Inc.
Richard Wilhelm, Principal, RJW Partners, LLC
Robert Connelly, President, Domains Only
Robin Gross, Executive Director, IP Justice
Steve Miholovich, Sr. Vice President Sales & Marketing, Safenames Ltd.
Susan Prosser, Vice President, Marketing, Domain Tools
Tad Yokoyama, President, Interlink Co., Ltd.
William Mushkin, Chief Executive Officer and Founder, Name.com

cc: Members of the Commerce, Science and Transportation Committee

                                  
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