Testimony

• The Honorable Nancy J. Victory
  Read statement

  Testimony

  The Honorable Nancy J. Victory

  Thank you, Mr. Chairman. I would like to thank you and the members of the Subcommittee on Communications of the Senate Committee on Commerce, Science and Transportation for inviting me here today to testify on this important issue. I am Nancy J. Victory, Assistant Secretary for Communications and Information and Administrator of the National Telecommunications and Information Administration. The Internet and the variety of applications that it supports provide tremendous opportunities for economic and social development around the world. What started as a small-scale system of links among U.S. academic institutions is now a gigantic global network connecting individual users, companies and institutions from any access point, regardless of national or geographic borders. The Internet continues to expand in terms of size and scope and has become a significant and important means of doing research, communicating with each other, and conducting business. In fact, e-commerce sales by U.S. retail establishments reached $11.921 billion during the first quarter of 2003 - a 25.9 percent increase over first quarter 2002. Given the Internet's importance in all of these facets of daily life and the country's general economic well-being, it is essential that the Internet - and its underlying domain name and addressing system (DNS) - remain stable and secure. This is the primary concern of the Department of Commerce, which currently serves as the steward of critical elements of the DNS. The Department believes that the stability and security of this important global resource can best be achieved through privatization of the technical management of the DNS and continued global cooperation, via appropriate public-private partnerships that reflect the international nature of the Internet. Innovation, expanded services, broader participation, and lower prices will arise most easily in a market-driven arena, not in an environment that operates under substantial regulation. The Internet Corporation for Assigned Names and Numbers (ICANN) is the private sector entity responsible for day-to-day management of the DNS. ICANN performs this function pursuant to a Memorandum of Understanding (MOU) with the Department of Commerce. The Department supports the ongoing work of ICANN and applauds its efforts to engage all critical stakeholders in its decision-making processes. We are particularly encouraged by the progress ICANN has made over the past year towards implementing a number of structural and procedural reforms, as well as moving forward on several of the tasks set forth in the MOU. The Department desires to see ICANN evolve into a stable and sustainable organization that is well equipped to weather a crisis. Last year, when the Department of Commerce and ICANN chose to renew the MOU for a period of one year, both parties agreed that continued progress toward stability and sustainability required ICANN to focus on improvements in 5 major areas: · Clarifying ICANN’s mission and responsibilities; · Ensuring transparency and accountability in its processes and decision making; · Increasing its responsiveness to Internet stakeholders; · Developing an effective advisory role for governments; and, · Ensuring adequate and stable financial and personnel resources to carry out its mission and responsibilities. The Department believes that ICANN has made significant strides this year in developing into a more stable, transparent and responsive organization. ICANN has completed a comprehensive reform effort that has resulted in major structural adjustments and refinements to its decision-making processes that allow for greater transparency and responsiveness to all critical Internet stakeholders. Specifically: · ICANN has refined its mission and restructured its supporting organizations and advisory committees, including the establishment of a new supporting organization for country code Top Level Domain (ccTLD) managers; · ICANN has implemented new, transparent, constituency-driven policy development processes; · ICANN has established an at-large advisory committee and regional at-large organizations to encourage greater global public participation; · ICANN has created liaisons between the Governmental Advisory Committee (GAC) and the other ICANN supporting organizations and advisory committees; · ICANN has established a process for the ICANN board to solicit and receive GAC advice on public policy matters between meetings; and · ICANN has restructured its staff to better respond to ICANN’s technical policy, DNS management and financial responsibilities. In addition, the organization has hired a new CEO with both management expertise and experience in dealing with this unique organization. It has also implemented a new nominating process to ensure qualified, committed and internationally representative board members. It recently appointed eight new board members with impressive credentials and very relevant experience. I am also pleased to note that the ICANN GAC, of which the United States is an active participant, has undergone an evolution of its own. The establishment of GAC liaisons to each of the other ICANN supporting organizations is intended to encourage communications between the GAC and the relevant constituent groups with respect to public policy issues. In addition, the GAC has established internal working groups on relevant public policy issues to facilitate their analysis and to engage in dialogue with ICANN supporting organizations and committees as needed. While ICANN has made a great deal of progress, both the Department of Commerce and ICANN recognize that much is still to be done for ICANN to evolve into the stable and sustainable DNS management organization we would all like it to be. These include: · Ensuring Root Server Security. The root server system forms a critical component of the DNS by linking domain names to the corresponding numerical addresses. Ensuring the security of this function is therefore of the utmost importance. While the request for specific information set forth in the Cooperative Research and Development Agreement (CRADA) was met, ICANN needs to continue to exchange views and ideas with the root server system operators to solidify relationships that guarantee the security of this resource. The formation of ICANN’s Security and Stability Advisory Committee, of which many of the root server operators are members, is a first step in the right direction. · Securing Agreements with Regional Internet Registries. As the entity responsible for the allocation of numbering resources within their respective geographic region, the Regional Internet Registries (RIRs) play a crucial role. Although productive talks are underway, legal agreements between the RIRs and ICANN have not yet been completed. Finalizing these agreements to formalize the relationship between ICANN and the RIRs remains essential not only to ICANN’s ability to perform its address allocation responsibilities, but also to the overall stability of the Internet. · Enhancing Accountability Mechanisms. As the Internet continues to play a significant role in our daily lives, transparent mechanisms that provide accountably to all stakeholders are important. While ICANN has initiated a review of suitable international arbitration providers to constitute an Independent Review Panel and has called for the establishment of an Office of Ombudsman, these mechanisms must be finalized to ensure appropriate accountability to all ICANN stakeholders. · Developing Agreements with ccTLD Operators. The fastest growing segment of the DNS is within the ccTLD community. While ICANN continues to make progress towards establishing stable agreements with ccTLD operators, forward movement has been slow. This is largely attributable to the complexities resulting from the convergence of national sovereignty assertions, international law considerations, and the general concerns of global and local Internet communities. Despite these competing pressures, ICANN must develop a framework agreement that would appeal to the majority of ccTLD operators, while recognizing the various national sovereignty issues involved. The establishment of a country code Name Supporting Organization (ccNSO) during the last year represents significant progress towards this end. · Refining the Processes for Selecting New TLDs. Determining the circumstances under which new top level domains (TLDs) would be added to the DNS was one of the key functions identified in the White Paper. While ICANN has approved the addition of seven new TLDs, much work remains to be done in this area with respect to developing an appropriate long-term strategy. This strategy should use predictable, transparent and objective procedures that preserve the stability of the Internet. While the ICANN Board has recently taken welcomed steps in this regard - charging its CEO with providing a detailed policy development plan and schedule for the introduction of new TLDs and preparing to issue a Request for Proposals for new sponsored TLDs - this remains one of ICANN’s core yet-to-be-accomplished objectives. The current MOU between the Department of Commerce and ICANN expires at the end of September. The Department is currently in the process of reviewing ICANN’s accomplishments and assessing what actions remain under the MOU. This review will underlie any decision to extend the MOU and, if so, how best to modify the agreement to focus ICANN’s and the Department’s efforts going forward. The Department stands ready to continue its stewardship obligations of critical elements of the DNS during the transition period and to assist the global Internet community in maintaining a stable and secure Internet. To this end, the Department remains committed to working diligently with ICANN and all critical Internet stakeholders to assist ICANN in its evolution and to preserve and enhance this global resource. Finally, I would like to thank the Members of this Committee for their support and cooperation during my tenure at NTIA. With your help, NTIA has been able to lob a number of accomplishments, including helping to make the Internet more secure and accessible for a wide variety of users. I particularly want to commend the Congress for its vision and leadership in establishing the .kids.us space. The Internet can be a wonderful resource for children, and soon we will be have a safe place for children under 13 where they can discover and explore educational, fun, and age appropriate content. I hope I can count on you and your colleagues to develop websites in the .kids.us space, giving our nation’s children a better understanding of the workings of Congress and the issues before you. Thank you and I would be happy to answer any questions that you may have.

Witness Panel 2

• Mr. Paul Twomey
  Read statement

  Witness Panel 2

  Mr. Paul Twomey

  Mr. Chairman and members of the Committee, thank you for the opportunity to make my first appearance before this Committee in my role as President and Chief Executive Officer of the Internet Corporation for Assigned Names and Numbers (ICANN). I assumed this responsibility about four months ago, and have been spending most of my time since then listening to the many constituency interests that in the aggregate make up ICANN, which has kept me on the road a very large portion of the last four months. In addition, I and many others have been working very hard to finally implement the ICANN reforms that were kicked off by Stuart Lynn's report to the Board in February of 2002, and I have published a comprehensive plan for the reorganization of the ICANN staff function, which is in the process of being implemented. This testimony will focus on these two aspects of ICANN reform. Reform and Change at ICANN In the year since Stuart Lynn last appeared before you to discuss ICANN, the reform process that he described as underway has essentially been completed. Of course, we still have things to do; important parts of the reforms are still being implemented. But the basic and critical building blocks of the new ICANN -- ICANN 2.0, if you will -- are now in place. I would like to describe both the process and the results, since I think both are important signs of the continuing maturation of this still young entity. ICANN is a complex body with a complicated mission -- developing consensus policies related to the technical coordination, at the overall level, of the global Internet's systems of unique identifiers, and in particular ensuring the stable and secure operation of the Internet's unique identifier systems, including the Domain Name System. Because it is intended to be a private sector consensus development body, it necessarily must permit, and indeed encourage, participation from all who have legitimate interests in the subject matter, from individuals to governments. But if it is to be effective in overseeing the management of this critical global asset, it must also be able to come to conclusions and to implement them efficiently when required. Finding the right balance of these two somewhat inconsistent objectives has been a constant learning experience for those involved in ICANN, none of whom had experience in such an entity, since no similar private sector entity has ever existed. ICANN is unique, for better or worse, and thus the learning curve has been steep. The good news is that I believe that the various interests and constituencies that make up the ICANN community have now moved very far up that steep learning curve. We have more than four years of experience in learning how to make this concept work, and with the benefit of that experience, we have essentially completed a thorough reform of ICANN structures, processes, and indeed its very constitutional documents. We have a new set of bylaws, a new mechanism for selecting the ICANN Board of Directors, a new mechanism for enabling and encouraging individual participation in a meaningful and productive way, and new procedures and structures for ensuring transparency, fairness and accountability. I don't want to overstate the case: ICANN 2.0 is still a work in progress. But I believe that, in completing this reform and reorganization, the ICANN community has demonstrated that it can develop consensus on important and controversial issues. The various ICANN constituencies have learned to work together, to compromise, to take account of the points that are important to others just as they want the points important to them accounted for. The success of the reform efforts, and the changes it has produced, leave me very optimistic that ICANN will be a more productive entity in the years ahead. Specific Accomplishments It is hard to overstate the comprehensiveness of the ICANN reforms that have taken place over the last year. They include: · Restructuring the ICANN Board, advisory committees, supporting organizations and other participatory bodies to build effective, transparent, responsive and balanced participation by all stakeholders; · Forming a Country-Code Names Supporting Organization to further participation in ICANN by the almost 250 ccTLDs around the world; · Establishing more effective processes for ICANN to solicit and receive advice on public policy and consumer policy matters from the Governmental Advisory Committee, other multi-national expert agencies, and its own Supporting Organizations; · Creating new constituency driven policy-development processes; · Monitoring and offering policy guidance on key upcoming technical issues facing the domain name system, such as the implementation of Internationalized Domain Names and the transition to a new numbering protocol, IPv6; · Establishing accountability mechanisms, such as creation of an Ombudsman program and an independent review process for Board decisions; · In response to consumer demand, adopting new policies relating to a redemption grace period for deleted domain names, inter-registrar transfers and whois data protection and accuracy policies; and · Establishing an at-large advisory committee and organizing regional at-large organizations to encourage informed and productive public participation by individual Internet users. New Structures and Policy Processes The reforms of the past year have completely transformed ICANN. A majority of the ICANN Board is now selected by ICANN’s Nominating Committee, with the remainder being selected by ICANN's policy making bodies -- the Address Supporting Organization, Generic Names Supporting Organization and Country-Code Names Supporting Organization. Nominating Committee members are delegated to act on behalf of the global Internet community, and are guided by very specific and detailed criteria set out in the bylaws for qualifications, international representation, diversity, experience and eligibility. There is a Nominating Committee Code of Ethics, and mandatory disclosure of any potential conflicts of interest. In its initial experience of selecting eight ICANN Board members earlier this year, the Nominating Committee solicited ideas and statements of interest from the Internet community as a whole, and made its eight selections from over one hundred persons considered. In addition to the Board, the ICANN reforms of the past year created the Generic Names Supporting Organization and the Country-Code Names Supporting Organization as two new policy-making entities within ICANN. The GNSO replaced a similar body, but with a more balanced representation of those affected by generic domain names policies, and with a carefully crafted Policy Development Process designed to ensure the opportunity for participation by all relevant parties, a transparent process and a decision within a reasonable timeframe. The ccNSO, the formation and structure of which was agreed to by all involved parties at the recent ICANN meeting in Montreal, is emblematic of the recent progress. It reflects a judgment by the country code Top Level Domains that they must be a part of the ICANN policy development process, and follows more than a year of detailed discussions between ICANN, ccTLD administrators and other interested parties. The ccNSO also includes a detailed Policy Development Process designed to ensure a balance of input from country code Top Level Domains from all geographic regions, and an established process by which to deal with policies of global concern affecting country code Top Level Domains. How to ensure informed and productive participation by individual Internet users has been a frustratingly difficult problem for ICANN since its creation. As part of the overall reforms adopted in the last year, we have established the At Large Advisory Committee, which will be the representative body of a supporting framework of local and regional entities made up of and representing individual Internet users. The At Large Advisory Committee will be responsible for generating and providing advice to ICANN policy bodies and the ICANN Board from the global user community. The At Large Advisory Committee also appoints delegates to ICANN's Nominating Committee, and liaisons to the managing Councils of the Generic Names Supporting Organization and the Country-Code Names Supporting Organization, as well as other ICANN committees and participatory bodies. Accountability and Transparency Mechanisms ICANN is as much a process as it is an entity -- a place where those with legitimate interests in DNS operation and policies can come together to discuss, and hopefully reach consensus on, matters of common interest. To be successful, it must be open and transparent, and there must be appropriate accountability mechanisms. Like all things, these goals must be balanced against the practical realities of reaching and implementing decisions, but we believe we have now arrived at an appropriate balance of all these factors. Potentially the most important innovation in this area is the Ombudsman Program. ICANN’s new Bylaws provide for an Office of the Ombudsman to act as a neutral dispute resolution practitioner for matters not subject to reconsideration by the Board or eligible for the Independent Review Process (both described below). The Ombudsman’s role is to serve as an objective advocate for fairness, tasked with evaluating and clarifying complaints from members of ICANN's various constituencies, and where possible, helping to resolve complaints about unfair or inappropriate treatment by ICANN staff, the ICANN Board, or ICANN constituent bodies, using the full range of conflict resolution tools. ICANN has recently retained an individual experienced in the establishment of Ombudsman Programs to provide assistance in developing and writing ICANN’s Ombudsman program policies and operating practices, and in the identification of appropriate candidates to lead the Office of the Ombudsman. ICANN’s new Bylaws also include a procedure by which any person or entity materially affected by an action of ICANN may request review or reconsideration of that action by the Board, to the extent that he, she, or it have been adversely affected by (a) a staff action or inaction contradicting established ICANN policy or policies; or (b) one or more actions or inactions of the ICANN Board taken or refused to be taken without consideration of material information. All reconsideration requests are publicly posted on ICANN’s website, and must be responded to in some fashion by the Board’s reconsideration committee within thirty days of receipt. To date, ICANN has received, evaluated, and acted on a number of such reconsideration requests. ICANN’s new Bylaws also mandate that ICANN establish a process for independent third-party review of Board actions alleged to be inconsistent with ICANN’s Articles of Incorporation or Bylaws. Requests for review are to be referred to an independent review panel operated by an international arbitration provider with an appreciation for and understanding of applicable international laws, as well as California not-for-profit corporate law. Three arbitration providers have emerged as suitable candidates to operate the review panel, and the qualifications and attributes of each are being reviewed currently, with the intent for the organization to make a selection this Fall. Finally, the new ICANN bylaws also incorporate a specific articulation of ICANN's mission -- to coordinate the allocation of the global Internet's systems of unique identifiers, and to coordinate policy development reasonably and appropriately related to these technical functions. After considerable discussion and debate, the new bylaws set forth in some detail the core values that underlie that mission statement, and thus should inform the performance of that mission by ICANN. ICANN 's bylaws also adopt policies to ensure balanced input and participation reflecting the functional, geographic, and cultural diversity of the Internet at all levels of policy development and decision-making. Participation and a voice within ICANN is available to any interested participant. ICANN’s Board and Board committees, Supporting Organizations, Advisory Committees, and other ICANN bodies all operate under principles which include striving for geographic and professional diversity. Each ICANN committee, Supporting Organization, and other constituent body is charged with adopting rules and procedures intended to ensure a balance of views within the entity. Consumer Issues Notwithstanding the fact that the participants in ICANN have been devoting significant time and attention to the reform effort over the past year, ICANN has also been able to respond to concerns and issues about the DNS that directly affect consumers and other users. Four examples of this are described below. Redemption Grace Period Service The Redemption Grace Period Service is a response to the increasing number of complaints made by holders of domain names that were unintentionally deleted (either because of unintentional failure to renew or for other reasons) and then registered by someone else, sometimes using the domain name to display content repugnant to the former registrant. Frequently the registrant experienced significant delays and costs in recovering the name and having the former services (web service, e-mail, etc.) restored. To address these unfortunate situations, it was proposed to institute a grace period after expiration of a name, during which the domain name would no longer resolve but the former registrant (and only the former registrant) could have the name restored in return for payment of any fees required. After favorable public discussion, the Board concluded that the idea should be further explored. A technical steering group was formed (including knowledgeable registry and registrar personnel and in consultation with the relevant Supporting Organization) to develop a concrete proposal implementing the Redemption Grace Period Proposal. This resulted in amendments to ICANN’s agreements with registry operators designed to require the implementation of a Redemption Grace Period Service. To date, VeriSign has introduced a Redemption Grace Period Service in the .com and .net top-level domains, subject to completion of contractual documentation. Likewise, the Public Interest Registry has introduced a Redemption Grace Period Service in the .org top-level domain on a provisional basis. NeuLevel has launched a Redemption Grace Period Service in the .biz top-level domain. Other registry operators are expected to follow suit shortly. The decision of whether and how to implement a Redemption Grace Period Service in sponsored top-level domains has been left to the sponsors of those domains. The implementations mentioned above have incorporated the first phase of the Redemption Grace Period Service. The next step in implementation of the Redemption Grace Period Service is expected to occur this Fall, and will allow a registrant to move the renewed registration to another registrar if so desired. Whois ICANN is the leading global forum for discussion of Internet Whois issues. We are currently moving forward with implementation of four consensus policies related to Whois that were adopted at the ICANN Board of Directors meeting in March 2003 in Rio de Janeiro. One of the four recommended policies, the Whois Data Reminder Policy, was implemented in June 2003. The Whois Data Reminder Policy calls for ICANN-accredited registrars to provide domain-name registrants with an annual listing of their Whois data and to remind registrants of the need to correct inaccurate or out-of-date information. The other three policies, as to which the technical considerations of implementation are currently being considered, are expected to be implemented this Fall. ICANN also recently posted a “Registrar Advisory Concerning the ‘15-day Period’ in Whois Accuracy Requirements.” The advisory was posted in order to promote a clearer understanding of registrar Whois data-accuracy requirements. As explained in detail in the advisory, registrars have the right to cancel a registration if a customer fails to respond within 15 days to an inquiry concerning Whois data accuracy, but registrars also have flexibility to decide when to use that right, depending on factors including whether the inaccuracy appears intentional and whether third parties are being harmed by maintaining the registration with inaccurate data. Registrars are obligated to take reasonable action to correct reported Whois inaccuracies, but are not bound to a fixed timetable or specific action. A two-day Whois Workshop held during ICANN’s meetings in Montréal initiated a new phase of discussion within the ICANN community on Whois and related privacy and other issues. The Whois Workshop was held in response to a request from the GNSO, and in cooperation with the GAC’s Whois policies program. The two-day workshop consisted of one day of tutorial-style presentations (with public comment and question/answer sessions) dealing with current Whois policy and practice, and one day of public policy-focused panel discussions on “Balancing Public Policy Issues in the Current Whois System” and “New Approaches to Whois Policy and Practice.” Whois-related discussions will be a continued focus of ICANN’s Whois Steering Group and the ICANN President’s Standing Committee on Privacy. Inter-Registrar Transfers ICANN is in the process of implementing another new set of consensus policies intended to improve inter-registrar transfers of domain names. Domain transfers (portability) allow consumers and business to freely select their domain registration service provider based on price and service levels. When competition was introduced into the domain registration market in 1999, there were initially only five accredited registrars. There are now more than 168 accredited registrars, approximately 100 of whom are active. Competition has been extremely successful, with prices having fallen approximately 80%, and widespread innovation and creativity in the domain registration market. However, transfer issues continued to be troublesome, and in 2001, ICANN’s Domain Name Supporting Organization convened a Transfers Task Force to study the inter-registrar transfer system and recommend improvements. The Transfers Task Force worked for over a year in crafting twenty-nine (29) consensus policy recommendations set forth in its final report. The Task Force’s recommendations were accepted unanimously by the GNSO Council, and were forwarded to ICANN’s Board early this year. In March 2003, ICANN referred the recommendations to its Governmental Advisory Committee (as is required for all proposed actions affecting public policy concerns.) The GAC’s recommendation to ICANN was “to support and implement the GNSO Task Force’s recommendations, without amendment.” In April 2003, ICANN’s Board unanimously adopted the 29 consensus policy recommendations on transfers, and authorized staff to take steps to implement the policy recommendations. ICANN has convened a Transfers Assistance Group, including individuals from the Transfers Task Force, the GNSO Council, the Registries and Registrars Constituencies, and the At Large Advisory Committee. This Group will work with ICANN staff in the coming weeks and months to draft notices and amendments to ICANN’s contracts with registries and registrars in order to put these recommendations into practice. Wait List Service (WLS) The WLS is a new registry service proposed by Verisign, the registry operator for the .com and .net. top-level domains. The service, if implemented, would allow potential registrants to subscribe to a “wait list” that would guarantee they would be next in line to register a name if the current registrant lets it expire. Domain names ending in .com, .net, .info, etc. are registered through ICANN accredited registrars – of which about 100 are currently active. Generally, anybody can register any string of characters through any registrar on a first-come, first-served basis. Once somebody registers a particular name, no one else can register that same name until the current registrant lets the registration expire and the name is deleted from the registry. The WLS proposal is designed to offer consumers and businesses the opportunity to secure the next place in line to obtain the right to register a particular name should the current registrant decide not to renew it. (Approximately 800,000 names are deleted by the registry each year.) The WLS proposal generated considerable controversy within the ICANN community. In the absence of a registry service such as that proposed by VeriSign, various ICANN registrars had created products that purported to take reservations for names that might be deleted in the future. Those registrars then regularly queried registries in an attempt to be the first to learn of a deletion, in which case they would then seek to register the name for their clients. Obviously, no registrar could guarantee that any particular registration would be successful, and since there were commonly a number of registrars seeking to register any given deleted name, most people who signed up for those services were destined to be disappointed. The VeriSign proposal offered a significant improvement from a consumer perspective to the various services already offered by registrars. Because VeriSign operated two registries, it could guarantee that a reservation made in the WLS for names registered in those registries would always be successful IF the name was ever deleted. Obviously, such a guarantee can only be offered by the registry or its agent, since only the registry can guarantee such performance. This fact lead some registrars to conclude that the availability of the WLS (with its guarantee of performance) to consumers would reduce the demand for their services (which were not able to offer a comparable guarantee), and thus they strongly opposed approval of the WLS. While reaction from other parts of the ICANN community that did not have a direct competitive interest was more mixed, it would be fair to characterize the majority view as opposed to approval of the WLS proposal. After considering the full range of views expressed, the ICANN Board concluded that ICANN should act whenever possible in a way that promotes consumer choice and innovative services, and that its general goal to seek to increase competition when possible did not require it to prevent consumers from having the option of purchasing services they may decide are beneficial. It would be anomalous to "protect" competition between providers of non-guaranteed products by preventing the new competition of a guaranteed product that at least some consumers would likely prefer. Considering all these factors, the Board approved the WLS proposal with certain conditions that it felt appropriate under the circumstances to protect consumer interests. Among these were a limitation of the approval to a twelve month experimental period, after which time the Board would be required to review and make an independent decision on the continuation of the WLS. The Board authorized ICANN’s CEO and its General Counsel to negotiate amendments to the registry agreements with VeriSign that were consistent with its approval. The Board's approval did not end the controversy over WLS. In fact, this issue is now the subject of two lawsuits, one filed in Canada and one in California. In the California litigation, the plaintiff requested a Temporary Restraining Order, which request was denied by the Court. Further proceedings will likely take place. The WLS will not be implemented until the registry agreement amendments that the Board's approval requires are completed, and the new agreement is approved by the Department of Commerce, as required by the Memorandum of Understanding between ICANN and the DOC. Security and Stability Following the ICANN meeting at Marina del Rey in November of 2001, ICANN created a Security and Stability Advisory Committee focused on security and integrity of the Internet's naming and address allocation systems. The committee draws its membership from operators of Internet infrastructure and other security specialists, and presently continues work on several ongoing projects, including a recommendation regarding the layering of services on the DNS ( for example, the Verisign IDN Program and the domain name "auctions" of various registrars), an evaluation of the redundancy and resiliency of the major domain name servers to withstand distributed denial of service (DDoS) attacks, and an assessment of the status of DNSSEC, the forthcoming protocol to add cryptographically signatures to the domain name system and thereby prevent forgery and hijacking of domain names. The DNSSEC work includes building a road map outlining its deployment and identification of where further work is needed. The committee is also assessing most of the significant security issues affecting the Internet; and is beginning an assessment of the transition to the new Internet addressing system, IPv6. Root Server Systems ICANN's Root Server System Advisory Committee has a membership drawn from representatives of the organizations responsible for operating the world's thirteen root nameservers and other organizations focused on stable technical operation of the authoritative root server system. ICANN operates one of these thirteen root servers, which has given ICANN valuable insight into the issues involved in root-server operations and enhancement. The RSSAC has spent considerable time examining and monitoring the deployment of more robust DNS infrastructure for the Internet. The Committee has also closely followed the efforts of root server operators to successfully expand the capacity of the system and its geographical diversity through the use of “anycast” systems. At present, the committee is examining the implications of new technologies on the root server system, such as implementation of IPv6 for the root. Staff Reorganization One of the first things that I focused on when I assumed this position was the internal organization of ICANN. Since I had been involved with ICANN, one way or another, since before its birth, and because of my personal background in business and business consulting, I had some very definite ideas about how ICANN staff could be organized to enable more efficient and more effective performance, even working under what will always be significant financial constraints. After some consultation with various constituencies, I announced plans for evolving ICANN into a more business-like management structure -- one that takes into account the increasing demand for and complexity of the work that ICANN undertakes to support the Internet community. My goal is to improve responsiveness and to streamline management processes. The new structure contemplates two Vice President positions (a Vice President of Business Operations, focusing on the day-to-day operation of ICANN, and a Vice President of Supporting Organizations and Committee Support, focusing on the need to support ICANN's constituent bodies). It also includes the reorganization of the various ICANN staff functions into four general groups, each headed by a General Manager; these will be the IANA function, the Public Participation function, a Global Partnerships function that focuses on our relationships with governments and multi-national bodies, and Technical Operations, which is self-explanatory. Finally, there will be a General Counsel responsible for the legal activities of ICANN, principally the negotiation of agreements and advising the Board and the CEO on various legal requirements. Recruitment for these new positions is now well underway. This new management structure is intended to clearly delineate internal and external operations; recognize important relationships that ICANN has with the community; and provide clear lines of accountability for key operational and strategic functions. While this will involve the addition of a small number of new positions, I am convinced that this structure will greatly assist in ICANN's efforts to enhance the responsiveness and transparency of its operations to the community. Conclusion I hope this brief overview of the immense changes that ICANN has been and is going through gives you both a feel for the velocity of change -- which is considerable -- and a heightened sense of confidence that ICANN can in fact carry out its limited but important mission effectively. I believe that it can, or I would not have taken on this visible (but not always popular) position. I took the job because I believe that the ICANN mission is important, and because I want to help establish that a public-private partnership of the kind that ICANN has become is in fact a feasible and appropriate way to deal with matters like the DNS, over which no single government can claim sovereignty, but which all governments and many private parties have important and legitimate interests in seeing function well. I will be pleased to answer any questions you may have.

• Mr. Ari Balough
  Read statement

  Witness Panel 2

  Mr. Ari Balough

  Good Afternoon Mr. Chairman, and distinguished members of the committee. My name is Aristotle Balogh; I am Senior Vice-President of Operations & Infrastructure for VeriSign, Incorporated, based in Mountain View, California. I have a prepared statement, which I would request be inserted in the record. VeriSign is the leading provider of critical infrastructure services for the Internet and telecommunications networks. Every day we support 10 billion domain name lookups and emails, provide Internet security for thousands of corporations, process 25 percent of all North American e-commerce and help facilitate billions of daily phone calls and millions of daily SMS messages. VeriSign is pleased to have the opportunity to come before you to discuss the Internet and its coordination, its impact on our economic future, and the contribution the Internet Corporation for Assigned names and Numbers (ICANN) might make going forward. We strongly support the concept of a central coordinator of the administration functions of the Internet’s address system. Our role in providing the Internet’s infrastructure gives us a unique perspective on the Internet. VeriSign operates two of the 13 authoritative “root” server operation centers that direct Internet traffic, including, at the request of the U.S. Commerce Department, the "A" Root Server. In this server, we maintain the authoritative address list of all Internet top-level domains. VeriSign also manages the “dot COM” and “dot NET” domain registries. These are the central data bases that enable you as an Internet user to simply type in a domain name on your computer, such as "verisign.com," and connect it over the Internet to the machine that hosts the proper Website. To support these functions, VeriSign has invested hundreds of millions of dollars into building a global network of computers that are a critical component of the Internet’s infrastructure. Today, I come with a simple message: although the Internet may have started as an interesting place to send emails, and check stock prices or sports scores, it is now part of the essential fabric of global economic activity. Among other indicators of this growing, central, critical role for the Internet is the fact that in a little over two years, the daily traffic of domain name resolutions—“hits”—on our servers has increased tenfold (from 1 billion a day to over 10 billion a day). In a very short time, nearly every key element of our global infrastructure and every key industry—financial services and markets, education, manufacturing, transportation, electric power, broadcasting, government services – has come to depend on the Internet to function, to reach their customers and constituencies, to increase their efficiency, and to maintain their ability to operate. And that reliance will only grow. By 2010, the Internet will have nearly 2 billion users, serve as the platform for over $1 trillion in economic activity, handle roughly 25% of all telephone traffic and connect billions of computer devices. In short, the Internet no longer can be seen as just the means of adding e-commerce to the mix of retail activities, or providing a convenient set of e-government services. As much as coal and iron were the keystones of the Industrial Age, the Internet is the essential tool of the Information Age. That means an Internet failure – such as the one we came close to experiencing last October when nine of the thirteen root servers were disabled for several hours - will have a devastating effect on the global economy. This growing global dependency, and its associated enormous risks tell me that we—the entire community of governments, infrastructure stewards and users—obligates us all to evolve our notion of the Internet as a technology spawned by academia and the government for their own use, to the present reality: a system that is a critical tool for a global economy, in a manner that is historically without precedent. And so too, must evolve our institutions of Internet coordination into those which will have the legitimacy, capacity and authority necessary to assure the availability and growth of a reliable, secure Internet. For the past five years, ICANN has been the entity charged by the U.S. government and a community of Internet interests with coordinating certain technical functions of the Internet’s naming and numbering system. As the ONLY institution serving in a multi-national capacity in the Internet space—other than the professional technical standards bodies—ICANN has “acquired” some roles, and “assumed” others that have little to do with “coordinating the administration of the naming and numbering system.” And this functional “ambiguity” for ICANN has led to significant debate around the nature of and proper scope of responsibility for any entity taking on responsibilities of Internet “coordination.” In our capacity as a leading provider of key Internet infrastructure services relied on by the rest of the Internet, and consequently, a half a billion users, VeriSign believes that any entity charged with ensuring the stability, availability and growth of the Internet requires the legitimacy, capacity and authority necessary to accomplish those tasks. Today’s ICANN cannot effectively do this. ICANN’s legitimacy is hampered by the non-inclusion/non-participation of regional numbering authorities, the collective community of root server operators or over 200 country code Top Level Domain registries. ICANN’s capacity is questioned by those who see security and stability as essential to the Internet, but find ICANN preoccupied with regulation of registrar business practices and the minutiae of delegation of new generic registries. ICANN’s authority is clouded by its ambiguous status as a contractor with the U.S. Department of Commerce, but a PR message espousing its “international” character. So, while a need clearly exists for a coordination body to take on the challenge of the 21st Century’s Internet, a question exists as to how ICANN can evolve to be that body. If ICANN is to be that body; let me suggest areas where important work must be done. There are three key functions where we believe ICANN can play a constructive leadership role in the next phase of the Internet: 1) Stability and Security. The 13 root servers serve as the nerve center of the Internet’s addressing system. Their failure would be highly disruptive to the smooth functioning of the Internet addressing system. Last October’s attacks that paralyzed nine of the thirteen root servers underscored how these networks are under increasingly sophisticated attack. These attacks come from not only cyber terrorists with grand designs to disrupt the U.S. critical infrastructure but from IT professionals who might work in the cubicle next door. We believe ICANN can play a constructive role by fostering information sharing of information and serving as a forum that promotes industry best practices and uniform operating standards. 2) Continued Globalization of the Internet. The Internet domain name system is no longer just about .com, .net and .org. Besides other top-level domains like .biz and .info, there are over 200 country-code top-level domains such as .de for Germany, .jp for Japan and .br for Brazil. These country specific domain names today represent nearly half of all registered names on the Internet; soon, they will account for the majority of domain names in the world. Yet only a handful of these 200+ country-code domain name operators have executed agreements with ICANN. This lack of true global support for ICANN limits ICANN’s legitimacy. It is imperative that ICANN be streamlined into an organization that the country-code operators see benefit in joining, rather than a burden or risk. A good first step would be ICANN adopting an approach that respected sovereignty of the country-code operators and their ability to govern themselves. In short, to operate within an ICANN model without fear of ICANN dictates. Only then will the majority of this important constituency consider joining ICANN. 3) Innovation in Services and Processes. While the Internet has spawned many innovative services over the last decade, the blunt truth is that few new services have been added to benefit Internet users. For example, Internationalized (sometimes called “multi-lingual”) Domain Names (“IDN”) provide a means for non-English users to type in domain names in their native language. But the introduction of IDNs has been slowed-at least in part-by an internal ICANN debate—framed as an almost FCC-like regulatory “review” process—with a current implementation that falls short of the stated goal of providing the end user the ability to navigate on the Web in his or her native language. Far too often, new and innovative Internet technologies have been kept from the user community, bogged down and polarized in similar processes that are murky even to the most ardent ICANN watchers. ICANN should be streamlined to enable industry to develop and offer new services in a timely fashion to meet the ever-changing needs of the Internet. I have suggested that for a coordination body to be in a position to play a useful role in the important task of supporting effective growth of the global Internet, it needs broad user community and industry support. And for ICANN to have broad support, industry must see a benefit to being a member. For many -- such as root server operators and country-code domain name operators -- the “pain” of joining ICANN (onerous contracts, lengthy review periods, and the unfortunate politicization of ICANN’s administrative functions) has not made membership a viable option. ICANN -- if it is to be the organization that sets the tone for the Internet addressing system’s future growth -- must be capable of instilling confidence in its actions among the global user community. As mentioned earlier, a good start would be for ICANN to recognize that Internet constituencies have the capacity for self-coordination, with ICANN serving as the umbrella organization for technical coordination. We believe, as do others in the Internet community, that such a framework would strengthen standards of operation and conduct, improve the process for resolving critical issues and promote information sharing and adoption of best practices that would make the Internet stronger. Invested with the support of these communities, an effective ICANN could educate the growing user community on shared obligations of security. An empowered ICANN could organize financial support for advanced research at leading universities on next-generation technologies to maintain the integrity of the Internet’s assets, in the face of the hundreds of daily exploits directed against it. And, a visionary ICANN could serve as a forum that leads to innovative new services that enrich the user experience. To state again our road-map: We need a body that is legitimate and effective. If it is to be ICANN, ICANN must: --bolster its legitimacy by ensuring that critical Internet constituencies that are responsible for the operation of the global networks and domain names are active and supportive members; --limit its attempts at business micro-management in a way that will invite the participation of ccTLD registries, IP numbering registries and root server operators and encourage innovation and new services; --abandon its aspirations to be the unchartered FCC of the Internet; and --sponsor the discussions and actions regarding the Internet’s security and growth that will ratify a view among all constituencies that the institution is adding real value. Mr. Chairman, we are entering the next phase of the Internet – not born in a bubble era of the Internet but driven by society’s increasing reliance on these networks for commerce and communications. VeriSign is mindful of the enormity of this challenge; we stand ready to play our part in the evolution of the present ICANN, or a successor organization, into the leadership role necessary to ensure the Internet’s continued growth and role in supporting our global economy. Thank you, Mr. Chairman and members of the committee, for allowing me this opportunity to testify today.

• Mr. Alan Davidson
  Read statement

  Witness Panel 2

  Mr. Alan Davidson

  Chairman Burns, members of the Subcommittee, on behalf of the Center for Democracy and Technology I would like to thank you for this opportunity to testify on the important issues surrounding the management of the Internet's naming and numbering systems. We commend the Subcommittee for holding this hearing, because continuing Congressional oversight is necessary if we to insure that the Internet's critical technical resources are managed in the public's interest. The Internet's great promise to promote economic opportunity, civic discourse, and the free flow of information relies largely on its open, decentralized nature. Yet even such a decentralized network of networks relies heavily on a small set of centralized mechanisms to coordinate the unique assignment of domain names and addresses online. These centralized naming and numbering systems are important because they way they are managed can affect Internet users around the world. The Internet Corporation for Assigned Names and Numbers (ICANN) is an unprecedented experiment in open management of these important global resources. The idea behind it -- of global non-governmental bottom-up coordination -- is sound. The current alternatives to ICANN are not attractive. But serious questions persist about ICANN's public accountability and its ability to fulfill its role as a steward of an important public trust. While CDT remains a believer in the ideal behind ICANN, close oversight by Congress and the Department of Commerce are essential to provide accountability for ICANN. 1. The vision underlying ICANN -- private-sector, bottom-up, technical coordination -- is still the right approach for administering key Internet functions. The vision of that a non-governmental body managing key coordination functions for the Internet -- a vision first spelled out by the Commerce Department six years ago -- remains a remains the approach most likely to reflect the needs of the Internet community. Key features of this original vision included: · Non-governmental -- to benefit from more nimble private sector capabilities to handle fast-paced, complex Internet technical decisions, and more likely to reflect the diversity of user interests. · Bottom-up and consensus oriented -- making decisions in the best traditions of Internet bottom-up processes designed to account for broad interests · Narrowly focused -- to create trust that it would not exercise undue power and to increase comfort in its non-governmental character · Globally representative -- to ensure both public accountability and to include the interests of stakeholders affected by its decisions. CDT continues to believe that an institution with these characteristics -- like the original conception of ICANN -- is the best approach to managing the narrow set of functions necessary to coordinate the domain name and numbering systems. If it can do a better job of realizing these objectives, ICANN has the potential to provide flexible, representative coordination that will support the Internet's continued growth. Most of the alternatives to this vision of ICANN remain unattractive. The Commerce Department alone is likely to be an unacceptable global coordinator in the long run. Some envision a form of multi-lateral government administration of the Internet's critical functions. The private sector remains the most likely venue to provide technical expertise and flexibility for a rapidly evolving Internet. A bottom up and globally representative private body is actually more likely to provide opportunities for participation and accountability to the richly diverse Internet community than a government-only treaty organization. So long as ICANN remains focused narrowly on its technical coordination mission, it is likely to have sufficiently Despite serious shortcomings, interest in this multilateral approach appears to be increasing in some circles. For example, as part of its World Summit on the Information Society (WSIS), the International Telecommunication Union (ITU) has hosted several discussions of Internet management. But the case has not been made that a government takeover of ICANN functions is likely to better reflect diverse community interests, and such a takeover should be resisted at his time. 2. ICANN will fail unless it makes significant progress in meeting its public interest obligations. ICANN has had a number of significant accomplishments over the last few years. It has accredited nearly 200 domain name registrars, facilitating competition in the retail domain names market where none had previously existed. It has introduced seven new global Top-Level Domains (gTLDs), although many argue it should do more. It has introduced a procedure for resolving disputes over name registration. And it has recently established the framework for agreements with country-code Top-Level Domains (ccTLDs). Most importantly from a user perspective, ICANN has facilitated the assignment of names and IP address blocks with high degree of stability, and broadly enhanced competition. At the same time, ICANN has a decidedly mixed record in meeting its public interest obligations, which stem from its delegated authority over globally critical Internet functions. · ICANN has in many ways abandoned the "bottom-up" and "consensus-based" policy processes that were so critical to giving stakeholders comfort that they would have a meaningful role in policy at ICANN. Increasingly decisions are made top-down by ICANN's Board, sometimes clearly against the stated views of much of the affected community. · There are insufficient limits on ICANN's regulatory authority, and no well-understood delineation of its powers. For example, ICANN's detailed and massive contracts with the gTLD registries lead many to be concerned about how far it can go in regulating the DNS. They are a striking contrast to the very limited ccTLD agreement framework, which may indicate how little is really needed to insure stable coordination of the domain name system. · The user community and non-commercial interests are poorly represented at ICANN. Last year ICANN eliminated its nine "At-Large" board members, viewed as a central element to representing public interests. While the public election of At-Large directors was controversial, it is striking that ICANN has done so little to replace that representation. An at-large advisory council is still just forming, though welcome, and there are few chances for user influence at ICANN. · Accountability mechanisms are still lacking. For example, ICANN's ombudsman -- itself a pale shadow of the independent review process originally part of ICANN's bylaws -- has yet to be appointed. ICANN's leadership has acknowledged many of these concerns, which is much appreciated, but it remains to be seen what concrete steps will be taken. Congress should not be left with the mistaken impression that ICANN's recent reform effort has taken care of these public accountability concerns. It has not. Unless ICANN does more to address those shortcomings, it risks failure. Without progress on these accountability issues, ICANN risks becoming little more than a sophisticated trade association -- but one with substantial delegated powers. If ICANN continues to be viewed as unaccountable, non-representative, and without adequate limits on its powers, it will not be able to achieve the stability -- political, financial, and otherwise -- crucial to long-term success. If ICANN cannot earn the public trust, then users, companies, and organizations are more likely to undermine its activity than to embrace it. Moreover, if ICANN is perceived as an unaccountable organization whose activities impinge the rights of users worldwide, then powerful entities such as foreign governments, the ITU, or even the United Nations will accelerate their search for alternatives. Such approaches would likely include a vastly expanded role for governments, and could fuel efforts at multilateral regulation of the Internet -- a costly and user-unfriendly environment that could constrain innovation substantially. If the goals of private, bottom-up coordination of key Internet functions are to be sustained, ICANN must do better at meeting its public interest obligations. Many at ICANN recognize this. We look forward to their efforts. 3. Benchmarks should be developed to assess ICANN's progress over time and to identify areas for improvement. How do we assess whether ICANN is succeeding? This question is especially relevant as the Commerce Department prepares to renew its Memorandum of Understanding with ICANN this September -- and as people worldwide evaluate ICANN. Yet there is no widely agreed upon set of benchmarks for measuring how ICANN is doing -- and it is unclear how ICANN itself measures success. Today CDT is releasing a new study, "Assessing ICANN: Towards Civil Society Metrics for Measuring ICANN," designed to assist in this process. Our study is attached to this testimony and submitted for the record. In it, we review the literature and indicate key recurring themes or goals for ICANN. We then suggest ten "civil society metrics" for assessing ICANN from a public interest perspective: 1. Stable and secure coordination of key Internet functions. 2. Adherence to clearly defined scope of activities. 3. Accountability to affected stakeholders, including effective independent review procedures. 4. Transparency, including procedural and financial transparency. 5. Representation of key Interest groups, including the public's interests. 6. Acceptance by key stakeholders, ccTLDs, Regional Internet Registries, etc. 7. Minimized impact on user rights, such as privacy and free speech; consideration of impact on Less Developed Countries, etc. 8. Support for competition and, when possible, reliance on market mechanisms. 9. Increased security of the root server system. 10. Support for long-term evolution and innovation in information and computing technologies. CDT believes that a set of commonly agreed metrics is critical to evaluating ICANN's strengths and shortcomings. Our hope is that other groups will use this list, or create their own, to develop a multi-sectoral approach to assessing ICANN. We look forward to feedback of others interested in ICANN's evolution. 4. ICANN faces crucial tests over the next year on key issues of public interest, including Whois reform and the selection of new gTLDs. In the next year, ICANN is expected to undertake several issues of broad interest to the Internet community -- including Whois database privacy, the selection of new top-level domains, root server security, and international domain names. The way it handles these issues will be a measure of its accountability and responsiveness after its reform process. Privacy and the "Whois" database - The Whois database -- a public listing of contact information for millions of domain name registrants -- has long raised significant privacy concerns. Currently, the registrant of a domain name in the public gTLDs and many ccTLDs must make certain technical and administrative contact information available in the "Whois" database accessible to the public online. Originally designed to allow contact in the case of a technical problem, the database is now also used by law enforcement, consumer protections agencies, and private groups including intellectual property holders. When individual Internet users register domain names, however, they can be forced to make their names, home addresses, home phone numbers, and home e-mail addresses publicly available to the world. Such potentially sensitive personal information, released publicly, can be used for unrelated purposes ranging from unwelcome marketing to identity theft, fraud, stalking, or other criminal activities. This exposure violates worldwide privacy norms and had put Whois on a collision course with national privacy laws, particularly in Europe, where is appears to violate the law of some countries. A move is underway at ICANN to reform Whois in ways that will address individuals' privacy concerns while maintaining legitimate uses for the data. Proposals include the creation of a "tiered access" system for viewing Whois data, providing notice to users when their data is viewed, and creating "audit trails" that could expose abuse or misuse of the database. CDT believes a balance can be struck that protects privacy and allows reasonable access to data for important public purposes. ICANN's ability to incorporate the privacy interests of the global user community in this debate will be closely watched. CDT strongly believes that recently proposed U.S. legislation criminalizing false Whois information is inappropriate. It is simply unfair to make an Internet user a potential felon for putting incomplete or inaccurate personal information into a public database where there is no guarantee that their privacy or security will be protected. If better accuracy is desired in the Whois database, the best way to achieve it will be to protect the privacy of registrants. Selection of new gTLDs -- Three years after selecting a first set of seven new global top level domains (such as .biz and .museum) ICANN is now launching a process for the selection of new gTLDs. Since gTLDs are a primary means of expression for millions of users, this process is of substantial public importance. ICANN's process for selecting new gTLDs in 2000 raised procedural concerns that should be avoided in the future. Many observers questioned the "beauty contest" approach taken by ICANN, which relied heavily on relatively subjective and arbitrary criteria, and not enough on the technical merits of the applications. For many, this subjective approach was inappropriate, ripe for conflict and abuse, and corrosive to the technically-focused bottom-up vision of ICANN activity. ICANN is not a governmental body designed to make public choices about the allocation of property and wealth, nor should it want to become one. Thoughtful proposals have been put forward for improving this process. They propose more objective criteria for new gTLDs -- including the selection of a fixed number annually by lottery or auction from among technically-competent bidders. ICANN has not yet announced what process it will use for the next major round of gTLD selections -- though for an immediate, smaller round it has declared its intention to use criteria similar to those used in 2000. CDT strongly believes that ICANN should avoid any appearance of arbitrariness in its next selections of gTLDs, and should pursuer more objective systems consistent with its narrow technical coordination mission. 5. Congress and the Department of Commerce should continue their active oversight, and should only renew ICANN's MoU for a limited period. The US Government explicitly -- and other nations implicitly -- have delegated administration of critical public interests to ICANN. Many outstanding questions remain about how that delegated responsibility is being met. There are few ways to hold ICANN accountable for its actions. Continued government oversight of ICANN is badly needed. We urge that: · ICANN's Memorandum of Understanding with the Department of Commerce should be renewed for no more than one year. The MoU is one of ICANN's few remaining tether to traditional notions of public accountability. Today, ICANN has a new and untested leadership and is undergoing massive internal reorganization. Major checklist items from previous MoUs -- on topics from security to accountability to public representation -- are largely incomplete. NTIA itself is undergoing major changes. In such an uncertain environment, it would be inappropriate to renew ICANN's MoU for more than a year. The one year term adopted last year, with interim reports to DoC, has worked well and should be continued. · Congress should continue its active oversight of ICANN. While Congress should not be directing ICANN's activity -- no national government can if ICANN is to work -- the U.S. government had a special relationship with the root server system and ICANN. Congressional oversight has been an essential force for improving ICANN's transparency and raising public awareness about domain name policy issues. We hope that Congress will continue to monitor ICANN's work closely, either on its own or through an appointed commission to explore ICANN in depth. · The National Telecommunications and Information Administration should publicly report on ICANN's progress in meeting the MOU and its other public responsibilities. A public assessment of ICANN would greatly help to focus discussion on improving ICANN for the future. If ICANN is able to show progress in its commitment to a limited mission, public accountability, and other goals, it will greatly strengthen its position among Internet users worldwide. If it is not, it risks rejection by the Internet community and the community of nations. We look forward to working with ICANN, the Commerce Department, and the broader Internet community to help make community-based Internet coordination a success.

• Mr. Paul Stahura
  Read statement

  Witness Panel 2

  Mr. Paul Stahura

  Good afternoon. My name is Paul Stahura. I am CEO and President of eNom. eNom is a domain name registrar. I started eNom in 1997 in my garage in Redmond, Washington with one small computer on an ISDN line, and now the company is one of the largest domain name registrars in the world with loads of servers in five locations and millions of domain names. eNom is part of the Domain Justice Coalition. The Domain Justice Coalition is comprised of domain name registrars and resellers who oppose the proposed Wait List Service (WLS) that has been approved by ICANN. Formed in March 2003, the Coalition shares the belief that the proposed WLS will: harm competition in the secondary market for domain names; increase the cost of acquiring domain names for consumers; and add an unnecessary layer of bureaucracy to the process of acquiring expiring domain names without adding measurable benefits to consumers. I want to thank the Committee for inviting me to testify today before the Communications Subcommittee and giving me an opportunity to share my views on ICANN. I want to state at the outset that I am a supporter of ICANN. While I may not agree with all of their decisions, many of which have been adverse to me – I do believe that ICANN is the correct organization to oversee the Domain Name System and that, for the most part, the organization has been doing a good job. The success of my company, and the hundreds of other competitive domain name registrars in existence today, is the result of ICANN policies that promoted competition in the registration of domain names. There is no question that competition has been tremendously beneficial for consumers and businesses. The cost of registering a domain name has dropped from a high of $70 for a minimum 2-year registration contract to as little as $7 per name per year today. Consumers today have choices that were simply not available to them when only one company registered domain names. Competition has brought a variety of business models, and improvements such as better customer service, more distribution channels, and complementary products bundled with the low-cost registration. All of these choices and other advances in the DNS system are the result of competition. I was involved in the early stages with the formation of ICANN. What I want to communicate to the Committee today is that while ICANN is the correct model, there should be changes to increase ICANN’s accountability to, and foster trust from, those they regulate. 1) There must be assurances that those affected by ICANN’s decisions have some commitment or measure of comfort that they are able to participate in the decision-making process. Moreover, there should be some safeguards in place to ensure that, ICANN’s decisions are based on the facts and to remove even the perception that the decisions are not the product of behind the scenes, back room secret negotiations or funny business. 2) There must also be a way to challenge ICANN decisions and have those decisions reviewed by an independent or objective decision-making body. 3) The way ICANN selects new TLDs and who will offer new services should change from a “beauty contest” which is vulnerable to decision making based on favoritism to an objective standard that would be free of potential bias. 4) Finally, ICANN must have a higher degree of accountability. The Department of Commerce must do a better job of overseeing ICANN to ensure that the goals of the MOU, especially the goal of increasing fair competition, are being fulfilled. There are two issues that illustrate my concerns with ICANN and not coincidentally also affect competition in the domain name space: 1) Verisign’s proposed wait-list-system (WLS) 2) New top-level domains WLS No issue better illustrates the problems with ICANN in my mind than WLS – the proposed Wait List Service. The WLS was proposed by VeriSign as a way to supposedly make the process of registering expiring domain names simpler for the consumer. Unfortunately, VeriSign’s attempts at simplification come at the expense of competition and consumer choice. Since WLS is a monopoly service, to be only offered by Verisign, it completely destroys today’s competitive marketplace. WLS replaces good old-fashioned free enterprise with a government-sanctioned monopoly. But, whatever your opinion of WLS, I think virtually everyone can agree that this issue has been badly handled by ICANN. Initially ICANN declared that WLS was a policy change and therefore a final decision would be handled through ICANN’s consensus processes. ICANN established a Task Force to study the WLS proposal and report back to the ICAANN Board. For more than 18 months, many hundreds of people from all types of companies -- domestic and international -- participated in the consensus process debating Verisign’s controversial WLS proposal. Meetings were held around the globe… papers submitted, conference calls conducted and task forces organized. This effort took months to build what appeared to be a consensus – that ICANN should not go forward with WLS – and was surprisingly rejected by ICANN six months after a decision by the board on the grounds that a consensus was not necessary on this issue. To those opposed to WLS, this reversal appears, at best, extremely suspicious. When the consensus process resulted in consensus that was adverse to VeriSign, ICANN reversed its position and declared consensus was not necessary with little justification for the complete about face. This WLS situation highlights one of my principle concerns with ICANN: the lack of transparency in its decision-making processes. ICANN is a black box. You have what goes in, and you have what comes out, with no idea of how or why. Even now, only a very few insiders are privy to what the final WLS will be. This is significant because, in the details, the WLS is a very conceptually complicated proposal. A small change to the proposed WLS can make a big difference. Since I am not one of these insiders, I can only go by what has come out of the black box, I can only go by what the ICANN board has already approved, and that decision, unfortunately, takes a step backwards, competition-wise. Besides that fact that WLS would replace today’s competitive re-registration system with a monopoly system and higher fees for Verisign, the problem is that WLS, as approved by the ICANN board, would tilt the competitive playing field among registrars, a, so-far, even playing field that has been setup by ICANN and the rest of the Internet community. Coincidently, the registrar that would gain the largest advantage is Network Solutions, which is owned by Verisign, the company proposing the WLS. The funny thing is that ICANN knew that a certain aspect of Verisign’s proposed WLS would have this effect, so ICANN prudently modified Verisign’s proposal in an attempt to remove the advantage. ICANN’s board subsequently approved the WLS with the modification. Unfortunately, ICANN’s modification does not remove the advantage. Again, as I am not inside the black box, I do not know why the form of WLS approved by ICANN still had the flaw. Thinking the best of ICANN as I usually do, I assume it was an oversight, or possibly ICANN needs more resources to fully understand the repercussions of their decisions, but since as far as outsiders can tell, these problems are not being corrected, I’m reluctantly beginning to think baser thoughts. So we are in a situation where it seems that the form of WLS that will come out of ICANN and will be implemented by Verisign is anti-competitive, a flaw that can be removed with only a few words changed in the ICANN board’s resolution on WLS. I have appended my testimony with a letter I sent to the ICANN Board outlining my concerns with WLS “condition (c)” and recommending a small, but important change. (See Tab 1). This change could be made as part of the ongoing, ICANN board authorized, WLS “tailoring” that, as far as outsiders can tell, is happening between ICANN and Verisign. As WLS is a controversial issue to many people, and there have been few recent decisions that affect competition in the name space, a competitively-neutral WLS output by ICANN is not just my test to determine if the reformed ICANN is advancing competition or taking a step backward, but many other people’s as well. It doesn’t matter that the initial WLS as originally proposed by Verisign or the final WLS that emerges out of the ICANN black box is a better product or worse product than the competitive re-registration system that exists today. At the end of the day, it doesn’t matter what previous process was used to come to the output, though if a fair process was not followed, then that needs to be corrected. I know, as you Senators do, that as they say, making sausage isn’t pretty. But what matters is the output. What matters is that whatever the final WLS, it not tilt the exactly fair, competitive, playing field that ICANN and the Department of Commerce have painstakingly put in place. Another concern with ICANN that is relevant to the WLS issue is the lack of independent review of ICANN decisions. Under the current process there appears to be no way to appeal ICANN’s decision to an independent, objective third party, a process which is outlined and guaranteed in ICANN’s own bylaws, but has yet to be enacted even once. In fact, one of the Domain Justice Coalition members requested such an independent review board but this request, was denied. ICANN’s grounds for the denial is that only decisions made through the consensus process are entitled to be reviewed by an independent review board. Regrettably, the Domain Justice Coalition has had to resort to a lawsuit in an effort to resolve this issue. Even if ICANN were to have appointed an independent review panel, the so-called independence of this review panel must be seriously questioned since the ICANN Board determines who serves on the panel. The inability of complainants to get an objective, impartial review of ICANN decisions seriously undermines ICANN’s credibility with the companies it regulates. Time does not permit me to go into greater detail on WLS. I have taken the liberty of including as part of my testimony a letter submitted to the NTIA which outlines my concerns with the proposal in greater detail. I have also included frequently asked questions, or “FAQ” page, on WLS for the Committee’s review. (See Tab 2). New Top-Level Domains (TLDs) My company has had some experience with ICANN regarding TLDs. In 2001, eNom participated in the “.one” TLD proposal. ENom did not win that beauty contest. That process resulted in many TLDs, if not all, that have not met their projections. I know its impossible to get every decision right, especially on the first time out, but many of the 7 TLDs selected back then have fewer than 10,000 names, and one is not even live though it has been two years since its selection. The vast majority of internet users have not even heard of some of the TLDs selected, TLDs such as “.areo”, “.coop”, and “.museum”. Have you ever seen a domain with these TLDs in use, let alone the others? The proof of a successful test bed is in usage. The TLD round in 2000 was not only a test bed for each of the new TLDs but also a test of the selection process itself. Proof of a successful TLD distribution scheme is in whether or not it results in TLDs that are utilized. Why repeat a process that resulted in an allocation and expansion of the name-space resource if the resulting “expansion” is not utilized? In 2002, eNom participated in another proposal for “.org”. Another group, as well, won that contest. Though the winners have successfully transitioned .org, which is good, I know that registrars are paying the exact same price for the same services as before the transition, while there were many others who had proposed the same service for substantially less, and that were equally qualified to perform the transition. Without clear, quantifiable criteria, it is really difficult for outsiders to tell if ICANN acted arbitrarily or with favoritism in its approval processes, let alone for those who submitted proposals. I do hope that there will be many more opportunities for ICANN to delegate many new TLDs in the near future. And that the knowledge gained in the past will be applied to make the selection incontrovertible. To that end, I support the following two-step process 1) the ongoing accreditation of registry operators with objective technical criteria, and 2) an auction to determine who is delegated which TLD. Meanwhile; the issue of the remaining applicants from 2000 has to be addressed. First, accredit registry operators based on specific technical operational criteria. This would focus this part of the debate on what are the “must have” objective technical operational criteria, but at least after the debate had ended; everyone would know what they are. With a registry accreditation step, even if step 2 were a beauty contest, instead of an auction, the prospective registries would know with certainty that their selection of an accredited registry operator will not bias the decision. Without this step, most new TLD proposers will choose an incumbent operator to reduce the risk of ICANN having some issue about an unknown operator and denying their application, even if Step 2 was a more objective and impartial process, such as an auction. Adding a registry operators’ accreditation step to the process will create more competition at the registry level and make for a more indisputable outcome Second, auction them, within limits. A suitable auction could be designed to distribute a small number of TLDs. Safeguards could be built-in to prevent the auction itself from weakening the proposers. The winning bidders would advance to the registry agreement negotiation stage with ICANN, with ICANN publicizing non-technical “must have” terms before the auction (such as adherence to the DRP and data escrow or whatever), Payment to ICANN would occur after actual agreement. Other terms that would be negotiated leave room for the prospective registry to innovate. This will constrain this part of the debate to what the “must have” terms should be. The who-gets-what-TLD machinations would then be removed entirely. The proceeds of the auctions would help fund ICANN. ICANN can use some of the funds to support less objectively chosen TLDs that may be proposed for specific interests, such as for public interest, or for non-profit groups. An auction will help insure that proposers put their money where their mouth is, and therefore that the TLDs delegated would actually be used. And if it turns out that the TLD is not utilized, at least ICANN has funding to make corrective action. The incumbent registries would rather not have competitors, so they will fight this 2-step process becoming policy. If I were a for profit registry, I’d advocate more “.museums” or “.nonprofits” to occupy ICANN’s time. Its as if, in the early days of Television, CBS, NBC and ABC, seeing an expansion in television channels, advocate for all new channels to be PBS. With that said, there remains the single issue of the existing applications from the first beauty-contest round in 2000. These remaining applications, each of which paid a $50,000 application fee to ICANN, were specifically told by ICANN that their applications were not denied, but are, instead, “still pending” the results of the initial test bed. Clearly, these applications need to be addressed before moving forward to Step 2 of the process. With a beauty contest: 1) There is incentive for the proposers to make wild projections to get the TLD, while they are at no risk to losing the TLD if those projections do not turn out. This has already happened. 2) Much too much effort is spent in proposers lobbying the ICANN board and other ICANN decision makers 3) Insiders have an advantage 4) With broad, subjective criteria, the proposers are forced to attempt to read ICANN’s mind, which results in “hobbled” TLDs, or TLDs that are constrained by imagined criteria. As if, in granting spectrum in the early days of radio, the FCC had such subjective criteria that it could be interpreted that you’d have a better chance to be granted spectrum if you wanted to use the space to broadcast music, so the proposers attempt to guess the director’s favorite kind. 5) Even if all intentions were honorable, due to subjective criteria such as “The prospects for the continued and unimpaired operation of the TLD”, it is very difficult to know with certainty that the output of the process was arrived at without shenanigans. Finally, I urge the Department of Commerce to step up its level of oversight over ICANN. The Memorandum of Understanding (MOU) that ICANN signed with the Department of Commerce clearly envisions some oversight role. Department of Commerce oversight is particularly important in the WLS issue. Paragraph One of Amendment Three to the MOU, which was entered on May 25, 2001 (http://www.icann.org/general/amend3-spamou-25may01.htm) requires prior Department of Commerce approval for any material amendments to ICANN's Registry Agreement with VeriSign. The Domain Justice Coalition believes WLS falls under this requirement. Yet, VeriSign began rolling out the WLS service on July 28th by releasing its WLS software development kit despite the fact that the Department of Commerce has yet to review, let alone approve, a single word of the agreement between VeriSign and ICANN making the necessary changes to the Registry Agreement for WLS to go forward. Moreover, because ICANN's procedures offer no real opportunity for review or reconsideration of ICANN Board decisions, the burden of ensuring that ICANN is adhering to the MOU and of preserving a competitive domain name registration system must fall to the Department of Commerce. The Department of Commerce should make it clear that WLS cannot go forward without the Department's review and approval. The extension of ICANN's MOU provides the Department of Commerce with a unique opportunity to make sure that ICANN is functioning as the government and the Internet community intended. It is also a chance for Commerce to review whether the reforms ICANN has recently adopted are having the desired effect. Congress must also continue to exercise its oversight jurisdiction by holding the Department of Commerce accountable for its activities regarding ICANN. Chairman Burns is to be commended for holding these hearings. There is no dispute of the importance of the Internet to the U.S. and global economy. Proper management of the Domain Name System (DNS) is one of the most important aspects of ensuring the Internet is a stable environment for business to operate. To improve both the Department of Commerce and the Congress' understanding of ICANN's operations, the Domain Justice Coalition has endorsed legislation that would place a moratorium on further ICANN activity until the GAO can conduct a review and report back to Congress. H.R. 2521, "The Fair, Transparent, and Competitive Internet Naming Act", introduced by Representatives Baird and Inslee, would provide a much-needed objective and independent evaluation of ICANN. The information contained in a GAO study could prove invaluable to Congress and the Department of Commerce during the MOU extension process and I urge the introduction of similar legislation in the Senate. ICANN has had many accomplishments in bringing competition to this industry. I hope the reformed ICANN will continue to promote fair and even competition and to bring more of it, not less. I thank the committee for giving me the opportunity to testify. I am happy to now answer any questions that you may have.