Hearings on DNS/ICANN - Scribe's Notes
The following notes were taken by
Berkman staff at hearings of the House Commerce Committee Subcommittee on Oversight
and Investigations on the morning of July 22 in a session called "Hearing
on "Domain Name System Privatization: Is ICANN Out of Control?" They are unofficial
in the sense that they represent solely the points thought to be salient by
the particular staff attending. However, we believe that, along with the audio
archive of the proceedings, these notes generally represent a reasonable archive
of what was discussed.
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Go back to the ICANN
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Berkman Home Page.
- Panel I Questions
- Bliley: Did DoC see these problems
- Burr: Yes, expected private
sector initial funding for ICANN.
- Bliley: Did ICANN consult with
USG re advisability of $1 fee per domain?
- Burr: Yes, DoC reviewed and
commented on draft accreditation agreement which contained the $1/domain
fee. Discussed alternative funding mechanisms. Issue put up for public
comment, not many comments received on the subject, esp not many opposing.
- Klink: Washington Post this
morning says NSI refuses to recognize ICANNís legitimacy. "Theyíre
not really necessary," says the article. Is this accurate?
- Rutt: Quote taken out of context.
First, said that a "good ICANN" is a good thing. Then the question
was posed "Is ICANN necessary for competition in domain registration?"
"No, itís not," was my response.
- Pincus: NSI exclusively operates
the commercially viable domains (as the registry for those domains). After
the MoU with NSI expires in the fall of 2000, NSI could do whatever it
wants Ė and not allow competition in those domains Ė so either government
or private oversight is necessary.
- Rutt: Business is already
fiercely competitive. 248 registries in operation around the world.
- Klink: But NSI has 75% or
more of the domains.
- Upton: How many directors are
there, and what is holding up elections?
- Roberts: There are nine directors
now, also Roberts, the CEO. Processes seem to be on track.
- Dyson: Expect to have nine
elected board members by November of this year.
- Upton: Why will the next meeting
be in Chile?
- Roberts: Latin American representation
- Burr: Moving around the world
makes it possible to include more people from around the world in the
- Degette: Who owns the intellectual
property that makes up the DNS?
- Pincus: Government owns them
as a result of the Cooperative Agreement.
- Dyson: Public property. Important
that the information be publicly available for a number of public interest
- Rutt: In its compiled form,
the intellectual property is quite clearly NSIís. NSIís lawyers say so,
after reviewing hundreds of other cooperative agreements which seem to
set a clear predent. But, agrees that the community needs access to this
data (i.e. through the WHOIS service).
Degette: Please submit that legal analysis. The data is simply facts,
so it would be difficult to copyright.
- Degette: NSIís primary fiduciary
duty is to shareholders, not to the Internet community or USG, right?
- "Clearly, as an officer
of a public company, my first responsibility is to shareholders. But,
what's good for the Internet is good for NSI."
Degette: Not sure if others would agree.
- Degette: Should there be full
competition in domain name registration, and do you think this will benefit
- Yes and yes. Others will think
of other ways to use domain names, and weíll sell to some of those people.
Degette: This seems surprising, for your testimony and press statements
indicate that NSI questions the basis of ICANNís authority.
- Bilbray: NSIís shareholders
are its employees Ė itís an employee-owned business. Does DoC have a plan
if NSI doesnít sign an agreement with ICANN?
- Pincus: Hope to reach an agreement,
havenít yet decided how to proceed if no agreement possible. DoC believes
it has the authority to reassign the cooperative agreement, but this would
likely lead to lengthy litigation so we want to reach agreement if possible.
- Bilbray: What is NSI doing to
move towards a competitive environment?
- Rutt: Have invested $10 million,
will spend tens of millions more, to develop competitive registrations
in .com, .net., and .org. Are moving as fast as practicable to bring in
the competition. Capable of bringing online at least five additional registrars
a month. Five competing registrars are actually in business right now,
the first one having gone online on June 5.
Bilbray: Committee would like a "closer estimate" of how much
NSI has spent.
- Stupak: NSI claims that it only
has to recognize ICANN if ICANN has a "final agreement." DoC says
the agreement has been finalized. Sounds like a delay tactic to me. What
do you think? Have you ever told ICANN or DoC that there is no final agreement?
- Rutt: Let me ask my lawyer
and get back to you tomorrow. Yes, have said there is no final agreement.
- Pincus: Didnít and donít want
to let this stall the process of ICANN moving forward.
- Stupak: Whoís the final arbitrator
here? The courts?
- Pincus: Canít force NSI to
enter a contract against its will. Would have to put the gTLDs back out
for "recompetition" (bidding).
- Klink: The longer you drag it
out, the more money youíre making. What do you say to that?
- Rutt: I didnít come here to
have border wars with lawyers or try to squeeze a few more pennies out
of an old business. Want to grow the business and compete and be a ferocious
competitor in a fair and open market, not waste everyoneís time with "small
change matters." Think we can make a lot more money with more interesting
businesses, being an aggressive fast-moving Internet company.
Klink: Are you saying the money NSI is making from its current business
is small change? You are walking away from a sure thing? That gravy is
running all over your plate.
Rutt: I donít think of it that way.
Stupak: I think that if DoC has the ability to enter into a cooperative
agreement, then it has the right to rebid it.
- Cox: Whatís the status of the
$1 fee now? Whatís your personal recommendation? Is WIPO role funded through
- Dyson: Postponed until at
least November when there are more (elected) board members. I think itís
good Ė the registrars agreed to it, the Internet community thought it
was acceptable. And, in the context of the payment to NSI going from $35
per domain name per year to $9, it will be a net gain for consumers. WIPO
has made recommendations to ICANN, but the money is for funding ICANN
generally (and not WIPO). Trademark is but one of ICANNís concerns.
- Upton: ICANN received donations
from high-tech companies. Is it appropriate for ICANN to be seeking assistance
from these sources?
- Roberts: ICANN has raised
on both a short-term and permanent basis from a variety of constituencies.
Both Dyson and I have had conversations with the White House with people
attempting to promote the Presidentís e-commerce initiative. Do anticipate
that contributions to ICANN will be tax exempt; IRS will rule after paperwork
is submitted, within next 30-40 days (because needed more financial details
before submitting forms).
- Upton: Are you aware that Sims
contacted DoJ re possible pursuit of NSI for antitrust violations?
- Burr: Doesnít generally follow
the correspondence of ICANN with other parts of the USG.
- Klink: Funding problem. Have
you solved the problem? Plans?
- Dyson: Sims works on credit.
Directors havenít gotten their expenses paid. Robertsí company hasnít
been paid in some months. Some money coming in from companies as listed
on web site. Two registrars have volunteered to pay the $1/domain fee
even though it isnít required.
- Klink: NSI has said it wonít
recognize ICANN unless it operates in compliance with the White Paper. (See
your testimony, page 7, middle of first full paragraph.) But who says whether
or not theyíre in compliance?
- Rutt: Itís a comment about
the contract discussions between NSI and ICANN.
Klink: Allegation is that NSI is reluctant to give up the cash flow from
gTLDs and only has to stall. You need to persuade me that such stalling
is not happening.
- Pincus: DoC wonít approve
a NSI-ICANN contract if DoC doesnít think the contract satisfies the White
- Bilbray: As a layman involved
with regulatory agencies for 25 years, I note that this is hard to comprehend.
Moves fast, many dimensions. So I donít expect to understand everything,
but a reduction from $35 to $10 seems huge, incredible, outstanding.
- Pincus: When NSI charges $35,
that covers both registry and registrar operations. The $9 covers NSIís
registry fee (for maintaining the central list), but thereís also likely
to be a registrar fee for the retail side of the business. Nevertheless,
itís still anticipated that the sum of registry and registrars fee will
be less than $35.
- Bilbray: How much does ICANN
owe its lawyers?
- Roberts: Total money owed
to all creditors is $800,000. $500,000 of that is to lawyers.
- Bilbray: Concern about openness
and how people get involved in ICANN. How were you approached to become
involved with ICANN? And when will the light of day shine into the board
meeting? Will all meetings be open from then on?
- Dyson: Magaziner and Cochetti
(of IBM) asked if sheíd be interested if officially asked. Official invitation
came from Joe Sims. Santiago will be open. Subsequent meeting will be
open pursuant to vote of new board.
Stupak: But you said you reserved the right to have a private session?
Dyson: Just for litigation, personnel issues, and other subjects that
have to be discussed in private.
- Stupak: NSI will still be paid
even when thereís competition, right? How will you feel about competitive
bidding in the fall of 2000?
- Yes, NSI will still be paid
for registry services. NSI expects to agree to terms that last considerably
beyond September 30, 2000.
- Stupak: NSI wants industry consensus,
but who decides whether or not thereís consensus?
- Rutt: One obstructionist player
shouldnít be able to stop the process from going forward. Should have
some sort of supermajority standard. "Consensus is like pornography
Ė you know it when you see it."
- Pincus: Need an agreement
between NSI and ICANN, and should see what public comment says also.
- Cox: Government Advisory Committee,
created by By-Laws, board can change those, so board can change structure
of GAC, right? Concern that ICANN is becoming a government or will be run
by governments. Concern also re who can be there Ė why China (which is taking
some policy actions we might regard as undesirable) and not Taiwan?
- Roberts: Yes. But White Paper
is quite definitive that governments should not play a major role in ICANN.
- Dyson: Committee is advisory,
just writes recommendations. Unlike SOs which provide more of a policy-setting
role. ICANN can only manage technical infrastructure, not content, freedom
of speech. Canít control what PRC does.
- Burr: Taiwan is in the GAC.
Initially, the GAC required members to be nations, but change was made
to allow "distinct economies" to participate as equals.
- Panel II Statements
- Love: Interested in Network
Solutions and ICANN.
- NSI: Concerned that NSI says
it owns the information in its registry. Thereís a lock-in problem that
needs to be addressed, because itís hard to move to a new address once
established at some initial address.
- ICANN: Power limited only
by the ability of others to work around it. ICANNís non-profit status
provides no structural protection against abuses. Wants ICANN to sign
an agreement promising not to go beyond technical issues. But they wonít.
How USG could oversee ICANN if it wanted to? Could be harder than overseeing
- Norquist: Thinking about how
and why to tax commerce on the Internet.
- Concerned about ICANNís $1
tax Ė not a lot of money, but where does the authority to do so come from?
They could make the tax bigger. Congress shouldnít delegate the power
- Barry: ICANN is not just plumbing.
Goes far beyond whatís contemplated by the White Paper.
- Will sacrifice small business
and individual interests without structures in place for accountability.
- US Small Business Administration
says WIPOís recommendations are not appropriate because they may be discriminatory
against small businesses.
- Agree with ICANN that competition
is important. But ICANN is requiring too much of registries to adopt provisions
detrimental to small businesses and individuals.
- Andrew has all the power of
a government, but none of the oversight.
- Miller: Hearing today is important
because it sheds light on a confusing and previously-obscure process.
- Key points: Pleased to hear
the meetings will be open in the future. New era of competition in domain
names. Government involvement needs to be reduced.
- Those who challenge ICANN
may unintentionally be undermining the Internet itself, for we canít turn
these powers back over to governments.
- Must deal with the problem
- Users must pay for the services
- ICANN suffered self-inflicted
wounds: Board members donít have very technical backgrounds. Closed meetings.
Communicates to outside world through lawyers, PR firm. Has created an
arbitrary structure for DNSO. Hasnít limited its policy role appropriately.
- Todo: Needs new board members,
more representative, drawn from the Internet community. Needs to define
and limit its own policy mandates.
- Criticism of $1/year "tax"
- Conflict between NSI and ICANN
is inevitable because NSI is enjoying huge profits from its monopoly while
ICANNís task is to eliminate NSIís monopoly. NSI has consistently sought
to slow down the process of creating competition.
- Zittrain: Berkman has sought
to document the process of ICANNís creation, identify underlying issues
at stake, and develop systems for deliberation in ICANNís decision-making
- What ICANN has been asked
to do: The system prior to ICANN was a series of handshakes and traditions,
plus a couple cooperative agreements with vague terms. Government involvement
was limited to subsidies (like NEA, maybe, but less controversial). The
IETF developed the actual protocols by which the network worked, informally
and among only engineers with little beyond technical "glory"
- Why itís hard for ICANN to
do it: But now thereís real money at stake, and engineers donít want to
deal with those kinds of problems. ICANN therefore really does have some
regulatory power. And there are very powerful interests involved. To make
ICANN work, there should be openness (not just open board meetings, but
thatís only the beginning). Better to have a forum in which issues are
discussed as openly as possible rather than have the deliberation take
place in private without the procedures of openness. Also due process,
- What happens if ICANN fails
- Panel II Questions
- Upton: Is ICANN board representative?
Is ICANN going too far by attempting to address cybersquatting?
- Barry: No, because individuals
are under-represented. Yes, because cybersquatters have never won a case
in the US or in any other country.
- Miller: Board is doing a good
job, but faces hard challenges. Need representation of users. Need to
include all parts of the world, so board is to be commented for moving
meetings around the world. Itís appropriate to discuss WIPO issues.
- Weinberg: Board isnít representative.
PSO and ASO will send engineers to the Board. DNSO will send people interested
in the business of registering domain names. Need At-Large Membership
to represent the interests of individuals. An agreement will be reached
- Zittrain: Major voices missing?
I donít think theyíre meant to each represent different interests, rather
theyíre a sort of collective. Going forward, the bicameral structure of
the board gives the At-Large Membership a significant power. But how to
make the A-L M representative? The Membership Advisory Committee worked
on that. Re cybersquatting, disputes like Spring having mci.com have been
resolved by the courts satisfactorily so far, and Iím generally not hoping
for heavy-handed power wielded by ICANN.
- Klink: Is there a game of chicken
going on here? Will the Internet come crashing down if NSI walks away?
- Barry: Internet will route
around instability. Internet did not come crashing down when NSI had significant
technical difficulties. Running a root server is not magic or even especially
- Miller: This is not an easy
system to run, and itís getting more sophisticated every day as the size
of the network grows. It would be terribly disruptive to forcefully remove
- Weinberg: NSI would like to
have the real power over its gTLDs, ideally with the "fig leaf"
of someone elseís so-called control. It would be a big mess if the gTLDs
were pulled away from NSI.
- Zittrain: It really is a game
of chicken Ė DoC doesnít want a lawsuit, ICANN doesnít have the money
for a lawsuit, NSI wants a monopoly for as long as possible (so thereís
law and structure to prevent them from doing so!) Ė so we should expect
agreement at the eleventh hour.
- Klink: Government has created
a monopoly and now doesnít know what to do with it?
Zittrain: You find yourself on top of the goldmine.
Miller: Itís like the food service at a stadium Ė thereís only one, but
you want it to be high-quality, so someone has to watch the monopolist.
- Pickering: Want to set up a
structure for accountability. Does USG need to step in until issues are
adequately addressed in an open forum? Does NTIA/DoC have adequate authority?
- Weinberg: Donít need to step
in. ICANN has a long way to go, as does NSI of course. But DoC is basically
doing all the right things, maybe being too timid sometimes in its negotiations
with NSI (but thatís "backseat driving"). Committee should throw
its support behind the DoC.
- Miller: Committee should hold
another hearing in November, when ICANN will have seated the first nine
elected members, when the issue of openness will have been dealt with
or not, when there will be real competition in registrations, and so on.
So donít step in now.
- Barry: A freeze might be appropriate
given the extent to which the ICANN process represents significant worries.
- Zittrain: This process has
been like watching a faucet drip Ė nothing all that shocking has happened.
Thereís a contract between ICANN and the USG which expires in October
2000; Congress could weigh in any time between now and then with instructions
or concerns. Re the NSI monopoly, not sure thereís much Congress can do.
Finally, itís not clear why domains should be "rented" rather
- Panel III Statements
- Forman: register.com was the
first company to go live with a competitive registration system. Market
expected to grow by a factor of twenty in the next four years.
- ICANN Participation: have
been involved at every ICANN public meeting. Can attend physically and
talk at a microphone, or participate remotely (listening to audio and/or
watching video, submitting questions to be responded to immediately) as
I did in Singapore.
- Comfortable with $1 fee, just
as obliged to pay NSI the $9 fee.
- Need level playing field:
internic.net needs to be impartial, making it hard to offer service to
customers. NSI should have to sign a Registrar Accreditation Agreement
so that it operates on the same terms as competing registrars.
- Stubbs: Is ICANN fulfilling
its responsibility to open the DNS to the Internet community? No, because
it canít. NSI still makes the process more difficult than it needs to be.
Customers must be able to choose their registrar without having to pay excessive
- Bramson: Transition event is
extraordinary, bringing competition to an important part of the Internet.
Need predictability, stability, and a level playing field. ICANN has provided
the only structure for this process, and we think it needs to continue.
- Want to focus on test bed.
Why? Allow community to be involved. Maintaining consumerability. But
still lack fundamental structure Working on internal principles.
- Expect to launch AOLs registration
system by end of test bed period. Want consumers to be able to be involved/compete
- Is ICANN process to be reassessed?
Some parts, but healthy questions going on today, with DoC playing a part.