 |
|
The basic message I would like to leave with you today is that ICANN is functioning well, especially for such a young organization with such a difficult job. In fact, it has made substantial progress toward the specific goals it was created to meet, including the introduction of competition at both the wholesale and retail levels of the registration of names in the Domain Name System (DNS). The recent action to introduce seven new Top Level Domains (TLDs) into the DNS will double the number of global TLDs and at the same time will not, we believe, create serious risks of destabilizing the Internet -- something I know none of us wants to see. The fact that ICANN, in just over a year, has been able to generate global consensus on this issue -- which has been fiercely debated for most of the last decade -- is a testament to ICANN's potential to effectively administer the limited but important aspects of the DNS that are its only responsibility.(2) A. What is ICANN? It is probably useful to first provide a little background about ICANN, which is a unique entity that may not be familiar to everyone. ICANN is a non-profit private-sector organization with a 19-member international volunteer Board of Directors drawn from a set of specialized technical and policy advisory groups, and through open, worldwide online elections. ICANN was formed in 1998 through a consensus-development process in the global Internet community, in response to a suggestion by the United States Government that the private sector create such a body. It was formed to undertake certain administrative and technical management aspects of the Domain Name System (DNS) and the Internet address space. Domain names serve as the visible face of the name and address mechanism of the Internet -- in short, the way computers know where to send or receive information. ICANN performs functions that, prior to ICANN's creation by the private sector, were performed by contractors to the US Government (National Science Foundation and DARPA). ICANN is a young, and still maturing organization; it turns out that achieving global consensus is not so easy. But it has made great -- and many would say surprising -- progress toward the objective shared by the vast majority of responsible voices in the international Internet community: the creation of a stable, efficient and effective administrative management body for specific technical and related policy aspects of the DNS and the Internet address space that is consensus-based, internationally representative, and non-governmental. B. What are the Guiding Principles of ICANN? There is nothing quite like ICANN anywhere in the world, and of course it will be some time before we are certain that this unique approach to consensus development can effectively carry out the limited but quite important tasks assigned to it. I am cautiously optimistic, but we are still at an early stage of evolution, and there is much work to do. The organizational work has been complicated by the fact that we have also been asked to simultaneously begin to accomplish the specific operational goals set out by the US Government in the White Paper.(3) The situation is analogous to building a restaurant and starting to serve customers while the kitchen is still under construction; it is possible, but may occasionally produce cold food. The White Paper set forth four principles that it described as critical to the success of an entity such as ICANN: stability; competition; private, bottom-up coordination; and representation. 1. Stability is perhaps the easiest to understand. The US Government was seeking to extract itself from what it had concluded was no longer a proper role for the US Government -- the funding of private contractors to manage important technical aspects of the global Internet name and number address system -- but only in a way that did not threaten the stability of the Internet. As the White Paper said, and as seems obvious, "the stability of the Internet should be the first priority of any DNS management system." If the DNS does not work, then for all practical purposes for most people, the Internet does not work. That is an unacceptable outcome, and thus everything that ICANN does is guided by, and tested against, this primary directive. 2. Competition was also an important goal set forth in the White Paper, which stated that "[w]here possible, market mechanisms that support competition and consumer choice should drive the management of the Internet because they will lower costs, promote innovation, encourage diversity, and enhance user choice and satisfaction." Competition in the DNS structure as it stands today is theoretically possible at both the registry (or wholesale) level, and the registrar (or retail) level. Increasing competition at the retail level involves only adding additional sellers of names to be recorded in existing registries; as a result, it generates relatively minor stability concerns. For this reason, adding new competition at the retail level was the first substantive goal that ICANN quickly accomplished after its formation. On the other hand, adding new registry (or wholesale) competition -- which is the subject of this hearing -- requires the introduction of additional Top Level Domains into the namespace, and thus does raise potential stability issues of various kinds. As a result, and given its prime directive to protect stability, ICANN has moved forward in this area in a prudent and cautious way, consistent with recommendations from many constituencies interested in the Internet, which I will describe in more detail later in this testimony. 3. A third principle was private sector, bottom-up consensus development, and the entirety of ICANN's processes are controlled by this principle. ICANN is a private-sector body, and its participants draw from the full range of private- sector organizations, from business entities to non-profit organizations to foundations to private individuals. Its policies are the result of the complex, sometimes cumbersome interaction of all these actors, in an open, transparent and sometimes slow progression from individuals and particular entities through the ICANN working groups and Supporting Organizations to ICANN's Board, which by its own bylaws has the role of recognizing consensus already developed below, not imposing it from above. Like democracy, it is far from a perfect system, but it is an attempt, and the best way we have yet been able to devise, to generate global consensus without the coercive power of governments. 4. Finally, the fourth core principle on which ICANN rests is representation. A body such as ICANN can only plausibly claim to operate as a consensus development organization for the Internet community if it is truly representative of that community. The White Paper called for ICANN to "reflect the functional and geographic diversity of the Internet and its users," and to "ensure international participation in decision making." To satisfy these objectives, all of ICANN's structures are required to be geographically diverse, and the structures have been designed to, in the aggregate, to provide opportunities for input from all manner of Internet stakeholders. This is an extremely complicated task, and we are not yet finished with the construction phase; indeed, we have just initiated a Study Committee chaired by the former Prime Minister of Sweden, Carl Bildt, to oversee a new effort to find a consensus solution for obtaining input from and providing accountability to the general user community, which might not otherwise be involved in or even knowledgeable about ICANN and its activities. Other organizational tasks necessary to ensure that ICANN is fully representative of the entirety of the Internet community are also ongoing. This is hard work, and there is more to do to get it done right. C. What Has ICANN Accomplished So Far? Obviously, ICANN is still a work in progress. Nevertheless, it has, in my view, already made remarkable progress in its young life. ICANN was created in November of 1998, and did not really become fully operational until a year later (November of 1999) with the signing of a series of agreements with Network Solutions Inc., then the sole operator of the largest and most significant registries -- .com, .net, and .org. So ICANN really has only about 14 months of operating history. Still, even in that short span of time, some significant things have happened. 1. The Introduction of Retail Competition. As one of its very first actions, ICANN created an accreditation system for competitive registrars and, pursuant to its NSI agreements, gave those new competitors access to the NSI-operated registries. When ICANN was formed, there was only a single registrar (NSI) and everyone had to pay the single price for the single domain name product that sole registrar offered: $70 for a two-year registration. There are now over 180 accredited registrars, with more than half of those actively operating, and you can now register a domain name in the .com, .net, and .org registries for a wide range of prices and terms - some will charge zero for the name if you buy other services, while others will sell you a ten-year registration for significantly less than the $350 it would have cost pre-ICANN (even if it had been available, which it was not). While there are no precise statistics, in part because the market is so diverse, a good estimate of the average retail price today of a one-year domain name registration in the NSI registries is probably $10-15 -- or less than half the retail price just 18 months ago. At the time of ICANN's creation, NSI had 100% of the registration market for the .com, .net and .org TLDs. Today, we estimate that NSI is registering less than 40% of new registrations in those TLDs -- a market share drop of more than half in that same 18-month period. There are still issues that must be dealt with in this area; some registrars have not lived up to their contractual commitments, and ICANN needs to ensure that they do. And indeed, there may be too many registrars; 94% of all registrations come from the 10 largest registrars, with the other 80 or 90 active registrars sharing the other 6%. Name registration is quickly becoming a commodity business, and a commodity business, with commodity margins, will probably not support 100 vigorous competitors. We are already starting to see some companies wishing to leave the business, and we need to make as sure as we can that those departures do not impair the ability of consumers and businesses to rely on names they have registered, and that departures or even failures do not generate unreliability or other forms of instability in the namespace itself. So while there are still issues to be dealt with, I think it is widely recognized that ICANN has been very successful in changing the retail name registration market from a monopoly market to a highly competitive market. 2. Creation of a Cost-Effective, Efficient Dispute Resolution System. A second significant accomplishment has been the creation of the Uniform Dispute Resolution Policy, a way to quickly and cheaply arbitrate certain domain name disputes. While domain names themselves cannot be trademarked, it is certainly possible for domain names to be confusingly similar to a trademarked name, or in other ways to be inappropriately used by someone for illegitimate means. Since trademark and other intellectual property rules differ from country to country, enforcing those rights is complex and expensive. One of the policies that was generated from the ICANN bottom-up process early on was the need for a simple procedure to resolve the clearest and most egregious violations on a global basis. The result, after considerable work in a variety of ICANN forums, is the UDRP, which one commentator recently noted is "widely viewed as a model of dispute resolution for the 21st Century." The UDRP is limited to certain very specific claims, is intended to require only about $1,500 in costs and 45 days to invoke, and is required to be included in all name registration contracts by all ICANN-accredited registrars, thus providing the basis for global uniformity in the resolution of this particular class of domain name disputes. Even though the UDRP is non-binding (either party may take the dispute to court after an unfavorable UDRP decision), it appears that has happened in only a few dozen out of over 2,000 decisions to date. The UDRP is, I would submit, another very positive accomplishment of ICANN during its short existence to date. As of this writing, parties interested in further refinement of the UDRP are already studying its design for possible revisions. D. The Introduction of New Global Top Level Domains. That brings me to the subject of today's hearings, which is really the third major accomplishment of ICANN in its short existence: the creation of additional competition at the registry (or wholesale) level of the namespace. To understand how much of an accomplishment this was, and how difficult it has been to get to this point, we need to start with some history, after which I will walk through the general standard utilized, the criteria that were applied, the application process, the evaluation process, and the selection process. I will then bring the story up to date with a description of what has happened since the selections were made. Background. The Internet as we know it today was not created with all of its present uses clearly in mind. In fact, I can safely say (having been very much involved in the very earliest days of the Internet) that no one had any idea how it would develop in the hands of the general public, nor even that it would ever reach public hands. Certainly there was little appreciation of the increasingly critical role it would play in everyday life. In those days, we were designing a communications system intended for military application and used for experimental purposes by the research and academic community, and not a system for commerce. Internet addresses are numeric values, usually represented by four numbers separated by "." (dots). This is sometimes called "dotted notation" as in 192.136.34.07. In the earliest days, computers ("hosts") were known by simple names such as "UCLA" or "USC-ISI". As the system grew, especially after 1985 as the National Science Foundation began growing its NSFNET, it became clear that a system of hierarchical naming and addressing conventions would be needed. At that time, seven so-called "Top Level Domains" were created: .com for commercial, .net for networks, .org for non-commercial organizations, .gov for government users, .mil for the military, .edu for educational institutions, and .int for international organizations. All domain names since that time (with an important exception I will mention momentarily) have been subdivisions of those original seven TLDs. Thus, wcom.com, to pick an example, is part of the .com top level domain, and all messages sent to Vinton.G.Cerf@wcom.com are routed pursuant to the information contained ultimately in the .com registry's distributed database. In particular, that database resolves "wcom.com" into a 32 bit address, such as 192.136.34.07 [note, this is not the actual Internet address associated with the wcom.com domain name]. The exception mentioned earlier is the set of so-called "country code" (or "cc") TLDs. The original seven TLDs were once called "generic" TLDs and are now known as "global" TLDs, meaning that there are theoretically no geographic boundaries that constrain entries in those databases.(4) In the early days of the Internet, one of the most important values to the scientists seeking to incubate and grow this new thing was the spreading of connectivity to as many parts of the world as possible. To help in that, individual countries (and some other geographic areas) were delegated their own TLDs, such as .au for Australia, or .jp for Japan, or .fr for France. Operation of the registries for these ccTLDs was delegated to a wide variety of people or entities, with the primary consideration being a willingness to agree to operate them for the benefit of the citizens of that geography. These original delegates were frequently academics, sometimes government agencies, and sometimes local entrepreneurs; the common thread was that they promised to use these TLDs to provide access to this new thing called the Internet for local constituents. In this way, the Internet, which started as a research experiment in American universities, slowly became truly global. It is worth noting that the Internet research project was international in its scope almost immediately. It started in 1973, and by early 1975, University College London and the Norwegian Defense Research Establishment were involved. Later, sites in Italy and Germany became a part of the Internet research effort. The original seven gTLDs were created in the mid- to late-1980s; no new global TLD has been added to the namespace since then. There are now some 245 ccTLDs, but as described, these were intended to be for localized use, not as alternatives for global TLDs. So as the Internet grew during the 1990s, demand for domain names grew as well, but as a practical matter the only global (i.e., non-national) TLDs in which businesses or individuals could freely register a domain name were .com, .net and .org - all administered by Network Solutions, Inc. under a contract with the National Science Foundation. There is a long history about how this came about, which I don't have time to tell, but suffice it to say that as demand exploded, NSI could not effectively operate the registry within the financial framework of its agreement with the National Science Foundation and sought to remedy this by obtaining permission to charge users for registration of names in the .com, .net and .org databases. Over time, there came to be dissatisfaction with the service offered by NSI. In addition (also for reasons too complicated to relate here), NSI was constrained by its contract with NSF to charge exactly $70 for a two-year registration with an annual $35 charge after the second year -- no exceptions, no changes. As the number of name registrations climbed into the millions, many felt that the charge far exceeded the cost of accepting the registration and maintaining the database. This unhappiness of a significant portion of the Internet community was one of the driving forces behind a grass-roots attempt to institutionalize the function of the original ICANN, the Information Sciences Institute at the University of Southern California, a government contractor that performed a set of functions known as the Internet Assigned Numbers Authority (IANA). After almost three years of contentious debate, the grass-roots effort failed to gel and the US Government (after extensive public consultation) then called on the private sector to come forward with a new kind of organization. The private sector responded by creating ICANN, as a way to, among other things, encourage the addition of competition at both the retail and wholesale levels of the namespace. Standards for Introduction of New TLDs. As described above, ICANN was able to introduce retail competition relatively quickly after its creation, and this has produced the expected benefits -- lower prices, more consumer choice, and innovation. But the introduction of wholesale competition, because it involves actually expanding the structure of the namespace, presented and continues to present more risks. While most Internet engineers believe that some number of additional TLDs could be added without serious risks of instability, there is considerable uncertainty about how many could be added without adverse side effects, and very few engineers have been willing to absolutely guarantee that there was zero risk of instability. Given the increasingly critical role the Internet now plays in everyday commercial and personal life, the almost uniform consensus in the community was to be cautious and prudent in this process. For example, the White Paper asserted that "expansion of gTLDs [should] proceed at a deliberate and controlled pace to allow for evaluation of the impact of the new gTLDs and well-reasoned evaluation of the domain space." In addition to concerns about the technical stability of the Internet, many were concerned about potential costs that rapid expansion of the TLD space might impose on business and consumers. The World Intellectual Property Organization, which conducted a study of intellectual property issues in connection with the DNS at the request of the United States Government, concluded that new gTLDs could be introduced if done "in a slow and controlled manner that takes into account the efficacy of the proposed measures in reducing existing problems." The Protocol Supporting Organization of ICANN (made up of the Internet Engineering Task Force and other Internet engineering and protocol development bodies) said it saw no technical problems with the introduction of a "relatively small" number of new TLDs. In fact, every entity or organization without an economic stake in the answer that has examined this question has recommended the same thing: a "small" or "limited" or "prudent" number of new TLDs should be tried first, as a sort of proof of concept or experiment. Once this "limited" number of new TLDs was introduced -- and the suggested numbers roughly ranged from 1 to 10 -- and assuming there were no adverse side effects, then additional TLDs could be introduced if there was consumer demand for them. The ICANN Structure and Procedures. Because ICANN is a consensus development body that relies on bottom-up policy development, the issues of whether and how to introduce new gTLDs were first taken up by the Domain Name Supporting Organization (DNSO), the ICANN constituent body responsible for name policy issues. The DNSO organized a Working Group, which recommended that a small number (6-10) of TLDs be initially introduced, and that the effects of that introduction be evaluated before proceeding further. That recommendation was forwarded to the Names Council, the executive body of the DNSO, which reviewed the Working Group recommendation and public comments on it, and recommended to the ICANN Board that it establish a "policy for the introduction of new gTLDs in a measured and responsible way." The Names Council suggested that "a limited number of new top-level domains be introduced initially and that the future introduction of additional top-level domains be done only after careful evaluation of the initial introduction." Consistent with the ICANN bylaws, the ICANN Board accepts the recommendations of Supporting Organizations if the recommendations meet certain minimal standards designed to ensure that they truly represent consensus recommendations. Thus, the Names Council recommendation was published for public comments, and following the receipt of numerous public comments, the ICANN staff in June 2000 issued a Discussion Draft seeking public comments on a series of questions intended to lead to the adoption of principles and procedures to be followed in a "measured and responsible introduction" of a limited number of new TLDs.(5) Following several thousand additional public comments, and considerable discussion at a public meeting in Yokohama in July 2000, the ICANN Board adopted a series of resolutions instructing its staff to begin the process of accepting applications for a "proof of concept" for the introduction of new TLDs.(6) In early August, ICANN posted a detailed discussion of the new TLD process it proposed to follow(7), and in mid-August a detailed set of Criteria for Assessing TLD Proposals.(8) These nine criteria have been constant throughout this process, and so they bear repeating here: 1. The need to maintain the Internet's stability. This speaks for itself. ICANN's overriding obligation is to protect the stability of the Internet, and all other objectives are secondary. Thus, any proposal that could be shown to threaten this stability (other than any risk inherent in any new TLD introduction) was obviously unacceptable. 2. The extent to which selection of the proposal would lead to an effective "proof of concept" concerning the introduction of top-level domains in the future.
This too is largely self-explanatory. The effort here was not to find the "best" application, however that might be measured, but to ask the community to offer up a set of options from which ICANN could select a limited number that, taken in the aggregate, would satisfy the evaluation objectives of this proof of concept. This is exactly the same approach that ICANN had previously taken in the introduction of competitive registrars, and which had worked so well there. The addition of multiple registrars to the NSI registries required the creation of new interface software, since before this time only one registrar had been able to direct new entries in those
registries. Thus, there was some experimental effort required to make sure that the software was ready for use by a larger number of simultaneous registrars. ICANN first created a "test-bed," asked for expressions of interest from the community, and accredited only five new registrars for a period of a few months, while they and NSI worked out the bugs in the interface software. As soon as the test-bed was completed, ICANN accredited large numbers of registrars, now exceeding 180. Here, the concept is similar: from options offered up from the community, create a limited number of new TLDs to ensure that the DNS can accept, both technically and practically, these additions without impairing stability in any way. Once that is proven, additional TLDs can be created as appropriate. 3. The enhancement of competition for registration services. Obviously, this is the principal reason for adding new TLDs, so one criterion for determining which applications to accept initially is how effective they are likely to be in creating new competition for the NSI registries. Of course, competition takes many forms; here, one form would be analogous to .com -- a global, unrestricted registry focusing on business. To compete in this way requires not only desire, but the capacity to effectively compete with a competitor with high brand awareness (.com has almost become a generic term), a very significant marketing budget, and a large installed base of registered names which will produce some level of renewals more or less automatically. To compete successfully on a global basis under these circumstances requires a significant capital investment, very significant technical expertise (running a database of several million names that gets hundreds of simultaneous queries every second is a complicated matter), and a substantial marketing budget to build the kind of brand equity that will be necessary to compete effectively with, for example, .com. Another way to introduce competition into the wholesale part of the market is to offer a different kind of product -- not a global unrestricted domain, but various kinds of limited or restricted registries that might appeal to specific different sectors of the market. To use a television analogy, narrowcasting instead of broadcasting. Here, capital and marketing expenses may be lower, but other kinds of service characteristics may be more important. ICANN's purpose with this criteria was to invite a broad range of competitive options, from which it could select a menu that, taken as a whole, would offer a number of different competitive alternatives to consumers of domain name services. 4. The enhancement of the utility of the DNS. In addition to competition, one must reasonably consider the practical effects of the introduction of new TLDs. The names registered in the DNS are intended to be used by people, and sound engineering requires that human factors be taken into account. 5. The extent to which the proposal would meet previously unmet types of needs.
If it is assumed that the DNS should meet a diversity of needs, it would be a positive value if a proposed TLD appeared to meet any previously unmet needs of the Internet community. 6. The extent to which the proposal would enhance the diversity of the DNS and of registration services generally.
Here, what was sought was diversity of all kinds, in the hopes of creating the broadest possible -- and thus most instructive -- experiment within the limitations recommended (i.e., a small number of new top level domains). So, the published criteria encouraged the submission of proposals for different kinds of TLDs (open or closed, non-commercial or commercial, personal or business-oriented, etc.) The criteria also sought diverse business models and proposals from different geographic regions, for the same reasons. 7. The evaluation of delegation of policy-formulation functions for special-purpose TLDs to appropriate organizations.
For those proposals that envisioned restricted or special-purpose TLDs, this criterion recognized that development of policies for the TLD would best be done by a "sponsoring organization" that could demonstrate that it would include participation of the segments of the communities that would be most affected by the TLD. Thus, with this class of application, the representativeness of the sponsoring organization was a very important criterion in the evaluation process. 8. Appropriate protections of rights of others in connection with the operation of the TLD.
Any new TLD is likely to have an initial "land rush" when it first starts operations as people seek the most desirable names. In addition, every new TLD offers the potential opportunity for cybersquatting and other inappropriate name registration practices. This criterion sought information about how the applicant proposed to deal with these issues, and also how it proposed to provide appropriate mechanisms to resolve domain name disputes. 9. The completeness of the proposals submitted and the extent to which they demonstrate realistic business, financial, technical, and operational plans and sound analysis of market needs.
Finally, this criterion simply emphasized that, since the effort was a "proof of concept," the soundness and completeness of the application and the business plan would be important elements of the selection process. This was not intended to be an experiment in how well the DNS or the Internet could survive the business failure of a new TLD operator. Nor was it intended to be clairvoyant with regard to the outcome of any particular proposal. Thus, to the extent possible, those applications that appeared to have the soundest business plans, based on the most realistic estimates of likely outcomes. The Application Process. The application process required the filing of a detailed proposal speaking to all the criteria outlined above. It recommended that applicants retain professional assistance from technical, financial and management advisers, and lawyers. And perhaps most controversially, it required a non-refundable application fee of $50,000. A brief explanation of this particular requirement may be useful. ICANN is a self-funding organization. It has no capital, and no shareholders from which to raise capital. It must recover its costs from the various constituent units that benefit from ICANN's processes and procedures -- today, those costs are borne by address registries, name registries, and registrars. Its annual expenditures to date have been in the $4-5 million range, covering employee salaries and expenses (there are now 14 employees), and a wide range of other expenditures associated with operating in a global setting. Thus, there was no ready source of funds to pay for the process of introducing new TLDs, and the ICANN Board determined that this, like all other ICANN activities, should be a self-funded effort, with the costs of the process borne by those seeking the new TLDs. At that point, ICANN estimated the potential costs of this process, including the retention of technical and financial advisers, legal advice, the logistics of the process, and the potential cost of litigation pursued by those unhappy with the results. While obviously all these elements were highly uncertain, based on its best judgment of how many applications were likely to come in and what the likely costs would be, and incidentally only after receiving public comments, ICANN established a $50,000 fee. As it turns out, there were more applications than expected, and thus the absolute costs of processing and reviewing them were higher than expected; about half the application revenues have already been used to cover costs of the process to date, with considerable work left to do and still with the potential for litigation at the end of the process. To date, it appears that the fact of more applications and higher costs of review and evaluation than expected have cancelled each other out, and so it appears that the fees adopted were about right in creating the funds necessary to carry out this process. I know there have been complaints by some that they were foreclosed from this process because they simply could not afford the $50,000 application fee, and I am sympathetic to these concerns. But there are three practical responses that, in my view, make it clear that this is not a fair criticism of the process. First, the process had to be self-funding; there simply was no other option, since ICANN has no general source of funds. Based on costs to date and those projected, it certainly does not seem that the fee was set too high. While there are still application fee receipts that remain unspent, the process is not over, and it has already consumed half of the fees collected. Second, and as importantly, it is highly unlikely that any individual or entity that could not afford the application fee would have the resources to be able to operate a successful and scalable TLD registry. The capital and operating costs of even a small registry are thought to be considerable, and especially if the goal is to operate a registry that charged low or no fees for name registrations (many of the persons and entities advancing this particular complaint are non-profit or public interest bodies), those fees would not likely cover the costs of operation, much less the necessary start-up and capital costs. Of course, it is possible that, if an organization that would otherwise have difficulty managing the costs of operating a TLD registry were in fact awarded a new TLD, it might be able to raise the funds through subsequent contributions or grants or the like, but this leads us directly to the third point. This effort was not a contest to find the most qualified, or the most worthy, or the most attractive for any reason of the various applicants. ICANN is not and should not be in the business of making value judgments. What ICANN is about is protecting the stability of the Internet and, to the extent consistent with that goal, increasing competition and competitive options for consumers of domain name services. Thus, what ICANN was doing here was an experiment, a proof of concept, an attempt to find a limited number of appropriate applicants to test what happens when new TLDs of various kinds are added to the namespace today -- a namespace that is vastly different in size and in application than that which existed more than 15 years ago when the first seven global TLDs and the ccTLDs were created. Because this was a proof of concept, the emphasis was on diverse business models, technical capacity, and diversity of geography and focus -- and not on some weighing of the relative merits, however measured, of the applicants. Indeed, a serious attempt was made to avoid otherwise normal business risks, such as limits on capital or other resources, so that forseeably likely business failures did not interfere with the data collection and evaluation process of this experiment. Thus, it would have been impossible to accept any application which relied on the mere hope of obtaining funding if an application was accepted, and indeed, several of the applicants not selected in the evaluation process were thought to be deficient just on that point. Under these circumstances, it was not appropriate to encourage applications by those with limited resources, since those limitations would almost certainly result in their not being selected. Thus, setting the fee to recover expected costs, without regard to the effect it had on applications, seemed then (and seems today) the logical approach. Once this experiment is over, and assuming it demonstrates that adding new TLDs in a measured way does not threaten the stability of the DNS or the Internet, I would hope that processes could be developed to both expedite and significantly reduce the cost of new TLD applications or, at a minimum, to deal with special cases of TLDs with very limited scope, scale and cost. The Evaluation Procedure. Forty-seven applications were submitted by the deadline established; three of those were withdrawn for various reasons, and the remaining 44 were then published on ICANN's website, open to public comments, and subjected to an extensive evaluation, applying the criteria set forth in the various materials previously published by ICANN. More than 4,000 public comments were received. The applications and the public comments were carefully reviewed by technical, financial and legal experts, and the result of that evaluation -- a 326-page staff report summarizing the public comments and the staff evaluation -- was itself posted on the ICANN website for public comment and review .by the Board of Directors of ICANN.(9) Another 1,000 public comments were received on the staff report. The Board was provided with regular status reports, interim results of the staff evaluations, and of course had access to the public comments as they were filed. There has been some criticism of the fact that the full staff evaluation was not available to the public -- and thus to the applicants -- until November, only days before the actual Board meeting. Obviously, it would have been much better to produce this earlier, and we tried to do so. But in fact the timing of the release of the staff report was largely the product of the bottom-up process that ICANN follows to generate consensus. An important ingredient in the staff evaluations was the substance of the voluminous -- over 5000 -- public comments produced in the month after the applications were posted. ICANN's job is to identify consensus, and thus input from the community is a critical part of any Board decision. Getting that community input, considering it, and completing the technical and financial evaluations was a massive job. It would have been preferable to have issued the staff report earlier. But on the other hand, in the six days between the posting of the report and the Board meeting, ICANN received more than 1,000 additional public comments on the staff report, many from the applicants responding to the evaluation of their particular application. The ultimate question is whether the Board got sufficient timely information on which to base its selection decisions, bearing in mind the objective of the exercise. I believe it did. At its Annual Meeting in Los Angeles in November 2000, the ICANN Board devoted most of the standard public forum day immediately preceding the Board meeting to the new TLD issue, with presentations by the staff of their findings, public comments, and short presentations from the applicants. Another point of criticism by some has been the short time -- three minutes -- allowed during this public forum for presentations by each of the applicants, but oral presentations were never intended to be the sole or primary source of information for the Board. Voluminous applications (with many hundreds of pages) had been filed by each applicant; many of them had received and answered clarifying questions from the staff; and many of them had provided additional material by filing material on the ICANN public comment page (every one of the 5,000+ comments was read by ICANN staff). The Board had access to the applications and to the staff evaluations well ahead of the public Board meeting at which the applications were reviewed. The opportunity to make a presentation at the public forum was simply the final step in an extensive process, available so that any last-minute questions could be asked or points made. Since there were 44 applicants, nearly all of whom wished to speak, and since the time available (given the other parts of the community who also wished to be heard) was limited to about two hours, three minutes was simply all the time available. Most used it wisely, pointing out the particular strengths of their applications. Some disappointed applicants have also complained that ICANN staff refused to talk with them, or let them respond to concerns raised by their applications. This is not accurate; what ICANN staff refused to do is have private conversations with the applicants, and this derives from the very nature of ICANN as an entity. ICANN is a consensus development body, not a regulatory agency; its decisions are intended to reflect consensus in the Internet community, not simply the policy preferences of those who happen to sit on its Board at any given moment. For this process to work, the vast bulk of ICANN's work must be transparent to the public, and so with very rare exceptions (such as matters dealing with personnel issues), everything ICANN does it does in public. (In fact, one of the three applications that were withdrawn resulted from the applicants' unwillingness to allow significant material in their application to be posted on ICANN's website.) If the public was going to have a real opportunity to comment on the applications, the applications themselves needed to be public, and any substantive discussion of them had to be public as well. In an effort to help this process, and still get questions answered, ICANN staff frequently took email or other private questions, reformulated them to make them more generically useful, and then posted them on the website as FAQs. In addition, staff encouraged applicants to post any information they wished on the public comment pages, where it would be read by ICANN staff, the ICANN Board and also by any interested observer. What staff would not do, and what was evidently very frustrating to many of the applicants that had not previously had any experience with the open structure and operations of ICANN, was to have private substantive discussions with the applicants. It is easy to understand this frustration, especially for those disappointed applicants who had not previously participated in the ICANN process and, as a result, did not understand what ICANN is and how it operates and thus were surprised at the transparency of the entire process. Still, it is hard to see how any other process could have been followed consistent with ICANN's consensus development process. Without access to the entirety of the information about each applicant and each application that was available to the Board, the Board would not have had the benefit of public comments on some (often significant) factors, and it would have been hard to justify its selections as deriving from a consensus development process. The Selection Process. To understand the selection process, we must go back to first principles. The goal here was not to have a contest and pick winners; it was not to decide who "deserved" to have a new TLD; it was not even to attempt to predict the kind or type of TLDs that might get public acceptance. The goal, articulated plainly from the beginning of the process more than a year ago, was to identify from suggestions by the community a limited number of diverse TLDs that could be introduced into the namespace in a prudent and controlled manner so that the world could test whether the addition of new global TLDs was feasible without destabilizing the DNS or producing other bad consequences. This was not a race, with the swiftest automatically the winner. It was a process that was intended to enable an experiment, a proof of concept, in which private entities were invited to participate if they chose to do so -- and those who did choose to participate did so voluntarily, knowing that the odds of being selected were not high, that the criteria for being included in this experiment were in some measure subjective, and that the goal was the production of experimental information that could be evaluated. Of course, when many more applications were received than anyone had suggested should be prudently introduced at this stage, some evaluation was necessary to attempt to identify those suggestions that might best fit the experimental parameters that had been laid down. But this was never a process in which the absolute or relative merit of the particular application was determinative. Many applications with likely merit were necessarily not going to be selected, if the goal was a small number (remember, the entire range of responsible suggestions for introducing new TLDs was from one to 10 new ones). And since one objective was diversity -- of business model, of geography, of type of registry -- it was highly likely that some qualified applications would not be selected -- both because prudence required the addition of only a small number of TLDs, and because our proof of concept required data from a diverse set of new TLDs. This was especially true of those applications seeking open, global TLDs; while two were selected, about half of the 44 applications sought such a charter. But it was also true of others; .geo received a very positive evaluation from the staff, but the Board felt that, at this proof of concept stage, there were in fact potential risks to the operation of the DNS that could not be fully evaluated without consultation with the technical support organization(s) associated with ICANN. Thus, the Board considered every one of the 44 remaining applications at its meeting on November 16, 2000, measuring them against their collective judgment about how well they would serve to carry out the test that was being considered. In a meeting that lasted more than six hours, the Board methodically reviewed, and either set aside or retained for further evaluation, application after application, until it was left with approximately 10 applications that seemed to have broad consensus support. After further, more focused discussion, that number was pared to the seven that were ultimately selected, and which had almost unanimous Board support: .biz, .info, .pro, .aero, .coop, .museum, and .name.(10) In the aggregate, the Board concluded that this group provided enough diversity of business models and other relevant considerations so as to form an acceptable test bed or proof of concept. The various TLDs have very different intended purposes, and that is the strength of the group in the aggregate. Two -- .biz and .info -- were advanced as essentially alternatives to .com -- global, business-oriented registries aimed at capturing millions of registered names around the world. In order to compete with .com -- which has a recognized brand, a large installed base that produces a regular stream of renewals, and a very substantial marketing budget -- these particular applicants assumed they would need a significant investment in both capital equipment and marketing. The Board felt that these applicants seemed most capable of bringing the necessary resources to bear to test whether anyone can effectively compete with .com after the latter's significant head start. Two other TLDs -- .pro and .name -- were aimed at individuals rather than businesses, but in very different ways. .pro was aimed at licensed professionals, while .name was aimed at any individual. The other three -- .aero (aerospace industry), .coop (for cooperatives), and .museum (for museums) -- were all restricted TLDs, aimed at an industry or a business method or a type of entity, and added to the diversity of this experimental collection of TLDs. ICANN's objectives -- and by that we mean to say the objectives of the general Internet community, which ICANN tries to represent -- were to introduce a small number of various kinds of new TLDs into the namespace in a prudent fashion, see what happened, and then, if appropriate, based on those results, move forward with additional new TLDs. It is certainly conceivable that some different subset of the applications it had before it would have met that objective as well as those chosen, but the real question is whether the choices were reasonable, and likely to produce the necessary information on which future introductions could be based. It is also possible, as some of those not selected have complained, that those selected will have a head start (to the extent that matters) over future TLD applicants, but this would be an inevitable consequence of any selection of less than all applicants. Those who were not selected, no matter who they are, were predictably going to be unhappy, and those who were selected were predictably going to be glad, but neither was an ICANN goal. ICANN's goal, and its responsibility, was to find a limited collection of diverse new TLDs that could be prudently added to the namespace while minimizing any risk of instability. While time will tell, at this point we believe we faithfully carried out that responsibility. The Post-Selection Process. Since November, we have been in the process of drafting and negotiating agreements with the selected applicants. Since these agreements will hopefully be templates for future agreements, we are taking great care to make sure that the structure and terms are replicable in different environments. Since these agreements will contain the promises and commitments under which the applicants will have to live for some time, the applicants are being very careful. The result is slow progress, but progress. We are hopeful that we will be able to complete the first draft agreements within a few weeks. The Board will then be asked to assess whether the agreements reflect the proposals that were selected and, if so, to approve the agreements. Shortly thereafter, this great experiment will begin. We are all looking forward to that time. Of course, it cannot be stressed enough that no one knows for sure what the effects of this experiment will be. Since there have been no new global TLDs introduced for more than a decade, the Internet is a vastly different space than it was the last time this happened. Of course, there have been a number of country code TLDs introduced over that period, and since some of those have recently begun to function in a way quite analogous to a global TLD, it may be that we will be able to conclude that the DNS can readily absorb more new global TLDs. But there has never been an introduction of as many as seven new global TLDs simultaneously, with the possibility of a land rush that is inherent in that fact. There has never been a highly visible introduction of multiple new TLDs in the context of an Internet that has become a principal global medium for commerce and communication. We do not know whether the introduction of a number of new TLDs -- especially combined with the relatively new phenomenon of the use of ccTLDs in a fashion never intended (after all, .tv stands for Tuvalu, not television, no matter what its marketers say) -- will create consumer confusion, or will impair the functioning of various kinds of software that has been written to assume that .com is the most likely domain for any address. In short, it is not absolutely clear what effects these introductions will have on the stability of the DNS or how to introduce new TLDs in a way that minimizes harmful side-effects, and that is precisely why we are conducting this experiment. The results will guide our future actions.
E. Conclusion One of ICANN's primary missions is to preserve the integrity and stability of the Internet through prudent oversight and management of the DNS by bottom-up, global, representative consensus development. Like location in real estate, the three most important goals of ICANN are stability, stability and stability. Once there is consensus that stability is not threatened, ICANN is then charged with seeking to increase competition and diversity, both very important but secondary goals. A competitive Internet that does not function is not useful. An Internet in which anyone can obtain the domain name of their choice, but where the DNS does not function when someone seeks to find a particular website, is also not useful. In its short life, ICANN has some real accomplishments -- made more impressive by the inherent difficulty of developing global consensus on anything, but especially on issues as complex and contentious as those facing ICANN. It has achieved these accomplishments by hewing to its first and guiding principle -- to maintain a stable, functional DNS -- and within those limits by seeking to increase competitive options and efficient dispute resolution. This same principle has guided the careful, prudent way in which ICANN has approached the introduction of new global TLDs, really for the first time in the history of the Internet as we know it today. ICANN's processes are and have been transparent. The goals and procedures were derived from public comments, clearly laid out at the beginning of the process, and all decisions were made in full public view. Given the importance of care and prudence in the process, and the potentially devastating results of a misstep, ICANN has and will continue to err on the side of caution. This may mean slower progress than some would like, but it will also reduce and hopefully eliminate the potential for the catastrophic effects on business and personal use of the Internet that malfunction or other instability of the DNS would produce.
1 My curriculum vitae is attached. 2 I have attached to this testimony a time line that describes the chronology of the debate over new Top Level Domains. 3 The White Paper was a policy statement published by the Department of Commerce on June 10, 1998. See Management of Internet Names and Addresses, 63 Fed. Reg. 31741 (1998) 4 Of course, in fact entries in .gov, .mil, and for the most part .edu relate only to the United States, but the other global TLDs are open to entries from all over the world. 5 See generally ICANN Yokohama Meeting Topic: Introduction of New Top-Level Domains, at http://www.icann.org/yokohama/new-tld-topic.htm. 6 See Resolutions of the ICANN Board on New TLDs, at http://www.icann.org/tlds/new-tld-resolutions-16jul00.htm 7 See New TLD Application Process Overview, at http://www.icann.org/tlds/application-process-03aug00.htm 8 See Criteria for Assessing TLD Proposals, at http://www.icann.org/tlds/tld-criteria-15aug00.htm 9 See Report on New TLD Applications, at http://www.icann.org/tlds/report 10 See http://www.icann.org/minutes/prelim-report-16nov00.htm#00.89 |