TESTIMONY OF LOU KERNER
CHIEF EXECUTIVE OFFICER
THE .TV CORPORATION INTERNATIONAL
THE SELECTION PROCESS FOR NEW TOP LEVEL DOMAINS
THE INTERNET CORPORATION FOR ASSIGNED NAMES AND
SUBCOMMITTEE ON TELECOMMUNICATIONS
HOUSE COMMITTEE ON COMMERCE AND ENERGY
FEBRUARY 8, 2001
The .tv Corporation International
1100 Glendon Avenue
Los Angeles, CA 90024
Good morning, Mr. Chairman and members of
the Committee. My name is Lou Kerner. I am Chief Executive Officer of
The .tv Corporation International ("dotTV"). Thank you for allowing
me the opportunity to appear today and to share our serious concerns with
respect to the process by which the Internet Corporation for Assigned
Names and Numbers (ICANN) proposes to introduce a new set of generic top
level domains ("TLDs") to the Internet.
I want to emphasize at the outset that ICANN,
a body that is largely unknown to the public, has enormous power over
the Internet today. How it exercises that power has great significance
for consumer choice, competition and the efficiency and viability of the
Internet. Congress has an important role to play in making sure that ICANN
carries out its responsibilities in the public interest.
In July of 1998, the Department of Commerce
issued a "White Paper" to create a private, non-profit corporation
with broad responsibility to manage the policy and operation of the Internet.
This entity, which subsequently became ICANN, was to be governed "on
the basis of a sound and transparent decision-making process" that
was to be "fair, open, and pro-competitive." Mr. Chairman, this
lofty ideal in no way resembles the events of recent months, which more
accurately could be described as hurried, arbitrary and unfair. As a member
of two bidding consortiums, the dotNOM Consortium and The dotPRO Consortium,
it is our belief that the process prescribed and implemented by ICANN
is fundamentally flawed and that due process and thoughtful decision making
has been sacrificed for the sake of expediency. In reliance on this flawed
process, critical decisions with irreversible and far-reaching consequences
affecting the future of the Internet may soon be made.
We come here as supporters of ICANN generally,
but with serious concerns about its TLD selection process which we view
as fundamentally flawed and lacking due process. We continue to recognize
the enormous task and power ICANN holds over the Internet today and in
the future. How it exercises that power has great significance for consumer
choice, competition and the efficiency and viability of the Internet.
As the U.S. Department of Commerce still has oversight authority over
ICANN, the U.S. Government has an important role to play in making sure
that ICANN carries out its responsibilities in a responsible manner.
Following some brief background information,
I first will describe the method by which ICANN selected a new set of
TLDs and then identify some of the specific flaws in the TLD selection
process. Finally, I will set forth the congressional action we believe
is necessary to remedy ICANN's actions and to ensure that the deliberate
and thoughtful process contemplated by the ICANN charter is followed in
1. About Top Level Domain Names:
The Internet domain name system ("DNS")
is based on a hierarchical structure of names. At the top of this hierarchy
are top level domain names ("TLDs") comprising "generic"
TLDs ("gTLDs") such as .com, .org, .net and the two letter country
code top level domains ("ccTLDs") such as .uk, .jp and .tv.
Below the TLDs are the many millions of second level domain names that
have been registered by individuals and organizations such as amazon.com,
earthlink.net and npr.org. For some years consideration has been given
to the introduction of new gTLDs, however, none have been added to the
system since the mid 1980s.
2. About ICANN:
Responsibility for the overall coordination
of the DNS originally resided with the Internet Assigned Numbers Authority
("IANA") under the oversight of the U.S. Department of Commerce.
This responsibility was subsequently passed to ICANN which was created
in 1998, however, ICANN continues to be subject to oversight by the Department
ICANN is a not-for-profit corporation that
operates under the direction of a board of 19 directors (the "Board");
nine appointed by ICANN's supporting organizations, nine at-large directors
and ICANN's President. As at November 16, (the date on which the Board
decided upon the new gTLD which were to be approved) the nine at-large
directorships continued to be held by interim directors appointed by the
Department of Commerce.
Five directors elected in October 2000 from
the at-large Internet community did not assume their positions on the
Board until immediately following the November 16 meeting and were therefore
precluded from the evaluation and selection of applications for new gTLDs.
This is a matter of significant controversy within the Internet community
with many believing that the Board's haste to conclude the new gTLD review
process was, at least in part, motivated by the desire to thwart the new
directors from participating in the process.
3. About dotTV:
dotTV is a leading global provider of Web
identity services and the exclusive worldwide source for Web addresses
ending in .tv. In 1999, we entered into a partnership with the sovereign
nation of Tuvalu to operate the registry for its assigned country code
top-level domain name, .tv. In just over nine months we have registered
over 250,000 domain names and have established ourselves as the fastest
growing top level domain in the history of the Internet. To meet these
increasing demands and the possibility of assuming the registry function
for new TLDs, we have invested millions in building a globally diverse
and robust technical infrastructure that is scalable, secure and reliable.
4. About the dotPRO and dotNOM
dotTV led a consortium of major international
corporations including Lycos Inc., XO Communications, OnlineNIC, SK Telecom
and 7DC which submitted two applications for ".pro" (for use
by professional service providers) and ".nom" (for non-commercial
use by private individuals). Information regarding the structure, operation
and objectives of these proposed TLDs is contained in the attached executive
summaries of the applications.
The consortium offered many collective strengths
· broad geographical reach through its international
partners based in the US, China, Korea and Europe;
· an impressive and diverse range of Internet
and related technological expertise including registry services, wireless
networking, web navigation, broadband, web-hosting and online services;
· financial resources and business relationships
necessary to quickly establisha
distribution network and promote the recognition
and adoption of new gTLDs.
With the objective of promoting competition
in the domain name industry and providing consumers with a low priced
alternative, the dotTV-led Consortium proposed that both the .pro and
.nom TLDs would be made available to registrars at an annual rate of $3.50.
This price was significantly lower than that proposed by most other applicants
including the successful rival application for .pro which proposed a price
4. The Application Process:
In August of 2000, ICANN began its process
by announcing that it would solicit applications for new TLDs to supplement
the Internet's current TLDs. Application Instructions were first posted
on ICANN's website on August 15, 2000 directing that applications in the
prescribed format be filed by October 2, 2000 with an accompanying non-refundable
fee of $50,000. Applications were required to set forth in great detail
the applicant's technical, financial and business plans with regard to
the new gTLD being proposed. Some applications exceeded several hundred
pages and included lengthy technical appendices.
ICANN received 47 applications by the October
2 filing deadline and publicly acknowledged that it had not expected such
a large number of submissions. This volume clearly overwhelmed ICANN which
fell further and further behind its stated timetable over the following
weeks. In the face of the increasing backlog in the process, ICANN chose
to significantly abbreviate or abandon certain planned steps in the review
and evaluation process rather than push back its self-imposed November
16 deadline for completion of the process. Attached is a schedule outlining
the review and evaluation timetable showing targeted and actual dates
of each step in the process.
The mere 6-week period allocated by ICANN
for the entire review process was extremely ambitious and, in light of
the number of applications filed, completely unrealistic.
5. The Defects in the Process:
Mr. Chairman, I am not a lawyer, and I do
not claim to be an expert on the subject of procedural requirements, but
the methods employed by ICANN to select new TLDs fundamentally lacked
fairness, and it does not take a lawyer to reach that conclusion.
Many of the flaws in the process stem from
the unrealistic timetable that ICANN imposed upon itself
in evaluating and selecting successful applications. It is unclear to
us why the Board should have been so motivated to conclude the process
by November 16, though we note that by making its decision on this date
the newly elected at-large directors were prevented from being involved
in the selection process.
Mr. Chairman, we believe that the selection
process was fundamentally flawed in the following three respects:
A. Vague and Unweighted Selection Criteria.
The stated criteria for assessing new top-level
domain proposals were vague at best and were not weighted in any manner
to give applicants a clear idea of the relative importance attributed
by ICANN to each of the criteria.
B. Lack of Due Diligence.
Partly due to the unanticipated number of
applicants (47) and the extensive nature of the application materials,
ICANN found itself unable to review the proposals as planned and as the
Internet community expected.
ICANN's original instructions contemplated
that "ICANN staff may gather additional information by sending applicants
e-mails asking for the information, by conducting telephone or in-person
interviews with applicants, by attending (possibly with ICANN-retained
experts) presentations by applicants or their experts, or by other means.
These inquiries will be initiated by ICANN staff." The original timetable
provided that such consultation would occur between October 18-21; however,
on October 23 ICANN advised that it had abandoned this step stating that
because "the applications that have been submitted do a generally
good job of explaining the nature of the proposals, [we] have concluded
that real-time interviews are not warranted at this time." In reality,
it appeared that ICANN's decision to dispense with this important step
of the review procedure was entirely motivated by its desire to expedite
the process, and that applicants were being denied due process so that
ICANN's staff could meet their self-imposed November 16 deadline for concluding
the selection process.
In response to mounting criticism over the
lack of opportunity for applicants to present their proposals in person
and to respond to the staff report, the ICANN staff announced on November
14 that each of the remaining 44 applicants would be permitted to make
a three minute presentation to the Board on the following day.
Applicants who had invested tens if not hundreds of thousands of dollars
and countless hours to prepare and file immensely detailed proposals incorporating
financial, technical and operational plans, (in many cases comprising
hundreds of pages), and paid a non-refundable fee of $50,000 now found
that success or failure could hinge on a three minute "pitch".
C. Publication of and reliance on factually
inaccurate Staff Report.
Prior to the November 16 decision, the ICANN
staff prepared a staff report, which though replete with errors about
our proposal as well as others, profoundly influenced the final decisions
by the Board of Directors. ICANN posted the staff report on its website
on Friday, November 10, only one day before the start of the ICANN meetings
at which the Board was to select the new gTLDs. Neither the TLD applicants
nor the public had a meaningful opportunity to register objections or
comments to the staff report prior to the inception of the ICANN conference.
The preliminary assessments made in the staff report essentially amounted
to the summary rejection of many of
the applications and was formulated behind closed doors
without any consultation with the public or the applicants. The staff
report included serious factual errors and presented damaging misstatements
to the Board and the public. The report also ignored or downplayed important
positive elements of certain applications that it appeared not to favor.
Specifically, with regard to the dotTV Consortium's applications, the
report inaccurately assessed dotTV's technical capabilities and failed
to discuss our proposed pricing structure that would have enormously enhanced
competition in the domain name business for the ultimate benefit of the
consumer. dotTV issued a letter to ICANN on November 12 identifying and
correcting several of the most glaring errors and misstatements contained
in the report and urging the Board not to rely solely on the findings
of the staff report, however, it appears that this letter was not seriously
considered by the Board before their deliberations.
The ICANN staff strongly urged the Board
to rely on the staff report's findings and to adhere to its recommendations.
This position was reinforced by the in-person presentation made to the
Board by ICANN staff on November 15 which prompted Board member Vinton
Cerf to comment "I must confess to a certain discomfort with the
process because it feels like we're a venture capital firm". During
this presentation, staff members advised that many applications had failed
to meet certain "threshold" criteria including "completeness",
though these criteria were not elaborated upon by the presenters. The
presentation then went on to discuss only those applications which had
satisfied the staff's undefined criteria and no reference was made to
dotTV's written response which had challenged underlying assumptions contained
in the staff report.
On November 14, by a vote of 78 to 52, the
General Assembly of the Domain Name Supporting Organization, a supporting
body of ICANN, adopted a resolution that the Board "should not decide
upon new gTLDs until the applicants have had time to respond to the Staff
Report." The ICANN Board ignored this resolution.
7. Questionable Selections of
The gTLDs selected by the Board on November
16 include: .pro, .aero, .museum, .name, .biz, .info, and .coop. Given
the inherently flawed nature of the process, it is not surprising that
the wisdom of these selections is being seriously questioned by the Internet
public. It is generally felt that few if any of the selected gTLDs meet
the criteria by which ICANN purported to evaluate the applications and
that, collectively, they offer little to enhance the utility of the Internet.
It is our view that the proposals presented
by the dotTV-led consortiums would provide a low-priced alternative, promoting
competition and consumer choice within the domain name business. Owing
to erroneous conclusions in the staff report, however, ICANN eliminated
this proposal from consideration early in the selection process.
8. Congress Must Intervene in
the ICANN Selection Process to Ensure Fair and Equitable Method for Approving
Mr. Chairman, dotTV strongly believes that
the approval of new TLDs is an important matter for congressional review,
and that the Department of Commerce should not be permitted to implement
ICANN's recommendations until such a review takes place. We are concerned
that the Department intends to treat ICANN's request for implementation
of the new TLDs simply as a matter for technical review which we believe
is inappropriate due to the fundamental flaws in the selection process.
The United States government -- and the American public -- have a stake
in ensuring that ICANN's procedures be as fair as possible.
Mr. Chairman, we are not advocating that
the United States attempt to dominate the management of the Internet,
nor are we advocating that the U.S. or any government control the Internet.
As long as the Department of Commerce maintains oversight authority of
ICANN, however, the U.S. government has a responsibility to ensure that
decisions affecting the Internet are reached fairly. In addition, it is
important to establish correct precedents for similar decisions by ICANN
in the future. The Department's White Paper contemplated that ICANN would
engage in fair, open, and representative decision-making, and ICANN's
approval of new TLDs is the first major test of its decision-making authority.
Congress has an important role to play in establishing and enforcing these
standards to guide how decisions will be made in the future.
Through the urging of Congress, the Department
of Commerce should direct ICANN to immediately suspend the current process
and to reconsider all TLD applications--both those approved and those
denied--under a procedure that is fairer and more rational than witnessed
in recent months. Only by doing so will ICANN assure that the first expansion
of TLDs occurs in manner that is both deliberative and pro-consumer.