Statement of James Love Director Consumer Project on Technology Before the Committee on Commerce U.S. House of Representatives on ICANN and Internet Governance July 22, 1999 My name is James Love. I am the Director of the Consumer Project on Technology (CPT), an organization created by Ralph Nader in 1995. I am involved in a number of issues related to electronic commerce, intellectual property rights, software, computers, telecommunications, and the Internet. The CPT web page is http://www.cptech.org. CPT is a non-profit organization. We have no financial relations with any company or non-profit entities that are involved in domain registration. I am here today to discuss proposals for the Internet Corporation for Assigned Names and Numbers (ICANN), as well as our concerns about the role of Network Solutions, Inc. (NSI) in the management of internet domains. On June 11, 1999, Ralph Nader and I wrote to Esther Dyson, the Chair of ICANN, asking a series of questions about its mission, the degree to which ICANN could or would use its control over IP addresses or domain names to set policy on trademarks or other (unrelated) issues, the source and scope of authority to levy fees on the use of internet domains, what those funds can be used for, and the role of the interim board in making substantive policy decisions. Ms Dyson wrote back on June 15, 1999, in a letter that began with a rather lengthy "scene-setting" discussion about the efforts of NSI to protect its monopoly, and then offered often incomplete answers to the questions we raised. We have subsequently engaged in a number of discussions with persons representing ICANN, NSI and other persons who are interested in issues relating to the management of domain name registrations and other Internet governance issues. There is a sense among some that the controversy over ICANN is about NSI and NSI's attempts to retain its monopoly over the .com, .org, .net and .edu domains. For certain interests, this is indeed the key issue. However, our concerns over ICANN are much broader, and go to more basic questions of how key internet resources are managed and controlled. Before discussing ICANN, however, I would like to make a few comments about NSI, to make it clear that our concerns about ICANN should not be misread as a defense of the NSI monopoly. In our view, NSI is a government contractor performing a service for owners of particular domains. We do not believe that it is appropriate for NSI to assert ownership or control over the .com, .net, .org or .edu top level domains. Nor do we think it appropriate for any top level domains to be "owned" by a private firm. The prices for domain registration are excessive. We are alarmed that NSI is making claims that it "owns" certain databases that are essential for the operation of the network. We are concerned that NSI is using the profits from its current monopoly to lobby the government to extend its monopoly. We are concerned about these and many other issues, and we want the NSI contract for .com, .net, .org and .edu to be subject to periodic competitive bids. That said, we remain very interested in the fundamental issues about ICANN itself. What is ICANN? Who will control the board of directors? What will be the legally binding limits of ICANN's power? What recourse do people have if they are unhappy with ICANN's actions or policies? As I have said elsewhere, we don't view ICANN as a substitute for NSI, but rather as a potential substitute for the Department of Commerce, or more generally, as a substitute for governments. ICANN is poised to control key internet resources, and to impose private forms of taxation and regulation on the Internet. However, it will not be accountable in the same ways that governments are. Some persons perceive this as a positive feature, while others view the lack of accountability as a serious problem. The July 1, 1999 Presidential Directive on Electronic Commerce directed the Secretary of Commerce: to support efforts to make the governance of the domain name system private and competitive and to create a contractually based self-regulatory regime that deals with potential conflicts between domain name usage and trademark laws on a global basis. For many persons, this Directive, and the subsequent Commerce Department's Statement of Policy on the Management of Internet Names and Addresses (the "White Paper"), were highly technical matters that did not appear to have broader practical significance. However, as the ICANN proposal has become better understood, there are concerns about the scope of issues that may be addressed by ICANN, the many limitations and problems of the "self-regulatory" and governance structures that are based upon private contracts, and the uncertainly over how ICANN itself will be governed. What exactly is ICANN, and why does anyone who is not in the domain registration business care? ICANN seeks to control Internet domains, IP numbers and root servers that are essential for anyone who wants to be connected to the Internet. David Post refers to this as "life-or-death power" over the Internet. The Australian competition authorities referred to it has the "God power" for the Internet. What exactly will ICANN do with this power? In her June 15, 1999 letter to Ralph and Myself, Esther Dyson said: The White Paper articulates no Internet governance role for ICANN, and the Initial Board shares that (negative) view. Therefore, ICANN does not "aspire to address" any Internet governance issues; in effect, it governs the plumbing, not the people. It has a very limited mandate to administer certain (largely technical) aspects of the Internet infrastructure in general and the Domain Name System in particular. However, this statement is far too modest. As Professor Froomkin and David Post have pointed out, ICANN has already proposed mandatory contract terms for firms that register (and own) domains, making substantive and non-trivial policy regarding the use of trademarks and personal privacy. ICANN has also proposed a mandatory fee of $1 per domain to finance its activities, and some persons associated with ICANN are considering asking for a fee on IP numbers, in order to cut down on the current hoarding of IP numbers. I asked ICANN what else it could do, in terms of putting conditions on domain registrations or spending the mandatory fees it collects. To put this in a positive light, for me, I asked, if the ICANN board of directors could legally require .com domains to post privacy policies on their home pages, or use the money from the $1 fee to fund the use of computers in Russian libraries. The purpose of this inquiry was to get a better idea of the limits of ICANN's authority. I was told that, yes, if the ICANN board wanted, it could do both of these things. But Ms Dyson did not think that this would ever happen. At best, less than half the ICANN board members will be elected from the general public. An equal number of board members will come from business consistences that are "stakeholders" in various Internet and ecommerce functions, such as the companies involved in domain registration. The ICANN President, who is an employee of ICANN, is given a vote on the board. Pro-consumer measures like requiring the .com domains to post privacy policies would never receive board support, Ms Dyson reckoned. Indeed, it isn't clear if there will be any meaningful consumer representation in ICANN. Board meetings are held in places like Berlin, Santiago, and Singapore, in fancy hotels, and it is difficult to participate in such events without corporate sponsors who can pay the travel expenses. And, having been told that it will be impossible to get support for pro-consumer policies, one wonders about policies that are supported by big ecommerce firms. Could ICANN become a mechanism to promote intrusive schemes for surveillance of copyright on the Internet, for example? If not today, what about 10 years from now when ICANN will be run by an entirely different board of directors elected by a different group of "stakeholders?" Our guess is that if ICANN succeeds, it will become a magnet for policy making on a wide range of issues. ICANN will have power, money and a dynamic staff. If it can "solve" trademark disputes, will it be surprising if ICANN is later asked to "solve" the SPAM problem? Or to set standards for digital signatures, or any number of ecommerce issues that benefit from harmonization? Indeed, ICANN has recently been asked to address new and novel issues that are associated with Internet searching and navigation services, raising even now the possibility of engaging ICANN in important content areas. In fact, persons associated with ICANN are already setting their sights on issues far beyond IP numbers and domain names. One of the arguments for ICANN is that it will be quick and non- bureaucratic, and thus able to move faster than government agencies to solve new problems. This may indeed be true. But who will ICANN really be accountable to? What are the differences between "self governance" and government? One model that has apparently been rejected is for the ICANN board to be elected directly by the people who use the Internet. If this is too hard to manage, given the difficulty of figuring out who is real and who is virtual, ICANN's board could be elected directly by domain owners, who are a known group. (A modern day version of letting property owners vote, albeit a system where people who own lots of property can vote more than once.) Instead, ICANN (and the White Paper) proposes a structure that elects some board members from the general public, under a system that has yet to be announced, and gives seats on the board to groups like the "Address Supporting Organization," the "Domain Name Supporting Organization" or "The Protocol Supporting Organization." Later on ICANN can and probably will add additional "Supporting Organizations," each with seats on the ICANN board of directors. The idea that this is "self" governance depends entirely upon who is considered "self." Many of the current discussions regarding ICANN concern the nature of contractual agreements between ICANN and the organizations, like NSI, that manage domain registrations. These contracts are held out as models for governance. The problems with this approach are many. For one thing, consumers are not part of this bargaining process. Neither are new entrants part of the process, thus giving too much power to established firms. There is also a question regarding bargaining power, as ICANN becomes more firmly in control of the "plumbing" of the Internet. Contracts that may be negotiated today will likely become "take it or leave it" propositions in the future, if indeed this is not the case already. It would be helpful if the government could begin to identify the range of issues and decisions that it expects ICANN to resolve, even in the short run, and then consider whether ICANN is truly the appropriate body to be making the decisions. Many of our concerns about ICANN would be mitigated somewhat if there was some plan for future accountability, some way to rein ICANN in if it goes crazy. We asked Esther Dyson if ICANN would be willing to enter into a charter with the US government or with an international intergovernmental organization (existing or new) that limited ICANN's powers in ways that were legally binding. Ms Dyson said that was not acceptable. While ICANN did not want to be accountable to any government or governments. ICANN is happy to receive the US government backing to get control over key Internet resources, it just doesn't want to ever look back once it gets those resources. As someone who works for a non-profit organization, I am not moved by the suggestion that ICANN is seriously constrained by its Articles of Incorporation or bylaws. The ICANN Articles of Incorporation are very brief and don't say much, and the bylaws, which are pretty general to begin with, can be changed by a 2/3 vote of the board of directors. We asked NSI if it was in favor of ICANN having some type of government charter that limited ICANN's powers. David Johnson, a lawyer representing NSI, said no. NSI apparently prefers to deal with an ICANN that has no official charter. What NSI does want is greater bargaining power with ICANN. And as noted, NSI wants very badly to become the "owner" of .com, .net and .org top level domains, at least at the registry level. I asked NSI how consumers would be protected from over charging for registry services. NSI said that if .org was over priced, we could register a different top level domain. This of course is a ridiculous remedy. CPT has spent enormous resources to create our web pages, and the value and usefulness of the web page is based upon the internal and external hyperlinks to the web page content. We are in a "lock-in" situation where it would be extremely costly and inconvenient to abandon www.cptech.org. NSI also suggested that if it was required to charge everyone the same price, it would not gouge consumers, because it wanted to sell more domains, or that prices would be moderated by competition between top level domains. We don't find this persuasive, given the importance and economic value of the top level domains currently managed by NSI. NSI is clearly opposed to the idea that the contract for the registry would be re-bid, but this would be our preferred solution, to have periodic competition for the registry services. It does appear that NSI, through its management of approximately three quarters of registered domains, has too much power. Both the government and ICANN seem to need cooperation from NSI to accomplish a smooth transition from the current monopoly to a competitive system. This raises questions in our mind about the wisdom of permitting any single firm to control so much of the critical infrastructure resources. We have suggested it might be appropriate to have redundancy at the registry level, so that a contractor would not become so essential that it could make it impossible to re-bid a contract (arguably the position we are in today). It is not at all clear that ICANN will have the authority to solve this problem as a purely private party. We would very much like to see the Department of Commerce become more pro-active on the issue of new top level domains, to address the contrived scarcity of domain name space. We recognize there is growing international interest in participation in these policy decisions, and we urge the Department of Commerce to identify suitable forums for discussing these issues, including the creation of new special purpose agreements among interested countries on this topic. Policy makers, whoever they are, should explore mechanisms for putting restrictions on the registration of the same name in different top level domains, in order to truly expand the availability of the name space (as opposed to creating a situation where persons simply register all available top level domains.) With respect to ICANN, we are opposed to ICANN's current proposal to take control of key Internet resources without any clear understanding of the limits of ICANN's powers and without any ongoing oversight by government bodies. The concerns that we have discussed regarding ICANN are not about its present leadership, or about any particular policy decision that ICANN has undertaken. We are concerned about ICANN as an institution, and about the ramifications of current proposals for the future of democracy in cyberspace. Finally, I would like to thank the Commerce Committee for holding this important hearing.