The Domain Name registration process is currently facing the most significant changes in its short history. The U.S. government is stepping away from its monopoly over top-level domains and organisations the world over are beginning to take up the slack. In this special report, Todd Spangler examines the role of the new Internet Corporation for Assigned Names and Numbers that will oversee the new regime.
Maybe the best way to describe the Internet Corporation for Assigned Names and Numbers is that it is an extraordinarily ambitious effort to create a private, global governance body from scratch.
ICANN is also a widely criticized, sorely underfunded not-for-profit start-up venture, whose first order of business is opening up the Domain Name System (DNS) to competition. Not surprisingly, perhaps, the 8-month-old ICANN has met its No. 1 critic in Network Solutions, which by many accounts - including that of the Department of Commerce - is ardently resisting changes to the status quo under which NSI has enjoyed quite a healthy monopoly in registering domain names.
First, some background. Its precise role is without precedent, but the Internet's stability and growth depends on the functions ICANN hopes to eventually take over. ICANN has been tasked by the U.S. government with managing the Internet's critical technical underpinnings - including the DNS, the Internet's distributed navigation system that lets users locate Web sites using names such as www.zd.com.
What makes ICANN different from the way these issues have been handled in the past - actually, since the Internet's very beginnings - is that ICANN isn't directly funded or controlled by the U.S. government. Instead, ICANN will be supported by the individuals, groups and companies that make use of the Internet.
That's the idea, anyway.
But so far, ICANN has found the journey to global Net governance to be very treacherous. Forming its organizational structure has taken considerable time, more time than was expected. ICANN also doesn't have a regular source of income to defray its estimated $5.9 million in annual expenses. It's collected a mere $421,610 in donations from individuals and companies that include America Online, IBM, MCI WorldCom and Microsoft.
What's more, since the day ICANN was formed in the fall of 1998 at the behest of the government, its initial board members have faced an almost nonstop barrage of questions from some powerful critics, who have included members of Congress and Ralph Nader. The questions posed have a similar flavor: Why do you get to have this authority over the Internet? Why are you meeting behind closed doors? What gives you the right to charge fees? And who picked you, anyway?
Esther Dyson, the interim chairperson of ICANN who joined the venture in October 1998 with bright-eyed enthusiasm, has grown somewhat weary in repeatedly trying to justify ICANN's existence.
"In many cases, ICANN has been misunderstood," Dyson said. "It's complex and it's new. It's a hard beast to understand, because it's not a government and it's not a charity - it's a private body that works on a horizontal basis."
ICANN's main problem is that it is starting way too late. Unlike the Internet Engineering Task Force, for example, which was in place before the commercial explosion of the Internet and in fact made it possible, ICANN is coming onstage while the show is already in progress.
The situation derives from the legacy of the Internet's decision-making mechanisms. The late Jon Postel, a taciturn computer scientist at the University of Southern California, acted as a one-man policy board for many years, as head of the Internet Assigned Numbers Authority. When it became obvious that IANA was impractical for the very rapidly growing and increasingly commercial Internet, Postel - at the urging of the government and others - last year drew up the bylaws for what has become ICANN. Postel, who died in October 1998, hand-picked the initial board members for ICANN based on input from the Internet community.
ICANN can't collect
Perhaps the most obvious direct effect of NSI's lack of cooperation is that ICANN can't collect any revenue via user fees from the company, which has created a lucrative business - NSI's revenue for 1998 was US$93.7 million, yielding US$11.2 million in net profit - from its monopoly control of ".com," ".net" and ".org" registrations. ICANN assumed that NSI, as the single incumbent domain registrar with 5 million names, would contribute a good portion of its operating budget.
Donald N. Telage, NSI's senior vice president for Internet relations, agreed that NSI is now "the principal critic of ICANN." He said NSI objected to ICANN in its present form because it has become more akin to a regulatory agency than a passive standards-setting body.
"ICANN is claiming to be able to determine whether you can or can't be in the business [of registering domain names]," Telage said. "ICANN should be setting minimum criteria to protect consumers, not to regulate the space. The entire intent of this privatization is to avoid a regulated space. ICANN is attempting to do what the U.S. government would have extreme difficulty in doing."
Last week, NSI was still negotiating that very issue with Commerce Department officials, who had hoped to resolve the matter by July 16. Pending the negotiations, it's unclear whether NSI will willingly reach an agreement with ICANN or if the Commerce Department will have to dangle the threat of recompeting its domain name contract, which would possibly kick NSI out of the domain name game.
Included in the talks are the price NSI should be allowed to charge registrars and the issue of ownership of the ".com," ".net" and ".org" registry, on which NSI clearly differs with the government. Telage said NSI hopes to keep the rights to ".com," ".net" and ".org" and negotiate a price cap with the government that will give the company an 11 percent profit margin on its registry business.
"We've invested a lot of time, sweat, blood and equity into the registry," he said. "We have a fiduciary responsibility to our shareholders in keeping that and to make a reasonable profit on it."
Don Heath, president and chief executive of the Internet Society - who was one of the leaders in trying to introduce new top-level domains that would have competed with NSI two years ago - said he thought NSI should take a more supportive role regarding ICANN, and that protecting its commercial interests ahead of supporting ICANN was shortsighted.
"If [NSI] took a more supportive role of ICANN - and it's in the best interests of the Internet to make it happen - NSI could have been the heroes," Heath said. "Instead, they're in jeopardy of losing it all."
However, Telage said, NSI has been cooperative in opening up its domain name registry to competition. In April, ICANN selected five test-phase registrars - America Online, the Council of Registrars, France Telecom, Melbourne IT and Register.com - and NSI spent US$25 million, according to Telage, to develop the shared registration system to let the registrars directly access NSI's database. Another 52 registrars approved by ICANN are set to come online in the coming months.
"You never ever see NSI getting any credit for being a proactive player in this space, but we have done a tremendous job," Telage said.
However, Ken Stubbs, chairman of CORE, said that NSI is deliberately dragging its feet in introducing competition. He noted that NSI deliberately designed certain features of the shared registration system to inhibit competition - allowing names to be registered for only a two-year term and claiming it only had the resources to bring five new registrars into the system each month.
"NSI has constantly fought the process," Stubbs said. "I think NSI is acting the way I would expect any for-profit shareholder company to act. But NSI has made it a little more difficult in terms of the transition process."
NSI spokesman Brian O'Shaughnessy said it was "absolute nonsense" that NSI designed its system to inhibit competitors. He added that introducing competition as quickly as possible "is in Network Solutions' best interests, because we need a robust marketplace for domain names."
In addition, NSI executives have said they intend to compete on value-added services beyond just registering names. "On a certain level, '.com' is just a branding issue," Telage said. Next week, for example, NSI is expected to announce Dot Com Directory, a Yellow Pages-like business-to-business directory service, according to an NSI spokeswoman.
Regardless of NSI's specific activities to slow ICANN, independent critics are still skeptical about ICANN and its role as the manager of the Internet's key systems. Contrary to the principle that ICANN be formed as a nongovernmental body, James Love, director of Ralph Nader's Consumer Project on Technology - who has questioned some of ICANN's actions and authority - said ICANN should be structured as an international organization that is overseen by the world's governments.
"I definitely think that ICANN should be accountable to governments, not to America Online or other corporations," Love said.
ICANN officials said they welcome all input. "If you're going to develop consensus, you're going to have a lot of disagreement," said ICANN lawyer Joe Sims.
Ample ammunition
The circumstances surrounding its ex nihilo creation - and the feeling that ICANN could somehow become too powerful - have given its critics ample ammunition to question its board members' motives and actions.
This month, ICANN's trials have come to the fore on Capitol Hill. The House of Representatives' Committee on Commerce as early as this week may commence hearings investigating ICANN and its proposed actions, although none officially had been set at press time.
And ICANN now appears to have lost the one way it planned to cover its first-year operational costs. On the basis of pointed criticism from U.S. Republican politician Thomas Bliley who chairs the U.S. House Commerce Committee, the Department of Commerce asked ICANN to scrap the US$1-per-domain-name fee it had planned to collect from registrars for the time being. The Commerce Department's National Telecommunications and Information Administration has been overseeing the transition of the government's legal control over the Internet's core infrastructure to ICANN's private-sector control.
Fallout from failure
So what if ICANN, in its present incarnation, were shot down or went bankrupt tomorrow?
Given the importance of the organization to the development of the Internet, ICANN's failure could have a devastating effect on the future of e-commerce. The doomsday scenario, which most observers consider utterly remote, is a "fracturing" of the Internet's unified DNS into isolated and incompatible splinters, essentially rendering domain names unreliable. But even in the best-case scenario, ICANN's troubles have delayed competition in the domain name system and have left some people worried that the Internet's technical infrastructure isn't exactly in good hands yet.
No one really expects ICANN to fail, at least in the near future, because of lack of funds. The Commerce Department has said it will work to "obtain interim resources" - in other words, funding to tide ICANN over. Still, ICANN's lack of funds makes life difficult for the fledgling group and prevents it from moving as quickly as it would like to.
Rather, it is the politically charged environment in which ICANN is viewed as usurping control over the Net that threatens ICANN's existence, Dyson acknowledged. Naturally, she refuted this impression as a basic misunderstanding of ICANN's purpose.
"We don't have authority over anything, and we can't 'impose' any kind of fees," Dyson said. "We're trying to create consensus - which, by the way, doesn't mean unanimous agreement - and enter into contracts with the appropriate parties."
In trying to reach those agreements, the blame for ICANN's difficulties is not entirely on ICANN itself. One of ICANN's biggest obstacles has been NSI, the company that has held an exclusive government contract to register the most popular top-level domains since 1993. NSI had a hand in creating ICANN's structure last fall; now, though, it is ICANN's biggest critic and refuses to recognise its authority.
A close reading of publicly posted correspondence from the Commerce Department, along with interviews with participants in DNS issues, indicates that it is NSI's unwillingness to work with ICANN - and to fully open its profitable ".com," ".net" and ".org" registry to competition - that is largely responsible for slowing ICANN down.
Andrew Pincus, the U.S. Commerce Department's general counsel, suggested in a letter to Bliley dated July 8 that NSI's reluctance to adapt to the new landscape could seriously threaten the stability of the Internet.
"NSI's position has disturbing implications for the future of the Internet," Pincus wrote. "Obviously, failure to reach agreement with ICANN" - which would lead the U.S. government to revoke NSI's right to register ".com," ".net" or ".org" names completely - "will be extremely destabilizing for the Internet."
In addition to refusing to accept ICANN and its accreditation process - which NSI agreed to do when the government conditionally extended its exclusive cooperative agreement through Sept. 30, 2000 - NSI is asserting its right to retain ownership of the ".com," ".net" and ".org" registry database in perpetuity, according to the Commerce Department. The government believes that it legally controls the domain name database because NSI procured the data as its contractor.
