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Is ICANN's New Generation of Internet Domain Name Selection Process Thwarting Competition?"
Subcommittee on Telecommunications and the Internet
Professor A. Froomkin
Prepared Statement of A. Michael Froomkin Professor of Law University of Miami School of Law P.O. Box 248087 Coral Gables, FL 33124 before the U.S. House of Representatives Committee on Energy & Commerce Subcommittee on Telecommunications "Is ICANN's New Generation of Internet Domain Name Selection Process Thwarting Competition?" February 8, 2001 Mr. Chairman and members of the Subcommittee, my name is Michael Froomkin. I would like to thank the Subcommittee for inviting me to appear today at this hearing on "Is ICANN's New Generation of Internet Domain Name Selection Process Thwarting Competition?" I am a law professor at the University of Miami, specializing in the law of the Internet. I have published more than 20 academic papers on Internet governance, ICANN, e-commerce, cryptography, and privacy. I maintain a web site at http://www.law.tm where my articles on these and related topics can be found. I am co-director of ICANNWatch.org, an independent watchdog group that comments on ICANN policies. Two years ago the World Intellectual Property Association (WIPO) appointed me to serve as the sole public interest representative on its "Panel of Experts" that advised WIPO on its report on The Management of Internet Names and Addresses: Intellectual Property Issues. I am also a director of disputes.org which, in partnership with eresolution.ca, has been involved in dispute services provision under ICANN's UDRP. My role in ICANN's selection of new global Top Level Domains (gTLDs), however, is strictly that of an academic observer and commentator, and sometime participant in public comment fora. I have no past or present financial relationship with any gTLD applicant. My goal is to advance what I understand to be the public interest by advocating policies that increase access to the Internet by enhancing free speech and promoting competition. Vigorous competition makes for a healthy marketplace of ideas, and also for a healthy market, as it lowers prices and improves the quality of service - thus enhancing access to the Internet and to Internet-based information. I have four basic points that I would like to draw to your attention: 1. ICANN's decision to artificially restrict new gTLDs to a small number of arbitrary selections, further hemmed in by ICANN's insistence on anti-competitive terms of service, has negative consequences for competition in three markets: the market for registry services, the market for registrar services, and the market for second-level domains (including the aftermarket), with spill-over effects on e-commerce generally. Each of these markets would be more competitive if ICANN and the Department of Commerce were to lift their limit on new gTLDs and accept all competent applicants according to open, neutral, and objective criteria. It should be noted, however, that the negative consequences for competition I describe below would be even worse if there were no new gTLDs at all. This is, in summary, a situation where the ordinary rules of supply and demand operate. It is axiomatic that competition increases if one removes barriers to entry. 2. The shortage of gTLDs today is entirely artificial, and easily curable. There is a great pent-up demand for short and attractive second-level registrations in new gTLDs but experts agree there is NO technical obstacle to the creation of at least thousands and possibly tens or hundreds of thousands of new gTLDs, or even more. The current shortage exists only because the body with the power to create new gTLDs - the U.S. Department of Commerce - has not yet chosen to do so. The Department of Commerce - in what I have argued is a violation of the Constitution and/or the Administrative Procedures Act(1) - has chosen to delegate the power to make an initial recommendation regarding new gTLDs and the registry operators to the Internet Corporation for Assigned Names and Numbers (ICANN). Commerce has also delegated to ICANN the power to negotiate restrictive contractual terms with these registry operators - negotiations that were due to conclude by Jan. 1, 2001, but are currently continuing in secret. 3. ICANN purports to be a technical standards or technical coordination body, but it did not act like one in this process, as it made arbitrary allocation decisions. When it came to the creation of new gTLDs, rather than act as a technical standards body and promulgate a standard under which all technically and financially qualified new registry operators could qualify, ICANN instead decided to act like an allocation authority for its artificially limited resource. ICANN arbitrarily limited the number of new gTLDs it would approve to under ten. ICANN then solicited $50,000 applications from prospective registries. Instead of considering the applications solely on technical merit, or indeed on any other set of neutral and objective criteria, ICANN selected seven winners on the basis of a series of often subjective and indeed often arbitrary criteria, in some cases applied so arbitrarily as to be almost random. I have no reason to believe that the seven TLDs selected are bad choices; but given ICANN's arbitrary procedures I also have no doubt that many other applicants would have been at least as good. The striking arbitrariness of the ICANN decision-making process is illustrated by the rejection of the ".union" proposal based on unfounded last-minute speculation by an ICANN board member that the international labor organizations proposing the gTLD were somehow undemocratic. The procedures ICANN designed gave the applicants no opportunity to reply to unfounded accusations. ICANN then rejected ".iii" because someone on the Board was concerned that the name was difficult to pronounce, even though the ability to pronounce a proposed gTLD had never before been mentioned as a decision criterion. 4. The correct strategy for maximizing competition would have been to accept all applicants who met a pre-announced, open, neutral, and objective standard of competence, rather than to pick and choose among the applicants on the basis of the ICANN Board's vague and inconsistent ideas of aesthetic merit, market appeal, capitalization, or experience. As a result of its relationship with the Department of Commerce, ICANN is a state actor. Accordingly, its arbitrary and capricious decisions violate both the APA and the Due Process Clause of the Constitution. Rubber-stamping of its decisions by the Department of Commerce will only make these violations explicit, since the U.S. government would essentially endorse both ICANN's practices and its conclusions. Alternately, ICANN might be converted into a true technical coordination body, whose main functions were to set quotas for new gTLD creation, to prevent TLD name collisions by maintaining a master list, and to coordinate the management of parallel TLD creation processes by public and private policy partners around the globe.
Two principles should shape any analysis of the competitive effects of ICANN's gTLD selection process: (1) Careful definition of the relevant markets; (2) An understanding that each of these markets obeys the normal laws of supply and demand, and that despite attempts by some to obfuscate the issues, in each of these markets there are at most only very minor and easily surmounted technical obstacles to allowing normal market forces to operate. Terminological note: A "registrar" is a firm that contracts with clients ("registrants") to collect their information and payment in order to make a definitive and unique entry into a database containing all domain names registered in a top-level domain (TLD). This database is maintained by a "registry." Top-level domains are sometimes grouped into "generic TLDs" (gTLDs), which are currently three- or four-letter transnational domains, and "country code TLDs" (ccTLDs) which are currently two-letter TLDs. The "root" is the master file containing the authoritative list of which TLDs exist, and where to find the authoritative registries that have the data for those TLDs. Registrants typically register second-level domains (e.g. myname.com), but sometimes are limited to third-level domains (e.g. myname.genericword.com). The Three Relevant Markets There are at least three markets affected by ICANN's decisions relating to the creation of new gTLDs: the market for registry services, the market for registrar services, and the market for domain names (including the secondary market). This last market has spillover effects on e-commerce generally. In order to examine the overall competitive effects of ICANN's recent actions relating to gTLDs, it is important to understand what those three markets are and how the supply of new gTLDs affects them. (1) The market for registry services. For technical reasons, each gTLD has a single registry. A single registry can serve more than one gTLD, but under the current architecture having multiple registries serve a single gTLD creates potential problems that most internet engineers would prefer to avoid. A registry maintains the authoritative database containing registration information for a given TLD. This database includes the name of the second level domain (SLD) [e.g. the "miami" in "miami.edu"], the registrant's contact information, and the information about which nameservers carry the authoritative data that allows users to resolve the domain name to an IP number.
Currently, pursuant to an agreement between NSI and the US Department of Commerce,(2) NSI (Verisign) is the single monopoly registry for the lucrative .com, .org, and .net domains. That agreement also set a fixed $6/year price per registration that the registry may charge to registrars,(3) which they then pass on to registrants. There is currently no competition in this market, although when Verisign's exclusive rights lapse there may be some sort of bidding process instituted to decide who will run the registry in the future. Verisign also runs a registrar, which has competitors. Under Verisign's agreement with the Department of Commerce, Verisign soon must divest itself of either its registry or its registrar business in order to benefit from a contractual opportunity to extend its registry monopoly by four years. Verisign has just announced a planned divestiture of its registrar. As a result of this divestiture, competition for registry services in .com, .org. and .net - and the legal wrangles over intellectual property rights it will engender - remains far in the future. Meanwhile, Verisign's monopoly registry will continue to require its $6 per year payment from every registration in .com, .org, and .net - a number that is probably well over the market-clearing price, and indeed is greater than the prices projected by many registry applicants to ICANN. Since the price charged to registrars by Verisign is fixed for the time being by an agreement that ICANN lacks the power to vary, ICANN's ability in the short and medium term to enhance competition in the market for registry services turns on its willingness to recommend that the Department of Commerce create attractive competitors to the exiting gTLDs. If enough gTLDs with attractive names are created, and if the registries are free to set prices and policies as the market demands, this should create pressure on the price charged to registrants. Given that there is already substantial competition among registrars and that the market price of domains in gTLDs is already as low as $9.99 per year, the $6 being charged annually by Verisign becomes a very significant part of the total cost of a registration in the TLDs for which it is a registry. It is almost certain that having multiple attractively named gTLDs would promote price and service competition that would work to the advantage of the end-user. As new gTLDs are created, each will have its own registry. Indeed, what ICANN really did at its LA meeting was to select registries from among the applications, in which the registry's proposed gTLD was only one of several factors that ICANN considered. ICANN, as the Department of Commerce's delegate, is currently negotiating contract terms with these registries. Despite ICANN's obligation under paragraph 4 of its Articles of Incorporation to use transparent procedures in conducting its affairs "to the maximum extent feasible" those negotiations have been completely secret, and we know only what was in the proposals submitted by the would-be registries. The absence of this information makes a precise discussion of the effect of the new gTLDs difficult. One can, however, make informed speculation based on the content of the proposals selected by ICANN. In order to produce maximum price and service competition in the registry market, ICANN and the Department of Commerce would have to approve a large number of attractively named gTLDs. The registries would have had to have the freedom to adopt pricing and registration policies of their own, based on market conditions, rather than having their business plans selected and enforced by ICANN. The proposals that ICANN has stated it intends to send to the Department of Commerce do not appear to be likely to create the optimal amount of competition with Verisign. The creation of the seven new gTLDs proposed by ICANN will introduce competition to the market for registry services, but this will be less than the optimal amount, probably substantially less, for three reasons: (1) the small number of relatively open new gTLDs, (2) the actual names selected, and (3) the restrictive conditions that the registries and associated registrars may be contractually obligated to impose on the public. Small Number. For technical reasons, each registry will have a monopoly over the gTLD(s) it controls. The seven gTLDs selected by ICANN are .aero, .biz, .coop, .info, .museum, .name and .pro. Of these seven proposed gTLDs, three - . aero, .coop, and .museum - will limit themselves to a very select group of potential registrants; their effect on the overall competitive market will therefore be quite trivial. The other four - .biz, .info, .name, and .pro - will have much broader charters, and their competitive impact should therefore be greater also. Names Selected. In the view of many observers, the gTLDs ICANN selected are not the ones most calculated to meet registrants' desires. Ted Byfield's comprehensive article, "Ushering in Banality"(4) quotes BBC Online as saying "The net's new domain names may do little to open up the internet and the range of names that people can pick." My personal guess, and it is only a guess, is that the pent-up demand for attractive names is sufficiently strong that there will be significant take-up in the new open gTLDs. That is not to say, however, that the take-up would not be greater, and registrant satisfaction higher, if there were a greater variety of choices available. Restrictive Conditions. Of the four relatively open gTLDs ICANN selected, both .pro and .name will restrict registrants to third-level domains, potentially lessening their attractiveness. As we do not know what conditions are currently being negotiated between the registries and ICANN, we can only speculate as to what conditions ICANN will impose on them. It seems likely that in general the registries will not be fully free to compete on terms of service, as they will be required to adhere to ICANN's controversial dispute resolution policy, by which ICANN requires every registrant to agree to an adhesive third-party beneficiary agreement promising to arbitrate disputes initiated by any trade or service mark owner in the world-before a tribunal chosen and paid for by the mark holder. It appears that both .biz and .info will be hampered by restrictive pre-registration policies that will give substantial preferences to trademark holders over start-ups and other potential registrants. Why the Australian makers of "computer" brand socks should have priority right to register computer.biz, or how this enhances competition for computers (or socks) is not evident. Additional competitive issues raised by ICANN's hostility to "alternate" or "non-legacy" roots and registries. One other factor shaping the market for registry services is ICANN's apparently deep-seated hostility to "alternate" or "non-legacy" registries. ICANN's discrimination against these very minor competitors (measured by market share) appears anti-competitive. It was striking that in the beginning of the first paragraph of its list of criteria for evaluating applications for the new gTLDs, ICANN warned applicants that any application which ICANN found could "create alternate root systems" would be rejected.(5) Note also that in one of a series of agreements between Verisign (then NSI), the Department of Commerce, and ICANN, NSI - probably the only company then capable of deploying an alternate root with instant worldwide acceptance - promised the Department of Commerce that it would not deploy alternative DNS root server systems.(6) There are technical reasons why it is highly desirable, at least for most people most of the time, to have a single common root. "Splitting the root" is indeed anathema to Internet traditionalists. On the other hand, the alternate roots currently deployed and in use by a small fraction of Internet users appear to harm no one. As a technical coordination body, ICANN's hostility to these small independent registries may therefore seem surprising. It is the case, however, that ICANN derives a major part of its current and planned revenue from registrars or registries that contract with it in order to be listed in the Department of Commerce's so-called "legacy" root, and that the creation of new ICANN-affiliated gTLD registries could increase this revenue stream. In the relatively unlikely event that the alternate registries were to acquire a substantial market share independent of the legacy root, they would not only compete with the registries that have contracted with ICANN, but would strike at the financial and political foundations of ICANN's continued existence. This financial interest may not be irrelevant to the legal consequences of ICANN's insistence that registries who deal with it abjure alternatives and competitors. (2) The market for registrar services. Where once there was a monopoly, there is now cut-throat competition in the market for registrar services. Prices have dropped very substantially as a result. A recent report stated that NSI's market share for last year had fallen to less than 60% of the total for the open gTLDs, with its next competitors, Register.com at 11.5% BulkRegister.com at 6.5%; Tucows.com, Inc. at 5.9%; and CORE Internet Council of Registrars at 3.5%. More than 50 competitors shared the remaining 14% of the registrations business last year. (I have not considered whether there is cross-ownership of registrars by registries or others, and it is possible that this may cut against what appears on the surface to be healthy competition.) The introduction of new gTLDs, several of which will be available to be marketed by multiple registrars, should increase competition in this market further, although again competition might be enhanced even more by a larger supply. Registrars need product to sell, and the introduction of new gTLDs provides that. Furthermore, NSI's advantages in both branding and automatic renewal deriving from its former monopoly position, will be absent in the new TLDs. (3) The market for domain names (including aftermarket) It is an article of faith among Internet entrepreneurs that possession of a good domain name is a necessity for an Internet startup. Many traditional firms also consider the acquisition of a memorable or short domain name to be of strategic importance. Recently, for Internet startups, possession of a "good" name was seen as a major asset - reputedly enough in some cases to secure venture financing. For some time now, however, it has also been an article of faith in the Internet community that "all the good names are taken" Recently it has seemed as if simply all the names that were a single word were taken. This apparent shortage, especially in .com, has driven firms seeking catchy names into the aftermarket. There does appear to be a reasonably large stock of names in the existing gTLDs being held by domain name brokers for resale in the aftermarket. Prices are very variable. Although few firms paid millions of dollars like the purchasers of business.com, and loans.com, it appears that at least until the .com bubble burst, the shortage of attractive names in .com , and the resulting need to purchase them at high markups in the aftermarket created what amounted to a substantial "startup tax" on new businesses. In this respect, it might seem that the creation of new gTLDs can only be good for competition as it will increase supply and thus drive down prices. And indeed, supply will increase. Unfortunately, of the new gTLDs, only .biz and maybe .info are likely to be of attractive to the majority of startups and other Internet newcomers. Because there are only two such domains, and because there is no easily foreseeable date at which additional gTLDs might become available, there is a substantial risk of a speculative frenzy in which domain name brokers, cybersquatters, and amateur arbitragers all seek to register the catchy names that have not already been snapped up by trademark holders who took advantage of their pre-registration period. The surest way to drive down and keep down the price of domain names, thus eliminating the "startup tax" and enhancing the ability of new firms to enter new markets and incidentally greatly reducing, perhaps even almost eliminating, cybersquatting, is to create healthy expectations. As soon as participants in the market understand that a steady supply of new domain names in attractive gTLDs will continue to become available on a predictable schedule, the bottom will fall out of the after-market, and the incentive (albeit not the opportunities) for cybersquatting will be greatly reduced, thus helping e-commerce by making attractive names available on reasonable terms to a much greater number, and wider variety, of persons and firms.
I am not an expert on Internet engineering. However, my understanding is that although experts do not agree on precisely how many gTLDs could be created without adverse consequences to DNS response time, there appears to be a technical consensus that we are nowhere near even the lowest possible limit. ICANN At-Large Director Karl Auerbach, himself a technical expert, has suggested that the smallest technically-mandated upper level for the number of gTLDs might be as high as a million.(7) Persons with long experience in DNS matters, including BIND author Paul Vixie, apparently agree.(8) Others have performed tests loading the entire .com file as if it were a root file, and found that it works. In principle, this is not surprising, as there is no technical difference between the root file containing the information about TLDs and a second-level domain file. Given that there are currently about sixteen million registrations in .com, if this argument is right, then the maximum number of TLDs may be very high.(9) Some experts worry, however, that a very large number of new TLDs, such as a million, might affect DNS response time.(10) If so, that still means that with fewer than 300 TLDs in operation today (gTLDs + ccTLDs), we can afford to create tens of thousands, and probably hundreds of thousands, more. Thus, the pre-ICANN moratorium on the creation of new gTLDs had no technical basis, and neither does the current go-very-slow policy adopted by ICANN. It is a purely political choice, a product of an internal deliberative process devised by ICANN that under-weighs the interests of the public at large and in so doing tends towards anti-competitive, or competitively weak, outcomes skewed by special interests. The source of this tendency is the distribution of decision-making authority on the ICANN Board, and in ICANN's subsidiary institutions. In July, 1999, ICANN Chair Esther Dyson told this Committee's Subcommittee on Oversight and Investigation that ICANN's "highest priority" was to elect nine at-large Board members,(11) exactly as ICANN had committed to do as an original condition of being approved by the Department of Commerce. Instead, ICANN reneged on its commitment to the United States government, and to the public, that half its Board would be elected by an at-large membership. Indeed, the Board amended its bylaws and rushed its timetable so that its selection of the new gTLDs would be complete before even the five elected at-large directors could participate. Similarly, the institutions that ICANN created to take the lead in domain name policy - the seven constituencies in the "Domain Name Supporting Organization" - were designed from the start to exclude individuals from membership. The interest groups that acquired a voting majority in those institutions have shown relatively little interest in the rights and needs of small businesses, non-commercial entities, or individuals. They have shown considerably more interest in securing special protections for trademarks, above and beyond what is provided by statute, than they have in maximizing the competitive potential of the Internet. ICANN justifies its very tentative initial foray into gTLD creation as a "proof of concept" but it has not disclosed the concept that is believes it is trying to prove, nor described how one tells if the test is successful, nor even when one might expect ICANN to do the evaluation. The "concept" cannot be gTLD creation itself: There is no rocket science to the mechanics of creating a new gTLD. From a technical perspective, creating a new gTLD is exactly like creating a new ccTLD, and creating new ccTLDs is quite routine. Indeed, .ps, a TLD for Palestine, was created less than a year ago with no noticeable effect on the Internet at all.(12)
ICANN usually justifies its processes by claiming to be either a technical standards body or a technical coordination body. In the case of the recent gTLD process, however, ICANN acted not as a standards or coordination body, but as if it were allocating scarce broadcast spectrum is some kind of comparative hearing process. ICANN created no standard. It 'coordinated' no projects with running code being deployed by outside parties. Rather, ICANN acted like a foundation grant committee, trying to pick 'winners.' In practice, ICANN's exercise of its gatekeeper committee role contributes to the artificial shortage of gTLDs. Worse, the selection processes ICANN employed were amateurish and arbitrary. In fairness, ICANN is not originally responsible for the gridlock in gTLD creation policy, which in fact long predates it. Indeed the Department of Commerce called ICANN into being because it wanted to find a politically feasible way to create new TLDs in the face of difficult political obstacles, not least a belief in the intellectual property rights holders community that new TLDs might add to the risk of customer confusion and trademark dilution. This fear, more than any technical consideration, explains why ICANN imposed a needlessly low limit on the number of new gTLDs it would recommend the Department of Commerce create in this first round, and why ICANN has as yet not been able to consider when if ever it will contemplate future rounds of gTLD recommendations. It does not explain, however, why ICANN went about selecting its seven finalists in the manner it did. Indeed, ICANN's gTLD selection procedures were characterized by substantial failures. First, although all applicants were charged the same non-refundable $50,000 fee, it appears not all received equal treatment. During the Los Angeles ICANN Board Meeting, it transpired that the staff had not subjected all the proposals to the same level of analysis. Thus, when Board members sought more detailed information about proposals that interested them, but which the staff had relegated to the second tier, that information sometimes did not exist, although it existed for the staff's preferred picks. Second, both the staff and the Board seemed excessively concerned with avoiding risk. Although true competition in a fully competitive market requires that participants be allowed to fail if they deserve to do so, there are reasonable arguments why it makes sense to have a body like ICANN require potential registry operators to meet some minimum standard of technical competence. One can even make a case for requiring a showing of some financial resources, and for requiring the advance preparation of basic registry policy documents spelling out who will be allowed to register names and under what terms. Perhaps there are other neutral criteria that should also be required and assessed. This is a far cry from ICANN's apparent tendency to tend to prefer established institutions and big corporations, and to downplay the value of experience in running code. If in 1985 the Internet itself had been a proposal placed before a committee that behaved as ICANN did in 2000, the Internet would have been rejected as too risky. Risk aversion of this type is antithetical to entrepreneurship and competition. Worst of all, ICANN applied its criteria arbitrarily, even making them up as it went along. The striking arbitrariness of the ICANN decision-making process is illustrated by the rejection of the ".union" proposal based on unfounded last-minute speculation by an ICANN board member that the international labor organizations proposing the gTLD were somehow undemocratic. (That this same Board member was at the time recused from the process only adds to the strangeness.) The procedures ICANN designed gave the applicants no opportunity to reply to unfounded accusations. ICANN then rejected ".iii" because someone on the Board was concerned that the name was difficult to pronounce, even though the ability to pronounce a proposed gTLD had never before been mentioned as a decision criterion. I am not in a position to vouch for the accuracy of each of the claims of error made by the firms that filed reconsideration requests after the Los Angeles meeting (available at http://www.icann.org/committees/reconsideration/index.html) but as a group these make for very sobering reading.
The procedural mess described above makes it impossible for me, at least, to form an opinion as to which were the "best" applicants. That sort of decision is in any case one more properly made by markets rather than by ICANN or by academics. I have no reason to believe that any of the seven TLDs selected are bad choices; but given ICANN's arbitrary procedures I also have no real doubt that many other applicants would have been at least as good. But in any case these are really the wrong questions. Other than rejecting technically incompetent or otherwise abusive applications, e.g. a single registry improperly claiming a large number of gTLDs, ICANN should not be acting as a barrier to entry. The right questions, which ICANN apparently never asked, are
Today, reasonable people could no doubt disagree on the fine details of some of these questions, and perhaps on almost every aspect of others. Resolving these issues in the abstract would not necessarily be easy. It would, however, be valuable and appropriate work for an Internet standards body, and would greatly enhance competition in all the affected markets. A thoughtful answer would inevitably resolve a number of difficult questions, not least the terms on which a marriage might be made between the Department of Commerce's "legacy" root and the so-called "alternate" roots. Using a standards-based approach, rather than an ad-hoc comparative hearing or committee allocation approach, could only enhance competition in each of the affected markets. Once ICANN makes its formal recommendations, the Department of Commerce will have to decide how to proceed. As I have argued elsewhere, as a result of its relationship with the Department of Commerce, ICANN is a state actor. Accordingly, its arbitrary and capricious decisions violate both the APA and the Due Process Clause of the Constitution. Rubber-stamping of its decisions by the Department of Commerce will only make these violations explicit, since the U.S. government would essentially endorse both ICANN's practices and its conclusions. If, on the other hand, ICANN is private, then rubber-stamping ICANN's decisions will amount to endorsing a deeply flawed procedure. The Department of Commerce has maintained that its relations with ICANN are not subject to the APA, or indeed to any legal constraint other than those relating to relations with a government contractor and/or a participant in a cooperative research agreement. This characterization twists forms to obliterate substance. But whatever the legal arguments, when contemplating decisions which will shape the very nature of the Internet naming system, Commerce should proceed with deliberation, and act only on the basis of reliable information. The need for reliable information, proper public participation, and transparent and accountable decision-making is even stronger when Commerce contemplates making the sort of social policy choices - as opposed to mere technical standard-setting - embodied in creating new gTLDs and imposing conditions on their use. Basic requirements of fairness, due process, and the need to make reasonable decisions counsel in favor of notice, public access, the making of an official record, and deliberation. There is no question but that if a federal agency had acted as the ICANN Board did, its decisions would not satisfy even cursory judicial review. In the circumstances, therefore, it would be unreasonable and a denial of due process for Commerce to rely on the outcome of such a flawed process without conducting its own review. An Alternate Approach An alternate approach to gTLD creation, one that would most certainly enhance competition, would take its inspiration from the fundamental design of the Internet itself-and from major league sports. The Internet was designed to continue to function even if large parts of the network sustained damage. Internet network design avoids, whenever possible, the creation of single points of failure. When it comes to policy, however, ICANN is currently a single point of failure for the network. A solution to this problem would be to share out part of ICANN's current functions to a variety of institutions. In this scenario, ICANN would become a true technical coordination body, coordinating the activities of a large number of gTLD policy partners. ICANN's functions would be: (1) to keep a master list of TLDs, (2) to ensure that there were no 'name collisions' - two registries attempting to mange the same TLD string; (3) to fix an annual quota of new gTLDs; (4) to run an annual gTLD draft; (5) to coordinate the gTLD creation process so that new gTLDs came on stream in an orderly fashion instead of all at once. Each of ICANN's policy partners would be assigned one or more draft choices, and then ICANN would randomly (or, perhaps, otherwise) assign each one their draft picks. As each policy partner's turn came up, it would be entitled to select a registry - imposing whatever conditions it wished - to manage any gTLD that had not yet been claimed on ICANN's master list. In keeping with the transnational and public/private nature of the Internet, ICANN's policy partners could be a highly diverse mix of international, national, and private "civil society" bodies. While I think this alternate solution would best achieve the ends of internationalization, competition, and diversity, it might well require legislation since it is unclear if the Department of Commerce has the will (or the authority) to implement such a plan, and it is quite clear that ICANN is not about to divest itself of any policy authority unless forced to do so. 1. A. Michael Froomkin, Wrong Turn in Cyberspace: Using ICANN to Route Around the APA and the Constitution, 50 Duke L.J. 17 (2000), available online http://www.law.miami.edu/~froomkin/articles/icann.pdf . 2. DoC-NSI Cooperative Agreement, Amendment 19, § I.B.10 (Nov. 4, 1999), http://www.icann.org/nsi/coopagmt-amend19-04nov99.htm . 3. Paragraph 5.2(b) of the Registry-Registrar Agreement, required by ICANN of every registrar, states that "Registrar agrees to pay NSI the non-refundable amounts of $6 United States dollars for each annual increment of an initial domain name registration and $6 United States dollars for each annual increment of a domain name re-registration (collectively, the "Registration Fees") registered by Registrar through the System." http://www.icann.org/nsi/nsi-rla-04nov99.htm . 4. Ted Byfield, Ushering In Banality, Telopolis, http://www.heise.de/tp/english/inhalt/te/4347/1.html . 5. ICANN, Criteria for Assessing TLD Proposals ¶ 1 (Aug. 15, 2000), http://www.icann.org/tlds/tld-criteria-15aug00.htm . 6. DoC-NSI Cooperative Agreement, Amendment 19, § I.B.4.E. (Nov. 4, 1999), http://www.icann.org/nsi/coopagmt-amend19-04nov99.htm 7. Posting of Karl Auerbach, karl@CaveBear.com, http://www.dnso.org/wgroups/wg-c/Arc01/msg00195.html . 8. E-mail from Paul Vixie, BIND 8 Primary Author, to Eric Brunner (Dec. 15, 1999) ("A million names under '.' isn't fundamentally harder to write code or operate computers for than are a million names under 'COM.'"), http://www.dnso.org/wgroups/wg-c/Arc01/msg00203.html . 9. See Quickstats, at http://www.dotcom.com/facts/quickstats.html (reporting twenty million registrations, of which 80% are in .com). 10. See, e.g., E-mail from Paul V. Mockapetris, BIND Author, to Paul Vixie, BIND 8 Primary Author, & Eric Brunner (Dec. 15, 1999) (querying whether one million new TLDs would impose performance costs on DNS), http://www.dnso.org/wgroups/wg-c/Arc01/msg00202.html . 11. Testimony of Esther Dyson, Chair, ICANN, before the House Commerce Committee, Subcommittee on Oversight and Investigations, July 22, 1999, http://www.icann.org/dyson-testimony-22july99.htm . 12. See IANA Report on Request for Delegation of the .ps Top-Level Domain, at http://www.icann.org/general/ps-report-22mar00.htm (Mar. 22, 2000). |
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