Esther's response to Ralph and Jamie

Esther's response to Ralph and Jamie

Ralph Nader
P.O. Box 19312
Washington, DC 20036

James Love
Consumer Project on Technology
P.O. Box 19367, Washington, DC 20036

Dear Ralph and Jamie:

Thank you both for your letter of June 11.  The questions you ask are
legitimate, and we have legitimate answers to them.  What is illegitimate is
the motivation of some of the people who keep asking the same questions
without paying attention to the answers. 

 I hope that my answers below will respond to your concerns. Indeed, I hope
that they may persuade you to join us in our fight to remove monopoly from
the business of registering domain names and help keep the Net free for
small businesses and individuals to use as they see fit. As a longtime
champion of individual rights and against monopolies, you hold common cause
with us. 

Accordingly, I'd like to start by setting some context before answering your
specific questions.  My response is intended not as an attack against
anyone, but as a defense against attacks which are hindering us at ICANN
from doing the tasks for which we were created. 

As it happens, I'll be in Washington today (Tuesday), and I'd be happy to
meet with either or both of you. Please let me know by e-mail or by calling
my office at (212) 924-8800. You can also reach me later this afternoon at
(202) 979-3863.


I'd like to set the scene for the answers to your questions by noting that
ICANN is a newly minted organization with many of its organizational
processes still under way. It was created primarily in response to the
Internet's extraordinary growth, which required a transition from informal
management of its technical infrastructure, to something more formal and
predictable, and subject to public (but not directly government) oversight. 

The Initial Board is following the guidelines set forth in the United States
Government's policy paper of last June (the White Paper), as further
amplified by the Memorandum of Understanding/Joint Project Agreement ICANN
signed with the Department of Commerce in November.  These documents
comprise an agenda both important and ambitious, and we are doing our best
to work our way through it with the help of public input, several formal
advisory  committees, and the so-called Supporting Organizations that make
up ICANN's internal structure.  We welcome your input, both now and in the

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. 

One important aspect of its mandate is the introduction of competition into
the business of registering domain names, under an agreement with the US
Government. In this particular task, naturally enough, it is meeting fierce
resistance from the private government contractor that has been the monopoly
provider of DNS services, Network Solutions -- a company that has
transformed itself from an unknown start-up at the time (1992) when it first
entered into a contract with the National Science Foundation, into a
subsidiary of a large privately-owned government contractor today, with a
market value of over $2 billion for its own publicly traded stock [NSOL].
Given this history, and the wealth that has been created through its
administration of those government contracts, NSI is in no hurry to see that
monopoly eroded.  Since this very goal is a principal short-run objective of
ICANN, NSI has apparently concluded that its interests are not consistent
with ICANN's success. Thus it has been funding and otherwise encouraging a
variety of individuals and entities to throw sand in the gears whenever
possible, from as many directions as possible. 

Of course, "I want to protect my monopoly" is hardly an attractive slogan,
and so NSI uses the language of democracy instead. In addition, it
encourages and supports others who have a variety of reasons -- economic,
philosophical or political -- to be unhappy with the way the community
consensus has formed.  Of course, many of these people are sincere in their
concerns about the transparency of ICANN's operations and their interest in
fostering public debate about its activities - as you are.  But ICANN's
goals and its actions are in fact the result of public debate and consensus
- though not of unanimity.

NSI's rhetoric is also quite inconsistent with its conduct.  The company
operates under the cloak of nondisclosure agreements covering not just
technical and commercial information, but also the experiences of the
ICANN-accredited registrars now attempting to open up the domain-name
registration business to competition.  Furthermore, Network Solutions claims
"proprietary" rights in databases and techniques developed under government
contract as a reason for refusing to release information and for expensive
license fees. The nondisclosure agreements it imposes on competing
registrars are so onerous that many who wish to participate in ICANN's
competition initiative cannot do so without permanently restricting their
ability to compete in this space in the future.  

Forgive this lengthy preamble, but I wanted you to understand the origin of
many of the complaints you have been hearing - basically, the effective PR
of a monopolist seeking to postpone the inevitable arrival of competition
fostered by ICANN. Since you have not been actively involved in this project
over the several years it has been underway, you may not appreciate the
power struggles involved…but given your long history of fighting monopoly
power, I thought it was important to provide you with some background.

Now of course, there are many participants in this debate who are not NSI
agents, and who have honestly differing views about particular issues.
Since ICANN is a consensus, non-governmental body, we are charged to listen
to all such views and debate them, and eventually we reach a consensus
position.  As a non-elected initial board, we take this duty very seriously;
our method is to foster and then recognize consensus rather than force it.
This has certainly been the case to date: Every policy developed in ICANN
has been the product of a comprehensive notice and comment process, and
every effort has been made to reflect in ICANN policies the consensus
position to the extent we can determine it.  Of course, consensus is not
unanimity, and there are people of good faith who disagree with certain
specific ICANN policies. We try hard to explain the reasons and trade-offs
for each decision. In the end, we realize we can achieve legitimacy only if
a substantial number of those affected agree that we are making the right
compromises most of the time.  (I myself do not agree with every facet of
every ICANN decision, which is why ICANN has a board and not just a chairman!) 

With this background, let me try to respond to your specific questions.

IP issues

On the intellectual property issues, in its White Paper the Department of
Commerce requested the World Intellectual Property Organization to conduct a
study for submission to ICANN  concerning how to operate the domain name
system so as to minimize  conflicts with trademark laws throughout the
world.  These issues include the need for and scope of alternative dispute
resolution mechanisms that could work despite the varying legal regimes that
control the use and protection of trademarks and similar intellectual
property on the global Internet; the desirability of special rules for
so-called "famous names;" and the intellectual property issues raised by the
possible addition of new Top-Level Domains (beyond .com, .net and .org).
WIPO led a 10-month study, held 15 public meetings with more than 1300
participants, and ultimately produced a set of recommendations that it
transmitted to ICANN this April.  

At its meeting in Berlin in May, ICANN considered the WIPO report and
recommendations, and the many public comments (both online and in-person)
about them.  Ultimately, the Board endorsed WIPO's call for consistent
administrative dispute resolution procedures in principle, and referred that
recommendation to its newly formed constituent unit, the Domain Name
Supporting Organization, for its review and specific implementation
recommendations.  It also referred most of the rest of the report to the
DNSO for further study, without endorsing a particular direction.  (And it
noted that it had already implemented some administrative recommendations,
concerning prepayment and contact information, in its standard registrar

The DNSO's input will also be fully subject to the ICANN notice and comment
procedures before ICANN's next full-scale  meeting in August, where the
board will once again consider them in the light of public comments and look
for consensus before deciding whether and how they should be implemented (or

The root server system

On the root server system, the White Paper called for improvements in the
system and ICANN has formed a committee of experts to look into that complex
subject.  The committee has provided reports on its work at each of the last
two public meetings, and has ensured that the system does not face Y2K
vulnerabilities  At this moment, ICANN does not control the root servers,
although it expects to do so  by the end of the transition period.  In the
meantime, ICANN is continuing to administer TLD assignments and related root
server policies in the same manner as they were managed by Dr. Jon Postel
before ICANN was formed.  Any policies relating to the root servers under
ICANN oversight will, of course, be subject to the standard notice, comment
and consensus procedures that precede any ICANN decision that could
significantly affect the Internet.  

Review and recourse 

ICANN is a private organization; its actions are fully subject to legal
review and oversight.  Thus, if any action is believed to impair some legal
right, a complainant would have full recourse to any relevant court.  In
addition, ICANN has a fully developed reconsideration procedure, and is in
the process of establishing an Independent Review entity to evaluate any
claim that ICANN has acted inconsistently with its Articles or Bylaws.

Financial issues 

The White Paper assumed that, since the private non-profit organization it
called for (now ICANN) would not be funded by governments, it would have to
be funded by by the beneficiaries of  its technical and policy development
activities.  Since it is still very early in ICANN's existence, and we have
no experience to determine the level of resources necessary to carry out its
duties, ICANN has (again, after a full process of notice and comment)
established a fee not to exceed $1 annually per name registration -- which
fee would be paid by the business entities actually making the registration.
(You asked by what authority we will charge the fees; we will do so in
accordance with a contract that we will execute with each registrar - a
group that we still hope will soon include NSI.)

 Since ICANN seeks only to recover its costs, we believe the $1 fee will  be
adjusted downward as the early organizational expenses are gradually reduced
and as the number of names registered increases.  In addition, if ICANN
succeeds in fostering competition in the registration process, it is likely
that the overall consumer price of registrations will come down
dramatically. Currently, it is set unilaterally by NSI at $70 for a two-year
registration (NSI does not permit one-year registrations). A
competition-spurred reduction would lead to a substantial net consumer
benefit due to ICANN's activities.  

Finally, ICANN's activities are strictly limited by its Articles and Bylaws,
and any fees it collects can be used only to offset the costs of these
specific activities.  Since ICANN is intended to be a 501(c)(3) tax-exempt
organization, it is also limited by IRS regulations in any expenditure of
funds aimed at influencing legislation. If you would like additional details
on the expenses  we foresee for the fiscal year beginning July 1 (just under
$6 million), you can find  a comprehensive budget document posted at our
Website for public viewing.

The role of the Initial/Interim Board

Finally, I would like to consider your question whether ICANN's "interim"
Board is making policy decisions it should not be making.  First of all, on
semantics:  NSI has promoted the notion that ICANN somehow has violated the
White Paper by having an "initial" Board rather than an "interim" Board.
This argument is pointless. The White Paper calls for the consensus entity
that became ICANN to "appoint, on an interim basis, an initial Board of
Directors (an Interim Board)"  (emphasis in original]. This "initial" Board
was to serve until it established "a system of electing a Board of
Directors."  Thus, the terms "initial" and "interim" were clearly synonymous
in the White Paper.

More importantly, the White Paper made it absolutely clear that the Board
(whatever it was called) should deal with a variety of substantive policy
issues in addition to establishing the procedures and structures necessary
to create an elected Board going forward.  The White Paper specifically
called on the "initial" Board to formulate the necessary consensus policies
to allow competition to be introduced as quickly as possible.  These
policies included "qualifications for domain name registries and domain name
registrars" and "policies for the addition of TLDs."  Finally, in the White
Paper, the United States government said it would ask WIPO to "develop a set
of recommendations for trademark/ domain name dispute resolutions and other
issues to be presented to the Interim Board for its consideration."

The current Board, which I assure you would very much like keep its tenure
as short as possible consistent with doing its duty, has undertaken no
policy initiatives not expressly contemplated in the White Paper, or for
which there was not some urgency of action necessary to meet the principal
objectives of the White Paper and of ICANN itself.

Having said all this, I would like to mention that we have made significant
progress toward a fully elected Board.  The first of the three Supporting
Organizations responsible for electing nine of the 19 Board members is now
in existence (the DNSO), and we expect it to provide its three Directors
soon.  The other two SO's are currently organizing themselves, and we hope
that they will provide their three Directors each by early next year.
ICANN's Membership Advisory Committee has presented recommendations to the
ICANN Board dealing with the establishment of the At Large membership that
will elect nine Directors, and the ICANN staff and counsel are currently
figuring out how to implement them.  This latter effort has proven
complicated, since it is critical that the membership and election process
that will produce fully half of the Board be fair, open, resistant to fraud
or capture, and as widely inclusive of the full range of users and others
affected by ICANN policies as possible. 


Thus, we have made  much progress on many fronts, thanks largely to enormous
volunteer contributions of many, many people, from Directors (who are not
compensated other than out-of-pocket expenses and cannot be elected to the
Board for two years  following their current service) to hundreds of
individuals and entities that want this unique process to work. Our work
has, however, been made much more difficult by the direct and indirect
opposition of NSI, the primary entity that stands to gain from such delay.
I suppose this is an understandable approach for a monopolist threatened by
new competition, but it is still disappointing, to me and to the Internet
community as a whole.
It would have been much simpler, and a lot more pleasant, to have seen NSI
work with the rest of the community to make this obviously necessary
transition to open competition and policy-based management of the Internet's
vital technical infrastructure.  Still, we will persevere, and we will succeed.

I hope this is responsive to your questions.  Perhaps you could help us to
generate even more momentum behind the forces of Internet competition and
move away from monopoly as quickly as possible. We would  greatly appreciate
your assistance in this effort.  If you have further questions, please call
on me, our Interim President Mike Roberts, or our Chief Counsel Joe Sims. We
would be glad to try to answer them at your convenience and to gain your
understanding and support.

Yours truly,

Esther Dyson
Interim Chairman, Internet Corporation for Assigned Names and Numbers (ICANN)