ICANN INTERNET GOVERNANCE: 

IS IT WORKING? 

HEARING 

BEFORE THE 

SUBCOMMITTEE ON COMMERCE, TRADE, 

AND CONSUMER PROTECTION 

AND 

SUBCOMMITTEE ON TELECOMMUNICATIONS 

AND THE INTERNET 

OF THE 

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED NINTH CONGRESS 

SECOND SESSION 

SEPTEMBER 21, 2006 

Serial No. 109-142 

Printed for the use of the Committee on Energy and Commerce 

Available via the World Wide Web: http://www.access.gpo.gov/congress/house 

U.S. GOVERNMENT PRINTING OFFICE 

WASHINGTON : 2006 

For sale by the Superintendent of Documents, U.S. Government Printing Office 

Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800 

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31-468PDF 
COMMITTEE ON ENERGY AND COMMERCE 

JOE BARTON, Texas, Chairman 

RALPH M. HALL, Texas 

MICHAEL BILIRAKIS, Florida 

 Vice Chairman 

FRED UPTON, Michigan 

CLIFF STEARNS, Florida 

PAUL E. GILLMOR, Ohio 

NATHAN DEAL, Georgia 

ED WHITFIELD, Kentucky 

CHARLIE NORWOOD, Georgia 

BARBARA CUBIN, Wyoming 

JOHN SHIMKUS, Illinois 

HEATHER WILSON, New Mexico 

JOHN B. SHADEGG, Arizona 

CHARLES W. “CHIP” PICKERING, Mississippi 

 Vice Chairman

VITO FOSSELLA, New York 

ROY BLUNT, Missouri

STEVE BUYER, Indiana 

GEORGE RADANOVICH, California 

CHARLES F. BASS, New Hampshire 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE FERGUSON, New Jersey 

MIKE ROGERS, Michigan 

C.L. “BUTCH” OTTER, Idaho 

SUE MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

JOHN D. DINGELL, Michigan 

 Ranking Member 

HENRY A. WAXMAN, California 

EDWARD J. MARKEY, Massachusetts 

RICK BOUCHER, Virginia 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., New Jersey 

SHERROD BROWN, Ohio 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

BART STUPAK, Michigan 

ELIOT L. ENGEL, New York 

ALBERT R. WYNN, Maryland 

GENE GREEN, Texas 

TED STRICKLAND, Ohio 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MIKE DOYLE, Pennsylvania 

TOM ALLEN, Maine 

JIM DAVIS, Florida 

JAN SCHAKOWSKY, Illinois 

HILDA L. SOLIS, California 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

BUD ALBRIGHT, Staff Director 

DAVID CAVICKE, General Counsel

REID P. F. STUNTZ, Minority Staff Director and Chief Counsel

SUBCOMMITTEE ON COMMERCE, TRADE, AND CONSUMER PROTECTION 

CLIFF STEARNS, Florida, Chairman 

FRED UPTON, Michigan 

NATHAN DEAL, Georgia 

BARBARA CUBIN, Wyoming 

GEORGE RADANOVICH, California 

CHARLES F. BASS, New Hampshire 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO, California 

LEE TERRY, Nebraska 

MIKE FERGUSON, New Jersey 

MIKE ROGERS, Michigan 

C.L. “BUTCH” OTTER, Idaho 

SUE MYRICK, North Carolina 

TIM MURPHY, Pennsylvania 

MARSHA BLACKBURN, Tennessee 

JOE BARTON, Texas 

 (EX OFFICIO)

JAN SCHAKOWSKY, Illinois 

 Ranking Member 

MIKE ROSS, Arkansas 

EDWARD J. MARKEY, Massachusetts 

EDOLPHUS TOWNS, New York 

SHERROD BROWN, Ohio 

BOBBY L. RUSH, Illinois 

GENE GREEN, Texas 

TED STRICKLAND, Ohio 

DIANA DEGETTE, Colorado 

JIM DAVIS, Florida 

CHARLES A. GONZALEZ, Texas 

TAMMY BALDWIN, Wisconsin 

JOHN D. DINGELL, Michigan 

 (EX OFFICIO) 

(II)
SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET 

FRED UPTON, Michigan, Chairman 

MICHAEL BILIRAKIS, Florida 

CLIFF STEARNS, Florida 

PAUL E. GILLMOR, Ohio 

ED WHITFIELD, Kentucky 

BARBARA CUBIN, Wyoming 

JOHN SHIMKUS, Illinois 

HEATHER WILSON, New Mexico 

CHARLES W. “CHIP” PICKERING, Mississippi 

VITO FOSSELLA, New York 

GEORGE RADANOVICH, California 

CHARLES F. BASS, New Hampshire 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE FERGUSON, New Jersey 

JOHN SULLIVAN, Oklahoma 

MARSHA BLACKBURN, Tennessee 

JOE BARTON, Texas 

 (EX OFFICIO)

EDWARD J. MARKEY, Massachusetts 

 Ranking Member 

ELIOT L. ENGEL, New York 

ALBERT R. WYNN, Maryland 

MIKE DOYLE, Pennsylvania 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

RICK BOUCHER, Virginia 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., New Jersey 

SHERROD BROWN, Ohio 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

BART STUPAK, Michigan 

JOHN D. DINGELL, Michigan 

 (EX OFFICIO)

(III) 

CONTENTS 

Page 

Testimony of: 

Kneuer, John M.R., Acting Assistant Secretary for Communications and Information, 

United States Department of Commerce ...................................................................... 14 

Twomey, Dr. Paul, President and Chief Executive Officer, Internet Corporation for 

Assigned Names and Numbers ...................................................................................... 19 

DelBianco, Steve, Vice President for Public Policy, Association for Competitive 

Technology, on behalf of NetChoice Coalition............................................................. 25 

Lenard, Thomas M., Senior Vice President for Research, The Progress & Freedom 

Foundation...................................................................................................................... 37 

Feld, Harold, Senior Vice President, Media Access Project .............................................. 42 

Bohannon, Mark, General Counsel and Senior Vice President, Public Policy, Software 

& Information Industry Association .............................................................................. 61 

Additional material submitted for the record: 

Kneuer, John M.R., Acting Assistant Secretary for Communications and Information, 

United States Department of Commerce, response for the record ............................... 93 

Twomey, Dr. Paul, President and Chief Executive Officer, Internet Corporation for 

Assigned Names and Numbers, response for the record ............................................... 95 

DelBianco, Steve, Vice President for Public Policy, Association for Competitive 

Technology, on behalf of NetChoice Coalition, response for the record...................... 98 

Lenard, Thomas M., Senior Vice President for Research, The Progress & Freedom 

Foundation, response for the record............................................................................... 101 

Feld, Harold, Senior Vice President, Media Access Project, response for the record ....... 102 

Bohannon, Mark, General Counsel and Senior Vice President, Public Policy, Software 

& Information Industry Association, response for the record....................................... 103 

(V) 

(1) 

ICANN INTERNET GOVERNANCE: 

IS IT WORKING? 

THURSDAY, SEPTEMBER 21, 2006 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON ENERGY AND COMMERCE, 

SUBCOMMITTEE ON COMMERCE, TRADE,

AND CONSUMER PROTECTION, 

AND

SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET, 

Washington, DC. 

The subcommittees met, pursuant to notice, at 2:18 p.m., in Room 

2322 of the Rayburn House Office Building, Hon. Fred Upton [Chairman 

of the Subcommittee on Telecommunications and the Internet] presiding. 

Members Present: Representatives Upton, Stearns, Shimkus, Terry, 

Markey, Wynn, Gonzalez, Inslee, Eshoo, Murphy, Green and Dingell (ex 

officio). 

Staff Present: Kelly Cole, Counsel; Howard Waltzman, Chief 

Counsel, Telecommunications and the Internet; Chris Leahy, Policy 

Coordinator; Brian McCullough, Professional Staff Member; Billy 

Harvard, Legislative Clerk; Anh Nguyen, Legislative Clerk; Johanna 

Shelton, Minority Counsel; and Alec Gerlach, Minority Research and 

Press Assistant. 

MR. UPTON. Good afternoon. Today, the Subcommittee on 

Telecommunications and the Internet, in conjunction with the 

Subcommittee on Commerce, Trade, and Consumer Protection, chaired 

by Mr. Stearns, will examine, ICANN Internet governance: Is it 

working? 

I would like to note that, on a cold February afternoon in 2001, I 

convened my first hearing as Chairman of the Telecommunications 

Subcommittee. And the subject that day was ICANN, the Internet 

Corporation for Assigned Names and Numbers. The focus that afternoon 

was protecting our kids on the Internet, and the law creating the new dot 

kids site with the dot U.S. country code Internet domain was a product of 

that very first hearing. 

While much has changed since February 2001, there continues to 

remain constants when it comes to ICANN Internet governance, one of 

which is the Department of Commerce’s oversight. Commerce continues 

to have a role regarding oversight of ICANN, and I am quite pleased to 
2

hear and read that the Memo of Understanding was extended beyond 

September 30th. I am anxious to hear the terms of that agreement. 

As we discuss the issues this afternoon surrounding ICANN, I am 

particularly interested in details as they relate to some of the complaints. 

While some believe that the U.N. should assume control of ICANN, 

there are too many red flags for me to ignore. Although some have 

complained about the lack of transparency of ICANN, moving its 

function to the U.N. is no way to fix the problem. In fact, it will likely 

make it worse. 

I look forward to hearing from our witnesses today as they give their 

thoughts on how to move forward. 

Allowing ICANN to continue to develop under the watchful eye of 

the Department of Commerce is not only the right thing to do but the 

most prudent action as well. The stakes are too high. 

I yield back my time. And I would recognize the Ranking Member 

of the full committee, the gentleman from the great state of Michigan, 

Mr. Dingell. 

[The prepared statement of Hon. Fred Upton follows:] 

PREPARED STATEMENT OF THE HON. FRED UPTON, CHAIRMAN, SUBCOMMITTEE ON 

TELECOMMUNICATIONS AND THE INTERNET

Good afternoon. Today, the Subcommittee on Telecommunications and the 

Internet, in conjunction with the Subcommittee on Commerce, Trade and Consumer 

Protection, will examine “ICANN Internet Governance: Is it Working?” 

I would like to note that, on a cold February afternoon in 2001, I convened my first 

hearing as chairman of the Telecommunications Subcommittee, and the subject of that 

hearing was ICANN – the Internet Corporation for Assigned Names and Numbers. The 

focus that afternoon was protecting our kids on the internet, and the law creating the new 

.kids site within the .us country code internet domain was a product of that very first 

hearing. 

While much has changed since February 2001, there continues to remain constants 

when it comes to ICANN Internet governance, one of which is Department of Commerce 

oversight. Commerce continues to have a role regarding oversight of ICANN, and I am 

quite pleased to hear that the Memo of Understanding was extended beyond September 

30th. I am anxious to hear the terms of the agreement. 

As we discuss the issues this afternoon surrounding ICANN, I am particularly 

interested in details as they relate to some of the complaints. While some believe that the 

UN should assume control of ICANN, there are too many red flags to ignore. Although 

some have complained about the lack of transparency of ICANN, moving its functions to 

the United Nations is no way to fix that problem. In fact, it will likely make them worse. 

I look forward to hearing from our witnesses today as they give their thoughts on 

how to move forward. 

Allowing ICANN to continue to develop under the watchful eye of the Department 

of Commerce is not only the right thing to do, but the most prudent action as well. The 

stakes are too high. 

I yield back the balance of my time. 
3

MR. DINGELL. Mr. Chairman, thank you. I commend you and our 

other colleague, Mr. Stearns, for holding this hearing. I think it is a very 

important one. It involves the Internet Corporation for Assigned Names 

and Numbers, and this is something which is critically important to our 

national and economic security. The Internet is also an important tool 

for communication and commerce worldwide. It is ICANN’s job to 

assure the many technical--I hope everybody heard that word--technical 

pieces of the Internet from root servers to domain name registries are 

coordinated and function smoothly and securely. Therefore, ICANN’s 

actions are a matter of deep concern to many and to this Congress. 

ICANN continues to fall short in representing the interests of the 

broad Internet community. The last time, under your leadership, Mr. 

Chairman, this committee held a hearing on ICANN more than 5 years 

ago. Many serious questions were raised at that time. While ICANN has 

since made some progress in instituting reforms, several fairness, 

transparency and accountability issues and problems remain. Following 

the creation of the Internet in the U.S., ICANN was formed in 1998 as a 

global nongovernmental organization with guiding principles of stability, 

competition, bottom-up coordination and representation. 

The Department of Commerce’s relationship with ICANN was under 

review at last year’s United Nations World Summit on the Information 

Society. With the bipartisan support of this committee and the Congress, 

attempts to shift Internet control away from the current framework were 

quelled. The international community instead reached consensus on 

maintaining a stable and secure Internet and continuing further dialogue 

on Internet governance. That said, we cannot allow U.S. interests to be 

put at risk by blindly ignoring ICANN’s flaws or failing to seek 

improvement for fear of global dissatisfaction. Indeed, I would worry 

that there may perhaps be more risk to us in ignoring than in proceeding 

to address this matter. As the Department negotiates an extension of the 

Memorandum of Understanding, further reforms must be sought. And 

the Memorandum of Understanding must be held up to the light for all to 

see and understand. ICANN remains far from a model of effective and 

sustainable self governance. It seems, however, to be a device which has 

a rich opportunity for prosperity and profit to some. Moreover, the 

Department should be sensitive that the manner in which the dot com 

registry contract is renewed bears on the integrity of ICANN and the 

Department itself. 

After a legal dispute between ICANN and VeriSign, they agreed on a 

new contract to enable VeriSign to continue operation of the dot com 

registry. ICANN’s approval of this new contract has been roundly 

criticized by stakeholders in the Internet community as anti-competitive 

and as lacking in fairness, transparency, and accountability. We will 
4

want to know whether those facts are so. It appears that, even though the 

current contract does not expire until November 2007, ICANN and 

VeriSign got together off the record and agreed on a mutually beneficial 

settlement to a legal dispute and then rushed approval of a new dot com 

contract changing longstanding registry policies without effectively 

addressing input from the broader Internet community. 

I have previously raised questions over the apparent lack of 

arms-length negotiations between ICANN and VeriSign, and I take little 

comfort that ICANN has apparently not changed its behavior. The 

proposed contract is worrisome in part because it would remove the 

prospect of competitive bidding for the dot com registry--and I think that 

is an important matter--and the better services and lower prices that 

could result for the public. This change is particularly troubling since, 

last year, VeriSign lowered its registration from $6 to $3.50 and 

implemented other improvements when the dot net registry contract was 

re-vetted. 

We, I think, should be inquiring as to why some benefit of this kind 

has not transpired with regard to other contracts and perhaps why people 

were interested in achieving this kind of goal instead of one which gave 

us more competition. Another problem is that under the dot com 

contract, which represents by far the largest and most profitable Internet 

registry, VeriSign would be permitted to raise registration fees by 

7 percent in 4 of the next 6 years without the justification of 

infrastructure investment that occurs today. And I note that one of the 

things that we see in technical matters and technology is that prices tend 

to go down when there is competition. We do not see it going down. 

We see it going up. 

The Department must take sufficient time to review fully the 

implications of this agreement. With years to go before the contract 

expires, there is no need for haste. ICANN and, ultimately, the 

Department, must ensure that all registry agreements are made in a fair 

and open process and that they are fair to all who are concerned. And 

this must be done with attention to ICANN’s core principles. Our 

constituents may not be familiar with ICANN, but they use domain 

names every day, and they need and deserve assurance that their 

government is doing all it can to support a secure and well-governed 

Internet. They also need to know that this Nation, because of the way we 

are managing these things, is not losing the support of the international 

community, a matter of concern to me also today. 

I thank our witnesses for coming before us today, and, gentlemen, I 

look forward to your testimony. 

Thank you, Mr. Chairman for your courtesy. 

MR. UPTON. Thank you. 
5

I recognize the Chairman of the Subcommittee on Commerce, Trade, 

and Consumer Protection, Mr. Stearns. 

MR. STEARNS. And I thank my colleague and I welcome this 

opportunity to have this joint hearing between our two subcommittees. I 

think we have an opportunity to better understand how the safe and 

secure functioning of the Domain Name System, the DNS, under the 

watch of ICANN is integral to protecting consumers strengthening the 

United States economy and providing the Internet security necessary for 

e-commerce and other sensitive online functions. We all know what the 

Internet has done since the Telecom Act of 1996, and we see that the 

Internet has fueled increase productivity here in America. 

At home, the Internet has led a tremendous, tremendous economic 

growth for innovative American and global companies. According to 

Forrester Research, online retailers achieved over $170 billion in sales 

during 2005 and expect to make over $300 billion by the year 2010. The 

annual value of business-to-business transaction is approximately valued 

at $2 to $3 trillion. So I believe the DNS system administered by 

ICANN, with very significant private sector involvement, has been, as 

my colleagues have pointed out, a total success. 

Restructuring this arrangement--one that has obviously worked well 

over many years--could very well lead to greater uncertainty, less 

innovation, and fewer choices for consumers. The Internet is built upon 

the flexibility to develop from the bottom up, rather than from 

governmental mandates. But despite the success of the Internet under 

this model and under ICANN since 1998, some governments around the 

world would like to see some changes. Specifically, some would like to 

see it put under the U.N. agency. The fact is, of course, that the United 

States invented, developed and shared the Internet with the world. 

Heavy-handed government involvement, particularly by supra-national 

institutions like the United Nations, I think, would spell disaster for a 

system that is thriving around the world. Politics and policy agendas 

have no place in the ICANN system and in the operation of the DNS. I 

will oppose any efforts for a number of reasons to put it under the U.N. 

jurisdiction. The Internet is just too important for the positive economic 

and social benefits for this country, and second, “if it is not broke, don’t 

fix it.” The current structure has been successful and works. 

On another issue that I would like to discuss with my colleagues, 

through our subcommittee, is the tangential effect any changes could 

have on the prevalence of online fraud and general consumer protection, 

as well as the less obvious security issues that would most certainly 

develop if we start making wholesale changes to ICANN and the way the 

DNS is administered. My subcommittee has had hearings. We have 

looked at a number of issues through the Federal Trade Commission. 
6

They have the jurisdiction of enforcing these. What is clear is that the 

Internet scams continue to proliferate, and we must continue to try to 

give the Federal Trade Commission the tools they need to stop these 

frauds. I want the ICANN governance structure and its technical 

requirements to help the Federal Trade Commission’s ability to combat 

fraud, not hinder it. Mechanisms that provide information about owners 

of websites and domain names is one way we are helping fortify the 

DNS system, and I believe, my colleagues, we need to preserve that. 

The system is working and is working well. I am not interested in 

making changes that would in any way endanger what has proven to be 

one of the most powerful tools in history for empowering American 

commerce and the American consumers. And I would like to thank our 

witnesses today for attending and their participation. Thank you. 

[The prepared statement of Hon. Cliff Stearns follows:] 

PREPARED STATEMENT OF THE HON. CLIFF STEARNS, CHAIRMAN, SUBCOMMITTEE ON 

COMMERCE, TRADE, AND CONSUMER PROTECTION

Good afternoon. I’m very pleased that we have an opportunity to understand better 

how the safe and secure functioning on the Domain Name System (DNS) under the watch 

of ICANN is integral to protecting consumers, strengthening the U.S. economy, and 

providing the Internet security necessary for e-commerce and other sensitive on-line 

functions. The economic might of the Internet is everywhere. It is has been adopted by 

both the titans of global commerce and the local main street store in the smallest towns in 

America. The Internet has fueled an increase in productivity worldwide, but has also 

provided positive economic and social benefits to many parts of the world that previously 

had limited contact with the global marketplace. At home, the Internet has led to 

tremendous economic growth for innovative American and global companies and has 

given consumers powerful new tools to stay informed and empowered. According to 

Forrester Research, online retailers achieved over $170 billion in sales during 2005 and 

expect to make over $300 billion by 2010. The annual value of business-to business 

transactions is approximately valued at $2-3 trillion dollars. 

I believe the DNS system administered by ICANN, with very significant private 

sector involvement, has been a success. Restructuring this arrangement – one that has 

worked well over the years – could very well lead to greater uncertainty, less innovation, 

and fewer choices for consumers. The Internet is built upon the flexibility to develop 

from the bottom up, rather than from governmental mandates. But despite the success of 

the Internet under this model and under ICANN since 1998, some governments around 

the world would like to see changes. Specifically, some would like to see it put under a 

U.N. agency. The fact is that the U.S invented, developed and shared the Internet with 

the world. Heavy-handed government involvement, particularly by supra-national 

institutions like the United Nations, would spell disaster for a system that is thriving 

around the world. Politics and policy agendas have no place in the ICANN system and in 

the operation of the DNS. I WILL OPPOSE any such efforts for a number of reasons. 

First, the Internet is too important for the positive economic and social benefits it has 

brought the world to be weighed down by a dysfunctional, multi-government 

bureaucracy. And second, “if it’s not broke, don’t fix it.” The current structure has been 

success and WORKS! If improvements are required to ICANN and its processes, that is 

a much easier process than constructing another U.N organization. 
7

Another issue important to the Commerce Trade, and Consumer Protection Committee is 

the tangential effect any changes could have on the prevalence of on-line fraud and 

general consumer protection, as well as the less obvious security issues that would most 

certainly develop if we start making wholesale changes to ICAAN and the way the DNS 

is administered. My Subcommittee has looked at a number of issues that the FTC is 

charged with enforcing. What is clear is that Internet scams continue to proliferate, and 

we must continue to try to give the FTC the tools they need to stop these frauds. I want 

the ICANN governance structure and its technical requirements to help FTC’s ability to 

combat fraud, not hinder it. Mechanisms that provide information about owners of 

websites and domain names is one way we are helping fortify the DNS system, and I 

believe we need to preserve that. The system is working and is working WELL. I am not 

interested in making changes that would in any way endanger what has proven to be one 

of the most powerful tools in history for empowering American commerce and the 

American consumer. 

Again, I’d like to thank everyone for joining us this afternoon and I look forward to 

the testimony of this distinguished panel. 

Thank you. 

MR. UPTON. Thank you, Mr. Stearns. I would recognize the 

Ranking Member of the Subcommittee on Telecommunications and the 

Internet, Mr. Markey, from Massachusetts, for an opening statement. 

MR. MARKEY. Thank you, Mr. Chairman. 

And thank you to Chairman Stearns as well for calling this hearing 

today on Internet governance. 

ICANN is an organization with international representation that, 

through an agreement with the United States Department of Commerce, 

manages a system of Internet domain names. Simply put, ICANN’s role 

is to coordinate the management of the technical elements of the domain 

name system so that the Internet users the world over can efficiently 

ensure that there are valid addresses, whether they are the top level 

domains, dot com, dot org or others. It has been several years since we 

had an oversight hearing on the NTIA and its handling of the 

Memorandum of Understanding between the U.S. Government and 

ICANN. 

At the last hearing, it was evident that ICANN was struggling in 

several areas, including the adequacy and efficiency of its various 

processes and its responsiveness to the Internet community generally. I 

think it is fair to say that ICANN has made strides and has improved its 

operations in many ways. And I want to commend Dr. Paul Twomey for 

efforts he has made to ensure that ICANN functions in a manner 

consistent with ICANN’s mandate as well as our broader goals for the 

Internet. 

I do not believe that the United Nations or a variation of the same 

can or should replace ICANN. Having said that, I do not believe that 

means we ought to simply leave ICANN to its own devices without 

comment or critique. So while it has improved, I do not believe that 
8

ICANN has finished its task, reformation. For example, I believe that 

the organization ought to explore additional ways of ensuring that its 

so-called constituency effectively captures the demographics and uses of 

the Internet today. This is a challenging task, as the Internet, at its best, 

is constantly being reinvented. 

In addition, I remain concerned that ICANN still lacks an effective 

means for achieving accountability. Aggrieved parties need some way 

through some impartial vehicle and through a dispassionate arbiter to 

register complaints and seek redress if warranted. More challenging is 

addressing a practical dividing line between what ICANN is tasked to do 

and what it is not intended to do. Many have lamented that ICANN 

appears to set policy when it was simply set up to do rather narrow 

technical issues. In ICANN’s defense, some rather narrow technical 

resolutions can have practical and significant policy implications. As 

Mitch Kapur, the founder of Lotus, has said, architecture is policy. And 

to the extent to which ICANN has some role in the technical 

configuration of the DNS, it is, willing or not, going to affect, directly or 

indirectly, Internet policy for companies and countries. 

The reality is that NTIA must ensure that the Memorandum of 

Understanding clearly restrains unintended policymaking by ICANN, 

and NTIA must also be willing to speak up when ICANN transgresses its 

charter. Otherwise, all we get is high-tech handwringing. And I get to 

paraphrase Winston Churchill again about ICANN being the worst form 

of Internet governance except, of course, all other forms. 

Finally, as we look forward, the future of ICANN and its ongoing 

reform, I do have some concerns that the recent agreement with VeriSign 

has several provisions which evidence tendencies towards a 

counter-reformation. I would encourage NTIA to very closely examine 

the provisions of this new contract. First, it appears that the amount and 

mechanism for determining prices is untethered to any data about actual 

cost and is itself untethered from commitments to perform functions for 

which these price increases are ostensibly justified. I am not saying the 

prices cannot be justified somehow or that the contract cannot be easily 

amended to correct deficiencies in the apparent latitude of uses for which 

this additional revenue may be used. All I am saying is that they are not 

now. And parenthetically, saying that these price caps were run by the 

Bush Administration’s antitrust division is like saying that they checked 

with Rip Van Winkle, because that division has suffered a 5-year bout of 

bureaucratic narcolepsy. In short, the historic sound of its 

marketplace-protecting bark has been drowned out by the hum of its 

snoring. So there is little comfort in any such consultation. 

Finally, we have spent considerable time here and in the Homeland 

Security Committee debating terrorism and cyber security. In the 
9

pending ICANN-VeriSign contract, there is no baseline for oversight for 

monitoring and mitigating ongoing security risks to the DNS. ICANN 

should modify this agreement to ensure that operators provide detailed 

security plans and safeguards for the DNS. ICANN would do well to 

develop independent means of assessing vulnerabilities so that these can 

be addressed in future agreements as necessary. These economic 

security and national security shortcomings are ones that NTIA clearly 

has an opportunity and an obligation to address. Again, I want to thank 

the chairmen for your hearing today. And I yield back the balance of my 

time. 

MR. UPTON. Thank you. 

The gentleman from Illinois, Mr. Shimkus. 

MR. SHIMKUS. Thank you Mr. Chairman. Thank you for this 

hearing. We all know the history of ICANN and this issue of 

memorandums of understanding and the domain debate. A few of us 

have dealt with ICANN personally, and I am glad to see my friend, Mr. 

Markey, here, because, as a new member, when we started doing our dot 

kids debate dealing with ICANN, we found ICANN to be everything 

frustrating that it advertised itself to be; not transparent, not open, but 

confusing, frustrating. So that is why, when we are in this time of this 

extension of this Memorandum of Understanding, having not seen any 

real reforms based upon our previous, our last dealings with ICANN, you 

know, I really would hope that the NTIA would really go to work and 

help us believe that there is a process here by which the public as a 

whole can have some light of day. I mean, the public demands from 

politicians that the light of day be shown on our activities. And we move 

to do that through campaign finance reform, through public debate, 

through all sorts of issues. There is no reason why this ICANN cannot 

be more open, more accessible, more visible. 

And I think we have failed. And that is why the importance of this 

hearing here is to ask these questions in which we will--I will do it when 

I get a chance to get into my line of questioning, sole proprietorship. The 

ability to affect the lives of the Internet system is not acceptable without 

scrutiny. Having the ability to have it--we still want it under the NTIA. 

We want to make sure it stays within the purview of a trusted 

international country like the United States so we know that there is 

safety and security. With what has gone on at the U.N. the last couple of 

days, the last thing we would want is any movement in an international 

community. Could you imagine the farce and the jokes that that would 

create of the World Web and the Domain Names System? So thank you, 

Mr. Chairman. I hope to learn a lot from this hearing. I yield back. 

MR. UPTON. Mr. Gonzalez. 

MR. GONZALEZ. Waive opening. 
10

MR. UPTON. Mr. Wynn. 

Ms. Eshoo. 

MS. ESHOO. Thank you, Mr. Chairman, for holding this hearing. I 

think it is an important one. And it is a subject matter that hasn’t been 

visited by the committee for a number of years. In fact, I think it was 

February 2001, and it was your first hearing as a subcommittee 

chairman. So I welcome it. 

I think that there are issues to examine here, and I think that it is an 

opportune time to say that ICANN, like any new organization, always 

has to go through growing pains. And since it was created 8 years ago, 

you have certainly had yours and been a frequent target of criticism 

among the Internet global community. Some of the criticisms, I think, 

are legitimate, and they are appropriate. And I think that ICANN still 

continues to struggle to exercise appropriate and thorough oversight over 

the technical and administrative functions under its jurisdiction. I think 

ICANN and consumers would benefit enormously from more 

transparency. Maybe it isn’t written anywhere in the agreement or in the 

directive that says you don’t have to speak to anyone, but, you know 

what, it is not such a good way to operate. 

And so I think that transparency should be taken seriously by the 

organization and that you take some really solid steps to bring about 

transparency and broader input, as Mr. Markey said, from the Internet 

constituents. That would go a long, long way, and it is beyond me why 

that doesn’t happen, but you know, in life, when you don’t talk to 

someone, it is the first sign of something not being healthy. So I wanted 

to touch on that. 

Of course, you were founded in response to growing concerns about 

U.S. domination of the Internet, and I think today still many countries 

believe that the United States continues to exert undue influence over the 

organization and the administrative functions of the Internet. I think that 

it is important to note that you have enjoyed several noteworthy 

accomplishments. You have successfully introduced competition to both 

the retail and the wholesale domain name business and both of those 

were former monopolies. So that is a big transition. Driven down prices 

in the domain name market worldwide. 

I think it is also important to note that, under ICANN’s tenure as the 

manager of the Internet, that domain names have coincided with an 

explosion of Internet usage. Today, more than 1 billion users worldwide 

rely on the Internet. And that is absolutely extraordinary. That is a 300 

percent increase since 2001, almost a 300 percent increase since you 

became subcommittee chairman. 

It is now estimated that 25 percent of America’s economic value 

moves over network connections each day. That is quite extraordinary. I 
11

think that ICANN and the domain name service providers it manages 

have been successful in defending the system from security threats and 

kept the system up and running. The most important and heavily 

trafficked domains, the dot com and the dot net, are operated by 

VeriSign, whom you are very familiar with, and they are a company 

headquartered in my district in Mountain View, California. And they 

have maintained 100 percent up time for dot com, and it has never failed. 

I have heard from people on the management of these issues. Again, 

I think that transparency is something that’s really needed--more 

transparency brought to the process. 

So we have a lot of catch up in talking to you today because we 

haven’t done that for a long time. So, Mr. Chairman, I am glad that you 

are having the hearing. I hope that in the next Congress and future 

congresses, that we won’t wait as long to come back to this. This is an 

area that is growing in leaps and bounds, and I think that our oversight 

and our interest in it needs to be brought more into play with all the 

stakeholders that are a part of it. So I am glad you are here. Thank you 

for having the hearing. I will look forward to talking to you and asking 

some questions. 

[Additional statements submitted for the record follows:] 

PREPARED STATEMENT OF THE HON. JOE BARTON, CHAIRMAN, COMMITTEE ON ENERGY 

AND COMMERCE

Thank you, Mr. Chairman, for holding this joint subcommittee hearing on the 

Internet Corporation for Assigned Names and Numbers, otherwise known as ICANN. 

ICANN is one of the “behind-the-scenes” organizations that help run the Internet. More 

specifically, ICANN is responsible for the addressing and naming functions of the 

Internet to ensure universal resolvability – which simply means that when I type an 

address into my browser, like www.house.gov, that I actually get to the website I want. 

It’s been five years since this Committee’s last hearing on ICANN, and much has 

changed since 2001. Five years ago, this Committee was inundated with complaints 

about how ICANN was run, what its mission should be, and its unresponsiveness. And 

while complaints about accountability and transparency have not disappeared, we have 

before us today a much-improved ICANN that is capable of managing the technical 

functions it has been assigned. 

But I do not believe that it is time to eliminate the Commerce Department’s 

oversight role in ICANN. ICANN has some work to do before I would be comfortable 

asking the Department of Commerce to permit ICANN to be totally independent. 

Even with its deficiencies, however, ICANN offers a far better model to achieve 

transparency and administrative fairness than the U.N. Private sector leadership has 

enabled the Internet to evolve into the great medium it is today. Given the Internet’s 

importance to the U.S. economy as well as the global economy, it is essential that the 

underlying domain name system of the Internet remains stable and secure. While the 

attempt to give these functions to the United Nations failed earlier this year, I do not 

expect this debate to disappear. But I will continue to oppose this idea – there is little the 

United Nations can do that private industry can’t do better. 
12

I look forward to the testimony of our witnesses and thank you for holding this 

hearing. 

MR. UPTON. Thank you. 

I want to thank our panel for submitting their testimony early. I will 

tell you that it is part of the record in its entirety. At this point, we are 

going to ask you to summarize your testimony and not to exceed 

5 minutes. I believe there is as a clock in the front. I think it is behind 

Mr. DelBianco. When the red light goes on, that means the 5 minutes 

has expired. And we will try to do the same for members. I will ask 

unanimous consent that all members have the opportunity to put their 

statements in as part of the record at the beginning. 

We are joined by Mr. John Kneuer, Acting Assistant Secretary for 

Communications and Information, from the United States Department of 

Commerce; Mr. Paul Twomey, President and CEO of Internet 

Corporation for Assigned Names and Numbers, ICANN; Mr. Steve 

DelBianco, Vice President for Public Policy from the Association for 

Competitive Technology on behalf of NetChoice Coalition; Mr. Thomas 

Lenard, Senior VP for Research from the Progress & Freedom 

Foundation; Mr. Harold Feld, Senior VP for the Media Access Project; 

and Mr. Mark Bohannon, General Counsel and Senior VP of Public 

Policy for the Software & Information Industry Association. 

 

STATEMENTS OF JOHN M. R. KNEUER, ACTING ASSISTANT 

SECRETARY FOR COMMUNICATIONS AND 

INFORMATION, UNITED STATES DEPARTMENT OF 

COMMERCE; PAUL TWOMEY, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, INTERNET CORPORATION FOR 

ASSIGNED NAMES AND NUMBERS; STEVE DELBIANCO, 

VICE PRESIDENT FOR RESEARCH, THE PROGRESS & 

FREEDOM FOUNDATION; HAROLD FELD, SENIOR VICE 

PRESIDENT, MEDIA ACCESS PROJECT; AND MARK 

BOHANNON, GENERAL COUNSEL AND SENIOR VICE 

PRESIDENT, PUBLIC POLICY, SOFTWARE & 

INFORMATION INDUSTRY ASSOCIATION 

 

MR. UPTON. Gentlemen, we are delighted that you are here. 

Mr. Kneuer, we will start with you. Welcome. 

MR. KNEUER. Thank you. 

Chairman Upton, Chairman Stearns, members of the committee, my 

name is John Kneuer. Thank you for this opportunity to testify before 

the committee on the progress of ICANN meeting its obligations under 

its Memorandum of Understanding with the Department of Commerce. 

The department continues to believe that the stability and security of the 
13

Internet and Domain Name System can best be achieved by transitioning 

to the private sector. The vehicle for that transition has been ICANN and 

the memorandum of understanding that it has with the Department of 

Commerce. 

This Memorandum of Understanding does not establish a 

relationship of regulator and regulated between the department and 

ICANN; rather it is a vehicle for our cooperation and participation in 

achieving this transition in an efficient manner. Under the terms of the 

MOU, we offer our expertise and advice on the transition, and we 

monitor ICANN’s performance under the MOU. 

The current MOU was drafted to permit the department and ICANN 

to measure progress towards concrete goals and objectives. When the 

current MOU was entered into in 2003, ICANN had just completed its 

own internal review of its processes and was well into the process of 

implementing structural and organizational changes. That MOU, the 

most current MOU, is intended to provide a vehicle and a tool for 

measuring their progress and making those reforms. 

The current MOU expires on September 30th of this year. In 

preparation for that expiration and examining what the path forward 

would be, at NTIA, we undertook a public consultation this summer. We 

issued a notice of inquiry, held public meetings. We received more than 

700 comments from interested parties around the world, from 

governments, nongovernmental entities, registrars, registries, pretty 

much the entire cross-section of interested stakeholders in the Internet. 

The majority of these stakeholders continue to endorse the original 

principles put forward in the MOU and those that guided DNS transition, 

stability and security, competition, bottom-up policy coordination and 

broad representation. More importantly, the consultation revealed strong 

support for more specific focus on transparency and accountability for 

ICANN, the continued involvement of the Department of Commerce in 

helping with this transition. 

As we approach the end of this term of the MOU, we are working 

with ICANN, and we are negotiating an extension of the MOU. In 

conclusion, we continue to be supportive of private-sector leadership in 

the coordination of the technical functions related to the management 

with DNS. Furthermore, we continue to support the work of ICANN as 

the appropriate coordinator of these technical functions. Both ICANN 

and the department agree that preserving security and stability of the 

Internet DNS is a critical priority that will guide our work in the next 

stage of the transition. Thank you, and I will look forward to any of your 

questions. 

[The prepared statement of John M. R. Kneuer follows:] 
14

PREPARED STATEMENT OF JOHN M. R. KNEUER, ACTING SECRETARY FOR 

COMMUNICATIONS AND INFORMATION, UNITED STATES DEPARTMENT OF COMMERCE

Mr. Chairman, 

Thank you and the members of the Committee for this opportunity to testify on the 

progress of the Internet Corporation for Assigned Names and Numbers (ICANN) under 

the Memorandum of Understanding (MOU) between ICANN and the Department. 

The Administration recognizes the critical importance of the Internet to the 

economic and social well-being of the United States and the global community, and is 

committed to its future growth. The Department has been charged with preserving the 

stability and security of the Internet’s underlying infrastructure - the domain name and 

addressing system. I am pleased to have this opportunity to share the results of our 

efforts to date, as well as our perspective for the future. 

The Department’s Relationship with ICANN 

The Department continues to believe that the stability and security of the Internet 

domain name and addressing system (DNS) can best be achieved by transitioning the 

coordination of the technical functions related to the management of the DNS to the 

private sector. The vehicle for achieving this goal is the MOU between the Department 

and ICANN. As the Committee will recall, ICANN was formed in 1998 in response to 

the Department of Commerce’s call for a partner to lead the transition to private sector 

management of the DNS. 

In September, 2003, the Department and ICANN agreed to renew the MOU for a 

period of three years, with several date-specific milestones and broad tasks aimed at 

guiding ICANN to a stable, independent, and sustainable organization. The expectation 

of the Department was that the three-year time frame would allow ICANN sufficient 

opportunity to formalize appropriate relationships with the organizations that form the 

technical underpinnings of the Internet, secure the necessary resources to ensure its longterm independence, improve its mechanisms for broad participation by all Internet 

stakeholders, and continue to improve its decision-making processes. The Department 

plays no role in the internal governance or day-to-day operations of the organization. 

However, under the terms of the MOU, the Department monitors and ensures that 

ICANN performs the MOU tasks, and offers expertise and advice on certain discrete 

issues. 

As you may recall, this relationship was the focus of much debate at last year's 

United Nations World Summit on the Information Society. To provide clarity to this 

debate, the Administration issued the U.S. Principles on the Internet’s Domain Name and 

Addressing System. In this set of principles, the Administration reiterated its commitment 

to preserving the security and stability of the Internet domain name and addressing 

system; recognized that governments have legitimate public policy and sovereignty 

concerns with respect to the management of their country code top level domains; 

reaffirmed its support for ICANN; and encouraged continued dialogue on Internet 

governance issues. After much discussion and debate, and with your help and support, 

the international community arrived at a consensus on the importance of maintaining the 

stability and security of the Internet, the effectiveness of existing Internet governance 

arrangements, and the importance of the private sector in day-to-day operations of the 

Internet. 

Measuring Progress 

The current MOU was deliberately crafted to permit the Department and ICANN to 

measure progress toward discrete goals and objectives. When this MOU was entered into 

in September, 2003, ICANN had just completed an internal review and reform effort, and 

was well into the process of implementing the structural and organizational changes 
15

called for through that process. In the course of the past three years, ICANN has 

successfully met many of the MOU’s date-specific milestones, which included the 

following: 

• developing a strategic plan addressing administrative, financial and operational 

objectives; 

• developing a contingency plan to ensure continuity of operations in the event 

ICANN incurs a severe disruption of such operations, by reason of bankruptcy, 

corporate dissolution, natural disaster or other financial, physical or operational 

event; 

• conducting a review of corporate administrative and personnel requirements 

and corporate responsibility mechanisms; 

• developing a financial strategy to secure more predictable and sustainable 

sources of revenue; 

• improving its processes and procedures for the timely development and 

adoption of policies related to the technical management of the DNS; 

• implementing reconsideration and review processes, including an Ombudsman 

and commercial arbitration clauses in ICANN contracts; 

• developing a strategy for the introduction of new generic top level domains, 

including internationalized domain names; 

• enhancing broader participation in ICANN processes by the global community 

through improved outreach, regional liaisons, and multilingual 

communications; 

• publishing annual reports on community experiences with the WHOIS Data 

Problem Reports System, used to report inaccuracies in the submission of 

WHOIS data by domain name registrants; and 

• publishing annual reports on the implementation of the WHOIS Data Reminder 

Policy, which domain name registrars are required to send to domain name 

registrants. 

ICANN has also made steady progress toward the MOU’s broader tasks, including: 

entering into an agreement with the Regional Internet Registries to facilitate the 

development of global addressing policy, and developing and implementing new 

accountability framework agreements with many country code top level domain 

operators. 

Future Relationship 

The current MOU expires on September 30, 2006. Over the course of the past year, 

the Department has conducted an internal review of its relationship with ICANN. To 

complement the Department’s internal review of ICANN’s progress under the MOU, the 

National Telecommunications and Information Administration (NTIA) initiated a public 

consultation process to obtain the views of all interested stakeholders. In May, 2006, 

NTIA issued a Notice of Inquiry on the Continued Transition of the Technical 

Coordination and Management of the Internet Domain Name and Addressing System to 

solicit views on such issues as: 

• ICANN’s progress in completing the core tasks and milestones contained in 

the current MOU, and whether these activities are sufficient for transition to 

private sector DNS management by the scheduled expiration date of the MOU, 

of September 30, 2006; 

• Whether the principles underlying ICANN’s core mission (i.e. stability, 

competition, representation, bottom-up coordination and transparency) remain 

relevant and whether additional principles should be considered; 
16

• Determining whether the tasks and milestones contained in the current MOU 

remain relevant, and/or whether new tasks would be necessary; 

• Assessing whether all key stakeholders are effectively represented and 

involved in ICANN’s activities, and if not, how that could be accomplished; 

and 

• Whether new methods or processes should be considered to encourage greater 

efficiency and responsiveness. 

NTIA received and analyzed over 700 responses from individuals, private 

corporations, trade associations, non-governmental entities, and foreign governments. 

NTIA invited a representative sample of these interested stakeholders to participate in a 

public meeting on July 26, 2006. Representatives from the Regional Internet Registries, 

the root server operators, registrars, registries, country code top level domain operators, 

the Internet Society, the Internet research and development community, trademark 

interests, the user community, the business community, and a representative from the 

Canadian government shared their perspectives on the questions NTIA posed to the 

global Internet community. Well over one hundred interested stakeholders participated in 

the public meeting. 

This public consultation process revealed broad support for continuing the transition 

the coordination of the technical functions related to the management of the DNS to the 

private sector through the continued partnership between the Department and ICANN. A 

majority of interested stakeholders continue to endorse the original principles put forward 

to guide the DNS transition – stability and security; competition; bottom-up policy 

coordination; and broad representation. Equally importantly, the consultation process 

revealed strong support for a more specific focus on transparency and accountability in 

ICANN’s internal procedures and decision-making processes, and the continued 

involvement of the Department of Commerce in this transition. 

As we approach the end of this term of the MOU, we are working with ICANN to 

negotiate the next phase of our continued partnership. 

Conclusion 

In conclusion, the Department continues to be supportive of private sector leadership 

in the coordination of the technical functions related to the management of the DNS as 

envisioned in the ICANN model. Furthermore, the Department continues to support the 

work of ICANN as the coordinator for the technical functions related to the management 

of the Internet DNS. Both ICANN and the Department agree that preserving the security 

and stability of the Internet DNS is a critical priority that will guide/govern the next stage 

in the transition process. 

Thank you and I would be happy to answer any questions that you may have. 

MR. UPTON. Thank you. 

Dr. Twomey. 

DR. TWOMEY. Thank you, Chairman Upton. 

Thank you, Chairman Stearns. 

And thank you, members of both committees for the opportunity to 

speak to you today in my role as President and CEO of ICANN. I feel, 

after all the members’ statements, I should simply stop. I think you have 

so much knowledge of the organization. 

But the best I could say, you know, ICANN has been recognized by 

the world community as the global authoritative body on the technical 
17

and organizational means to ensure the stability and interoperability of 

the DNS and the distribution of unique identifiers for the Internet, in 

particular IP addresses. 

Since appearing last before Congress, which was nearly 2 years ago 

in the other place, ICANN has continued to secure a stable and secure 

Internet that ensures universal resolvability. ICANN has fostered greater 

choice, lower costs and better services to DNS registrants, including over 

10 million businesses in the United States alone. ICANN’s successful 

coordination of its community underpins the operation of the global 

Internet. 

Each day, the system supports an estimated 30 billion resolutions, 

nearly 10 times the number of phone calls in North America each day. 

And as members have already pointed out, nearly $2 trillion of 

e-commerce a year flows across this network. Why is universal 

resolvability important? Success means that Internet addresses resolve in 

the same way for every one of the Internet’s global users, every one of 

the one billion people who use the Internet online. 

As part of the international private-sector entities tasked to provide 

technical coordination of the domain system, ICANN in recent years has 

recognized six new agreements for gTLD registry operations and has 

finalized negotiations and is waiting for approval of five others. All of 

the pending agreements have set out language with a greater 

accountability to ICANN on security and stability concerns and also 

provide greater opportunity for ICANN to act in the event of actions of 

registries or such other issues that might arise from registry operator 

practices. 

I might point out to members that all of these agreements have been 

sent out in an open and consultative process. The new general 

framework for these contracts was first released publicly 18 months ago 

and has been discussed over this time, including in four global meetings, 

and has received several thousand public consultation receipts. To give 

you a specific example, the dot com agreement is part of a larger, overall 

settlement of a longstanding dispute with VeriSign over its desire to 

introduce new registry services. We engaged in a 4-month public 

process, which included two different public comment periods, the 

receipt of over 600 public comments and the substantial renegotiation of 

key terms important to our community. We look forward to the 

Department of Commerce approving the agreement as provided for in the 

specifics. New registry agreements have already benefited the Internet 

community by creating a better working relationship between ICANN 

and key registry operators, perhaps turning to the relationship with the 

United States Government. ICANN has been engaged in a longstanding 

and important relationship with the United States Government. 
18

ICANN is about to successfully complete the sixth separate 

amendment to the original Memorandum of Understanding with the 

DOC. And as Mr. Kneuer pointed out, ICANN and the DOC are in 

conversation about the steps forward. ICANN has recently entered into a 

new 5-year arrangement for ICANN to manage the Internet address 

naming authority function. ICANN and the NTIA are in final stages of 

discussions which will confirm an appropriate continuing relationship 

and will recognize ICANN’s global private sector role and continue the 

transition of the coordination of technical functions and the management 

of the DNS to the private-sector. One of the greatest achievements of 

ICANN has been the successful creation, support, and coordination of an 

ICANN community and the creation of the bottom-up policy, making 

process supported by various stakeholders involved in the DNS. The 

evolution of this model continues in many ways but most recently in the 

following actions. This week the ICANN board has commenced a 

review of its own guiding principles and is publishing soon a set of 

private-sector management operating principles, which will be offered 

for public review and will be directed, in many respects, to some of the 

issues raised by members. 

Last week, the London School of Economics provided the ICANN 

commission an independent third-party review of one of ICANN’s key 

policy development supporting organizations, ICANN’s generic name 

supporting organization. The information contained in this review will 

likely result in considerations of additional improvements to ICANN’s 

GNSO and supporting organizational structures. The key point to point 

out here is ongoing evolution and ongoing listening to the community 

about the need to evolve as an organization, both to evolve concerning 

constituencies and evolve concerning processes and evolve concerning 

principles for the operation of the organization. 

I might just finish with perhaps three--two comments concerning, I 

think, real achievements of ICANN to address some of the issues 

members may have heard about and one final comment about 

transparency and accountability. ICANN has been very concerned to 

ensure the protection of intellectual property when it comes to domain 

names, and ICANN’s uniform domain name dispute resolution policy 

has been highly successful and a great barrier to individuals, businesses, 

and intellectual property holders. The policy allows them to assert their 

rights against domain name squatters and infringers of intellectual 

property interests. The UDRP has resolved more than 17,000 disputes 

over the rights of domain names and has proven to be efficient and cost 

effective for those utilizing this alternative dispute resolution 

mechanism. 
19

The market for generic top-level domains has also very much been 

benefited by the introduction of competition in that space, both the 

introduction of new gTLDs and the introduction of much increased 

numbers of generic registrars. When ICANN started its work, there was 

one registrar, one person who sold domain names. Consumers today can 

choose from 845 ICANN accredited registrars, derived from more than 

250 unique businesses in over 40 countries. And the average cost or the 

price of domain names saying dot com have now been reduced by as 

much as 90 percent to consumers. 

My final comment on transparency and accountability: ICANN does 

have well-established principles and processes for accountability in its 

decision-making and in its bylaws. In particular, after its 

decision-making processes at the board level, there is the ability for 

appeal to a review committee, and then, from there, to an independent 

review panel and independent arbitration. It is interesting to note that 

none of the ICANN constituencies or members have yet decided to take 

advantage--to complete an independent review panel or arbitration 

process. That may actually tell you something about the nature of the 

accountability of the organization, that, in any of its decisions, nobody 

has yet decided to use the final method of accountability available to 

them under the bylaws. 

My final observation with regard to the discussion is that there is, I 

think, quite a bit of distinction between the issue of transparency and the 

issue of accessibility. ICANN is actually an incredibly transparent 

organization. It is. If you look on its website, you will find vast amounts 

of information about the processing and activities underway. Although, I 

fear it is transparent in a way which certainly is pertinent, I think, at the 

moment, it is transparent in the way, the same way that credit card 

agreements are transparent. They are all there; it is just very hard to 

understand it. And so I think one of the challenges we certainly have is 

about making our information much more accessible and making certain 

we do put in place principles that really do address some of the issues of 

transparency that people have been discussing. 

Thank you, Mr. Chairman. 

[The prepared statement of Dr. Paul Twomey follows:] 

PREPARED STATEMENT OF DR. PAUL TWOMEY, PRESIDENT AND CHIEF EXECUTIVE OFFICER,

INTERNET CORPORATION FOR ASSIGNED NAMES AND NUMBERS

Introduction 

Good Morning, Chairman Upton, Chairman Stearns and members of the Committee. 

Thank you for the opportunity to speak before this Subcommittee in my role as President 

and CEO of the Internet Corporation for Assigned Names and Numbers (ICANN). 

ICANN is a private sector organization performing a global function, with our main 

office in Marina del Rey, California. ICANN has been recognized by the world 
20

community as the global authoritative body on the technical and organizational means to 

ensure the stability and interoperability of the DNS, and the distribution of IP addresses. 

ICANN’s Role in Internet Governance 

Since appearing before Congress nearly two years ago, ICANN has continued to 

take great steps forward in solidifying its role as the international private sector entity 

tasked to provide technical coordination of the domain name system (DNS). 

The limited and distinct mission of The Internet Corporation for Assigned Names 

and Numbers is clearly set out in Article I of ICANN’s Bylaws. ICANN: 

1. Coordinates the allocation and assignment of the three sets of unique identifiers 

for the Internet, which are 

a. Domain names (forming a system referred to as "DNS"); 

b. Internet protocol ("IP") addresses and autonomous system ("AS") 

numbers; and 

c. Protocol port and parameter numbers. 

2. Coordinates the operation and evolution of the DNS root name server system. 

3. Coordinates policy development reasonably and appropriately as they relate to 

these technical functions. 

Since its origins in 1998, ICANN has helped secure a stable and secure Internet that 

creates a presumption of universal resolvability. ICANN has fostered greater choice, 

lower costs and better services to DNS registrants, including over ten million businesses 

in the United States alone. The Internet requires a stable and secure system of unique 

identifiers if it is to serve the global community efficiently and reliably. 

At the core of ICANN’s mission is global interoperability of a single Internet. 

ICANN was established to serve the Internet community by maintaining the stability and 

security of the Internet’s unique identifier systems, and fostering competition where 

appropriate to give Internet users greater choice at optimal cost. 

ICANN’s successful coordination of its community underpins the operation of the 

global Internet. Each day this system supports an estimated 30 billion resolutions, nearly 

10 times the number of phone calls in North America per day. There are currently more 

than one billion users of the Internet. Due to the universal DNS resolvability secured and 

coordinated by ICANN, the Internet addresses resolve in the same way for every one of 

the Internet’s global users once online. 

ICANN has entered into six new agreements with gTLD registry operators 

(including .NET, .TRAVEL, .CAT, .JOBS, .MOBI, and .TEL) in the last two years (and 

has finalized negotiations and is waiting for approval of 5 others). All of the pending 

agreements have set out language with a greater accountability to ICANN on security and 

stability concerns, and also provide greater opportunities for ICANN to act in the event of 

actions of registries, or such other issues that might arise from registry operator actions or 

practices., including: a) the .COM agreement (which is currently pending approval by the 

US Department of Commerce) and b) four other registry agreements for .ASIA, .BIZ, 

.INFO and .ORG (which are subject to review by the ICANN Board of Directors during 

the next ICANN Board Meeting). 

The .COM agreement is part of a larger overall settlement of a long-standing dispute 

with VeriSign over its desire to introduce new registry services. That dispute arose with 

the creation of ICANN and has been resolved in a way that would enhance the 

performance of both entities, to the benefit of all of the users of the Internet. ICANN and 

VeriSign Board’s have both approved settlement documents that would permit the parties 

to act together in a concerted way to protect the overall security and stability of the 

Internet. Further, if VeriSign were ever to act in a manner that is inconsistent with the 

interests of the Internet community, ICANN has built additional mechanisms into the 

agreement to resolve such disputes promptly and effectively. 
21

Continuing Relationship with the United States Government 

ICANN has been engaged in a long-standing and important relationship with the 

United States Government since ICANN’s inception, which has been administered by the 

US Department of Commerce’s NTIA. ICANN is about to successfully complete the 

sixth separate amendment to its original Memorandum of Understanding with the DOC. 

ICANN will continue in its relationship with the United States Government, having 

recently entered into a new 5-year arrangement for ICANN to manage the Internet 

Assigned Numbers Authority (IANA) function. Additionally, ICANN and the NTIA are 

in the final stages of discussions, which will confirm an appropriate continuing 

relationship and will recognize ICANN’s global private sector role providing technical 

management of the DNS in a manner that promotes stability and security, competition, 

coordination, and representation. 

ICANN’s Private Sector Multi-Stakeholder Model and its Continuing Evolution 

One of the greatest achievements of ICANN has been the successful creation, 

support and coordination of an ICANN Community and creation of the bottom-up policy 

making process supported by various stakeholders involved in the DNS. Since ICANN’s 

creation, the Internet community stakeholders, have vigorously discussed and reviewed 

ICANN’s mission and values. Accordingly, ICANN has continued to build into a robust 

entity, and has continued to evolve ICANN’s multi-stakeholder model, which remains 

encapsulated in ICANN’s Bylaws and its Mission and Core Values. 

The evolution continues in many ways, but most recently in the following actions: 

1) This week, the ICANN Board, having reviewed the comments about ICANN and 

its processes generated from the community during the past year, has commenced a 

review of its own guiding principles and is publishing a set of Private Sector 

Management Operating Principles (ICANN PSMOPs), which will be offered for public 

review. 

2) Last week, the London School of Economics provided an ICANN-commissioned 

independent third-party review of one of ICANN’s key policy development supporting 

organizations, ICANN’s Generic Name Supporting Organization (GNSO). The 

information contained in this review will likely result in considerations of additional 

improvements to ICANN’s GNSO and supporting organizational structure. 

ICANN’s Continuing Accomplishments 

Since 1998, ICANN’s self-governance model has succeeded in addressing 

stakeholder issues as they have appeared, and bringing lower costs and better services to 

DNS registrants and everyday users of the Internet. 

ICANN has been continuing its efforts to manage and adapt in the face of continued 

and dynamic growth of the Internet. ICANN, with the efforts of the ICANN Security and 

Stability Advisory Committee, has worked to make the Domain Name System more 

resistant to external attack. 

ICANN has undertaken significant work in relation to Internationalized Domain 

Names (IDNs) that will enable people across the world to interact with the Internet's 

domain name system in their own languages, which will work to avoid the creation of 

alternate root systems. Working in coordination with the appropriate technical 

communities and stakeholders, ICANN’s adopted guidelines have opened the way for 

domain registration in hundreds of the world's languages. 

ICANN’s Uniform Domain Name Dispute Resolution Policy (UDRP) has been 

highly successful and of great value to individuals, businesses and intellectual property 

holders. The policy enables them to assert in allowing them to assert their rights against 

domain name squatters and infringers of intellectual property interests. The UDRP has 

resolved more than 17,000 disputes over the rights to domain names, and proven to be 
22

efficient and cost effective for those utilizing this alternative dispute resolution 

mechanism. 

After significant study and discussion, and working with the accredited gTLD 

registrars, ICANN developed a domain name transfer policy enabling domain name 

holders to transfer management of their domain name from one registrar to another 

readily. The implementation of this policy has been highly successful and has been an 

important step in providing additional registrar market changes and greater choice to 

consumers. 

ICANN continues to introduce new Top Level Domains to give registrants right of 

choice. These include the introduction of seven new gTLDs in 2000 and four additional 

ones so far from the 2004 sponsored top-level domain name round. 

ICANN re-bid the .NET registry during 2005, resulting in a new agreement being 

executed between ICANN and VeriSign. ICANN has proposed five additional gTLD 

agreements with the registry operators of .ASIA, .BIZ, .COM, .INFO, and .ORG. All of 

the newly proposed registry agreements contain new language supporting ICANN’s role 

in the security and stability of the DNS. 

The market competition for generic Top Level Domain (gTLD) registrations 

established by ICANN has lowered domain name costs in some instances by as much as 

80 to 90%, with savings for both consumers and businesses. Additional detail is provided 

below. 

Registry-Registrar Level Competition 

Since ICANN was founded in 1998, ICANN has entered into many private armslength agreements with registries (that operate the generic top-level domains), and with 

registrars (who are accredited by ICANN to sell domain names directly to consumers). 

Through these actions, ICANN has provided a private-sector solution and helped break 

down the monopoly position by a single dominant company, which provided both 

registry and registrar functions to the majority of consumers purchasing domain names. 

In 1998, there were only three main generic top-level domain name registries 

(.COM, .NET, and .ORG) from which domain names could be purchased by American 

small businesses. Only one company was running all three registries, Network Solutions 

(which was later acquired by VeriSign). Most registrations by small businesses were in 

.COM. 

There was a single registrar in 1998. That same company that ran the registries, 

Network Solutions, was the only registrar from which a consumer could purchase a 

domain name. The price of a single domain name in .COM in 1998, was approximately 

$90.00 per domain name. 

The .COM Registry still controls a significant amount of the marketplace, but now 

less than 50% of the market, including ccTLD operators. 

The price for a .COM registration today depends upon where you purchase the name 

from, but in some instances the price of a domain name has been reduced by as much as 

90%. Today, the price ranges from $7 to $35 per domain name. GoDaddy is now the 

largest registrar, displacing Network Solutions, which has been spun out of VeriSign. 

Consumers can choose from over 845 ICANN-Accredited Registrars, derived from 

more than 250 unique business groups (a significant number owning interests in multiple 

registrar companies), located in over 40 countries. 

Between 2000 and today, 11 new generic top-level domains have signed agreements 

with ICANN. Five of those (.CAT, .JOBS, .MOBI, .TEL and .TRAVEL) having signed 

agreements with ICANN in the last 18 months. 

Conclusion 

In conclusion Chairman Upton, Chairman Stearns and distinguished subcommittee 

members, ICANN is committed to its continuing role as the private sector steward of a 
23

stable and globally interoperable Internet, and is committed to fostering competition in 

the domain name marketplace. 

MR. UPTON. Mr. DelBianco. 

MR. DELBIANCO. Chairman Upton, members of the committee, 

NetChoice is a coalition of trade groups, such as the Electronic Retailing 

Association, e-commerce leaders like AOL, eBay and VeriSign, plus 

thousands of small e-commerce businesses. They register their own 

domain names. They build websites, and they do business online. 

In my remarks today, I intend only to make three points. The first is 

that e-commerce really needs availability and integrity from the Domain 

Name System. Second point, availability has been good, but there is a 

growing gap on integrity. The third point is to suggest ways that this 

committee can help close that gap. 

The title of today’s hearing was with respect to ICANN’s Internet 

governance, but I would suggest to you that ICANN is really the 

Internet’s manager; it is not the governor. And Congresswoman Eshoo 

called it a manager, the term that you used. The DNS manager actually 

coordinates, through the use of contracts and agreements, with privatesector entities that have invested $1 trillion to bring the Internet to a 

billion people around the planet. Now the manager’s job in this case is 

to keep a single interconnected DNS going and growing. 

Now, governments, on the other hand, can prosecute crimes, 

legislate, and they can also regulate content, each in its really own 

sovereign way. So I am going to agree with some of the opening 

statements on the committee, as well as some of the panelists here, in 

suggesting that a multi-governmental body, most specifically the U.N., 

would make a mess out of DNS management and conclude that we 

should therefore, wholeheartedly support ICANN’s independence from 

government encroachment. 

Now, from our DNS manager, ICANN, America’s e-commerce 

industry really just needs two qualities; we need availability and 

integrity. Now, availability means being able to get to that website, 24/7, 

365, in any language, and even while the Internet domain system is under 

attack. Integrity, says that when you click on a link, that you actually get 

to the intended page you were seeking, not redirect yourself to some 

fraudulent website. And integrity is also meaning that domain names 

and typographical variance on your domain name should be held by their 

rightful owner. 

Now, DNS availability. The first of those concepts, has been 

excellent so far; 100 percent up time. But we do need continued 

investments in infrastructure to maintain availability like that, with 

growing Internet usage and the growing strategy of attacks. 
24

Now, if I turn to the domain name marketplace, not just the DNS per 

se, but the marketplace around names, there is a growing integrity gap. 

And I will just give you three kinds of examples. The Federal Trade 

Commission and law enforcement in other nations are working to stop 

phishing, pharming and spam. But I agree with some other witnesses 

you will hear from today, that ICANN must force registrars to do a better 

job of maintaining the “Whois” data that is necessary for the FTC to do 

their job. 

Cyber squatting. Another element of integrity has taken on a whole 

new spin. It is called typo squatting. Some registrars are abusing the 

5-day grace period available to them under many registry contracts to 

learn what are the commonly used typographical errors that users will 

type in when they enter the name of a website. Now, this has been called 

domain tasting, but we like to call it sharking. The same way that a 

shark circles its prey before it decides to attack. Even the largest 

registrar said yesterday that this sharking is grounds to decertify 

registrars who conduct it. 

Another form is the notion of deceptive content on the websites that 

are for sale. It used to be that a cyber squatter would display just, oh this 

name is for sale, contact me to buy it. But now they are a little more 

creative. Pages themselves are full of links to competitors products. In 

fact, page 7 of my testimony shows a page for 1800contacts.com, one of 

my members, and it shows what happens if you type 1-8-o-o instead of 

1-8-zero-zero. 

The final form of integrity gap I want to point out to you is that 

registrars are still practicing the slamming technique on domain name 

owners. That is where a registrar, not the one you initially used, sends 

you a fraudulent invoice for your domain name renewal months ahead of 

expiration. If you fall for it, the slammer basically takes over your 

domain account. In 2003, the FTC prosecuted and obtained a consent 

decree against a few registrars for slamming, but it still goes on today, 

and ICANN hasn’t aggressively enough decertified, in fact, they haven’t 

decertified a single registrar yet. 

Let me close by suggesting three ways the committee can really help 

to ensure availability and close the gap. First, I think the U.S. 

Government should continue its oversight of ICANN, adding milestones 

to enforce contracts and decertify registrars who don’t follow the rules. 

Second, we should select responsible and experienced vendors to run 

DNS infrastructure and then provide incentives for them to invest in 

scale and security. And finally, we hope that the FTC would 

aggressively pursue registrars who slam and any other deceptive 

practices where they rely upon ICANN to keep the “Whois” data secure. 

So I thank you and look forward to your questions. 
25

[The prepared statement of Steve DelBianco follows:] 

PREPARED STATEMENT OF STEVE DELBIANCO, VICE PRESIDENT FOR PUBLIC POLICY,

ASSOCIATION FOR COMPETITION TECHNOLOGY, ON BEHALF OF NETCHOICE COALITION

Chairman Stearns, Chairman Upton, and distinguished members of the Committee: 

My name is Steve DelBianco, and I would like to thank you for holding this important 

hearing. I’m pleased to testify on how ICANN’s contribution to Internet Governance is 

working. 

I’m the Executive Director of NetChoice, a coalition of trade associations and ecommerce leaders such as AOL, eBay, and VeriSign, plus thousands of small ecommerce retailers. 

I also appear before you as a genuine “small business survivor.” In 1984 I founded 

an information technology (IT) consulting firm, and grew it to $20 million in sales and 

200 employees before selling the business to a national firm. After that experience, I was 

drawn to Washington to help start a trade association that focused on the needs of small 

IT businesses like mine. 

In the states, here in Washington, and as a member of ICANN’s Business 

Constituency, NetChoice works to improve the availability and integrity of e-commerce. 

NetChoice members are growing concerned about threats to trade, security, trademarks, 

and consumer protection on the Internet. Moreover, we are wary of United Nations and 

international organizations who covet ICANN’s role as manager of the Internet. 

The title of today’s hearing poses a seemingly simple question—is ICANN Internet 

Governance working?—though the answer is anything but simple. In my testimony, I will 

describe current and future concerns and make several recommendations for ICANN and 

for the U.S. Government in its oversight role. First, however, I should clarify that 

ICANN’s management role is only a part of the overall Internet governance process. 

ICANN is the Internet’s Manager, not its Governor

It’s a common perception that ICANN is engaged in Internet governance, but 

ICANN’s stated mission is to ensure the stability and interoperability of the Domain 

Name System (DNS). It works in coordination with a private sector that has invested a 

trillion dollars to bring Internet connections to over a billion people around the world. 

Bearing that in mind, it’s better to think of ICANN as the Internet’s manager—not its 

governor. 

While ICANN’s management focus is commonly described as “security and 

stability”, the Internet community actually relies on ICANN to manage the DNS to 

achieve two key qualities—availability and integrity. 

Availability of the DNS is critical for anyone who relies on the Internet for 

information, communications, and trade. Domain name resolutions need to be available 

24 hours a day, 365 days a year, from anywhere on the globe—in any language. Even the 

slightest degradation or interruption in DNS availability can slow or interrupt access to 

email and websites. 

Integrity of the DNS is vital to both business and end users of the Internet. 

Businesses rely upon the integrity of domain name registration to ensure that their brands 

aren’t misrepresented or misappropriated. E-commerce and internet financial 

transactions require integrity in resolution of domain names and secure delivery of 

encrypted information. 

Internet consumers depend upon the integrity of domain name services to provide 

accurate and authentic results when they lookup a website or send an email. Integrity is 

undermined by deceptive practices such as redirecting users to fraudulent websites, or 

providing false information about the true owner of a web domain. 
26

Always-on availability and uncompromised integrity are necessary for a fully 

functional DNS and a properly performing Internet. 

 To deliver these qualities, ICANN acts as a project manager, coordinating contracts 

with vendors and organizations that manage key DNS functions. These contracts and 

agreements are narrowly tailored and limited in scope to what can be agreed to by 

consenting parties. 

Governments, on the other hand, are public institutions with broad portfolios and the 

power to compel or punish specific actions. Those powers are an essential part of 

governing the internet: enforcing trademark laws; protecting consumers from fraud; and 

prosecuting hackers and criminals. 

But imagine if ICANN were run by governments using governmental powers. 

Quarreling nations would find it impossible to agree on anything but the most trivial 

technical decisions. Lesser-developed nations would press for changes in Internet 

management to advance economic development goals. Special interests would seek 

Internet-enabled social programs to address perceived disadvantages. It’s no stretch to 

imagine a tax, or “contribution,” on domain names to fund programs to “bridge the digital 

divide” and promote local commerce and content. 

ICANN Management of the DNS Works (for now)

From the perspective of businesses that rely upon the internet for communications, 

information, and e-commerce, it’s clear that the DNS is working. Customers and 

suppliers can quickly and reliably get to our members’ websites, buy online, check the 

status of an order, or just find the address of the nearest store. Over three-quarters of 

small businesses say their website generates leads and gives them a competitive 

advantage.1

 Online retailers realized $172B in sales during 2005 and expect over $300B 

by 2010, according to Forrester. 

The increase in e-commerce has placed greater demand on the DNS. As of June 

2006, there were 105 million total domain registrations, and this is 27% more than a year 

ago.2 Ten million new domains were registered in the second quarter of 2006, up 33% 

over the same period in 2005. Compared with 6 years ago, there are four times as many 

Internet users, and Internet usage is 20 times greater. International Data Corporation 

estimates that over a billion electronic mailboxes were in use around the world in 2005.3

 

The registry operator for .com and .net domains processed an average of 18 billion

queries per day in the second quarter of 2006, an increase of 30 percent year-over-year.4

Moreover, the .com and .net domains have seen 100% uptime reliability for the past 13 

years.5

Judging by growth and vitality, yes, ICANN’s management is working. However, 

there are several ways that ICANN’s management is not working effectively to maintain 

the most important qualities of the DNS—availability and integrity. 

Attacks Threaten Internet Availability & Integrity 

Seven major attacks on the DNS availability have occurred in the past six years. The 

largest attacks on domain name servers hijacked multiple computers to amplify and 

accelerate the assault. This year, a distributed denial-of-service attack disabled 1,500 

 

1

 Source: eMarketer 

2

 Domain Name Industry Brief, Vol. 3, Issue 1, August 2006, available at 

http://www.verisign.com/static/039111.pdf 

3

 Background Paper for the OECD Workshop on Spam, Jan. 22, 2004, available at 

http://www.olis.oecd.org/olis/2003doc.nsf/43bb6130e5e86e5fc12569fa005d004c/edfc2255d6a8a51a

c1256e240030f5b6/$FILE/JT00157096.PDF 

4

 Id. at Note 2 (Domain Name Industry Brief). 

5

 See http://www.verisign.com.sg/dns/comparison.shtml VeriSign manages the DNS for .com and 

.net. 
27

websites using 32,000 hijacked computers.6 Symantec estimates that denial-of-service 

attacks rose 51 percent in the second half of 2005, to an average of 1,400 attacks per day. 

Denial-of-service attacks can cripple a website and disable an online business. 

Moreover, small businesses are experiencing blackmail via denial-of-service attacks, 

where a business owner is forced to pay-up in order to stop the attack.7

 

Attacks on the integrity of the DNS itself are also raising alarms. Attackers can 

redirect web browsers and DNS servers to fraudulent sites hosting convincing scams. 

One method of redirection involves corrupting DNS data that’s “cached” in memory so 

that users are pointed to fraudulent websites. Increased security measures can help, but 

hackers and scam artists are quick to adapt their technology and tactics. 

Just how concerned are American businesses by these attacks on the Internet and 

affronts to consumer protection? To get answers straight from the source, we sponsored a 

Zogby Interactive poll of 1200 small businesses across the nation, conducted May 26-30, 

20068

. The poll included questions about Internet availability and the integrity of the 

domain name system. Top-lines from that poll tell a story in two parts: 

• 78% of small biz owners say a less reliable internet would damage their 

business. 

• 78% said reliability & performance were more important than low fees for 

domain names. 

• 68% support a $1.86 hike in domain fees to invest in reliability and security. 

• 81% said they are unconcerned about a $1.86 fee increase. 

For businesses that rely on the Internet for exposure and for e-commerce, threats to 

Internet availability are serious concerns. These businesses have little concern about 

modest price increases for domain names when that money goes towards Internet security 

and stability. 

The second part of the Zogby poll shows that small businesses with websites are 

questioning the integrity of business practices in the domain name marketplace: 

• 59% are concerned about cybersquatting—where speculators buy domain 

names closely related to names of real businesses, and hold them for ransom. 

• 69% are concerned about being exploited by registrars who charge exorbitant 

fees to reinstate a domain name that’s been allowed to expire. 

The poll findings are unambiguous—the availability and integrity of the domain 

name system are a concern to business owners. How effective is ICANN in responding to 

these concerns? 

In its new registry operating contracts, ICANN is attentive to security and 

stability—these exact words appear 26 times in 28 pages of the contract, which also 

declares ICANN’s intention to develop new policies to improve security. 

However, ICANN has to react faster to threats and vulnerabilities. After years of 

study and debate, everything possible should be done to implement DNS security 

extensions as quickly as feasible. More important, security policies that help ensure 

availability in the face of tomorrow’s threats and vulnerabilities cannot take years to 

develop and execute. Security delayed is dollars lost and new business opportunities 

denied. 

 

6

 Distributed Denial of Service (DDoS) attacks are conducted by controlling and compromising 

multiple computers—by the use of "zombies" or “bots”—to send a flood of queries against a 

targeted website. DDoS attacks generally overload the target’s network with a high volume of traffic 

while simultaneously opening many web pages so that the site runs out of resources to handle 

legitimate requests. See http://www.symantec.com/avcenter/venc/data/ddos.attacks.html 7

 Daniel Thomas, “Websites face more attacks – BLACKMAIL” Financial Times, May 31, 2006. 8

 For the complete Zogby Interactive poll, see www.netchoice.org\ZogbyPoll.htm 
28

Similarly, ICANN has simply taken too long to implement internationalized domain 

names, a step that would improve Internet availability for populations that don’t use the 

Roman alphabet character set. 

An available Internet is one goal of the DNS—the integrity of domain names is 

another. Unfortunately, the integrity of domain name services is being undermined by 

unfair and deceptive practices. 

An Integrity Gap in the Domain Name Marketplace 

The integrity of the DNS is vital to Internet trade and consumer protection. 

Businesses rely upon the integrity of domain name registration processes for the 

resolution of domain names and secure exchanges of encrypted information. Internet 

users depend upon the integrity of domain name services to provide reliable results when 

sending email and visiting websites. Abusive, fraudulent and unfair practices undermine 

the integrity that is vital to the DNS. 

As manager of the DNS, ICANN can and should do more to assure the system’s 

integrity. Based on its consensus policies, ICANN enters contracts with registries and 

certifies registrars to manage the availability and integrity of the DNS. Registries contract 

with ICANN-accredited registrars that resell domain names and provide direct services to 

domain name owners. These registrars are in the best position to prevent many of the 

unfair and deceptive practices described below. 

Cybersquatting 

Cybersquatting is an abusive practice in which a speculator registers a domain name 

identical or very similar to the trademarked name of a legitimate company or other 

organization. The speculator can then hold the name for ransom, forcing the trademark 

owner to pay far more than the actual cost of registration just to get control of a domain 

name that would not otherwise have any value to anyone. 

Cybersquatters unfairly and illegally take advantage of the established value of 

someone else's trademark. But defending a valuable trademark in court can be 

prohibitively expensive, especially for a small business. The World Intellectual Property 

Organization reports year that the number of cybersquatting cases it handled rose 20 

percent in 2005.9

Under the Anti-Cybersquatting Consumer Protection Act of 1999, trademark owners 

can sue a cybersquatter or ask ICANN to arbitrate their claim. For a small business, the 

time and expense needed to understand and assert these legal remedies are often more 

than the owner can afford. Consequently, most small businesses either continue to lose 

prospects to cybersquatters, or are forced to meet the ransom demanded. 

Typo-Squatting

"Typo-squatting" is registering domain names that closely resemble those of already 

popular Web sites, usually common misspellings of the legitimate site name. 

Since almost half of all Web users prefer to type Web site names directly into their 

browsers, misspellings are inevitable. If a customer accidentally misspells the domain 

name they are looking for, they can end up instead at a typo-squatter's website. All they 

find there are advertisements, often for competing products and services. 

For example, I tried a few typographical variations on 1800Contacts.com, the 

leading telephone and online seller of replacement contact lenses, and a NetChoice 

coalition member. If I enter 18OOcontacts.com instead of 1800contacts.com (letter O 

instead of numeral zero), I arrive at a page designed to steer me into buying contacts from 

competing lens sellers. 18OOcontacts.com points to a server owned by Sedo, the current 

 

9

 WIPO Responds to Significant Cybersquatting activity in 2005, Press Release 435, January 25, 

2006, available at http://www.wipo.int/edocs/prdocs/en/2006/wipo_pr_2006_435.html 
29

leader in “Parking” domain names.10 Sedo’s parking site is designed to generate ad 

revenue when users who intended to go to 1800Contacts start clicking on sponsored 

links—for other lens sellers. (Screen capture shown below).11 

When I clicked on the 1800Contacts.com link displayed on this page, I was re-directed to 

yet another page showing ads for other lens sellers. In other words, the hyperlink for 

1800Contacts.com is falsely labeled in order to generate ad revenue from a competing 

site. 

Typo-Squatting sites confuse and divert potential customers. 46% of users prefer to 

type the domain name of a known website directly into the browser’s address bar.12 But 

when typos happen, legitimate businesses shouldn’t lose customers who fall into traps 

designed to generate ad revenue. What’s more, the ad revenue generated by parking 

drives up the price if the intended business tries to acquire the domain from the parking 

operator. 

The Land Grab on New Top Level Domains 

A similar abuse of the domain name registration system, called a "land grab," can 

occur whenever a new top level domain is launched. Speculators register thousands of 

names in the new domain, hoping to tie-up names similar to those of legitimate 

businesses and organizations. The speculators then either ransom these names to their 

legitimate owner or use them for typo-squatting and ad parking. 

For example, when the .eu domain was created for Europe, speculators quickly 

moved to register names that legitimate businesses and organizations already held on 

other domains. EUrid, the non-profit organization operating the .eu registry, consequently 

 

10 For information about Sedo, see 

http://www.sedo.co.uk/about/index.php3?tracked=&partnerid=&language=e 11 See http://www.18oocontacts.com/ 

12 North America Domain Name Study, Windward Directives, June 2005. 
30

suspended 74,000 .eu domain names and sued 400 registrars for breach of contract.13 A 

syndicate of registrars had engaged in abusive behavior by warehousing tens of thousands 

of .eu domain names with the obvious intent of selling them. 

Critics of ICANN suggest that the organization exceeds its management role when 

trying to prevent and resolve domain name abuses. However, ICANN manages policies 

for initial registration, which is the best point to prevent squatting abuses. And if a 

trademark dispute arises later, it is far more efficient to use ICANN’s arbitration process, 

saving legal fees and cutting the time to resolve the dispute and re-assign the name. 

Registrars are not doing enough to maintain the quality of the “Whois” data needed 

to fight squatting, fraud, and traffic in copyrighted material and counterfeit goods. 

ICANN needs to enforce its contracts, and de-certify registrars who fail to meet their 

contractual obligations to collect, maintain, and display accurate and complete Whois 

data. 

"Sharking" (a.k.a. Domain Tasting) 

Domain name "sharking" is an abusive practice in which speculators looking for 

sites where they can park ads take advantage of the five-day grace period between the 

time a new domain name is reserved and the time the registration fee must be paid. In 

April 2006, out of 35 million registrations, only a little more than 2 million were 

permanent or actually purchased. It’s a good bet that a large portion of the other 33 

million registrations were part of the sharking scheme.14

Speculators routinely register large numbers of potentially attractive domain names 

and then carefully track how many accidental hits they generate. If a site fails to generate 

much traffic, the speculator can let the domain name lapse without paying anything. But 

if the site generates a lot of traffic, the speculator can use it to park ads, often from one of 

the large managed Web advertising networks like Google, and generate significant 

revenue with no effort. 

ICANN is aware of growing abuse of the 5-day Grace Period policy, and held a 

workshop in its last meeting in Morocco. Still, I have not seen aggressive moves by 

ICANN to explore new grace period policies and restrictions to guard the integrity of the 

DNS from this kind of abuse. 

Slamming 

Most consumers with a telephone can remember the scourge of slamming – where 

resellers of long-distance telephone service switched providers only to have the 

incumbent switch back, and so on. Domain name slamming works in a similar way. A 

registrar tricks an unwary domain name holder into unintentionally switching from one 

registrar to another. 

Domain name slammers often use direct mail or email spam to target domain name 

holders with phony renewal notices. If the domain name holder takes the bait, thinking 

that they are just renewing their subscription with their existing registrar, they may soon 

be forced to pay whatever the slammer demands or risk losing their domain name when it 

comes up for renewal. 

In the U.S. domain name slamming is a considered an Unfair and Deceptive Trade 

Practice and has been prosecuted by the Federal Trade Commission. In 2003, one of the 

largest domain name registrars, Network Solutions, settled a complaint with the Federal 

 

13 EURid Suspends 74 000 .eu Domain Names, July 24, 2006, available at 

http://www.eurid.eu/en/general/news/eurid-suspends-74-000-eu-domain-names-due-to-breach-ofcontract 

14 Bob Parsons, 35 million names registered in April. 32 million were part of a kiting scheme. A 

serious problem gets worse, May 10, 2006, available at 

http://www.bobparsons.com/DomainKiting.html 
31

Trade Commission, admitting that it had deceived customers into switching registrars 

when the customer was led to believe they were merely renewing their previous 

registrations. 

Slamming continues, despite the FTC enforcement work. ICANN has a more 

immediate and direct way to restore integrity to domain name billing process, by 

rigorously enforcing its Registrar contracts, and de-certifying any Registrar who’s caught 

slamming. 

Expiration Extortion

“Expiration Extortion” describes a common practice of forcing a domain owner to 

pay an exorbitant fee to reinstate a name that’s been allowed to expire. A leading 

registrar, for example, charges $80 to reinstate a domain name that costs only $8 to 

initially register. Expiration Extortion also describes the speculative game of snatching 

expiring domain names for resale to their former owner – or to the highest bidder. 

Domain names are generally registered only for a year, although most owners renew 

before the year is up. Among all registrants, the average term for domain registration is 

1.3 years.15 Last year, the renewal rate for dot-com and dot-net domain names was 75%. 

That means 25% of names aren’t renewed, so every day there’s an average of 22,000 

expiring domain names released by registries. 

A company called Pool.com has perfected the science of snatching domain names as 

they expire, or “drop”. Pool runs 80 servers in Sterling, Virginia that fire into action 

every day when dropped domain names are released at 2pm. According to Pool.com’s 

president, Taryn Naidu, “It’s like going to the horse races every day.”16 The race is won 

by whichever company, blasting multiple commands per second, snatches the dropped 

domain name. 

Imagine if Pool.com were in the business of buying expired auto registrations 

instead of expiring domain names. Pool could snag your car registration if you failed to 

renew it by the expiration date, then sell the registration back to you or to another bidder 

who’s willing to pay more. 

Parking of Generic Terms 

This fast-growing practice involves registering generic names, such as 

"consulting.com”, which have little value in themselves but can generate revenue by 

carrying minimal content and advertising. Unsuspecting visitors to 

www.antidepressants.com might think they have found a site with reliable information 

regarding depression medications. But in fact, there is no content – only links to paid ads 

parked on the pseudo-site by a speculator looking to prey on people looking for helpful 

information. 

Parking ads on otherwise unused sites like this is not only deceptive and confusing 

to the customer, it clutters the Internet the same way that unsightly billboards clutter the 

landscape along many of our nation's highways. This clutter undermines the value of the 

Internet for legitimate businesses and organizations, and misleads individuals searching 

for meaningful information. 

ICANN’s Agreements with Registries and Registrars can Promote DNS Integrity 

Small businesses are increasingly frustrated and concerned about abusive domain 

name practices like squatting and slamming. Is ICANN doing enough to maintain the 

integrity of the DNS marketplace? 

 

15 ASCII Com/Net for Q1 2006 

16 As quoted by Peter Hum, “The New Cybersquatting: What’$ in a Name,” The Ottawa Citizen, 

March 16, 2006. 
32

Not a single one of the over five hundred registrars has been de-certified by ICANN, 

despite dodgy practices by some. Dotster, one of the largest registrars, was recently sued 

for allegedly participating in a massive typo-squatting campaign.17 Dotster is accused of 

abusing its status as a registrar by sampling hundreds of domain names that closely 

resemble true names and then keeping only those that generated enough traffic to justify 

the registration fee. 

Nevertheless, ICANN seems to grasp the seriousness of maintaining integrity of the 

DNS marketplace, judging by the new registry contract proposed for .com and 

subsequent TLD registries. In its new registry agreement for .com, ICANN indicates the 

potential for “prohibitions on warehousing of or speculation in domain names by 

registries or registrars.”18 An additional provision requires a registry operator to meet 

any future “consensus policy” adopted by ICANN to improve security and stability and 

to resolve disputes about domain names. 

ICANN is managing DNS availability and integrity concerns contractually, through 

agreements with registries and registrars. However, a few large businesses have 

complained about ICANN’s management of registry contracts, carrying their complaints 

here to Washington and requesting that the Commerce Department and this Committee 

reject ICANN’s new agreement to run the .com registry. They complain that these 

registry contracts would create “perpetual monopolies” by granting exclusive contracts 

with presumption of renewal if the operator has met all performance requirements. 

ICANN’s new contracts may not be perfect, but this criticism is misguided and selfserving. 

First, an exclusive contract is essential to focus responsibility and accountability on 

the vendor running any single registry. The same is true for many outsourcing contracts 

that require accountability and consistency in the delivery of critical services, especially 

for infrastructure services that require significant investments. 

Second, renewal options are common in longer-term service contracts to provide 

incentives for making investments that improve vendor performance. For example, the 

operators of the cafeteria downstairs might invest in a new grill or espresso machine if 

they’re confident that their contract would be renewed upon expiration. And landlords 

often give tenants a purchase option as an incentive to maintain and improve the 

property. 

Renewal options are already included in ICANN’s existing registry contracts. 

Moreover, ICANN’s new registry contracts require operators to implement any future 

policies adopted by ICANN to improve security and resolve domain name disputes. 

While such open-ended obligations could be difficult for any operator to meet, NetChoice 

would join those objecting to renewal if the incumbent registry operator failed to satisfy 

the contract’s requirements. 

An exclusive, renewable contract is therefore typical for infrastructure services that 

require single-vendor accountability and continuity. Moreover it provides incentives for 

investment, even during the final years of the contract. What, then, is the real nature of 

this complaint? 

The largest registrars must approve fees that presently provide most of ICANN’s 

funding. I attended the ICANN meeting in Vancouver last December, where the Finance 

Committee chair complained that ICANN expenditures were being delayed and possibly 

diminished because registrars had not yet approved the fees in the budget that was 

adopted for 2005-06. 

 

17 Declan McCullagh, Registrar Named in Massive Cybersquatting Suit, June 5, 2006, available at 

http://news.zdnet.co.uk/internet/0,39020369,39273075,00.htm 18 Draft Registry Agreement, Section III.1(b), page 4, at http://www.icann.org/topics/vrsnsettlement/revised-com-agreement-clean-29jan06.pdf 
33

ICANN’s new registry contracts, however, would reduce the leverage held by large 

registrars today. When ICANN wants to make investments to ensure the Internet’s 

security and stability, ICANN should not have to beg a “permission slip” from 

registrars—many of whom have little interest in security or stability. 

From all appearances, this loss of leverage is why a few large registrars have pressed 

Congress and the Commerce Department to reject the new .com contract. ICANN can 

always improve its contracts, but complaints about a perpetual monopoly in the registry 

agreement are without merit. 

The Committee should not let the loaded discussion of the registry contract distract 

it from acknowledging that ICANN’s DNS management is working—even in the face of 

challenges to DNS availability and integrity. Furthermore, this Committee should 

consider the alternatives to ICANN management. ICANN’s management duties are 

threatened by outside forces that could become serious in the near future if ICANN fails 

to do its job properly or if it becomes overburdened with governance duties beyond its 

managerial role. Two major threats are United Nations encroachment on ICANN and a 

potential splintering of the Internet. 

The Threat of United Nations Encroachment on ICANN 

There’s a real and growing risk that ICANN’s technical role for managing domain 

names will be encroached upon by the United Nations. The UN organized a World 

Summit on the Information Society last year to discuss Internet Governance. A UN 

working group then released a report that included controversial policy recommendations 

for the future of the Internet. Thanks largely to a unanimous resolution from Congress in 

November 2005, representatives from the international community allowed ICANN to 

continue managing the Internet under U.S. oversight, for the time being. 

At the same time, the UN formed a new organization, the Internet Governance 

Forum, which meets for the first time in Athens next month. The current agenda for 

Athens includes workshops on a diverse range of societal issues, such as the “Greening of 

IT” through “legal and institutional mechanisms which strengthen the capacity of civil 

society for participation in decision-making.” 

While ICANN is far from a perfect manager, it provides the needed separation 

between Internet technical operations and governments. ICANN’s bottom-up 

coordination of technical functions is the best way to preserve the democratic and 

decentralized character of the Internet. If there’s anything that everyone at today’s 

hearing should be able to agree upon, it’s that we need ICANN to be strong and 

independent so it can fend-off interference from the UN and from governments. 

DNS control by the UN or other governmental body would have significant 

economic and cultural effects. The decision making process would be even slower than it 

is now; the result would be a technological lag that could prevent the implementation of 

new technologies and processes that would benefit the DNS and its use in e-commerce. 

Economic development and “social engineering” projects could interfere with 

essential technical management functions. Some nations, most notably China, maintain 

censorship controls on internet content available to their citizens. In a governmentcontrolled ICANN, these nations might call for technical changes to facilitate censorship, 

tempting other regimes to restrict content access. 

However, it would be a risky strategy for the US and ICANN to ignore the voices of 

the UN and other governments. That could lead to an unlikely, though highly undesirable 

outcome—splintering of the Internet. 

A Splintered Internet Threatens All of Us – Not Just ICANN 

In the brief history of the Internet, ICANN has not always been the only keeper of 

the domain name system. Alternative domain name systems still exist today, and are 
34

trivial to create, as a technical matter. The consequences of a split internet, however, 

may not be trivial. 

A split internet root would lead to a split in DNS policies, which could impair 

information security technologies, delivery of email, secure e-commerce transactions, 

trademark enforcement, and other forms of consumer protection. A split isn’t likely, but 

ICANN and the U.S. Government need to be cognizant of the risk that a large nation or 

multi-national group could easily establish its own DNS. 

How Can the U.S. Government and ICANN Make Internet Governance Work Better? 

ICANN currently manages a DNS that generally works well for businesses and end 

users. However, the DNS is facing new attacks on availability and an erosion of 

integrity, calling for better contract management by ICANN and greater vigilance by 

consumer protection officials. ICANN must also withstand UN encroachment and avoid 

possible splintering of the Internet, challenges that could be met by ICANN and U.S. 

policymakers through these recommendations: 

1. The U.S. Government should develop a “lighter touch” in its ICANN oversight. 

The U.S. Government must avoid giving the international community any 

excuse to claim that the U.S. is being heavy-handed in Internet governance. From 

this point onward, U.S. actions should demonstrate a “lighter touch” in its ICANN 

oversight. 

The U.S. Government is said to have unduly influenced ICANN’s redesignation of registry operators for two country-code top-level domains (ccTLDs), 

and these instances have become legendary among critics of U.S. oversight. While 

there were valid reasons for the re-delegation of the Iraq and Australia ccTLDs, 

critics cite these instances to claim that the U.S. cannot be trusted with its oversight 

role. 

The U.S. can take a major step to alleviate these concerns by unilaterally 

committing to a formal, internationalized process for changing a designated country 

top level domain. Countries regard their country code TLD as being under their 

sovereign authority, so they are entitled to designate their own registry. ICANN 

should respect those decisions, subject to security or stability qualifications and 

allowing for expedited re-designation during emergencies. The key is to balance the 

sovereignty of local communities while ensuring the unity, availability, and integrity 

of the DNS. A detailed process for this internationalization can be developed, such 

as one suggested by J. Beckwith Burr and Marilyn Cade.19 

Another area where the U.S should show a lighter touch is in the launch of new 

top level domains. In 2005, the U.S. Government asked ICANN to delay the launch 

of the .xxx domain, designated for adult content. The proposal for .xxx had already 

made it through the ICANN approval processes, including opportunities for 

governments to comment. Although Brazil and France expressed similar 

reservations about .xxx, critics complain that U.S. abused its oversight role by 

overriding a DNS management decision that rightly belongs under ICANN purview. 

2. The expiring Memorandum of Understanding should transition into a longterm agreement. 

The current Memorandum of Understanding (MoU) between the U.S. and 

ICANN expires on September 30, 2006. Six previous expirations were marked by 

 

19 Burr, J. Beckwith and Cade, Marilyn S, in a letter submitted to NTIA regarding the Transition of 

the Technical Coordination and Management of the Internet DNS and Addressing System to the 

private sector, July 13, 2006, at 

http://www.ntia.doc.gov/ntiahome/domainname/dnstransition/comments/dnstrans_comment0643.pdf 
35

amendments to extend the MoU and specify further milestones for ICANN to fully 

transition to private sector management. 

Repeated extensions and milestones imply that the U.S. Government will one 

day cede all authority over ICANN and the “master copy” of the DNS root server. 

 We believe the U.S. should formalize its long-term intention to keep the 

authoritative root distribution server physically located in the United States. This 

would send a clear signal that moving the root server is not an option. As with the 

back-stop agreements, this is necessary to ensure the availability and integrity of the 

DNS—no other purposes should be implied or intended. 

3. The U.S. Government should maintain “back-stop” agreements for major 

registry operators and numbering authorities. 

Presently, the U.S. Government has contingency agreements with operators of 

the authoritative root server, just as a back-stop in case ICANN were unable to 

execute its current responsibilities. It’s prudent for the U.S. to continue this practice 

as a way to guarantee DNS availability to business and consumer interests both here 

and abroad. 

4. ICANN and Governments should make the Government Advisory Committee 

(GAC) more involved and responsive. 

Governments are not nearly as effective as they should be when participating in 

ICANN policy development. Government representatives often disregard target 

dates established in the policy development process by failing to provide timely and 

responsive comments at the time when policies are being formulated. What’s more, 

some government comments have reflected more rhetoric than reality when 

characterizing the potential impact of proposed ICANN policies. Finally, ICANN 

decisions should not be held hostage when governments cannot reach consensus—

government input should be given even where it does not represent a consensus 

position. 

5. ICANN should improve the reach and transparency of stakeholder 

involvement. 

Whenever ICANN supporting organizations and advisory committees present 

their official positions to the ICANN Board and community, they should reveal the 

degree of consensus achieved and the range of views. ICANN should encourage 

constituencies and advisory committees to report voting results, if any votes were 

taken. More important, ICANN’s Board should request fuller disclosure of 

dissenting opinions and alternatives considered. 

A recent example where this form of transparency worked well is the GNSO 

Council report on alternative formulations for the purpose of Whois. As this report 

showed, a bottom-up process can attempt to forge consensus, but should not 

suppress dissenting views. Moreover, ICANN outsiders would more readily 

participate when they see that dissenting views and alternatives are presented 

alongside majority views when constituencies pass advice along to ICANN’s Board. 

Conclusion

ICANN is a work-in-progress on the way to a bold and optimistic vision. I can think 

of no precedent for a multi-national, public-private partnership to manage an enterprise as 

complex and dynamic as the Internet. 

The DNS has become an irresistible target for hackers, criminals, and unfair or 

deceptive practices, all of which endanger its availability and integrity. ICANN has 

made progress in its 7 year history, but it needs more operational experience to merit 

greater independence from U.S. Government oversight. 
36

I close by thanking the Committee for holding this important hearing and I look 

forward to your questions. 

MR. UPTON. Thank you. Mr. Lenard. 

MR. LENARD. Thank you, Chairman Upton, members of the 

subcommittee. Thank you for this opportunity to express my views on 

the ongoing experiment in Internet governance that is ICANN. 

The Internet is now the main driver of the digital economy, not only 

a global marketplace but also a means to communicate and contribute 

information more efficiently and more widely than ever before. How we 

govern the Internet has far-reaching economic, political and social 

ramifications. It can determine whether the Internet continues to flourish 

and grow or whether it gets bogged down by bureaucratic and politicized 

decision making. 

My testimony makes three basic points. First, for all the controversy 

that has at various times surrounded the current government’s 

arrangement, it is, as seems to be generally the view expressed here 

today, far superior to the alternative multilateral arrangements that have 

been proposed. There are many countries that do not share our 

commitment to promoting innovation, free markets and the free flow of 

information. And it is not difficult to envision a governing structure that 

would be far less friendly to the development of the Internet than the one 

we now have. Some other governments clearly are more prone to want 

to control the content that is available on the Internet. Governments may 

impede technical advances that now occur routinely in response to 

market forces in order to further their political and economic agendas. It 

is likely that a multilateral organization would adopt a more heavyhanded approach to Internet governance and that governance procedures 

would be used by countries to try to gain competitive advantages over 

each other. 

Second point, having said all that, ICANN needs to resist its 

tendency toward becoming an economic regulatory agency and limit 

itself to administering the technical aspects of the domain names. In the 

current competitive environment in which customers are confused by the 

number of alternative and country code TLDs, there is no need for a 

regulatory approach with, for example, competitive bidding or price 

regulation to avoid the exercise of market power. We should give 

competing registry operators quasi property rights to their TLD registries 

in order to improve their incentives to invest in their business and 

maintain the quality of their TLD brands. These incentives are severely 

dampened if the registry operator knows that the rights to operate the 

registry can be lost when the contract expires. Giving incumbents the 

presumptive right of renewal is pro-competitive, and similarly, registries 
37

should not face barriers if they want to offer new vertically related 

services. 

Third, to ensure that the market for registry services is as competitive 

as possible, ICANN should free up entry and let the market determine 

the number of top level domains. ICANN’s policies still limit 

competition in the TLD market as evidenced by the fact that ICANN has 

approved only a relatively small number of applications for new TLDs 

that it has received. The market should determine the number of TLDs 

available and ICANN should only disapprove applications if there are 

legitimate technical reasons for doing so. Innovation in the IT sector, in 

which the Internet obviously plays a key role, has been the engine of 

growth in the U.S., the basis for an economic performance over the past 

decade that sets us apart from much of the rest of the world. Maintaining 

a climate of innovation benefits every one, not just the U.S. However, 

the U.S. has perhaps more to lose if the pace of innovation slows because 

of more bureaucratic process and a more heavy-handed regulatory 

approach. 

Despite ICANN’s defects, the Internet has flourished under the 

current Internet governance arrangement, and I would not have the same 

confidence with respect to a multilateral arrangement. But ICANN can 

be even more light handed and pro-competitive, and that should be its 

goal. Thank you very much. 

[The prepared statement of Thomas Lenard follows:] 

PREPARED STATEMENT OF THOMAS M. LENARD, SENIOR VICE PRESIDENT FOR RESEARCH,

THE PROGRESS & FREEDOM FOUNDATION

Chairman Upton, Chairman Stearns, Ranking Members Markey and Schakowsky, 

and members of the Committee. Thank you for this opportunity to express my views on 

the ongoing experiment in Internet governance that is ICANN and how well it is 

working. My name is Thomas Lenard and I am a senior fellow and senior vice president 

for research at The Progress & Freedom Foundation. PFF is a non-partisan, non-profit 

think tank that focuses on public policy issues that affect the digital revolution and the 

information economy generally. 

The Internet is now the main driver of the digital economy—not only a global 

marketplace, but also a means to communicate and distribute information more 

efficiently and more widely than ever before. How we govern the Internet has farreaching economic, political and social ramifications. It can determine whether the 

Internet continues to flourish and grow, or whether it gets bogged down by bureaucratic 

and politicized decision making. 

My views on ICANN’s performance, briefly, are as follows: 

• ICANN has made progress and is continuing to improve. Despite some 

problems that have plagued the organization, the Internet has flourished during 

the period that ICANN has been “in charge”. This is due to ICANN’s charter 

to concentrate its oversight on technical aspects of the domain name system 

(DNS) and its relatively light-handed approach. 
38

• Moving ICANN’s governance functions to a multilateral organization would be 

extremely risky. A multilateral organization is likely to be far more intrusive 

and regulatory, which would put the future development of the Internet at risk. 

• However, ICANN must resist the drift toward becoming an economic 

regulatory agency. There is already sufficient competition in the markets for 

domain names to move away from ICANN’s regulatory approach. 

• To ensure that the market for registry services is as competitive as possible, 

ICANN should free up entry and let the market determine the number of TLDs 

(top-level domains). 

Multilateral Governance 

There are a number of countries that believe that Internet governance should be 

shifted to a multilateral organization of some sort. The Congress expressed its 

disagreement with that view in a resolution passed last year. The agreement reached at 

the World Summit on the Information Society in Tunis in November 2005 assures that 

the current structure of Internet governance will remain in place, at least for the time 

being. 

We should thank our very able diplomats for achieving the Tunis commitment, 

which is very important. For all the controversy that at various times has surrounded the 

current governance arrangement, and notwithstanding some criticisms I will discuss, it is 

far superior to the alternative multilateral arrangements that have been proposed. There 

are many countries that do not share our commitment to promoting innovation, free 

markets and the free flow of information. It is therefore not difficult to envision a 

governance structure that would be far less friendly to the development of the Internet 

than the one we now have. Some other governments clearly are more prone to want to 

control the content that is available on the Internet and limit the free flow of information. 

Governments may impede technical advances—advances that now occur in response to 

market forces—in order to further their political and economic agendas. It is likely that a 

multilateral organization would adopt a more heavy-handed approach to Internet 

governance and that governance processes would be used by countries to try to gain 

competitive advantages over each other. 

Innovation in the IT sector—in which the Internet has played a key role—has been 

the engine of growth in the U.S., the basis for an economic performance over the past 

decade that sets us apart from much of the rest of the world. Maintaining a climate of 

innovation benefits everyone, not just the U.S. However, the U.S. has perhaps more to 

lose if the pace of innovation slows because of more bureaucratic processes and a more 

heavy-handed regulatory approach, which would be predictable if Internet governance 

were shifted to a multilateral organization. 

Internet Governance and the Domain Name System 

ICANN administers the DNS, which is essential for the operation of the Internet. 

Operationally, the DNS is organized as a hierarchy with top-level domains (TLDs), such 

as .com or .edu at the top. These TLDs are operated by registry operators who take 

requests for second-level domains—e.g., amazon.com—and determine whether they are 

available and, if so, register them. The registry operators maintain the database of all 

registered names so they can determine if domain names are available if requested. For 

the domain name system to work for Internet users, each domain name must resolve to a 

unique IP address, and the registries obviously are an essential part of that system. 

All this suggests that the administration of the DNS is essentially a technical 

exercise, and ICANN, or any alternative system, is best if it limits itself to administering 

the technical aspects of the DNS. This view is reflected in the Department of 

Commerce’s 1998 White Paper on DNS coordination and management, which set forth 

the following responsibilities for a DNS administrator: 
39

1. To set policy for and direct the allocation of IP number blocks; 

2. To oversee the operation of the Internet root server system; 

3. To oversee policy for determining the circumstances under which new top level 

domains would be added to the root system; and 

4. To coordinate the assignment of other Internet technical parameters as needed 

to maintain universal connectivity of the Internet.1

These are largely technical functions, with the exception of the third, which has a 

potentially significant economic policy element. 

Competition and Regulation 

From an economic standpoint, there are good efficiency reasons to have a single 

registry operator for each TLD. Because of this, it is sometimes assumed that registries 

should be viewed as monopolists and regulated accordingly. Indeed, this has been 

ICANN’s approach: 

• ICANN enters into agreements with registry operators, sometimes through a 

competitive bidding process, to operate a given registry under specific 

operational and service parameters. These parameters may include price 

ceilings (e.g., for the .com operator). 

• At the end of the contract period, the right of the incumbent to renew the 

contract and continue to operate the registry is uncertain, even if its 

performance has been entirely satisfactory. 

• The introduction of new services related to the core registry functions has been 

proscribed under the theory that such new businesses can be used to circumvent 

the established price ceilings. 

The rationale for such regulation in an environment in which there is competition, 

even if not perfect competition, is very weak. A regulatory regime of the type that 

ICANN has been operating, including regulation of price and service quality, is at best a 

flawed tool, even for true monopolies. Notwithstanding the fact that there is only one 

registry operator for each TLD, there is a significant amount of competition between 

TLDs—from new gTLDs (generic TLDs, such as .info) and from the proliferation of 

ccTLDs (country code TLDs, such as .us). Indeed the ICANN board in a majority 

statement issued earlier this year indicated its view that the market for registry services 

was increasingly competitive: 

However, we firmly believe that ICANN is not equipped to be a price regulator, and 

we also believe that the rationale for such provisions in registry agreements is much 

weaker now than it was at the time the VeriSign agreement was originally made in 

1998. At that time, VeriSign was the only gTLD registry operator, and .COM was, 

as a practical matter, the only commercially focused gTLD. Today, there are a 

number of gTLD alternatives to .COM, and several ccTLDs that have become much 

stronger alternatives than they were in years past. In addition, the incredibly 

competitive registrar market means that the opportunities for new gTLDs, both in 

existence and undoubtedly to come in the future, are greater than they have ever 

been. It may well be that .COM offers to at least some domain name registrants 

some value that other registries cannot offer, and thus the competitive price for a 

.COM registration may well be higher than for some alternatives. But price is only 

one metric in a competitive marketplace, and relative prices will affect consumer 

 

1

 U.S. Department of Commerce, Statement of Policy on the Management of Internet Names and 

Addresses (Docket Number 980212036-8146-02) (available at 

http://www.ntia.doc.gov/ntiahome/domainname/6_5_98dns.htm). 
40

choices at the margin, so over time, we expect the registry market to become 

increasingly competitive. One way to hasten that evolution is to loosen the artificial 

constraints that have existed on the pricing of .COM and other registries. We began 

this process with the .NET agreement, and we now continue it with the .COM 

agreement, and we expect to continue along this path as we renegotiate agreements 

with other registries.2

In the current competitive environment, in which customers can choose between a 

number of alternative gTLDs and ccTLDs, there is no need for competitive bidding or 

price regulation to avoid the exercise of monopoly power and, in fact, such regulation is 

harmful. We should give competing registry operators quasi property rights to the TLD 

registry in order to improve their incentives to invest in their businesses and maintain the 

quality of their TLD “brand”. These incentives are severely dampened if the registry 

operator knows that the rights to operate the registry can easily be lost when the contract 

expires. This implies that giving incumbents the presumptive right of renewal—e.g., the 

proposal to extend VeriSign’s contract to operate the .com registry—is procompetitive. 

Similarly, registries should not face barriers if they want to offer vertically related 

services, which will enhance economic efficiency. 

Having said all this, ICANN’s policies still unduly limit competition in the TLD 

market. ICANN has approved only a relatively small number of the applications for new 

TLDs it has received. There is no good rationale for such a restrictive policy. The 

market should determine the number of TLDs available and ICANN should only 

disapprove applications if there are legitimate technical reasons for doing so. 

Conclusion 

The current Internet governance arrangement should not be set in stone, because we 

are dealing with a fast-changing technological environment. At this stage, however, there 

does not seem to be a good reason to make any significant change. Despite ICANN’s 

defects, the Internet has flourished under the current Internet governance arrangement. I 

would not have that same confidence with respect to a multilateral governance 

arrangement. But, ICANN can be even more light-handed and pro-competitive in its 

approach to overseeing the DNS and that should be its goal. 

 

2

 Joint Statement from Affirmative Voting Board Members (available at 

http://www.icann.org/topics/vrsn-settlement/board-statements-section1.html).

MR. UPTON. Thank you. 

Mr. Feld. 

MR. FELD. Thank you. The question is not should we turn ICANN 

over to the U.N., nobody here thinks that, it would be disastrous. The 

number of ridiculous decisions that would be voted 147 to 3 within the 

first 2 weeks is staggering. 

The real question is, one, why, despite that, were there so many 

people so upset with U.S. involvement with ICANN and with the way 

ICANN is running itself that this was even something that a lot of people 
41

were seriously talking about leading up to the World Summit on the 

Information Society. 

This should never have gotten past suggestions batted around by a 

few folks in Geneva and some governments that are perpetually opposed 

to our interests. But even the European Union started to say, hmm, 

maybe it wouldn’t be a bad idea. When there is that much unhappiness, 

we need to look at why. 

The other problem is how do we get ICANN out of Internet 

governance. ICANN sadly has become what nobody wanted it to be, a 

really bad copy of the FCC making every mistake that the FCC has made 

on Internet time. We cycled through beauty contests for assignments of 

licenses, we are into the license renewal phase. I am looking forward to 

when we finally get the competitive options for TLDs. 

And it is astounding how we are doing the same thing over and over 

again. This shows up in the question of what does stability mean. The 

AM/FM radio and television standards have been very stable, we are still 

using 1950s technology. We were hoping that that was not the kind of 

stability that we were going to see in the Internet, but the problem is, 

when you have control over the generic top level domain contracts, then 

you have huge debates of what do we mean by stability. The incident 

with Site Finder, where VeriSign unilaterally introduced a new service, is 

a classic example of a problem of mixed engineering, policy, and 

economics. Did it make it very inconvenient for a number of ISPs who 

were relying on dot coms to work the same way forever? Yes, a lot of 

people spent a lot of time up late at night, when it went online 

unexpectedly. But nobody has figured out a good process for how dot 

com is going to innovate, so that we are not 50 years from now working 

with the same kind of registry/registrar services. 

We are also seeing real problems with the level of oversight that is 

being exercised by NTIA and by ICANN. On the one hand, everybody 

says they don’t want to regulate, and NTIA says we are not the court of 

last resort, but the contract between VeriSign and ICANN is pending in 

front of NTIA in a way it stands before no other government. And, of 

course, when there is a possibility that somebody else might fix your 

problems, you attract people who are interested in having their problems 

fixed. 

So what should we be doing? Because nobody wanted this 10 years 

ago. And it was around 10 years ago when we first started talking about 

this, and nobody supposedly wants it today. I think Mr. Twomey has 

been doing an excellent job, but I looked at the ICANN strategic plan, it 

is now up to $30 million, and people are talking about making 

enforcement mechanisms to it? You all know on this committee how 

much the FCC spends on an annual basis for enforcement, and that is one 
42

country’s issues. Are we prepared for ICANN’s budget to go from $30 

million, which it is now, to $250 million? 

We need to do a number of things, as I have suggested in my 

testimony. One, in making the world more comfortable, we need to first 

find an appropriate forum to talk about the issues that a lot of the people 

in the world want to talk about in Internet governance. Happily, there 

now is one, the Internet Governance Forum, which will be starting in 

Athens. We should go and participate there and quietly slip ICANN and 

the DNS out the back door at the first opportunity because it doesn’t 

belong in the Internet Governance debate. We need to resolve the 

relationship between ICANN and NTIA and be open and up front about 

it. If NTIA is going to be ICANN’s permanent oversight, we need to say 

it. If there is a way that NTIA is going to let go, then we need to figure 

out how we are going to let go. But we can’t keep having a discussion 

about NTIA letting go when we don’t really mean it. That gets people in 

the world very annoyed at us because nobody in the world likes a tease. 

Finally, there is ICANN. There is a real problem with accountability 

and representation. The vast majority of people who have ever actually 

dealt with ICANN from the bottom up agree with that. I understand Dr. 

Twomey’s remark that nobody has used the accountability mechanism 

that is right now at ICANN. There are two possible reasons for that, 

either because everybody is so happy and wonderful--which, given the 

public comments, is not the case--or because nobody thinks that that 

process is worth bothering with. 

So I would urge NTIA, as it reviews the contract, to force ICANN to 

re-examine its accountability mechanisms. Thank you. 

MR. UPTON. Thank you. 

[The prepared statement of Harold Feld follows:] 

PREPARED STATEMENT OF HAROLD FELD, SENIOR VICE PRESIDENT, MEDIA ACCESS 

PROJECT

Executive Summary of Prepared Testimony of Harold Feld 

Senior Vice President, Media Access Project

 The question is not “should we turn ICANN over to the U.N., as some have phrased 

it. We should not. Nor is the relevant question “does ICANN do internet governance 

well?” It doesn’t, because it shouldn’t be doing it in the first place. Unfortunately, 

ICANN has morphed into what nobody wanted, the Federal Communications 

Commission (FCC) of the internet. Worse, it does it badly, repeating every mistake ever 

made by the FCC in its 70+ years of history – on internet time. 

 The real questions, in my opinion at least, are “how to get ICANN out of the internet 

governance debate” and “how to make sure ICANN does the job it has to do better.” 

Answering the first question is significantly easier than the second. For the reasons 

explained below, I recommend the following: 
43

To Get ICANN Out of the Internet Governance Debate: 

• The U.S. should embrace the Internet Governance Forum (the successor to the 

World Summit on the Information Society) as the proper place to talk about 

“internet governance,” a category that excludes the technical management of 

the domain name system but includes the much more interesting things -- like 

cybercrime, censorship, and security -- most governments really want to talk 

about. Hopefully, we can remove ICANN as an attractive target for topics it 

has no business or interest in addressing. 

• NTIA should not be the “court of last resort” for ICANN decisions, a de facto

role it unwillingly occupies now because it can veto any important ICANN 

decision. 

• The USG should appoint someone other than NTIA to represent the U.S. in the 

GAC (or transfer the MoU to a different agency. Expecting the world to treat 

the NTIA representative in the GAC as just another government representative 

when the same person has veto power over ICANN decisions is simply 

unreasonable. 

• NTIA needs to either say up front that it will never fully transfer authority over 

the DNS to ICANN or it needs to set a clear path (with a projected time line) 

for the transfer to take place. Real dialog with concerned governments and 

other stakeholders cannot be premised on false positions or ambiguity on this 

vital issue. If full transfer is off the table, say so and begin discussions on how 

to make other governments as comfortable as possible with that reality. 

To Get ICANN Functioning More Efficiently:

• NTIA cannot act unilaterally on ICANN’s internal structures, but can use the 

MoU renewal and threat of rebid to force critical changes. 

• First and foremost, ICANN must have a meaningful accountability mechanism. 

If ICANN is the FCC of the internet, it needs a D.C. Circuit Court of Appeals 

to keep it from exceeding its mandate and to protect DNS users (meaning 

everyone) from arbitrary and capricious decision making. 

• ICANN needs some kind of mechanism to provide all stakeholders a way of 

participating. Right now, there is no formal way in which any person or entity 

can participate in ICANN and hope to influence ICANN’s process for 

developing policy if he or she does not fit into one of ICANN’s six arbitrary 

“constituencies.” Worse, these Constituencies were created based on which 

interests were present in 1998/1999 and had enough clout to force 

representation. The world has changed a lot since then, particularly with regard 

to who uses the internet. ICANN’s processes need to reflect these changes. 

• ICANN needs to stop pretending it doesn’t do regulation and learn to separate 

regulatory issues like competition policy from technical coordination. If 

ICANN is going to set tariffs and price caps, which is essentially what it does 

for domain names, it needs to stop navigating by the seat of its pants and figure 

out how to come up with real numbers that makes sense. 

I wish I had more specific solutions for ICANN’s problems. But NTIA has gotten 

good recommendations from a number of interested parties. I recommend starting with 

the comments of the Internet Governance Project (IGP), a consortium of academics 

interested in ICANN and internet governance. They have a lot of relevant knowledge 

and experience. 

 Which, I suppose, leads to one last recommendation. It is high time for ICANN and 

NTIA to stop circling the wagons against critics and start looking outsider its insider 

circle for advice. The days in which only engineers had useful things to say about DNS 
44

management, for better or for worse, are over. Public policy, economics, and law are as 

much specialties as engineering. Yet ICANN’s Board and many key supporters continue 

to insist that only engineering expertise matters because ICANN is only about technical 

coordination. Until ICANN recognizes that it does real regulation rather than just 

technical coordination, it will lack the expertise it needs to do its job properly. 

Good afternoon. My name is Harold Feld. I am Senior Vice President of the Media 

Access Project (MAP), a 35-year old non-profit public interest law firm protecting the 

public’s First Amendment right to speak and hear information from a diversity of sources 

in the electronic media. MAP is a member in good standing of ICANN’s noncommercial user constituency (NCUC). 

 The question is not “should we turn ICANN over to the U.N., as some have phrased 

it. We should not. Nor is the relevant question “does ICANN do internet governance 

well?” It doesn’t, because it shouldn’t be doing it in the first place. Unfortunately, 

ICANN has morphed into what nobody wanted, the Federal Communications 

Commission (FCC) of the internet. Worse, it does it badly, repeating every mistake ever 

made by the FCC in its 70+ years of history – on internet time. 

 The real questions, in my opinion at least, are “how to get ICANN out of the internet 

governance debate” and “how to make sure ICANN does the job it has to do better.” 

Answering the first question is significantly easier than the second. For the reasons 

explained below, I recommend the following: 

To Get ICANN Out of the Internet Governance Debate:

• The U.S. should embrace the Internet Governance Forum (the successor to the 

World Summit on the Information Society) as the proper place to talk about 

“internet governance,” a category that excludes the technical management of 

the domain name system but includes the much more interesting things -- like 

cybercrime, censorship, and security -- most governments really want to talk 

about. Hopefully, we can remove ICANN as an attractive target for topics it 

has no business or interest in addressing. 

• NTIA should not be the “court of last resort” for ICANN decisions, a de facto

role it unwillingly occupies now because it can veto any important ICANN 

decision. 

• The USG should appoint someone other than NTIA to represent the U.S. in the 

GAC (or transfer the MoU to a different agency. Expecting the world to treat 

the NTIA representative in the GAC as just another government representative 

when the same person has veto power over ICANN decisions is simply 

unreasonable. 

• NTIA needs to either say up front that it will never fully transfer authority over 

the DNS to ICANN or it needs to set a clear path (with a projected time line) 

for the transfer to take place. Real dialog with concerned governments and 

other stakeholders cannot be premised on false positions or ambiguity on this 

vital issue. If full transfer is off the table, say so and begin discussions on how 

to make other governments as comfortable as possible with that reality. 

To Get ICANN Functioning More Efficiently:

• NTIA cannot act unilaterally on ICANN’s internal structures, but can use the 

MoU renewal and threat of rebid to force critical changes. 

• First and foremost, ICANN must have a meaningful accountability mechanism. 

If ICANN is the FCC of the internet, it needs a D.C. Circuit Court of Appeals 

to keep it from exceeding its mandate and to protect DNS users (meaning 

everyone) from arbitrary and capricious decision making. 
45

• ICANN needs some kind of mechanism to provide all stakeholders a way of 

participating. Right now, there is no formal way in which any person or entity 

can participate in ICANN and hope to influence ICANN’s process for 

developing policy if he or she does not fit into one of ICANN’s six arbitrary 

“constituencies.” Worse, these Constituencies were created based on which 

interests were present in 1998/1999 and had enough clout to force 

representation. The world has changed a lot since then, particularly with regard 

to who uses the internet. ICANN’s processes need to reflect these changes. 

• ICANN needs to stop pretending it doesn’t do regulation and learn to separate 

regulatory issues like competition policy from technical coordination. If 

ICANN is going to set tariffs and price caps, which is essentially what it does 

for domain names, it needs to stop navigating by the seat of its pants and figure 

out how to come up with real numbers that makes sense. 

 I wish I had more specific solutions for ICANN’s problems. But NTIA has gotten 

good recommendations from a number of interested parties. I recommend starting with 

the comments of the Internet Governance Project (IGP), a consortium of academics 

interested in ICANN and internet governance. They have a lot of relevant knowledge 

and experience. 

 Which, I suppose, leads to one last recommendation. It is high time for ICANN and 

NTIA to stop circling the wagons against critics and start looking outsider its insider 

circle for advice. The days in which only engineers had useful things to say about DNS 

management, for better or for worse, are over. Public policy, economics, and law are as 

much specialties as engineering. Yet ICANN’s Board and many key supporters continue 

to insist that only engineering expertise matters because ICANN is only about technical 

coordination. Until ICANN recognizes that it does real regulation rather than just 

technical coordination, it will lack the expertise it needs to do its job properly. 

Background

 Since 1997, I have participated in the debate over ICANN and the broader “internet 

governance” concepts that ICANN has alternately sought to embrace or avoid. In that 

time, I served as an NCUC representative to the Names Council (now the Generic 

Names Support Organization), served as NCUC’s representative on the advisory board of 

the Public Interest Registry (the registry for the .org generic top level domain), 

participated in various ICANN processes, task forces, and meetings. Recently, however, 

I have been primarily as an observer rather than a participant. It is therefore from the 

perspective of an observer that I offer my testimony today. 

 In 2003, I wrote that ICANN was fundamentally flawed because it arose from a 

compromise among competing interests and could not possibly hope to satisfy them all.1

 

The traditional internet community, members of which continued to control important 

pieces of the internet’s infrastructure, wanted a narrowly focused organization that could 

act as a “heat shield” against intrusive political actors or business interests. Trade 

associations concerned with “cybersquatting” and other issues involving intellectual 

property wanted a convenient way to address their concerns. Businesses and 

governments wanted stability and a place to raise issues related to the name system. This 

activity attracted the interest of civil society advocates, such as myself, who were 

concerned that the central critical resource of the internet would fall under the 

unaccountable control of one or more interests indifferent to the impact of decisions on 

DNS on free expression, privacy and consumer protection. 

 

1

Harold Feld, “Structured to fail: ICANN and the ‘Privatization’ Experiment,” in Who Rules the 

Net? CATO (2003). 
46

 The resulting compromise structure that became ICANN survives by the happy 

chance that its dysfunctionalities have so far cancelled each other out. On the one hand, 

ICANN decisions are made by a Board of Directors accountable to no political authority 

and with no meaningful appeal of its decisions. On the other had, the process by which 

ICANN distills “consensus” is so cumbersome, complicated, frustrating and difficult to 

manage that little actually gets done. In some ways, this resembles the complicated 

system for passing laws envisioned in the Constitution, where our libertarian forbears 

compromised between Federalists like Hamilton and anti-Federalists who feared a strong 

central government. But frustration with this system does occasionally build to a point 

where the continued existence of ICANN is actually threatened. 

 Frustration with ICANN has precipitated political crisis twice in ICANN’s relatively 

brief history. The first time, in 2002, the ICANN Board pushed too hard and too fast to 

assert control over critical aspects of the Internet naming structure. Notable missteps 

included: 

• Endless contract negotiations between staff for new registry and registrar 

services that embodied the worst in unaccountable bureaucratic rulemakings; 

• Extension of director terms and elimination of promised accountability 

mechanisms such as electing Directors; 

• Threatening to withhold needed services to country code top level domain 

(ccTLD) root zone files unless the ccTLDs entered into binding contracts with 

ICANN; 

• Simultaneously seeking to embrace governments by redelegating the .AU 

ccTLD at the request of the Australian government while formally limiting the 

role of governments to the Government Advisory Committee (GAC); and, 

• Simultaneously embracing the dominant registry Verisign by modifying the 

agreement under which Verisign operated the “.com” domain while allowing 

industry rivals to leverage ICANN’s processes to impose onerous regulatory 

hurdles before Verisign could bring new services to market. 

 Throw in accusations of cronyism, a ballooning budget paid for by fees ICANN 

imposed on entities ICANN regulated, and increasing concern by foreign governments 

that the U.S. government and U.S. businesses were exercising too much control over the 

internet’s naming structure, and it is no surprise that the Department of Commerce faced 

serious pressure in 2002 to find another contractor to handle ICANN’s duties or 

otherwise force ICANN to change how it conducted business. 

 ICANN survived the 2002 crisis for several reasons. First and foremost, no one 

could come up with a better solution for how to manage the internet naming system that 

commanded anything close to consensus. Second, ICANN actively undertook steps to 

placate its most powerful critics. Several of the more controversial directors allowed 

their terms to end, bringing in much needed fresh blood an new perspectives. The hiring 

of Dr. Paul Twomey, an Australian with experience in government, non-governmental 

organizations and the private sector, as President likewise helped diffuse hostility from 

foreign governments and disgruntled stakeholders. ICANN provided a more formal role 

for the GAC, clarified to some degree its policy formation structure, and agreed to move 

forward (in a limited way) on some of the more pressing issues surrounding the DNS. 

 Nevertheless, problems continued. Notable flash points included the controversy 

over Verisign’s unilateral decision to introduce a new service, “Site Finder,”in September 

2003. Prior to the introduction of Site Finder, entering a non-existent URL ending in 

.com or .net returned a message that the requested domain did not exist (although 

numerous browser plug-ins would take the opportunity to redirect users to sites where 

they could register the non-existent name). When Verisign introduced Site Finder, 

entering a non-existing URL would direct the user to the Site Finder website. In response 

to widespread complaints that this new service at the registry level created potential 
47

instabilities, ICANN directed Verisign to withdraw Site Finder. Verisign replied that it 

would voluntarily withdraw the service, but maintained that ICANN had no authority to 

regulate its service offerings. Verisign also complained that to the extent it had failed to 

follow ICANN processes, this was because it was impossible to determine what the 

correct processes were. 

 The incident highlighted one of the chief problems for ICANN. On the one hand, an 

unannounced unilateral change at the registry level, particularly of the dominant generic 

top level domains, could potentially create serious issues for ISPs and others relying on 

the stability of the registry service. On the other hand, ICANN was not supposed to act 

as a regulatory body. Its supporters had argued time and again that requiring businesses 

to seek regulatory approval for new services would prove the death knell of innovation on 

the internet. And, if ICANN could regulate Verisign’s services, what were the limits of 

that authority? Was there any appeal for Verisign, or Verisign’s competitors, once the 

ICANN Board made a decision? 

 Another issue that caused world governments to take notice was the redelegation of 

Iraq’s country code, the .iq ccTLD. According to the official report by the Internet 

Assigned Numbers Authority (IANA)2

, the .iq ccTLD was never activated. In 2002, the 

original recipient of the .iq delegation was arrested for laundering money for Hamas. In 

2004, the Coalition Provisional Government requested redelegation of .iq. In 2005, the 

IANA redelegated the .iq ccTLD to the National Communications and Media 

Commission of Iraq. 

 In many ways, this decision was entirely unremarkable; ICANN has redelegated 

ccTLDs before. But the fact that this took place in secret (as other redelegation decisions 

had) in the context of deep international suspicion about the United States involvement in 

Iraq and U.S. control over the DNS aroused concerns that the U.S. had simply ordered its 

contractor ICANN to make a unilateral change to the .iq ccTLD. As many countries 

increasingly regard their ccTLD as both an aspect of their sovereignty and as critical to 

their commerce and information infrastructure, the fear that the U.S. exercised too much 

control over the DNS gained significant currency in the international community. 

 These fears were further stoked by the controversy surrounding inclusion of the 

proposed .XXX gTLD. In the summer of 2005, ICANN staff completed negotiations 

with the proposed .XXX registry and the Board of Directors scheduled a vote. This 

triggered protests from a number of governments through their representatives in the 

GAC. In addition, however, a significant number of opponents to the .XXX gTLD 

appealed directly to NTIA to “veto” any ICANN decision to include the .XXX gTLD in 

the root. 

 This put NTIA in a profoundly awkward position. As representative of the U.S. 

government to the GAC, it is entirely appropriate for the Administrator of NTIA (or 

delegated representative) to express opinions consistent with U.S. interests. Indeed, it 

would seriously disadvantage the U.S. if NTIA could not participate fully in the GAC. 

At the same time, no one can forget that the Administrator of NTIA is the only 

government representative in the world with the ability to veto a decision by the ICANN 

Board of Directors. This inevitably makes NTIA a target for lobbying by parties with 

interests before ICANN, and opens NTIA to accusations of “regulating by raised 

eyebrow” when it forcefully advocates for particular positions. 

 Meanwhile, between 2003 and 2005, ICANN continued to stumble along. While 

improved somewhat after the reforms of 2002-03, ICANN’s consensus and policy 

development processes still move incredibly slowly and inefficiently, with no clear 

understanding of the Board ultimately determines the “consensus” and no means of 

 

2

http://www.iana.org/reports/iq-report-05aug05.pdf. Among the many complicating factors in DNS 

management is the continued persistence of the IANA as a quasi-entity and quasi-function within the 

ICANN structure. 
48

appealing ICANN decisions. This lack of accountability, combined with an ever 

increasing bureaucracy and budget (ICANN now employs over 50 staff members and has 

a budget of $30 Million – not bad for a small organization dedicated to technical 

coordination), has bred considerable frustration among participants in the ICANN 

process. It is telling to me that, although I stopped significant participation in ICANN in 

2003, I could attend the meeting scheduled for December 2-8 in Sao Paulo and find 

familiar topics such as the implementation of internationalized domain names, the 

purpose of the WHOIS registry, and policy for including new gTLDs on a regular basis 

still under discussion. 

 Worse, because ICANN’s mandate remains ill-defined, it continues to attract the 

attention of interested parties and world governments interested in “Internet governance,” 

the very thing ICANN’s founders intended to avoid. ICANN has no mandate or expertise 

for how to bring the benefits of the internet to developing nations. Nor should it serve as 

a global police officer for internet content. There are many issues of worth considered 

under the rubric of “internet governance,” but ICANN is precisely the wrong place to 

settle them. On the other hand, if trade organizations can successfully ask ICANN to 

solve their intellectual property enforcement issues, why shouldn’t other interest groups 

or governments look to ICANN to solve what they consider to be the pressing issues of 

the day? 

 In November of 2005, the frustration with ICANN again boiled over, this time at the 

World Summit on the Information Society (WSIS). As part of the preparation for WSIS, 

a Working Group on Internet Governance (WGIG) examined both governance of the 

naming system and other issues loosely related as “internet governance.” Although 

WGIG itself was only intended as one part of a broader WSIS agenda, the primary focus 

of the WSIS meeting in Tunis turned to the efforts of various governments to move 

ICANN out of U.S. control and the efforts of other participants to use the dissatisfaction 

around ICANN to create real change in its operation.3 This, in turn, prompted the House 

of Representatives to approve overwhelmingly a resolution supporting continued 

management of the DNS by ICANN under the authority of NTIA. 

 After considerable negotiation at the WSIS meeting in Tunis, world governments 

agreed to accept the basic arrangements under which ICANN manages the DNS. In 

exchange, the United States agreed to participate in a new international “Internet 

Governance Forum” (IGF). The IGF was explicitly designed to include the wide range of 

issues relating to “internet governance” that fall outside the proper role of ICANN. The 

IGF will continue discussion on a wide variety of issues for five years. The first formal 

meeting of the IGF will take place in Athens, Greece on October 30, 2006. 

 On September 30, 2006, the existing Memorandum of Understanding (MoU) 

between ICANN and the Department of Commerce will expire. It is a forgone 

conclusion that NTIA will renew the MoU. The critical questions are under what terms, 

and with what expectations. 

DISCUSSION 

 In considering what level of oversight NTIA should exercise over ICANN through 

the MoU, and what level of oversight Congress should exercise over NTIA, it is 

important to distinguish between separate issues that are frequently confused. In recent 

debates the question is usually phrased as whether some sort of international 

intergovernmental organization, such as the U.N., should assume control of ICANN. 

 

3

A number of useful background pieces on WSIS, WGIG, and ICANN Reform can be found at the 

Internet Governance Project, http://www.igp.org. The IGP is a consortium of academics from a 

variety of disciplines relevant to the questions of internet governance. For a good, narrative 

background piece on WSIS and the WGIG see Andrew Updegrove, “WSIS, ICANN and the Future 

of the Internet,” available at http://www.consortiuminfo.org/bulletins/nov05.php#feature 
49

This question is easily answered “no,” at least by anyone concerned with preserving 

freedom of expression on the Internet. 

 But the easy answer to this question hides matters deserving of significant attention. 

It is often used as a distraction from examining the very real problems that still afflict 

ICANN and its processes. ICANN can attribute its survival to date more to the lack of 

any real alternative capable of commanding consensus than to deep satisfaction with the 

status quo. Or, in an oft repeated observation by Representative Markey (D-MA), 

paraphrasing Winston Churchill, “ICANN is the worst form of Internet governance ever 

conceived, except for all the other forms proposed.” 

 To dismiss international opposition to U.S. management of ICANN and concern 

about ICANN itself to the machinations of a few governments perpetually hostile to U.S. 

interests merely invites us to undertake the same cycle of argument again and again until 

something changes dramatically. When even usual allies of the United States at ICANN 

such as the European Union express concerns with continued U.S. management of 

ICANN, we should recognize a serious problem. We ignore the warning signals sent up 

at WSIS at our peril. 

 On the other hand, it is logical to ask why it matters whether governments are or are 

not satisfied with U.S. arrangement for management of the DNS. After all, at the end of 

the day, governments cannot force the U.S. to turn over its contracts or critical 

infrastructure if the U.S. declines to do so. 

 Two factors, however, mitigate against a such a unilateral approach. First, the 

debate over ICANN and internet governance takes part in a larger context of multilateral 

negotiations of importance to the United States. To respond to world governments with a 

simple “sucks to be you” is to invite retaliation – both subtle and gross – against U.S. 

companies and U.S. interests in other fora. 

 Second, a real danger exists in the form of “splitting the root.” At it’s heart, the 

DNS is simply a table that keeps a list of name servers that match domain names with 

internet protocol (IP) addresses used by machines to send internet traffic. Nothing 

prevents a country from creating its own master list and requiring by law that all ISPs 

within its boarders use this “alternate root” rather than the existing root. The problem 

arises if the “alternate root” has different information from the “authoritative root.” If 

this happens, Internet traffic intended for the same recipient could go to different 

recipients. Predictions for the outcome of such an experiment range from ultimately 

beneficial (a minority view) to catastrophic (somewhat more broadly held view) to a 

range in between. At the very least, the existing global nature of the internet would be 

altered in ways that would impose significant costs on U.S. businesses and on people 

everywhere trying to communicate with one another. 

 “Splitting the root” is highly unlikely, in no small part because doing so imposes 

significant costs on the country isolating itself from the broader internet. But, like the 

existence of nuclear weapons, the possibility of splitting the root provides an incentive 

for the United States to continue to engage other countries. 

 Finally, leaving international considerations aside, the temptation to give ICANN a 

“free pass” because no one can find a better alternative that commands sufficient support 

imposes very real consequences on DNS management and on the people and businesses 

that rely on the DNS (which, at this point, is just about everyone). An ICANN incapable 

of commanding legitimacy cannot create consensus or coordinate needed improvements 

in the DNS as intended. An ICANN that remains unaccountable is a recipe for autocratic 

and ill-informed decision making, cronyism, and bureaucratic waste. ICANN’s decisions 

can impact the civil liberties of millions of American citizens registering domain names 

in their personal capacities, and impose billions in hidden costs (both directly and through 

missed opportunities) on U.S. businesses. 

 At the same time, Congress and NTIA must approach reform of ICANN with 

considerable delicacy. Unilateral decisions to address concerns, however worthy, give 
50

credence to the charge that the U.S. has a privileged position in internet domain name 

management that others resent. 

 I present therefore only some very surface recommendations. The first center on 

specific changes Congress and NTIA can make outside of ICANN to defuse the 

legitimate concerns raised by other governments. The second set of recommendations 

address ICANN specific problems that NTIA should attempt to remedy via the MoU 

renewal process. 

Mitigating World Hostility

Embrace the Internet Governance Forum. It is understandable that, after WSIS, 

interested parties might resist the IGF as a continuation of the process by which hostile 

interests try to seize control of ICANN. But the IGF presents a tremendous opportunity 

to get ICANN out of the issue of “internet governance” by providing a proper forum to 

address issues of global concern. Too many people look to ICANN to resolve their 

“internet governance” problems – whether this means online gambling, digital inclusion, 

of “irresponsible” websites critical of totalitarian regimes – because there is no other 

forum in which to discuss these issues. Furthermore, because control of the DNS, the 

central bottleneck of the internet, offers a convenient means by which governments can 

hope to control content or levy fees similar to the manner which they have traditionally 

controlled and levied fees on broadcasting and telephony, it naturally attracts the 

attention of governments and others looking for global solutions to their perceived 

problem. While this last will continue to remain true for the foreseeable future, we can at 

least take steps to minimize the attractiveness of ICANN as a forum for “governance” 

issues by providing alternate fora for discussion. 

 U.S. participation in the IGF, particularly after the endorsement of ICANN by the 

WSIS participants, thus becomes the means by which the U.S. engages with other 

countries on critical internet issues as part of a multilateral process familiar to most 

governments and open to both civil society and private sector interests. By establishing 

IGF as the appropriate forum for these broad-ranging discussions, interest in leveraging 

ICANN as a forum for these discussions will diminish over time. While this will not 

satisfy those intent on attacking U.S. “dominance” of the DNS, it will help satisfy 

countries and interests whose chief frustration is the lack of a suitable forum to resolve 

pressing internet governance issues. 

 NTIA Must Not Be The “Court of Last Resort” For ICANN. When people are 

unhappy with ICANN, or with potential ICANN decisions, they go to NTIA. NTIA 

continues to maintain it doesn’t oversee ICANN. But because NTIA has the power to do 

so, and because NTIA is the U.S. representative to the GAC, it will continue to attract the 

attention of parties unhappy with ICANN. 

 NTIA should give serious consideration to eliminating its “veto right” over ICANN 

and content itself with the MoU renewal as a means of maintaining suitable oversight to 

safeguard U.S. interests. In addition, NTIA should either transfer the MoU to some other 

agency, or should delegate representation to the GAC to some other agency. 

Appoint someone other than NTIA to represent the U.S. in the GAC. As illustrated 

by the controversy over the proposed .XXX TLD NTIA’s continued involvement in 

ICANN as U.S. representative to the GAC while simultaneously exercising oversight 

creates significant concern about the nature of NTIA’s oversight. There is no reason why 

the same agency must both manage the ICANN MoU while representing U.S. interests. 

Transferring the U.S. GAC representation to another agency, such as the State 

Department, could eliminate this needless source of tension. 

 Let me stress that, as an American citizen, I feel that the current arrangement 

hampers the U.S.’s ability to represent me and my interests in ICANN. The U.S. needs a 

GAC representative that can forcefully represent U.S. interests without raising the specter 

that the U.S. is “really” sending a signal about what it will or will not permit. NTIA 
51

representation of U.S. interest in the GAC, while simultaneously holding the MoU, is a 

historic artifact we should end. 

NTIA Must Clarify When It Will Transfer Full Control to ICANN or Stop 

Pretending. In 1997, the United States proposed fully internationalizing the DNS under 

private sector management. In 1998, when NTIA picked ICANN to manage the root, it 

again promised to relinquish control over the root. Since then, however, NTIA has not 

explained when or under what circumstances it will carry out this promise to relinquish 

U.S. control. The “sense of Congress” resolution passed last year in response to pressure 

from WSIS strongly suggests that United States will never entirely relinquish control of 

the domain name system. 

 Bluntly, nobody likes a tease. If complete elimination of U.S. oversight of the Root 

is out of the question, NTIA should say so up front. We can have an honest and 

productive dialog with other countries on how to address real concerns about the U.S. 

role in DNS management if we delineate the boundaries of that conversation clearly. We 

cannot have productive dialog if it is premised on the assumption that we would some 

day accede to relinquishing all control of the DNS when we have no intention of ever 

doing so. 

 By contrast, if there are conditions under which the United States would feel 

comfortable relinquishing its current level of control, we should clarify what those 

conditions are and how ICANN can satisfy them. A clear set of milestones that ICANN 

must meet can provide a valuable road map and incentive for ICANN to reform itself. 

But NTIA should not commit to such a path unless it has confidence that it could, in fact, 

relinquish control under proper circumstances. 

Recognize that ccTLDs raise sensitive issues. As countries increasingly rely on their 

country code top level domains for commerce and communication, they become 

understandably nervous about exercising control over them. Sensitivity is further 

increased by the growing perception that a ccTLD is as much an attendant right of 

sovereignty (or, at least, recognition as a distinct economy) as the right to participate in 

the Olympics or have one’s own area code. 

 The United States would not be happy if the .us ccTLD were controlled by another 

country, even an allied country with whom we enjoyed close relations. The United States 

needs to find some way to satisfy other countries that it will not make unilateral changes 

to the ccTLD of a sovereign nation without the consent of that country’s government. 

Addressing ICANN’s Real Problems

 I have remarked in the past that ICANN recapitulates the FCC, but does it badly. 

ICANN has its own version of tariffing and price caps (for name registrations), its own 

version of license renewal hearings, complete with “beauty contest” style comparative 

hearings. In place of a “public interest” standard, it operates under a rubric of stability 

and consensus of the “internet community.” 

 Sadly, with great power has come no responsibility. ICANN lacks a Congress or 

D.C. Circuit Court of Appeals to ensure that its decisions are not arbitrary, capricious or 

contrary to law. Its Board of Directors, the equivalent of the FCC Commissioners (whose 

open meetings and written opinions increasingly come to resemble FCC opinions, with 

concurring statements and dissents), serve as volunteers on a part time basis. This gives 

enormous latitude to ICANN’s full time professional staff to set policy through contract 

negotiation with the entities ICANN regulates and through the recommendations to 

Directors that Directors have neither the time nor expertise to consider. 

 The question is not whether ICANN directors or staff are good people trying their 

best to do what’s right in the world. On the contrary, I believe they are good people 

trying to do their best in an impossible job. The job is “impossible” because ICANN as 

currently constituted either does too much or too little. ICANN either needs to jettison its 

regulatory functions or complete its transformation into a regulatory body capable of 
52

regulating properly. Since the former is impossible at this point, I suggest developing 

ways to do the later. 

 Two things make it impossible for ICANN to reduce itself to the narrowly focused 

non-regulatory body it wants to be. First, voluntary coordination of the kind envisioned 

by ICANN’s founders and modeled on such entities as the Internet Engineering Task 

Force (IETF) worked because it they were voluntary. No one needed to follow a 

standard set by the IETF, or get permission from IETF first before writing code. Once 

participation in ICANN became mandatory for inclusion in DNS, and once ICANN 

decisions became as binding as agency regulations, the entire dynamic changed. 

 Second, although ICANN publicly maintains that it has no intention of managing 

“internet governance,” its commendably narrow focus became laughable as soon as 

ICANN also became responsible for protecting trademark rights. There is nothing 

remotely technical about using control over the Domain Name System to resolve 

complaints about whether this name or that name conflicts with a trademark. There is 

nothing technical about requiring would be registrars to have “sunrise” periods in which 

trademark holders can register names in the new registry before anyone else. 

 As ICANN has discovered, doing a little bit of policy is like the old cliche about 

being a little bit pregnant. ICANN now finds itself bedeviled by a non-stop stream of 

requests to resolve this issue or that. Law enforcement agencies want changes in how 

registries manage the “Whois” database to facilitate law enforcement – a move opposed 

by civil liberties organizations concerned with privacy issues and protecting speakers 

from retaliation by oppressive governments. After all, if ICANN can resolve problems 

for intellectual property holders, why can’t it resolve problems for law enforcement or 

anyone else? 

 To illustrate by analogy, phone numbers in the United States are administered by the 

FCC as part of an international system called the North American Numbering Plan 

(NANP). NANP is a voluntary coordination between 19 different North American 

countries administered by a private company (Neustar). It works without fuss because 

each country maintains control of its own phone numbers and Neustar plays a ministerial 

role in facilitating coordination between the countries. 

 If countries participating in NANP decided to use it to take phone numbers away 

from people, required every government to pass through binding contracts to each phone 

number user to abide by conditions set via the NANP, or otherwise leveraged control of 

phone numbers, you can imagine it would attract quite a bit of interest all of a sudden. If 

those opposed to indecent speech over the telephone thought they could circumvent the 

Supreme Court’s decisions protecting “dial-a-porn” by having NANP include a 

“voluntary” provision in every phone number agreement, they would show up to lobby 

NANP. So would those opposed to hate speech or other “inappropriate content.” And 

with them would come those opposing such new regulation, or seeking additional 

regulation. 

 Even when avoiding such clearly non-technical concerns as trademark enforcement, 

ICANN finds itself involved in traditional competition and industry regulation questions 

that have nothing to do with technical stability. For example, to promote competition in 

the domain name registration business, ICANN required that TLD registries be 

artificially separated from businesses that register domain names (registrars). This may 

have made good economic sense (a debatable point), but it did not increase technical 

stability. To the contrary, it introduced an entirely new set of coordination issues tied to 

this split between the purchase of a domain name by a consumer and the actual 

registration of that name in the registry database. 

 One competition/consumer protection decision begets another. At the time Verisign 

and ICANN entered into an agreement in 1999, they set the “wholesale” rate for .com 

registrations (what Verisign charges registrars) at $6/name. No economic justification for 

this figure has ever been given. It was what ICANN and Verisign (and NTIA) agreed to 
53

in private negotiations. The recent agreement between Verisign and ICANN renewing 

Verisign’s control of .com for another 6 years would allow Verisign to raise the 

wholesale rate by 7% per year in four of the six years. Unsurprisingly, registrars have 

protested the decision. 

 Is 7% justified? Is it too much? Not enough? This is a classic tariffing question in 

rate-controlled industries. But ICANN has no process or expertise for setting or 

challenging a price. The process of rate setting, which impacts millions of .com 

registrants around the globe, takes place in private between staff for ICANN and staff for 

Verisign. 

 Meanwhile, other registry contracts raise new questions. Is it fair to treat .com and 

.net differently, because they remain the dominant registries? Recently, ICANN 

announced that it will permit new registries to have “variable pricing” under which a 

registry can set a different rate for a specific domain name or class of names, or could 

raise the price of a domain name after a registrant has invested in significant resources in 

creating good will in the name. 

 This has understandably created concerns. Some names may appear intrinsically 

valuable, such as “wine.com” or “sex.com.” But should registries be the ones to capture 

that value? After all, the right to run a registry is a valuable license handed out by 

ICANN on an exclusive basis. Does it constitute an “unjust enrichment” to allow a 

registry to profit in such a way? By contrast, why should whoever proved lucky enough 

to register “wine.com” first enjoy all of the benefit? Why shouldn’t the registry, which is 

creating value by creating the registry, be allowed to price its registration services under 

free market principles? 

 Worse, what about name renewals? The name “mediaaccess.org” had no particular 

value when MAP registered it. But if the Public Interest Registry, which controls .org, 

announced that it was going to assess new fees or cancel the name, MAP would pay those 

fees. MAP would not pay because PIR was suddenly adding new value, but because 

switching to another name would prove far more costly. Should ICANN restrict such 

practices? Should it permit them in new registries, but not in the dominant gTLDs such as 

.com and .net? 

 Finally, as the Site Finder incident demonstrates, even technical questions about 

how new registry services impact stability raise non-technical concerns. When and how 

registries should be allowed to innovate cannot be resolved without balancing a host of 

economic and political questions. 

 Unfortunately, I have no prescription for ICANN’s overall ills. It is simply too late 

to eliminate the Uniform Dispute Resolution Process (UDRP) and revert to an 

organization providing only voluntary technical coordination. Even if such an 

arrangement were in the feasible set (and I have no illusions on that score), UDRP has 

become too widespread and imbedded in the web of contracts governing the DNS. And, 

even if UDRP were eliminated, the competition issues would remain. 

 If it is impossible to pare back ICANN to a non-regulatory body, then it needs to 

become a regulatory body that actually works. ICANN ending up as the FCC for the 

internet is pretty dreadful, but it beats ICANN becoming the equivalent of the 

International Olympic Committee or some other wholly unaccountable behemoth. 

 As numerous individuals, organizations, and academics have repeated time and 

again, ICANN cannot function without legitimacy. To gain legitimacy, it needs 

accountability. It gains these by having straightforward, transparent processes and some 

oversight authority that ensures that ICANN decisions do not exceed ICANN’s mandate 

and that ICANN decisions have at least some rational basis to them. 

 ICANN also gains legitimacy by providing some means by which participants feel 

they are represented in the decision making process, and that participation in the process 

can have impact. While I do not suggest that ICANN must fulfill its 1998 promise to 

permit election of directors by internet users, it needs something better than the current 
54

processes that seeks to fit all possible interests into 6 “Constituencies” with no formal 

process for participation by individuals. 

 I have no neat solution to this problem either. But NTIA can at least attack the 

accountability and representation issues through the MoU renewal process without 

tampering with ICANN’s internal deliberations on pending matters. The Internet 

Governance Project, a consortium of interested academics, has filed comments with 

NTIA providing recommendations on how NTIA can use the MoU process to address the 

accountability and representation problems.4

 I hope that NTIA gives these and other 

proposals serious consideration when addressing the MoU renewal. 

CONCLUSION

 In examining ICANN and internet governance, this Committee and NTIA cannot 

content themselves by asking whether ICANN as it exists today is better than ceding 

authority to the U.N. Of course it is. To set the question up in such a fashion ignores the 

real problems that have made even the U.N. an attractive alternative to ICANN to some 

parties. 

 Instead, Congress and the NTIA need to address a different question, can we turn 

ICANN into a non-issue? I believe it is possible to do so by refocusing the broader 

debate on “internet governance” in an appropriate forum (the IGF) and getting ICANN to 

function in a way that stakeholders find acceptable. This last creates very real challenges 

for NTIA, particularly in light of the desire to shift “internet governance” questions away 

from ICANN. But failure to get ICANN to work in an accountable and representative 

manner will make it impossible to refocus the “internet governance” question. As long as 

ICANN remains both unaccountable and unconstrained, it will continue to attract parties 

looking for ICANN to solve its problems. 

MR. BOHANNON. Chairman Upton, Chairman Stearns, members of 

the subcommittee, I appreciate being able to testify here today on the 

important role that ICANN plays in promoting confidence and stability 

on the Internet. 

As the principal and the largest trade association of software and 

digital information companies, we have supported and carefully 

monitored the role and activities by ICANN since its inception, and we 

have seen firsthand how ICANN’s policies contribute directly, as 

Chairman Stearns alluded to, combating online copyright and trademark 

infringement, promoting civil protection, combating cyber squatting, 

phishing, criminal acts on the Internet, including the pernicious effects of 

spyware. And those are all detailed in my testimony, I am not going to 

repeat them here. 

ICANN plays that critical role because it sets the policy for domain 

names and IP addresses and the “Whois” databases. And that database 

and that information has been accessible to the public since the very 

inception of the Domain Name System. 

As we are focused here at the end of the month on the renewal of the 

MOU, it is our view--and I think the view is held widely by others in my 

industry and others--that the focus needs to be on the Department of 

 

4

Available at http://internetgovernance.org/pdf/NTIAcomments-IGP-FINAL.pdf.
55

Commerce’s future relationship with ICANN, and not entertaining 

speculative ideas about new entities or wholly new arrangements. Our 

belief is that it is vitally important that when the MOU is renewed, that 

the contractual obligations between ICANN and domain name registrars 

and registrees be fully and vigorously enforced. 

More concrete steps need to be taken to improve the accuracy of 

contact data in the “Whois” database, and ICANN should commit to the 

preservation of public access to “Whois” data so that its many beneficial 

uses can be maintained. 

For that very reason, last week SIIA and others joined with other 

trade associations, companies and other nonprofit groups in sectors 

ranging from banking, hotel, entertainment, online retail, technology and 

others to communicate this message to Mr. Gutierrez. And Mr. 

Chairman, I would ask that in addition to my testimony, this letter be 

introduced into the record. 

MR. UPTON. Without objection. 

[The information follows:] 
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MR. BOHANNON. The concerns in this letter, and others expressed 

earlier this year, were prompted when in the first step of a policy 

development process a vote was taken to narrow the purpose of the 
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“Whois” database. That narrower purpose would have basically covered 

only a very small proportion of the current critical uses of publicly 

available “Whois” data. And many of the ways that we have used that 

data to fight intellectual property infringement, fight phishing and fight 

online crime would basically be eviscerated if that policy proposal went 

forward. 

The reaction, even at the beginning of this year, was just incredible. 

And even the American Red Cross expressed its concerns that the impact 

of this vote on its ability to shut down fraudulent fundraising sites, such 

as those that sprang up within hours after Hurricane Katrina that hit the 

Gulf Coast last year, would be very much impeded. 

Do we think ICANN is listening? I think despite the earlier steps 

this year, we think that some progress is being made. There does appear 

to be some backing away from the concept that the only purpose of 

making contact data available is to resolve just simple technical 

problems, which, of course, flies in the face of the role of the “Whois” 

database since the inception of the Domain Name System. 

We are certainly hopeful, and we certainly want to commend the 

leadership of the Department of Commerce, Acting Administrator 

Kneuer and his team, as well as FTC Commissioner Leibowitz, for 

stating in our view a very firm view of the U.S. Government about the 

role of the “Whois” database, both at the last ICANN meeting and 

otherwise publicly. 

But preserving public access to “Whois” is just one issue. It is also 

essential that we dramatically improve the accuracy and the liability of 

the data that we find there, and that problem has been amply 

documented. In a study that the GAO released last December, it 

estimated that the “Whois” data, in over 5 million domain names in dot 

com, dot net, and dot org, is either obviously false, incomplete, or simply 

could not be found. This is simply too high a level of inaccuracy which 

undermines the value of this important tool for all users of the Internet. 

This hearing comes at a critical juncture, two weeks now before the 

end of the current MOU, and the relationship of the U.S. Government 

and ICANN. In the last renewal of the MOU in 2003, ICANN pledged 

to take steps to improve the accuracy of “Whois” data. It promised to 

put into place an enhanced system for ensuring that domain name 

registrars and registrees live up to their contractual obligations, including 

keeping “Whois” data publicly accessible. While some steps have been 

taken, and we do want to acknowledge those, ICANN’s own report 

shows that the system does not work and the steps that have been taken 

simply are not operating in the way they were designed to do. 

And I think this boils down to a very simple challenge, which is that 

ICANN has consistently shied away from taking on the more difficult 
60

task of requiring registrars and registrees to take some proactive steps, 

any proactive steps to verify the information they are collecting from 

those who want to register a domain name on the global TLDs. 

So Mr. Chairman, we want to acknowledge and confirm the 

important role that ICANN plays in promoting stability and confidence. 

And while some suggest that this could be done by another organization, 

either intergovernmental or otherwise, with all due respect, we do not 

agree. We think the more appropriate thing is to focus on improving 

ICANN’s role. Let’s not start over. 

And I will be glad to take any questions you may have. 

[The prepared statement of Mark Bohannon follows:] 
61

PREPARED STATEMENT OF MARK BOHANNON, GENERAL COUNSEL AND SENIOR VICE 

PRESIDENT, PUBLIC POLICY, SOFTWARE & INFORMATION INDUSTRY ASSOCIATION
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MR. UPTON. Well, thank you. And I certainly agree with your 

closing statement that we want to improve what we have today. And I 
73

just want to say before I start, because we are expecting votes on the 

House floor soon, if we do this right and maintain a tough gavel, I think 

we might be able to get all our questions in before the votes start. But I 

want to thank and commend Kelly Cole, our diligent staffer; this is the 

last hearing that she will be on this side of the dais. And she has been 

worth her weight in gold, and she is off to greener pastures--I get an 

extra two minutes, right, Kelly? 

MR. STEARNS. Mr. Chairman, I will just say a few words also. 

Kelly has helped me on my subcommittee, so I also want to congratulate 

her in her transition. 

And when a person takes her last night in an Air Force airplane, what 

they do is all the crew douses that person with water, but we won’t do 

that with Kelly; we won’t give her that cold chill, we will give her the 

warmest greetings as she leaves. 

MR. UPTON. We will save that for Coach Carr after he beats 

Wisconsin this weekend. 

Okay, the clock has started. 

Thank you all for your testimony. And again, Mr. Bohannon, I 

certainly agree, how can we improve this process? I don’t think anybody 

here on this panel wants to see the U.N. put out their air balls and exert a 

great influence on the process. But I will tell you, the question that 

comes to mind right away for me is, obviously, the story that broke this 

week that the MOU is going to be extended. There weren’t a lot of 

details that were given, but I would note that that is yesterday’s news. 

The 30th is next week, and I am just wondering what details the two 

of you might be able to give us in terms of how long an MOU we are 

expecting? What changes do you see, particularly in light of some of the 

testimony by the other four panelists, in terms of how can we improve 

the system. What light can you shed on the process today? And 

remember, you are not under oath, so you can tell us. No bad 

consequences will happen. 

MR. KNEUER. Oath or no oath, I will be truthful. 

Yesterday, at a hearing at the Senate Commerce Committee, I was 

asked this question, will there be an extension of the MOU, and the plain 

answer is yes, we intend to extend our Memorandum of Understanding 

with ICANN to help continue this transition. Each Memorandum of 

Understanding that we have executed with ICANN has been publicly 

available on the Internet, and I am sure this will be no exception. We 

conducted this consultation over the summer to look at how has ICANN 

progressed through the last version of the MOU? What are the issues 

that are most outstanding? And I think the comments we have heard of 

the panel this afternoon reflect very similar issues to things that we 

heard. 
74

MR. UPTON. And let me interrupt you for one second. I would 

guess that all four of you submitted comments, right? You are among 

the 700 that they reviewed; is that right? Anybody not submit 

comments? Mr. Feld. Two, Mr. Lenard and Mr. Feld did not submit 

comments. Okay. Go ahead, I am sorry. 

MR. KNEUER. Clearly the areas that people had continued concerns 

are transparency and accountability. Over the last iterations of the MoU, 

the progress that ICANN was making was largely institutional, 

organizational, getting staff in place, having budgets in place, having 

contingency plans, those sorts of things. That being said--and they have 

made enormous progress in that regard--that being said, the ultimate goal 

of having a lasting institution that has well understood and well 

articulated processes in place for accountability and transparency is 

ongoing. 

And those are the sorts of things that I believe that we expect to 

memorialize in our ongoing agreement so that we can continue this 

transition, that we can have in place an institution that we all collectively 

have confidence in, that it will be lasting and stable and secure and will 

be able to carry out this function with the confidence of its constituents. 

MR. UPTON. For how long? 

MR. KNEUER. In the past, we have done these for 1 year, for 3 years. 

I think what we want to be mindful of is give it enough time that they can 

actually make progress, we don’t want it to be so short in time that 

nothing realistically can be accomplished; but at the same time, we don’t 

want it to be so long that it appears to be interminable. So those are the 

sorts of things that we are still discussing, but I would imagine it would 

be somewhere in those sorts of timeframes that we have had in the past. 

MR. UPTON. Probably at least 3 to 4 years? 

MR. KNEUER. I think 4 would be longer than anything we have done 

in the past, the last one was 3. But I think they have made significant 

progress, so I think we can look for a timeframe that, as I said, gives 

them an opportunity to get some real concrete work done, but is not so 

long as to--and also recognizes the fact that they have made considerable 

progress--this process has been going on for an extended period of time--

something that indicates a clear path forward. 

MR. UPTON. You didn’t tell us a lot in terms of details. 

Dr. Twomey, can you tell us a little more? Knowing that you came 

the farthest, right? Didn’t you come from halfway around the world for 

this? 

DR. TWOMEY. Actually, in some sort of bizarre post Cold War 

phenomenon, I flew in from Moscow to attend, being in some key 

conferences there. 
75

Chairman, part of my response would be that we are having these 

hearings today, not on the 30th, and so this discussion is clearly 

underway. But I wanted to reinforce what Mr. Kneuer has said. ICANN 

has achieved, I think, a lot in the last 3 years in terms of the many things 

in the existing Memorandum of Understanding for organizational 

development and strength and what have you. Part of its commitment 

going forward is also that it takes much more of its own sense of control, 

a sense of its own purpose, a sense of its own destiny if you like. I make 

that point because the board itself is considering a new set of principles 

for private-sector management and operating principles which are 

directed to many of the things that members have actually pointed out. 

The board itself has been listening very closely to the feedback from 

members of the community over the last 18 months, and things like 

transparency, things like high standards for accountability and other 

issues are very important to the board. 

I did make the point in my opening statement that I think there is a 

lot of transparency in what ICANN does, but it needs to maintain the 

various high standards, and the board is committed to that. Separate to 

any discussion in an MOU, the board itself is working on a set of 

principles in response to what it has heard from the community to direct 

where it goes directly towards these things. In other words, it doesn’t 

need the United States Department of Commerce or anybody else to tell 

them what it needs to do to achieve its task, it listens to its community 

and is really working on that. 

But we have also been in discussions about the nature of the sort of 

relationship we need to go. We recognize and value the role that the 

Department of Commerce has played in the MOU process in due 

diligence about the growing sense of ICANN and the development of 

this form of Internet governance, if you like. And we do recognize that 

we will have some arrangement going forward; I think it will be of a 

slightly different nature in the detail than the previous ones. 

And the timeframe I think is something that we are also still 

considering. I couldn’t give a straight answer on that, the consultation of 

the board is still underway. But we recognize the things that have been 

put forward in the consultation process, in the consultation process that 

we have taken, we think they are important. But a lot of those things I 

think that we, as a board, just want to do ourselves. 

MR. KNEUER. Mr. Chairman, if I could just add to that, saying that I 

didn’t give much information. We will have all the information when we 

are done. 

MR. UPTON. Okay. Ms. Eshoo. 

MS. ESHOO. Thank you, Mr. Chairman. 
76

I have two questions--well, I have lots of questions, but I don’t have 

a lot of time and the bells are going off. 

There are two questions, and I want to direct them to Mr. Twomey, 

but I want to thank the entire panel for your testimony and your work, 

some I know and have worked very closely with. 

And Mr. Feld, I am glad that you are here today. You have a lot on 

your mind, and it has been building up over 5 years I think, right? I am 

not diminishing it, really, but thank you to everyone. 

So to Dr. Twomey, I have heard--and I have made references to this-

-complaints about ICANN’s lack of transparency. Transparency is a big 

word, you know, and a lot of things can come under that umbrella. But 

particularly with regard to the contracting processes and the ability of 

affected parties and the public to provide input into these important 

agreements. And there is a protection of the contract. VeriSign has a 

contract; they are proud of the work that they have done. But, you know, 

the mark of humanity is that no one is perfect. No matter what it is, no 

matter how hard we work to refine things and recognize, it is like 

punching a pillow, you put a dent in it and there is something else that 

comes up. 

My sense is is that the way the system works is that you really don’t 

have to pay very much attention to complaints. And that is my sense 

from what I have gathered. So tell me what you and your contractors are 

doing to provide the best service possible. And, in particular, are you 

using technology to handle these things? You make reference in your 

testimony to how many things are posted and whatever, but I don’t know 

if that really speaks to it, you know? 

And my other question is, and you touched on the London School of 

Economics, but they issued their report on your GNSO, and the report 

says that that the GNSO must have greater transparency and enhance its 

ability to reach consensus positions, and that you have to respond much 

more quickly--I think the "much" was underlined--to your constituents. 

So what are you doing about these recommendations? 

DR. TWOMEY. Good set of questions, Congresswoman. 

Come to the first one, your point about transparency, it is quite--you 

are right, this is a very difficult topic. I think our processes around these 

contracts, in particular, where there has been feedback on the sense of 

not being transparent. These contracts have been out publicly, they have 

been posted. 

MS. ESHOO. Well, if I might. It is one thing to be able to read the 

language of a contract, it is another thing to be able to go somewhere and 

talk to someone about it. It is not just reading something. 

DR. TWOMEY. I agree with you. But this is my point, I was saying 

about accessibility. I think one of the things we need to work more on is 
77

it is not just a question of having this material posted, but you have to 

make it more accessible for people to understand. 

MS. ESHOO. So if I have a complaint about it and I send something 

to you, how do you handle it? 

DR. TWOMEY. Well, we have two ways of handling the complaints. 

First of all, there are complaints handled through staff processes, but we 

also have an independent ombudsman, and if people have future 

complaints they can take those complaints to the independent 

ombudsman. 

MS. ESHOO. Do you have backlogs on it? Are you all up to date? 

Does anyone ever meet with anyone, with organizations? 

DR. TWOMEY. Yes. We have a process of meeting with people 

throughout the year, but we also hold three very large public meetings a 

year where member constituencies all come together. The ombudsman, 

for example, is available the entire time there, he has an office available 

for people to come and talk, staff and board members and others as well. 

I mean, we could keep-- 

MS. ESHOO. Well, see, I think that there is a lot of quality and a lot 

of important growth and management and all of that, the organization. I 

think you have a ways to go. You know what we call it? Constituent 

service. And you know what? None of us would be sitting up here 

unless we really gave good constituent service because they are not so 

much into how we voted on the previous question, but rather how we 

have responded effectively to what people are saying to us. 

DR. TWOMEY. I would agree completely, and we are looking to 

dedicate more resources on this. But I think as you, in Congress, would 

know more than most--more than all, really--you can have open 

transparent processes, you can go through a set of feedback, eventually 

you have to make some decisions as a board, and often people who don’t 

like the decision will often criticize your own process. 

MS. ESHOO. Well, if that is where you start from, it is going to affect 

your process. What about the London School of Economics? 

DR. TWOMEY. Their review process has just been made public; they 

just finished their independent review. And members of the board and of 

the Generic Names Supporting Organization’s own constituencies are 

now coming together as to how to actually implement some of those 

recommendations and discuss those recommendations. 

So the response there will be bottom up, it won’t be from myself or 

the board down saying this is the answer. We will be listening to further 

consultations on those recommendations. 

MS. ESHOO. Who is going to consult with you on them? They are? 

DR. TWOMEY. They have given this report to our community. Our 

Generic Names Supporting Organization and the board are going to 
78

convene a process for handling that report and figuring what the way to 

respond to it should be. Again, it will have to be through an open 

consultation process. 

MS. ESHOO. It seems like if you could have a more direct punch to 

what you do, but that is just my observation. 

Thank you, Mr. Chairman. 

MR. UPTON. The Chair recognizes Chairman Stearns and will just 

announce votes have started in the House, Mr. Stearns will continue to 

chair. 

MR. STEARNS. [Presiding.] Thank you, my colleague. I am going 

to get through my 5 minutes. 

And Mr. DelBianco, this is a question for you. Is there a threat in 

letting ICANN go independent too early, that would open it up to a 

takeover by another body such as the United Nations? Just yes or no. 

MR. DELBIANCO. The answer is yes, Mr. Chairman. 

MR. STEARNS. Okay. Can governance be separated from the 

technical functions of integrity and availability when both are necessary 

to address certain cyber crimes? 

MR. DELBIANCO. Cannot be separated. We need to do all--we need 

to do availability and integrity. And not just as ICANN as manager, the 

FTCs and the similar FTCs in other nations also have to participate in 

protecting consumers. 

MR. STEARNS. How do we do that? How do we get the nations to 

participate? 

MR. DELBIANCO. We cannot convince other nations to legislate in 

the same way we do on consumer crimes, on spam, on spyware and on 

regulating of content. All we can do is expect them to respect our wishes 

to cooperate in law enforcement efforts, and that is one of the key 

reasons that the “Whois” data has got to be open and accurate. As 

Chairman Leibowitz said yesterday, if the FTC had to go into another 

nation and beg a registrar there to provide the information needed to 

investigate a fraudulent website, they would have very little to stand on if 

ICANN were not enforcing the accuracy of the “Whois” database. 

MR. STEARNS. Do you think we have to develop a cross-border 

fraud bill in the United States that would have some accountability and 

have some way to enforce it? 

MR. DELBIANCO. I think the chances to do that on fraud are far 

better than the chances to do it on content regulation. We will have too 

many differences when it comes to content or censorship, but on fraud I 

think it is promising. 

MR. STEARNS. Do you think we should try to pursue then today this 

cross border fraud, on the fraud, but leave the content to a later date 

then? 
79

MR. DELBIANCO. Yes, Mr. Chairman. 

MR. UPTON. Do you think there is any hope to ever do any in 

content, or is it just because there are so many cultural challenges here 

that--I guess we can’t. 

What is the biggest threat of the Internet if the abuse of domain name 

practices are not stopped? 

MR. DELBIANCO. As the integrity of being able to get to the Internet 

website you originally intended begins to erode, businesses lose their 

ability to control the consumer experience, consumers begin then to lose 

confidence that that site hasn’t been redirected or that is not a fraudulent 

website. It will have an ancillary effect as well, because advertisers--and 

again, advertising revenue really drives a lot of what happens on the 

Internet today--advertisers will lose the effectiveness of their impressions 

if fewer and fewer of them are reaching the target audience they were 

intended for. 

MR. STEARNS. Mr. Lenard, you state that ICANN has had a 

relatively light touch. What do you think a multi-lateral organization, if 

they were put in charge of the Internet, is likely to do, perhaps in terms 

of regulation or that type of thing? 

MR. LENARD. Well, obviously, one can hypothesize, but first of all, 

other nations --for all the regulation we sometimes don’t want that we get 

here--other nations just have a much more regulatory approach, many of 

them less faith in the free market. And I think you would have lots of 

kind of what we would call rent seeking behavior, behavior between 

various countries trying to use the procedures to try to gain competitive 

advantages for themselves, and I think that would be ultimately quite 

damaging. 

MR. STEARNS. If we want to promote innovation and investment by 

the competing registry operators and reduce regulation, do we invite a 

greater threat from those who want a multilateral organization to control 

the Internet? 

MR. LENARD. No, I don’t think so. I think we need to have procompetitive policy. ICANN needs to have as pro-competitive a policy as 

possible, that will stimulate investment. And I don’t think that 

necessarily will invite, you know, more interest in a multilateral 

organization. 

MR. STEARNS. Mr. Bohannon, how do consumers benefit from the 

“Whois” database, and does it apply to entities outside the United States? 

MR. BOHANNON. Thank you, Mr. Chairman. 

Let me answer the second part first. The “Whois” database supplies 

right now to all the domain names registered in any of the generic top 

level domains, dot com, dot net, dot org, et cetera. There are separate 
80

“Whois” databases for all the country code TLDs, and that is not really 

the subject of what my testimony was about. 

Consumers benefit because, quite frankly, when they get an e-mail 

that looks like it is legit, they can go check out the domain name, verify 

independently who it is that they are dealing business with. And when 

they submit a complaint to a consumer protection authority, whether it be 

the Attorney General or the FTC, the FTC can do the same thing, it can 

help identify whether, in fact, it came from a legitimate source or not. 

MR. STEARNS. How does fraud affect your members and their 

ability to conduct business, consumers and other businesses who want it? 

MR. BOHANNON. It occurs a number of ways. My testimony 

outlines that certainly for our industry, the ability to go after pirates of 

our intellectual properties is absolutely four square in the interest of our 

members and something that we are daily in the role of working together 

to try to figure out how we go after this. 

But my members, many of whom are well known brands, are also 

the victims themselves of phishing attacks to their consumers who claim 

that they are representing a product--people out there representing that 

their products are a certain company’s product, which is not true. So 

both on the side of protecting intellectual property, as well as combating 

fraud and phishing, my members need to make sure that the system by 

which we can know who we are doing business with is both something 

we can rely on, that it is accurate and up to date, and that we have the 

tools to use it freely and in real-time. 

MR. STEARNS. Can fraudulent websites be detected or prevented 

with tools other than “Whois” database? 

MR. BOHANNON. We have never said that the “Whois” database is 

the silver bullet, but we are not aware of any effort to go after either an 

intellectual property pirate or a scam artist that doesn’t first use “Whois”. 

Once you have that kind of information, you can then use other tools, 

both technology, legal self-help. But we are not aware of anything that 

doesn’t first require us going to the “Whois” database to double check 

where it is. 

MR. STEARNS. The subcommittee is going to temporarily adjourn 

until we vote, and we will be back. There are several other members that 

wish to ask, so we appreciate your forbearance. 

[Recess.] 

MR. STEARNS. The subcommittee will come to order. And 

Mr. Green is recognized. 

MR. GREEN. Thank you, Mr. Chairman. And I would like to ask 

unanimous consent for my statement to be placed into the record. 

MR. STEARNS. By unanimous consent, so ordered. 
81

[The information follows:] 

PREPARED STATEMENT OF THE HON. GENE GREEN, A REPRESENTATIVE IN CONGRESS FROM 

THE STATE OF TEXAS

Thank you to our Chairman and Ranking Member for holding this hearing on the 

Internet Corporation for Assigned Names and Numbers or ICANN. 

The Internet is a unique asset that poses many challenges for individual nations to 

manage individually and collectively. 

The United States government, including actions by Congress, helped create the 

Internet, but it is now a huge international system of networks that defies complete 

control by any particular government. 

Comparing the problems of unwanted email and telemarketing solicitations proves 

that the Internet is beyond even the control of the United States, the most powerful nation 

on earth. 

While our federal law is an extremely important tool against spam, it can never work 

as well as the do-not-call list because the problem requires major international 

cooperation. 

As a result, the question of how to coordinate the technical and management aspects 

necessary for the Internet to work is also extremely important. 

An effectively functioning Internet is clearly in the national interest, and removing 

these functions to the United Nations is a bad idea. 

The United Nations is a diplomatic body for debating international issues, and is not 

a particularly effective standard-setting or management agency. 

In addition, there is a lot of anti-American sentiment around the world these days 

and a U.N.-managed Internet governance body would likely see spill-over from other 

diplomatic disputes. 

Even if the U.S. Department of Commerce limits their impact on ICANN under the 

current arrangement, the appearance of control inevitably makes America a target of 

some criticism. 

As a result, it may be difficult to continue forever with the appearance of American 

control over ICANN, because at the end of the day the Internet is global. 

I look forward to learning more about these issues from today’s hearing and 

questioning our witnesses on some of the recent controversial with ICANN. 

In particular I am interested in their proposals to remove the “Whois” database of 

website operators from the public domain and the recent settlement with Verisign. 

Thank you and I yield back the balance of my time. 

MR. GREEN. Mr. Twomey, in a Senate hearing yesterday, there was 

a discussion that ICANN consider, change, or restrict the access to the 

“Whois” database of website operators, and it is currently publicly 

available on the Internet. Both the FCC and FTC and other U.S. and 

international law enforcement agencies are concerned of this move 

because it restricts ability to stop spam, spyware and identity theft. Our 

office used this database before to find out who registered websites in my 

own name, and our FTC Commissioner Liebowitz said that the FTC uses 

database in almost all its Internet investigations and seems very worried 

about ICANN’s new policy. 

During our work on our spam bill a few years ago, I learned it is 

difficult enough to police the Internet and prevent spam, spyware, 
82

identity theft and viruses without introducing more hurdles to law 

enforcement. 

If ICANN goes forward with the change and restricts access to 

“Whois” database, what would the FTC and other agencies do, much less 

the Members of Congress who want to know who is using--has an 

Internet address with our name on it? And how would it be able to 

access that information? 

DR. TWOMEY. Thank you, Congressman, for the question. 

Let me be clear about where we are with “Whois”. ICANN’s policy 

on “Whois”, as it presently stands, is quite clear, to maintain timely, 

unrestricted public access to accurate and complete “Whois” data, 

including registrant technical, billing, and administrative contact 

information. And that is our policy, and that is what is written into our 

contract. So that is what we administer and enforce and will continue to 

enforce. 

MR. GREEN. So it will be available? 

DR. TWOMEY. Yes. And we are putting more resources into that. 

We have a policy development process, which is a bottom up 

process, and “Whois” has been in a discussion in that arena for some 

time. And the points that have been referred to in the Senate yesterday 

and other places has been some discussion by some constituencies about 

changing that policy. But that policy cannot change without input from 

all our constituencies, including all of the governments who are part of 

that process, and many others. That could take a very long time, it may 

come to nothing at all. And the sentiments that you have put forward 

and others put forward are clearly going to be heard in any crisis. And at 

that stage, you know--because it is being discussed, it does not mean that 

is what ICANN is going to do. 

MR. GREEN. We have that problem here in Congress. 

Mr. Kneuer, do you have anything else to add to this? 

MR. KNEUER. Other than that it is the express position of the 

administration, not just in the Department of Commerce, but across all of 

the various executive branch agencies and equities that have an interest 

in “Whois” database that is publicly available, accurate and searchable 

“Whois” information is critical for law enforcement for the protection of 

intellectual property and others. We think it is vitally important that 

ICANN enforce its contracts to ensure that that information is made 

publicly available. We have made our input into the government 

advisory process, and we will certainly be active in all of ICANN’s 

processes and elsewhere to make sure that information remains publicly 

available, accurate and accessible and searchable. 

MR. GREEN. My next question for both of you today is that, under 

the recent litigation settlement between ICANN and VeriSign allowed 
83

VeriSign to increase prices for domain names 7 percent per year, 4 out of 

the 6 years. One of the concerns I have about that is we are still working 

on when AT&T was a monopoly and the FTC controlled their cost, I 

know in settling lawsuits, is it just the settlement of the lawsuit, or is 

there a background reason for the 7 percent per year? 

DR. TWOMEY. Congressman, you pointed out that contract, 

proposed contract coming out of a very broad settlement arrangement 

around a series of issues, and that particular term--which is just one of 

many, many terms in that contract--emerged out of those negotiations. 

And out of a sense from VeriSign, the things that they saw as being 

important, as they put it, the need to ensure sufficient funds for 

increasing demands in their infrastructure and infrastructure investment, 

particularly for security. 

I would just make this observation, Congressman; under the previous 

contract, they also had the right to ask for a price increase. 

MR. GREEN. Oh, I don’t mind. I was just wondering 7 percent 

compared to 5 percent, or whatever. 

DR. TWOMEY. That has been a matter, I think, of negotiation. 

MR. DELBIANCO. Congressman, with respect to that, in May our 

group commissioned Zogby International to do a poll. They polled 1,200 

American businesses who owned websites and asked that question, how 

much does this--well, 7 percent doesn’t really tell the story, it is 1.86. 

For instance, on a domain name registration that costs between 10 and 

$50 a year, within the context of building and maintaining a website in 

the Commerce platform with technical support--it is irrelevant. And the 

survey results came back that 81 percent are completely unconcerned 

with 1.86, especially if it was presumably going for security and stability. 

They were far more concerned about those integrity problems we 

discussed. 

MR. GREEN. Mr. Kneuer, is the Department of Commerce entered 

into the Memorandum of Understanding with ICANN on that settlement 

with VeriSign? 

MR. KNEUER. We don’t look at the overall settlement of the 

litigation with ICANN and VeriSign, but as part of that litigation 

settlement, they renegotiated the dot com registry agreement. As part of 

our overall management of the transition of the DNS to the private sector 

we have retained the right to review those contacts. We are reviewing 

the VeriSign-ICANN dot com registry agreement. 

We are doing that in consultation with the Department of Justice, 

Antitrust Division for purposes of these competition issues and the 

pricing issues that you raised, as well as with various entities throughout 

the Federal government that have insight and expertise on matters of 

stability and security. 
84

And if I just might, my experience with the Antitrust Division in this 

review is that they have been wide awake and very vigilant in their work 

on our behalf. They have been extraordinarily proactive and 

hardworking in their review and analysis; and we very, very much value 

the advice and the expertise that they provide us. 

MR. GREEN. This is probably my last--I can’t read how much time I 

have left, Mr. Chairman, with the lights, but did VeriSign commit that 

these funds would be used for the increased security? 

DR. TWOMEY. There is no explicit terms in the contract to that 

effect. Their public statements have all been directed towards that effect. 

There is no requirement in this contract that they have to increase their 

prices, that is the other point. This doesn’t say that there will be a price 

increase, it just doesn’t label it. 

MR. GREEN. Okay, thank you, Mr. Chairman. 

MR. STEARNS. I thank the gentleman, Mr. Shimkus. 

MR. SHIMKUS. I thank you, Mr. Chairman. And I appreciate you all 

being here. It is really noteworthy that we are finished voting today and 

members actually came back. I don’t know if that is good or bad, but it 

does show you that there is interest by many of us to try to figure out and 

understand this, which is kind of a bizarre process. And it has been 

working, but I think people have questions, and that is why I am going to 

first start with Mr. DelBianco. 

In your testimony, you note that you believe the authoritative or A 

root server belongs in the United States. It is currently located in 

Virginia, can you explain why you believe this? 

MR. DELBIANCO. Thank you, Congressman. 

I did suggest in there that I am echoing what I believe was a very 

strong statement by both the House and Senate last November, 

unanimous in both House and Senate, when they laid out a series of 

parameters around which the U.S. wanted to maintain oversight of the 

Internet. And one essential ingredient in that, unanimous in both Houses, 

was that the physical master copy, we will call it that, the master copy of 

the highest level table be physically kept in the United States. It is a 

security backstop. Not unlike the other things the U.S. has done by 

negotiating backup agreements with certain partners, contracting partners 

to make sure that whatever happens with ICANN, we can guarantee the 

stability and security of the DNS. 

MR. SHIMKUS. Which is part of the issue on, you know--I concur 

with the analysis of what the legislative bodies did, but that is also part 

of--that is why NGIA is empowered with an oversight role. But I want 

the other panelists to comment on the same question. 

Do you believe that the A root server--the A root should remain in 

the United States? And I don’t know if you can comment, but whoever 
85

would like to comment on that, I want to open it up for the panel. Go 

ahead. 

MR. BOHANNON. Congressman, my association has not taken a 

formal view, but I can give you my personal, professional opinion based 

on my-- 

MR. SHIMKUS. I will take it. 

MR. BOHANNON. Which is, I agree with Mr. DelBianco, I think it is 

the right thing to do. And I have yet to see any reasons or conditions that 

would lead me to believe that that policy should be changed any time in 

the near future. 

MR. SHIMKUS. Mr. Feld. 

MR. FELD. I would just say that this is one of the matters which 

actually should be the subject of some discussion with other 

governments. That may be the appropriate thing now. There may be 

other arrangements which would satisfy our concerns with regard to 

security, commerce and so forth, which would not involve the A root 

residing in the United States, and a gesture like that might well go a long 

way towards satisfying a number of concerns abroad. 

MR. LENARD. I agree that it should be kept in the United States--for 

the present certainly. 

MR. SHIMKUS. Let me--Mr. Feld, I find that a lot of the debate has 

been addressing--and I think Mr. DelBianco before, and in response to 

my friend from the Houston area, that what the entities who are using it 

want to make sure of is safety and security and the like. So you don’t 

fear those issues, should the root server be moved to other countries? 

MR. FELD. No, that is not what I said. What I did say, however, is 

that we have a global system; we are participating with other countries. 

ICANN strives to be a multinational organization, and one in which other 

countries feel that they have a genuine role. 

A question as complex as where should the A root reside is one that I 

think we should be willing to think about. What is important, I think, is 

not just to conclude ourselves that this is the best place for it, and why 

would anybody want it elsewhere, but to think about, if we are concerned 

with making sure that other people buy into the notion that the United 

States is not trying to keep a privileged position for itself any more than 

necessary for Internet stability, that we need to be open to the possibility 

that there might be a reason to relocate it, and do so in a way that would 

still satisfy our concerns about security. 

MR. SHIMKUS. Okay. I disagree, but I respect your opinion. 

Mr. Lenard, did I cut you off? Did you have anything more to say? 

MR. LENARD. I had actually finished. I was going to say I agree that 

it should be kept in the United States. 

MR. SHIMKUS. Mr. Twomey. 
86

DR. TWOMEY. Thank you, Mr. Congressman. 

As far as--my understanding is there is no discussion, expectation--

well, there is no discussion of this topic; there is no talk that I know of on 

that issue. But I wanted to make this point. Root servers have evolved 

of recent time, particularly utilizing a key technology called Anycast. 

And so what we now have is, instead of having what we used to have 13 

pizza boxes, 13 root servers, we actually now have 13 clusters. And 

these are now distributed across 50 countries around the world, and this 

is growing significantly. 

And I think that is a key part of how the technology evolves to keep-

-because I do agree with the international access, international aspect of 

how serving a billion users of the Internet around the world--150 million 

are Americans, but 50 million are not Americans. So I think the key 

thing here is that the technology takes away some of the symbolism 

because it is allowing us to actually ensure that root servers are 

distributed throughout the world and operated in big clusters. 

MR. SHIMKUS. But does the movement of the root server, would that 

change the oversight of our Department of Commerce and NTIA? 

MR. KNEUER. If I might, Congressman. This discussion of 

unilateral U.S. action and this concern over unilateral U.S. action, the 

unilateral action that we have taken--the only unilateral action that we 

have taken is the decision to take this critical government function and 

transition it into the private sector. We did that on our own initiative. 

Rather than keeping this authority forever enshrined in the U.S. 

Government, we took the unilateral step to start this transition into the 

private sector. The A root is essentially managed and run by the private 

sector. To move it because it might makes somebody else feel good 

makes zero sense. To introduce instability into the critical infrastructure 

with no technical justification of any kind doesn’t make any sense at all. 

MR. SHIMKUS. As long as the Chairman allows me to go over my 

time, Mr. Feld. 

MR. FELD. If I may, as I stated in my testimony, as an American 

citizen and as a Senior Vice President for an organization that is 

concerned with freedom of expression, I am extraordinarily happy with 

having the United States maintain control of the A root and to maintain a 

level of oversight over the naming system. As I said at the beginning, I 

would find it extraordinarily troubling if we were to internationalize this 

and to move this out in an irresponsible manner. 

At the same time, however, there is an enormous difference between 

a system in which we say we are working with the world because that is 

the appropriate thing to do--and this is a global Domain Name System--

and to say we are working with the rest of the world as a matter of grace, 

but where we want to draw the line we choose to draw the line. 
87

Every Nation, I think, would recognize that we are obviously going 

to protect our interests as we need to, but in a very complex negotiation 

among nations who are increasingly dependent upon this resource, I 

think it is a responsible thing for us to do to consider how we can protect 

our own interests, and at the same time ensure that those governments 

that are inclined to trust us and are not permanently dedicated to being 

against our interest feel that they have a measure of involvement and 

security. 

I am not suggesting moving the A root, and I think that an attempt to 

do so now would be inappropriate; but I would prefer that at this stage, 

and as a general rule, that our policy would be that we set limits on the 

things we categorically take off the table unless we have to. 

MR. SHIMKUS. Okay. And let me just, finally--I think the problem 

that the laymen--and I really admit that I am a laymen in this, I am not a 

techie, and I have tried to follow this for a while--is that there is really 

schizophrenia in this management control oversight, who pushes who, is 

it going to be--are we moving to a free market, in essence, competitive 

issues or are we still going to have oversight? 

We want to move, but then we want to control--so let me ask you, 

Mr. Twomey, what steps are you taking--this is America, we like free 

market capitalism. We like, if there are competitive markets, for them to 

be fair. And thereare winners and losers, and those losers should be able 

to find out why they lost, especially in this quasi-government oversight 

process by which we empower the, in essence, the providing of business. 

So what steps are you taking to increase competition in your spaces? 

DR. TWOMEY. Well, I think the key aspect of competition has to be 

judged by the consumer. So I think one of the first questions in any 

discussion about competition is competition for whom? And we take 

respect of competition for registrants, and I think that is a key principle. 

At the heart of that, therefore, has been, first of all, in the generic top 

level domains in which we have policy influence, a separation of the 

registry from the registrar; in other words, a separation from the 

databases from those who actually sell you the domain name, if I can 

make it as simple as that. That has resulted in the usual things you get. 

And in that separation, the registrar function is something that clearly can 

be open to competition and can be replicated. And we have gone from 

one registrar to over 800 now. The benefits of being what you get from 

that sort of competition, one, it is bidding price, so prices can be up to 

less than 90 percent of what they used to be. 

The other benefit is the market increasingly implements new 

services, packages new services, there are registrar-- 

MR. SHIMKUS. Or promises of security issues? I mean, better 

quality, better-- 
88

DR. TWOMEY. That is right. Some registrars now package the 

domain name, but it is part of the package of services around hosting, 

around looking after your intellectual property interests and domain 

names. There is a whole series of things people offer. 

When it comes to registries, the key point there is introducing more 

and more registries and more and more gTLD. And we are in the 

process, we have increased the number of gTLDs to 11 additional ones. 

And there is a policy process underway now to look at potentially 

opening up to full liberalization for new gTLDs, and a process for how 

we would actually introduce more gTLDs on an ongoing basis to give 

consumers again more choice of not only who they buy it from, but what 

TLD do they get? 

MR. SHIMKUS. I think I understood that. Your acronyms-- 

DR. TWOMEY. Yes, I am sorry. The point is, it is not just dot com; 

you can get a dot net, you can get a dot org. 

MR. SHIMKUS. Well, I know in the dot net issue, that was open to a 

competitive process, and we had--what are the results of that? 

DR. TWOMEY. I understand. Let me take you where your question is 

going. 

An important part of the process of moving to competition was a 

series of discussions that took place in 2000 and 2001 with the 

Department of Commerce, VeriSign and ICANN to further tease out 

what was VeriSign’s dominant position on dot net, dot com, and dot org, 

three top level domains. And in the agreement that was done at that 

time, it was agreed that dot org would be rebid and VeriSign could not 

bid for it. 

The dot net would be rebid, and VeriSign could be a bidder along 

with another people, and that dot com would not be rebid, it would be 

renewed. And that was a decision made in 2001. 

It is an important point to your question because-- 

MR. SHIMKUS. I think it is important to lay the whole--I mean, that 

is why we have these hearings, to get the whole story of how you are 

moving, and hopefully in some progress towards these ends. 

DR. TWOMEY. So we could rebid dot net last year under those terms 

and those agreements, and there was a price competition as you pointed 

out. Dot com, the board of ICANN, as it was constituted last year and 

this year, did not have the legal freedom to rebid dot com because these 

were agreements made in 2001, so we were already bound by agreements 

that were made in 2001 by the three parties. 

MR. SHIMKUS. Thank you. I learned something, I appreciate it. 

I yield back, Mr. Chairman. 

MR. STEARNS. I thank the gentleman. I think I will close and just 

ask sort of a general question for Mr. Feld and Mr. Twomey. 
89

As I understand it, decisions by ICAAN are made by a board of 

directors, they are really not political appointees, they are really not 

influenced by politics, and there is really perhaps the normal kind of 

appeal process that many feel that you could make. 

And I guess the question for you, Mr. Twomey, and then I will let 

Mr. Feld comment on this. Do you feel the appeal mechanism is 

adequate enough for those people that have a problem with what ICANN 

is doing? And is there any way to make it a little bit easier to understand 

and what to do? 

DR. TWOMEY. Good question, Chairman. And I think the answer is 

a two-part one. 

One, I think that we do have, both through our ombudsman and then 

through the independent review process as we have the special board 

committee and then an independent panel of arbitrators, we do have an 

established system for review. Having said that, the board of ICANN is 

certainly conscious in its new principles, it is establishing, of its need to 

maintain very high standards of accountability. 

So I think reviewing that is quite appropriate. And the board, I think, 

needs to be constantly looking at improving and always maintaining a 

high standard of accountability, and looking at those processes and see 

where they would work better. 

MR. STEARNS. Have you had that many appeals? 

DR. TWOMEY. We have had no party take an appeal to the final 

stage, the arbitrator, to conclusion. 

MR. STEARNS. Now does that tell you anything, or is it just that you 

have been so impeccable in your credentials? 

DR. TWOMEY. What it does tell you, Chairman, is that some of the 

parties have decided to go straight to the courts, and we haven’t--quite 

separately, we defend quite a number of legal actions in courts. 

MR. STEARNS. And do those overturn some of your decisions? 

DR. TWOMEY. To date, no. There might be one potential 

interpretation of one decision about access to information by a board 

member, but apart from that particular decision, I don’t think there has 

been a decision related to a contract that has been turned against ICANN-

-from my recollection. 

MR. STEARNS. Mr. Feld, what do you think of the whole process of 

accountability for the decisions made by ICANN? 

MR. FELD. Well, part of the problem is there are several levels of 

accountability, and the question of what is being looked at. Let me take 

the VeriSign renewal contract for dot com that we were just discussing. 

That was a contract that was negotiated between ICANN and VeriSign. 

Registrars, whose entire livelihood depends upon this, were not allowed 

to be privy to any part of that negotiation, were asked to comment upon 
90

the entire package. And when seeking information on what was, for 

them, a critical element, this ability to raise prices, were unable to find 

any information, none has been forthcoming on where that has come 

from. 

When I was in private practice, I used to do tariffing cases, and I can 

tell you for some clients that we had, the difference between a 10th of a 

cent on some things could be the difference between bankruptcy and 

profitability. So while not particularly of interest to end-users who are 

registering the names, it is a great deal of interest to at least one 

constituency. To be locked out of the critical part of that while it is being 

formulated, to be presented with an entire agreement afterwards and then 

to be told that the first step of a process for which there is no deadline 

while this is moving forward is to go to an employee of the people who 

just made the decision to try to work it out is not something that people 

whose livelihoods depend on this are going to find very attractive. 

So I think that while I understand Dr. Twomey’s perspective that 

there is a process that needs to be worked through, I would hope that 

there would be some understanding among the decision makers in 

ICANN of why so many people feel that critical aspects of the decisionmaking process are not subject to any kind of accountability check. 

When these things are reviewed by courts, they are not reviewed as an 

FTC action would be reviewed on. Was this decision arbitrary and 

capricious or in accordance with--in this case, we might say, the mandate 

of ICANN? They are reviewed under various theories of action, like 

antitrust, to try to somehow find a way to get the court to have 

jurisdiction over the issue. But if the court does not look to see that 

ICANN followed its processes, that is not what U.S. courts do. 

MR. STEARNS. No, I understand. Is there anyone else that would 

like to comment on that particular question? Yes, Mr. Lenard? 

MR. LENARD. Well, I think this just points up to the problem of 

ICANN taking on the functions of a regulatory agency. Obviously, one 

of the prime functions of the regulatory agency is setting-- 

MR. STEARNS. Couldn’t the Department of Commerce step in here, 

though? 

MR. LENARD. Well, I think whoever steps in it seems to me, the 

objective should not be to set up, quote, transparent or procedures, you 

know, that guarantee people due process. The objective should be to 

move away from that entire model and not have those, you know, 

regulatory functions, like I said in price ceilings, and to rely on 

competition, which Dr. Twomey says they are moving towards. 

MR. STEARNS. So you would suggest a different regulatory model? 

MR. LENARD. I would suggest moving away from monopoly-type 

regulatory model, which obviously price controls and price ceilings are a 
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prime element of, just not have price--not have those things at all, rely on 

competition to discipline the market. And the market is sufficiently 

competitive that that type of a regime is not justified even now. 

MR. STEARNS. Yes, Mr. DelBianco. 

MR. DELBIANCO. Yes. Earlier, I believe, Mr. Chairman, you asked 

a question about whether ICANN was sufficiently strong and 

independent to go on its own, this gets to that, this gets to the nub of it. 

If ICANN is perceived as having been too much under the control of one 

government, ours, other governments covet some piece of that power. 

So I believe that in this transition to independence, that would 

abdicate us to do three things to demonstrate by our actions that we are 

serious about independence. The first is stop trying to interfere with 

decisions ICANN makes with private parties who negotiate contracts. 

Where contracts have to be sacrosanct, they have to be written in pen, 

and we all need to pay attention to process and transparency, but if 

somebody doesn’t win a contract or doesn’t like that their margins aren’t 

going to be as big as they want, we can’t let them believe they can 

simply run to Congress and change things. 

Second quick thing is, let’s avoid giving the U.N. any more excuses. 

Let’s make sure we stay above the fray and don’t interfere in any way 

with things like a .XXX, let’s participate through the process. 

And that was my third. We need to play the government advisory 

committee. We need to play very seriously there, go to the Internet 

Governance Forum and show that the U.S. is serious at being there on 

the Internet governance conversations, and being shoulder to shoulder 

with other nations on the process of Internet governance. 

MR. BOHANNON. This discussion could get very abstract. I think 

there are actually two very specific things that I think we are frustrated 

with and I hope we have made it clear in our testimony. One is that 

ICANN made some commitments in the MOU in 2003 that they would 

take concrete steps to improve what is an existing policy for accuracy of 

“Whois” data. In our view, and it is reflected in the letter from 35 

different organizations and different sectors, is that before the MOU that 

expires at the end of this month is renewed, we have got to have concrete 

obligations that are going to fulfill those requirements. 

The second one, and I think it is a harder one, that we want to work 

with ICANN is that ICANN needs to make sure that the agreements they 

have with registrars are also enforced. Registrars have an obligation to 

collect accurate information. They are not doing it. The GAO found that 

more than 5 million domain name registrations in dot com and dot net 

are obviously false or misleading. That is not acceptable. And we need 

to work with ICANN so that we have a meaningful way to make sure 

that those kinds of agreements are enforced and that everyone’s 
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obligations are met. So rather than talk about the broader ones, let’s talk 

about what is really on the table now, what people have already agreed to 

do, and let’s make sure that that gets done. 

MR. STEARNS. Okay. If there is nothing else--Mr. Kneuer, anything 

you want to say? Okay. Mr. Twomey, I think you have got some 

marching orders, or at least you have heard some anyway. Let me just 

say, I think all of us on the committee think that ICANN is improving 

and is moving in the right direction, so that is good news and it has been 

educational for both the members and perhaps some of you, the 

witnesses here for our hearing. And I thank you for waiting through our 

votes. And with that the subcommittee is adjourned. 

[Whereupon, at 4:55 p.m., the subcommittee was adjourned.] 
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RESPONSE FOR THE RECORD OF JOHN M. R. KNEUER, ACTING SECRETARY FOR 

COMMUNICATIONS AND INFORMATION, UNITED STATES DEPARTMENT OF COMMERCE

1. I'm concerned about the security and availability of the Internet, particularly of 

the dot com domain that carries trillions of dollars of American commerce every 

year. I know that we've experienced a number of denials of service and viruses 

attacks in the past and I assume that these are increasing. What is the magnitude of 

increase in the attacks, say, since 2000? Is it a five fold increase, a ten fold increase, 

what? 

Answer: The Department remains committed to preserving the stability and security of 

the Internet domain name and addressing system (DNS). This commitment guides all of 

NTIA’s activities in this area, including our recent Joint Project Agreement with ICANN. 

We continue to believe the private sector coordination of the technical management 

functions related to the DNS is the best approach to achieve stability and security given 

that the private sector has the tools and investment funds to rapidly react to new threats 

that are emerging daily. More specific information on specific incidents and attacks can 

be obtained from the United States Computer Emergency Readiness Team (US-CERT), 

the operational arm of the National Cyber Security Division (NCSD) at the Department 

of Homeland Security (DHS). The US-CERT is charged with protecting the nation's 

Internet infrastructure by coordinating defense against and response to cyber attacks. The 

US-CERT is responsible for analyzing and reducing cyber threats and vulnerabilities, 

disseminating cyber threat warning information, and coordinating incident response 

activities. The US-CERT interacts with federal agencies, industry, the research 

community, state and local governments, and others to disseminate reasoned and 

actionable cyber security information to the public. 

2. Who is attacking the Internet? Are these just hackers doing this or is it 

something more? Is it organized crime, maybe international organized crime? Do 

we know if any of it is sponsored by foreign governments? 

Answer: There are numerous classes of attackers on the Internet, including everything 

from state-sponsored efforts to home hobbyists. Preserving stability and security of the 

Internet DNS is a top priority of the Department. NTIA works very closely with a variety 

of U.S. government agencies, including the Department of Justice Computer Crimes and 

Intellectual Property Section (CCIPS), Department of Defense Joint Task Force – 

Government Network Operations (JTF-GNO) and the National Cyber Security Division 

(NCSD) at DHS, to pursue appropriate national action and international collaboration 

across a range of legal, enforcement, administrative and technical areas to build a global 

culture of cybersecurity. 

3. How do we protect ourselves and our economy from these attacks? ICANN is 

responsible for the domain name server registries, how do the registry companies - 

such as VeriSign, which is the registry for dot com - protect us against that 

increasing volume of attacks? Do they have to invest in additional infrastructure to 

increase their capacity? Do the registries have the resources they need to protect 

our resources? 

Answer: Cybersecurity standards are developed by various industry organizations, such 

as the Internet Engineering Task Force (IETF), International Organization for 

Standardization (ISO), and the Institute of Electrical and Electronics Engineers (IEEE), 

and adherence to the variety of standards is voluntary for the most part. While ICANN is 

not a standards organization, it does promote the adoption of industry standards through 
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its agreements with registry operators to comply with these standards. Registry 

agreements address the technical obligations, including compliance with the various 

industry developed standards, security requirements, and outage reporting that all registry 

operators must meet. In addition, each registry agreement contains a Service Level 

Agreement, which identifies the terms should the registry operator fall below the 

performance specifications. One standard that may help in this regard is the Domain 

Name System Security (DNSSEC) standard. NTIA has been actively working with an 

interagency working group to review the issues associated with the deployment of 

DNSSEC. Compliance with DNSSEC may require many of the providers of critical 

infrastructure to invest in additional infrastructure to increase their capacity. 

4. If governance of the Internet were to move to an international body, such as the 

UN, or if the dot com registry were to go to a foreign company, what assurance do 

we, as Americans, have that our commerce and our economy will continue to be 

protected? 

Answer: The Department of Commerce will continue to advocate for private sector 

leadership in the innovation and investment in the Internet while opposing calls for 

intergovernmental control. The success of the Internet is that it has been decentralized 

and private sector-led, encouraging individual creativity, access, and competition at all 

levels. The Department of Commerce is committed to taking no action that would have 

the potential to adversely impact the effective and efficient operation of the Internet DNS, 

including moving its governance to an international body such as the United Nations. 
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RESPONSE FOR THE RECORD OF DR. PAUL TWOMEY, PRESIDENT AND CHIEF EXECUTIVE 

OFFICER, INTERNET CORPORATION FOR ASSIGNED NAMES AND NUMBERS
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RESPONSE FOR THE RECORD OF STEVE DELBIANCO, VICE PRESIDENT FOR PUBLIC POLICY,

ASSOCIATION FOR COMPETITION TECHNOLOGY, ON BEHALF OF NETCHOICE COALITION

Promoting Convenience, Choice, and Commerce on The Net 

The NetChoice Coalition 

1401 K St NW, Suite 502 

Washington, DC 20005 

www.netchoice.org 

November 1, 2006 

ICANN Internet Governance: Is It Working? 

Hearing Date: September 21, 2006 

Subcommittee on Telecommunications and the Internet and Subcommittee on 

Commerce, Trade, and Consumer Protection 

Answers to follow-up questions by The Honorable C.L. “Butch” Otter 

Prepared by Steve DelBianco 

Executive Director, NetChoice 

Question 1: What is the magnitude of the increase in the attacks, say, since 2000? 

The many communications devices that make our lives more efficient and allow us 

to communicate faster are unfortunately also vulnerable targets for expanded Internet 

attacks. According to CipherTrust, computer hackers hijack more than 180,000 

computers each day so that they can steal computing power to perpetrate attacks on larger 

networks. These attacks have grown by almost seven-fold in the past year, according to 

Symantec. 

The same forces that are helping our economy to expand are also allowing extortion 

rackets to expand their reach to victimize far less sophisticated Internet users 

The security of the Internet’s core infrastructure is a key component for keeping the 

Internet user safe. Given the increased number of attacks the companies who are 

responsible for the core infrastructure must continually strengthen their firewalls and 

secure all transactions to ensure consistent, fast, efficient response times for an Internet 

that is “always on” and available to a worldwide user base. 

The companies who are responsible for these Infrastructure build outs need to have a 

forward operating plan that scales at least ten times the level of volume they expect the 

network to expand each year if not larger. The key to keeping ahead of the usage curve is 

the ability and incentive to invest heavily in system infrastructure. 

A powerful incentive for registry operators to keep investing in infrastructure is the 

expectation that their contracts will be renewed if they’ve met performance requirements 

and honored all terms of their contract. 

As I said in testimony before the House Small Business Committee in June, I have 

some first-hand experience with service contracts, since my own business was selected to 

provide software help-desk support for a large credit card company. I invested heavily in 

hiring and training help-desk staff, rented new space for the operation, acquired new 

computers and integrated a call management system. We even bought electronic scrolling 

sign boards to alert the staff about callers in the queue and hold times. 

To have any hope of recovering this huge up-front investment, I insisted on renewal 

terms that gave us a favorable chance to renew the contract after its initial term. To earn 
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the renewal, we had to satisfy several metrics for service levels. In addition, we could 

not have any sustained failures to meet new or emergency initiatives that could be 

expected over the term of the contract. “Best efforts” wouldn’t be good enough—we 

had to be able to recover and deliver if unexpected call volumes hit us out of the blue. 

 My experience is fairly typical, and tells me that ICANN is right to include a 

renewal option in its registry contracts. While a renewal option helps the incumbent to 

retain the contract upon expiration, the incumbent will lose the contract if it fails to 

satisfy the functional requirements in the new contract. 

Question 2: Who is attacking the Internet? Are these just hackers doing this or is it 

something more? Is it organized crime, maybe international organized crime? Do we 

know if any of it is sponsored by foreign governments? 

We don’t know exactly who is attacking the Internet, but the emerging attack profile 

suggests ways to mitigate the activity once it’s identified by a network operator. I 

understand that several government agencies are aware of this activity and work with 

Internet infrastructure companies to fight organized attackers. Speculation is that some 

attackers are organized efforts by crime factions, intended to show their computing 

firepower and their ability to disrupt networks. 

I have no specific information regarding state-sponsored attacks. However, I think 

that several states are far too tolerant of criminal activity coming from within their 

borders. Brazil, Poland, Romania, Romania, and Russia, for instance, host underground 

economies built upon counterfeit goods. These nations tolerate high rates of computer 

software piracy, make millions of counterfeit DVDs, and produce, deal, or traffic in fake 

consumer merchandise. To the extent they are hospitable to counterfeiting rings, these 

nations are also likely to be hosting organized Internet attack groups. 

Question 3: How do we protect ourselves and our economy from these attacks? How do 

registry companies—such as VeriSign, the registry for dot com—protect us against the 

increasing volume of attacks? Do they have to invest in additional infrastructure to 

increase their capacity? Do the registries have the resources they need to protect our 

resources? 

 The best way to protect yourself as an individual user is to keep your anti-virus 

software and operating system up to date. The next step is to educate your family and 

employees on situational awareness tactics so they identify threats from phishing or 

spyware. Denial of service attacks are often extended versions of what seem like simple 

abuses to an individual user. 
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Registries, on the other hand, employ a range of measures to thwart attacks on the 

domain name system: 

Over-provisioning. Registry operators invest in extra capacity, or “overprovisioning” in order to handle much higher transaction volumes, such as 

those that occur during denial of service attacks. 

Redundant Systems. Registries invest in multiple, parallel systems to provide 

redundancy in the event that main systems are disabled. 

Geographical Distribution. Backup servers and facilities are hosted in 

geographically diverse locations to mitigate risks of physical disasters and of 

attacks on routers serving any single area of DNS servers.

Disaster Recovery. Registry operators prepare detailed plans and practices to 

enable a quick recovery from attacks and other disasters. 

Personal Vigilance. The largest registry operators can afford to hire 

experienced security professionals to manage all of these security systems 

investments, 24x7x365. 

International Cooperation. The larger registry operators are in constant 

communications and coordination with law enforcement and industry allies 

across the globe. 

Registries have access to the technology tools they need, but ICANN needs to 

maintain contractual incentives so that registry operators will continue to invest in 

security systems throughout the term of their contracts. 

Question 4: If governance of the Internet were to move to an international body, such as 

the UN, or if the dot com registry were to go to a foreign company, what assurance do 

we, as Americans, have that our commerce and our economy will continue to be 

protected? 

For the private sector to continue its success in managing and developing the 

Internet, one element is absolutely critical: continued reliance on the clarity and certainty 

of contracts. 

Operators of Internet infrastructure rely upon contracts with ICANN that clearly 

describe responsibilities and restrictions. As contract participants, these operators make 

significant investments in people, equipment, and long-term network contracts in order to 

secure the Internet. These contracts must therefore be honored by ICANN, without risk 

of being unilaterally abrogated or modified in response to a change of sentiments among 

ICANN participants. 

Moreover, these contracts must be upheld and interpreted by a reliable and 

consistent body of law. For the present, U.S. Courts serve as the place to govern contract 

disputes between operators and ICANN. If an international governance body were to 

take over ICANN’s role as contract partner for Internet operations, the clarity and 

certainty of these infrastructure contracts would be thrown into doubt. 

Even if ICANN offices or the distributive root server were to move out of the U.S., I 

believe that U.S. Courts should still be the way to resolve disputes arising out of ICANN 

contracts. 
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RESPONSE FOR THE RECORD OF THOMAS M. LENARD, SENIOR VICE PRESIDENT FOR 

RESEARCH, THE PROGRESS & FREEDOM FOUNDATION

“ICANN Internet Governance: Is It Working?” 

September 21, 2006 hearing 

Responses to questions from The Honorable C.L. “Butch” Otter 

For Thomas M. Lenard 

Answer to Question 1: 

I don’t have a precise answer to the question, but the following figures indicate that it is a 

large and growing problem. According to security company CipherTrust, more than 

180,000 PCs are turned into zombies every day. Symantec estimates that there has been 

a 700-percent increase in bot-nets over the past year. 

Answer to Question 2: 

There seems to be evidence that well-funded organized crime groups, increasingly 

located in other countries, use networks of bots to obtain financial information. 

Answer to Question 3: 

Protection will come from having a well-functioning private sector that has the right 

incentives to invest in security. This is why my testimony recommends moving away 

from a regulatory model for registries. These companies need to have the right incentives 

to invest in the additional infrastructure that will increase security and the regulatory 

model may interfere with those incentives. 

Answer to Question 4: 

I would be concerned that, despite the problems we have had with ICANN, an 

international body would be more regulatory. This would interfere with incentives to 

invest in capacity and security, which would have an adverse effect on the Internet, ecommerce and the economy in general. 

 
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RESPONSE FOR THE RECORD OF HAROLD FELD, SENIOR VICE PRESIDENT, MEDIA 

ACCESS PROJECT

Mr. Fred Upton 

 Chairman 

Subcommitee on Telecommunications 

 and the Internet 

U.S. House of Representatives 

 Committee on Energy and Commerce 

Mr. Cliff Stearns 

 Chairman 

Subcommittee on Commerce, Trade 

 and Consumer Protection 

U.S. House of Representatives 

 Committee on Energy and Commerce 

November 27, 2006 

Dear Mr. Upton and Mr. Stearns: 

Thank you for forwarding to me the additional questions from Mr. Otter with regard 

to the joint hearing by your Subcommittees on September 21, 2006 entitled “ICANN 

Internet Governance: Is It Working?” 

Unfortunately, the questions provided fall outside of my area of expertise, and 

outside the expertise of the Media Access Project generally. I regret that I can provide no 

useful information to the Subcommittees in response. 

If there is any other way I can be of further assistance in this matter, please feel free 

to contact me at (202) 454-5684, or hfeld@mediaaccess.org.

Sincerely, 

Harold Feld 

Senior Vice President 
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RESPONSE FOR THE RECORD OF MARK BOHANNON, GENERAL COUNSEL AND SENIOR VICE 

PRESIDENT, PUBLIC POLICY, SOFTWARE & INFORMATION INDUSTRY ASSOCIATION
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