[Federal Register Volume 63, Number 111 (Wednesday, June 10, 1998)]
[Notices]
[Pages 31741-31751]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-15392]


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DEPARTMENT OF COMMERCE

National Telecommunications and Information Administration
[Docket Number: 980212036-8146-02]


Management of Internet Names and Addresses

AGENCY: National Telecommunications and Information Administration, 
Commerce.

ACTION: Statement of policy.

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SUMMARY: On July 1, 1997, as part of the Clinton Administration's 
Framework for Global Electronic Commerce,<SUP>1</SUP> the President 
directed the Secretary of Commerce to privatize the domain name system 
(DNS) in a manner that increases competition and facilitates 
international participation in its management.
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    \1\ Available at <http://www.ecommerce.gov>.
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    Accordingly, on July 2, 1997, the Department of Commerce issued a 
Request for Comments (RFC) on DNS administration. The RFC solicited 
public input on issues relating to the overall framework of the DNS 
administration, the creation of new top-level domains, policies for 
domain name registrars, and trademark issues. During the comment 
period, more than 430 comments were received, amounting to some 1500 
pages.<SUP>2</SUP>
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    \2\ July 2, 1997 RFC and public comments are located at: <http:/
/www.ntia.doc.gov/ntiahome/domainname/index.html>.
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    On January 30, 1998, the National Telecommunications and 
Information Administration (NTIA), an agency of the Department of 
Commerce, issued for comment, A Proposal to Improve the Technical 
Management of Internet Names and Addresses. The proposed rulemaking, or 
``Green Paper,'' was published in the Federal Register on February 20, 
1998, providing opportunity for public comment. NTIA received more than 
650 comments, as of March 23, 1998, when the comment period 
closed.<SUP>3</SUP>
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    \3\ The RFC, the Green Paper, and comments received in response 
to both documents are available on the Internet at the following 
address: <http://www.ntia.doc.gov>. Additional comments were 
submitted after March 23, 1998. These comments have been considered 
and treated as part of the official record and have been separately 
posted at the same site, although the comments were not received by 
the deadline established in the February 20, 1998 Federal Register 
Notice.
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    The Green Paper proposed certain actions designed to privatize the 
management of Internet names and addresses in a manner that allows for 
the development of robust competition and facilitates global 
participation in Internet management. The Green Paper proposed for 
discussion a variety of issues relating to DNS management including 
private sector creation of a new not-for-profit corporation (the ``new 
corporation'') managed by a globally and functionally representative 
Board of Directors.

EFFECTIVE DATE: This general statement of policy is not subject to the 
delay in effective date required of substantive rules under 5 U.S.C. 
Sec. 553(d). It does not contain mandatory provisions and does not 
itself have the force and effect of law.<SUP>4</SUP> Therefore, the 
effective date of this policy statement is June 10, 1998.

    \4\ See Administrative Law Requirements at p. 19.
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FOR FURTHER INFORMATION CONTACT: Karen Rose, Office of International 
Affairs (OIA), Rm 4701, National Telecommunications and Information 
Administration (NTIA), U.S. Department of Commerce, 14<SUP>th</SUP> and 
Constitution Ave., NW, Washington, DC., 20230. Telephone: (202) 482-
0365. E-mail: <a href="/cdn-cgi/l/email-protection#74101a07041b181d170d341a001d155a101b175a131b02"><span class="__cf_email__" data-cfemail="04606a77746b686d677d446a706d652a606b672a636b72">[email protected]</span></a>

    Authority: 15 U.S.C. 1512; 15 U.S.C. 1525; 47 U.S.C. 
902(b)(2)(H); 47 U.S.C. 902(b)(2)(I); 47 U.S.C. 902(b)(2)(M); 47 
U.S.C. 904(c)(1).

SUPPLEMENTARY INFORMATION:

Background

    Domain names are the familiar and easy-to-remember names for 
Internet computers (e.g., ``www.ecommerce.gov''). They map to unique 
Internet Protocol (IP) numbers (e.g., 98.37.241.30) that serve as 
routing addresses on the Internet. The domain name system (DNS) 
translates Internet names into the IP numbers needed for transmission 
of information across the network.

U.S. Role in DNS Development

    More than 25 years ago, the U.S. Government began funding research 
necessary to develop packet-switching technology and communications 
networks, starting with the ``ARPANET'' network established by the 
Department of Defense's Advanced Research Projects Agency (DARPA) in 
the 1960s. ARPANET was later linked to other networks established by 
other government agencies, universities and research facilities. During 
the 1970s, DARPA also funded the development of a ``network of 
networks;'' this became known as the Internet, and the protocols that 
allowed the networks to intercommunicate became known as Internet 
protocols (IP).
    As part of the ARPANET development work contracted to the 
University of California at Los Angeles (UCLA), Dr. Jon Postel, then a 
graduate student at the university, undertook the maintenance of a list 
of host names and addresses and also a list of documents prepared by 
ARPANET researchers, called Requests for Comments (RFCs). The lists and 
the RFCs were made available to the network community through the 
auspices of SRI International, under contract to DARPA and later the 
Defense Communication Agency (DCA) (now the Defense Information Systems 
Agency (DISA)) for performing the functions of the Network Information 
Center (the NIC).
    After Dr. Postel moved from UCLA to the Information Sciences 
Institute (ISI) at the University of Southern California (USC), he 
continued to maintain the list of assigned Internet numbers and names 
under contracts with DARPA. SRI International continued to publish the 
lists. As the lists grew, DARPA permitted Dr. Postel to delegate 
additional administrative aspects of the list maintenance to SRI, under 
continuing technical oversight. Dr. Postel, under the DARPA contracts, 
also published a list of technical parameters that had been assigned 
for use by protocol developers. Eventually these functions collectively 
became known as the Internet Assigned Numbers Authority (IANA).
    Until the early 1980s, the Internet was managed by DARPA, and used 
primarily for research purposes. Nonetheless, the task of maintaining 
the name list became onerous, and the Domain Name System (DNS) was 
developed to improve the process. Dr. Postel and SRI participated in 
DARPA's development and establishment of the technology and practices 
used by the DNS. By 1990, ARPANET was completely phased out.

[[Page 31742]]

    The National Science Foundation (NSF) has statutory authority for 
supporting and strengthening basic scientific research, engineering, 
and educational activities in the United States, including the 
maintenance of computer networks to connect research and educational 
institutions. Beginning in 1987, IBM, MCI and Merit developed NSFNET, a 
national high-speed network based on Internet protocols, under an award 
from NSF. NSFNET, the largest of the governmental networks, provided a 
``backbone'' to connect other networks serving more than 4,000 research 
and educational institutions throughout the country. The National 
Aeronautics and Space Administration (NASA) and the U.S. Department of 
Energy also contributed backbone facilities.
    In 1991-92, NSF assumed responsibility for coordinating and funding 
the management of the non-military portion of the Internet 
infrastructure. NSF solicited competitive proposals to provide a 
variety of infrastructure services, including domain name registration 
services. On December 31, 1992, NSF entered into a cooperative 
agreement with Network Solutions, Inc. (NSI) for some of these 
services, including the domain name registration services. Since that 
time, NSI has managed key registration, coordination, and maintenance 
functions of the Internet domain name system. NSI registers domain 
names in the generic top level domains (gTLDs) on a first come, first 
served basis and also maintains a directory linking domain names with 
the IP numbers of domain name servers. NSI also currently maintains the 
authoritative database of Internet registrations.
    In 1992, the U.S. Congress gave NSF statutory authority to allow 
commercial activity on the NSFNET.<SUP>5</SUP> This facilitated 
connections between NSFNET and newly forming commercial network service 
providers, paving the way for today's Internet. Thus, the U.S. 
Government has played a pivotal role in creating the Internet as we 
know it today. The U.S. Government consistently encouraged bottom-up 
development of networking technologies, and throughout the course of 
its development, computer scientists from around the world have 
enriched the Internet and facilitated exploitation of its true 
potential. For example, scientists at CERN, in Switzerland, developed 
software, protocols and conventions that formed the basis of today's 
vibrant World Wide Web. This type of pioneering Internet research and 
development continues in cooperative organizations and consortia 
throughout the world.
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    \5\ See Scientific and Advanced-Technology Act of 1992; Pub. L. 
102-476 section 4(9), 106 Stat. 2297, 2300 (codified at 42 U.S.C. 
1862 (a)).
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DNS Management Today

    In recent years, commercial use of the Internet has expanded 
rapidly. As a legacy, however, major components of the domain name 
system are still performed by, or subject to, agreements with agencies 
of the U.S. Government.
    (1) Assignment of numerical addresses to Internet users.
    Every Internet computer has a unique IP number. IANA, headed by Dr. 
Jon Postel, coordinates this system by allocating blocks of numerical 
addresses to regional IP registries (ARIN in North America, RIPE in 
Europe, and APNIC in the Asia/Pacific region), under contract with 
DARPA. In turn, larger Internet service providers apply to the regional 
IP registries for blocks of IP addresses. The recipients of those 
address blocks then reassign addresses to smaller Internet service 
providers and to end users.
    (2) Management of the system of registering names for Internet 
users.
    The domain name space is constructed as a hierarchy. It is divided 
into top-level domains (TLDs), with each TLD then divided into second-
level domains (SLDs), and so on. More than 200 national, or country-
code, TLDs (ccTLDs) are administered by their corresponding governments 
or by private entities with the appropriate national government's 
acquiescence. A small set of gTLDs do not carry any national 
identifier, but denote the intended function of that portion of the 
domain space. For example, .com was established for commercial users, 
.org for not-for-profit organizations, and .net for network service 
providers. The registration and propagation of these key gTLDs are 
performed by NSI, under a five-year cooperative agreement with NSF. 
This agreement expires on September 30, 1998.
    (3) Operation of the root server system.
    The root server system is a set of thirteen file servers, which 
together contain authoritative databases listing all TLDs. Currently, 
NSI operates the ``A'' root server, which maintains the authoritative 
root database and replicates changes to the other root servers on a 
daily basis.
    Different organizations, including NSI, operate the other 12 root 
servers.<SUP>6</SUP> The U.S. Government plays a role in the operation 
of about half of the Internet's root servers. Universal name 
consistency on the Internet cannot be guaranteed without a set of 
authoritative and consistent roots. Without such consistency messages 
could not be routed with any certainty to the intended addresses.
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    \6\ An unofficial diagram of the general geographic location and 
institutional affiliations of the 13 Internet root servers, prepared 
by Anthony Rutkowski, is available at <<a href="http://www.wia.org/pub/
rootserv.html">http://www.wia.org/pub/
rootserv.html</a>>.
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    (4) Protocol Assignment.
    The Internet protocol suite, as defined by the Internet Engineering 
Task Force (IETF), contains many technical parameters, including 
protocol numbers, port numbers, autonomous system numbers, management 
information base object identifiers and others. The common use of these 
protocols by the Internet community requires that the particular values 
used in these fields be assigned uniquely. Currently, IANA, under 
contract with DARPA, makes these assignments and maintains a registry 
of the assigned values.

The Need for Change

    From its origins as a U.S.-based research vehicle, the Internet is 
rapidly becoming an international medium for commerce, education and 
communication. The traditional means of organizing its technical 
functions need to evolve as well. The pressures for change are coming 
from many different quarters:

--There is widespread dissatisfaction about the absence of competition 
in domain name registration.
--Conflicts between trademark holders and domain name holders are 
becoming more common. Mechanisms for resolving these conflicts are 
expensive and cumbersome.
--Many commercial interests, staking their future on the successful 
growth of the Internet, are calling for a more formal and robust 
management structure.
--An increasing percentage of Internet users reside outside of the 
U.S., and those stakeholders want to participate in Internet 
coordination.
--As Internet names increasingly have commercial value, the decision to 
add new top-level domains cannot be made on an ad hoc basis by entities 
or individuals that are not formally accountable to the Internet 
community.
--As the Internet becomes commercial, it becomes less appropriate for 
U.S. research agencies to direct and fund these functions.
    The Internet technical community has been actively debating DNS

[[Page 31743]]

management policy for several years. Experimental registry systems 
offering name registration services in an alternative set of exclusive 
domains developed as early as January 1996. Although visible to only a 
fraction of Internet users, alternative systems such as the name.space, 
AlterNIC, and eDNS affiliated registries <SUP>7</SUP> contributed to 
the community's dialogue on the evolution of DNS administration.
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    \7\ For further information about these systems see: name.space: 
<http://namespace.pgmedia.net>; AlterNIC: <http://www.alternic.net>; 
eDNS: <http://www.edns.net>. Reference to these organizations does 
not constitute an endorsement of their commercial activities.
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    In May of 1996, Dr. Postel proposed the creation of multiple, 
exclusive, competing top-level domain name registries. This proposal 
called for the introduction of up to 50 new competing domain name 
registries, each with the exclusive right to register names in up to 
three new top-level domains, for a total of 150 new TLDs. While some 
supported the proposal, the plan drew much criticism from the Internet 
technical community.<SUP>8</SUP> The paper was revised and 
reissued.<SUP>9</SUP> The Internet Society's (ISOC) board of trustees 
endorsed, in principle, the slightly revised but substantively similar 
version of the draft in June of 1996.
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    \8\ Lengthy discussions by the Internet technical community on 
DNS issues generally and on the Postel DNS proposal took place on 
the newdom, com-priv, ietf and domain-policy Internet mailing lists.
    \9\ See draft-Postel-iana-itld-admin-01.txt; available at 
<http://www.newdom.com/archive>.
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    After considerable debate and redrafting failed to produce a 
consensus on DNS change, IANA and the Internet Society (ISOC) organized 
the International Ad Hoc Committee <SUP>10</SUP> (IAHC or the Ad Hoc 
Committee) in September 1996, to resolve DNS management issues. The 
World Intellectual Property Organization (WIPO) and the International 
Telecommunications Union (ITU) participated in the IAHC. The Federal 
Networking Council (FNC) participated in the early deliberations of the 
Ad Hoc Committee.
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    \10\ For further information about the IAHC see: <<a href="http://
www.iahc.org">http://
www.iahc.org</a>> and related links. Reference to this organization does 
not constitute an endorsement of the commercial activities of its 
related organizations.
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    The IAHC issued a draft plan in December 1996 that introduced 
unique and thoughtful concepts for the evolution of DNS 
administration.<SUP>11</SUP> The final report proposed a memorandum of 
understanding (MoU) that would have established, initially, seven new 
gTLDs to be operated on a nonexclusive basis by a consortium of new 
private domain name registrars called the Council of Registrars 
(CORE).<SUP>12</SUP> Policy oversight would have been undertaken in a 
separate council called the Policy Oversight Committee (POC) with seats 
allocated to specified stakeholder groups. Further, the plan formally 
introduced mechanisms for resolving trademark/domain name disputes. 
Under the MoU, registrants for second-level domains would have been 
required to submit to mediation and arbitration, facilitated by WIPO, 
in the event of conflict with trademark holders.
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    \11\ December 1996 draft: draft-iahc-gtldspec-00.txt; available 
at <http://info.internet.isi.edu:80/in-drafts/files>.
    \12\ The IAHC final report is available at <<a href="http://www.iahc.org/
draft-iahc-recommend-00.html">http://www.iahc.org/
draft-iahc-recommend-00.html</a>>.
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    Although the IAHC proposal gained support in many quarters of the 
Internet community, the IAHC process was criticized for its aggressive 
technology development and implementation schedule, for being dominated 
by the Internet engineering community, and for lacking participation by 
and input from business interests and others in the Internet 
community.<SUP>13</SUP> Others criticized the plan for failing to solve 
the competitive problems that were such a source of dissatisfaction 
among Internet users and for imposing unnecessary burdens on trademark 
holders. Although the POC responded by revising the original plan, 
demonstrating a commendable degree of flexibility, the proposal was not 
able to overcome initial criticism of both the plan and the process by 
which the plan was developed.<SUP>14</SUP> Important segments of the 
Internet community remained outside the IAHC process, criticizing it as 
insufficiently representative.<SUP>15</SUP>
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    \13\ See generally public comments received in response to July 
2, 1997 RFC located at <<a href="http://www.ntia.doc.gov/ntiahome/domainname/
email">http://www.ntia.doc.gov/ntiahome/domainname/
email</a>>.
    \14\ For a discussion, see Congressional testimony of Assistant 
Secretary of Commerce Larry Irving, Before the House Committee on 
Science, Subcommittee on Basic Research, September 25, 1997 
available at <http://www.ntia.doc.gov/ntiahome/domainname/email>.
    \15\ See generally public comments received in response to July 
2, 1997 RFC located at <<a href="http://www.ntia.doc.gov/ntiahome/domainname/
email">http://www.ntia.doc.gov/ntiahome/domainname/
email</a>>.
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    As a result of the pressure to change DNS management, and in order 
to facilitate its withdrawal from DNS management, the U.S. Government, 
through the Department of Commerce and NTIA, sought public comment on 
the direction of U.S. policy with respect to DNS, issuing the Green 
Paper on January 30, 1998.<SUP>16</SUP> The approach outlined in the 
Green Paper adopted elements of other proposals, such as the early 
Postel drafts and the IAHC gTLD-MoU.
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    \16\ The document was published in the Federal Register on 
February 20, 1998, (63 FR 8826 (Feb. 20, 1998)).
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    Comments and Response: The following are summaries of and responses 
to the major comments that were received in response to NTIA's issuance 
of A Proposal to Improve the Technical Management of Internet Names and 
Addresses. As used herein, quantitative terms such as ``some,'' 
``many,'' and ``the majority of,'' reflect, roughly speaking, the 
proportion of comments addressing a particular issue but are not 
intended to summarize all comments received or the complete substance 
of all such comments.
1. Principles for a New System
    The Green Paper set out four principles to guide the evolution of 
the domain name system: stability, competition, private bottom-up 
coordination, and representation.
    Comments: In general, commenters supported these principles, in 
some cases highlighting the importance of one or more of the 
principles. For example, a number of commenters emphasized the 
importance of establishing a body that fully reflects the broad 
diversity of the Internet community. Others stressed the need to 
preserve the bottom-up tradition of Internet governance. A limited 
number of commenters proposed additional principles for the new system, 
including principles related to the protection of human rights, free 
speech, open communication, and the preservation of the Internet as a 
public trust. Finally, some commenters who agreed that Internet 
stability is an important principle, nonetheless objected to the U.S. 
Government's assertion of any participatory role in ensuring such 
stability.
    Response: The U.S. Government policy applies only to management of 
Internet names and addresses and does not set out a system of Internet 
``governance.'' Existing human rights and free speech protections will 
not be disturbed and, therefore, need not be specifically included in 
the core principles for DNS management. In addition, this policy is not 
intended to displace other legal regimes (international law, 
competition law, tax law and principles of international taxation, 
intellectual property law, etc.) that may already apply. The continued 
applicability of these systems as well as the principle of 
representation should ensure that DNS management proceeds in the 
interest of the Internet community as a whole. Finally, the U.S. 
Government believes that it would be irresponsible to withdraw from its 
existing management role without

[[Page 31744]]

taking steps to ensure the stability of the Internet during its 
transition to private sector management. On balance, the comments did 
not present any consensus for amending the principles outlined in the 
Green Paper.
2. The Coordinated Functions
    The Green Paper identified four DNS functions to be performed on a 
coordinated, centralized basis in order to ensure that the Internet 
runs smoothly:
    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 development of other technical protocol 
parameters as needed to maintain universal connectivity on the 
Internet.
    Comments: Most commenters agreed that these functions should be 
coordinated centrally, although a few argued that a system of 
authoritative roots is not technically necessary to ensure DNS 
stability. A number of commenters, however, noted that the fourth 
function, as delineated in the Green Paper, overstated the functions 
currently performed by IANA, attributing to it central management over 
an expanded set of functions, some of which are now carried out by the 
IETF.
    Response: In order to preserve universal connectivity and the 
smooth operation of the Internet, the U.S. Government continues to 
believe, along with most commenters, that these four functions should 
be coordinated. In the absence of an authoritative root system, the 
potential for name collisions among competing sources for the same 
domain name could undermine the smooth functioning and stability of the 
Internet.
    The Green Paper was not, however, intended to expand the 
responsibilities associated with Internet protocols beyond those 
currently performed by IANA. Specifically, management of DNS by the new 
corporation does not encompass the development of Internet technical 
parameters for other purposes by other organizations such as IETF. The 
fourth function should be restated accordingly:
    <bullet> To coordinate the assignment of other Internet technical 
parameters as needed to maintain universal connectivity on the 
Internet.
3. Separation of Name and Number Authority
    Comments: A number of commenters suggested that management of the 
domain name system should be separated from management of the IP number 
system. These commenters expressed the view that the numbering system 
is relatively technical and straightforward. They feared that tight 
linkage of domain name and IP number policy development would embroil 
the IP numbering system in the kind of controversy that has surrounded 
domain name issuance in recent months. These commenters also expressed 
concern that the development of alternative name and number systems 
could be inhibited by this controversy or delayed by those with vested 
interests in the existing system.
    Response: The concerns expressed by the commenters are legitimate, 
but domain names and IP numbers must ultimately be coordinated to 
preserve universal connectivity on the Internet. Also, there are 
significant costs associated with establishing and operating two 
separate management entities.
    However, there are organizational structures that could minimize 
the risks identified by commenters. For example, separate name and 
number councils could be formed within a single organization. Policy 
could be determined within the appropriate council that would submit 
its recommendations to the new corporation's Board of Directors for 
ratification.
4. Creation of the New Corporation and Management of the DNS
    The Green Paper called for the creation of a new private, not-for-
profit corporation <SUP>17</SUP> responsible for coordinating specific 
DNS functions for the benefit of the Internet as a whole. Under the 
Green Paper proposal, the U.S. Government <SUP>18</SUP> would gradually 
transfer these functions to the new corporation beginning as soon as 
possible, with the goal of having the new corporation carry out 
operational responsibility by October 1998. Under the Green Paper 
proposal, the U.S. Government would continue to participate in policy 
oversight until such time as the new corporation was established and 
stable, phasing out as soon as possible, but in no event later than 
September 30, 2000. The Green Paper suggested that the new corporation 
be incorporated in the United States in order to promote stability and 
facilitate the continued reliance on technical expertise residing in 
the United States, including IANA staff at USC/ISI.
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    \17\ As used herein, the term ``new corporation'' is intended to 
refer to an entity formally organized under well recognized and 
established business law standards.
    \18\ As noted in the Summary, the President directed the 
Secretary of Commerce to privatize DNS in a manner that increases 
competition and facilitates international participation in its 
management. Accordingly, the Department of Commerce will lead the 
coordination of the U.S. government's role in this transition.
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    Comments: Almost all commenters supported the creation of a new, 
private not-for-profit corporation to manage DNS. Many suggested that 
IANA should evolve into the new corporation. A small number of 
commenters asserted that the U.S. Government should continue to manage 
Internet names and addresses. Another small number of commenters 
suggested that DNS should be managed by international governmental 
institutions such as the United Nations or the International 
Telecommunications Union. Many commenters urged the U.S. Government to 
commit to a more aggressive timeline for the new corporation's 
assumption of management responsibility. Some commenters also suggested 
that the proposal to headquarter the new corporation in the United 
States represented an inappropriate attempt to impose U.S. law on the 
Internet as a whole.
    Response: The U.S. Government is committed to a transition that 
will allow the private sector to take leadership for DNS management. 
Most commenters shared this goal. While international organizations may 
provide specific expertise or act as advisors to the new corporation, 
the U.S. continues to believe, as do most commenters, that neither 
national governments acting as sovereigns nor intergovernmental 
organizations acting as representatives of governments should 
participate in management of Internet names and addresses. Of course, 
national governments now have, and will continue to have, authority to 
manage or establish policy for their own ccTLDs.
    The U.S. Government would prefer that this transition be complete 
before the year 2000. To the extent that the new corporation is 
established and operationally stable, September 30, 2000 is intended to 
be, and remains, an ``outside'' date.
    IANA has functioned as a government contractor, albeit with 
considerable latitude, for some time now. Moreover, IANA is not 
formally organized or constituted. It describes a function more than an 
entity, and as such does not currently provide a legal foundation for 
the new corporation. This is not to say,

[[Page 31745]]

however, that IANA could not be reconstituted by a broad-based, 
representative group of Internet stakeholders or that individuals 
associated with IANA should not themselves play important foundation 
roles in the formation of the new corporation. We believe, and many 
commenters also suggested, that the private sector organizers will want 
Dr. Postel and other IANA staff to be involved in the creation of the 
new corporation.
    Because of the significant U.S.-based DNS expertise and in order to 
preserve stability, it makes sense to headquarter the new corporation 
in the United States. Further, the mere fact that the new corporation 
would be incorporated in the United States would not remove it from the 
jurisdiction of other nations. Finally, we note that the new 
corporation must be headquartered somewhere, and similar objections 
would inevitably arise if it were incorporated in another location.
5. Structure of the New Corporation
    The Green Paper proposed a 15-member Board, consisting of three 
representatives of regional number registries, two members designated 
by the Internet Architecture Board (IAB), two members representing 
domain name registries and domain name registrars, seven members 
representing Internet users, and the Chief Executive Officer of the new 
corporation.
    Comments: Commenters expressed a variety of positions on the 
composition of the Board of Directors for the new corporation. In 
general, however, most commenters supported the establishment of a 
Board of Directors that would be representative of the functional and 
geographic diversity of the Internet. For the most part, commenters 
agreed that the groups listed in the Green Paper included individuals 
and entities likely to be materially affected by changes in DNS. Most 
of those who criticized the proposed allocation of Board seats called 
for increased representation of their particular interest group on the 
Board of Directors. Specifically, a number of commenters suggested that 
the allocation set forth in the Green Paper did not adequately reflect 
the special interests of (1) trademark holders, (2) Internet service 
providers, or (3) the not-for-profit community. Others commented that 
the Green Paper did not adequately ensure that the Board would be 
globally representative.
    Response: The Green Paper attempted to describe a manageably sized 
Board of Directors that reflected the diversity of the Internet. It is 
probably impossible to allocate Board seats in a way that satisfies all 
parties concerned. On balance, we believe the concerns raised about the 
representation of specific groups are best addressed by a thoughtful 
allocation of the ``user'' seats as determined by the organizers of the 
new corporation and its Board of Directors, as discussed below.
    The Green Paper identified several international membership 
associations and organizations to designate Board members such as 
APNIC, ARIN, RIPE, and the Internet Architecture Board. We continue to 
believe that as use of the Internet expands outside the United States, 
it is increasingly likely that a properly open and transparent DNS 
management entity will have board members from around the world. 
Although we do not set any mandatory minimums for global 
representation, this policy statement is designed to identify global 
representativeness as an important priority.
6. Registrars and Registries
    The Green Paper proposed moving the system for registering second 
level domains and the management of generic top-level domains into a 
competitive environment by creating two market-driven businesses, 
registration of second level domain names and the management of gTLD 
registries.

a. Competitive Registrars

    Comments: Commenters strongly supported establishment of a 
competitive registrar system whereby registrars would obtain domain 
names for customers in any gTLD. Few disagreed with this position. The 
Green Paper proposed a set of requirements to be imposed by the new 
corporation on all would-be registrars. Commenters for the most part 
did not take exception to the proposed criteria, but a number of 
commenters suggested that it was inappropriate for the United States 
government to establish them.
    Response: In response to the comments received, the U.S. Government 
believes that the new corporation, rather than the U.S. Government, 
should establish minimum criteria for registrars that are pro-
competitive and provide some measure of stability for Internet users 
without being so onerous as to prevent entry by would-be domain name 
registrars from around the world. Accordingly, the proposed criteria 
are not part of this policy statement.

b. Competitive Registries

    Comments: Many commenters voiced strong opposition to the idea of 
competitive and/or for-profit domain name registries, citing one of 
several concerns. Some suggested that top level domain names are not, 
by nature, ever truly generic. As such, they will tend to function as 
``natural monopolies'' and should be regulated as a public trust and 
operated for the benefit of the Internet community as a whole. Others 
suggested that even if competition initially exists among various 
domain name registries, lack of portability in the naming systems would 
create lock-in and switching costs, making competition unsustainable in 
the long run. Finally, other commenters suggested that no new registry 
could compete meaningfully with NSI unless all domain name registries 
were not-for-profit and/or noncompeting.
    Some commenters asserted that an experiment involving the creation 
of additional for-profit registries would be too risky, and 
irreversible once undertaken. A related concern raised by commenters 
addressed the rights that for-profit operators might assert with 
respect to the information contained in registries they operate. These 
commenters argued that registries would have inadequate incentives to 
abide by DNS policies and procedures unless the new corporation could 
terminate a particular entity's license to operate a registry. For-
profit operators, under this line of reasoning, would be more likely to 
disrupt the Internet by resisting license terminations.
    Commenters who supported competitive registries conceded that, in 
the absence of domain name portability, domain name registries could 
impose switching costs on users who change domain name registries. They 
cautioned, however, that it would be premature to conclude that 
switching costs provide a sufficient basis for precluding the proposed 
move to competitive domain name registries and cited a number of 
factors that could protect against registry opportunism. These 
commenters concluded that the potential benefits to customers from 
enhanced competition outweighed the risk of such opportunism. The 
responses to the Green Paper also included public comments on the 
proposed criteria for registries.
    Response: Both sides of this argument have considerable merit. It 
is possible that additional discussion and information will shed light 
on this issue, and therefore, as discussed below, the U.S. Government 
has concluded that the issue should be left for further consideration 
and final action by the new corporation. The U.S. Government is of the 
view, however, that competitive systems generally result in greater 
innovation, consumer choice,

[[Page 31746]]

and satisfaction in the long run. Moreover, the pressure of competition 
is likely to be the most effective means of discouraging registries 
from acting monopolistically. Further, in response to the comments 
received, the U.S. government believes that new corporation should 
establish and implement appropriate criteria for gTLD registries. 
Accordingly, the proposed criteria are not part of this policy 
statement.
7. The Creation of New gTLDs
    The Green Paper suggested that during the period of transition to 
the new corporation, the U.S. Government, in cooperation with IANA, 
would undertake a process to add up to five new gTLDs to the 
authoritative root. Noting that formation of the new corporation would 
involve some delay, the Green Paper contemplated new gTLDs in the short 
term to enhance competition and provide information to the technical 
community and to policy makers, while offering entities that wished to 
enter into the registry business an opportunity to begin offering 
service to customers. The Green Paper, however, noted that ideally the 
addition of new TLDs would be left to the new corporation.
    Comments: The comments evidenced very strong support for limiting 
government involvement during the transition period on the matter of 
adding new gTLDs. Specifically, most commenters--both U.S. and non-
U.S.-- suggested that it would be more appropriate for the new, 
globally representative, corporation to decide these issues once it is 
up and running. Few believed that speed should outweigh process 
considerations in this matter. Others warned, however, that relegating 
this contentious decision to a new and untested entity early in its 
development could fracture the organization. Others argued that the 
market for a large or unlimited number of new gTLDs should be opened 
immediately. They asserted that there are no technical impediments to 
the addition of a host of gTLDs, and the market will decide which TLDs 
succeed and which do not. Further, they pointed out that there are no 
artificial or arbitrary limits in other media on the number of places 
in which trademark holders must defend against dilution.
    Response: The challenge of deciding policy for the addition of new 
domains will be formidable. We agree with the many commenters who said 
that the new corporation would be the most appropriate body to make 
these decisions based on global input. Accordingly, as supported by the 
preponderance of comments, the U.S. Government will not implement new 
gTLDs at this time.
    At least in the short run, a prudent concern for the stability of 
the system suggests that expansion of gTLDs proceed at a deliberate and 
controlled pace to allow for evaluation of the impact of the new gTLDs 
and well-reasoned evolution of the domain space. New top level domains 
could be created to enhance competition and to enable the new 
corporation to evaluate the functioning, in the new environment, of the 
root server system and the software systems that enable shared 
registration.
8. The Trademark Dilemma
    When a trademark is used as a domain name without the trademark 
owner's consent, consumers may be misled about the source of the 
product or service offered on the Internet, and trademark owners may 
not be able to protect their rights without very expensive litigation. 
For cyberspace to function as an effective commercial market, 
businesses must have confidence that their trademarks can be protected. 
On the other hand, management of the Internet must respond to the needs 
of the Internet community as a whole, and not trademark owners 
exclusively. The Green Paper proposed a number of steps to balance the 
needs of domain name holders with the legitimate concerns of trademark 
owners in the interest of the Internet community as a whole. The 
proposals were designed to provide trademark holders with the same 
rights they have in the physical world, to ensure transparency, and to 
guarantee a dispute resolution mechanism with resort to a court system.
    The Green Paper also noted that trademark holders have expressed 
concern that domain name registrants in faraway places may be able to 
infringe their rights with no convenient jurisdiction available in 
which the trademark owner could enforce a judgment protecting those 
rights. The Green Paper solicited comments on an arrangement whereby, 
at the time of registration, registrants would agree to submit a 
contested domain name to the jurisdiction of the courts where the 
registry is domiciled, where the registry database is maintained, or 
where the ``A'' root server is maintained.
    Comments: Commenters largely agreed that domain name registries 
should maintain up-to-date, readily searchable domain name databases 
that contain the information necessary to locate a domain name holder. 
In general commenters did not take specific issue with the database 
specifications proposed in Appendix 2 of the Green Paper, although some 
commenters proposed additional requirements. A few commenters noted, 
however, that privacy issues should be considered in this context.
    A number of commenters objected to NSI's current business practice 
of allowing registrants to use domain names before they have actually 
paid any registration fees. These commenters pointed out that this 
practice has encouraged cybersquatters and increased the number of 
conflicts between domain name holders and trademark holders. They 
suggested that domain name applicants should be required to pay before 
a desired domain name becomes available for use.
    Most commenters also favored creation of an on-line dispute 
resolution mechanism to provide inexpensive and efficient alternatives 
to litigation for resolving disputes between trademark owners and 
domain name registrants. The Green Paper contemplated that each 
registry would establish specified minimum dispute resolution 
procedures, but remain free to establish additional trademark 
protection and dispute resolution mechanisms. Most commenters did not 
agree with this approach, favoring instead a uniform approach to 
resolving trademark/domain name disputes.
    Some commenters noted that temporary suspension of a domain name in 
the event of an objection by a trademark holder within a specified 
period of time after registration would significantly extend trademark 
holders' rights beyond what is accorded in the real world. They argued 
that such a provision would create a de facto waiting period for name 
use, as holders would need to suspend the use of their name until after 
the objection window had passed to forestall an interruption in 
service. Further, they argue that such a system could be used anti-
competitively to stall a competitor's entry into the marketplace.
    The suggestion that domain name registrants be required to agree at 
the time of registration to submit disputed domain names to the 
jurisdiction of specified courts was supported by U.S. trademark 
holders but drew strong protest from trademark holders and domain name 
registrants outside the United States. A number of commenters 
characterized this as an inappropriate attempt to establish U.S. 
trademark law as the law of the Internet. Others suggested that 
existing jurisdictional arrangements are satisfactory. They argue that 
establishing a mechanism whereby the judgment of a court can be 
enforced absent personal jurisdiction

[[Page 31747]]

over the infringer would upset the balance between the interests of 
trademark holders and those of other members of the Internet community.
    Response: The U.S. Government will seek international support to 
call upon the World Intellectual Property Organization (WIPO) to 
initiate a balanced and transparent process, which includes the 
participation of trademark holders and members of the Internet 
community who are not trademark holders, to (1) develop recommendations 
for a uniform approach to resolving trademark/domain name disputes 
involving cyberpiracy (as opposed to conflicts between trademark 
holders with legitimate competing rights), (2) recommend a process for 
protecting famous trademarks in the generic top level domains, and (3) 
evaluate the effects, based on studies conducted by independent 
organizations, such as the National Research Council of the National 
Academy of Sciences, of adding new gTLDs and related dispute resolution 
procedures on trademark and intellectual property holders. These 
findings and recommendations could be submitted to the board of the new 
corporation for its consideration in conjunction with its development 
of registry and registrar policy and the creation and introduction of 
new gTLDs.
    In trademark/domain name conflicts, there are issues of 
jurisdiction over the domain name in controversy and jurisdiction over 
the legal persons (the trademark holder and the domain name holder). 
This document does not attempt to resolve questions of personal 
jurisdiction in trademark/domain name conflicts. The legal issues are 
numerous, involving contract, conflict of laws, trademark, and other 
questions. In addition, determining how these various legal principles 
will be applied to the borderless Internet with an unlimited 
possibility of factual scenarios will require a great deal of thought 
and deliberation. Obtaining agreement by the parties that jurisdiction 
over the domain name will be exercised by an alternative dispute 
resolution body is likely to be at least somewhat less controversial 
than agreement that the parties will subject themselves to the personal 
jurisdiction of a particular national court. Thus, the references to 
jurisdiction in this policy statement are limited to jurisdiction over 
the domain name in dispute, and not to the domain name holder.
    In order to strike a balance between those commenters who thought 
that registrars and registries should not themselves be engaged in 
disputes between trademark owners and domain name holders and those 
commenters who thought that trademark owners should have access to a 
reliable and up-to-date database, we believe that a database should be 
maintained that permits trademark owners to obtain the contact 
information necessary to protect their trademarks.
    Further, it should be clear that whatever dispute resolution 
mechanism is put in place by the new corporation, that mechanism should 
be directed toward disputes about cybersquatting and cyberpiracy and 
not to settling the disputes between two parties with legitimate 
competing interests in a particular mark. Where legitimate competing 
rights are concerned, disputes are rightly settled in an appropriate 
court.
    Under the revised plan, we recommend that domain name holders agree 
to submit infringing domain names to the jurisdiction of a court where 
the ``A'' root server is maintained, where the registry is domiciled, 
where the registry database is maintained, or where the registrar is 
domiciled. We believe that allowing trademark infringement suits to be 
brought wherever registrars and registries are located will help ensure 
that all trademark holders `` both U.S. and non-U.S. `` have the 
opportunity to bring suits in a convenient jurisdiction and enforce the 
judgments of those courts.
    Under the revised plan, we also recommend that, whatever options 
are chosen by the new corporation, each registrar should insist that 
payment be made for the domain name before it becomes available to the 
applicant. The failure to make a domain name applicant pay for its use 
of a domain name has encouraged cyberpirates and is a practice that 
should end as soon as possible.
9. Competition Concerns
    Comments: Several commenters suggested that the U.S. Government 
should provide full antitrust immunity or indemnification for the new 
corporation. Others noted that potential antitrust liability would 
provide an important safeguard against institutional inflexibility and 
abuses of power.
    Response: Applicable antitrust law will provide accountability to 
and protection for the international Internet community. Legal 
challenges and lawsuits can be expected within the normal course of 
business for any enterprise and the new corporation should anticipate 
this reality.
    The Green Paper envisioned the new corporation as operating on 
principles similar to those of a standard-setting body. Under this 
model, due process requirements and other appropriate processes that 
ensure transparency, equity and fair play in the development of 
policies or practices would need to be included in the new 
corporation's originating documents. For example, the new corporation's 
activities would need to be open to all persons who are directly 
affected by the entity, with no undue financial barriers to 
participation or unreasonable restrictions on participation based on 
technical or other such requirements. Entities and individuals would 
need to be able to participate by expressing a position and its basis, 
having that position considered, and appealing if adversely affected. 
Further, the decision making process would need to reflect a balance of 
interests and should not be dominated by any single interest category. 
If the new corporation behaves this way, it should be less vulnerable 
to antitrust challenges.
10. The NSI Agreement
    Comments: Many commenters expressed concern about continued 
administration of key gTLDs by NSI. They argued that this would give 
NSI an unfair advantage in the marketplace and allow NSI to leverage 
economies of scale across their gTLD operations. Some commenters also 
believe the Green Paper approach would have entrenched and 
institutionalized NSI's dominant market position over the key domain 
name going forward. Further, many commenters expressed doubt that a 
level playing field between NSI and the new registry market entrants 
could emerge if NSI retained control over .com, .net, and .org.
    Response: The cooperative agreement between NSI and the U.S. 
Government is currently in its ramp down period. The U.S. Government 
and NSI will shortly commence discussions about the terms and 
conditions governing the ramp-down of the cooperative agreement. 
Through these discussions, the U.S. Government expects NSI to agree to 
take specific actions, including commitments as to pricing and equal 
access, designed to permit the development of competition in domain 
name registration and to approximate what would be expected in the 
presence of marketplace competition. The U.S. Government expects NSI to 
agree to act in a manner consistent with this policy statement, 
including recognizing the role of the new corporation to establish and 
implement DNS policy and to establish terms (including licensing terms) 
applicable to new and existing gTLD registries under which registries, 
registrars and gTLDs are permitted to

[[Page 31748]]

operate. Further, the U.S. Government expects NSI to agree to make 
available on an ongoing basis appropriate databases, software, 
documentation thereof, technical expertise, and other intellectual 
property for DNS management and shared registration of domain names.
11. A Global Perspective
    Comments: A number of commenters expressed concern that the Green 
Paper did not go far enough in globalizing the administration of the 
domain name system. Some believed that international organizations 
should have a role in administering the DNS. Others complained that 
incorporating the new corporation in the United States would entrench 
control over the Internet with the U.S. Government. Still others 
believed that the awarding by the U.S. Government of up to five new 
gTLDs would enforce the existing dominance of U.S. entities over the 
gTLD system.
    Response: The U.S. Government believes that the Internet is a 
global medium and that its technical management should fully reflect 
the global diversity of Internet users. We recognize the need for and 
fully support mechanisms that would ensure international input into the 
management of the domain name system. In withdrawing the U.S. 
Government from DNS management and promoting the establishment of a 
new, non-governmental entity to manage Internet names and addresses, a 
key U.S. Government objective has been to ensure that the increasingly 
global Internet user community has a voice in decisions affecting the 
Internet's technical management.
    We believe this process has reflected our commitment. Many of the 
comments on the Green Paper were filed by foreign entities, including 
governments. Our dialogue has been open to all Internet users--foreign 
and domestic, government and private--during this process, and we will 
continue to consult with the international community as we begin to 
implement the transition plan outlined in this paper.
12. The Intellectual Infrastructure Fund
    In 1995, NSF authorized NSI to assess domain name registrants a $50 
fee per year for the first two years, 30 percent of which was to be 
deposited in the Intellectual Infrastructure Fund (IIF), a fund to be 
used for the preservation and enhancement of the intellectual 
infrastructure of the Internet.
    Comments: Very few comments referenced the IIF. In general, the 
comments received on the issue supported either refunding the IIF 
portion of the domain name registration fee to domain registrants from 
whom it had been collected or applying the funds toward Internet 
infrastructure development projects generally, including funding the 
establishment of the new corporation.
    Response: As proposed in the Green Paper, allocation of a portion 
of domain name registration fees to this fund terminated as of March 
31, 1998. NSI has reduced its registration fees accordingly. The IIF 
remains the subject of litigation. The U.S. Government takes the 
position that its collection has recently been ratified by the U.S. 
Congress,\19\ and has moved to dismiss the claim that it was unlawfully 
collected. This matter has not been finally resolved, however.
---------------------------------------------------------------------------

    \19\ 1998 Supplemental Appropriations and Rescissions Act; Pub. 
L. 105-174; 112 Stat. 58.
---------------------------------------------------------------------------

13. The .us Domain
    At present, the IANA administers .us as a locality-based hierarchy 
in which second-level domain space is allocated to states and U.S. 
territories.\20\ This name space is further subdivided into localities. 
General registration under localities is performed on an exclusive 
basis by private firms that have requested delegation from IANA. The 
.us name space has typically been used by branches of state and local 
governments, although some commercial names have been assigned. Where 
registration for a locality has not been delegated, the IANA itself 
serves as the registrar.
---------------------------------------------------------------------------

    \20\ Management principles for the .us domain space are set 
forth in Internet RFC 1480, (<a href="http://www.isi.edu/in-notes/
rfc1480.txt">http://www.isi.edu/in-notes/
rfc1480.txt</a>).
---------------------------------------------------------------------------

    Comments: Many commenters suggested that the pressure for unique 
identifiers in the .com gTLD could be relieved if commercial use of the 
.us space was encouraged. Commercial users and trademark holders, 
however, find the current locality-based system too cumbersome and 
complicated for commercial use. They called for expanded use of the .us 
TLD to alleviate some of the pressure for new generic TLDs and reduce 
conflicts between American companies and others vying for the same 
domain name. Most commenters support an evolution of the .us domain 
designed to make this name space more attractive to commercial users.
    Response: Clearly, there is much opportunity for enhancing the .us 
domain space, and .us could be expanded in many ways without displacing 
the current structure. Over the next few months, the U.S. Government 
will work with the private sector and state and local governments to 
determine how best to make the .us domain more attractive to commercial 
users. Accordingly, the Department of Commerce will seek public input 
on this important issue.

Administrative Law Requirements

    On February 20, 1998, NTIA published for public comment a proposed 
rule regarding the domain name registration system. That proposed rule 
sought comment on substantive regulatory provisions, including but not 
limited to a variety of specific requirements for the membership of the 
new corporation, the creation during a transition period of a specified 
number of new generic top level domains and minimum dispute resolution 
and other procedures related to trademarks. As discussed elsewhere in 
this document, in response to public comment these aspects of the 
original proposal have been eliminated. In light of the public comment 
and the changes to the proposal made as a result, as well as the 
continued rapid technological development of the Internet, the 
Department of Commerce has determined that it should issue a general 
statement of policy, rather than define or impose a substantive 
regulatory regime for the domain name system. As such, this policy 
statement is not a substantive rule, does not contain mandatory 
provisions and does not itself have the force and effect of law.
    The Assistant General Counsel for Legislation and Regulation, 
Department of Commerce, certified to the Chief Counsel for Advocacy, 
Small Business Administration, that, for purposes of the Regulatory 
Flexibility Act, 5 U.S.C. 601 et seq., the proposed rule on this 
matter, if adopted, would not have a significant economic impact on a 
substantial number of small entities. The factual basis for this 
certification was published along with the proposed rule. No comments 
were received regarding this certification. As such, and because this 
final rule is a general statement of policy, no final regulatory 
flexibility analysis has been prepared.
    This general statement of policy does not contain any reporting or 
record keeping requirements subject to the Paperwork Reduction Act, 44 
U.S.C. ch. 35 (PRA). However, at the time the U.S. Government might 
seek to enter into agreements as described in this policy statement, a 
determination will be made as to whether any reporting or record 
keeping requirements subject to the PRA are being implemented. If so, 
the NTIA will, at that time, seek approval under the PRA for such 
requirement(s) from the Office of Management and Budget.

[[Page 31749]]

    This statement has been determined to be not significant for 
purposes of Office of Management and Budget review under Executive 
Order 12866, entitled Regulatory Planning and Review.

Revised Policy Statement

    This document provides the U.S. Government's policy regarding the 
privatization of the domain name system in a manner that allows for the 
development of robust competition and that facilitates global 
participation in the management of Internet names and addresses.
    The policy that follows does not propose a monolithic structure for 
Internet governance. We doubt that the Internet should be governed by 
one plan or one body or even by a series of plans and bodies. Rather, 
we seek a stable process to address the narrow issues of management and 
administration of Internet names and numbers on an ongoing basis.
    As set out below, the U.S. Government is prepared to recognize, by 
entering into agreement with, and to seek international support for, a 
new, not-for-profit corporation formed by private sector Internet 
stakeholders to administer policy for the Internet name and address 
system. Under such agreement(s) or understanding(s), the new 
corporation would undertake various responsibilities for the 
administration of the domain name system now performed by or on behalf 
of the U.S. Government or by third parties under arrangements or 
agreements with the U.S. Government. The U.S. Government would also 
ensure that the new corporation has appropriate access to needed 
databases and software developed under those agreements.

The Coordinated Functions

    Management of number addresses is best done on a coordinated basis. 
Internet numbers are a unique, and at least currently, a limited 
resource. As technology evolves, changes may be needed in the number 
allocation system. These changes should also be coordinated.
    Similarly, coordination of the root server network is necessary if 
the whole system is to work smoothly. While day-to-day operational 
tasks, such as the actual operation and maintenance of the Internet 
root servers, can be dispersed, overall policy guidance and control of 
the TLDs and the Internet root server system should be vested in a 
single organization that is representative of Internet users around the 
globe.
    Further, changes made in the administration or the number of gTLDs 
contained in the authoritative root system will have considerable 
impact on Internet users throughout the world. In order to promote 
continuity and reasonable predictability in functions related to the 
root zone, the development of policies for the addition, allocation, 
and management of gTLDs and the establishment of domain name registries 
and domain name registrars to host gTLDs should be coordinated.
    Finally, coordinated maintenance and dissemination of the protocol 
parameters for Internet addressing will best preserve the stability and 
interconnectivity of the Internet. We are not, however, proposing to 
expand the functional responsibilities of the new corporation beyond 
those exercised by IANA currently.
    In order to facilitate the needed coordination, Internet 
stakeholders are invited to work together to form a new, private, not-
for-profit corporation to manage DNS functions. The following 
discussion reflects current U.S. Government views of the 
characteristics of an appropriate management entity. What follows is 
designed to describe the characteristics of an appropriate entity 
generally.
Principles for a New System
    In making a decision to enter into an agreement to establish a 
process to transfer current U.S. Government management of DNS to such a 
new entity, the U.S. will be guided by, and consider the proposed 
entity's commitment to, the following principles:
    1. Stability. The U.S. Government should end its role in the 
Internet number and name address system in a manner that ensures the 
stability of the Internet. The introduction of a new management system 
should not disrupt current operations or create competing root systems. 
During the transition and thereafter, the stability of the Internet 
should be the first priority of any DNS management system. Security and 
reliability of the DNS are important aspects of stability, and as a new 
DNS management system is introduced, a comprehensive security strategy 
should be developed.
    2. Competition. The Internet succeeds in great measure because it 
is a decentralized system that encourages innovation and maximizes 
individual freedom. Where possible, market mechanisms that support 
competition and consumer choice should drive the management of the 
Internet because they will lower costs, promote innovation, encourage 
diversity, and enhance user choice and satisfaction.
    3. Private, Bottom-Up Coordination. Certain management functions 
require coordination. In these cases, responsible, private-sector 
action is preferable to government control. A private coordinating 
process is likely to be more flexible than government and to move 
rapidly enough to meet the changing needs of the Internet and of 
Internet users. The private process should, as far as possible, reflect 
the bottom-up governance that has characterized development of the 
Internet to date.
    4. Representation. The new corporation should operate as a private 
entity for the benefit of the Internet community as a whole. The 
development of sound, fair, and widely accepted policies for the 
management of DNS will depend on input from the broad and growing 
community of Internet users. Management structures should reflect the 
functional and geographic diversity of the Internet and its users. 
Mechanisms should be established to ensure international participation 
in decision making.
    Purpose. The new corporation ultimately should have the authority 
to manage and perform a specific set of functions related to 
coordination of the domain name system, including the authority 
necessary to:
    (1) Set policy for and direct allocation of IP number blocks to 
regional Internet number registries;
    (2) Oversee operation of the authoritative Internet root server 
system;
    (3) Oversee policy for determining the circumstances under which 
new TLDs are added to the root system; and
    (4) Coordinate the assignment of other Internet technical 
parameters as needed to maintain universal connectivity on the 
Internet.
    Funding. Once established, the new corporation could be funded by 
domain name registries, regional IP registries, or other entities 
identified by the Board.
    Staff. We anticipate that the new corporation would want to make 
arrangements with current IANA staff to provide continuity and 
expertise over the course of transition. The new corporation should 
secure necessary expertise to bring rigorous management to the 
organization.
    Incorporation. We anticipate that the new corporation's organizers 
will include representatives of regional Internet number registries, 
Internet engineers and computer scientists, domain name registries, 
domain name registrars, commercial and noncommercial users, Internet 
service providers, international trademark

[[Page 31750]]

holders and Internet experts highly respected throughout the 
international Internet community. These incorporators should include 
substantial representation from around the world.
    As these functions are now performed in the United States, by U.S. 
residents, and to ensure stability, the new corporation should be 
headquartered in the United States, and incorporated in the U.S. as a 
not-for-profit corporation. It should, however, have a board of 
directors from around the world. Moreover, incorporation in the United 
States is not intended to supplant or displace the laws of other 
countries where applicable.
    Structure. The Internet community is already global and diverse and 
likely to become more so over time. The organization and its board 
should derive legitimacy from the participation of key stakeholders. 
Since the organization will be concerned mainly with numbers, names and 
protocols, its board should represent membership organizations in each 
of these areas, as well as the direct interests of Internet users.
    The Board of Directors for the new corporation should be balanced 
to equitably represent the interests of IP number registries, domain 
name registries, domain name registrars, the technical community, 
Internet service providers (ISPs), and Internet users (commercial, not-
for-profit, and individuals) from around the world. Since these 
constituencies are international, we would expect the board of 
directors to be broadly representative of the global Internet 
community.
    As outlined in appropriate organizational documents, (Charter, 
Bylaws, etc.) the new corporation should:
    (1) Appoint, on an interim basis, an initial Board of Directors (an 
Interim Board) consisting of individuals representing the functional 
and geographic diversity of the Internet community. The Interim Board 
would likely need access to legal counsel with expertise in corporate 
law, competition law, intellectual property law, and emerging Internet 
law. The Interim Board could serve for a fixed period, until the Board 
of Directors is elected and installed, and we anticipate that members 
of the Interim Board would not themselves serve on the Board of 
Directors of the new corporation for a fixed period thereafter.
    (2) Direct the Interim Board to establish a system for electing a 
Board of Directors for the new corporation that insures that the new 
corporation's Board of Directors reflects the geographical and 
functional diversity of the Internet, and is sufficiently flexible to 
permit evolution to reflect changes in the constituency of Internet 
stakeholders. Nominations to the Board of Directors should preserve, as 
much as possible, the tradition of bottom-up governance of the 
Internet, and Board Members should be elected from membership or other 
associations open to all or through other mechanisms that ensure broad 
representation and participation in the election process.
    (3) Direct the Interim Board to develop policies for the addition 
of TLDs, and establish the qualifications for domain name registries 
and domain name registrars within the system.
    (4) Restrict official government representation on the Board of 
Directors without precluding governments and intergovernmental 
organizations from participating as Internet users or in a non-voting 
advisory capacity.
    Governance. The organizing documents (Charter, Bylaws, etc.) should 
provide that the new corporation is governed on the basis of a sound 
and transparent decision-making process, which protects against capture 
by a self-interested faction, and which provides for robust, 
professional management of the new corporation. The new corporation 
could rely on separate, diverse, and robust name and number councils 
responsible for developing, reviewing, and recommending for the board's 
approval policy related to matters within each council's competence. 
Such councils, if developed, should also abide by rules and decision-
making processes that are sound, transparent, protect against capture 
by a self-interested party and provide an open process for the 
presentation of petitions for consideration. The elected Board of 
Directors, however, should have final authority to approve or reject 
policies recommended by the councils.
    Operations. The new corporation's processes should be fair, open 
and pro-competitive, protecting against capture by a narrow group of 
stakeholders. Typically this means that decision-making processes 
should be sound and transparent; the basis for corporate decisions 
should be recorded and made publicly available. Super-majority or even 
consensus requirements may be useful to protect against capture by a 
self-interested faction. The new corporation does not need any special 
grant of immunity from the antitrust laws so long as its policies and 
practices are reasonably based on, and no broader than necessary to 
promote the legitimate coordinating objectives of the new corporation. 
Finally, the commercial importance of the Internet necessitates that 
the operation of the DNS system, and the operation of the authoritative 
root server system should be secure, stable, and robust.
    The new corporation's charter should provide a mechanism whereby 
its governing body will evolve to reflect changes in the constituency 
of Internet stakeholders. The new corporation could, for example, 
establish an open process for the presentation of petitions to expand 
board representation.
    Trademark Issues. Trademark holders and domain name registrants and 
others should have access to searchable databases of registered domain 
names that provide information necessary to contact a domain name 
registrant when a conflict arises between a trademark holder and a 
domain name holder.<SUP>21</SUP> To this end, we anticipate that the 
policies established by the new corporation would provide that 
following information would be included in all registry databases and 
available to anyone with access to the Internet:

    \21\ These databases would also benefit domain name holders by 
making it less expensive for new registrars and registries to 
identify potential customers, enhancing competition and lowering 
prices.
---------------------------------------------------------------------------

--Up-to-date registration and contact information;
--Up-to-date and historical chain of registration information for the 
domain name;
--A mail address for service of process;
--The date of domain name registration;
--The date that any objection to the registration of the domain name is 
filed; and
--Any other information determined by the new corporation to be 
reasonably necessary to resolve disputes between domain name 
registrants and trademark holders expeditiously.
    Further, the U.S. Government recommends that the new corporation 
adopt policies whereby:
    (1) Domain registrants pay registration fees at the time of 
registration or renewal and agree to submit infringing domain names to 
the authority of a court of law in the jurisdiction in which the 
registry, registry database, registrar, or the ``A'' root servers are 
located.
    (2) Domain name registrants would agree, at the time of 
registration or renewal, that in cases involving cyberpiracy or 
cybersquatting (as opposed to conflicts between legitimate competing 
rights holders), they would submit to and be bound by alternative 
dispute resolution systems identified by the new corporation for the 
purpose of resolving those conflicts. Registries and Registrars should 
be required to abide by decisions of the ADR system.

[[Page 31751]]

    (3) Domain name registrants would agree, at the time of 
registration or renewal, to abide by processes adopted by the new 
corporation that exclude, either pro-actively or retroactively, certain 
famous trademarks from being used as domain names (in one or more TLDs) 
except by the designated trademark holder.
    (4) Nothing in the domain name registration agreement or in the 
operation of the new corporation should limit the rights that can be 
asserted by a domain name registrant or trademark owner under national 
laws.

The Transition

    Based on the processes described above, the U.S. Government 
believes that certain actions should be taken to accomplish the 
objectives set forth above. Some of these steps must be taken by the 
government itself, while others will need to be taken by the private 
sector. For example, a new not-for-profit organization must be 
established by the private sector and its Interim Board chosen. 
Agreement must be reached between the U.S. Government and the new 
corporation relating to transfer of the functions currently performed 
by IANA. NSI and the U.S. Government must reach agreement on the terms 
and conditions of NSI's evolution into one competitor among many in the 
registrar and registry marketplaces. A process must be laid out for 
making the management of the root server system more robust and secure. 
A relationship between the U.S. Government and the new corporation must 
be developed to transition DNS management to the private sector and to 
transfer management functions.
    During the transition the U.S. Government expects to:
    (1) Ramp down the cooperative agreement with NSI with the objective 
of introducing competition into the domain name space. Under the ramp 
down agreement NSI will agree to (a) take specific actions, including 
commitments as to pricing and equal access, designed to permit the 
development of competition in domain name registration and to 
approximate what would be expected in the presence of marketplace 
competition, (b) recognize the role of the new corporation to establish 
and implement DNS policy and to establish terms (including licensing 
terms) applicable to new and existing gTLDs and registries under which 
registries, registrars and gTLDs are permitted to operate, (c) make 
available on an ongoing basis appropriate databases, software, 
documentation thereof, technical expertise, and other intellectual 
property for DNS management and shared registration of domain names;
    (2) Enter into agreement with the new corporation under which it 
assumes responsibility for management of the domain name space;
    (3) Ask WIPO to convene an international process including 
individuals from the private sector and government to develop a set of 
recommendations for trademark/domain name dispute resolutions and other 
issues to be presented to the Interim Board for its consideration as 
soon as possible;
    (4) Consult with the international community, including other 
interested governments as it makes decisions on the transfer; and
    (5) Undertake, in cooperation with IANA, NSI, the IAB, and other 
relevant organizations from the public and private sector, a review of 
the root server system to recommend means to increase the security and 
professional management of the system. The recommendations of the study 
should be implemented as part of the transition process; and the new 
corporation should develop a comprehensive security strategy for DNS 
management and operations.

    Dated: June 4, 1998.
William M. Daley,
Secretary of Commerce.
[FR Doc. 98-15392 Filed 6-9-98; 8:45 am]
BILLING CODE 3510-60-P


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