Looking Back at ICANN: First Taste of Incumbent Intransigence, Congressional Oversight

This is the second in a series of posts I am writing prior to the Internet Corporation for Assigned Names and Numbers' 50th public meeting on June 22-26 in London. In honor of the occasion, I thought I should share some of Bloomberg BNA's coverage of ICANN over the past 16 years. Today's topic: ICANN's efforts to bring Network Solutions to heel, and its first tour of the House Rayburn Building.

The drafters of the Nov. 25, 1998, Memorandum of Understanding between the U.S. Department of Commerce and ICANN devoted most of their attention to declaring the U.S. government's authority over the domain name system, declaring the Department of Commerce's ability to transfer key aspects of that authority to ICANN, and providing ICANN, at a very general level, with a policy purpose and approach (consensus-driven multi-stakeholderism) to discharging its assigned responsibilities.

However, the MoU offered little assistance in dealing with Network Solutions Inc., the incumbent, exclusive registry and registrar operator for .com, .org, .net, and .edu domain names. NSI was a hard-nosed operator that did not give an inch. NSI forced ICANN to fight for every little bit of authority that was not explicitly nailed down in writing. NSI, which had its own agreement with the government to perform registry operations, refused to recognize ICANN's authority or submit to ICANN's new registrar accreditation program.

NSI further complicated the introduction of competition in the domain name business by claiming ownership of the WHOIS contact information database that it had accumulated since 1992, the year it acquired the National Science Foundation domain name registration services contract. Without a doubt, NSI was one of the largest thorns (there were many) in ICANN's side during ICANN's early, formative years.

ICANN also struggled in 1999 to establish a reliable source of funding, another topic that was unaddressed in the MoU. ICANN's proposal to collect $1 from each domain name registration was characterized as "taxing the Internet," a public policy third rail then and today.

NSI had a strong ally in Rep. Thomas J. Bliley (R-Va.), the chair of the House Commerce Committee who, unluckily for ICANN, happened to hail from Virginia, the same state as Herndon, Va.-based NSI. Bliley stood up for NSI when ICANN threatened to terminate NSI's ability to register domain names. Bliley challenged the legal basis of ICANN's funding proposal. Bliley blustered publicly about the Department of Justice's suggestion of antitrust problems with NSI's position as sole registry operator of .com and .net top-level domains. Bliley questioned the Department of Commerce's authority to hand over domain name administration responsibilities to ICANN.

Throughout the summer of 1999, Bliley's apparent support of NSI's foot-dragging was a potent counter-balance to pressure that NSI had been receiving from the Department of Commerce, the Department of Justice, and ICANN itself.

In the end a deal was cut. NSI got to keep (possibly forever) its registry contract for the .com and .net top-level domains. NSI recognized ICANN's authority and signed its registrar accreditation agreement. Bliley stood down. The Department of Justice antitrust investigation went away. And ICANN soon began collecting a fee on every domain name registration, a fee that it continues to collect today.

Less than a year later, NSI was acquired by Verisign Inc. for $21 billion, the largest Internet transaction up to that time.

Bliley Challenges ICANN About NSI Termination Threats, Authority to Levy Fees (6/30/1999)

New Net Authority Faults NSI's Intransigence; Commerce Sees Bad Behavior on Both Sides (7/14/1999)

NSI Questioned About Monopoly, Competition During House Committee ICANN Investigation (7/28/1999)

NSI, Department of Commerce Dig in Heels Over Database Ownership at House Hearing (8/4/1999)

House Commerce Chair Calls DOJ to Task Over 'Inappropriate' Conduct in NSI Dealings (8/4/1999)

NSI Agrees to Recognize ICANN, Pay $1.25M To Keep Net Registry For At Least Four Years (10/6/1999)

Bliley Challenges ICANN About NSI Termination Threats, Authority to Levy Fees

Originally published June 30, 1999


U.S. Rep. Thomas J. Bliley (R-Va.) challenged the Internet Corporation for Assigned Names and Numbers over alleged threats by ICANN to terminate Network Solutions Inc. as a domain name registrar, the appointment process of ICANN's interim board, and the authority of ICANN to levy fees for domain name registration, in a June 22 letter to ICANN Interim Chairman Esther Dyson.

The Chairman of the House Commerce Committee also sent a similar letter to Department of Commerce Secretary William M. Daley. Responses to both letters, and documents requested by them, are due back to the committee by July 6.

ICANN's Actions 'Exceed Authority'

Bliley noted that recent actions by ICANN's interim board of directors "likely exceed the authority" that the Commerce Department's June 1998 white paper contemplated for the private organization. The white paper outlined the administration's proposal for the creation of a private-sector corporation to manage the domain name system (DNS) (3 ECLR 748, 6/10/98). According to the white paper, the new corporation would practice sound and transparent decision making, and would be fair, open, and pro-competitive.

Questions Raised Over Fees, Board Members

Bliley raised new questions about the manner in which the interim board of directors operates, as well as about some of its recent decisions. In particular, he said he was distressed by reports that ICANN allegedly threatened to terminate NSI as a domain name registrar if the company refused to enter into the ICANN registrar accreditation agreement by June 25.

NSI is the private corporation that until recently had an exclusive contract with the U.S. government to register domain names. ICANN announced April 21 five new test-bed registrars (4 ECLR 355, 4/28/99). Although the test-bed phase was slated to end by late June, thus far only one company, register.com, has begun registering domain names in competition with NSI.

Bliley also renewed questions raised last October about the process by which board members were selected. He asked that ICANN provide specifics on:

  • legal analysis of ICANN's authority to impose a $1 per domain name registration fee, to terminate NSI's authority to register domain names, and to retain intellectual property rights over registrar data;
  • the time frame for replacing the interim board with an elected board; and
  • a detailed summary from each ICANN interim board member recounting the sequence of events that preceded the person's acceptance of membership on the ICANN board.

Bliley also asked for information about negotiations between ICANN and the executive branch on several related topics. Those topics include the transfer of control of the server root system to ICANN, as well as future agreements relating to the DNS between ICANN and the Commerce Department. The committee also wants communications about the termination or alteration of DOC's cooperative agreement with NSI, and relatedly any attempts to persuade or force NSI into entering a registrar accreditation agreement with ICANN.

Questioning Commerce Authority, Oversight of ICANN

Bliley's letter to the Commerce Department requested similar information and materials as those requested of ICANN. Bliley also asked about a perceived lack of action by a department official to the alleged threat made by the ICANN board during its May meeting.

Further, the letter requested that Commerce analyze its organic authority to empower ICANN, as well as the nature and scope of the department's oversight authority over ICANN. The chairman also requested an analysis of whether Commerce's cooperative agreement with NSI requires NSI to sign a registrar accreditation agreement with ICANN.

Bliley expressed his belief to both parties that ICANN, rather than promoting the Internet's evolution, is adopting policies that may jeopardize the continued stability of the underlying systems that enable the Internet.

The Bliley letter highlights growing tensions between ICANN, the federal government, and NSI over access to the Whois database (see related story this issue). The Justice Department recently renewed its antitrust investigation of NSI (4 ECLR 422, 5/12/99). NSI has refused to share a database of its customer names and e-mail addresses with nascent competitors. NSI generated the database while it held a sole contract since 1992 with the National Science Foundation, an independent federal agency. The contract permitted NSI to serve as the exclusive registrar of alphanumeric World Wide Web site addresses that end in the generic top-level domains .com, .org, .net, and .edu.

New Net Authority Faults NSI's Intransigence; Commerce Sees Bad Behavior on Both Sides

Originally published July 14, 1999


The Internet Corporation for Assigned Names and Numbers July 8 defended its recent fee levy and other corporate decisions, saying Network Solutions Inc. instead is to blame for the increasing cost of opening competition in the Internet domain name registration business.

In a response to a June 22 House Commerce Committee letter, ICANN blamed the intransigence of NSI in refusing to sign a registrar contract and otherwise cooperate with ICANN for increasing competition transition costs.

In its response to a similar letter from the committee, the Department of Commerce advocated elimination of ICANN's $1 fee and urged the opening of ICANN board meetings. In addition, the DOC sharply criticized NSI's position on ownership of the domain name registry database, and also faulted NSI for not fulfilling its obligation to recognize ICANN's authority.

The Commerce Committee letters were sent to Esther Dyson, ICANN's interim chairman, and Secretary of Commerce William M. Daley by committee Chairman Thomas J. Bliley (R-Va.) (4 ECLR 569, 6/30/99). Bliley questioned ICANN on its authority to levy fees, the appointment process of ICANN's interim board, and about alleged threats by ICANN to terminate Network Solutions Inc. as a domain name registrar. The letter to Daley covered similar subjects.

NSI is the private corporation that until recently had an exclusive contract with the U.S. government to register domain names. ICANN announced April 21 five new testbed registrars (4 ECLR 355, 4/28/99). Although the testbed phase was slated to end by June 24, thus far only three of the five companies have begun registering domain names in competition with NSI. The testbed phase was recently extended to July 16 (4 ECLR 567, 6/30/99).

User Fees Defended, Database Ownership Questioned

ICANN claims that it has not imposed any fee on users, but rather receives payments via contracts with the registrars it has accredited. It defended the registrar fee on the grounds that it now performs many functions formerly carried out by the federal government and NSI under government contract, as well as new functions specified by the white paper. The white paper outlined the administration's proposal for the creation of a private-sector corporation to manage the domain name system (DNS) (3 ECLR 748, 6/10/98).

ICANN condemned the recent elimination by NSI of its WHOIS service as part of NSI's registry function. The WHOIS system allowed users to look up domain name registration data. ICANN claims that NSI decided to eliminate the service once competition was imminent in the domain name registration business, thus creating an additional cost for new registrars, as well as for businesses relying on the service.

ICANN also criticized NSI's failure to reach agreement with it on the registry database. NSI has historically performed two functions under its government contract, that of registry and registrar. The registry is the authoritative database of all Internet addresses. A registrar is an entity which adds new information, i.e., registrations, to that database.

The ICANN response questioned whether the registry database was subject to any legitimate intellectual property claims by NSI. ICANN noted that the data in the registry has long been available to the public, due to U.S. government requirements.

No Termination Threatened?

ICANN denied that it had any power to terminate NSI's authority to register domain names. However, ICANN pointed to requirements in the DOC white paper that it give access to the registry only to ICANN-accredited registrars. NSI has yet to request accreditation from ICANN to act as a registrar, according to ICANN. The response lamented NSI's "refusal to date to be a positive contributor"to the registration process, blaming NSI for increasing costs of the transition to competition.

ICANN defended the closure of portions of its board meetings to the public, likening the closed meetings to private interactions between members of Congress and their staff. The decisions the board makes require "voluntary compliance by a large number of independent actors," belying the notion of a secret process with any significant power, according to the response.

Commerce Faults NSI on Database Position

The Commerce Department also criticized NSI's claim that it owns the information in the registry database. DOC faulted NSI for eliminating the WHOIS service, characterizing the information in the WHOIS database as having "been compiled by NSI in the course of its operations under the authority of the U.S. Government." The Justice Department recently renewed its antitrust investigation of NSI's refusal to share the database with nascent competitors (4 ECLR 422, 5/12/99).

With respect to introducing competition, NSI "must fulfill its obligation to recognize ICANN," according to the Commerce response. All of the DNS participants, including NSI, must subject themselves to the rules emerging from the white paper process, the department response said.

NSI Post-Contract Rights Subject to Interpretation

Commerce's sharpest criticism of NSI involved the company's position on its post-contract rights. The current NSI contract is set to expire on September 30, 2000. NSI's position, according to Commerce, is that once the contract expires, NSI can operate the domains--.com, .net and .org--without any government or ICANN supervision, absent agreement to the contrary. The Commerce response stated its strong belief that NSI does not have the legal right to operate domains in perpetuity.

ICANN Actions Also Targeted by Commerce

ICANN did not escape criticism by Commerce, either. The Department opposes the $1 per year domain name registration fee, at least for the present. The Commerce response voiced concern that a permanent financing method for ICANN, adopted before the election of the ICANN board, would violate the representative, bottom-up governance process outlined in the white paper. Currently, the interim directors are unelected. The department did pledge to work with ICANN to secure interim resources for the organization until permanent funding is in place.

Commerce placed the election of the ICANN board of directors at the top of the department's priorities for ICANN. The DOC also called for the opening of ICANN board meeting to the public. Commerce's response did praise ICANN for its prompt action in moving forward to implement uniform dispute resolution procedures for cybersquatting.

Hearings are expected to be held before the House Commerce Committee before the August recess.

NSI Questioned About Monopoly, Competition During House Committee ICANN Investigation

Originally published July 28, 1999


Network Solutions Inc. (NSI), was put in the hot seat before Congress July 22, and forced to defend itself against characterizations of the company as a monopoly unwilling to cooperate in creating competition in the domain name registration business.

During a hearing before the House Commerce Committee's Subcommittee on Oversight and Investigations that was supposed to focus on the actions of the Internet Corporation for Assigned Names and Numbers (ICANN), NSI found itself answering charges that it has delayed reaching agreement with the Commerce Department and ICANN on a new registrar contract because the longer it is the dominant registrar, the more money it makes.

Also at the hearing, the Commerce Department's top lawyer told members of the committee that the U.S. government has legal authority to reassign the contract under which NSI has been operating should no agreement be reached with NSI over its competitors' access to a key database it now solely controls.

Jim Rutt, NSI's chief executive officer, denied that his company's refusal to sign the agreement had to do with profits, saying that NSI favors robust competition because it likely will stimulate growth in the domain-name registration business.

"Our company's view has been what's good for Network Solutions is good for the Internet," said Rutt, whose Herndon, Va.-based company until recently had an exclusive contract with the U.S. government to register domain names. While the contract does not expire until September 2000, it is no longer exclusive.

But while Rutt defended NSI as a proponent of competition, he also sent out mixed signals.

Rutt told members of the committee that there was no legal right to take away the generic top-level domain .com from NSI when its contract with the government expires in September. This issue is key, people who track this issue have said, because if NSI's competitors cannot gain access to the Whois database, which NSI has claimed is proprietary, they will lack necessary information about existing .com names and they will not be able to update the database. The Whois system allowed its users to look up domain name registration data.

'Metaphysical Question'

And when asked point-blank if his company would continue to have a monopoly once the contract expires in September 2000, Rutt answered, "That's a metaphysical question I'll leave to the lawyers and philosophers."

ICANN, a nonprofit corporation that has been taking over management of the Internet, has challenged NSI's intellectual property claims over the registry database.

NSI is at odds with ICANN and the Commerce Department over ownership of the Whois database, which contains all current Internet address registration information. NSI developed the database under an exclusive contract it had with the National Science Foundation. NSI has laid claim to the intellectual property rights in the customer information and in the database, which contains e-mail addresses of domain name registrants (4 ECLR 422, 5/12/99). The nascent competitors have complained that without access to NSI's database, they will be unable to compete.

Currently, there are five testbed competitors, the first of which, Register.com, went online with competing registrations June 7. The Commerce Department has extended the testbed phase to Aug. 6 (4 ECLR 624, 7/21/99). Rutt testified that his company controls "about 75 percent" of the Internet domain name registration business worldwide.

NSI has yet to sign a registrar contract with ICANN, and it is unclear whether NSI can continue to act as a registrar after the testbed phase ends if it fails to sign ICANN's registrar agreement (4 ECLR 593, 5/12/99).

Department of Commerce General Counsel Andrew J. Pincus testified that NSI has an obligation to recognize ICANN's authority and that if NSI continues to refuse to agree to a sharing arrangement, the contract it has with the government could be reassinged.

"The hope is that we can reach agreement and we won't have to go down that road," Pincus said. "But if we hit a stone wall we've got to do this another way."

However, Pincus said he was "not ready to give up" on reaching an agreement with NSI, adding that going "down the recompetition road" would be "disruptive" to the Internet.

ICANN Preempted Questions

ICANN, which initially was to be the main target of the hearing, preempted much of the questioning by acting in advance of the hearing. The main concerns, raised primarily by Commerce Committee Chairman Thomas J. Bliley Jr. (R-Va.), were over ICANN's attempt to charge $1 per domain name annually to fund itself and over its closed-door board meetings. ICANN Interim Chairman Esther Dyson testified that both practices have been suspended, pending the election of a permanent board this November.

As to questions regarding ICANN's existence and authority to manage the Internet, senior Commerce Department official Becky Burr told the panel members that ICANN was a private-sector creation that emerged after extensive public comment solicited by the department. Burr is the acting associate administrator of DOC's National Telecommunications Information Agency Office of International Affairs.

Under the Commerce Department's 1998 white paper that urged the formation of a nonprofit registrar overseer, ICANN, as that entity, is responsible for introducing competition into the domain name registration business (3 ECLR 748, 6/10/98).

Burr said that as to the funding mechanism, public comments again were solicited, and that "other than Network Solutions, there were no negative comments."

Burr testified that the DOC white paper anticipated the type of organization that would be needed, and the funding requirement, as well as the need for NSI's cooperation if launching competition in the domain name registration business was to be successful.

However, Burr added, she recognized that "all things have not moved forward smoothly."

NSI, Department of Commerce Dig in Heels Over Database Ownership at House Hearing

Originally published Aug. 4, 1999


Network Solutions Inc. continued to claim ownership of the Whois database, which contains all Internet addresses in .com, .org, and .net, at a House Judiciary subcommittee oversight hearing July 28.

At the same hearing, the Department of Commerce strongly denied NSI had any rights to the database after the expiration of the Herndon, Va., company's government contract in September 2000.

The Internet Corporation for Assigned Names and Numbers did not escape criticism, either, facing questions from members of the Courts and Intellectual Property Subcommittee on why newly accredited domain name registrars do not have dispute resolution policies in place yet.

The positions of NSI and the Department of Commerce on database ownership remained essentially the same as those they took at the previous week's hearing before the House Committee on Commerce (4 ECLR 649, 7/28/99).

Commerce Confident About Public Access to Whois

Andrew J. Pincus, general counsel at the Department of Commerce, testified that the government's position is that the government owns the Whois database. However, he added, the more critical question is whether the government's cooperative agreement with NSI permits NSI to deny or limit access to the critical database. Rep. James E. Rogan (R-Calif.), quizzed Pincus on why Commerce appeared "reticent" to assert government ownership of the database. Pincus responded that it was a difficult question, but one that he ultimately thinks will be decided in favor of the government. Pincus characterized the access argument as "very strong" for the government, pointing to the history of unrestricted Whois access for the public.

Ultimately, according to Pincus, free, current, and accurate domain registration information will be publicly available regardless of who is declared the owner of Whois. The cooperative agreement, said Pincus, dictates such access, and until just prior to the arrival of registration competition, the information was available on an unlimited basis, as the contract required. NSI changed the access to Whois earlier this year. Now, Pincus says, NSI allows access to the database only after users agree to a clickwrap agreement. That agreement states that "[c]ompilation, repackaging, dissemination, or other use of the WHOIS database in its entirety, or of a substantial portion thereof, is not allowed without NSI's prior written permission. By submitting this query, you agree to abide by this policy."

Subcommittee Chairman Howard Coble (R-N.C.) queried Pincus on whether NSI could unilaterally cut off access to Whois. Pincus responded that NSI does not have the authority to cut off database access. Should the Department of Commerce be unable to reach agreement with NSI over database access, he said, the department would simply re-compete the management of the database, i.e., the registry function that NSI now performs.

Democrats Press NSI on Ownership Issue

NSI board chairman Michael A. Daniels and its outside counsel Philip L. Sbarbaro faced pointed questions from subcommittee Democrats on the basis of its claim of Whois ownership.

Howard L. Berman (D-Calif.), ranking member of the subcommittee, and Rep. Zoe Lofgren (D-Calif.) both pressed NSI on the basis for its ownership claim to the database, in light of Feist Publications v. Rural Telephone Service, 499 U.S. 340 (1991). Feist invalidated the "sweat of the brow" doctrine in copyright law, thereby giving databases only thin copyright protection for original arrangement of data, but no protection to the underlying data.

According to Sbarbaro, NSI does not base its claim to the database on copyright, but rather on the data rights granted to it in the original National Science Foundation contract. Daniels emphasized that the NSF contract was not a traditional government contract, since NSF is an independent agency. He also stated that the precise issue of ownership rights was raised before a September 1997 hearing before the House Science committee, at which NSF stated that all data rights belonged to the contract awardee, NSI. In response to a question from Rep. Bob Goodlatte (R-Va.), Daniels stated that NSF wrote his company a letter acknowledging NSI's ownership of the data rights.

When questioned by Rep. William J. Delahunt (D-Mass.) about the source of the intellectual property rights NSI was asserting in Whois, Sbarbaro pointed to the identification of NSI as the source for the past six years for domain registration. The NSI witnesses also analogized the customer information in Whois to telephone company customer information, which NSI claims is not required to be shared.

NSI was also grilled about whether it would cut off access to Whois when its contract with Commerce expired. Daniels said NSI would not do that. When asked if NSI would permit access to Whois without restriction, Daniels stated that "the database is and has been available to the public to look up registrations."

But J. Beckwith Burr, associate administrator, National Telecommunications and Information Administration in the Department of Commerce, noted after the hearing that only allowing for individual lookups in Whois was a condition to access. Before this spring, companies were able to look up multiple registrations in one search.

Fragile Internet Infrastructure

Daniels stated that the infrastructure of the Internet was more fragile than most people realize. Lofgren pressed Daniels for specifics on that claim. Daniels pointed to three factors:

  • Many of the root servers, or 13 computers that direct Internet traffic, are staffed by volunteers, and are not under around-the-clock monitoring;
  • There are concerns about root servers being Y2K compliant, as NSI outlined in a December letter to Commerce;
  • NSI questions stability of the governance structure of the Internet.

ICANN Questioned

ICANN was questioned by several committee members about why the new domain name registrars it has accredited do not have dispute resolution policies. Michael Roberts, president and CEO of ICANN, responded that the ICANN accreditation agreement does require the registrars to adopt a dispute resolution policy, as soon as ICANN develops one.

The corporation is a bottom-up, consensus-based organization, though, and Roberts said that the policy had yet to be completed, though it was being energetically worked on within ICANN. Roberts expects that the working group within ICANN charged with developing the dispute resolution policy will have one ready for the board's consideration at its meeting in three weeks in Santiago, Chile. Roberts assured Berman, in response to questioning, that ICANN will require each registrar to adopt the dispute resolution process once the board has approved it, or face losing their ICANN accreditation.

Cannon Irate Over Seven Dirty Words

Rep. Chris Cannon (R-Utah) repeatedly questioned both the Commerce Department and NSI about changes in the cooperative agreement between the two that has allowed the infamous George Carlin "seven dirty words" to be registered as domain names, along with other obscenities. Cannon asked Pincus about how such registrations were now possible, and expressed his displeasure that the registrations had become possible. Pincus testified that NSI had never asked Commerce for contract changes to allow the registrations, or brought the issue to the attention of Commerce during the contract negotiation process. According to Pincus, the government could not impose limitations on making such registrations without running afoul of the first amendment.

The NSI witnesses, though, claimed that Commerce was well aware of its concerns about the seven dirty words registrations, and that in fact, the company's negotiators spoke with DOC officials, including Burr, about those concerns. NSI was sued in April over its refusal to register several domains containing the words (4 ECLR 365, 4/14/99).

Burr, speaking after the hearing, said that the discussions she had with NSI about such registrations came after Commerce approved the NSI license agreement for the new trial registrars. NSI came to Commerce with the issue after it was sued for refusing to registering the names, Burr said.

House Commerce Chair Calls DOJ to Task Over 'Inappropriate' Conduct in NSI Dealings

Originally published Aug. 4, 1999


Rep. Thomas J. Bliley Jr. (R-Va.) said July 28 that he was troubled by the apparent impropriety of a Department of Justice attorney's alleged role in the long-running struggle to transfer key Internet functions from Network Solutions Inc. to other entities.

In letters to Attorney General Janet Reno and Esther Dyson, chairman of the Internet Corporation for Assigned Names and Numbers, Bliley questioned the DOJ attorney's apparent approval of a plan to pressure the Department of Commerce to prod a recalcitrant NSI into relinquishing Internet duties it is performing under an exclusive government contract.

A second set of letters, this time to NSI chief executive officer James P. Rutt and Commerce Secretary William M. Daley, sought both parties' legal positions on ownership rights in a lucrative database of Internet domain name registrants now controlled by NSI.

Bliley's inquiry appears to have been prompted by NSI's recently announced plans to introduce a new Internet directory created from the domain name database. From 1993 until June, NSI was the sole registrar of names in the .com, .org, and .net top-level Internet domains. While NSI still is under contract with the government, it is no longer exclusive.

Five "testbed" competitors have begun operations, with three already beginning to register domain names. However, they have criticized NSI's unwillingness to share information in its key Whois database, saying they will not be able to compete with the established registrar without it. NSI has claimed proprietary rights over the information in the database.

'Highly Inappropriate' DOJ Conduct

Bliley's July 28 letter to Reno was highly critical of a Department of Justice official's apparent discussions with an ICANN attorney over ways in which NSI could be coerced into relinquishing control over key Internet functions.

Bliley called Reno's attention to a March 31, 1999, e-mail message sent by ICANN attorney Joe Sims to Dyson. In it, Sims details a telephone communication between himself and DOJ attorney Chris Kelly. According to Sims, the pair expressed disappointment that the Department of Commerce--which at the time was negotiating a plan with NSI to create competition in the domain name registration business and to transfer key Internet governance functions to ICANN--was not being sufficiently aggressive with NSI.

Again according to Sims, the pair discussed the possibility that DOJ pressure DOC to take a firmer stance with NSI. They also discussed, according to Sims' e-mail message, "how desirable it would be" to wrest control of the Internet's A root server--the authoritative traffic router for Internet communications--from NSI and to place it in some other entity's hands.

Shortly after the Sims e-mail was written, the DOJ ramped up a previously inactive antitrust investigation of NSI.

"I must say that these communications appear to be highly inappropriate," Bliley wrote. "Given that ICANN presently is party to a Memorandum of Understanding with DOC to assume essential Internet functions, I find it interesting that Mr. Sims was seeking the assistance of DOJ, an agency that has no direct role in the privatization effort and which whom ICANN has no agreement."

Bliley's letter to Reno demands to know the details of the DOJ conduct indicated by the Sims e-mail, the reasons for DOJ's renewed interest in an antitrust case against NSI, and a description of DOJ policy on government attorneys discussing open enforcement matters with outside parties.

Bliley's letter to Dyson also requested a detailed factual account of ICANN's contacts with DOJ.

NSI's Database Claims Challenged

In his letters dated July 27 to Daley and Rutt, Bliley asked for specific information from both organizations about NSI's planned launch of its "Dot Com Directory," which will draw from information NSI complied in its database while it had an exclusive contract with the government.

In his letter to Daley, Bliley wrote that he was "concerned about whether the Department of Commerce could have devoted additional forethought and resources to address this specific issue earlier, possibly avoiding the present situation."

Bliley said he wanted the Commerce Department to provide him with:

  • information related to any legal analysis if any was performed by DOC on whether the government's contract with NSI, or existing law, permits NSI to claim proprietary rights over the database;
  • information regarding whether the subject of such proprietary rights came up during negotiations between DOC and NSI on the new competitive arrangement and, if so, a description of what actions DOC took; and
  • a description of actions, if any, DOC took when it first learned that NSI intended to use the data in the Whois database to create the Dot Com Directory.

Bliley also asked for records related to negotiations between DOC and NSI over the competition scheme and records of communications between DOC and the Justice Department regarding NSI.

In a July 22 hearing before the Commerce Committee's investigations subcommittee, Rutt was asked pointed questions about NSI's views on its ownership of the database. Rutt was evasive, at one point calling a question about whether NSI's dominance in the market would make it a monopoly "a metaphysical question."

But Rutt said NSI would supply answers at a later time to written questions. In his letter to Rutt, Bliley noted that promise.

Bliley wrote that he wanted to know more about the impact NSI's actions have on the nascent competition in the domain name registration business.

Among the material Bliley demanded that NSI turn over to the committee is:

  • information identifying all individual and aggregate data elements to which NSI claims a proprietary right;
  • a detailed legal analysis under which NSI is claiming such a proprietary right;
  • a list of users NSI has permitted to directly access more than one top-level domain zone file record at a time; and,
  • information regarding what action, if any, DOC took when it discovered NSI's plans regarding the database and records of negotiations and communications between NSI and DOC.

"In light of NSI's introduction of this new directory, and the emerging competition for domain name registration services, the Committee wants to learn more about the effect your company's actions may have on an open and competitive domain name marketplace and the potential consumer confusion that could result from such actions," Bliley wrote.

NSI Agrees to Recognize ICANN, Pay $1.25M To Keep Net Registry For At Least Four Years

Originally published Oct. 6, 1999


Network Solutions Inc., the Internet Corporation for Assigned Names and Numbers, and the Department of Commerce announced Sept. 28 several agreements under which NSI would recognize ICANN's authority over it on Internet governance issues, would pay ICANN at least $1.25 million up front, and would get to keep the registry containing all domain names in .com, .org, and .net for the next four years.

NSI also agreed to lower the fee it charges registrars from $9 to $6 per registration, effective Jan. 15, 2000. In addition, NSI has promised to make changes to its registration software that would allow initial domain registrations of one year, rather than the current two-year initial registration, and that would allow domain names to be transferred without incurring the same costs as new registrations.

The software changes came about as a result of the testbed phase of opening domain name registration to competition, according to J. Beckwith Burr, associate administrator, National Telecommunications and Information Administration. The agreements effectively resolve issues that had caused the testbed phase, originally set to end June 24, to be extended several times. Although the testbed has technically been extended now a fifth time, that extension is only for purposes of allowing ICANN to formally approve the documents at its next board meeting.

Critical Issues Settled

The set of five agreements among NSI, ICANN, and Commerce settles a number of critical issues regarding domain name system management. NSI will be accredited by ICANN as a registrar, and so can continue registering domain names. Until June, NSI had been the sole registrar of domain names in the generic top level domains of .com, .org, and .net. Had NSI not reached agreement with ICANN and the Department of Commerce, it would only have been allowed to register names through the end of its contract with Commerce, set to expire in September 2000.

The agreements also guarantee that ICANN has a source of funding. ICANN is not funded by the federal government; its attempt to impose a $1 fee on each domain name registration was met with stiff resistance from House Commerce Committee Chairman Thomas J. Bliley (R-Va.) and from the Department of Commerce (4 ECLR 569, 6/30/99; 4 ECLR 648, 7/28/99). In a statement issued following the Commerce Department announcement, Bliley attributed the agreement to his committee's "rigorous oversight efforts."

NSI Agrees to $2.25M in Fees to ICANN

Under the agreements, ICANN will adopt a fee structure for equitably apportioning fees among both registrars and registries, through a consensus process. Registrars representing two-thirds of all domain registrations must approve the fee structure. Currently, NSI registers well over two-thirds of all domain names in the gTLDs; thus, this provision gives NSI effective veto power over ICANN fees. NSI did agree, however, to approve an ICANN registrar fee policy so long as NSI's share of the fees does not exceed $2 million. NSI agreed to pay $1 million of the fee up front. There are currently 11 active registrars, with another 60 accredited by ICANN and working to implement the NSI shared registration software.

The parties also agreed that registries would pay fees to ICANN, also on an equitable basis. Registries are the businesses that maintain centralized databases containing all registrations in a domain. The registry fee structure will be subject to the same type of two-thirds approval as the registrar fees. Currently, NSI is the only registry for gTLDs, and thereby would have complete veto power over an ICANN proposal. However, NSI agreed to pay up to $250,000 as its registry fee to ICANN. ICANN is in the initial stages of considering what new gTLDs to add to the DNS. If and when new gTLDs are added, the registries for those domains would also be assessed fees.

What is not clear is whether the ICANN/NSI/DOC agreements mean that the registry and registrar functions will be separate for any new gTLDs, as is now the case with .com, .org, and .net.

NSI Keeps Registry Database for at Least Four Years

As part of the three-way deal, NSI will be allowed to keep the registry for .com, .org, and .net for at least four years from the date the agreements are all signed. As an incentive for NSI to divest its registrar or registry business, the company will get an additional four years to act as registry if it transfers either business to an unaffiliated third party within 18 months of the signing of the agreements. The agreements define unaffiliated third party as one in which NSI does not have a majority stake or over which it does not have operational control. Control, in the context of the agreements, means that NSI cannot have more than 25 percent voting ownership interest, or have the ability to elect 25 percent or more of the board of directors of the entity. Even if NSI does not divest one of the businesses, it has agreed to separately house, manage, and account for the registry and registrar businesses. When asked at a press conference whether NSI intended to divest, NSI Chief Executive Officer James Rutt said that the company had just finalized these agreements, and had not had time to consider how it will proceed under them.

At the end of the term of the registry agreement, the contract will be re-bid by the Department of Commerce.

ICANN Consensus, Scope of Authority Defined

The agreements will not be signed until after ICANN's board of directors meeting on Nov. 4 in Los Angeles. In the meantime, the agreements will be posted for comment for 30 days on ICANN's World Wide Web site. The agreements spell out how consensus will be determined within the company, and give NSI a mechanism for challenging ICANN policies that NSI believes were not reached through the approved consensus process.

Under the ICANN/NSI registry agreement, the key benchmark for assessing consensus on an ICANN policy is a written report documenting:

  • the extent of agreement or lack of it among the impacted groups;
  • the outreach process used to seek representation of potentially impacted groups; and
  • the nature and intensity of reasoned support and opposition to the proposed policy.

A two-thirds vote by the supporting organization to which the policy has been delegated, and adoption of the policy by the ICANN board are the other necessary elements to demonstrate consensus.

Should NSI dispute the existence of consensus, it can seek review of the issue via the independent review panel established by the ICANN by-laws. NSI will have 15 days after the ICANN board's action to seek review.

The agreements also define explicitly the subjects that are within ICANN's scope of authority with respect to managing the DNS. Those areas are:

  • issues for which uniform or coordinated resolution is reasonably necessary to facilitate interoperability, technical reliability and/or stable operation of the Internet or domain-name system;
  • consensus policies relating to the registrars; and
  • resolution of disputes regarding the registration, but not the use, of domain names.

The agreements also contain an explicit requirment that ICANN consensus policies do not unreasonably restrain competition.

Whois Access Allowed, Ownership Unresolved

The agreements do not resolve the thorny issue of who owns the Whois database, which contains all registrations in .com, .org, and .net (4 ECLR 675, 8/4/99). Instead, NSI had agreed to allow query-based access of Whois by all accredited registrars. In addition, no conditions on any subsequent legal use of the data can be imposed by NSI, except to prohibit spam. At a press conference, Andrew J. Pincus, general counsel at the Department of Commerce, said that while ownership of the database "might be a interesting legal issue, we wanted to focus on people's right" to access the data. Accredited registrars, including NSI, also will be required to provide third-party bulk access to registration data for an annual fee that cannot exceed $10,000.

The agreements also establish an escrow for registry data. The escrow will contain all data in the registry. The entire escrowed database will be updated periodically, probably on a weekly basis, with incremental daily updates. Escrow data will be released to ICANN and the Commerce Department if NSI is not chosen to continue as the registry once the agreements expire.

Commerce Get InterNIC, Keeps Root Control

Under the agreements, the InterNIC Web site will be transferred from NSI to the Department of Commerce. After that transfer, Commerce will maintain the Web site as a directory for registrar services. Pincus said that he expects there will be links to all accredited registrars on the InterNIC Web site, once Commerce takes over.

Nothing in the agreements affects the management of the A root server. NSI will continue to manage the primary, authoritative A root under the direction of Commerce. DOC said that it expects to receive a technical proposal from ICANN to manage the root, and that management responsibility "may be transferred to ICANN at some point in the future." However, Commerce has no plans to transfer its authority to direct the A root to any entity, according to a summary fact sheet released on its Web site.

Next: How NSI's courtroom victories paved the way for the modern domain name industry.