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The complicated world of ICANN – part one
*Carlos Afonso, RITS’s Director of Planning and Strategy
May 01, 2004

This report has been translated into English and Spanish by APC.

ROME, Italy -- From March 2 to 6, the Council of the Internet Corporation for Assigned Names and Numbers (ICANN), met in Rome with the different committees of the so-called support organisations. It was the largest meeting to date, with more than 600 delegates from dozens of countries, meeting in over 27 fora.

Brazil sent nine delegates, seven of them linked to the current Comitê Gestor da Internet no Brasil (Brazilian Internet Management Committee – CGIBr), and all of them members of at least one of the councils or subsidiary organisations of ICANN, a civil society entity based in California.

ICANN’s central mission is very specific: to coordinate the global system of announcing and assigning domain names and IP addresses – the internet’s inter-computer address system – through delegation, under contract, for periods determined by the Department of Commerce of the US government.

In practice, this mission encompasses a large number of obligations, contracts, and coordination and supervisory activities, as well as responsibility for the operation of the internet’s "DNS root servers", most of which are hosted in the USA.

The complexity of this ensemble of activities ends up creating assignment and "boundary zone" problems, where many question whether ICANN does in fact have the mandate to deliberate on some of them.

In fact, ICANN decides its mandate on matters that it deems likely to compromise "the stability and operational security of the internet," which in itself already gives rise to disputes and doubts. It is obvious, for example, that email spam, together with viruses, represent the major threat at the moment to the internet’s stability and security, owing to the increasing load on data transmission infrastructures, and server operations. However, ICANN does not include the resolution of these problems in its portfolio.

Another example is how the different agents operating the infrastructure decide on the interconnections between the different physical networks. Various problems arise from the non-standardised way in which different countries and even regions resolve this problem – in some cases, interconnection is considered as a public service that should reduce traffic costs and optimise speed, but in others it is considered as an income generating service. For example, in the case of Brazil in 2002, the Fundação de Amparo à Pesquisa do Estado de São Paulo (The State of São Paulo Research Foundation- Fapesp ) simply decided to sell our main interconnection point to an American enterprise – and to transform the operation into a very bad business for Brazil and Brazilian internet users. There is no international entity in the world with the authority to coordinate or propose standards in this area, and ICANN does not consider this role to be theirs either.

In practice, ICANN focuses on administering a complex system of delegating assignments for the management (with or without profit) of large groups of domain names, in two basic areas: generic domains (represented by gTLDs), and country domains (represented by ccTLDs).

When ICANN was created, the US government had already delegated to a company called Network Solutions (which is today a subsidiary of Verisign) the function of registering some of the internet’s major gTLDs (".com", ".net" and ".org"), thereby transforming an activity that could have been a public non-profit enterprise into a very lucrative business. ICANN was never given the chance to reverse this, even if it had wanted to. Nevertheless, it recently acted to withdraw the gTLD ".org" (destined for non-profit organisations) from Verisign, and passed it over to a non-profit organisation that is a subsidiary of ISOC (Internet Society), named PIR (Public Internet Registry).

Worse is the fact that gradually, the idea of making money through the sale of domains has spread throughout organisations in every country that has received delegation by ICANN to register their respective ccTLDs. In some cases (such as Brazil), the service is operated without financial gain.

In the case of Brazil, for example, there is neither commercialisation nor financial speculation with regard to domain names in the ".br" ccTLD. These can only be delegated to physical or legal entities, that are legally established in the country. In this way, the national identity of the ccTLD is maintained. There is a fee for the service (an almost symbolic annual fee equivalent to approximately US$10 per registered domain) with the goal of covering operational costs and management development costs of the Brazil domain, coordinated by the CGIBr.

Nevertheless, in other cases, domains are commercialised, creating a chain of intermediation from the official registrar and "registrars" (domain name resellers), such as in the case of gTLDs. Here there are two vastly different scenarios. One of them relates to registrars who, while commercialising their ccTLDs, preserve their country’s identity on the internet, as is the case in Brazil.

However, the other scenario, that is increasingly common, allows the sale of domains to any person or entity from any country, with or without any type of link to country to which the ccTLD belongs. The most well-known example is that of Tuvalu, where the internet domain ".tv" now represents the television industry, instead of the country Tuvalu. The same is happening with Sao Tome and Principe (".st"), and the Ascension Islands (".ac") etc. But it also happens with countries the size of China (".cn"). In these cases, it is common for the official registrar to simply sign a contract with a business (not necessarily from that country), and to hand over all the domain sales business, taking a percentage of this.

For a user from any country that wants to register a domain, there is in practice little or no difference between a country domain such as ".tv" or ".cn" or a gTLD such as ".com" or ".net". For the user, the differences are merely economic (registration costs) and promotional – what domain better represents their business on the internet. In practice, therefore, the boundary between gTLDs and these types of ccTLDs no longer exists for users.

Nevertheless, to mention this obvious fact, or even to raise this subject in ICANN’s meetings unleashes a nervous debate in which logic is pushed aside, and voices become threatening. The obvious reason for this is the amount of business involved. If ICANN decided by chance that ccTLDs could only be distributed (commercially or not) within the scope of the respective country (as is already the case in Brazil), in such a way that the ccTLD would be (as it should be), synonymous with the country on the internet, millions of dollars per year would stop being made, not only by the king of Tuvalu and others like him, but above all by businesses who obtained licences to sell these domains.

In truth, the majority of ICANN’s activities today focus on obstacles and business disputes related to gTLDs. It should be remembered that today it is the gTLD registrars that contribute the lion’s share towards ICANN’s budget. There are even those (like myself) who think that, if gTLDs did not exist, ICANN could simply disappear, giving up its place to a world consortium of entities registering ccTLDs. And it seems to be precisely the big gTLD business that makes some of ICANN’s Council members cling so voraciously to their responsibilities, even on a voluntary basis.

One of ICANN’s council decisions, that was not modified at the Rome meeting, was the definition of a very onerous and complex process (request for a sophisticated business plan as part of the proposal) to create and manage a new gTLD.

Let us suppose, for example, that a group of organisations dedicated to preservation of the environment, decides to dispute a new generic domain, let’s say ".env". The cost for the mere application for a new domain is US$45 thousand, which is lost by the candidate if ICANN does not accept the request for the new domain (or gives it to someone else), not counting the expenses involved in developing a detailed business plan. Not feasible for most environmental groups in the world. This is evidently a matter for large businesses.

It would remain for this group to try to find a ccTLD that would be inclined to negotiate, and whose abbreviation had a connection with the environmental cause – preferably, a small island nation lost in the Pacific, or something similar…. But it is almost certain that all the ccTLDs available for this have already been sold.

An obvious conclusion is that worldwide gTLD coordination, together with ccTLD administration (with less and less exceptions), has become a large business platform, a type of confused franchise that is giving rise to all types of legal actions. To complete the scenario, it is certain that in the majority of cases, those responsible for the ccTLDs did not consult with the opinion of the public in their countries to find out whether they wanted the national identity of internet addresses to be simply sold and decharacterised as a country domain.

In the case of gTLDs, ICANN already had a small opportunity to change some aspects of the business, seeing that the domain concessions for the registrars are for a fixed period. For example, the gTLD ".net" expires on June 30, 2004, and could be reassigned to a registrar that will at least guarantee that the domain will effectively represent businesses and institutions that are operational within telecommunications networks, or, at it could at least be managed by another registrar, to lessen Verisign’s quasi-monopoly. Who is capable?

But we have no illusions: in the case of ".org", as it says in PIR’s registration page, ".org" is the domain for non-commercial organisations and activities. Registration is open to everyone." They could add, but it is not necessary: "money is money"…

Various other issues will be dealt with in the next texts, not necessarily in this order: approval of the domain waiting list service (WLS); Verisign’s appeal; the consequences of the SiteFinder service (another Verisign deal); the creation of a new support organisation (ccNSO, representing the ccTLD registrars); the creation of a Conflict Resolution Committee (the way that things are, it is probable that the members of the committee are quarrelling amongst themselves); indication of the new chair of the Nominations Committee (the all-powerful committee of sinecures involved in ICANN’s Committee ); the policy of resolution of disputes around domains (UDRP), worldwide discussion, post WSIS, on alternatives to the current management structure, etc.


*Carlos A. Afonso is RITS’s Director of Planning and Strategy. His report has been translated into English and Spanish by APC.

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