[107th Congress House Hearings] [From the U.S. Government Printing Office via GPO Access] [DOCID: f:71484.wais] IS ICANN'S NEW GENERATION OF INTERNET DOMAIN NAME SELECTION PROCESS THWARTING COMPETITION? ======================================================================= HEARING before the SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET of the COMMITTEE ON ENERGY AND COMMERCE HOUSE OF REPRESENTATIVES ONE HUNDRED SEVENTH CONGRESS FIRST SESSION __________ FEBRUARY 8, 2001 __________ Serial No. 107-4 __________ Printed for the use of the Committee on Energy and Commerce Available via the World Wide Web: http://www.access.gpo.gov/congress/ house _______ U.S. GOVERNMENT PRINTING OFFICE 71-484 WASHINGTON : 2001 ____________________________________________________________________________ For Sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512-1800 Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001 ------------------------------ COMMITTEE ON ENERGY AND COMMERCE W.J. ``BILLY'' TAUZIN, Louisiana, Chairman MICHAEL BILIRAKIS, Florida JOHN D. DINGELL, Michigan JOE BARTON, Texas HENRY A. WAXMAN, California FRED UPTON, Michigan EDWARD J. MARKEY, Massachusetts CLIFF STEARNS, Florida RALPH M. HALL, Texas PAUL E. GILLMOR, Ohio RICK BOUCHER, Virginia JAMES C. GREENWOOD, Pennsylvania EDOLPHUS TOWNS, New York CHRISTOPHER COX, California FRANK PALLONE, Jr., New Jersey NATHAN DEAL, Georgia SHERROD BROWN, Ohio STEVE LARGENT, Oklahoma BART GORDON, Tennessee RICHARD BURR, North Carolina PETER DEUTSCH, Florida ED WHITFIELD, Kentucky BOBBY L. RUSH, Illinois GREG GANSKE, Iowa ANNA G. ESHOO, California CHARLIE NORWOOD, Georgia BART STUPAK, Michigan BARBARA CUBIN, Wyoming ELIOT L. ENGEL, New York JOHN SHIMKUS, Illinois TOM SAWYER, Ohio HEATHER WILSON, New Mexico ALBERT R. WYNN, Maryland JOHN B. SHADEGG, Arizona GENE GREEN, Texas CHARLES ``CHIP'' PICKERING, KAREN McCARTHY, Missouri Mississippi TED STRICKLAND, Ohio VITO FOSSELLA, New York DIANA DeGETTE, Colorado THOMAS M. DAVIS, Virginia THOMAS M. BARRETT, Wisconsin ROY BLUNT, Missouri BILL LUTHER, Minnesota ED BRYANT, Tennessee LOIS CAPPS, California ROBERT L. EHRLICH, Jr., Maryland MICHAEL F. DOYLE, Pennsylvania STEVE BUYER, Indiana CHRISTOPHER JOHN, Louisiana GEORGE RADANOVICH, California JANE HARMAN, California JOSEPH R. PITTS, Pennsylvania MARY BONO, California GREG WALDEN, Oregon LEE TERRY, Nebraska CHARLES F. BASS, New Hampshire David V. Marventano, Staff Director James D. Barnette, General Counsel Reid P.F. Stuntz, Minority Staff Director and Chief Counsel ______ Subcommittee on Telecommunications and the Internet FRED UPTON, Michigan, Chairman MICHAEL BILIRAKIS, Florida EDWARD J. MARKEY, Massachusetts JOE BARTON, Texas BART GORDON, Tennessee CLIFF STEARNS, Florida BOBBY L. RUSH, Illinois Vice Chairman ANNA G. ESHOO, California PAUL E. GILLMOR, Ohio ELIOT L. ENGEL, New York CHRISTOPHER COX, California GENE GREEN, Texas NATHAN DEAL, Georgia KAREN McCARTHY, Missouri STEVE LARGENT, Oklahoma BILL LUTHER, Minnesota BARBARA CUBIN, Wyoming BART STUPAK, Michigan JOHN SHIMKUS, Illinois DIANA DeGETTE, Colorado HEATHER WILSON, New Mexico JANE HARMAN, California JOHN B. SHADEGG, Arizona RICK BOUCHER, Virginia CHARLES ``CHIP'' PICKERING, SHERROD BROWN, Ohio Mississippi TOM SAWYER, Ohio VITO FOSSELLA, New York JOHN D. DINGELL, Michigan, THOMAS M. DAVIS, Virginia (Ex Officio) ROY BLUNT, Missouri ROBERT L. EHRLICH, Jr., Maryland W.J. ``BILLY'' TAUZIN, Louisiana (Ex Officio) (ii) C O N T E N T S __________ Page Testimony of: Broitman, Elana, Director, Policy and Public Affairs, register.com............................................... 31 Cerf, Vinton G., Chairman of the Board, Internet Corporation for Assigned Names and Numbers............................. 13 Davidson, Alan B., Associate Director, Center for Democracy and Technology............................................. 78 Froomkin, A. Michael, Professor of Law, University of Miami School of Law.............................................. 68 Gallegos, Leah, President, AtlanticRoot Network, Inc......... 45 Hansen, Kenneth M., Director, Corporate Development, NeuStar, Inc........................................................ 42 Kerner, Lou, Chief Executive Officer, .tv.................... 26 Short, David E., Legal Director, International Air Transport Association................................................ 36 Material submitted for the record by: Gallegos, Leah, President, AtlanticRoot Network, Inc., letter enclosing material for the record.......................... 107 Name.Space, Inc., prepared statement of...................... 106 (iii) IS ICANN'S NEW GENERATION OF INTERNET DOMAIN NAME SELECTION PROCESS THWARTING COMPETITION? ---------- THURSDAY, FEBRUARY 8, 2001 House of Representatives, Committee on Energy and Commerce, Subcommittee on Telecommunications and the Internet, Washington, DC. The subcommittee met, pursuant to notice, at 10:05 a.m., in room 2123, Rayburn House Office Building, Hon. Fred Upton (chairman) presiding. Members present: Representatives Upton, Stearns, Gillmor, Cox, Shimkus, Pickering, Davis, Ehrlich, Tauzin (ex officio), Markey, Gordon, DeGette, Harman, Brown, and Dingell (ex officio). Staff present: Will Norwind, majority counsel; Yong Choe, legislative clerk; Andrew Levin, minority counsel; and Brendan Kelsay, minority professional staff. Mr. Upton. The hearing will come to order. Today we are holding the first hearing in the 107th Congress of the Subcommittee on Telecommunications, where we will be discussing the Internet. I want to welcome all the members of the subcommittee, particularly Ed Markey, the ranking member, and our vice chair Mr. Stearns, good friends both. Today's hearing focuses on whether ICANN's new generation of Internet domain name selection process is thwarting competition. Our constituents may not know the term ICANN, top- level domain name, or root server, but they are definitely familiar with .com, .net, and .org. And every time they e-mail us, .gov, our constituents use these top-level domain names every single day, enabling them with a simple click of the mouse to communicate almost instantaneously all over the world. If ICANN gets its way, our constituents may also--should become familiar with seven new top-level domain names, like .biz, .info, .pro, .name, .museum, .aero, and .coop. These are seven new names selected last November by ICANN for potentially launching as early as later this year. However, 37 other applicants were not selected by ICANN. Moreover, we know that others could not even afford the $50,000 application fee or chose not to apply because, on principle, they question ICANN's authority to, in their minds, play God with respect to approving new names. Hence there is a great deal of controversy surrounding ICANN's selection process which has prompted us to have this timely hearing called by myself and Chairman Tauzin in a January letter to ICANN. At this point I would ask unanimous consent to put that letter into the record. [The letter follows:] Congress of the United States House of Representatives January 12, 2001 Mr. Michael M. Roberts President and Chief Executive Officer Internet Corporation for Assigned Names and Numbers 4674 Admiralty Way, Ste. 330 Marina del Rey, CA 90292 Dear Mr. Roberts: The Committee on Energy and Commerce is continuing its oversight of the Internet Corporation for Assigned Names and Numbers (ICANN). As you may recall, the Subcommittee on Oversight and Investigations of the Committee on Commerce held a hearing on July 22, 1999, to examine the issue of domain name system privatization. In connection with our continuing review, we have been monitoring the process by which ICANN arrived at its decision in November to approve seven suffixes: .aero, .coop, .info, .museum, .name, .pro, and .biz. There have been a number of reports that ICANN's process to create a new generation of Internet domain name suffixes may be thwarting competition in the registration and assignment of Internet domain names. As the Committee of jurisdiction over this issue, the Committee wants to ensure that this process is open and fair, and most important, successfully sparks competition. To that end, we are gathering facts in preparation for a Subcommittee on Telecommunications hearing in February to examine the process by which ICANN selects Internet domain name suffixes. Accordingly, we request that you contact Chairman Tauzin's telecommunications counsel, Jessica Wallace, to arrange a time to jointly brief committee staff at your earliest convenience. Sincerely, W.J. ``Billy'' Tauzin Chairman, Committee on Energy and Commerce Fred Upton Member of Congress Mr. Upton. The House Energy and Commerce Committee has jurisdiction over ICANN, and this hearing is the latest in a series of activities in which this subcommittee is engaged on this topic. Back in July 1999, I chaired an Oversight and Investigations Subcommittee hearing entitled, Is ICANN Out of Control? At the heart of that hearing were broad fundamental questions about the Commerce Department's decision to vest responsibility for the management of the domain name system in a private nonprofit corporation as the Federal Government moved to privatize this critical function. Much has transpired since July 1999, but important policy questions still linger about ICANN. Some continue to question its very legitimacy and the propriety of the Commerce Department's delegation of responsibility to it. Others support the Commerce Department's efforts to privatize management of the DNS, but remain vigilant as this relatively fledgling concept evolves to ensure that it operates openly and fairly. While I anticipate more hearings on ICANN later this year on a variety of other important substantive issues, this hearing will focus specifically on ICANN's selection process for new top-level domain names and whether it is, in fact, thwarting competition. On the one hand some view ICANN's approval of only a limited number of names as thwarting competition. On the other hand, others argue ICANN was prudent in selecting a number of--limited number of new names so that they can be test-driven to best hedge against harming the technical integrity of the Internet. It appears these principles need to be balanced. Today we will get a feel for how well or poorly ICANN is balancing these principles by examining its selection process. In my mind, legitimate questions have been raised by several of our witnesses about the fairness of the application and selection process, questions which must, in fact, be answered by ICANN. As such, today we will hear from ICANN, two businesses whose applications were selected, two businesses whose applications were not selected, one small business which did not apply at all, and two public interest advocates. Today's witnesses will greatly assist our subcommittee in answering the question of whether ICANN is thwarting competition. In addition, I have to say that as a parent of two young kids, I want to explore ICANN's rationale for not approving two particular top-level domain names, .kids and .xxx as a means of protecting our kids from the awful, awful filth which is sometimes widespread on the Internet. We should strongly encourage the use of technology to protect our kids, and special top-level domain names may be just exactly the dose of medicine that is needed. That is why many parents lie awake at night thinking about the ways we need to respond. These issues are too important to not have proper oversight. If ICANN can't, who can? [The prepared statement of Hon. Fred Upton follows:] Prepared Statement of Hon. Fred Upton, Chairman, Subcommittee on Telecommunications and the Internet Good morning. Today we are holding the first hearing in the 107th Congress of the Subcommittee on Telecommunications and the Internet. I want to welcome all of the members of the Subcommittee and tip my hat to our ranking member, Ed Markey, and our vice chair Cliff Stearns. Today's hearing focuses on whether ICANN's new generation of Internet domain name selection process is thwarting competition? Our constituents may not know the terms: ICANN, Top Level Domain name, or root server, but they are definitely familiar with: ``dot com'', ``dot net'', ``dot org'', and--every time they e-mail us--``dot gov''. Our constituents use these Top Level Domain names every day, enabling them--with a simple click of the mouse--to communicate almost instantaneously all over the world. If ICANN gets its way, our constituents may become familiar with seven new Top Level Domain names, like: ``dot biz'', ``dot info'', ``dot pro'', ``dot name'', ``dot museum'', ``dot aero'', and ``dot co- op''. These are the seven new names selected last November by ICANN for potential launching as early as later this year. However, thirty-seven other applicants were not selected by ICANN. Moreover, we know that others could not even afford the $50,000 application fee or chose not to apply because, on principle, they question ICANN's authority to, in their minds, ``play god'' with respect to approving new names. Hence, there is a great deal of controversy surrounding ICANN's selection process--which has prompted this timely hearing, called for by myself and Chairman Tauzin in a January letter to ICANN. I ask unanimous consent to put the Tauzin/Upton letter in the record. The House Energy and Commerce Committee has jurisdiction over ICANN, and this hearing is the latest in a series of activities in which this Committee has engaged on this subject. In fact, in July 1999, I chaired an Oversight and Investigations Subcommittee hearing entitled: Is ICANN out of control? At the heart of that hearing were broad, fundamental questions about the Commerce Department's decision to vest responsibility for the management of the domain name system in a private non-rofit corporation, as the federal government moved to privatize this critical function. Much has transpired since July 1999, but important policy questions linger about ICANN. Some continue to question its very legitimacy and the propriety of the Commerce Department's delegation of responsibility to it. Others support the Commerce Department's efforts to privatize management of the DNS, but remain vigilant as this relatively fledging concept evolves to ensure that it operates openly and fairly. While I anticipate more hearings on ICANN this year on a variety of other important, substantive issues, this hearing will focus specifically on ICANN's selection process for new Top Level Domain names and whether it is thwarting competition. On the one hand, some view ICANN's approval of only a limited number of new names as thwarting competition. On the other hand, others argue that ICANN was prudent to select a limited number of new names so that they can be ``test driven'' to best hedge against harming the technical integrity of the Internet. It appears as if these are principles which need to be balanced. Today, we will get a feel for how well, or poorly, ICANN is balancing these principles by examining its selection process. In my mind, legitimate questions have been raised by several of our witnesses about the fairness of the application and selection process--questions which must be answered by ICANN. As such, today we will hear from: ICANN, two businesses whose applications were selected, two businesses whose applications were not selected, one small business which did not apply at all, and two public interest advocates. Today's witnesses will greatly assist our Subcommittee in answering the question of whether ICANN is thwarting competition. In addition, as a parent of two young children, I want to explore ICANN's rationale for not approving two particular Top Level Domain names: ``dot kids'' and ``dot xxx'', as a means to protect kids from the awful smut which is so widespread on the Internet. We should strongly encourage the use of technology to protect our kids, and special Top Level Domain names may be just the ticket. This is what so many parents lie awake at night thinking about, and we need to respond. I look forward to hearing from the witnesses, and I thank them for their participation today. Mr. Upton. I yield to my ranking member Mr. Markey, the gentleman from Massachusetts. Mr. Markey. Thank you, Mr. Chairman, and welcome to the Subcommittee on Telecommunications, Trade, and Consumer Protection---- Mr. Upton. Welcome back. Thank you. Mr. Markey. [continuing] in your new role as the chairman of this prestigious panel. I think it is going to be a very exciting 2 years. This is my 25th year on the Subcommittee on Telecommunications, Trade, and Consumer Protection, and I think that the issues today are more exciting than we have ever had in the past as all of these technologies offer new public policy challenges to the Congress as they do to the private sector. So this is a very distinguished panel which you have brought with us here today. ICANN was specifically created to undertake certain administrative and technical management aspects of the domain name system and Internet address space. ICANN exists because the U.S. Department of Commerce and many corporate and civic entities believe that these functions should not be done by the government, but, instead, by a private sector entity. In its early stages of the Internet's development, things were much easier. Vin Cerf could contact Jon Postel, who in turn contacted a select group of Internet pioneers and elder statesmen, and they were largely able to determine amongst themselves what was best for the Net's development. Yet given the rapid commercialization of the Internet and the ardent desire of various public, private and civic voices to have their say on how the Internet develops from here forward, it is obvious that we must proceed with a different process. As we do so, it is important to keep in mind ICANN is not simply an international standards-setting body. Recent decisions creating new top-level domains demonstrates that ICANN is establishing Internet policy in its selections, not merely advising the global community of appropriate technical standards. This development in itself is neither good nor bad. It is perhaps somewhat inevitable. It only becomes problematic when ICANN starts to make policy judgments without an adequate policy process. There is no question in my mind that the current process is highly flawed. ICANN has made much of the fact that all applications and comments were posted on a Web site. That is very useful, but it is no substitute for a comprehensive policy process, especially for something as important to Internet competition and diversity as selecting new top-level domains. New top-level domains are quasipublic assets. Some of the people making these decisions were elected; some were not. There was a significant $50,000 fee assessed against applicants, although not all that money was actually spent analyzing the applications themselves. Not all technically qualified and financially qualified applications were selected. The winners, therefore, were chosen for other, more subjective reasons, although it is not apparent what criteria were used for these subjective judgments. To hear some of the participants explain it, both winners and losers, events at the Vatican are shrouded in less mystery than how ICANN chooses top-level domains. Let me be clear, however, that this does not mean that any of the new seven top-level domains selected are bad choices or should not have been chosen. ICANN would have done well to prohibit in this first round of applications any applications from the incumbent, Verisign, but at the end of the day, the new seven domain names chosen will increase competition and diversity somewhat. My concern is with those that were not selected and with the smaller, less powerful voices who feel they have no access to this process. We have a number of important questions to explore today. For those applicants that were not selected, what is the appeals process? To whom are the ICANN board members accountable, to the Internet community, to the Department of Commerce? Is the Department of Commerce performing adequate oversight? Is it simply an eyewitness to history? How can we make the subjective criteria for ICANN's policymaking more clear? Does ICANN have adequate resources to perform these policy functions? And how do we address ICANN's long-term funding needs? The future of Internet governance and Internet policymaking raise vitally important issues. I want to commend Chairman Upton for calling this hearing and, again, thank the witnesses for their participation this morning. I yield back the balance of my time. [The prepared statement of Hon. Edward J. Markey follows:] Prepared Statement of Hon. Edward J. Markey, a Representative in Congress from the State of Massachusetts Good Morning. I want to commend Chairman Upton for calling this hearing today on the Internet Domain Name System and issues related to Internet governance. I also want to thank all of our witnesses for coming to share their views with us on these important topics. Mr. Chairman, the Internet Corporation for Assigned Names and Numbers--or ICANN--was established to perform certain limited, but highly vital functions. It was created specifically to undertake certain administrative and technical management aspects of the Domain Name System and the Internet address space. ICANN exists because the U.S. Department of Commerce, and many corporate and civic entities, believed that these functions should not be done by the government but instead by a private sector entity. In its early stages of the Internet's development, things were much easier. Vint Cerf could contact Jon Postel, who in turn contacted a select group of Internet pioneers and elder statesmen and they were largely able to determine among themselves what was best for the Net's development. Yet given the rapid commercialization of the Internet and the ardent desire of various public, private, and civic voices to have their say on how the Internet develops from here forward, it is obvious that we must proceed with a different process. As we do so, it is important to keep in mind that ICANN is not simply an international standards setting body. Recent decisions creating new Top Level Domains demonstrate that ICANN is establishing Internet policy in its selections, not merely advising the global community of appropriate technical standards. This development in itself is neither good nor bad. It is perhaps, somewhat inevitable. It only becomes problematic when ICANN starts to make policy judgements without an adequate policy process. There's no question in my mind that the current process is highly flawed. ICANN has made much of the fact that all applications and comments were posted on a website. That's very useful, but it is no substitute for a comprehensive policy process--especially for something as important to Internet competition and diversity as selecting new Top Level Domains. New Top Level Domains are a quasi-public asset. Some of the people making these decisions were elected, some were not. There was a significant $50,000 fee assessed applicants although not all of that money was actually spent analyzing the applications themselves. Not all technically qualified and financially qualified applications were selected. The ``winners'' therefore, were chosen for other, more subjective reasons--although its not apparent what criteria were used for these subjective judgements. To hear some of the participants explain it, (both winners and losers,) events at the Vatican are shrouded in less mystery than how ICANN chooses new Top Level Domains. Let me be clear however, that this does not mean that any of the seven new Top Level Domains selected are bad choices or should not have been chosen. ICANN would have done well to prohibit in this first round of applications any application from the incumbent, Verisign, but at the end of the day the new seven domain names chosen will increase competition and diversity somewhat. My concern is with those that were not selected and with the smaller, less powerful voices who feel they have no access to this process. We have a number of important questions to explore today. For those applicants that were not selected, what is the appeals process? To whom are the ICANN board members accountable--to the Internet community?--to the Department of Commerce? Is the Department of Commerce performing adequate oversight or is it simply an eyewitness to history? How can we make the subjective criteria for ICANN's policymaking more clear? Does ICANN have adequate resources to perform these policy functions? How do we address ICANN's long term funding needs? This future of Internet governance and Internet policymaking raise vitally important issues. I want to commend Chairman Upton for calling this hearing and again, thank the witnesses for their participation this morning. Mr. Stearns [presiding]. I would also like to have a short opening statement to congratulate the new Chairman on his selection to this prestigious committee and his kindness in offering me the vice chairmanship, and I look forward to working with him shoulder to shoulder on the issues. This, of course, marks the first hearing of this subcommittee, and it is examining the Internet Corporation for Assigned Names and Numbers, ICANN, selection process of new Internet domain names. The Internet is not the unsettled Wild West it once used to be. Users have tamed this frontier, and both the Internet and the World Wide Web have become a stable facet for many Americans. Furthermore, estimates indicate the number of e- commerce Web sites to double in the next 2 years, up from 687,000 just 2 years ago. Of course, to ensure this continual prosperity oversight of how the Internet infrastructure is managed should be a key responsibility for us on this subcommittee. So I look forward to getting a report card from today's witnesses on ICANN, accountability and transparency throughout the process, and to learn more about what ICANN is doing to ensure competition and the integrity and stability of the Internet. And Mr. Dingell, the ranking member of the full committee, is recognized. Mr. Dingell. Mr. Chairman, I thank you. Mr. Chairman, I want to congratulate you on the accession to the responsibility of the chairman of this subcommittee, and I look forward to working with you on these matters. I also want to commend you for today's hearings. We are engaged in inquiring into a matter which a lot of people regard as being arcane, but that does not mean that it is irrelevant. To the contrary, the integrity of the process used by ICANN recently when it selected a handful of new top domain names is arguably one of the most critical issues affecting the Internet today. Domain names are the key to Internet commerce, and we must determine whether ICANN has a process which is fair and proper, and whether the outcome will lead to a more effective competition in the management of the global domain name system. We must also inquire as to whether the process has resulted in achieving a measure of public confidence by its fairness or, by grotesque unfairness, has achieved not just distrust, but active distaste. The questions, important as they are, are only going to address, however, narrow issues pertaining to domain name assignments. The larger question we must ask is whether this administrative process is emblematic of a larger problem with the overall system of Internet governance. This system set up by ICANN was initiated by the U.S. Department of Commerce and continues to be subject to the authority of that agency. As such, it falls squarely within this committee's oversight responsibilities. I hope and expect that we will be holding hearings to evaluate whether the mission of that agency is being soundly defined, properly executed, and whether, in fact, it is being fair. The signs I would observe are that it has not been behaving fairly, and that its behavior has left a lot of unanswered questions. I hope that we will hear from witnesses today who will be able to describe what is going on there. I gather many of them believe the system is broken. I have strong evidence to believe they are correct. Some suggest that ICANN has morphed from a nongovernmental, technical standards-setting organization to a full-fledged policymaking body. If that is true, there is cause for serious concern. ICANN was not given authority to assume that function, and it appears to be accountable to no one, except perhaps God Almighty, for its actions. Most important, if ICANN is making Internet policy decisions, then the people must know that they who are affected will have access to a reliable and transparent system to seek redress for harm. There is no question we are treading on uncharted territory. Bumps in the road are, of course, unavoidable, but while it may be desirable to keep the Internet unregulated both from a diplomatic and economic standpoint, we must not allow U.S. interests to be put at risk by blindly adhering to a hands-off approach, and we must see to it that the agency which we are constituting to act on behalf of the U.S. Government in these matters functions fairly, well, efficiently and in a fashion which is going to be in the broad overall public interest. I particularly commend you, therefore, for initiating this hearing. I believe that our oversight efforts have to be extremely diligent, and we have to be prepared to act quickly should it become necessary to do so. I would observe that we should follow this set of hearings vigorously and energetically to require the necessary answers from ICANN and from the Department of Commerce. I believe there is much to be justified here, and I believe that the task of justifying these things is going to be difficult, and I look forward to assisting those agencies that are responsible here in achieving a correct and a proper result. It may be painful for them. Thank you, Mr. Chairman. [The prepared statement of Hon. John D. Dingell follows:] Prepared Statement of Hon. John D. Dingell, a Representative in Congress from the State of Michigan Mr. Chairman, thank you for recognizing me. First, I want to congratulate and welcome you to the Subcommittee on Telecommunications and the Internet. I know you will do a wonderful job in charting the course of this Subcommittee, and in helping us navigate through the many complex issues associated with telecommunications. You are to be commended not only for your enthusiasm in scheduling the very first hearing of the 107th Congress, but also for your courage in tackling what may be the most arcane issue we have faced in years. I've familiarized myself with today's testimony, Mr. Chairman, and even reciprocal compensation is starting to look like a simple fix. Arcane, however, does not mean irrelevant. To the contrary, the integrity of the process used by ICANN recently when it selected a handful of new top-level domain names is arguably one of the most critical issues affecting the Internet today. Domain names are the key to Internet commerce, and we must determine whether the ICANN process was fair and proper, and whether the outcome will lead to more effective competition in the management of the global domain name system. These questions, however important they may be, still only address the narrow issue pertaining to domain name assignments. The larger question we must ask is whether this administrative process--if found to be deficient--is emblematic of a larger problem with the overall system of Internet governance. This system of governance set up by ICANN--was initiated by the U.S. Department of Commerce, and continues to be subject to the authority of that agency. As such, it falls squarely within the jurisdiction of this Committee's oversight responsibilities, and I hope and expect that we will hold ongoing hearings to evaluate whether ICANN's mission is both soundly defined and properly executed. We will hear from some witnesses today who believe the system is broken. Some suggest that ICANN has morphed from a non-governmental technical standards-setting organization to a full-fledged policymaking body. If that is true, I believe it is cause for serious concern. ICANN was not given authority to assume that function, and it appears to be accountable to no specific body for its actions. Most important, if ICANN is making Internet policy decisions, then those people directly affected must have access to a reliable and transparent system to seek redress from harm. There is no question that we are treading on uncharted territory and bumps in the road are unavoidable. But while it may be desirable to keep the Internet unregulated, both from a diplomatic and economic standpoint, we must not allow U.S. interests to be put at risk by blindly adhering to a hands-off approach. I believe we should be diligent in our oversight efforts, and quick to act should it become necessary to do so. Thank you again, Mr. Chairman, for holding this important hearing, and I also want to extend my appreciation to each of the distinguished witnesses for appearing today. Mr. Upton. Thank you, Mr. Dingell. I would make a motion at this point that all Members--the House is not in session with recorded votes today, so a number of Members I know have gone back to their districts, but I would make a motion by unanimous consent that all members of the subcommittee have an opportunity to put their--insert their full statement into the record. And with that I recognize Mr. Shimkus from Illinois. Mr. Shimkus. Mr. Chairman, I don't have an opening statement. Mr. Upton. Mr. Brown. Mr. Brown. Thank you, Mr. Chairman, brief opening statement. I am pleased to join the Subcommittee on Telecommunications and the Internet with you, Mr. Chairman, with Ranking Member Markey, and look forward to working with both of you on issues that are so important to the new economy. The subject of domain names is of interest to all of us. Recently I met with the vice president of Cuyahoga Community College in Cleveland, who stressed his frustration with his school's Internet domain. Cuyahoga Community College in Cleveland, Ohio, otherwise known as Tri-C, is the first and largest community college in Ohio. It is the fourth largest institution of higher education in the State. Despite the fact Tri-C is a large, well-established higher education institution, it has been locked out of obtaining the domain .edu. Only 4-year, degree-granting colleges and universities generally are allowed the .edu domain. Two-year colleges are not allowed that address even though they educate as many, if not more, students than 4-year students. www.tri- c.cc.oh.us is not an especially memorable address for its faculty and others. The Department of Commerce, in partnership with ICANN, oversees the .edu domain. While they have expressed interest in finding a solution, action has not been taken in an expedient manner. It is important for the Department and ICANN to move expeditiously so community colleges and their students can have easier access and equal access to important campus resources and the Internet. Mr. Chairman, I thank you. Mr. Upton. Mr. Davis. Mr. Davis. I ask unanimous consent my statement go in the record in deference to our witnesses so we can hear from them. [The prepared statement of Hon. Tom Davis follows:] Prepared Statement of Hon. Tom Davis, a Representative in Congress from the State of Virginia Mr. Chairman, I am pleased to be beginning my membership on the Subcommittee with a very timely oversight hearing on ICANN's selection of new generic DNS suffixes. Thank you to all of the witnesses for taking time from their work to be here today. I am particularly pleased to see Dr. Cerf whom I have had the pleasure of meeting previously, and Ms. Leah Gallegos who hails from my home state of Virginia. As the Internet continues to grow, not only in terms of electronic commerce but also with respect to global communication in general, the number of people, businesses, and nations with a stakeholder interest in the fair and competitive expansion of its perimeters is growing. At the same time, there is a legitimate expectation that the Internet will be a predictable environment that reflects the competitive marketplace. With that growth, it becomes even more important that there is confidence the ICANN is managing Internet functions in a manner that promotes competition, uses an open and transparent process that maintains the Corporation's neutrality, and does no harm to the future growth of the Internet. I have heard from a number of persons in Virginia who have expressed their dismay at both the format and the process by which ICANN selected the suffixes and the successful registry applicants in November of last year. I look forward to hearing our witnesses's testimonies and having the opportunity to determine whether or not Congress needs to take action that will assist ICANN and the Department of Commerce in improving the process for promoting competition in the selection of next generation Internet Domain Names. Mr. Upton. Thank you, Mr. Davis. Mr. Gordon. Mr. Gordon. I am ready to hear the panel. Mr. Upton. Ms. Harman. Ms. Harman. As the rookie on this committee who represents what is now called the digital coast of California, I just want to say how happy I am to be here and to be on the this subcommittee and to make one observation, which is that I believe we have in general a digital economy and an analogue government, and the challenge is to create a digital government to match the digital economy. We have to do this right, and we have to observe fairness, but it would be a shame if we imposed analogue procedures on this issue. And so I hope that we will be very creative and very digital in this subcommittee as we move forward. I yield back, Mr. Chairman. Mr. Upton. Thank you. Ms. DeGette. Ms. DeGette. Mr. Chairman, I will echo my colleague from California's pleasure at being on this committee. You may not be aware, but just in the past few years, the Denver metropolitan area has become one of the fastest growing telecommunications hubs in the country, and, as a matter of fact, is now in the top five. So even though it is onerous, I know, I would love to invite the chairman and the ranking member to come out there and see our industry at some point and to perhaps have some field hearings there. It is exciting what is going on, and I am excited to be on the telecom committee. Even though I am new to this committee, I am not new to the issue. When I was in the State legislature in Colorado, we passed one of the landmark laws that preceded the 1969 act, so I am delighted to get back with these issues and to hear from the witnesses today, and I yield back my time as well. [The prepared statement of Hon. Diana DeGette follows:] Prepared Statement of Hon. Diana DeGette, a Representative in Congress from the State of Colorado Good morning Mr. Chairman. A warm welcome to our witnesses. I am thrilled to be here today as a new member of this subcommittee. I am pleased as well, that my colleague Mr. Stupak has joined me as a fellow refugee from the now defunct Finance and HazMat subcommittee. As some of you may know, the Denver metropolitan area, which I represent, has one of the fastest growing telecommunications industries in the country right now. In fact, overall, I believe we are in the top five telcom hubs in the nation at this time. The growth of this dynamic industry has unbelievable growth in the Denver area over the past decade, and as one who is very interested in these issues, it has been exciting to watch the progress. Given this fact, I would like to take the opportunity to invite my Chairman and Ranking Member to come pay us a visit. I would be happy to host some field hearings in the near future on some of the pressing telecom issues that we will be dealing with in the 107th. While I was not yet in Congress when the Telecommunications Act of 1996 passed, I did work on this issue in the Colorado State House. In fact Colorado passed a landmark telecom reform act in 1995, which I was very involved in, and I look forward to continuing that work here at the federal level. I am pleased to attend my first subcommittee first hearing on such an interesting issue, that of new domain names and how the whole process of selecting them has unfolded. This issue couldn't be more timely, not only because of the where ICANN is in the process of selecting new suffixes, but because the Internet is still growing at an unbelievable rate and pressure continues to build on its capabilities. If you look at the rate at which registered domain names have grown over the past few years, it is clear that there is a huge demand to expand the number of domain names available for registrations by individuals, organizations and businesses. As the Internet has grown, the method of allocating and designating domain names has been fairly controversial. The issues that have caused to many headaches include transitioning to a single domain names system (DNS) registrars to many registrars, trademark disputes, the appropriate federal role and of course, the issues that brings us here today, the process of creating new domain names. Certainly, it is the responsibility of this committee to make sure that the process is as open and fair as possible. It is also our responsibility to make sure that ICANN is taking every step necessary to guarantee that the overall efficacy of the Internet is not disrupted. I will forward to hearing the testimony of our witnesses. Mr. Upton. Thank you very much. [Additional statements submitted for the record follow:] Prepared Statement of Hon. W.J. ``Billy'' Tauzin, Chairman, Committee on Energy and Commerce I would like to thank Chairman Upton for holding this important and timely hearing on the Internet Corporation for Assigned Names and Numbers (ICANN). As the Committee of jurisdiction over ICANN, it is imperative that we continue our oversight responsibilities in this area. The issues ICANN is grappling with will have a fundamental impact on the future vibrancy of the Internet. While I recognize that there are a number of important and interesting issues involving ICANN governance issues, funding, issues, root server competition issues, multilingual issues, dispute resolution issues, countrycode TLD issues, and significant trademark implications--this hearing is intended to focus on the discrete but critical issue of the process by which ICANN recently approved seven suffixes: dot areo, dot co-op, dot info, dot museum, dot name, dot pro, and dot biz. That said, it is my intention to, with Chairman Upton, actively monitor those issues I just mentioned. In that regard, I sincerely hope that ICANN--and its outside representatives--will respect this Committee's rules in the future and submit its testimony within 48 hours of a hearing. This rule really is for your benefit as much as it is for ours. Providing Members and their staff with sufficient time to review your written testimony enables us to better understand your position, encourages Members to be more engaged and generally makes for a more fruitful hearing experience. For being in existence for a little over two years--ICANN has been charged with a number of important tasks, one of which is to establish a process for the introduction of new top level domain (TLDs) names in a way that will not destabilize the Internet. On November 16th ICANN announced its selection of the seven new suffixes--doubling the number of global TLDs. There are many arguments both for and against new TLDs. Those in favor of a limitless number (or at least significantly more than seven) maintain that new TLDs are technically easy to create, will help relieve the scarcity in existing name spaces that make it difficult for companies to find catchy new website addresses, and are consistent with increasing consumer choice and a diversity of options. However, there are those who urge restraint and caution in the introduction of TLDs pointing to greater possibilities for consumer confusion, the risk of increased trademark infringement, cybersquatting and cvberpiracy. I am eager to hear from ICANN about how it arrived at the number seven. Equally important, many are questioning the very process by which the suffixes were selected. I am eager to hear ICANN's view of the process, the views of selected and set aside applicants, and the views of Professor Froomkin and the Center for Democracy and Technology. I encourage all panelists to offer, in addition to specific criticism--or praise depending on their point of view--their insights as to how to improve the process as we move forward to future rounds of suffix selections. On August 3rd ICANN posted an extensive process overview to assist those considering applying to operate a new TLD. The application materials were subsequently posted on August 15th. October 2nd was the deadline for submitting applications and ICANN announced it decision on November 16th. Some validly argue that the six week application review process seemed unacceptably short--making it extremely difficult for each application to enjoy a thorough review. Some are complaining that the criteria was vague and not followed: they were not provided an opportunity to correct errors in the staff recommendation on their applications: they were not provided with any meaningful opportunity for face-to-face consultations and that in fact, they were only provided with three minutes to make a ``last ditch'' pitch to the Board. With each applicant paying a non-refundable $50,000 filing fee, should the process have provided more? Notwithstanding these complaints others were happy with the process and maintain that the time has come to introduce new domain names onto the Internet, and urge that there not be any further delay. Our role should be to ensure that the process by which ICANN, a private, non-profit entity with global responsibilities, selected domain names was open and fair to all applicants. Were the procedures clearly articulated and consistently followed? To the extent we find shortcomings in this new process, and I already have, I hope we can provide some guidance that will serve as a roadmap in the future given that this is not expected to be the last round of domain name selections. With this hearing, our review will not end, we will continue to review this process. I look forward to hearing from this distinguished panel of witnesses. Thank you. ______ Prepared Statement of Hon. Eliot Engel, a Representative in Congress from the State of New York Thank you Mr. Chairman. Let me also welcome you to your new position. Like all of my Democratic colleagues I look forward to working with you and the other Republican members on these issues to ensure consumer protection and free and open competition. I also want to welcome back Mr. Markey to the Ranking Position--I have always admired your strong leadership and vocal support for America's consumers. Today's hearing will hopefully be illuminating to all of us here. Many questions have been raised about the process that ICANN employed to approve the first round of new Top Level Domains (TLDs). This hearing will give us an opportunity to learn about this process. I, for one, am interested in ensuring that the process was open, fair, and clear to all the participants and those who may have wanted to participate. This is one of my concerns--the $50,000 filing fee does seem at first glance to be rather high. This hearing being called is very timely as well because the Commerce Department has not yet approved the new TLDs. I do appreciate the difficulty ICANN had in organizing this process. There is just no precedent for doing this. And so even if there were fits and starts, so long as the process was open and clear to all involved, then I am hopeful that we can work with ICANN to improve and streamline this process for future determinations of TLDs. Mr. Upton. Our witnesses today are Dr. Vincent Cerf, Chairman of the Board for the Internet Corporation for Assigned Names and Numbers, ICANN; Mr. Lou Kerner, CEO of .TV; Ms. Elana Broitman, director of policy and public affairs, register.com; Mr. David Short, legal director of the International Air Transport Association; Mr. Ken Hansen, director of corporate development of NeuStar, Inc.; Ms. Leah Gallegos, president of AtlanticRoot Network, Inc.; Professor Michael Froomkin, professor of law, University of Miami School of Law; and Mr. Alan Davidson, associate director of the Center for Democracy and Technology. Welcome all of you to our first hearing of the year. Your statements are made part of the record in their entirety. We would like to limit your presentation to no more than 5 minutes. We have a relatively new timer here which will tell you exactly how much time you have left, and I am going to be fairly fast with the gavel. Following that 5 minutes, members on the dais will be able to ask questions for 5 minutes, and we will proceed that way. Dr. Cerf, welcome. STATEMENTS OF VINTON G. CERF, CHAIRMAN OF THE BOARD, INTERNET CORPORATION FOR ASSIGNED NAMES AND NUMBERS; LOU KERNER, CHIEF EXECUTIVE OFFICER, .TV; ELANA BROITMAN, DIRECTOR, POLICY AND PUBLIC AFFAIRS, REGISTER.COM; DAVID E. SHORT, LEGAL DIRECTOR, INTERNATIONAL AIR TRANSPORT ASSOCIATION; KENNETH M. HANSEN, DIRECTOR, CORPORATE DEVELOPMENT, NEUSTAR, INC.; LEAH GALLEGOS, PRESIDENT, ATLAN- TICROOT NETWORK, INC.; A. MICHAEL FROOMKIN, PROFESSOR OF LAW, UNIVERSITY OF MIAMI SCHOOL OF LAW; AND ALAN B. DAVIDSON, ASSOCIATE DIRECTOR, CENTER FOR DEMOCRACY AND TECHNOLOGY Mr. Cerf. Thank you very much, Mr. Chairman, Ranking Member Markey, ladies and gentlemen of the committee. I appreciate the opportunity to describe what I believe is an important accomplishment of what is a young and still maturing entity, the Internet Corporation for Assigned Names and Numbers. The introduction of new competition for global domain names at the registry or wholesale level of the domain name system is happening for the first time in 15 years. This is the third and the last of the significant initial goals set forth in the U.S. Government white paper that called for the creation of ICANN. ICANN has succeeded in opening the registrar or the retail portion of the domain name market to new competition, accrediting more than 180 competitive registrars of which about half are now operating, and seeing average registrar prices drop by more than a factor of two in the first year of this competition. ICANN's uniform dispute resolution procedure has successfully provided a quick, cheap and globally available way to resolve many domain name disputes. This last major initial goal, the introduction of new global top-level domains, is the most complex of these three efforts. The seven original global TLDs were created in 1985, and for at least most of the past decade there has been considerable debate about whether adding new TLDs is a good idea. The range of opinion is from zero to millions, literally, and, as a result, a number of past efforts have not reached a conclusion for lack of consensus. It has only been with the creation of ICANN and the use of the consensus development mechanisms it contains that we have finally been able to come to a sufficient consensus to allow us to move forward with enough TLD additions to the domain name system. On the other hand, all the advice that we have received from the technical and the policy bodies of ICANN have told us to move prudently and carefully to minimize any risk of destabilizing the domain name system. Many of us believe that we can add new TLDs without creating instability or other adverse effects, but the fact is it has never been done in the context of the Internet as its exists today, and thus, while our objective is to encourage new competition here, just as we already have in the registrar segment of the market, we want to do so without endangering the utility of what has become a critical global medium for communication and commerce. The consensus development process within ICANN has been extensive. This issue was first referred to ICANN's Domain Name Support Organization, an open advisory body, that recommended the introduction of a limited number of new TLDs as a proof of concept, with additional TLDs to be added only if it was clear that it could be done without destabilizing or otherwise impairing the utility of the Internet. A similar recommendation was conveyed by ICANN's technical support organization. The board accepted these recommendations and asked for proposals for new TLDs to be included in this first limited proof-of- concept phase. Because ICANN is a consensus development body, everything about this process was transparent. All the proposals were posted on ICANN's Web site for public comment. Both the proposals and roughly 4,000 public comments were reviewed by ICANN's staff and independent consultants retained for that specific purpose. The results of that evaluation, a 326-page analysis, were also posted for public comment, and another thousand comments were received. The board then held a public forum lasting 12 hours, where the applicants and the general public provided final input and then the next day selected a diverse group of seven proposals to carry out this initial proof of concept experiment in a public meeting that lasted about 6 hours. Since that time, negotiation of appropriate commercial agreements have been under way, and I hope we will see those final agreements soon. Because, as was clear from the beginning of the process, ICANN was only going to select a limited number of proposals for this initial proof of concept phase, a significant fraction of the 44 applications that went through the process were inevitably going to be disappointed at not being selected in this first proof of concept round. And they were disappointed. But the real news here is that finally, with the formation of ICANN and the development of this consensus, this long debate is actually producing new TLDs. If all those selected become operational, we will have immediately doubled the number of global TLDs available. This will immediately increase competition and consumer choice. I have a longer statement, Mr. Chairman. Mr. Upton. I know, I read it last night. Mr. Cerf. You are very kind to have done so, sir. I have a longer statement, with attachments, and I would ask these be entered into the record. I will be happy to answer any questions you may have, and I thank you for allowing me and ICANN to participate in this important proceeding. [The prepared statement of Vinton G. Cerf follows:] Prepared Statement of Vinton G. Cerf, Chairman of the Board, Internet Corporation for Assigned Names and Numbers My name is Vinton G. Cerf, and outside of my regular employment at WorldCom,\1\ I am the volunteer Chairman of the Internet Corporation for Assigned Names and Numbers (ICANN). I appreciate the opportunity to appear before this Committee to describe the efforts of ICANN to introduce additional competition into the Internet name space, while at the same time prudently protecting against possible disruption of this extremely important global resource for communications and commerce. --------------------------------------------------------------------------- \1\ My curriculum vitae is attached. --------------------------------------------------------------------------- The basic message I would like to leave with you today is that ICANN is functioning well, especially for such a young organization with such a difficult job. In fact, it has made substantial progress toward the specific goals it was created to meet, including the introduction of competition at both the wholesale and retail levels of the registration of names in the Domain Name System (DNS). The recent action to introduce seven new Top Level Domains (TLDs) into the DNS will double the number of global TLDs and at the same time will not, we believe, create serious risks of destabilizing the Internet--something I know none of us wants to see. The fact that ICANN, in just over a year, has been able to generate global consensus on this issue--which has been fiercely debated for most of the last decade--is a testament to ICANN's potential to effectively administer the limited but important aspects of the DNS that are its only responsibility.\2\ --------------------------------------------------------------------------- \2\ I have attached to this testimony a time line that describes the chronology of the debate over new Top Level Domains. --------------------------------------------------------------------------- a. what is icann? It is probably useful to first provide a little background about ICANN, which is a unique entity that may not be familiar to everyone. ICANN is a non-profit private-sector organization with a 19-member international volunteer Board of Directors drawn from a set of specialized technical and policy advisory groups, and through open, worldwide online elections. ICANN was formed in 1998 through a consensus-development process in the global Internet community, in response to a suggestion by the United States Government that the private sector create such a body. It was formed to undertake certain administrative and technical management aspects of the Domain Name System (DNS) and the Internet address space. Domain names serve as the visible face of the name and address mechanism of the Internet--in short, the way computers know where to send or receive information. ICANN performs functions that, prior to ICANN's creation by the private sector, were performed by contractors to the US Government (National Science Foundation and DARPA). ICANN is a young, and still maturing organization; it turns out that achieving global consensus is not so easy. But it has made great--and many would say surprising-- progress toward the objective shared by the vast majority of responsible voices in the international Internet community: the creation of a stable, efficient and effective administrative management body for specific technical and related policy aspects of the DNS and the Internet address space that is consensus-based, internationally representative, and non-governmental. b. what are the guiding principles of icann? There is nothing quite like ICANN anywhere in the world, and of course it will be some time before we are certain that this unique approach to consensus development can effectively carry out the limited but quite important tasks assigned to it. I am cautiously optimistic, but we are still at an early stage of evolution, and there is much work to do. The organizational work has been complicated by the fact that we have also been asked to simultaneously begin to accomplish the specific operational goals set out by the US Government in the White Paper.\3\ The situation is analogous to building a restaurant and starting to serve customers while the kitchen is still under construction; it is possible, but may occasionally produce cold food. --------------------------------------------------------------------------- \3\ The White Paper was a policy statement published by the Department of Commerce on June 10, 1998. See Management of Internet Names and Addresses, 63 Fed. Reg. 31741 (1998) --------------------------------------------------------------------------- The White Paper set forth four principles that it described as critical to the success of an entity such as ICANN: stability; competition; private, bottom-up coordination; and representation. 1. Stability is perhaps the easiest to understand. The US Government was seeking to extract itself from what it had concluded was no longer a proper role for the US Government--the funding of private contractors to manage important technical aspects of the global Internet name and number address system--but only in a way that did not threaten the stability of the Internet. As the White Paper said, and as seems obvious, ``the stability of the Internet should be the first priority of any DNS management system.'' If the DNS does not work, then for all practical purposes for most people, the Internet does not work. That is an unacceptable outcome, and thus everything that ICANN does is guided by, and tested against, this primary directive. 2. Competition was also an important goal set forth in the White Paper, which stated that ``[w]here 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.'' Competition in the DNS structure as it stands today is theoretically possible at both the registry (or wholesale) level, and the registrar (or retail) level. Increasing competition at the retail level involves only adding additional sellers of names to be recorded in existing registries; as a result, it generates relatively minor stability concerns. For this reason, adding new competition at the retail level was the first substantive goal that ICANN quickly accomplished after its formation. On the other hand, adding new registry (or wholesale) competition--which is the subject of this hearing--requires the introduction of additional Top L