FC: ICANN problems still fester at the core --Milton Mueller

[Declan McCullagh <declan () well com>]

*********

[Milton is an ICANN critic who has written on the topic for Cato before. I 
will forward any responses (if there are any) from ICANN reps. As a side 
note I had promised to do the same re: the OSHA regs last week but my 
subsequent silence was due to my inability to find someone willing to 
defend them, not lack of interest in an opposing view. John Young wrote in 
but he was defending OSHA in general and not their latest action. --Declan]

*********

11 January 2000
NEWS RELEASE
Fundamental untruth festers at ICANN's core

ICANN's creation and the ensuing internet domain name war has delayed
the introduction of new top-level domains that can compete with NSI's
dot com, says internet analyst, Milton Mueller.

In an article just published in info, the journal of policy, regulation
and strategy for telecommunications, information and media, Mueller
provides an independent and comprehensive assessment of the first year
of existence of The Internet Corporation for Assigned Names and Numbers.

Mueller evaluates the policy of private sector 'self-regulation' of
internet names and numbers. He concludes that  'self-regulation' was not
a coherent policy but a rhetorical device used by the Internet Society
in a power struggle with Network Solutions Inc to legitimate and
preserve its own control.

Mueller is highly critical of the US government in allowing the Internet
Society to install ICANN's initial board. In doing so, the US government
undermined ICANN's capacity for consensus building.

Ironically, owing to the bitter controversies surrounding it, ICANN has
not avoided government regulation since the US Commerce Department
intends to retain 'policy authority' over the DNS root indefinitely and
has imposed utility-style regulation upon Network Solutions' wholesale
prices.

According to Mueller, "…the 'self-regulatory regime' being constructed
by ICANN is actually far more centralized and controlling in nature then
the pre-ICANN internet. Is it all that different from what could have
been expected of direct government intervention?"

Mueller believes that "a fundamental untruth" festers at ICANN's core.
"Official US policy characterized the creation of ICANN as a private-
sector driven process that did not affect basic political and legal
rights. It described an act of imposing wholesale centralization and
regulation at the internet's core as a way to avoid 'government
regulation'. The rhetoric of market liberalism was cynically abused to
gloss over the true nature of the transition. The tumult of ICANN's
first year is the price being paid for that."

...

For the complete article:
Colin Blackman, info
Tel: +44 1223 509161
Email: crblackman () camford demon co uk

***********

Date: Tue, 11 Jan 2000 13:11:55 -0500
From: Milton Mueller <mueller () syr edu>
To: Declan McCullagh <declan () well com>

Here's a big "excerpt" which you can put on politech if it's not too big:
It's the concluding section.
------------
“Self-regulation” in perspective
It is useless to debate concepts such as “private sector leadership,” 
“avoiding
government intervention,” or “self-governance” in the abstract. To 
understand what
these abstractions really mean, one must examine the historical process 
through
which ICANN came into being. That analysis makes it clear that the policy is
flawed both in its conception and its implementation.
Conception
Self-regulation of Internet names and numbers is not at all comparable to the
other areas where the concept has been applied. Content labeling standards and
privacy codes of conduct, for example, both involve collective action by
well-established industries around narrowly circumscribed areas of conduct. 
The
basic institutional regime under which these businesses operate predate the
“self-regulation” process and are fairly clear and stable.
Internet governance, on the other hand, involved creating an entirely new
institutional and property rights framework. At its center was the problem 
of who
owned critically important, valuable assets: the name and address spaces. 
Control
of these assets had to be transferred from an informal set of relationships
loosely centered in the US government and its private contractors to a formal,
internationally representative, legally incorporated entity. A host of 
related and
very complicated property rights issues flowed from that. How could domain 
name
registration, which provided globally exclusive control of a character 
string, be
reconciled with trademark protection, which provided jurisdiction-, 
industry-, and
product-specific forms of protection to certain names? What rules or 
procedures
governed access to the root of the domain name space? How much control did a
domain name registry have over the zone files containing the authoritative 
list of
second-level names? These and many other difficult questions were 
fundamentally
legal in nature; that is, the way in which they were decided assigned property
rights to specific actors and strengthened or diminished various individuals’
freedom of action. The legal questions were greatly complicated by the global,
trans-jurisdictional scope of the system. The Commerce Department basically
devolved global state power to ICANN.
To call such a policy a form of “self-regulation” comparable to the voluntary
adoption of a code of conduct by an established group of businesses is not 
just
mistaken, but dangerously obtuse. The error was compounded by the fact that 
the
private sector itself was deeply, bitterly divided over the resolution of the
property rights questions. The divisions were neither irrational nor minor.
Control of valuable assets was up for grabs. Decisions about the 
distribution of
property rights and transaction costs would create major winners and 
losers. There
was little incentive for the contesting parties to cooperate or compromise. 
On the
contrary, the situation gave private and public sector actors powerful 
incentives
to seize control of the process or to win a struggle for power. There was a
pressing need for an impartial government to impose constraints upon the 
process
based on some notion of justice and the proper distribution of rights.
Under these circumstances, the Clinton administration’s decision to throw 
up its
hands and wait for the “Internet community” to come forward with a “consensus
proposal” was disingenuous, at best. It is clear from the detailed history
presented above that “private sector leadership” did not mean turning over
governance to the Internet industry and its users to work out for 
themselves—even
if that had been possible. In practice, “self-regulation” was a code word for
something very different:
a) leaving control of name and address administration in the hands of the
hierarchy established by the Internet Society and a small band of its 
corporate
allies, and
b) implementing a private deal made between a few government officials in 
the US
Commerce Department and the EC.
The real object of “self-regulation” seems to have been avoidance of any 
formal,
public processes.
Implementation
If the results of the policy are good, criticisms of the conceptual basis 
for the
policy are rendered irrelevant. The white paper’s impact can be benchmarked
against its own professed criteria:
* Fostering stability
* Encouragement of stakeholder consensus
* Creating competition in the domain name markets
* Resolving domain name-trademark conflicts
* Avoiding government intrusion
Stability
Preserving the “stability” of the Internet is frequently cited as the “first
principle” of the Commerce Department and its corporate backers. The idea that
computer internetworking and e-commerce could flourish without the direct
involvement of a centralized, government-sanctioned authority is completely 
alien
to them. Leaving aside the question whether that assumption is true, recent
developments have shown that the US government’s concern about “stability” is
fundamentally at odds with its nominal commitment to “private sector
self-regulation.” The government has been forced to state explicitly that 
it is
unwilling to relinquish policy authority over the root because of the 
instability
engendered by its own process. It was unwilling to stand aside and let 
ICANN and
NSI and other private sector players work out their differences on their own.
Indeed, it seems evident now that the biggest threat to stability came from 
the
government’s logically inconsistent form of intervention. If the government 
wanted
to regulate and subordinate NSI, it should have done so directly and 
openly, via
laws and regulations. Instead, it created a private sector corporation that 
was
completely dominated by avowed enemies of NSI, and then expected NSI to
voluntarily play along. The resulting blood feud was predictable. And just as
predictably, in the end all the real work was performed by the US 
government, not
by ICANN. It was the Commerce Department that regulated NSI’s rates and 
practices
and renegotiated its contract in ways that got it to recognize ICANN and 
find a
place within its regime. ICANN simply had no leverage other than as a proxy 
for
the Commerce Department. One could therefore reasonably ask, what purpose 
did the
philosophy of “self-regulation” serve?
The threats to stability are not over. ICANN is now a heavily politicized
organization that is attracting the interest and attention of the
politically-minded. There will be more power struggles, more polarization 
as this
process continues.
Stakeholder consensus
The Commerce Department allowed ICANN’s initial board to be selected in 
secret by
a group with a divisive policy agenda. The determination of that faction to
implement its policies as quickly as possible seriously undermined the new
corporation’s ability to function as a vehicle for consensual policy 
development.
As the conflicting forces met on the battleground known as ICANN, its
organizational units metastasized into a structure of byzantine complexity, 
and
its processes took on the character of sheer adhocracy.
We can say without qualification that ICANN has failed to provide a vehicle 
for
developing “stakeholder consensus.” ICANN’s creation has not resolved the DNS
wars; it has simply fostered a political competition that allowed one 
faction to
win at the expense of others. And it is a serious mistake to view the 
dissent as a
product of NSI’s opposition alone. Virtually every major academic who follows
ICANN is positioned on the critical side of the spectrum; opposition to 
ICANN has
united Naderites and libertarians.
Competition in the domain name space
Two and a half years after the initiation of the NTIA process, there are 
still no
new gTLD registries authorized to compete with Network Solutions’ dot com. 
In its
responses to Congressional inquiries, the Department of Commerce has 
complained
repeatedly of the enormous market power of NSI and the complex problems it 
poses.
But the Commerce Dept itself is responsible for that market dominance. In 1997
NSI, in response to requests by competing registries, asked whether it 
could add
new TLDs to the DNS root. The National Science Foundation was prepared to 
let it
do so, but the Commerce Department prevented it. The object of this refusal 
was to
protect trademark holders and, more subtly and importantly, to avoid 
creating new
stakeholders in the root that might undermine Commerce’s ability to impose a
centralized policy on the process. During the White Paper process the Commerce
Department originally came up with a detailed proposal for quickly adding 
five new
gTLDs to the root, but then bowed to pressure from foreign governments and 
ISOC to
leave that decision to the new corporation.
Those delays have been a devastating setback to the cause of competition in 
DNS.
Commerce has delayed competition for more than two years. During that 
period the
number of .com, .net, and .org domain name registrations quadrupled and the 
.com
TLD obtained an almost unbreakable hold on the minds of Internet businesses 
as the
place to be visible. Although ICANN is now established as the authority for 
adding
new TLDs, its procedures for doing so are multi-layered bureaucratic processes
dominated by established stakeholders, such as trademark holders, country 
code TLD
registries, and large businesses with an established stake in dot com. Many of
these players have a vested interest in preventing the addition of new 
registries
and new gTLDs.
ICANN’s formation was followed by the opening up of the .com, .net, and .org
domains to registrar competition. But there is less here than meets the 
eye. The
registry is still a monopoly, it is just being regulated. The 
transformation of
the NSI gTLDs into a regulated, shared system is a product of direct 
government
intervention by the US Dept of Commerce, not the work of ICANN. It was the
Commerce Dept’s contractual agreement with NSI that created the shared
registration system and imposed wholesale price regulation on NSI. ICANN 
and its
processes were completely unnecessary to the achievement of that goal. And the
benefits of registrar competition are not all that impressive.
Trademark-domain name conflicts.
ICANN has provided the institutional mechanism for the development of a 
global,
uniform process to resolve disputes between trademark holders and domain name
registrants. Indeed, ICANN and WIPO together have given trademark and 
intellectual
property interests a privileged role in the definition of a new system of 
global
administrative law. Without ICANN’s grip on access to the root of the 
domain name
system and its ability to leverage that monopoly into a system of centralized,
uniform contracts, it would be impossible to impose uniformity on the 
process. But
even here, there are strong reasons to doubt whether ICANN was needed. Despite
ICANN’s existence, trademark lobbyists have prevailed upon the US Congress 
to pass
powerful new laws that punish “cybersquatters” and extend trademark 
protections
into the assignment of domain names. Trademark owners are now complaining that
ICANN’s dispute resolution process is too fair to domain name holders and they
will not use it. Countries such as New Zealand, in contrast, have succeeded in
completely separating trademark disputes from domain name registrations, 
leaving
resolution to the courts. After court precedents in New Zealand made it 
clear that
cybersquatting was illegal, there does not seem to be any significant 
problem in
that country.
Avoidance of governmental intrusion
Keeping things out of the hands of “government” has been one of the 
leitmotifs of
ISOC and its supporters. But what is the object of this avoidance? To 
prevent name
and number administration from falling into the hands of a top-heavy, ITU-like
intergovernmental organization? To prevent burdensome regulation of the 
Internet
and its content? Certainly, the public comments in the Commerce Department
proceedings and IFWP processes document overwhelming support for the 
principle of
a lightweight ICANN strictly confined to technical coordination of the 
Internet.
But ICANN has completely failed to live up to that promise. Even before 
ICANN’s
creation, the Internet Society’s Faustian bargains with the ITU and the 
trademark
interests, coupled with the Clinton administration’s subservience to trademark
lobby demands, had already undermined the neutrality of name and address
administration. Linking trademark protection to DNS administration completely
politicized the process of domain name assignment. Once it became evident that
domain name administration could be leveraged into a mechanism for policing 
and
enforcing property rights in names, ICANN became a de facto legislator, a 
definer
and enforcer of rights. These functions encroached deeply into the 
territory of
governmental power. It was only natural, then, for ICANN to be subject to 
the same
demands for accountability and procedure as a governmental body. Those 
demands in
turn are leading inexorably to the growth of bureaucracy and formal procedure.
(Prediction: if ICANN survives another five years, it will rival the ITU in 
size.)
Had the Clinton administration’s white paper explicitly and firmly distanced
Internet administration from trademark protection and other issues not 
directly
related to technical coordination of the Internet, then its policy of 
“industry
self-regulation” would have had some coherence. But the White Paper was 
first and
foremost a political bargain; its commitment to self-regulation and private
enterprise was mainly rhetorical.
The same tendency to stray into the realm of regulation and governance is 
evident
in the new regime’s approach to the creation of competition in domain name
registration. ISOC’s gTLD-MoU and its deep-seated animosity to NSI 
committed it to
a specific business model for domain name registries. The gTLD-MoU adherents
profess an ideological, almost religious belief that all domain name 
registries
must be non-profit and permit shared access to TLDs for competing 
registrars on
equal terms. Whether one supports or opposes that agenda, the imposition of a
specific economic model on private sector businesses is a regulatory 
function. In
order to enforce this model upon registrants, ICANN has had to establish a
contract-based accreditation system that is highly centralized and 
regulatory. The
US Commerce Dept, likewise, has imposed a cost-plus utility regulation 
model upon
NSI via its cooperative agreement contract. This is not technical 
coordination but
economic regulation.
Finally, ICANN has failed to avoid an even more direct form of government
involvement: the sovereignty claims on country code TLDs advanced by national
governments. Governments were given a direct channel in ICANN via its 
Government
Advisory Commission (GAC), and the GAC has been used as the point of 
departure for
declaring the name space a “public resource.”

The new regime is establishing sweeping new rights for trademark and 
intellectual
property holders. It is asserting forms of economic control over domain name
registries and registrars that did not exist before. It has provided a vehicle
through which national governments can assert sovereignty claims over the name
space. In short, the “self-regulatory regime” being constructed by ICANN is
actually far more centralized and controlling in nature than the pre-ICANN
Internet. Is it all that different from what could have been expected of 
direct
government intervention?
Whether deceptively or naively, official US policy characterized the 
creation of
ICANN as a private-sector driven process that did not affect basic 
political and
legal rights. It described an act of imposing wholesale centralization and
regulation at the Internet’s core as a way to avoid “government 
regulation.” The
rhetoric of market liberalism was cynically abused to gloss over the true 
nature
of the transition. In short, a fundamental untruth festers at ICANN’s core. 
The
tumult of ICANN’s first year is the price being paid for that.

###


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