Management of Internet Names and Addresses

DEPARTMENT OF COMMERCE

National Telecommunications and Information Administration

[Docket Number: 980212036-8146-02]

Management of Internet Names and Addresses

AGENCY: National Telecommunications and Information Administration,

Commerce.

ACTION: Statement of policy.

-----------------------------------------------------------------------

SUMMARY: On July 1, 1997, as part of the Clinton Administration's

Framework for Global Electronic Commerce,1 the President

directed the Secretary of Commerce to privatize the domain name system

(DNS) in a manner that increases competition and facilitates

international participation in its management.

---------------------------------------------------------------------------

\1\ Available at http://www.ecommerce.gov>.

---------------------------------------------------------------------------

Accordingly, on July 2, 1997, the Department of Commerce issued a

Request for Comments (RFC) on DNS administration. The RFC solicited

public input on issues relating to the overall framework of the DNS

administration, the creation of new top-level domains, policies for

domain name registrars, and trademark issues. During the comment

period, more than 430 comments were received, amounting to some 1500

pages.2

---------------------------------------------------------------------------

\2\ July 2, 1997 RFC and public comments are located at: www.ntia.doc.gov/ntiahome/domainname/index.html>.

---------------------------------------------------------------------------

On January 30, 1998, the National Telecommunications and

Information Administration (NTIA), an agency of the Department of

Commerce, issued for comment, A Proposal to Improve the Technical

Management of Internet Names and Addresses. The proposed rulemaking, or

``Green Paper,'' was published in the Federal Register on February 20,

1998, providing opportunity for public comment. NTIA received more than

650 comments, as of March 23, 1998, when the comment period

closed.3

---------------------------------------------------------------------------

\3\ The RFC, the Green Paper, and comments received in response

to both documents are available on the Internet at the following

address: http://www.ntia.doc.gov>. Additional comments were

submitted after March 23, 1998. These comments have been considered

and treated as part of the official record and have been separately

posted at the same site, although the comments were not received by

the deadline established in the February 20, 1998 Federal Register

Notice.

---------------------------------------------------------------------------

The Green Paper proposed certain actions designed to privatize the

management of Internet names and addresses in a manner that allows for

the development of robust competition and facilitates global

participation in Internet management. The Green Paper proposed for

discussion a variety of issues relating to DNS management including

private sector creation of a new not-for-profit corporation (the ``new

corporation'') managed by a globally and functionally representative

Board of Directors.

EFFECTIVE DATE: This general statement of policy is not subject to the

delay in effective date required of substantive rules under 5 U.S.C.

Sec. 553(d). It does not contain mandatory provisions and does not

itself have the force and effect of law.4 Therefore, the

effective date of this policy statement is June 10, 1998.

\4\ See Administrative Law Requirements at p. 19.

---------------------------------------------------------------------------

FOR FURTHER INFORMATION CONTACT: Karen Rose, Office of International

Affairs (OIA), Rm 4701, National Telecommunications and Information

Administration (NTIA), U.S. Department of Commerce, 14th and

Constitution Ave., NW, Washington, DC., 20230. Telephone: (202) 482-

0365. E-mail: [email protected]

Authority: 15 U.S.C. 1512; 15 U.S.C. 1525; 47 U.S.C.

902(b)(2)(H); 47 U.S.C. 902(b)(2)(I); 47 U.S.C. 902(b)(2)(M); 47

U.S.C. 904(c)(1).

SUPPLEMENTARY INFORMATION:

Background

Domain names are the familiar and easy-to-remember names for

Internet computers (e.g., ``www.ecommerce.gov''). They map to unique

Internet Protocol (IP) numbers (e.g., 98.37.241.30) that serve as

routing addresses on the Internet. The domain name system (DNS)

translates Internet names into the IP numbers needed for transmission

of information across the network.

U.S. Role in DNS Development

More than 25 years ago, the U.S. Government began funding research

necessary to develop packet-switching technology and communications

networks, starting with the ``ARPANET'' network established by the

Department of Defense's Advanced Research Projects Agency (DARPA) in

the 1960s. ARPANET was later linked to other networks established by

other government agencies, universities and research facilities. During

the 1970s, DARPA also funded the development of a ``network of

networks;'' this became known as the Internet, and the protocols that

allowed the networks to intercommunicate became known as Internet

protocols (IP).

As part of the ARPANET development work contracted to the

University of California at Los Angeles (UCLA), Dr. Jon Postel, then a

graduate student at the university, undertook the maintenance of a list

of host names and addresses and also a list of documents prepared by

ARPANET researchers, called Requests for Comments (RFCs). The lists and

the RFCs were made available to the network community through the

auspices of SRI International, under contract to DARPA and later the

Defense Communication Agency (DCA) (now the Defense Information Systems

Agency (DISA)) for performing the functions of the Network Information

Center (the NIC).

After Dr. Postel moved from UCLA to the Information Sciences

Institute (ISI) at the University of Southern California (USC), he

continued to maintain the list of assigned Internet numbers and names

under contracts with DARPA. SRI International continued to publish the

lists. As the lists grew, DARPA permitted Dr. Postel to delegate

additional administrative aspects of the list maintenance to SRI, under

continuing technical oversight. Dr. Postel, under the DARPA contracts,

also published a list of technical parameters that had been assigned

for use by protocol developers. Eventually these functions collectively

became known as the Internet Assigned Numbers Authority (IANA).

Until the early 1980s, the Internet was managed by DARPA, and used

primarily for research purposes. Nonetheless, the task of maintaining

the name list became onerous, and the Domain Name System (DNS) was

developed to improve the process. Dr. Postel and SRI participated in

DARPA's development and establishment of the technology and practices

used by the DNS. By 1990, ARPANET was completely phased out.

[[Page 31742]]

The National Science Foundation (NSF) has statutory authority for

supporting and strengthening basic scientific research, engineering,

and educational activities in the United States, including the

maintenance of computer networks to connect research and educational

institutions. Beginning in 1987, IBM, MCI and Merit developed NSFNET, a

national high-speed network based on Internet protocols, under an award

from NSF. NSFNET, the largest of the governmental networks, provided a

``backbone'' to connect other networks serving more than 4,000 research

and educational institutions throughout the country. The National

Aeronautics and Space Administration (NASA) and the U.S. Department of

Energy also contributed backbone facilities.

In 1991-92, NSF assumed responsibility for coordinating and funding

the management of the non-military portion of the Internet

infrastructure. NSF solicited competitive proposals to provide a

variety of infrastructure services, including domain name registration

services. On December 31, 1992, NSF entered into a cooperative

agreement with Network Solutions, Inc. (NSI) for some of these

services, including the domain name registration services. Since that

time, NSI has managed key registration, coordination, and maintenance

functions of the Internet domain name system. NSI registers domain

names in the generic top level domains (gTLDs) on a first come, first

served basis and also maintains a directory linking domain names with

the IP numbers of domain name servers. NSI also currently maintains the

authoritative database of Internet registrations.

In 1992, the U.S. Congress gave NSF statutory authority to allow

commercial activity on the NSFNET.5 This facilitated

connections between NSFNET and newly forming commercial network service

providers, paving the way for today's Internet. Thus, the U.S.

Government has played a pivotal role in creating the Internet as we

know it today. The U.S. Government consistently encouraged bottom-up

development of networking technologies, and throughout the course of

its development, computer scientists from around the world have

enriched the Internet and facilitated exploitation of its true

potential. For example, scientists at CERN, in Switzerland, developed

software, protocols and conventions that formed the basis of today's

vibrant World Wide Web. This type of pioneering Internet research and

development continues in cooperative organizations and consortia

throughout the world.

---------------------------------------------------------------------------

\5\ See Scientific and Advanced-Technology Act of 1992; Pub. L.

102-476 section 4(9), 106 Stat. 2297, 2300 (codified at 42 U.S.C.

1862 (a)).

---------------------------------------------------------------------------

DNS Management Today

In recent years, commercial use of the Internet has expanded

rapidly. As a legacy, however, major components of the domain name

system are still performed by, or subject to, agreements with agencies

of the U.S. Government.

(1) Assignment of numerical addresses to Internet users.

Every Internet computer has a unique IP number. IANA, headed by Dr.

Jon Postel, coordinates this system by allocating blocks of numerical

addresses to regional IP registries (ARIN in North America, RIPE in

Europe, and APNIC in the Asia/Pacific region), under contract with

DARPA. In turn, larger Internet service providers apply to the regional

IP registries for blocks of IP addresses. The recipients of those

address blocks then reassign addresses to smaller Internet service

providers and to end users.

(2) Management of the system of registering names for Internet

users.

The domain name space is constructed as a hierarchy. It is divided

into top-level domains (TLDs), with each TLD then divided into second-

level domains (SLDs), and so on. More than 200 national, or country-

code, TLDs (ccTLDs) are administered by their corresponding governments

or by private entities with the appropriate national government's

acquiescence. A small set of gTLDs do not carry any national

identifier, but denote the intended function of that portion of the

domain space. For example, .com was established for commercial users,

.org for not-for-profit organizations, and .net for network service

providers. The registration and propagation of these key gTLDs are

performed by NSI, under a five-year cooperative agreement with NSF.

This agreement expires on September 30, 1998.

(3) Operation of the root server system.

The root server system is a set of thirteen file servers, which

together contain authoritative databases listing all TLDs. Currently,

NSI operates the ``A'' root server, which maintains the authoritative

root database and replicates changes to the other root servers on a

daily basis.

Different organizations, including NSI, operate the other 12 root

servers.6 The U.S. Government plays a role in the operation

of about half of the Internet's root servers. Universal name

consistency on the Internet cannot be guaranteed without a set of

authoritative and consistent roots. Without such consistency messages

could not be routed with any certainty to the intended addresses.

---------------------------------------------------------------------------

\6\ An unofficial diagram of the general geographic location and

institutional affiliations of the 13 Internet root servers, prepared

by Anthony Rutkowski, is available at http://www.wia.org/pub/

rootserv.html>.

---------------------------------------------------------------------------

(4) Protocol Assignment.

The Internet protocol suite, as defined by the Internet Engineering

Task Force (IETF), contains many technical parameters, including

protocol numbers, port numbers, autonomous system numbers, management

information base object identifiers and others. The common use of these

protocols by the Internet community requires that the particular values

used in these fields be assigned uniquely. Currently, IANA, under

contract with DARPA, makes these assignments and maintains a registry

of the assigned values.

The Need for Change

From its origins as a U.S.-based research vehicle, the Internet is

rapidly becoming an international medium for commerce, education and

communication. The traditional means of organizing its technical

functions need to evolve as well. The pressures for change are coming

from many different quarters:

--There is widespread dissatisfaction about the absence of competition

in domain name registration.

--Conflicts between trademark holders and domain name holders are

becoming more common. Mechanisms for resolving these conflicts are

expensive and cumbersome.

--Many commercial interests, staking their future on the successful

growth of the Internet, are calling for a more formal and robust

management structure.

--An increasing percentage of Internet users reside outside of the

U.S., and those stakeholders want to participate in Internet

coordination.

--As Internet names increasingly have commercial value, the decision to

add new top-level domains cannot be made on an ad hoc basis by entities

or individuals that are not formally accountable to the Internet

community.

--As the Internet becomes commercial, it becomes less appropriate for

U.S. research agencies to direct and fund these functions.

The Internet technical community has been actively debating DNS

[[Page 31743]]

management policy for several years. Experimental registry systems

offering name registration services in an alternative set of exclusive

domains developed as early as January 1996. Although visible to only a

fraction of Internet users, alternative systems such as the name.space,

AlterNIC, and eDNS affiliated registries 7 contributed to

the community's dialogue on the evolution of DNS administration.

---------------------------------------------------------------------------

\7\ For further information about these systems see: name.space:

http://namespace.pgmedia.net>; AlterNIC: http://www.alternic.net>;

eDNS: http://www.edns.net>. Reference to these organizations does

not constitute an endorsement of their commercial activities.

---------------------------------------------------------------------------

In May of 1996, Dr. Postel proposed the creation of multiple,

exclusive, competing top-level domain name registries. This proposal

called for the introduction of up to 50 new competing domain name

registries, each with the exclusive right to register names in up to

three new top-level domains, for a total of 150 new TLDs. While some

supported the proposal, the plan drew much criticism from the Internet

technical community.8 The paper was revised and

reissued.9 The Internet Society's (ISOC) board of trustees

endorsed, in principle, the slightly revised but substantively similar

version of the draft in June of 1996.

---------------------------------------------------------------------------

\8\ Lengthy discussions by the Internet technical community on

DNS issues generally and on the Postel DNS proposal took place on

the newdom, com-priv, ietf and domain-policy Internet mailing lists.

\9\ See draft-Postel-iana-itld-admin-01.txt; available at

http://www.newdom.com/archive>.

---------------------------------------------------------------------------

After considerable debate and redrafting failed to produce a

consensus on DNS change, IANA and the Internet Society (ISOC) organized

the International Ad Hoc Committee 10 (IAHC or the Ad Hoc

Committee) in September 1996, to resolve DNS management issues. The

World Intellectual Property Organization (WIPO) and the International

Telecommunications Union (ITU) participated in the IAHC. The Federal

Networking Council (FNC) participated in the early deliberations of the

Ad Hoc Committee.

---------------------------------------------------------------------------

\10\ For further information about the IAHC see: http://

www.iahc.org> and related links. Reference to this organization does

not constitute an endorsement of the commercial activities of its

related organizations.

---------------------------------------------------------------------------

The IAHC issued a draft plan in December 1996 that introduced

unique and thoughtful concepts for the evolution of DNS

administration.11 The final report proposed a memorandum of

understanding (MoU) that would have established, initially, seven new

gTLDs to be operated on a nonexclusive basis by a consortium of new

private domain name registrars called the Council of Registrars

(CORE).12 Policy oversight would have been undertaken in a

separate council called the Policy Oversight Committee (POC) with seats

allocated to specified stakeholder groups. Further, the plan formally

introduced mechanisms for resolving trademark/domain name disputes.

Under the MoU, registrants for second-level domains would have been

required to submit to mediation and arbitration, facilitated by WIPO,

in the event of conflict with trademark holders.

---------------------------------------------------------------------------

\11\ December 1996 draft: draft-iahc-gtldspec-00.txt; available

at http://info.internet.isi.edu:80/in-drafts/files>.

\12\ The IAHC final report is available at http://www.iahc.org/

draft-iahc-recommend-00.html>.

---------------------------------------------------------------------------

Although the IAHC proposal gained support in many quarters of the

Internet community, the IAHC process was criticized for its aggressive

technology development and implementation schedule, for being dominated

by the Internet engineering community, and for lacking participation by

and input from business interests and others in the Internet

community.13 Others criticized the plan for failing to solve

the competitive problems that were such a source of dissatisfaction

among Internet users and for imposing unnecessary burdens on trademark

holders. Although the POC responded by revising the original plan,

demonstrating a commendable degree of flexibility, the proposal was not

able to overcome initial criticism of both the plan and the process by

which the plan was developed.14 Important segments of the

Internet community remained outside the IAHC process, criticizing it as

insufficiently representative.15

---------------------------------------------------------------------------

\13\ See generally public comments received in response to July

2, 1997 RFC located at http://www.ntia.doc.gov/ntiahome/domainname/

email>.

\14\ For a discussion, see Congressional testimony of Assistant

Secretary of Commerce Larry Irving, Before the House Committee on

Science, Subcommittee on Basic Research, September 25, 1997

available at http://www.ntia.doc.gov/ntiahome/domainname/email>.

\15\ See generally public comments received in response to July

2, 1997 RFC located at http://www.ntia.doc.gov/ntiahome/domainname/

email>.

---------------------------------------------------------------------------

As a result of the pressure to change DNS management, and in order

to facilitate its withdrawal from DNS management, the U.S. Government,

through the Department of Commerce and NTIA, sought public comment on

the direction of U.S. policy with respect to DNS, issuing the Green

Paper on January 30, 1998.16 The approach outlined in the

Green Paper adopted elements of other proposals, such as the early

Postel drafts and the IAHC gTLD-MoU.

---------------------------------------------------------------------------

\16\ The document was published in the Federal Register on

February 20, 1998, (63 FR 8826 (Feb. 20, 1998)).

---------------------------------------------------------------------------

Comments and Response: The following are summaries of and responses

to the major comments that were received in response to NTIA's issuance

of A Proposal to Improve the Technical Management of Internet Names and

Addresses. As used herein, quantitative terms such as ``some,''

``many,'' and ``the majority of,'' reflect, roughly speaking, the

proportion of comments addressing a particular issue but are not

intended to summarize all comments received or the complete substance

of all such comments.

1. Principles for a New System

The Green Paper set out four principles to guide the evolution of

the domain name system: stability, competition, private bottom-up

coordination, and representation.

Comments: In general, commenters supported these principles, in

some cases highlighting the importance of one or more of the

principles. For example, a number of commenters emphasized the

importance of establishing a body that fully reflects the broad

diversity of the Internet community. Others stressed the need to

preserve the bottom-up tradition of Internet governance. A limited

number of commenters proposed additional principles for the new system,

including principles related to the protection of human rights, free

speech, open communication, and the preservation of the Internet as a

public trust. Finally, some commenters who agreed that Internet

stability is an important principle, nonetheless objected to the U.S.

Government's assertion of any participatory role in ensuring such

stability.

Response: The U.S. Government policy applies only to management of

Internet names and addresses and does not set out a system of Internet

``governance.'' Existing human rights and free speech protections will

not be disturbed and, therefore, need not be specifically included in

the core principles for DNS management. In addition, this policy is not

intended to displace other legal regimes (international law,

competition law, tax law and principles of international taxation,

intellectual property law, etc.) that may already apply. The continued

applicability of these systems as well as the principle of

representation should ensure that DNS management proceeds in the

interest of the Internet community as a whole. Finally, the U.S.

Government believes that it would be irresponsible to withdraw from its

existing management role without

[[Page 31744]]

taking steps to ensure the stability of the Internet during its

transition to private sector management. On balance, the comments did

not present any consensus for amending the principles outlined in the

Green Paper.

2. The Coordinated Functions

The Green Paper identified four DNS functions to be performed on a

coordinated, centralized basis in order to ensure that the Internet

runs smoothly:

1. To set policy for and direct the allocation of IP number blocks;

2. To oversee the operation of the Internet root server system;

3. To oversee policy for determining the circumstances under which

new top level domains would be added to the root system; and

4. To coordinate the development of other technical protocol

parameters as needed to maintain universal connectivity on the

Internet.

Comments: Most commenters agreed that these functions should be

coordinated centrally, although a few argued that a system of

authoritative roots is not technically necessary to ensure DNS

stability. A number of commenters, however, noted that the fourth

function, as delineated in the Green Paper, overstated the functions

currently performed by IANA, attributing to it central management over

an expanded set of functions, some of which are now carried out by the

IETF.

Response: In order to preserve universal connectivity and the

smooth operation of the Internet, the U.S. Government continues to

believe, along with most commenters, that these four functions should

be coordinated. In the absence of an authoritative root system, the

potential for name collisions among competing sources for the same

domain name could undermine the smooth functioning and stability of the

Internet.

The Green Paper was not, however, intended to expand the

responsibilities associated with Internet protocols beyond those

currently performed by IANA. Specifically, management of DNS by the new

corporation does not encompass the development of Internet technical

parameters for other purposes by other organizations such as IETF. The

fourth function should be restated accordingly:

To coordinate the assignment of other Internet technical

parameters as needed to maintain universal connectivity on the

Internet.

3. Separation of Name and Number Authority

Comments: A number of commenters suggested that management of the

domain name system should be separated from management of the IP number

system. These commenters expressed the view that the numbering system

is relatively technical and straightforward. They feared that tight

linkage of domain name and IP number policy development would embroil

the IP numbering system in the kind of controversy that has surrounded

domain name issuance in recent months. These commenters also expressed

concern that the development of alternative name and number systems

could be inhibited by this controversy or delayed by those with vested

interests in the existing system.

Response: The concerns expressed by the commenters are legitimate,

but domain names and IP numbers must ultimately be coordinated to

preserve universal connectivity on the Internet. Also, there are

significant costs associated with establishing and operating two

separate management entities.

However, there are organizational structures that could minimize

the risks identified by commenters. For example, separate name and

number councils could be formed within a single organization. Policy

could be determined within the appropriate council that would submit

its recommendations to the new corporation's Board of Directors for

ratification.

4. Creation of the New Corporation and Management of the DNS

The Green Paper called for the creation of a new private, not-for-

profit corporation 17 responsible for coordinating specific

DNS functions for the benefit of the Internet as a whole. Under the

Green Paper proposal, the U.S. Government 18 would gradually

transfer these functions to the new corporation beginning as soon as

possible, with the goal of having the new corporation carry out

operational responsibility by October 1998. Under the Green Paper

proposal, the U.S. Government would continue to participate in policy

oversight until such time as the new corporation was established and

stable, phasing out as soon as possible, but in no event later than

September 30, 2000. The Green Paper suggested that the new corporation

be incorporated in the United States in order to promote stability and

facilitate the continued reliance on technical expertise residing in

the United States, including IANA staff at USC/ISI.

---------------------------------------------------------------------------

\17\ As used herein, the term ``new corporation'' is intended to

refer to an entity formally organized under well recognized and

established business law standards.

\18\ As noted in the Summary, the President directed the

Secretary of Commerce to privatize DNS in a manner that increases

competition and facilitates international participation in its

management. Accordingly, the Department of Commerce will lead the

coordination of the U.S. government's role in this transition.

---------------------------------------------------------------------------

Comments: Almost all commenters supported the creation of a new,

private not-for-profit corporation to manage DNS. Many suggested that

IANA should evolve into the new corporation. A small number of

commenters asserted that the U.S. Government should continue to manage

Internet names and addresses. Another small number of commenters

suggested that DNS should be managed by international governmental

institutions such as the United Nations or the International

Telecommunications Union. Many commenters urged the U.S. Government to

commit to a more aggressive timeline for the new corporation's

assumption of management responsibility. Some commenters also suggested

that the proposal to headquarter the new corporation in the United

States represented an inappropriate attempt to impose U.S. law on the

Internet as a whole.

Response: The U.S. Government is committed to a transition that

will allow the private sector to take leadership for DNS management.

Most commenters shared this goal. While international organizations may

provide specific expertise or act as advisors to the new corporation,

the U.S. continues to believe, as do most commenters, that neither

national governments acting as sovereigns nor intergovernmental

organizations acting as representatives of governments should

participate in management of Internet names and addresses. Of course,

national governments now have, and will continue to have, authority to

manage or establish policy for their own ccTLDs.

The U.S. Government would prefer that this transition be complete

before the year 2000. To the extent that the new corporation is

established and operationally stable, September 30, 2000 is intended to

be, and remains, an ``outside'' date.

IANA has functioned as a government contractor, albeit with

considerable latitude, for some time now. Moreover, IANA is not

formally organized or constituted. It describes a function more than an

entity, and as such does not currently provide a legal foundation for

the new corporation. This is not to say,

[[Page 31745]]

however, that IANA could not be reconstituted by a broad-based,

representative group of Internet stakeholders or that individuals

associated with IANA should not themselves play important foundation

roles in the formation of the new corporation. We believe, and many

commenters also suggested, that the private sector organizers will want

Dr. Postel and other IANA staff to be involved in the creation of the

new corporation.

Because of the significant U.S.-based DNS expertise and in order to

preserve stability, it makes sense to headquarter the new corporation

in the United States. Further, the mere fact that the new corporation

would be incorporated in the United States would not remove it from the

jurisdiction of other nations. Finally, we note that the new

corporation must be headquartered somewhere, and similar objections

would inevitably arise if it were incorporated in another location.

5. Structure of the New Corporation

The Green Paper proposed a 15-member Board, consisting of three

representatives of regional number registries, two members designated

by the Internet Architecture Board (IAB), two members representing

domain name registries and domain name registrars, seven members

representing Internet users, and the Chief Executive Officer of the new

corporation.

Comments: Commenters expressed a variety of positions on the

composition of the Board of Directors for the new corporation. In

general, however, most commenters supported the establishment of a

Board of Directors that would be representative of the functional and

geographic diversity of the Internet. For the most part, commenters

agreed that the groups listed in the Green Paper included individuals

and entities likely to be materially affected by changes in DNS. Most

of those who criticized the proposed allocation of Board seats called

for increased representation of their particular interest group on the

Board of Directors. Specifically, a number of commenters suggested that

the allocation set forth in the Green Paper did not adequately reflect

the special interests of (1) trademark holders, (2) Internet service

providers, or (3) the not-for-profit community. Others commented that

the Green Paper did not adequately ensure that the Board would be

globally representative.

Response: The Green Paper attempted to describe a manageably sized

Board of Directors that reflected the diversity of the Internet. It is

probably impossible to allocate Board seats in a way that satisfies all

parties concerned. On balance, we believe the concerns raised about the

representation of specific groups are best addressed by a thoughtful

allocation of the ``user'' seats as determined by the organizers of the

new corporation and its Board of Directors, as discussed below.

The Green Paper identified several international membership

associations and organizations to designate Board members such as

APNIC, ARIN, RIPE, and the Internet Architecture Board. We continue to

believe that as use of the Internet expands outside the United States,

it is increasingly likely that a properly open and transparent DNS

management entity will have board members from around the world.

Although we do not set any mandatory minimums for global

representation, this policy statement is designed to identify global

representativeness as an important priority.

6. Registrars and Registries

The Green Paper proposed moving the system for registering second

level domains and the management of generic top-level domains into a

competitive environment by creating two market-driven businesses,

registration of second level domain names and the management of gTLD

registries.

a. Competitive Registrars

Comments: Commenters strongly supported establishment of a

competitive registrar system whereby registrars would obtain domain

names for customers in any gTLD. Few disagreed with this position. The

Green Paper proposed a set of requirements to be imposed by the new

corporation on all would-be registrars. Commenters for the most part

did not take exception to the proposed criteria, but a number of

commenters suggested that it was inappropriate for the United States

government to establish them.

Response: In response to the comments received, the U.S. Government

believes that the new corporation, rather than the U.S. Government,

should establish minimum criteria for registrars that are pro-

competitive and provide some measure of stability for Internet users

without being so onerous as to prevent entry by would-be domain name

registrars from around the world. Accordingly, the proposed criteria

are not part of this policy statement.

b. Competitive Registries

Comments: Many commenters voiced strong opposition to the idea of

competitive and/or for-profit domain name registries, citing one of

several concerns. Some suggested that top level domain names are not,

by nature, ever truly generic. As such, they will tend to function as

``natural monopolies'' and should be regulated as a public trust and

operated for the benefit of the Internet community as a whole. Others

suggested that even if competition initially exists among various

domain name registries, lack of portability in the naming systems would

create lock-in and switching costs, making competition unsustainable in

the long run. Finally, other commenters suggested that no new registry

could compete meaningfully with NSI unless all domain name registries

were not-for-profit and/or noncompeting.

Some commenters asserted that an experiment involving the creation

of additional for-profit registries would be too risky, and

irreversible once undertaken. A related concern raised by commenters

addressed the rights that for-profit operators might assert with

respect to the information contained in registries they operate. These

commenters argued that registries would have inadequate incentives to

abide by DNS policies and procedures unless the new corporation could

terminate a particular entity's license to operate a registry. For-

profit operators, under this line of reasoning, would be more likely to

disrupt the Internet by resisting license terminations.

Commenters who supported competitive registries conceded that, in

the absence of domain name portability, domain name registries could

impose switching costs on users who change domain name registries. They

cautioned, however, that it would be premature to conclude that

switching costs provide a sufficient basis for precluding the proposed

move to competitive domain name registries and cited a number of

factors that could protect against registry opportunism. These

commenters concluded that the potential benefits to customers from

enhanced competition outweighed the risk of such opportunism. The

responses to the Green Paper also included public comments on the

proposed criteria for registries.

Response: Both sides of this argument have considerable merit. It

is possible that additional discussion and information will shed light

on this issue, and therefore, as discussed below, the U.S. Government

has concluded that the issue should be left for further consideration

and final action by the new corporation. The U.S. Government is of the

view, however, that competitive systems generally result in greater

innovation, consumer choice,

[[Page 31746]]

and satisfaction in the long run. Moreover, the pressure of competition

is likely to be the most effective means of discouraging registries

from acting monopolistically. Further, in response to the comments

received, the U.S. government believes that new corporation should

establish and implement appropriate criteria for gTLD registries.

Accordingly, the proposed criteria are not part of this policy

statement.

7. The Creation of New gTLDs

The Green Paper suggested that during the period of transition to

the new corporation, the U.S. Government, in cooperation with IANA,

would undertake a process to add up to five new gTLDs to the

authoritative root. Noting that formation of the new corporation would

involve some delay, the Green Paper contemplated new gTLDs in the short

term to enhance competition and provide information to the technical

community and to policy makers, while offering entities that wished to

enter into the registry business an opportunity to begin offering

service to customers. The Green Paper, however, noted that ideally the

addition of new TLDs would be left to the new corporation.

Comments: The comments evidenced very strong support for limiting

government involvement during the transition period on the matter of

adding new gTLDs. Specifically, most commenters--both U.S. and non-

U.S.-- suggested that it would be more appropriate for the new,

globally representative, corporation to decide these issues once it is

up and running. Few believed that speed should outweigh process

considerations in this matter. Others warned, however, that relegating

this contentious decision to a new and untested entity early in its

development could fracture the organization. Others argued that the

market for a large or unlimited number of new gTLDs should be opened

immediately. They asserted that there are no technical impediments to

the addition of a host of gTLDs, and the market will decide which TLDs

succeed and which do not. Further, they pointed out that there are no

artificial or arbitrary limits in other media on the number of places

in which trademark holders must defend against dilution.

Response: The challenge of deciding policy for the addition of new

domains will be formidable. We agree with the many commenters who said

that the new corporation would be the most appropriate body to make

these decisions based on global input. Accordingly, as supported by the

preponderance of comments, the U.S. Government will not implement new

gTLDs at this time.

At least in the short run, a prudent concern for the stability of

the system suggests that expansion of gTLDs proceed at a deliberate and

controlled pace to allow for evaluation of the impact of the new gTLDs

and well-reasoned evolution of the domain space. New top level domains

could be created to enhance competition and to enable the new

corporation to evaluate the functioning, in the new environment, of the

root server system and the software systems that enable shared

registration.

8. The Trademark Dilemma

When a trademark is used as a domain name without the trademark

owner's consent, consumers may be misled about the source of the

product or service offered on the Internet, and trademark owners may

not be able to protect their rights without very expensive litigation.

For cyberspace to function as an effective commercial market,

businesses must have confidence that their trademarks can be protected.

On the other hand, management of the Internet must respond to the needs

of the Internet community as a whole, and not trademark owners

exclusively. The Green Paper proposed a number of steps to balance the

needs of domain name holders with the legitimate concerns of trademark

owners in the interest of the Internet community as a whole. The

proposals were designed to provide trademark holders with the same

rights they have in the physical world, to ensure transparency, and to

guarantee a dispute resolution mechanism with resort to a court system.

The Green Paper also noted that trademark holders have expressed

concern that domain name registrants in faraway places may be able to

infringe their rights with no convenient jurisdiction available in

which the trademark owner could enforce a judgment protecting those

rights. The Green Paper solicited comments on an arrangement whereby,

at the time of registration, registrants would agree to submit a

contested domain name to the jurisdiction of the courts where the

registry is domiciled, where the registry database is maintained, or

where the ``A'' root server is maintained.

Comments: Commenters largely agreed that domain name registries

should maintain up-to-date, readily searchable domain name databases

that contain the information necessary to locate a domain name holder.

In general commenters did not take specific issue with the database

specifications proposed in Appendix 2 of the Green Paper, although some

commenters proposed additional requirements. A few commenters noted,

however, that privacy issues should be considered in this context.

A number of commenters objected to NSI's current business practice

of allowing registrants to use domain names before they have actually

paid any registration fees. These commenters pointed out that this

practice has encouraged cybersquatters and increased the number of

conflicts between domain name holders and trademark holders. They

suggested that domain name applicants should be required to pay before

a desired domain name becomes available for use.

Most commenters also favored creation of an on-line dispute

resolution mechanism to provide inexpensive and efficient alternatives

to litigation for resolving disputes between trademark owners and

domain name registrants. The Green Paper contemplated that each

registry would establish specified minimum dispute resolution

procedures, but remain free to establish additional trademark

protection and dispute resolution mechanisms. Most commenters did not

agree with this approach, favoring instead a uniform approach to

resolving trademark/domain name disputes.

Some commenters noted that temporary suspension of a domain name in

the event of an objection by a trademark holder within a specified

period of time after registration would significantly extend trademark

holders' rights beyond what is accorded in the real world. They argued

that such a provision would create a de facto waiting period for name

use, as holders would need to suspend the use of their name until after

the objection window had passed to forestall an interruption in

service. Further, they argue that such a system could be used anti-

competitively to stall a competitor's entry into the marketplace.

The suggestion that domain name registrants be required to agree at

the time of registration to submit disputed domain names to the

jurisdiction of specified courts was supported by U.S. trademark

holders but drew strong protest from trademark holders and domain name

registrants outside the United States. A number of commenters

characterized this as an inappropriate attempt to establish U.S.

trademark law as the law of the Internet. Others suggested that

existing jurisdictional arrangements are satisfactory. They argue that

establishing a mechanism whereby the judgment of a court can be

enforced absent personal jurisdiction

[[Page 31747]]

over the infringer would upset the balance between the interests of

trademark holders and those of other members of the Internet community.

Response: The U.S. Government will seek international support to

call upon the World Intellectual Property Organization (WIPO) to

initiate a balanced and transparent process, which includes the

participation of trademark holders and members of the Internet

community who are not trademark holders, to (1) develop recommendations

for a uniform approach to resolving trademark/domain name disputes

involving cyberpiracy (as opposed to conflicts between trademark

holders with legitimate competing rights), (2) recommend a process for

protecting famous trademarks in the generic top level domains, and (3)

evaluate the effects, based on studies conducted by independent

organizations, such as the National Research Council of the National

Academy of Sciences, of adding new gTLDs and related dispute resolution

procedures on trademark and intellectual property holders. These

findings and recommendations could be submitted to the board of the new

corporation for its consideration in conjunction with its development

of registry and registrar policy and the creation and introduction of

new gTLDs.

In trademark/domain name conflicts, there are issues of

jurisdiction over the domain name in controversy and jurisdiction over

the legal persons (the trademark holder and the domain name holder).

This document does not attempt to resolve questions of personal

jurisdiction in trademark/domain name conflicts. The legal issues are

numerous, involving contract, conflict of laws, trademark, and other

questions. In addition, determining how these various legal principles

will be applied to the borderless Internet with an unlimited

possibility of factual scenarios will require a great deal of thought

and deliberation. Obtaining agreement by the parties that jurisdiction

over the domain name will be exercised by an alternative dispute

resolution body is likely to be at least somewhat less controversial

than agreement that the parties will subject themselves to the personal

jurisdiction of a particular national court. Thus, the references to

jurisdiction in this policy statement are limited to jurisdiction over

the domain name in dispute, and not to the domain name holder.

In order to strike a balance between those commenters who thought

that registrars and registries should not themselves be engaged in

disputes between trademark owners and domain name holders and those

commenters who thought that trademark owners should have access to a

reliable and up-to-date database, we believe that a database should be

maintained that permits trademark owners to obtain the contact

information necessary to protect their trademarks.

Further, it should be clear that whatever dispute resolution

mechanism is put in place by the new corporation, that mechanism should

be directed toward disputes about cybersquatting and cyberpiracy and

not to settling the disputes between two parties with legitimate

competing interests in a particular mark. Where legitimate competing

rights are concerned, disputes are rightly settled in an appropriate

court.

Under the revised plan, we recommend that domain name holders agree

to submit infringing domain names to the jurisdiction of a court where

the ``A'' root server is maintained, where the registry is domiciled,

where the registry database is maintained, or where the registrar is

domiciled. We believe that allowing trademark infringement suits to be

brought wherever registrars and registries are located will help ensure

that all trademark holders `` both U.S. and non-U.S. `` have the

opportunity to bring suits in a convenient jurisdiction and enforce the

judgments of those courts.

Under the revised plan, we also recommend that, whatever options

are chosen by the new corporation, each registrar should insist that

payment be made for the domain name before it becomes available to the

applicant. The failure to make a domain name applicant pay for its use

of a domain name has encouraged cyberpirates and is a practice that

should end as soon as possible.

9. Competition Concerns

Comments: Several commenters suggested that the U.S. Government

should provide full antitrust immunity or indemnification for the new

corporation. Others noted that potential antitrust liability would

provide an important safeguard against institutional inflexibility and

abuses of power.

Response: Applicable antitrust law will provide accountability to

and protection for the international Internet community. Legal

challenges and lawsuits can be expected within the normal course of

business for any enterprise and the new corporation should anticipate

this reality.

The Green Paper envisioned the new corporation as operating on

principles similar to those of a standard-setting body. Under this

model, due process requirements and other appropriate processes that

ensure transparency, equity and fair play in the development of

policies or practices would need to be included in the new

corporation's originating documents. For example, the new corporation's

activities would need to be open to all persons who are directly

affected by the entity, with no undue financial barriers to

participation or unreasonable restrictions on participation based on

technical or other such requirements. Entities and individuals would

need to be able to participate by expressing a position and its basis,

having that position considered, and appealing if adversely affected.

Further, the decision making process would need to reflect a balance of

interests and should not be dominated by any single interest category.

If the new corporation behaves this way, it should be less vulnerable

to antitrust challenges.

10. The NSI Agreement

Comments: Many commenters expressed concern about continued

administration of key gTLDs by NSI. They argued that this would give

NSI an unfair advantage in the marketplace and allow NSI to leverage

economies of scale across their gTLD operations. Some commenters also

believe the Green Paper approach would have entrenched and

institutionalized NSI's dominant market position over the key domain

name going forward. Further, many commenters expressed doubt that a

level playing field between NSI and the new registry market entrants

could emerge if NSI retained control over .com, .net, and .org.

Response: The cooperative agreement between NSI and the U.S.

Government is currently in its ramp down period. The U.S. Government

and NSI will shortly commence discussions about the terms and

conditions governing the ramp-down of the cooperative agreement.

Through these discussions, the U.S. Government expects NSI to agree to

take specific actions, including commitments as to pricing and equal

access, designed to permit the development of competition in domain

name registration and to approximate what would be expected in the

presence of marketplace competition. The U.S. Government expects NSI to

agree to act in a manner consistent with this policy statement,

including recognizing the role of the new corporation to establish and

implement DNS policy and to establish terms (including licensing terms)

applicable to new and existing gTLD registries under which registries,

registrars and gTLDs are permitted to

[[Page 31748]]

operate. Further, the U.S. Government expects NSI to agree to make

available on an ongoing basis appropriate databases, software,

documentation thereof, technical expertise, and other intellectual

property for DNS management and shared registration of domain names.

11. A Global Perspective

Comments: A number of commenters expressed concern that the Green

Paper did not go far enough in globalizing the administration of the

domain name system. Some believed that international organizations

should have a role in administering the DNS. Others complained that

incorporating the new corporation in the United States would entrench

control over the Internet with the U.S. Government. Still others

believed that the awarding by the U.S. Government of up to five new

gTLDs would enforce the existing dominance of U.S. entities over the

gTLD system.

Response: The U.S. Government believes that the Internet is a

global medium and that its technical management should fully reflect

the global diversity of Internet users. We recognize the need for and

fully support mechanisms that would ensure international input into the

management of the domain name system. In withdrawing the U.S.

Government from DNS management and promoting the establishment of a

new, non-governmental entity to manage Internet names and addresses, a

key U.S. Government objective has been to ensure that the increasingly

global Internet user community has a voice in decisions affecting the

Internet's technical management.

We believe this process has reflected our commitment. Many of the

comments on the Green Paper were filed by foreign entities, including

governments. Our dialogue has been open to all Internet users--foreign

and domestic, government and private--during this process, and we will

continue to consult with the international community as we begin to

implement the transition plan outlined in this paper.

12. The Intellectual Infrastructure Fund

In 1995, NSF authorized NSI to assess domain name registrants a $50

fee per year for the first two years, 30 percent of which was to be

deposited in the Intellectual Infrastructure Fund (IIF), a fund to be

used for the preservation and enhancement of the intellectual

infrastructure of the Internet.

Comments: Very few comments referenced the IIF. In general, the

comments received on the issue supported either refunding the IIF

portion of the domain name registration fee to domain registrants from

whom it had been collected or applying the funds toward Internet

infrastructure development projects generally, including funding the

establishment of the new corporation.

Response: As proposed in the Green Paper, allocation of a portion

of domain name registration fees to this fund terminated as of March

31, 1998. NSI has reduced its registration fees accordingly. The IIF

remains the subject of litigation. The U.S. Government takes the

position that its collection has recently been ratified by the U.S.

Congress,\19\ and has moved to dismiss the claim that it was unlawfully

collected. This matter has not been finally resolved, however.

---------------------------------------------------------------------------

\19\ 1998 Supplemental Appropriations and Rescissions Act; Pub.

L. 105-174; 112 Stat. 58.

---------------------------------------------------------------------------

13. The .us Domain

At present, the IANA administers .us as a locality-based hierarchy

in which second-level domain space is allocated to states and U.S.

territories.\20\ This name space is further subdivided into localities.

General registration under localities is performed on an exclusive

basis by private firms that have requested delegation from IANA. The

.us name space has typically been used by branches of state and local

governments, although some commercial names have been assigned. Where

registration for a locality has not been delegated, the IANA itself

serves as the registrar.

---------------------------------------------------------------------------

\20\ Management principles for the .us domain space are set

forth in Internet RFC 1480, (http://www.isi.edu/in-notes/

rfc1480.txt).

---------------------------------------------------------------------------

Comments: Many commenters suggested that the pressure for unique

identifiers in the .com gTLD could be relieved if commercial use of the

.us space was encouraged. Commercial users and trademark holders,

however, find the current locality-based system too cumbersome and

complicated for commercial use. They called for expanded use of the .us

TLD to alleviate some of the pressure for new generic TLDs and reduce

conflicts between American companies and others vying for the same

domain name. Most commenters support an evolution of the .us domain

designed to make this name space more attractive to commercial users.

Response: Clearly, there is much opportunity for enhancing the .us

domain space, and .us could be expanded in many ways without displacing

the current structure. Over the next few months, the U.S. Government

will work with the private sector and state and local governments to

determine how best to make the .us domain more attractive to commercial

users. Accordingly, the Department of Commerce will seek public input

on this important issue.

Administrative Law Requirements

On February 20, 1998, NTIA published for public comment a proposed

rule regarding the domain name registration system. That proposed rule

sought comment on substantive regulatory provisions, including but not

limited to a variety of specific requirements for the membership of the

new corporation, the creation during a transition period of a specified

number of new generic top level domains and minimum dispute resolution

and other procedures related to trademarks. As discussed elsewhere in

this document, in response to public comment these aspects of the

original proposal have been eliminated. In light of the public comment

and the changes to the proposal made as a result, as well as the

continued rapid technological development of the Internet, the

Department of Commerce has determined that it should issue a general

statement of policy, rather than define or impose a substantive

regulatory regime for the domain name system. As such, this policy

statement is not a substantive rule, does not contain mandatory

provisions and does not itself have the force and effect of law.

The Assistant General Counsel for Legislation and Regulation,

Department of Commerce, certified to the Chief Counsel for Advocacy,

Small Business Administration, that, for purposes of the Regulatory

Flexibility Act, 5 U.S.C. 601 et seq., the proposed rule on this

matter, if adopted, would not have a significant economic impact on a

substantial number of small entities. The factual basis for this

certification was published along with the proposed rule. No comments

were received regarding this certification. As such, and because this

final rule is a general statement of policy, no final regulatory

flexibility analysis has been prepared.

This general statement of policy does not contain any reporting or

record keeping requirements subject to the Paperwork Reduction Act, 44

U.S.C. ch. 35 (PRA). However, at the time the U.S. Government might

seek to enter into agreements as described in this policy statement, a

determination will be made as to whether any reporting or record

keeping requirements subject to the PRA are being implemented. If so,

the NTIA will, at that time, seek approval under the PRA for such

requirement(s) from the Office of Management and Budget.

[[Page 31749]]

This statement has been determined to be not significant for

purposes of Office of Management and Budget review under Executive

Order 12866, entitled Regulatory Planning and Review.

Revised Policy Statement

This document provides the U.S. Government's policy regarding the

privatization of the domain name system in a manner that allows for the

development of robust competition and that facilitates global

participation in the management of Internet names and addresses.

The policy that follows does not propose a monolithic structure for

Internet governance. We doubt that the Internet should be governed by

one plan or one body or even by a series of plans and bodies. Rather,

we seek a stable process to address the narrow issues of management and

administration of Internet names and numbers on an ongoing basis.

As set out below, the U.S. Government is prepared to recognize, by

entering into agreement with, and to seek international support for, a

new, not-for-profit corporation formed by private sector Internet

stakeholders to administer policy for the Internet name and address

system. Under such agreement(s) or understanding(s), the new

corporation would undertake various responsibilities for the

administration of the domain name system now performed by or on behalf

of the U.S. Government or by third parties under arrangements or

agreements with the U.S. Government. The U.S. Government would also

ensure that the new corporation has appropriate access to needed

databases and software developed under those agreements.

The Coordinated Functions

Management of number addresses is best done on a coordinated basis.

Internet numbers are a unique, and at least currently, a limited

resource. As technology evolves, changes may be needed in the number

allocation system. These changes should also be coordinated.

Similarly, coordination of the root server network is necessary if

the whole system is to work smoothly. While day-to-day operational

tasks, such as the actual operation and maintenance of the Internet

root servers, can be dispersed, overall policy guidance and control of

the TLDs and the Internet root server system should be vested in a

single organization that is representative of Internet users around the

globe.

Further, changes made in the administration or the number of gTLDs

contained in the authoritative root system will have considerable

impact on Internet users throughout the world. In order to promote

continuity and reasonable predictability in functions related to the

root zone, the development of policies for the addition, allocation,

and management of gTLDs and the establishment of domain name registries

and domain name registrars to host gTLDs should be coordinated.

Finally, coordinated maintenance and dissemination of the protocol

parameters for Internet addressing will best preserve the stability and

interconnectivity of the Internet. We are not, however, proposing to

expand the functional responsibilities of the new corporation beyond

those exercised by IANA currently.

In order to facilitate the needed coordination, Internet

stakeholders are invited to work together to form a new, private, not-

for-profit corporation to manage DNS functions. The following

discussion reflects current U.S. Government views of the

characteristics of an appropriate management entity. What follows is

designed to describe the characteristics of an appropriate entity

generally.

Principles for a New System

In making a decision to enter into an agreement to establish a

process to transfer current U.S. Government management of DNS to such a

new entity, the U.S. will be guided by, and consider the proposed

entity's commitment to, the following principles:

1. Stability. The U.S. Government should end its role in the

Internet number and name address system in a manner that ensures the

stability of the Internet. The introduction of a new management system

should not disrupt current operations or create competing root systems.

During the transition and thereafter, the stability of the Internet

should be the first priority of any DNS management system. Security and

reliability of the DNS are important aspects of stability, and as a new

DNS management system is introduced, a comprehensive security strategy

should be developed.

2. Competition. The Internet succeeds in great measure because it

is a decentralized system that encourages innovation and maximizes

individual freedom. Where possible, market mechanisms that support

competition and consumer choice should drive the management of the

Internet because they will lower costs, promote innovation, encourage

diversity, and enhance user choice and satisfaction.

3. Private, Bottom-Up Coordination. Certain management functions

require coordination. In these cases, responsible, private-sector

action is preferable to government control. A private coordinating

process is likely to be more flexible than government and to move

rapidly enough to meet the changing needs of the Internet and of

Internet users. The private process should, as far as possible, reflect

the bottom-up governance that has characterized development of the

Internet to date.

4. Representation. The new corporation should operate as a private

entity for the benefit of the Internet community as a whole. The

development of sound, fair, and widely accepted policies for the

management of DNS will depend on input from the broad and growing

community of Internet users. Management structures should reflect the

functional and geographic diversity of the Internet and its users.

Mechanisms should be established to ensure international participation

in decision making.

Purpose. The new corporation ultimately should have the authority

to manage and perform a specific set of functions related to

coordination of the domain name system, including the authority

necessary to:

(1) Set policy for and direct allocation of IP number blocks to

regional Internet number registries;

(2) Oversee operation of the authoritative Internet root server

system;

(3) Oversee policy for determining the circumstances under which

new TLDs are added to the root system; and

(4) Coordinate the assignment of other Internet technical

parameters as needed to maintain universal connectivity on the

Internet.

Funding. Once established, the new corporation could be funded by

domain name registries, regional IP registries, or other entities

identified by the Board.

Staff. We anticipate that the new corporation would want to make

arrangements with current IANA staff to provide continuity and

expertise over the course of transition. The new corporation should

secure necessary expertise to bring rigorous management to the

organization.

Incorporation. We anticipate that the new corporation's organizers

will include representatives of regional Internet number registries,

Internet engineers and computer scientists, domain name registries,

domain name registrars, commercial and noncommercial users, Internet

service providers, international trademark

[[Page 31750]]

holders and Internet experts highly respected throughout the

international Internet community. These incorporators should include

substantial representation from around the world.

As these functions are now performed in the United States, by U.S.

residents, and to ensure stability, the new corporation should be

headquartered in the United States, and incorporated in the U.S. as a

not-for-profit corporation. It should, however, have a board of

directors from around the world. Moreover, incorporation in the United

States is not intended to supplant or displace the laws of other

countries where applicable.

Structure. The Internet community is already global and diverse and

likely to become more so over time. The organization and its board

should derive legitimacy from the participation of key stakeholders.

Since the organization will be concerned mainly with numbers, names and

protocols, its board should represent membership organizations in each

of these areas, as well as the direct interests of Internet users.

The Board of Directors for the new corporation should be balanced

to equitably represent the interests of IP number registries, domain

name registries, domain name registrars, the technical community,

Internet service providers (ISPs), and Internet users (commercial, not-

for-profit, and individuals) from around the world. Since these

constituencies are international, we would expect the board of

directors to be broadly representative of the global Internet

community.

As outlined in appropriate organizational documents, (Charter,

Bylaws, etc.) the new corporation should:

(1) Appoint, on an interim basis, an initial Board of Directors (an

Interim Board) consisting of individuals representing the functional

and geographic diversity of the Internet community. The Interim Board

would likely need access to legal counsel with expertise in corporate

law, competition law, intellectual property law, and emerging Internet

law. The Interim Board could serve for a fixed period, until the Board

of Directors is elected and installed, and we anticipate that members

of the Interim Board would not themselves serve on the Board of

Directors of the new corporation for a fixed period thereafter.

(2) Direct the Interim Board to establish a system for electing a

Board of Directors for the new corporation that insures that the new

corporation's Board of Directors reflects the geographical and

functional diversity of the Internet, and is sufficiently flexible to

permit evolution to reflect changes in the constituency of Internet

stakeholders. Nominations to the Board of Directors should preserve, as

much as possible, the tradition of bottom-up governance of the

Internet, and Board Members should be elected from membership or other

associations open to all or through other mechanisms that ensure broad

representation and participation in the election process.

(3) Direct the Interim Board to develop policies for the addition

of TLDs, and establish the qualifications for domain name registries

and domain name registrars within the system.

(4) Restrict official government representation on the Board of

Directors without precluding governments and intergovernmental

organizations from participating as Internet users or in a non-voting

advisory capacity.

Governance. The organizing documents (Charter, Bylaws, etc.) should

provide that the new corporation is governed on the basis of a sound

and transparent decision-making process, which protects against capture

by a self-interested faction, and which provides for robust,

professional management of the new corporation. The new corporation

could rely on separate, diverse, and robust name and number councils

responsible for developing, reviewing, and recommending for the board's

approval policy related to matters within each council's competence.

Such councils, if developed, should also abide by rules and decision-

making processes that are sound, transparent, protect against capture

by a self-interested party and provide an open process for the

presentation of petitions for consideration. The elected Board of

Directors, however, should have final authority to approve or reject

policies recommended by the councils.

Operations. The new corporation's processes should be fair, open

and pro-competitive, protecting against capture by a narrow group of

stakeholders. Typically this means that decision-making processes

should be sound and transparent; the basis for corporate decisions

should be recorded and made publicly available. Super-majority or even

consensus requirements may be useful to protect against capture by a

self-interested faction. The new corporation does not need any special

grant of immunity from the antitrust laws so long as its policies and

practices are reasonably based on, and no broader than necessary to

promote the legitimate coordinating objectives of the new corporation.

Finally, the commercial importance of the Internet necessitates that

the operation of the DNS system, and the operation of the authoritative

root server system should be secure, stable, and robust.

The new corporation's charter should provide a mechanism whereby

its governing body will evolve to reflect changes in the constituency

of Internet stakeholders. The new corporation could, for example,

establish an open process for the presentation of petitions to expand

board representation.

Trademark Issues. Trademark holders and domain name registrants and

others should have access to searchable databases of registered domain

names that provide information necessary to contact a domain name

registrant when a conflict arises between a trademark holder and a

domain name holder.21 To this end, we anticipate that the

policies established by the new corporation would provide that

following information would be included in all registry databases and

available to anyone with access to the Internet:

\21\ These databases would also benefit domain name holders by

making it less expensive for new registrars and registries to

identify potential customers, enhancing competition and lowering

prices.

---------------------------------------------------------------------------

--Up-to-date registration and contact information;

--Up-to-date and historical chain of registration information for the

domain name;

--A mail address for service of process;

--The date of domain name registration;

--The date that any objection to the registration of the domain name is

filed; and

--Any other information determined by the new corporation to be

reasonably necessary to resolve disputes between domain name

registrants and trademark holders expeditiously.

Further, the U.S. Government recommends that the new corporation

adopt policies whereby:

(1) Domain registrants pay registration fees at the time of

registration or renewal and agree to submit infringing domain names to

the authority of a court of law in the jurisdiction in which the

registry, registry database, registrar, or the ``A'' root servers are

located.

(2) Domain name registrants would agree, at the time of

registration or renewal, that in cases involving cyberpiracy or

cybersquatting (as opposed to conflicts between legitimate competing

rights holders), they would submit to and be bound by alternative

dispute resolution systems identified by the new corporation for the

purpose of resolving those conflicts. Registries and Registrars should

be required to abide by decisions of the ADR system.

[[Page 31751]]

(3) Domain name registrants would agree, at the time of

registration or renewal, to abide by processes adopted by the new

corporation that exclude, either pro-actively or retroactively, certain

famous trademarks from being used as domain names (in one or more TLDs)

except by the designated trademark holder.

(4) Nothing in the domain name registration agreement or in the

operation of the new corporation should limit the rights that can be

asserted by a domain name registrant or trademark owner under national

laws.

The Transition

Based on the processes described above, the U.S. Government

believes that certain actions should be taken to accomplish the

objectives set forth above. Some of these steps must be taken by the

government itself, while others will need to be taken by the private

sector. For example, a new not-for-profit organization must be

established by the private sector and its Interim Board chosen.

Agreement must be reached between the U.S. Government and the new

corporation relating to transfer of the functions currently performed

by IANA. NSI and the U.S. Government must reach agreement on the terms

and conditions of NSI's evolution into one competitor among many in the

registrar and registry marketplaces. A process must be laid out for

making the management of the root server system more robust and secure.

A relationship between the U.S. Government and the new corporation must

be developed to transition DNS management to the private sector and to

transfer management functions.

During the transition the U.S. Government expects to:

(1) Ramp down the cooperative agreement with NSI with the objective

of introducing competition into the domain name space. Under the ramp

down agreement NSI will agree to (a) take specific actions, including

commitments as to pricing and equal access, designed to permit the

development of competition in domain name registration and to

approximate what would be expected in the presence of marketplace

competition, (b) recognize the role of the new corporation to establish

and implement DNS policy and to establish terms (including licensing

terms) applicable to new and existing gTLDs and registries under which

registries, registrars and gTLDs are permitted to operate, (c) make

available on an ongoing basis appropriate databases, software,

documentation thereof, technical expertise, and other intellectual

property for DNS management and shared registration of domain names;

(2) Enter into agreement with the new corporation under which it

assumes responsibility for management of the domain name space;

(3) Ask WIPO to convene an international process including

individuals from the private sector and government to develop a set of

recommendations for trademark/domain name dispute resolutions and other

issues to be presented to the Interim Board for its consideration as

soon as possible;

(4) Consult with the international community, including other

interested governments as it makes decisions on the transfer; and

(5) Undertake, in cooperation with IANA, NSI, the IAB, and other

relevant organizations from the public and private sector, a review of

the root server system to recommend means to increase the security and

professional management of the system. The recommendations of the study

should be implemented as part of the transition process; and the new

corporation should develop a comprehensive security strategy for DNS

management and operations.

Dated: June 4, 1998.

William M. Daley,

Secretary of Commerce.

[FR Doc. 98-15392 Filed 6-9-98; 8:45 am]

BILLING CODE 3510-60-P