Internet Commerce Association Comments on ICANN's Performance

["Phil Corwin" <pcorwin@xxxxxxxxxxxxxxxxxx>]

BUTERA & ANDREWS

Attorneys at Law

1301 Pennsylvania Avenue, N.W.

Washington, D.C. 20004-1701

202-347-6875

Philip S. Corwin, Partner

pcorwin@xxxxxxxxxxxxxxxxxx <mailto:pcorwin@xxxxxxxxxxxxxxxxxx> 

 

 

By E-Mail       

 

June 5, 2007

 

Board of Directors

Internet Corporation for Assigned Names and Numbers (ICANN)

4676 Admiralty Way, Suite 330 
Marina del Rey, CA 90292-6601

 

Re: Request for Public Comments and Dialogue on ICANN's Performance

 

Dear Members of the ICANN Board:

 

This comment letter is submitted by the Internet Commerce Association
(ICA) in regard to the May 8, 2007 ICANN Notice, "Request for Public
Comment and Dialogue on ICANN's Performance". 

 

ICA is a not-for-profit trade association. Its membership is composed of
individuals and companies that invest in domain names and develop and
monetize the associated websites. ICA's mission is to promote the
benefits of the activities of professional domain name investors and
developers to the press, advertisers, and governmental authorities on a
global basis. ICA stands for Internet prosperity and entrepreneurship
and for fairness among regulators and in the dispute resolution process,
taxation, and treatment under other relevant laws, regulations, and
agreements in the U.S. and other nations. ICA provides a unified voice
for a membership with common interests and a diverse collection of
experience in the professional domain name ownership community. This
community represented by ICA has risked large amounts of capital in
order to develop domain names as the first new form of property of the
virtual age. Professional domain name registrants are a major source of
the fees that support registrars, registries, and ICANN itself.

 

Introduction

 

Starting off, while we would not wish to criticize ICANN for seeking
public commentary and feedback regarding its overall performance, we
share the puzzlement of other commentators responding to this particular
notice in regard to its timing and purpose. No explanation has been
provided by ICANN regarding the context for the scattershot inquiry
approach of this request, raising multiple issues when each is complex
in its own regard, or what action might result from a review of
submitted comments. Nor does the request contain any background material
or summary of ICANN's own view of its current policies regarding and
goals for a given issue to assist commentators -- which may well partly
explain the paucity of responses filed. Further, given the multiple
number of complex issues raised by the request, thirty days seems an
inadequate time period in which to expect concerned parties to provide
meaningful feedback. 

 

We have previously commented on similar shortfalls in prior ICANN
requests for input --  lack of contextual explanation, failure to share
ICANN's own thinking in regard to discrete policy development, and
inadequate time accorded for responses - and must note the irony that
these flaws  persist in a new process that is apparently meant to
demonstrate ICANN's "interest in continuous improvement". We anticipate
that these shortfalls will persist until ICANN adopts  the approach to
seeking public input that characterizes Federal Register notices under
the U.S. Administrative Procedures Act, the OECD's best practices for
conducting consultation, and similar governmental and intergovernmental
processes that share a decision-making body's own thoughts on competing
policy options and then provide adequate time for public participation
in a policymaking process that is perceived by effected constituencies
as being truly meaningful and capable of influencing final actions.
While ICANN is not a governmental regulator many of its actions are
quasi-regulatory in effect, and  we strongly urge ICANN to establish a
more formal, predictable, and comprehensive approach to seeking
stakeholder input with the goal of creating procedural due process for
the consideration and incorporation of such input in ICANN's decision
and policymaking process. 

 

With that introduction, we shall briefly comment on those areas raised
by your inquiry that are of particular interest to ICA members.

 

Transparency and Accountability

 

A policymaking process that is transparent in its purpose and logic and
that provides accountability by truly influencing final ICANN actions is
the standard to which ICANN should aspire, because only when the reality
of such a process is demonstrated will the various stakeholders in the
DNS feel that ICANN is truly operating in a bottom-up consensus manner.

 

In our letter of October 31, 2006 addressing "Development of
Transparency and Accountability Management Operating Principles" we
noted the reasons for according the highest priority to this area:

 

The importance of getting this matter right is twofold: 

1.      First, there remains strong concern throughout the Internet
community that ICANN has been operating in an opaque and cavalier manner
-- that it fails to explain or even recognize the policy assumptions
that underlie key decisions; that  it announces critical policy changes
as fait accompli after agreeing to them in private contract
negotiations; that it makes primarily cosmetic changes in response to
strong and negative consensus feedback from the affected Internet
community; and that it lacks an adequate administrative proposal and
review process to permit meaningful community participation in policy
development. 
2.      Second, the new Joint Project Announcement ratified by ICANN and
the U.S. Department of Commerce (DOC) on September 29th identifies
"greater transparency, accountability, and openness in the consideration
and adoption of policies related to the technical coordination of the
Internet DNS" as the leading priority for which the DOC will assess
progress in the continuing transition of ICANN to the private sector.
Similarly, the Affirmation of Responsibilities approved by ICANN's Board
on September 25th commits ICANN to continuing improvements in
transparency, accountability, and an improved policy development
process. While ICA commends these priorities and commitments, they must
move from the realm of mere rhetoric by being translated into genuine
and indisputable progress in the manner in which ICANN conducts its
operations and develops fundamental policy. We believe that substantial
progress in these areas must be the precondition for any future
termination of the MOU between ICANN and the DOC and completion of
ICANN's transition to full privatization.

 

The subsequent adoption of the revised gTLD agreements for .Org, .Info,
and .Biz at ICANN's Sao Paulo meeting last December, notwithstanding
extensive public comments that ran 200 to 1 against such adoption, was
extremely discouraging to all those who participated in that process.
Nonetheless, the tone of the more recent Lisbon meeting, particularly
ICANN's verbal commitment to undertake steps to prevent a repetition of
the RegisterFly fiasco, provided some hope that ICANN intends to back
its rhetorical commitment to greater transparency and accountability
with real change and substantive actions. The proof of that commitment
can only be demonstrated by concrete results in the policy area. We
shall be particularly attentive to the process that ICANN has promised
to initiate at the upcoming San Juan meeting to substantially revise the
standard Registry Accreditation Agreement (RAA) to prevent a repetition
of RegisterFly.

 

As we observed in our letter of last October, the achievement of greater
transparency, accountability and openness in its policy process has been
set as the key prerequisite for future termination of the MOU and
ICANN's transition to full privatization. The ICA intends to closely
monitor ICANN's performance between now and the fall of 2009 in this
regard. The prospect of full privatization takes on increased import
given the Board's decision in Lisbon to explore pursuing a transition
from non-profit corporation to Private International Organization (PIO)
status. We share the concern of many parties that a principal objective
of the PIO concept is to provide ICANN with quasi-sovereign immunity and
thereby further reduce the availability of legal process as an effective
tool for ensuring accountability. We believe it is incumbent upon ICANN
to fully explain its rationale for the PIO concept, to candidly discuss
its policy pros and cons, and to explain how the PIO concept is
consistent with a commitment to greater accountability. We look forward
to participating in that policymaking process as it is of critical
importance to the domain name investment and development community.

 

Operational Performance

 

ICANN's operational performance in regard to accredited registrars was
demonstrated to be woefully inadequate by the RegisterFly fiasco.
Decisive action came only when that registrar was in such an advanced
state of operational collapse that the deteriorating situation could no
longer be ignored. While the recent transfer of the RegisterFly database
to GoDaddy has restored operational functionality for long-suffering
registrants, tens of thousands of DN registrants had their websites lost
or stolen and it remains to be seen whether they have any effective
recourse for recovering those DNs or obtaining adequate monetary
compensation. In particular, it was extremely disquieting to learn that
ICANN has never effectively enforced the data escrow provisions of the
standard RAA, as such escrow may be the only means by which injured
registrants can prove their actual ownership of particular DNs. 

 

Again, the statements of ICANN officials and staff at the Lisbon meeting
provide some cause for hope that a real commitment to operational
improvement in the area of RAA oversight and enforcement, as well as the
provision of improved assistance to aggrieved registrants, is now in
place. The ICA intends to fully monitor and participate in the process
for revising and strengthening the RAA, which we expect to be launched
at the San Juan meeting.

 

A more recent area of operational concern is ICANN's transparency
regarding and response to a potential registry operator failure. We are
aware of press reports that the .Travel sTLD, created in 2004, is on the
brink of insolvency and may imminently terminate operations. According
to these reports, the Tralliance Corporation's most recent 10-Q filing
with the U.S. Securities and Exchange Commission stated:


We received a report from our independent accountants, relating to our
December 31, 2006 audited financial statements, containing a paragraph
stating that our recurring losses from operations and our accumulated
deficit raise substantial doubt about our ability to continue as a going
concern. The Company continues to incur substantial consolidated net
losses and management believes the Company will continue to be
unprofitable and use cash in its operations for the foreseeable future.
Based upon our current cash resources of approximately $480 thousand at
May 4, 2007, management does not believe the Company can operate as a
going concern beyond May 2007.

 

According to other news reports, .Travel registry TheGlobe.com had an
overall working capital deficit of about $7.8 million as of March 31st,
which included $2.6 million to settle a 2006 lawsuit brought by MySpace
alleging violation of U.S. anti-spamming law spurred by more than
100,000 e-mails sent to MySpace users. In other words, unlawful conduct
by the registry operator is a primary cause of its present financial
crisis.

 

Thus, it appears that .Travel's registry operator may already have
ceased operations, or be on the brink of doing so, yet we have not seen
any notice on the ICANN website regarding this matter, much less any
guidance to the approximately 25,000 .Travel registrants as to what
treatment their investment in .Travel DNs will receive in the insolvency
context. This absence of registrant information and guidance bears
unfortunate resemblance to the RegisterFly situation prior to the more
proactive stance undertaken by ICANN at its recent meeting in Lisbon,
and we would urge that the homepage of the ICANN.org website immediately
begin to provide candid acknowledgement of the .Travel situation as well
as links to registrant information and assistance. 

In this regard, we do take note that just prior to our filing of this
comment letter, on June 1, 2007, ICANN issued a new announcement,
"Building Towards a Comprehensive Failover Plan", in which you stated
your intention to "synthesize a best practices document describing
registry failover mechanisms" following the San Juan meeting later this
month, with the prospect that these mechanisms may be incorporated into
ICANN's new gTLD process potentially as a best practices contractual
requirement. It is implicit in this announcement that ICANN does not
presently have any such mechanisms in place to respond to the failure of
a gTLD registry, much less a sTLD registry such as .Travel. The report
accompanying this announcement notes that the potential mechanisms are
being considered in light of a number of questions, including, "What is
ICANN's duty to registrants in the event of a failure of a gTLD
registry?" Again, the clear implication of that question is that ICANN
has no fixed view at present regarding its duty to a registrant at a
failed gTLD, much less at a sTLD like .Travel. It is also appears that
ICANN is considering whether each registry should be required to
designate a back-up registry operator, or whether ICANN has the
authority to designate a replacement registry; while these are important
questions, they do not deal head on with situations like .Travel, in
which the issue is apparently not the technical performance of a
registry operator but the fact that the TLD in question is not
economically viable. Regardless, we trust that ICANN's work to date on
this matter will inform its handling of a .Travel collapse, and we would
urge ICANN to provide timely and comprehensive information and
assistance to .Travel registrants regarding the disposition of their
domain names.  

 

The  .Travel situation may well become clarified between the filing of
this comment letter and the San Juan meeting. In any event, we would
hope and expect that the collapse of a recently approved sTLD would
inform ICANN's future operational stance in regard to registry operator
oversight as well as overall policy criteria for the consideration and
approval of new TLD proposals. The ICA certainly intends to fully review
the report prepared for the registry failover project and to provide
further input to ICANN as well as to participate in the related public
forum session in San Juan as well as in subsequent discussions.

 

Policy Development Improvements

 

To recap our prior comments, if ICANN wants to meaningfully improve its
policymaking process it must begin to provide the same quality of
process as exists in the administrative procedures of major nations and
international organizations. At a minimum, that process must provide:

*       A full discussion of the context in which public comments are
solicited, the basis for asserted ICANN authority, and the operational
and policy goals sought to be achieved.
*       A candid discussion of the various policy options considered by
ICANN and its rationale for adopting the particular formulation
presented for public comment, and for rejecting alternatives.
*       The provision of adequate time for commentators to fully
consider the matter before them and to prepare detailed responses. The
30 day time period that seems to be the prevailing standard for most
ICANN requests for input is simply inadequate in most cases.

 

Finally, an improved policymaking process is one in which key decisions
are made in the sunshine, and not behind closed doors. In recent years
there have been too many instances of critically important policy
matters - such as the .Com settlement and resurrection of the .XXX
proposal - that were hammered out by ICANN staff in private
negotiations, without stakeholder awareness of such deal-making much
less ability to provide meaningful input. Such actions by ICANN
undermine overall confidence in its policymaking process.

 

Improvements in Participation and Efficiency of the Multi-Stakeholder
Model  

 

An efficient multi-stakeholder model is one in which the considered
commentary of ICANN's various constituencies has a demonstrated
influence on the policy end product. Nothing could be less efficient
than having hundreds of concerned parties provide feedback only to see
their efforts result in little more than cosmetic alteration of the
original proposal. The best means of improving participation by
stakeholders in ICANN processes is to conclusively demonstrate that
their involvement truly matters.

 

Conclusion

 

We appreciate the opportunity to provide this feedback and look forward
to participating in ICANN's future internal processes that affect ICA
members.

 

Sincerely,

Philip S. Corwin

Counsel, Internet Commerce Association 

 

 

 
Philip S. Corwin 
Partner 
Butera & Andrews 
1301 Pennsylvania Ave., NW 
Suite 500 
Washington, DC 20004 
202-347-6875 (office)

202-347-6876 (fax)

202-255-6172 (cell)

"Luck is the residue of design." -- Branch Rickey