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Username: Easy
Date/Time: Fri, June 1, 2001 at 10:16 AM GMT
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Subject: A Proposal to Introduce Market-Based - New.Net Policy Paper


The following paper addresses competition in the domain name industry.
hopes that this paper will stimulate discussion regarding the name space and help
bring all points of view to the table. may publish other papers in the future
concerning issues affecting the domain name industry, which could include issues
regarding intellectual property rights, privacy, and international domain names, among
others. In the spirit of fostering an on-going dialogue, welcomes suggestions
for future topics.

A Proposal to Introduce Market-Based Principles into Domain Name Governance

We believe that the current Domain Name System (DNS) – the system that
enables persons to use easy-to-remember, common language names instead of
numerical Internet Protocol (IP) addresses to locate other computers and users on the
Internet – suffers from an artificial scarcity of names that is detrimental to Internet
users worldwide. The current system, administered by the Internet Corporation for
Assigned Names and Numbers (ICANN), is one that hampers the release of top level
domains (TLDs) and is the product of a legacy, consensus-based system of
governance that inherently cannot serve the diverse and large groups that have
varying and even diametrically opposed stakes in how today’s Internet is operated. As
a possible solution, we propose a hybrid consensus/market-based system in which the
technical aspects of the DNS are run by consensus through a central organization
such as ICANN, but the political and economic aspects of the DNS – those involved in
choosing which TLDs to use and who will operate them – are best served by
companies competing in an open marketplace. (For those who are new to issues
relating to the DNS, we present as background a brief history of the DNS in the
attached appendix.)
In understanding the DNS, one must keep in mind the difference between
naming and addressing. As Dr. Jon Postel, who had coordinated different Internet
protocols including the assignation of names and numbers in the DNS, stated with
admirable clarity, “A name indicates what we seek. An address indicates where it is.”1
In other words, naming allows one to find a given computer more easily; addressing
refers to the way in which a computer is identified.
This distinction is not academic: there is a clear difference between (1) the
decisions regarding addresses – which relate to the way in which machines function
on the Internet including the assignment of IP addresses, the establishment of Internet
protocols and the manner in which names are mapped to addresses; and (2) decisions
regarding names – which relate to exactly what names should be used by humans to
locate the machines within the system as well as who should administer those names.
One set of decisions – addressing and its attendant issues – is technical; the other –
naming – is political and economic.2 For example, why must a TLD be “.COM” or
“.INFO”? The answer is simple: it need not. There is no technical reason for that
choice.3 As Paul Vixie, the author of the DNS server software BIND, has stated, "A
million names under “.” isn't fundamentally harder to write code or operate computers
for than are a million names under "COM"."4
Currently, however, one organization administers both the addressing and the
naming space of the DNS, and as such it must try to balance all three areas –
technology, politics and economics – in its work. In so doing, ICANN has attempted to
preserve the consensus-based decision-making model out of which the technical
parameters of the Internet grew. Along the way, ICANN has faced criticisms and
questions regarding its administration, decision-making procedures, rules, and even its
legitimacy.5 It is no surprise that any such administrative body would encounter these issues when trying to address political and economic matters, and especially so when
trying to apply a consensus-based decision process to such matters.
Indeed, those who originally laid out the parameters for moving the control of
the DNS out of the U.S. Department of Commerce were aware of the benefits of a
competitive marketplace. Specifically, in setting forth the “Principles for a New
System” (a key section of the Statement of Policy entitled “Management of Internet
Domain Names and Addresses” -- commonly known as the “White Paper”), the
Department of Commerce stated:
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.6
In keeping with the White Paper’s principle of competition, we propose that a
market-based approach in conjunction with a consensus approach will allow the DNS
to achieve high efficiency and broad representation. This result is possible because
such a combination allows the technical aspects of DNS to be separated from the
political and economic questions concerning the creation of new TLDs. Under such a
system, technical matters would be decided using a consensus-based decision-making
process, and political and economic matters would be determined by market
forces. Accordingly, under this proposal, consensus- and market-driven decision-making
processes are used where they are best suited rather than forcing one into the
other’s realm. This hybrid approach will allow the DNS to serve best the group with
the most at stake: Internet users.
A History of Consensus-Based Decision-making
Since the early days of the ARPANET, most questions of Internet architecture
have been resolved using a consensus-based system. Indeed, the very nature of the
Internet allows a consensus-based system to work extremely effectively in situations
where technical issues can be carefully considered by knowledgeable parties across
the world. The evolution of the RFC (request for comments) process – which allows
individuals or groups to publish technical proposals for the rest of the Internet
community to comment and build upon – has been and continues to be an essential
component in resolving technical issues quickly and efficiently.
It is also clear that consensus works well in certain situations but is unwieldy --
if not impossible -- as the numbers of persons engaging in the consensus process
grow large.7 Indeed, a consensus process loses its effectiveness as it tries to function
beyond a fairly homogenous group.8 In the case of domain names today where a
heterogeneous group seeks to govern technical, political, and economic matters,
consensus administration becomes unworkable and often produces undesirable
results.9 Accordingly, it may be that the natural limits of consensus-based decision-making
prevent it from achieving an efficient and broadly representative result. Appreciating the limits of consensus-based governance may be difficult for
many involved in the continuing administration of the Internet. It involves reassessing,
with an open mind, the state of the success or otherwise of a consensus-based
approach to Internet naming as a whole. We assert that the evolution of the Internet
has resulted in such a wide diversity of parties having an interest in the naming space
that the current approach, applying a consensus-based process to all aspects of
naming, is no longer the best way to ensure maximum efficiency and consumer
From early 1982, decisions as to how the domain name system would work
(and the attendant modifications to the technical aspects of the system) used the RFC
process, as did many other aspects of the Internet’s operation.10 This process issues
standards, informational pieces and commentary. The standards do not create a law
per se in that someone can choose to operate outside the standards, but deviating
from the standards obviously makes it harder to work with those who have adopted
them.11 Insofar as changes to these technical matters are required, the tested method
of the consensus-generating RFC makes sense and is desired. This process brings
the benefits of the appropriate group, the technical community – which is focused on
and passionate about making the Internet operate well from a technical standpoint –
vetting protocols and giving each other input. Technical innovation is positively
encouraged rather than stifled.

Limits of Consensus

In contrast, we and many other groups feel that the current naming process falls
short of such interaction and constructive procedures. Regardless of the various
actions that brought about ICANN as the current body governing the name space,
suffice it to say that no single body could use the process described above for TLD
naming issues today. The TLD name space is not comprised of a small independent
group as was the case with Internet Assigned Numbers Authority (IANA) with its rules
and procedures regarding adding extensions that meet a minimum specification
threshold,12 or the Internet Engineering Task Force (IETF) consisting of engineers
developing protocols via occasional meetings and email discussion groups to discuss
and evaluate those protocols.13 Rather, the TLD name space consists of numerous,
disparate interests, and thus any governing body must always attempt to serve many
masters at once. In so doing, it attempts to resolve political and economic issues
relating to which TLDs should be created, how they should be run, who should reap
the economic benefits of running them, and so on.
Any organization addressing political and economic matters runs into questions
of legitimacy and related questions of representation and due process. As such, it is
easy to understand why ICANN, whose regulatory or commercial nature has been
debated, faces numerous questions regarding legitimacy, fairness, undue influence
and accountability, to name a few.14 Indeed, it is no surprise that ICANN, in an
attempt to get anything done at all in the non-technical policy arena, has, according to
its critics and even neutral observers, chosen to marginalize many of its constituencies
and heed the counsel of a relatively like-minded, more homogeneous subset of affected groups. Whether well founded or not, all of these issues and questions
surrounding ICANN further hamper the process of creating new generic TLDs. In fact,
many of these questions need not have arisen and will actually be ameliorated by
opening up the naming space to competition and moving away from a position of
artificial scarcity of names.

It is too much to post. Read it at or download it by using the link below.

Open your mind! Read it!

Competition is better than Bureaucracy!

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