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Article - New plan for domain names (February 1998)

• Principles for a new system
  • Stability
  • Competition
  • Private Sector, Bottom-Up Coordination
  • Representation
• Proposed Structure
• The Coordinated Functions
• The Competitive Functions
• The Creation of New generic TLDs
• Trademark Disputes
• The .us Domain
• Conclusion

Chris Connolly, Galexia

Related Galexia services and solutions Specialised Legal and Regulatory Consulting. Read more » Published Internet Law Bulletin, volume 1, number 2, 1998

The US Department of Commerce has announced a proposal to allow more Internet functions to be managed by the private sector and opened up to competition. A discussion paper - ‘A proposal to improve technical management of Internet names and addresses’ - was released on 30 January 1998. This article briefly summarises the main recommendations.

The growing commercialisation and globalisation of the Internet have led to concerns that the role the US Government has played in the administration of technical aspects of the Internet has passed its use by date.

The discussion paper recognises a number of pressures for change:

• There is widespread dissatisfaction about the absence of competition in domain name registration.
• Mechanisms for resolving conflict between trademark holders and domain name holders are expensive and cumbersome.
• Without changes, a proliferation of lawsuits could lead to chaos as tribunals around the world apply the antitrust law and intellectual property law of their jurisdictions to the Internet.
• 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 US, and those stake-holders want a larger voice in Internet coordination.
• As Internet names increasingly have commercial value, the decision to add new top-level domains cannot continue to 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 inappropriate for US research agencies to participate in and fund these functions.

Principles for a new system

The discussion paper suggests that change can only take place if a wide consensus is achieved amongst Internet users and companies. It proposes that a set of four guiding principles should be adopted in the search for such a consensus:

1. Stability

The US government should end its role in the Internet number and name address systems in a responsible manner. This means, above all else, ensuring the stability of the Internet. The Internet functions well today, but its current technical management is probably not viable over the long term. The paper states ‘We should not wait for it to break down before acting. Yet, we should not move so quickly, or depart so radically from the existing structures, that we disrupt the functioning of the Internet.’

2. Competition

The Internet succeeds in great measure because it is a decentralised system that encourages innovation and maximises individual freedom. Where possible, market mechanisms that support competition and consumer choice should drive the technical management of the Internet because they will promote innovation, preserve diversity, and enhance user choice and satisfaction.

3. Private Sector, Bottom-Up Coordination

Certain technical 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 characterised development of the Internet to date.

4. Representation

Technical management of the Internet should reflect the diversity of its users and their needs. Mechanisms should be established to ensure international input in decision making.

Proposed Structure

The discussion paper suggests that the technical administration of the Internet name and number functions should be divided into two groups - those that can be moved to a competitive system and those that should be coordinated. It then recommends the creation of a representative, not-for-profit corporation to manage the coordinated functions according to widely accepted objective criteria.

In areas which can be market driven, the paper recommends steps to achieve competition.

The Coordinated Functions

The US Government argues that the management of IP addresses falls into the first category (coordination). The paper recommends the creation of a private, not-for-profit corporation to manage the coordinated functions in a stable and open institutional framework. The new corporation would have the following authority:

1. To set policy for and direct the allocation of number blocks to regional number registries for the assignment of Internet addresses;

2. To oversee the operation of an authoritative root server system;

3. To oversee policy for determining, based on objective criteria clearly established in the new organisation’s charter, the circumstances under which new top-level domains are 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.

The US government would gradually transfer existing IP numbering functions, the root system and the appropriate databases to this new not-for-profit corporation. This transition is scheduled to begin as soon as possible, with operational responsibility moved to the new entity by September 30, 1998, and a full hand-over by September 30, 2000.

The new corporation will be funded by domain name registries and regional IP registries. The new corporation will be headquartered in the United States, and incorporated under US law as a not-for-profit corporation. It will, however, have and report to a board of directors from around the world.

The paper anticipates that there may be criticism of this structure, in that it appears monopolistic. It counters with a warning about US antitrust laws:

‘In performing its functions, the new corporation will act much like a standard-setting body. Under US law, a standard-setting body can face antitrust liability if it is dominated by an economically interested entity, or if standards are set in secret by a few leading competitors. But appropriate processes and structure will minimise the possibility that the body’s actions will be, or will appear to a court to be, anti-competitive.’

The Competitive Functions

Under the proposal, the system for registering second-level domain names and the management of the top level domain (TLD) registries will become competitive and market-driven. The paper even proposes that multiple registries will be allowed to develop.

The paper notes, however, that many in the Internet community feel strongly that multiple registries should only be allowed if they are not-for-profit organisations. They argue that lack of portability among registries (that is, the fact that users cannot change registries without adjusting at least part of their domain name string) could create lock-in problems and harm consumers. For example, a registry could induce users to register in a top-level domain by charging very low prices initially and then raise prices dramatically, knowing that name holders will be reluctant to risk established business by moving to a different top-level domain.

However, the paper concludes that this is a risk which will have to be taken in the hope of introducing true competition amongst registries. The paper recommends complete competition amongst registrars (a registry maintains and administers one or more TLDs, a registrar acts as a broker obtaining registration on behalf of clients).

The Creation of New generic TLDs

The paper proposes that during the transition to private management of the domain name system (DNS), the addition of up to five new registries would be feasible. Each new registry will be limited to a single top-level domain. During this period, the new corporation will have to evaluate the effects that the addition of new generic TLDs have on the operation of the Internet. After this transition, the new corporation will be in a better position to decide whether or when the introduction of additional generic TLDs is desirable.

Trademark Disputes

For cyberspace to function as an effective commercial market, businesses must have confidence that their trademarks can be protected. The paper proposes providing trademark holders with the same rights they have in the physical world, ensuring transparency, guaranteeing a dispute resolution mechanism with resort to a court system, and only adding new top-level domains after careful consideration.

The paper puts forward a strong case for resolving domain name disputes online:

‘Mechanisms that allow for on-line dispute resolution could provide an inexpensive and efficient alternative to litigation for resolving disputes between trademark owners and domain name registrants. A swift dispute resolution process could provide for the temporary suspension of a domain name registration if an adversely affected trademark holder objects within a short time, e.g. 30 days, of the initial registration. We seek comment on whether registries should be required to resolve disputes within a specified period of time after an opposition is filed, and if so, how long that period should be. ‘

The paper also seeks comments on how jurisdictional issues can be resolved:

‘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 file suit to protect those rights. At the time of registration, registrants could agree that, in the event of a trademark dispute involving the name registered, jurisdiction would lie where the registry is domiciled, where the registry database in maintained, or where the ‘A’ root server is maintained. ‘

The .us Domain

The paper seeks to respond, for the first time, to the almost constant Internet community criticism of the use of (or rather lack of) the .us TLD by American companies. Many believe the pressure for unique identifiers in the .com generic TLD could be relieved if commercial use of the .us space was encouraged. Expanded use of the .us TLD could also alleviate some of the pressure for new generic TLDs and reduce conflicts between American companies and others vying for the same domain name.

There will be a separate paper issued on the .us issue, seeking comments from the public.

Conclusion

The paper is a welcome admission that changes are needed to the management of naming issues on the Internet. There are also good recommendations on dispute resolution and jurisdictional issues. However, shifting management responsibility from the Government to the private sector is no substitute for dealing with the substantive issues themselves, and may produce less change than anticipated.

From an Australian perspective it is still difficult to see how to influence Internet policy. The CNN headline announcing the proposal sums up the American domination in this field, and would have probably been no different if it was a government or private proposal: ‘US releases plan for Internet’s future’.

The paper is available at: http://www.ntia.doc.gov/ntiahome/domainname/

Chris Connolly
Galexia

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