Domain draft proposal released

The Clinton administration proposed this morning in its long-awaited "green paper" to carefully and slowly transfer power over the domain name system from the government to the private sector.

The paper, released by the Commerce Department, proposes initially

Ira Magaziner

limiting the number of new generic top-level domains (TLDs)--such as ".vend" and ".store"--to five.

The widely praised report also proposes transferring power over the domain naming system, which controls the functioning of the entire Internet, from a vanguard of old-school programmers and academics who ran the Net under government contract to a private, not-for-profit corporation with a 15-member board that includes representation from the private and public sectors as well as the international community.

Currently, the domain naming system is managed by the Internet Assigned Numbers Authority (IANA) and overseen by Jon Postel of the Information Sciences Institute (ISI) at the University of Southern California, under the authority of the Defense Department.

The government foresees the complete transfer of power to the new board, to be headquartered in the United States, by September 30, 2000. But the shift to the new system would begin long before that: "as soon as possible, with operational responsibility moved to the new entity by September 30, 1998," according to the report.

"From its origins as a U.S.-based research vehicle, the Internet is rapidly becoming an international medium for commerce, education, and communication," the report states. "The traditional means of organizing its technical functions need to evolve as well. The pressures for change are coming from many different quarters."

The report, while containing few surprises to those who have been following the issue intensely for the past few weeks, is likely to disappoint many of those same players who have run the domain naming system under government contract. But it has already brought cheers from a group of independent businesses that have long fought to get a piece of the domain name pie.

Most Netizens only know that when they type an address into their browsers or email, the system works. They are not aware of the intense power struggles and high-stakes battles over millions of dollars. They also are not aware that without a careful transfer of power, the Net could face a plunge into chaos.

To many of those involved in the domain name issue, today's report represents the changing of the guard--the transfer of power from the techies and academics who have basically run the Internet from its inception to a regulatory body that would take into account the Internet's dramatically changed character, from an academic and governmental communication system to an overarching system with significant international, commercial, academic, and social interests.

"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," the report states.

John Wood, senior Internet consultant for consultancy Prince PLC, added, "What this really represents is the changing of eras and changing of perspectives of what the Internet represents.

"What we've got here is the foundations of the commercial Internet. For it to be commercial, the Internet has to recognize that not computer users but consumers are what counts and consumers want to have an environment that is consistent and is run by people who are fully accountable for their actions," he added.

President Clinton's Internet policy adviser, Ira Magaziner, who oversaw the process, met for months with the various players. Ultimately, he tried to strike a balance--but the plan appears now to be most closely allied with one advocated by individuals who saw themselves as underdogs fighting established players.

Today's report is a draft and is open for public comment. The paper will be published in the Federal Register, which will establish the official deadline for the acceptance of public comment. A final ruling will then be issued by the Commerce Department at a later date, yet to be determined.

Under the proposal, the functions and businesses of registries, which are the actual databases where the TLDs are run, and registrars, the businesses that actually register individual domain names, will be split.

Both registries and registrars will have to meet criteria partially spelled out in the report. The requirements to run a registry are much more stringent, as the very functioning of the Internet will depend on how well they work.

To begin with, there will be only five new TLDs, and those TLDs will be run by five different entities, the report states. The TLDs will be added to the existing ones, which include ".com," ".net," and ".org."

To make sure the system runs smoothly, the government is proposing to limit the number of new TLDs to five, with each organization only being allowed one registry each.

After the not-for-profit corporation is established, it could decide how many others to add and how to add them.

But the number of companies that can register those TLDs is almost unlimited. Registrars will be able to make money by offering competitive pricing and services. All registries must share their information and offer the same deal to all registrars, the report states.

For instance, only one organization could run ".store," but a host of companies could sell domain names that end in ".store." And the company that ran ".store" would have to uniformly offer its names to the registrars.

The system clearly creates competition among registrars, who undoubtedly will try different business models, including offering cut-rate pricing with little service or more expensive registration fees for "boutique" service.

But how the registries will work is not completely clear. The two primary competing viewpoints are that the registries themselves should be nonprofit organizations that freely share their databases without trying to make money; and that the registries should be driven by the market and should be allowed to compete on pricing, as long as it is fair across the board.

The report leaves the question unanswered--on purpose. "We leave it unspecified so that includes for profit," said Brian Kahin, a senior policy analyst for the White House and chairman of the interagency task force on domain names. "It's basically wide open."

In other words, whether a registry will be capitalistic or not is up to the company that wins the contract.

The one thing that is clear, however, is that one company will not be able to have a monopoly over the domain name system.

Currently, one company, Network Solutions (NSI), holds the government contract to register domain names under the most top-level domains--such as ".com," ".net," ".org," and ".edu."

Not only does NSI register domain names for $100 each (for a two-year registration), it also maintains the database for the TLDs--called the "A" root server.

The proposal calls for making NSI, which has made millions of dollars from its monopolistic control of the system, an equal player in the domain name game. To do that, it is proposing that after NSI's contract expires on September 30, power over the root server should be transferred to the governing board, and the registry for ".com," ".net," and ".org" should be opened to others.

NSI will still run the registries--in addition to the five new ones--but must open its registry to all qualified registrars, just as others who run registries will do.

NSI has been preparing for the competition, for instance, by setting up its own registration system, WorldNIC.

Today, NSI's chief executive, Gabriel A. Battista, said he supported the plan and the competition, adding that he thinks competition will stimulate the market. "We welcome the first important step as Network Solutions has long supported a competitive environment," he said.

Of course, how it will fare in the newly competitive environment has yet to be seen.

Other players also are interested in getting a piece of the domain name pie.

One such player is the Policy Oversight Committee (POC), a powerful international group that has for many months been working on its own domain name plan. The POC had put together an ambitious plan to create seven new TLDs and keep them in a shared database. It then created a Council of Registrars (CORE), of which there are 88, that each paid $10,000 to create the databases.

Now CORE clearly will not be able to register all seven TLDs, since there are only five available and the government has stated it wants to give five companies one TLD apiece. David Maher, chairman of the POC, today said that CORE could split into several different companies to qualify for more than one TLD. He added that he thought there wouldn't be much competition for TLDs because companies don't stand to get rich from running a registry.

But his comments were founded on the premise that the government plan works like his: to run a nonprofit registry.

In fact, there will be room for those who want to run nonprofit registries. But there also will be room for those who want to make money at it to create competition, Kahin said.

"If the registries are gong to be profit-making, that is a very serious problem," Maher said.

But not to others who have been trying to break into the business.

While Maher said he thought CORE's registry, built by Emergent, is the only one that is qualified to run a registry, others say they also meet the standards and intend to try to become one of the new registries.

Individual businesses that have long fought to open the domain name system to private enterprise are already weighing in with praise for the plan.

"We are, overall, very pleased with the green paper," said Christopher Ambler with Image Online Design, which has been trying to get into the game with the addition of the TLD ".web." He added his company has been preparing for this for three years and meets all the standards outlined in the report.

While he said his intention is not to get rich, he does plan on making money.

Others also praised the plan.

Jay Fenello, president of another alternate DNS registry, Iperdome, felt that the paper redeemed his longheld view and increases competition among those trying to break into the DNS business.

"The entire plan is consistent with the suggestions that [alternate registry] Iperdome and others have been making ever since the IAHC [Internet Ad Hoc Committee, the precurser to CORE] final report was issued," said Jay Fenello, president of Iperdrome. "It is nice to know that we've been on target since the beginning of this debate."

While still digesting the fairly comprehensive report, people also were noting its pitfalls.

"The handing out of five new, exclusive registries will be an ugly process," said Eric Lyons with Tonga Network Information Center, a company that sells domain names to the Tonga TLD. "One could argue that instead of a single monopoly company [today's case] or a cartel of monopoly companies [the CORE plan], they propose simply shifting to a small club of monopolies. Their argument, of course, is that a gradual transition is necessary to ensure stability. True enough."

"The Commerce Department's green paper marks the first time that so many diverse voices were heard on the issue of Internet governance," said Mikki Barry, president of the Domain Name Rights Coalition. "The Internet community should be grateful to Ira Magaziner and his staff for sorting through the hundreds of pages of comments and ideas and producing this well-thought-out paper."

But Barry also said the paper overemphasizes commerce.

"One of the points that I fear was missed, however, was a clear statement that the Internet is more than a medium of commerce," she said. "The vast majority of Internet users and uses are for communications rather than commerce. Communications, including parody and political speech, need to be valued and protected above all other interests, including commerce and intellectual property. The policies of this paper need to reiterate that fact."

The paper addresses myriad other issues in an area plagued by complexity.

For instance, it also discusses trademark concerns, an issue that has dogged the Net since it became a commercial medium. While it does not spell out specifics, saying details should be left up to a board, it suggests having an open system where individual registries might be held accountable for disputes.

And it raises a concern about what will happen to a fund that the government set up to support the domain naming system. NSI has been required to contribute 30 percent of registration fees into the fund, called the Intellectual Infrastructure Fund.

There is now more than $46 million in that fund. Congress approved taking a $23 million chunk of it to give to the National Science Foundation to support Internet research and development. It's not clear from the report what will happen to the other $23 million. But the report does say that the fund is the subject of litigation.