Letter to Commerce Commission 05/03/01

Tom Thursby
Enquiries Officer
Commerce Act Division
COMMERCE COMMISSION

March 5 2001

Dear Tom

RE: ".BANK" SECOND LEVEL DOMAIN PROPOSAL (CAWN42879)

Thank you for your letter of 23 February 2001 addressed to Rick Shera, Chair of our Legal and Regulatory Committee. Please direct further correspondence to me. I am happy to provide further information on the process the Internet Society of New Zealand follows for the introduction of new Second Level Domain names in the New Zealand namespace. I am attaching copies of all the relevant documents, which can also be found on our website. I have also prepared a background paper which I attach.

In brief, the Society is responsible for the management of the New Zealand namespace and sets all policies for it. Policy is created by a process of open public consultation, and is based upon our Aims and Objectives which focus on an open, accessible and uncapturable Internet for all New Zealanders.

The Policy for the creation of new second level domains was created in 1997 after an extensive public consultation process. The process has seven steps with repeated opportunities for public consultation. The NZ Bankers Association proposal to create a moderated Second Level Domain, ".bank.nz" has just reached the third stage, namely, that of a public 'straw poll' which is designed to ensure that there is a threshold level of support to move into the next stage. That threshold is a minimum of 200 votes, of which 70% must be in favor. The straw poll is being conducted for the Society by an independent company, Election.com. Election.com ran the Arizona primary election in the USA last year (see http://www.election.com). The straw poll is non-binding. The next stage is a thirty - sixty day public comment period, and the Commerce Commission will be welcome to make submission on the proposal at that stage. The Background paper gives full details of this process.

The final decision will be one for the Council of ISOCNZ, which needs to balance all issues associated with the creation of a new part of the .nz namespace. As the policy documents make clear, the addition of a new Second Level Domain is practically irreversible

You raise the issue of moderated domains in your letter. It may be helpful to look at why they exist and how they operate. The Internet grew up with moderated domains as one of the key funders of the Internet, the American government, wished to ensure that only mandated American government agencies had names in their area of the namespace, i.e., ".gov". In like manner, the American military wanted to ensure that only legitimate parts of the military used the ".mil" area of the namespace. In New Zealand there was a similar situation, and the Society formalised the process when it took over the responsibility for the namespace in 1995.

There are currently four moderated domains, namely, "govt.nz", ".mil.nz", ".cri.nz", and ".iwi.nz". The two former were inherited by the Society, and the latter two created in response to community of interest requests in 1995-96. Each had a representative of the community of interest to act as moderator (and in the case of ".govt.nz" two - one for local government and one for national government). The key point here is that they act as moderators only with the approval of their community of interest and only by appointment by the Society. All moderators must supply their moderation policy and this must be accepted by the Society. The Society retains the right to abrogate the moderator/s should they breach either Society policy or their own moderation policy.

In this instance, the community of interest is acting through its elected representatives - the NZBA. As part of the approval process the Council will examine the conditions under which this entity will act as moderator, to ensure that its policies are in accordance with the open and uncapturable premise that binds the Society. Compliance with competition law is a factor which has been noted.

I hope that this helps to clarify matters. If you have any further questions, I would be happy to receive them

Cordially
Sue Leader
Executive Director
ISOCNZ

Attached:

1. Background Paper

2. Copy of NZ Bankers Association Proposal

3. Copy of Moderator's Agreement

4. Creation of New Second Level Domains Policy Paper

BACKGROUND - THE NEW ZEALAND NAMESPACE

The Internet Society of New Zealand is the delegated manager of New Zealand's Country Code Top Level Domain (ccTLD) - ".nz". This delegation means that the Society sets the Policy for the management and development of the ".nz" Namespace. Crucial to that Policy development is ensuring the rights of all New Zealanders to fair access to the Internet in New Zealand are maintained. The Society's approach is enshrined in its 'Aims and Objectives', which can be summed up as ensuring an 'open, uncapturable and accessible Internet for all New Zealanders'. (see Articles of Association http://www.isocnz.org.nz/articles.htm)

The creators of the Internet never intended that the Domain Name System (DNS) or 'Namespace' was to be a 'directory structure', that is, it was not the computer equivalent of the Yellow Pages. Rather, it was a clever design feature that allowed humans to interface with a rapidly expanding computer network using 'English' instead of strings of numbers. Some people still hold to that view and do not wish the namespace to be expanded further. Others, recognising that the Internet has expanded beyond anyone's wildest imaginings and is used every day by people with little or no technical knowledge, accept that the Namespace is now used as if it were a directory structure and therefore some accommodation must be made.

At the same time, expansion which is not carefully controlled can create, rather than reduce, confusion for Internet users. For instance, there are relatively clear 'boundaries' between 'communities of interest' in the ".nz" Namespace. The Society provides guidelines about these communities, though these are only enforced in the moderated Second Level Domains. The current Second Level Domain's are:

(http://www.isocnz.org.nz/dnsstr98.html#SecondLevel)

At the moment, therefore, Internet users trying to find an Internet address are able to 'guess' the address by taking a person's or company's name and add to it it's likely 'community' or Second Level Domain Name (2LD). For example - a person trying to find the XYZ company would try www.xyz.co.nz and would probably be correct. Other examples are the Purple Sun Volunteer organisation at www.purplesun.org.nz, and the Central Government's Department of New and Improved at www.dni.govt.nz.

Consultation on the need for immediate expansion of the ".nz" namespace was undertaken at the 'Second National Summit on International Internet Governance Changes' in June 2000. (http://www.isocnz.org.nz/sum00position.html) The issue arose as the Internet Corporation for Assigned Names and Numbers moved towards creation of new gTLD's (see below).

The conclusions were that the current situation of the ten 2LD's in ".nz", 85% were in "co.nz." Volume is the main driver for expanding gTLD's (at that stage 10 Million ".com" names), by comparison the total for ".co.nz" (in June 2000) was 55,000. Volume is not a driver to expand Second Level Domain Name's in ".nz". "

They noted that there may "be case for limited additional 2LD's.

• Must be distinct.
• Moderation aspects.
• Need absolutely clear rules
• Very difficult to remove a 2LD"

Perceived "Inhibitors:

• Dilution of name values may be caused by adding 2LD's.
• May also add confusion
• Will add cost for organisations in multiple domains
• Branding can be achieved within existing domain space"

CREATION OF NEW SECOND LEVEL DOMAIN NAME'S IN NZ - PROCESS

The process for creating a new Second Level Domain Name is set out on the Society's website at http://www.isocnz.org.nz/consult/2LD/Process.html. (attached).

The process entails seven stages:

1. Proposal from 'community of interest'
2. Public discussion via dedicated mailing list or web fora for a period of 60 to 90 days
3. Non-binding email 'straw poll' to see if threshold support level is achieved (at least 70% of votes cast and at least 200 votes)
4. If successful, payment of application fee, and Public Submissions opened for 30 to 60 days
5. The Council The Internet Society of New Zealand meets to consider Submissions and issues an Interim Decision
6. Interim Decision opened for Public Comment for 14 days
7. The next formal meeting of the Society's Council makes a binding Final Decision.

The policy for the creation of new Second Level Domain Name's can be found at http://www.isocnz.org.nz/dns/Change2LD.html (attached).

The Internet Corporation for Assigned Names and Numbers (ICANN) which was created in 1999 has as it's key task the expansion of the Global, or Generic, Top Level Domains (gTLD's) Namespace. Most people think of the gTLD's namespace as ".com". The ".com's" have led the internet revolution because of their popularity for the commercial part of the Internet. Less well known are ".gov", ".mil", ".org", ".gen", ".net", and ".int" (for international treaty-based organisations)

The nature of the Internet means that two people or organisations cannot have the same name in the same part of the Namespace - for example, there can only be one ".coke.com". [The same rules apply to Second Level Domain Names in the ccTLD's such as ".nz" and ".uk"].

The ".com" area of the gTLD's was intended for international commercial activities. However, as the USA has not made much use of their own Country Code Top Level Domain (ccTLD) Namespace, ".us," most of the more than 10 million registrations in ".com" are American businesses and individuals. This has led to perceived "shortages" of names and ICANN was tasked with fairly and equitably expanding the namespace. In a sometimes stormy process of international public consultation (see Congressional Hearings on the process http://www.icann.org/), ICANN announced seven new "proof of concept" gTLD's last November. These are listed in the table below. (see http://www.icann.org/tlds/). The new TLDs are not expected to be operational until at least the second quarter of 2001.

AGREEMENT TO MODERATE A SECOND LEVEL DOMAIN FOR *.NZ

The moderator acts on behalf of the community of interest for the domain, which in this case is <name of community of interest> (e.g. crown research institutes).

ISOCNZ retains the right to change the moderator if it deems this desirable for the community of interest the domain represents and for the wider local Internet community. Either party may give three months notice of withdrawal.

The moderator agrees to consider all requests for domain names in their domain and accept or reject them according to the criteria below. Any such acceptance or rejection should be notified to the applicant and to DOMAINZ within <number to be agreed> working days of the application being received. The moderator should designate a person to be the official contact person for DOMAINZ and ISOCNZ to submit requests to:

The moderator should specify below what criteria is applied as to what organisations and/or people may register a third level domain in this space.

  The moderator should also specify below what criteria will be used to judge if a name is appropriate for the applicant.

And finally any other policies that the moderator intends to apply for moderating the second level domain.

This constitutes an agreement between the Internet Society of New Zealand

<name of moderator>>

<name of second level domain>. >