Governance in the .nz DNS - A Position Paper

A Position Paper for:

Domainz, The New Zealand Internet Registry Ltd.
ISOCNZ, The Internet Society of New Zealand Inc.

Contents: GOVERNANCE IN THE .NZ DNS

Executive Summary 1.

Restructuring ccTLD's - 1996 to 1982 2.

US Governance & ICANN 3.

Registrar Agreements 4.

The WIPO Process 5.

Membership Constituencies 6.

Executive Summary

1.1 Introduction

The Internet industry is about to be shaken by major policy initiatives being introduced by the Internet Corporation for Assigned Names and Numbers (ICANN).

ICANN has been created to coordinate activities relating to the Internet, and replaces the US Government and scientific and other institutions previously tasked with those responsibilities.

Under the proposed regime, ICANN will influence and impact Internet operations within NZ. Moreover, ICANN's bottom-up approach provides opportunities for NZ to influence its decisions.

The risks of ignoring or resisting the proposed policy initiatives are great. The proposed changes have been instigated in part by:

• the explosive growth of the Internet
• increasing pressure created by litigation arising from trademark issues
• a need to open up registration in the gTLD's to competition

In May of this year the next Board meeting of ICANN is to be held in Berlin. Key issues are being raised to which New Zealand needs to take a position.

ISOCNZ will ensure a presence at this meeting as with previous critical meetings to keep abreast of proposed actions; and to lobby to protect the interests of the NZ Internet industry and NZ domain name holders.

We believe that the most effective way to move forwards will be to stage a summit within New Zealand, inviting the Internet Community, relevant Government and other industry representatives.

The purpose of this paper is to:

• advise you of what is being proposed,
• outline our understanding of the consequences of these proposals, and
• seek your guidance and assistance, as well as participation at the summit.

1.2 The Changes

1. Policy creation

   ICANN is currently making policy decisions that are impacting upon the Internet internationally without the democratic processes that one would normally expect of such a representative organisation.

2. Moderation

   Policy decisions will involve heavy moderation of domain name allocation.This appears to result from the strong influence of the Trademark and Intellectual Property community in policy creation to date.

3. TLD name registration

   ICANN is formulating a structure for the registration of domain names in the gTLD's that will require Registrars to contract to ICANN directly rather than to the gTLD Registry.

4. Increased regulatory regime for ccTLD's

   ICANN has proposed that ccTLDs be considered in two classes:-

   • Closed - self-governing, but will require a strong regulatory infrastructure (eg Australia);
• Open - follows the first come-first served principle (eg NZ) but subject to the ICANN regulatory regime, in effect treated as a gTLD.
5. ccTLD Registrar accreditation impost

For ccTLD Registrars to be accredited directly by ICANN there will be financial requirements of, among other things, validated liquid reserves exceeding $US100,000, annual license fees of $US10,000, public liability insurance $US500,000 minimum.

6. Information transmission requirements

   Accredited Registrars will be required to transmit on a daily basis all registration records they hold for that TLD.

7. Globalised disputes process

   New Zealand will lose its ability to resolve disputes in New Zealand Courts.Registrars and Name holders will be mandated by ICANN to direct all disputes to a global disputes process managed by WIPO.

1.3 The consequences

1. Loss of sovereignty, privacy issues

   • ICANN rules displace policy and decision-making in the .nz domain space, and no external channel for groups to organise and voice needs. (1.2.1)
   • Impact on privacy and conflict with NZ privacy laws. (1.2.6)
   • Imposed highly regulated regime. (1.2.4)

2. Business uncertainty

• The possible exclusion of current NZ ISP's from doing business in gTLD's. (1.2.3)
• Increased barriers to entry for new players in the Internet industry created by the significant financial outlays for Registrar accreditation.(1.2.5)
• Change in business practices through requirements imposed on registries and accredited registrars. (1.2.4, 1.2.6)
• Risk of restraint of trade and loss of names to non NZ organisations. (1.2.2);

3. Increased costs

• High registration costs. (1.2.5);
• Costs incurred through increased moderation, additional steps on name application. (1.2.2);
• Increased compliance costs resulting from the increased regulatory regime requirements, additional infrastructure required. (1.2.4, 1.2.6)
• Higher charges to customers to recover increased costs;

4. Legal risk

   • Increased legal risks and costs from the proposed disputes processes.

1.4&9 - Your assistance is sought

RFC 1591 requires ISOCNZ to serve the Internet community whose space we manage.Failure to act now could see changes forced upon New Zealand by ICANN that could have adverse effects.

Please let us know your views and suggestions by responding via the News groups or email as follows:

• News Group: nz.org.isocnz
• E-mail: &9;summit&64;isocnz.org.nz
  

An Internet Summit will be held at the end of April to bring together the views and energies of the New Zealand Internet community.Your participation in this will be greatly valued.

"Change can be a painful process, but not nearly as painful as when forced down by others"

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Restructuring ccTLD's 1996 to 1998

2.1 Pressure for Change

Over the last four years, the Internet has experienced explosive growth, putting pressure on traditional institutions and agencies involved in delivery of service.Growth in the .com, .net & .org domains (gTLD's) was managed through US Government contract by Network Solutions, NSI.

For country domains (ccTLD's) most of the larger country domain infrastructure was operated by individuals, universities or government agencies.Many of these "institutions" relied upon manual systems, and were put under pressure as the growth surged.

In addition, two other pressures were apparent.Firstly, there was increasing pressure on administrators with litigation arising from trademark issues.Secondly, there was need to provide funding to meet increasing operational costs, as well as invest in infrastructure and systems over the longer term.

The pressures led to large scale restructuring in a number of the larger Country Registries (ccTLD's). However, in many cases change was enacted swiftly, and sometimes with limited consultation amongst the Internet community at the time.

On reflection, rapid restructuring was inevitable as well necessary to cope with environmental changes taking place within the industry - there should be no issues of "laying blame".Moreover, it is clear that the enforced changes gave rise to, but did not always resolve, the first major ccTLD "Governance" issues:

• Who has the right to manage a country's domain?
• What policies & rules should apply in that domain?
• How much funding is adequate for long term viability?
• how should a country's domain operations be structured?.

2.2&9 Restructure of the New Zealand DNS

In 1995/6, the New Zealand Internet was experiencing similar pressures.At that time, responsibility for management had been split between two major Universities, Waikato and Victoria.By the middle of 1997, changes in the education sector had seen both Universities extracting themselves from the day-to day DNS management responsibilities.

During 1996, the .nz DNS was restructured, with responsibility moving from the University system, to the Internet Society of New Zealand Inc, ISOCNZ. ISOCNZ created a policy framework.

ISOCNZ has taken a "pro-competitive" stance to policy formulation reflecting New Zealand's de-regulated market approach.Where policies can be seen to add value, they are adopted; where they do not, the rules have been removed.Countries such as United Kingdom and New Zealand have adopted this approach.

In ICANN terms, New Zealand is seen as offering an "open" TLD as there are few entry barriers to businesses that choose to locate in the .nz name space.The alternate is a "closed" TLD, where a country sets restrictions upon name holders (eg only 1 domain per customer, no brand names, must be citizen etc).Australia has adopted this approach.

In early 1997, established Domainz to manage DNS operations.Domainz operates within that policy framework, and has introduced changes that have generally benefited the community at large, viz:

• Focused on stable operations of the name space during transition
• Established service based contractual framework for delivery of the DNS
• Introduced fee paying services to cover costs & investments
• Dramatically improved service delivery of name listings
• Opened up access to a new breed of service providers
• Catered for six-fold growth in names, in under 3 years.

In world terms, the .nz ccTLD regarded as a country that has implemented sound changes. Under inspection, changes introduced here are similar to other ccTLD's.The difference is more in the degree and pace of introduction, rather than the principles applied.

However, despite the service improvements, key governance questions remain, and from time-to-time, the ownership structure and "sole service provider" issue continues to re-surface.

2.3&9 Distribution Channels within New Zealand

Delivery of DNS service in 1995 was very different from today.In those days, there were maybe a couple of dozen active service providers. Technical competence was exceptionally important.

Finally, with such a small community, many DNS issues could be dealt with in a very personalised manner - typically the service provider was on first name terms with the University staff delivering the service.

One objective set by ISOCNZ was to open up access on as wide a basis as possible. Today there are at least 200 large service and over one thousand smaller providers.

The delivery channel is more complex with an abundance of ISP's, virtual ISP's, web designers, marketing companies, consultants et al.
The "net" has grown so large that there has been segmentation in the type of technology skills required, as well as where those skills are located.

The customer base has changed too. As business now embraces the "net", customers lack the "high technology" skills required by the DNS. For instance, the DNS requires knowledge of technology to understand the operation of name servers.

In opening up access, one side effect is that anyone may come to the Registry and get service so long as they meet the technology requirements. Direct access to the Registry (as opposed to access via an intermediary) gives rise to some conflict in the distribution channel.

Domainz provides options to bill intermediaries for services purchased, or bill the name holder direct.It is the choice of the intermediary which approach is taken.Finally, there is a diverse range of reasons why each chooses its approach.None the less, the option to bill either way does give rise to some customer confusion, as well as conflict with intermediaries.

Opening up the channel and providing billing options has provided benefits. However, it also leads to conflict issues arising in the distribution channel, that raise the following issues:-

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• Should the Registry generally only provide access only to defined intermediaries -- Registrars'
• Should the name holder be forced to provide two "name servers" upon listing, particularly when they have no immediate wish to use the name?
• Should Registry billing options be limited to only bill the intermediary rather than billing the name holder directly?

  .

New Zealand's approach is similar to other countries, the name space being structured to meet initial objectives.The early experience gained should now be harnessed to improve the policies in line Governance changes in the global environment.

2.4&9;Relevance to Wider US Governance Issues

One weakness of the US Green and White Paper process was the lack of understanding of country code issues - the main thrust related to issues in the gTLD's.

The process has now moved on, and it is now apparent that ICANN are viewing ccTLD's like .nz as being equivalent to gTLD's.This means that ICANN's policy reach will extend beyond the United States to impact directly the operations and usage of the domain name space in New Zealand.

It is clear that there are opportunities to review the .nz governance framework and address issues highlighted above.It will also be clear that issues in the wider Governance environment will impact, and these are addressed in the coming sections.

Our own experience and that of the US Governance process is providing insight to areas of improvement.It should also become clear, that it is an opportune time for New Zealand to consider, decide and embrace changes within its name space.

In 1996, it may have been OK to keep the focus narrow to one of stability.On this occasion, we need to be mindful of the global nature of the Internet, and choose options that position New Zealand favorably in that wider environment.

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3.1&9;Unforeseen Pressures

The growth in Internet gave rise to two major issues, perhaps unforeseen in the earlier days of Internet use,

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• Name scarcity, name conflicts, name "grabbing" & trademark disputes
• Monopoly profits accruing to NSI

  .

The DNS operates on the basis of unique names.This means that a domain name can only be held (assigned) to one entity at any one time.Companies or persons with similar or identical names in the physical world have well trodden ways of co-existing with minimal disputes arising.

In "cyberspace", those companies or persons found themselves competing for one name, and once assigned to a name holder, that name became unavailable for other claimants.

Further, the low entry barriers typically found on the Internet have made it easy for "entrepreneurs" to purchase domain names with a view to trading them to interested companies, for a fee.

Network Solutions (NSI) was awarded the US government contract to manage the .com, .net and .org gTLD's.They introduced fees at around the time growth began to lift off.Today they are a profitable, privately owned company, managing a "monopoly contract" awarded by the US Government.

3.2 Genesis of the "DNS Wars"

The main impact of both issues was undoubtedly felt mainly in the United States.Thus it appeared obvious that attempts to address the issues would commence in the US.

In early 1998, the Internet Society (ISOC) played a significant role in the formation of the International Ad Hoc Committee (IAHC).This organisation appeared focused on breaking open the monopoly on names held by NSI.

As a result of the IAHC process, a number of structures were created that we see paralleled in the current ICANN process.

A Policy Oversight Committee (POC) was created to set policy for seven new gTLD's (.firm, .store, .arts etc), and a Council of Registrars (CORE) was formed amongst (initially 80 ) Registrars.The role of a registrar was to allow potential name holders to register names in any of the newly created gTLD's.

The Registrars required access to a Shared Registry System (SRS), which needed to be specifically developed for the purpose.In addition, dispute resolution procedures were mandated to manage trademark conflicts, and the World Intellectual Property Office (WIPO) was a key player in these procedures.

The solution devised was deemed to be international in nature and thus the entities were incorporated in Switzerland.The original plan saw the new gTLD's being ready for service in late 1997.

However, the novelty of the plan left much of the Internet community with considerable angst.A range of objections surfaced, ranging from lack of involvement, insufficient consultation, fear of breaking the "root" of the DNS (the database defining where all TLD's are located) and the ultimate -- instability of the Internet.

In June 1997, the US Government signaled a desire to become involved.Thus, implementation of the CORE plan was put on hold pending the outcome of US Government involvement.

3.3 1998, US Governance Process Commences

In the middle of 1997, the US Government (USG) initiated a Request for Comments (RFC) into the management of the domain name space.This was partly in response to the IAHC process then underway.

In January 1998, USG issued its Green Paper into the Administration of the Internet.Publication of the paper raised the issue into a serious agenda item for many of the Internet community.The response was overwhelming, and it led to publication of a White Paper in April 1998.

The White Paper set out US Government policy regarding privatisation, amongst other things, of the domain name system.It set out the need (as seen by USG) for creating a not-for profit entity with authority to manage and coordinate the following functions:-

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• Overseeing Policy for allocation of "IP blocks" to regional registries
• Overseeing operation of the authoritative Internet root server system
• Overseeing policy for creation of new gTLD's
• Coordinating assignment of Internet technical parameters

  .

The USG involvement appeared to give initiative and momentum to the process, and helped raise the profile of the issue amongst other Governments.

USG also indicated a wish for WIPO to convene an International process to develop recommendations for trademark/domain name dispute resolutions.

The mantle for advancing the White Paper proposals was picked up by the Internet Assigned Names & Numbers Authority (IANA) led by the late Dr. John Postel.IANA was operated from a small department within University of Southern California, and used to look after the technical administration on the Internet.Dr. Postel was head of IANA, and provided the initial draft constitution for the organisation identified in the White Paper.

The constitutional defined a decision making body of 19 elected Directors underpinned by a membership structure.To ensure independence and avoid the risk of "capture" by a few dominant interest groups, three "Councils" were recommended to be the policy generation arm of the organisation:-

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• Names Council
• Address Council
• Protocols Council

  .

A series of global meetings was convened to discuss and debate the issue under the banner of the International Forum on the White Paper (IFWP).The meetings were helpful platforms to allow the interested parties to reach a deeper understanding of the issues.However, the holy grail of consensus was found to be far more illusory than many had hoped.The DNS was a continual source of unresolved contentious issues.

3.4 ICANN is Appointed, and Annointed

Shortly prior to the end of 1998, the Internet Corporation for Assigned Names and numbers (ICANN) was formed with an initial board of 9 Directors.USG initially held back decision making powers from the Board, but formally annointed it in early March 1999 during the Singapore Board meeting.

Today there remains considerable concern amongst the Internet community the key issues being.:-

.

• Basic Constitution upon which ICANN is founded
• Closed selection process for initial Board appointees
• Perceived lack of transparency in the Board's decision making process
• Operating with unconstrained powers whilst without a member structure
• Generating its policy in advance of the formation of supporting Councils

  .

During 1998, debate might have been the best response.However, in 1999 ICANN now has decision-making authority.This means that the debate needs to move away from simple like/dislike, to one of impact -- their decision making process needs to be understood and influenced; and their outcomes respected.

ISOCNZ was assigned the .nz delegation by IANA, and manages it under the framework set out in the "Request for Comments" document, RFC 1591.ICANN have subsequently replaced IANA, and so ICANN decisions will impact on the operation of the .nz delegation.

Currently, there are some key policy documents before ICANN covering:-

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• The Shared Registry System for gTLD's -- Section 4
• Registrar Accreditation Agreements-- Section 4
• WIPO proposals-- Section 5
• MAC ' Membership Advisory Committee - Section 6
• GAC ' Government Advisory Committee - Section 6

  .

3.5&9;Policy Reach & Impact

Subsequent sections set out more detail into the above policy areas.In summary, current decisions could mandate:-

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• Registration by New Zealand ISP's with ICANN
• Daily shipping off-shore .nz DNS data for ICANN escrow
• WIPO involvement in all New Zealand disputes

  .

These decisions will impact upon the New Zealand Internet Community, as well as the business community.Decisions being made within ICANN may also impact on sovereign control over New Zealand's Internet systems.

Despite efforts to inform the public of these policies, it is doubtful that the Internet community within New Zealand has a sufficient grasp of the issues and concerns.

There is a pressing need to make the wider community aware of the issues.They need to understand that the policies will impact upon the .nz space, the ISP's and Web designers acting as Registrars, and Domainz acting as their Registry manager.Options need to be discussed and the likely impact debated.The Industry needs to provide input to help in the construction of appropriate solutions.

As the issue will impact management of the .nz delegation, ISOCNZ should manage this consultation process.As the next ICANN Board meeting is set for late May in Berlin, it is important that the New Zealand Internet industry considers its position and is well prepared to respond.

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4.1&9;Opening up the gTLD's

NSI manages the .net, .com and .org name spaces under a US Government contract, otherwise known as the "Cooperative Agreement".During the transition to the not-for-profit entity (now called ICANN), USG signaled its expectations being for:-

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• USG to Ramp down the Cooperative Agreement
• NSI to provide agreement to open the gTLD space up to competition
• NSI to make available access to appropriate databases, software et al
• NSI to recognise that ICANN sets policy for existing and new gTLD's
• ICANN to create policies for gTLD Registries and & Registrars

  .

USG announced in October 1998, that agreement had been reached with NSI in relation to the Cooperative Agreement (Amendment No. 11).Key points of the agreement were as follows:-

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• Cooperative Agreement extended through September 2000
• NSI transition to a Shared Registry System (SRS) beginning March 1999
• SRS designed to support multiple licensed, accredited Registrars
• Separationof NSI's gTLD duties as Registry and Registrar

  .

4.2&9;Registry and Registrar

The ICANN Policy framework incorporates a split between Registry and Registrar functions and use of a Shared Registry System (SRS).Whilst no agreed definition currently exists, the following should provide some insight.

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• Registry - the central database detailing all domain names "Listed" in a TLD.The Registry also manages the zone database detailing all domain names "Activated" on the Internet in that TLD.

  .

  .

• Registrar - any entity that takes direct instructions from name holding customers in relation to Listing in the TLD space.Registrars submit direct requests on the Registry to change details held in the central listing database, and associated zone database

  .

  .

• SRS - will be managed by the Registry enabling only"Accredited" Registrars to submit requests.There is an assumption that an "Accreditation process" will be required to select and provide Registrars with privileges to access the Shared Registry database.

  .

Amendment 11 placed responsibility on ICANN in relation to the gTLD Registry and its Registrars,

Following the finalization of the agreement between the USG and NewCo, NSI will recognise NewCo pursuant to a contract between NSI and NewCo"

At the time these statements were generally interpreted to mean that,

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• ICANN forms contractual relationship with NSI, acting as the Registry
• NSI as Registry forms contractual relationships with each Registrar

.

On February 8, ICANN posted its draft Registrar Accreditation Guidelines.A two-week comment period followed, and the guidelines were revised and adopted at ICANN's March 4 Singapore Board meeting.

Amongst other things, the published Registrar guidelines cover major new principles for,

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• Qualifying criteria and an accreditation process
• Submission of data to ICANN (or an escrow agent) on a daily basis
• Privacy and Dispute Resolution procedures

.

The Agreement set out key dates for ICANN, NSI, and potential Registrars.

4.3&9;Registrar Issues Arising

ICANN is now authoritatively creating policy that has potential to impact the New Zealand Internet landscape.This policy making process gives rise to three major concerns relating to

.

1. Objectives
2. Definition
3. Scope

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Firstly Objectives.It was understood that the purpose of Amendment 11 was to open up the gTLD space through the introduction of competition into the NSI-USG monopoly Cooperative Agreement.&9;It appears that the effects of these new policies go far beyond that, preparing the ground for a global Internet Regulatory Environment.

Secondly Definition.The Shared Registry System (SRS), a Registry and Registrar are three key terms used without definition in the policy.There is no widespread industry agreement on what the terms mean, and thus these policies are open to different interpretations depending upon ones base definition.

Finally Scope.The policies now appear to have application beyond the gTLD's.ICANN, its Government Advisory Council (GAC) and WIPO are openly using the terms "Open & Closed TLD's".Once again, no definition exists for a term with common currency, yet there is strong inference that the newly formed Registrar policies and SRS may soon be applied to "Open TLD's".

4.4&9;Impact upon New Zealand

We understand that an "Open TLD" places minimal rules on applicants that choose to in that TLD. New Zealand is known for "light handed" approach to regulation and the .nz DNS policy framework set by ISOCNZ reflects this light touch.We therefore believe that .nz could be labeled an "Open TLD".

To what extent the above policies will be extended to ccTLD's is uncertain; therein lies the risk.With an open policy framework, ICANN may impose regulation on the NZ Internet against its sovereign wishes.This could include:-

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• NZ ISP's as Registrars subject to ICANN Accreditation guidelines
• Forced daily escrow of personal data from the NZ Registry offshore
• Submission to a Mandatory Dispute resolution code

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As the appointed manager of the .nz domain, Domainz believes it can speak authoritatively from a "Registry" perspective.However, who speaks for "Registrars"?

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• Postings to the ISOCNZ-L list have raised little Registrar feedback
• NZ Registrar contributions to the "Governance" lists is low
• Few have ventured off-shore to the numerous meetings

.

Directions are now clearly being set by ICANN as to how they perceive the Internet should move forwards over the next few years.These directions will drive changes into the NZ Internet industry generally, and Registrars and Domainz specifically.Our industry must adapt and develop new practices that best suit the New Zealand environment.

The Registry-Registrar split and SRS provide opportunities to re-model management of the .nz DNS.It is an appropriate time to consider changes in consultation with the wishes of the wider New Zealand Community.

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The WIPO Process

5.1&9;In at the Beginning

Trademark disputes, particularly in the US, seem to have been a recurring "feature" of the DNS since its take off in the mid 90's.The NSI "Dispute Handling Procedures" were felt by some to contribute to the problem.This procedure provided opportunities for objectors to "take down" listed names.

Thus, when the IAHC looked at ways of opening up the gTLD's, it also looked at alternates to the NSI dispute handling process.WIPO became involved proposing an on-line alternate dispute handling process.Their involvement was put on hold with the demise of the IAHC process.

As part of the Green/White paper process, the USG indicated its wish to include WIPO.The White paper called on WIPO to initiate a balanced and transparent process for trademark and non-trademark holding members of the Internet Community that would:-

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• Develop recommendations for a uniform approach to resolving trademark/domain name disputes involving cyberpiracy
• Recommend a process for protecting famous trademarks in the gTLD's
• Evaluate the effects of adding new gTLDs and related dispute resolution procedures on trademark and intellectual property holders
• Submit their findings and recommendations to the board of the new corporation for its consideration in conjunction with its-

.

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• development of registry and registrar policy
• creation and introduction of new gTLD

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5.2&9;The WIPO Process thus far

WIPO have tackled the Trademark question using a "Request for Comments" process (currently up to RFC 3).At each stage, these RFC's have been combined with a series of global fora, where organisations have had opportunity to present their case.

New Zealand has had active participation in this process through Roger Hicks (Clear Communications Ltd).Roger was appointed to the WIPO panel of experts in mid 1998.Submissions were sent to both RFC 2 & RFC 3 by Domainz & ISOCNZ.Domainz presented a paper in the Regional WIPO meeting in Sydney, November 1998, and ISOCNZ submitted the RFC 3 paper in March..

WIPO reported "work-in-progress" to the ICANN Board in Singapore, March 1998.Recommendations are to be finalised for the next ICANN Board meeting in late May in Berlin.WIPO RFC-III closure was extended through March 20 due to the high levels of incoming submissions in the final days.

WIPO deserve credit for the way that they have conducted the process thus far.It has been comprehensive and business like, and at each stage they have published a set of interim findings for further commentary.The biggest criticism of the process to date has been the audiences that have chosen to contribute.

It appears that WIPO have, quite naturally, attracted significant levels of response for the Trademark and Intellectual Property community.There is concern that insufficient input has been received from Internet practitioners.The issue is one of balance, the eventual outcome of the WIPO process should be of benefit to all, not just a small segment of the community.

The underlying fear is the process may result in an overly elaborate system that tends to favour large Trademark holding business interests over the interests of wider publics.There is considerable disquiet in some quarters of the Internet community in this regard.

5.3&9;WIPO 2, Key Points

The Interim Report from WIPO-II is a substantial document that synthesises comments received in the first 2 rounds.This document is an essential read for any organisation involved in the process of registering domain names.

The document is a comprehensive look at the registration process based upon the input and experiences of individuals and organisations with knowledge and insight.The document provides a useful framework to think about the domain name business covering the process "from go to whoa?",

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• Listing in the Registry
• Activation on the Internet
• Payment issues
• Privacy

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Whilst it provides a sound reflective assimilation of registration issues, the regime sign-posted differs widely from the "light touch" approach taken in New Zealand to date.

Key issues of concern and areas where it differs from the .nz environment are as follows:-

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• Scope : The US White paper began what was understood to be a process focused on Trademark issues and cyber-squatting.WIPO have broadened that scope to embrace all aspects of Intellectual Property, and to cover all disputes.
• Definition : as with other parts of the ICANN process, the report makes proposals based upon key terms that lack agreed definition.For instance, "cyber-squatting", "Registry" & "Registrar", "commercial" and "non-commercial" use, "open" & "closed" TLD's
• Mandatory : the report proposes, upon registration, a mandatory disputes resolution procedure that is agreed to upon registration.This procedure can be invoked at any time.
• "Take-down" provisions : Registrars will be subject to invoke automatic take-down provisions as part of the disputes process.
• Trademark rights : the regime appears to extend the rights of trademark holders in "Internet space", beyond those which they presently get in the "physical space"
• Registrar/Registry contractual roles : the proposal suggests that the key contractual document is that which exists between Name Holder and the Registrar, as opposed to the Registry and Name Holder.
• Advance Payment : There appears to be strong support for mandatory pre-payment for name listings.
• Listing/Activation split : the report makes clear the distinction between listing a name in the Registry and activation on the Internet.In the .nz environment these are synchronised by forcing "2 Name Server activation" before acceptance of the listing in the Registry.
• Privacy : issues of anonymity vs contactability are debated
• Service & Cost : it would appear that the regime could impact adversely on service delivery and add pre-screening costs to the listing process.Further, it has potential to add unlimited downside costs to registrants as a result of the dispute process

.

5.4&9;Relevance to New Zealand

It is likely that the ICANN Board will endorse the final documentation from WIPO in late May.It is also clear that the outcome will be a comprehensive regime with immediate applicability to the gTLD's.

It is less clear to what extent this regime will have for ccTLD's, or in what timeframe it will apply.It is a strong assumption that the ICANN Board would be looking to spread its applicability to what are termed "open TLD's" in as short a timeframe as possible.It is expected that New Zealand's "light touch" regulatory environment would see it labeled as an "open TLD".

ISOCNZ have established a framework for registration of domain names based upon service contracts.Further, it is currently felt that this approach has been suitable thus far.Only two .nz domain Trademark cases have been brought before the New Zealand Court (Cadbury, Sanyo, Xerox in 1996 and Oggi Outdoor Advertising Ltd in 1998) and the outcome of both cases was favourable to ISOCNZ and/or Domainz.

Adoption of practices set out in WIPO 3 would require a rethink on some of the domain name registration rules that are fundamental to the "contract for service" approach.It would also require that Registrars develop more comprehensive documentation for their Registration contracts with name holders.

Terms for purchase and payment will be impacted where pre-payment is mandated.Also, teasing out "Name Listing" from "Internet Activation" means that the requirement for two activated name servers prior to registration would need to be re-thought.

Finally, the approach to privacy and how that translates into the role of the Registry as providing publicly available contact information would need to be reviewed.

In summary, irrespective of the applicability of WIPO in the short term, it signposts changes in our wider operating environment.The impact and applicability of those changes needs to be determined from a wider industry standpoint and changes adopted.

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Membership Constituencies

6.1&9;Creation of ICANN

The Internet community has for some time had some difficulty with NSI being the sole recipient of the US Government contract for service delivery in the gTLD's.Concerns have been expressed in relation to the "monopoly" nature of the contract coupled with fears relating to "monopoly profits".

The White Paper process sees Privatisation coupled with Competition as key objectives of the White paper process.Policy recommended the creation of a separate organisation (ICANN) to be responsible for administration of four key areas outlined in Section 3.

There is a clear consensus within the Internet community that the "host vehicle" to be charged with responsibility for administration of the Internet must be:-

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• Open to all
• Capturable by none
• Transparent in its decision making
• Truly representative of its diverse constituencies
• A not-for-profit entity

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These are laudable goals but translating them into reality continues to be a challenge.

6.2&9;Proposed ICANN Governance Structure

To achieve the above objectives, ICANN is "owned" by the Internet Community at large.A "Membership" organisation has been created as the most suitable to achieve this.

Management is via a Board of 19 Directors (18 elected plus the President & CEO).The have decision making power based upon policies supplied by "Supporting Organisations (SO)".

One half of the Board is elected by the "At large" membership, the other half is elected by the Supporting Organisations

There are three supporting organisations representing a mix of constituencies,

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• DNSO&9;: The Domain Name Supporting Organisation
• PSO&9;: The Protocol Supporting Organisation
• ASO&9;: The Address Supporting Organisation

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Each Supporting organisation is responsible for electing 3 Directors, thus ensuring a total of 9 Directors are elected by way of the SO's.Each SO is responsible for creating Policy for decision at Board level.Each SO also requires its own membership structure that is drawn from the various constituency groups.

6.3&9;Progress on Proposed ICANN Structure

The initial ICANN Board was appointed (with considerable controversy) and they remain until replaced in an election process.The elections can only be conducted by the membership, thus there is considerable pressure create the membership structure in order to move ahead.

Considerable effort continues on the construction of membership structures that meet the above objectives and can gain consensus within the diverse group of "stakeholders".

ICANN created a Membership Advisory Council (MAC) to focus on creation of the "At large" membership responsible for electing 9 Directors from the General membership.Work-in-progress was delivered at Singapore, and it is felt that August is probably a more realistic time before final Board sign-off on MAC proposals.

Work-in-progress on the DNSO was reported at Singapore, and the Board decided upon a broad set of principles for creation of this organisation.Proposals for the ASO (mainly from the Regional IP Registries) and PSO (mainly from IETF) are in-progress.

6.4&9;The Rise of Governments in Governance

At its outset, the White paper process and the Internet Community were keen to keep Governments out of the process.As time has gone by, we have seen a growing involvement of Governments.

The European Community has been active through Christopher Wilkinson, Adviser at the Directorate General for Telecommunications (DGXIII).Australia has also been active through Dr. Paul Twomey, CEO of NOIE (the National Office for the Information Economy).

It has been clear that ICANN have been seeking the involvement of world governments over recent months.In March, ICANN officially appointed its Government Advisory Committee (GAC).The GAC is an advisory committee to the Board to deal with "things governmental".

Despite its advisory status, this committee appears to have an independent channel to the Board with the power to promote Government related agenda.The GAC appear to hold views on what constitutes "Open & Closed ccTLD's".

Australia is perceived as being a "Policy rich" ccTLD Registry, this makes it "Closed".In contrast, New Zealand is being referred to as open, which has connotations that we are in some way "Policy paupers".

The impact of these labels is not transparent at present, but it signals the need for New Zealand to become involved in this inter-government process.Government involvement is sought to ensure that appropriate agendas are set that enhance rather than restrict the New Zealand Internet environment.

It should be noted that the New Zealand Government was not involved in the inaugural meeting of the GAC at Singapore in March.

6.5&9;Issues Raised

ICANN Governance principles were constructed to see Policy being drawn in bottom-up fashion from a wide spread constituency base.This approach is key to ensure that interest groups do not capture the Corporation:-

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• Members elect the Board
• Board appoints SO's
• SO's create Policy
• Policy is agreed by Board

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The current concern is the length of time that this process is taking.This is resulting in the Policy being created and agreed by a non-elected Board, without a membership structure in place.

There is fear that all the key policy decisions will have been made by the time the desired Governance structure has been established.

There are some concerns that once the major decisions have been made and a structure put in place, membership interest may fall away.This may result in "reverse capture" as only the "interested" constituents will remain and they will find it easy to create policy that meets their needs.

6.6&9;Putting into a New Zealand Context

Like most major ccTLD's, New Zealand has undergone a similar privatisation process over the last 3 years.ISOCNZ is New Zealand's equivalent to ICANN and responsible for the management of the .nz ccTLD.

In many ways, the ICANN structure maps well into the .nz environment, so how do we stand re their Governance objectives?

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• Open to all
• Capturable by none
• Transparent in its decision making
• Truly representative of its diverse constituencies
• A not-for-profit entity

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ISOCNZ is not-for-profit member-owned organisation open to all.It is managed by a decision-making Council elected from the at large membership.

Council has a number of supporting committees who create policy for voting at Council.The DNS Policy committee creates policy for the .nz domain name space.Their role would be similar to the DNSO.

The key weaknesses in the New Zealand context appear to be three-fold:-

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• Truly representative of its diverse constituencies : ISP's are a key group that remains outside the ISOCNZ fold.There used to be an Association of ISP's, ISPANZ, but they do not appear active.
• Capturable by none - ISOCNZ struggles to grow its membership base.The lack of strong ISP representation gives rise to criticism that contributes adversely to membership numbers.
• Transparent in its decision making - ISOCNZ can ensure that decision making is transparent to its membership base.However, this base is small compared with the wider community that may be impacted by those decisions.

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Whilst there are some weaknesses that can be addressed, there is nothing peculiarly wrong with New Zealand : there is no suggestion that we've got it completely wrong, far from it.

UK made changes three years ago along similar lines to New Zealand.Currently they are looking to improve representation at policy creation level with creation of a "Policy Council".This Council may include representative of the DTI (Department of Trade & Industry).

Australia commercialised its second level ".com.au" three years ago with some success.Currently the Australian Industry in undergoing a total review on the ".au" ccTLD under the auspices of NOIE (National Office for Information Economy).

Finally, Canada has spent three years thinking about privatisation.They are currently undergoing a consultation process with plans to privatise management of the ".ca" domain in the near future.

It is widely understood that the management of a country's DNS is an essential service (the UK equivalent Nominet is described as a "benign monopoly" by the DTI).

In the light of changes at world level, the timing is probably right for New Zealand to review its governance structure.There may be opportunities for improvement particularly in relation to a more diverse and representative membership structure.A wider base should lead to improved transparency into the process by those constituents affected by the outcome of policy decisions.

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© 1999 The Internet Society of New Zealand
Last updated 2 April 1999