From: "J. William Semich (NIC JWS7)" <bsemich@mail.nu>
To: NTIA.NTIAHQ(dnspolicy)
Date: 10/3/98 10:19pm
Subject: Lack of Fiscal Accountability in ICANN Proposal

Hello;

Attached is my first set of comments on the ICANN proposal, in Word 97
format.

Thank you for the opportunity to present my concerns to the interested
parties and stakeholders in this process.

J. William Semich (NIC JWS7)
President and Chief Financial Officer
.NU Domain Ltd
bsemich@mail.nu
http://whats.nu

The New IANA-ICANN Bylaws: Who Controls the Money?

By J. William Semich
Bsemich@mail.nu

The latest set of proposed bylaws (version 5) for the New IANA (Internet Assigned Numbers Authority), released on September 29 at IANA's Web Site at http://www.iana.org, and currently posted as the ICANN Proposal at http://www.ntia.doc.gov/ntiahome/domainname/proposals/icann/icann.html

is seriously flawed by its lack of fiscal accountability to all of us who will use its services and pay its fees.

If the bylaws are approved unchanged by the White House as the basis for the Internet's first independent governance mechanism, the new ICANN Internet Authority would be able to set a wide range of Internet-related fees of any amount without constraint, float bonds of any amount which must be funded by future revenues, as well as collect additional fees of any amount to invest for undefined possible future needs, all such to be paid for by you, me and our children, the Internet's users of today and tomorrow, without their review, approval or control.

The new version of the proposed bylaws for the new Internet Authority was submitted on October 2, 1998 to Ira Magaziner of the White House and the Department of Commerce's NTIA, under the terms of the White House "White Paper" released last June, to create the replacement for the US Government's current contractual arrangement for management of the Internet, which is set to expire on Sept. 30, 1998.

But the new bylaws are completely devoid of any provisions to create any type of fiscal accountability for this, the Internet's first all-powerful, government-sanctioned independent Authority.

Although the new bylaws make it clear that the source of the new Internet Authority's revenues will be the Internet's end users and service providers, it leaves all spending, borrowing, investment and other financial decision-making solely in the hands of the Corporation's board of directors, who's members specifically ''have the duty to act in … the best interests of the Corporation and not as representatives of their Supporting Organizations, employers or any other organizations or constituencies." (Article V, Section 8)

Nowhere in the bylaws is the Board of Directors required to consult with any outside groups, experts, or other interested parties on how best to set its fees or plan its budget.

Nowhere in the bylaws is there any provision for any kind of independent budget review or hearing mechanism or approval process for the budget, borrowing, or any other fiscal decisions;

And nowhere in the bylaws is there any provision for any kind of independent fee-setting review process or approval mechanism, either by those who must pay the fees (the Supporting Organizations, who represent the consumers of the services to be provided by the new Corporation) or by any independent body of fiscal experts.

All these fiscal decisions are made solely by the new Internet Authority's own Board of Directors.

The relevant language in the proposed new bylaws makes this absolute power of the Board clear:

FIRST, it gives the board absolute control over any spending or borrowing decisions:

"Article IV, Section 1 (a)

…the powers of the Corporation will be exercised, its property controlled and its business and affairs conducted by or under the direction of the Board."

SECOND, it gives the board absolute control over the fee setting decisions:

"Article IV, Section 2. FEES AND CHARGES

The Board shall set fees and charges for the services, rights and benefits provided by the Corporation to the Supporting Organizations and others, with the goal of fully recovering the reasonable costs of the operation of the Corporation and establishing reasonable reserves for future expenses and contingencies reasonably related to the legitimate activities of the Corporation."

And THIRD, it gives the Board the sole authority and absolute control over setting its annual budget, with no requirement that it actually meet that budget or that the budget pass any kind of review process, all this in one simple line of the new Bylaws:

"Article V, Section 25. ANNUAL BUDGET

The Board shall prepare an annual budget, which shall be published on the Web Site."

These three phrases are the total extent of any language in the new bylaws that might be construed as setting ANY spending, fee setting and raising, budgeting, borrowing, investing or any other fiscal constraints on the board of an Internet Authority which will be the primary manager of the single most important communications resource in the world.

Such an all-powerful and fiscally unaccountable organization as would be created by the new bylaws is a classic textbook "Authority" in its structure, and that is the crux of my problem with the "final" set of IANA bylaws released on Sept. 29.

Look closely at any publicly-funded independent Authority in the US and you will find a self-perpetuating, quasi-governmental organization whose spending decisions can not be challenged, who spends the public's money like water, who has all the power over its particular area of activity, but no accountability to the public.

In the present case of the bylaws for the new Internet Authority, there is minimal accountability for its policy decisions, and that is cause enough for concern.

But there is NO accountability for its borrowing, spending and fee structure.

There needs to be some kind of mechanism in the new entity that will create a counter-force to the typical Authority's inevitable desire to grow and to spend more and more money and increase its sway in the world (remember, the margins in this business are huge. A big budget can "look" small when the margin is in the double digits)

The counter-force to spending increases could be a "budget review committee" solely comprised of the groups that will fund the new Internet Authority. Or it could be a Finance Committee made up of independent, world-renowned fiscal experts who have no vested interest in the new Internet Authority or the Internet per se. Or it could be a committee of government finance experts with experience bringing public spending into line. Or it could be some combination of the above.

It would be a real tragedy if, in its first efforts at self-government, the Internet community were to hand over management of the Internet to yet another quasi-public Authority, perhaps best defined in an article I co-authored nearly ten years ago:

"Authorities constitute a permanent, expansionist government, collecting and spending more and more public money, running up more and more public debt, and making more and more critical decisions on the public's behalf with each passing day. And because authorities do all this out of site - and beyond the control - of the general public, they constitute, finally, a Shadow Government."

"Inside the Shadow Government," by John Strahinich and J. William Semich, cover article, Boston Magazine, November, 1989.

###

From: "J. William Semich (NIC JWS7)" <bsemich@mail.nu>
To: NTIA.NTIAHQ(dnspolicy)
Date: 10/3/98 10:29pm
Subject: Proposed Modifications to ICANN Bylaws for Fiscal Accountability

Hello;

Attached in Word 97 format are our proposed modifications to the ICANN
proposal and proposed bylaws as posted at
http://www.ntia.doc.gov/ntiahome/domainname/proposals/icann/bylaws.htm

We appreciate the opportunity provided by NTIA to develop and present for consideration new language for the ICANN bylaws that will improve the responsiveness and accountabiity of the structure and organization of the new corporation.

Sincerely,

J. William Semich, President and Chief Financial Officer, .NU Domain Ltd
Harold J. Carroll, JD, Partner, Gadsby & Hannah, LLP, Attorneys at Law

How To Assure Fiscal Accountability of the New IANA?

By J. William Semich
President and CFO
.NU Domain Ltd
bsemich@mail.nu
http://whats.nu

With Harold J. Carroll, JD
Corporation Counsel to .NU Domain Ltd
And Partner, Gadsby & Hannah, LLP
Hcarroll@ghlaw.com
http://www.ghlaw.com/bios/carrollh.html#frame1

The basic problem with the latest of the new IANA Corporation's bylaws, now called the ICANN proposal and posted at http://www.ntia.doc.gov/ntiahome/domainname/proposals/icann/icann.html

is the apparently-intentional lack of board accountability to the public. The result will be an organizational structure similar to an independent public authority. To assure accountability to the public, it is necessary to include language in the bylaws that will give budget approval powers to the groups that are providing the source of funds to the new corporation - the Supporting Organizations.

Below I have proposed such additions to the IANA bylaws. If these additions are finally included in the New IANA's bylaws, it would:

- Require that the Corporation submit an annual budget request and service plan to the Supporting Organizations for review and approval or reduction;

- Require that all long-term bonding or bond refunding requests receive a 2/3 majority vote of by the Supporting Organizations;

- Require that the Corporation manage annual spending levels to stay within its approved annual budget;

- Require a guaranteed, maintenance of effort, level of funding to the Corporation regardless of any budget reductions voted by the Supporting Organizations, in order to assure the IANA's existing level of services are maintained. The base "maintenance of effort" level of funding is taken to be the current annual spending by IANA under its contracts with the US Government;

- Require that the Corporation make all its spending and other information available to the Supporting Organizations as part of the budget monitoring and approval process.

If these provisions are included in the bylaws to the new Corporation, it would go a long way to assuring public accountability.

Below is a list of problems inherent in the language of the current draft of the New IANA bylaws, and an explanation of each. These are followed by the proposed additions to the bylaws.

Problem 1:

The Board is controlled by the At Large Directors and the President, which together outnumber the three directors nominated by the each of three Supporting Organizations (total of nine for supporting organizations) (Bylaws, Art. V, Secs. 1, 4 , hereinafter "BL.V(1,4)", etc.). The predefined membership of one Supporting Organization (the Address Supporting Organization, BL. VI(3)(a)(I)) is a creature of the current IANA, and therefore adds to the potential majority of At Large directors and the President.

Problem 2:

The identity BL.VI(3)(b), powers, structure and number BL.VI(1)(a) of Supporting Organizations is determined by the Board, giving further control to the majority At Large members. Moreover, this control is self-perpetuating in that At Large members will select their own replacements until some unknown membership system is devised at some indefinite future time. BL.V(9)(c).

Problem 3:

The Board has complete control of the Corporation. BL.(1)(a).

Problem 4:

The Supporting Organizations are advisory only, unless the Board delegates powers. BL.VI(1)(a).

Problem 5:

The Supporting Organizations will provide the primary if not exclusive financial support of the Corporation through fees and charges solely to be set by the Board, BL.IV(2). The Supporting Organizations will have to assess their own membership for fees as yet undetermined to support a budget controlled entirely by board members not directly answerable to those who pay the fees.

Proposed solution:: Give Supporting Organizations the Power of the Purse

The powers of the Supporting Organizations under Article VI(1) should be expanded to include the power to approve (or reduce) the Authority's annual budget, along with the requirement that the Authority control spending to stay within that approved budget. This should prove sufficient to protect the Supporting Organizations and their constituents from the tendencies of a non-accountable, self-perpetuating Authority with powers of assessment, to serve ends not always in the public interest.

Such a process would also significantly increase the appearance of public participation in the governing process. Such power to approve the budget should include the right to review all spending, investment and borrowing activities, the right to perform an annual independent audit of the Authority, the right to examine books and accounts without notice, and to use any and all the other mechanisms available to assure the Authority's accounts are open to public view.

Proposed Revised Language for Version 5 of the new IANA Bylaws:

Make the following changes/additions to BL V (25):

Delete "The Board shall prepare an annual budget, which shall be published on the Web Site."

ADD:

BL V (25) (a.) The Chief Financial Officer shall prepare an annual operating budget, on a line-item basis, and submit it to the Supporting Organizations four months prior to the beginning of the Corporation's fiscal year, for their review and action. The Board shall establish, by a vote of not less than 60% of all the members, the appropriate definition of such line items for budgeting and accounting purposes. The Chief Technical Officer shall prepare and submit, at the same time, an annual service plan which shall be reflected in and complimentary to the funding requests in the annual budget. The Corporation shall make its best effort to tie the line items in the budget request to the detailed services to be provided during the upcoming fiscal year.

(b.) No budget shall be deemed to be approved for the purposes of enabling any increase in expenditures or funding any increased appropriation to the Corporation for the following fiscal year, excepting previous year's obligations such as payments on debts already incurred or multi-year contractual obligations or labor agreements, until the Committee of the Whole of the Supporting Organizations has approved an annual budget and service plan for the Corporation for that fiscal year; excepting that, if the Supporting Organizations have taken no action on the annual budget request, and the following fiscal year shall commence, the Corporation shall be required to operate on a 1/12 previous-year's operating expense, maintenance-of-effort basis, until such time as the Supporting Organizations approve an annual budget for the Corporation.

(c.) The sum total of all fees and charges assessed by the Corporation on or to the Supporting Organizations and/or its members during the fiscal year shall not exceed the amount required to support the approved annual budget for that fiscal year, or, if such budget is not approved, shall not exceed the amount assessed during the previous fiscal year, on a 1/12 monthly basis, until such time as the annual budget is approved by the Supporting Organizations.

(d.) Once an annual budget and service plan are approved by the Supporting Organizations' Committee of the Whole, the Corporation shall manage its affairs and operations in such a manner as to keep its expenditures and obligations within the constraints of the approved budget.

ADD

BL VI (d)All of the Supporting Organizations which have fee-payment responsibilities to the Corporation shall meet, no later than six weeks prior to the end of the current fiscal year, as a Committee of the Whole to vote, yea or nay, as submitted or as amended, on the annual budget and services plan for the Corporation's following fiscal year. A majority vote is required to approve the annual budget and the service plan, and a 2/3 majority vote is required to approve any long-term borrowing requests or long-term bond refunding requests by the Corporation. The Supporting Organizations may choose to assign weights to votes, based on the proportion of fees paid by each voting member, or on some other fair and reasonable method

(e)The Supporting Organizations may decide what structure or committees or staffing to establish in order best to enable an appropriate review process, perform any required analysis and take action on the budget, including developing an equitable voting mechanism for such action. The Committee of the Whole shall, prior to the beginning of the following fiscal year, either approve the budget and service plan as submitted, make reasonable reductions in the budget and service plan accompanied by a reasonable explanation of any reductions, or return the budget without action to the Chief Financial Officer, which he may subsequently re-submit to the Committee of the Whole after making any modifications which may be suggested by the Supporting Organizations

The Supporting Organizations' Committee of the Whole may not make any such reductions in the budget request that will result in the loss or substantial disruption of any ongoing Internet service currently provided by the Corporation at its inception, excepting in those cases where both the Supporting Organizations and the Board have agreed to terminate such services.

The Supporting Organizations' Committee of the Whole may not reduce any annual budget request by the Corporation to an overall amount that is lower than the amount expended during the previous fiscal year. For the purposes of establishing a starting point for the previous year's maintenance of effort spending level, the amount spent in support of the US Government's contract(s) with the University of Southern California's Information Sciences Institute for the final year of services by IANA under that contract(s) shall constitute the expenditure level for the first "previous fiscal year."

(f.) The Supporting Organizations shall have all the same rights and obligations of inspection of the Corporation's books, records, and documents of every kind, as is granted to the Board of Directors in Article V, Section 21 of the bylaws.

Respectfully Submitted on October 1, 1998 by

J. William Semich, President and Chief Financial Officer, .NU Domain Ltd

Harold J. Carroll, JD, Partner, Gadsby & Hannah LLP, Attorneys at Law

###

From: Gordon Cook <cook@cookreport.com>
To: NTIA.NTIAHQ(dnspolicy)
Date: 10/3/98 10:39am
Subject: Don't Rush to judgment

The COOK Report Position Paper on White House Sellout of Internet Governance

To Ms. Beckwith Burr
NTIA, DoC
Washington, DC

Ms. Burr:

Unfortunately in your desire to finish by October first you have beenunable to respect the condistions called for by the white paper. Myattached submissions tracks the perversion of your process. You must notrubber stamp the IANA submission in the light of the BWG alternative whichis consensus based..... As Ira has told me as recently as our conversationof Friday October 25th, we all don't turn into pumpkins on October 1.

A SHADOW GOVERNMENT

CLINTON ADMINISTRATION TO ESTABLISH PUBLIC AUTHORITY (NEW IANA CORP.) TO RUN INTERNET

We Find the White Paper Process to Have Been a Fraud

Magaziner's so Called Open Process is Ending in Ultimatums and Dealsand a IANA Board Responsible to No One Save Itself

Editor's Note: What follows is J. William Semich's 1989 definition of Public Authority. This article shows the New IANA to be such an authority with a board without any fiscal responsibility and with responsibility to no one except itself.

"[PUBLIC] Authorities constitute a permanent, expansionist
government, collecting and spending more and more public money,
running up more and more public debt, and making more and more
critical decisions on the public's behalf with each passing day. And
because authorities do all this out of site - and beyond the control
- of the general public, they constitute, finally, a Shadow
Government.".

October 1, Ewing, NJ

The Department of Commerce (DOC) is in the midst of pushing the pedal to the floor to get its way in reshaping the Internet. The White Paper process has been derailed.... going from open meetings in July and August to closed door non public bartering sessions in September. The consensus sought by open means has, as the Clinton administration seeks to "devolve" the NSI monopoly, been devolved into a closed-door series of secret 'u' turns at the highest levels of the US government. I have been trying to follow recent leads to get answers to questions, get a clearer picture and second source material only to find that my sources have suddenly dried up. Someone clearly has issued orders not to talk because the government position could not withstand the light of day.

Since the the government is free to slam doors shut, I am free to summarize my knowledge of the gap between the promise and reality of the so-called "open process" behind the White Paper. That process I contend has been a sham. Started possibly with good intentions, it has now become subject to naked power politics.

Consider Some of the Events of the Summer

The DOC waited until the second week of July to sit down with NSI. When the meeting occurred NSI was handed a 'terms sheet'. The terms essentially informed NSI that it would be treated as a LEC and forced to unbundle its services and price them to competitors at the same prices as to itself. The only problem was that unlike the CLEC world where CLEC attorneys have to negotiate endlessly with LEC attorneys, terms and conditions of interconnection, NSI software systems would have to be given to the US government with full warranties that the software would work when placed on their competitor's computers. What may never have occurred to Becky and Ira -- as they are imposing their public authority, top down model on the Internet -- is that the very reason unbundling was forced on the RBOCs was that the RBOCs are big enough so that the alleged competitive solution would not seriously effect them. NSI does not have the financial depth to survive if it were forced to endure the bizarre solution of being required to warranty and maintain on behalf of its competitors the systems that it developed.

The White Paper called for "negotiations", which normally implies an element of discussion involving some exchange of ideas.. NSI returned comments on the "terms" to NTIA which said, "No thank you. The terms are NOT NEGOTIABLE" and returned the paperwork to NSI with the instructions to dismember the 80% of its business represented by the .com, .org and .net registries. Ira asserted, in a July interview with me, that the government's aim was NOT to deprive NSI of .com or put it out of business but only out to ensure that it share .com registrations. What I am told happened does not seem to me to be consonant with that assurance. When NTIA refused to negotiate about any of the terms, NSI decided that the best way it could maintain its fiduciary responsibility to its stock holders was to simply refuse to sign the extension of the cooperative agreement that was being demanded of it. Come September 30 it figured that the cooperative agreement would expire.

As far as I know there has never been a situation where the holder of a cooperative agreement was forced by the US government to continue the cooperative agreement against its will. Only in a case of formal "takings" under the doctrine of "eminent domain" (which implies an overriding government interest that would appear inconsistent with the announced White House intent to disengage from involvement) can the government compel the use of private property for a public purpose and in such cases compensation must be paid.

Consequently, NSI reasoned that if it simply declined NTIA's offer, it could probably survive. After all, if NSI did not chose to cooperate, could the Department of Commerce take over its database and resister and bill for 140,000 new registrations per month? Not likely. Meanwhile the government rested its case that since, during the cooperative agreement NSI had always accepted the authority of the US gov't as exercised by the NSF, all it needed to do was tell NSI that the gov't was now exercising its authority that NSI dismantle 80% of its business and that it expected obedience.

Things dragged on until Monday September 28 when something new happened. When NSI was unwilling to accept nationalization by Magaziner and Burr, the DOC and DOJ walked out of the room, left NSI cooling its heels for 2 hours and walked back in handing NSI an ultimatum. NSI still didn't sign. Therefore the crisis session spilled over into Tuesday and by Tuesday afternoon Magaziner had used some kind of "club" such that, rather let the Coopertative Agreement (CA) expire, NSI signed a one week extension, an act that most of it friends considered unwise and an action that its enemies considered tantamount to suicide if it refused. NSI did not refuse. One wonders what weapon the White House and NTIA hung over NSI's head? Of course it's also possible that SAIC (a major government contractor) was willing for NSI to be eviscerated to maintain their "good relationship" with the United States Government.

Everyone agrees that if NSI doesn't sign and accept the government "nationalization" of the 80% of NSI's business represented by .com, .org and .net represented by the non negotiable "terms" that the two parties will wind up in court. **This is an action that will certainly destabilize the Internet.** The question is what is NTIA's motivation? Why would the White House be willing to take the internet to the brink for the sole purpose of ending the "NSI monopoly" when it is effectively ended already at the registrar level and other companies are selling thousands of .coms per month? The response that one hears is a doctrinaire: "they still have a financial advantage - one which we simply cannot permit." And besides.... why the secrecy? What are NTIA and the White House hiding? After I started revealing what they were doing to NSI, I have never heard so many doors slam in my face so quickly. Someone has been made very afraid.

It is clear that US Government intransigence is motivated in part by the Europeans. More on that in a moment. In the meantime the grade school level of preparation on the part of the administration is made clear by the issue of the root servers. Ira has made many statements as far back as last winter that his goal was to find a new home for the root servers and to harden them and enhance them. And yet in the final hours nothing has been accomplished and NTIA asked NSI for documentation on how to run a root server--presumably the A server. Told that no documentation existed, Becky Burr then instructed NSI to write it and give it to her with a warrantee that it would work! I ask what if the FCC had gone to AT&T in the 1984 divestiture and said: develop an operations manual for your competitors?

Becky's Role

Let's look further at Becky. I finally ascertained the source of the US government involvement. In December 1996 the Patent and Trademark Office in DOC prevailed upon the agency to send to OMB a request for the publication of an NOI on DNS from the point of view of trademark issues in the Federal Register. OMB had to follow the rules of circular A119 before going forward. Consequently it assembled the interagency task force on DNS. Ira became aware of the PTO concern in December and in January he also became aware that NSF was unhappy with the turn that IHAC was taking and that NSF was seeking internal authorization to end the Cooperative Agreement on April 1, 1997. He decided that intervention was called for to keep the internet from future destabilization. In one of the first meetings of the interagency task force, a participant remembers that a commerce department representative bragged that she had gotten the PTO to recognize the importance of DNS and had also taken it upon herself to go to WIPO and brief them in order to be sure that they staked their claim. In 1995, 1996, and 1997 the PTO aggressively pursued an agenda of expanding trademark rights over domain names by working in lock step with WIPO. The PTO work was done without any public notice or comment in the US. PTO representative Lynn Beresford chaired the WIPO consultative meetings on trademarks and domain names during 1997 in constant consultation with Al Tramposch an IAHC member and the WIPO staff member responsible for these issues. The December 1996 DOC/PTO draft notice of inquiry was essentially Lynn Beresford's stacked deck in line with the agenda above.

Meanwhile in January 1997 someone, whom I have not as yet been able to identify reached out and grabbed Beckwith Burr from the FTC. Burr was brought first into OMB where in February and March she worked for Sally Katzen before being shipped on to NTIA in the spring where she and Brian Kahin took charge of the interagency task force. It is not hard to imagine that big corporations liked the idea of taking an enforcer from FTC and moving her to Commerce to be their agent for trademarks. However, for me it is an interesting discovery to hear from a trusted inside source that when Ira Magaziner got involved and started working with Becky Burr at NTIA, the combined effort of these two people did take the process from the closed door bias of PTO into NTIA, which is a somewhat more neutral forum. And at NTIA they began to look at a wider set of issues. With the result that in the summer of 1997 NTIA did issue the well known NOI which garnered widespread public input.

At any rate, for the Patent and Trademark Office there was the smell of big bucks in the air. For WIPO the payoff was a seat at the table of Internet governance to protect their traditional publishing interests. Remember WIPO as the source of the "database treaty" and demand of payments for browser hits. In comparison DNS can be seen as trivial. DNS was a tool that WIPO could use to embed itself into Internet governance. Furthermore, the Europeans like the WIPO dispute resolution process. WIPO is another UN org like ITU. The administration, in its enthusiasm for WIPO and its global economics model, is siding with huge businesses who are eager to protect their vested interests against upstarts like NSI, IO Design, Iperdome and the Open Root Server Coalition.

By September of 1997 Becky and Brian Kahin had bought the socialist ITU model of DNS as a public trust. Having done that made them see IAHC as the only game in town. (Some readers may remember my FOIA battles with Kahin last winter over his and Becky's meetings with ATT, IBM, Oracle and DEC.) Feeling an ally in Becky, CORE moved forward and collected its $900,000 in fees from its would be registrars. However, on December 10, Ira informed Jon Postel that he would not put the seven core domains in the rootservers. On the morning of January 26 1998 with Christopher Wilkinson of the EC looking and George Strawn of the NSF, I heard Ira explain to Scott Bradner his concern that if Jon Postel gave into the folk who were pushing him to defy the US gov't and put the CORE domains in the root servers he, Jon, would go to jail because "when you are in control of a scarce resource, you had better have a scrupulously neutral policy for the distribution of that resource." Yet the irony of all this is that nearly a year later The white House has bought the essentials of the POC/CORE/ISOC solution. The only difference is that an IANA Board of people who will likely be sympathetic to this way out is being chosen and so what was illegal in 1998 will likely become legal in 1999.

The IANA Negotiations

After the CIX and AIM and ISOC announced the termination of the IFWP process at the end of August it seemed that IANA and ISOC, which had not given an inch (see Larry Lessig's Standard article) had won. Then suddenly, after Ira, in an interview, had complained to me that he wanted IANA and NSI at the negotiating table ASAP, IANA and NSI found themselves in face-to-face talks in early September.

A joint Draft 4 resulted and was published on September 17th and for the first time those of us who were not acolytes of IANA and who had been angered by how Jon issued pronouncements from Olympus, had reason to hope that the White House would insist that the consensus points of the IFWP meetings be respected. Postel had ignored them but NSI had drafted a set of bylaws that were admired by those of us not happy with Postel, and now it seemed that NSI had gained an opportunity to negotiate and force Postel into a more open and democratic position. The IANA - NSI Draft 4 was admired. It was the only draft that paid serious attention to the consensus points of the IFWP meetings -- meetings which many people took seriously but which, I now suspect, were intended by the White House as 'window dressing' to legitimatize what had already happened behind closed doors and is now just coming to light.

On Monday September 21st Ira Magaziner, in an interview with me, said that progress was being made but added that the two sides had to keep at the table and produce one more draft before the requisite consensus would be there. However, during the week of the 21st the Australian government and EC exploded. (The Australians whose anger had been less well known were having fits because of Adam Todd's rogue Australian root servers.)

Day after day went by without the publication of a new draft. Don Telage was trying to handle both the negotiations with the IANA and DOC. I was given the impression that negotiations went on during the weekend of the 26 and 27th. Then in the late evening of the 28th IANA dropped a bomb shell and put out draft five alone.... with clauses d and e of section 4 Powers of the by laws removed. These clauses were critical to NSI's interests but also protected the interests of other (smaller) U.S. players such as IO Designs and Iperdome.

Postel, in his solo introduction to draft five, said: "NSI is actively engaged in the final negotiations with the United States Government over the transition of its contractual relationship with the United States Government. That is, understandably, its highest priority at the moment. Given the shortness of time, it as not possible to wait for the conclusion of those negotiations to release these new drafts. Many of the changes contained in these new drafts have been discussed with NSI, as they have been with many other stakeholders, but NSI bears no responsibility for these changes."

I and others accused Jon of hi-jacking the process. And taking out what NSI had fought for when NSI's back was turned. Joe Sim's Postel's attorney would only tell me my conclusions were erroneous. Sims was correct. I have since ascertained that Sims and Postel were ordered to remove clauses (d) and (e). I state this unequivocally. What I infer from this information is that since NSI had not yet been sufficiently compliant with the wishes of DOC and Becky Burr, the US government retaliated against Telage and NSI by telling Sims to go forward with draft five as an IANA-only product.

When the open process was followed, clause (d) and (e) were put in the document. When foreign governments and inveterate NSI haters screamed, any last shred of openness disappeared. What the main stream press failed to note was that ripping out (d) and (e) also deprived other (smaller) U.S. entrepreneurs such as (IO Design's .web and Iperdome's .per of any standing.

I asked both to comment:

Christopher Ambler, founder of Image Online Design has pointed out that "removing IV-1(e), the section that many have called "NSI protection" also removes any protection that Image Online Design and other prospective registries (like Iperdome and CORE, for example) might have, and tramples the rights that Ira assured would be there."

Ambler continued that he felt that

"IV-1(e) being removed now clears the way for the ICANN (Internet Corporation for Assigned Names and Numbers) Board (a board about which we know nothing, and the selection process of which is still undefined) to make arbitrary decisions about how new TLDs will be created without taking into account existing work. IANA gave the direction to a number of entities, including Image Online Design and CORE, to create systems and infrastructure for new registries. Without IV-1(e), the ICANN board need not take this into account, and can, instead, choose to ignore these existing entities. This can cause direct damage to these entities, which have been relying on the original directives of IANA since 1995. For a system that is supposed to promote competition and fairness, my view is that it seems to have none of either."

Jay Fenello, president of Iperdome added:

"I concur with Chris. In addition, the failure of the Clinton administration to abide by the goals as stated in the White Paper will surely result in Congressional intervention. At this pace, we'll be lucky if we ever see new TLDs -- or complete this transition process."

White House Spin Picks up Speed

At 6:15 PM Eastern time, September 30 News.com posted an article by- lined by Courtney Macavinta. "We expect to receive the [IANA] proposal tomorrow for the new organization. We'll post that for comment for a week," Magaziner said today. "Then we will consult with other governments in that period. If there is just one proposal, we'll negotiate recognition of that organization and then we will begin transitioning to it," he added.

Now I find this statement quite fascinating. "If there is just one proposal" It wins he says. I say that he has every reason to understand that there are three proposals. The first is the officially blessed proposal from Jones and Day - that is to say draft 5 of September 28, 1998. (With Jones and Day as a Washington law firm I wonder if it was doing probono for Jon Postel, as had been assumed, or in reality was it on the job at the behest of the White House? Consider the strange differences between the FAQ that Jon wrote and the legal drafts that were supposed to support it and didn't.)

The second proposal is draft four the NSI/IANA draft - the one that many of those who could tolerate NSI liked. This draft was removed from the IANA web page when it was disqualified by the alleged "open" process. The third draft is the Boston working group draft, a final version of which was published on web pages today. This draft prefers the NSI IANA draft but feels that it is too favorable to NSI in some ways. Ira presumably considers the NSI/IANA draft. But Ira has no right to consider the Boston working group draft dead. The drafters say that they have informed Ira that they wish him to recognize its existence. The irony is that the Boston draft is the product of the only fully open process that occurred this summer. If Ira ignores it and declares the Postel draft five the winner he will make a complete mockery of a process that is already clearly not open.

Consider the Board

Courtney Macavinta writes: "The ICANN board is supposed to be neutral and include people who have not been involved in the ongoing heated debate over the future of the domain name system. There will be four members from the Americas, three from Europe, two from Asia, and a representative-at-large."

Ira told me on September 21 that he expected to see a slate of board members floated by the 23rd when I published my most recent issue. They would be nominees only. The purpose would be to find out whether there was consensus for them. Consensus never materialized. What was pervasive was a deep distrust of board members that Postel was felt to have chosen, and a fear that the names would be presented as a fait accompli. This fear was heightened when EFF issued a press release saying that one of its board members had agreed to serve on the new IANA board. This was an announcement that astounded those of use who had been assured that NO invitations had been made. However last week a POC/CORE supporter met a colleague on the east coast and told the colleague that a board with a heavy international representation had been chosen sometime ago. This remember, the US Department of commerce alleges, is an open process. I find it to be a fraud.

Courtney Macavinta writes: "It is likely that the ICANN board will be set up, however. Names being floated in closed circles include the following: Ron Bolger, a Telecom Eireann board member; H. Brian Thompson, a Qwest Communications board member; Ray Smith, chairman of Bell Atlantic; Esther Dyson of the Electronic Frontier Foundation; Dennis Jennings, formerly of the National Science Foundation; Jun Murai, a Net guru from Japan who advises the Asia Pacific Networking Group; and Nii Quanor, a high-tech entrepreneur from Ghana."

It seems that many of the inside choices have been leaked to Courtney. The EFF's Board Member Esther Dyson is there, as promised but not identified in the press release. Bell Atlantic's Ray Smith is there another person whose name I have heard floated. The old line phone company representation is impressive. Telecom Eireland and Qwest. Now Qwest is not old line but H Brian Thompson is the CEO of LCI the bell head IXC that Qwest recently purchased. Jun Murai runs the Japanese root server and is a close friend of Jon Postel. Nii Quanor runs the Ghana country code domain for Jon. Dennis Jennings originated the NSFnet that Steve Wolff vastly expanded. I am told that Dennis is Irish and is living in Ireland. It is exceedingly unlikely that Ray Smith, Esther Dyson or H Brian Thompson have much knowledge of the technical or historical details of the issues of names, numbers or protocols and the stature of the board as extremely busy non retired business people...(except for Jennings) makes it very likely that the ICANN staff will be able to shepherd policy to suit itself.

Now Courtney does present a single very interesting dissent from Bill Semich: "The latest set of proposed bylaws for the new IANA corporation are completely devoid of any provisions to create any type of fiscal accountability for the Internet's first all- powerful, government-sanctioned independent authority," said William Semich, president and chief financial officer of .NU Domain Limited. "Nowhere in the bylaws is there any provision for any kind of independent fee setting review process or for any kind of independent budget review or hearing mechanism or approval process for the budget, borrowing, or any other fiscal decisions," he added.

Cook: Such is the half baked pie that the pseudo open White paper process has given us. Here is Semich's well-argued piece. He ought to Have a seat on the IANA Board. consider his background. Consider also that he is the Nuie Country Code TLD manager. Consider that the White House would like Nii Quanor, the Ghana country code manager instead.

Formerly:

- Director of Financial Analysis for the City of Boston - Chairman, Finance Committee, Massachusetts Bay Transit Authority Advisory Board (The MBTA's Budget Review and Approval body) - Financial Adviser to the Mayor of Boston for Tax Policy and Planning - Assistant to Collector-Treasurer, City of Boston - Deputy Director and Executive Secretary to the Board, Boston Economic Development and Industrial Commission

Achievements: - Co-author, "Inside the Shadow Government," Boston Magazine, November, 1989, selected as one of the "Top 10 Magazine Investigations of 1989," by Investigative Reporters and Editors, Inc. (IRE); - Lead investigator and financial consultant, WBZ-TV Boston's "I-Team," in-depth 1995 investigative report on the Mass. Turnpike Authority's actions over a ten year period to extend it's life using fiscal manipulations; - Co-author, "The Money Pit," Boston Magazine, September, 1986, investigative article on abuses by the Mass. Convention Center Authority in its redevelopment of the Hynes Convention Center

New IANA that US Government Wants to Incorporate Has No Fiscal Accountability:

"If the bylaws are approved unchanged by the White House as the basis for the Internet's first independent governance mechanism, the new Internet Authority would be able to set a wide range of Internet- related fees of any amount without constraint, float bonds of any amount which must be funded by future revenues, as well as collect additional fees of any amount to invest for undefined possible future needs, all such to be paid for by you, me and our children, the Internet's users of today and tomorrow, without their review, approval or control.

The new version of the proposed bylaws for the new Internet Authority will likely be submitted today to Ira Magaziner of the White House, under the terms of the White House "White Paper" released last January, to create the replacement for the US Government's current contractual arrangement for management of the Internet, which is set to expire today ( Sept. 30, 1998).

But the new bylaws are completely devoid of any provisions to create any type of fiscal accountability for this, the Internet's first all- powerful, government sanctioned independent Authority.

Although the new bylaws make it clear that the source of the new Internet Authority's revenues will be the Internet's end users and service providers, it leaves all spending, borrowing, investment and other financial decision-making solely in the hands of the Corporation's board of directors, who's members specifically "have the duty to act in ... the best interests of the Corporation and not as representatives of their Supporting Organizations, employers or any other organizations or constituencies." (Article V, Section 8)

Nowhere in the bylaws is the Board of Directors required to consult with any outside groups, experts, or other interested parties on how best to set its fees or plan its budget.

Nowhere in the bylaws is there any provision for any kind of independent budget review or hearing mechanism or approval process for the budget, borrowing, or any other fiscal decisions;

And nowhere in the bylaws is there any provision for any kind of independent fee setting review process or approval mechanism, either by those who must pay the fees (the Supporting Organizations, who represent the consumers of the services to be provided by the new Corporation) or by any independent body of fiscal experts.

All these fiscal decisions are made solely by the new Internet Authority's own Board of Directors. [Remark by Gordon Cook the in ordinate power given the ICANN board of directors has been a steady criticism that has fallen on deaf ears all summer long.]

The relevant language in the proposed new bylaws makes this absolute power of the Board clear:

FIRST, it gives the board absolute control over any spending or borrowing decisions:

"Article IV, Section 1 (a)

"the powers of the Corporation will be exercised, its property controlled and its business and affairs conducted by or under the direction of the Board." SECOND, it gives the board absolute control over the fee setting decisions:

"Article IV, Section 2. FEES AND CHARGES

The Board shall set fees and charges for the services, rights and benefits provided by the Corporation to the Supporting Organizations and others, with the goal of fully recovering the reasonable costs of  the operation of the Corporation and establishing reasonable reserves for future expenses and contingencies reasonably related to the legitimate activities of the Corporation."

And THIRD, it gives the Board the sole authority and absolute control over setting its annual budget, with no requirement that it actually meet that budget or that the budget pass any kind of review process, all this in one simple line of the new Bylaws:

"Article V, Section 25. ANNUAL BUDGET

The Board shall prepare an annual budget, which shall be published on the Web Site."

These three phrases are the total extent of any language in the new bylaws that might be construed as setting ANY spending, fee setting and raising, budgeting, borrowing, investing or any other fiscal constraints on the board of the new Internet Authority which will be the primary manager of the single most important communications resource in the world.

Such an all-powerful and fiscally unaccountable organization as would be created by the new bylaws is a classic textbook "Public Authority" in its structure, and that is the crux of my problem with the fifth set of IANA bylaws released on Sept. 29.

White Paper Gives Us A "Public Authority" With Abolsute Power And Without Any Accountability

Look closely at any publicly-funded independent Authority in the US and you will find a self-perpetuating, quasi-governmental organization whose spending decisions cannot be challenged, who spends the public's money like water, who has absolute power over its particular area of activity, but no accountability to the public. In the present case of the bylaws for the new Internet Authority, there is minimal accountability for its policy decisions, and that is cause enough for concern. But there is NO accountability for its borrowing, spending and fee setting structure.

There needs to be some kind of mechanism in the new entity that will create a counter- force to the typical Public Authority's inevitable desire to grow and to spend more and more money and increase its sway in the world. .

The counter-force to spending increases could be a Budget Review Committee solely comprised of the groups that will fund the new Internet Authority. Or it could be a Finance Committee made up of independent, world-renowned fiscal experts who have no vested interest in the new Internet Authority or the Internet per se. Or it could be a committee of government finance experts with experience bringing public spending into line. Or it could be some combination of the above.

It would be a real tragedy if, in its first efforts at self-government, the Internet community were to hand over management of the Internet to yet another quasi public Authority, who's essence is perhaps best defined in an article I co-authored nearly ten years ago:

"Authorities constitute a permanent, expansionist government, collecting and spending more and more public money, running up more and more public debt, and making more and more critical decisions on the public's behalf with each passing day. And because authorities do all this out of site - and beyond the control - of the general public, they constitute, finally, a Shadow Government."

"Inside the Shadow Government," by John Strahinich and J. William Semich, cover article, Boston Magazine, November, 1989.

Conclusion ISOC (or at least Don Heath) is Delighted

Courtenay concludes: Still, other groups are hoping that the ICANN  gets pushed forward so that the long-awaited domain name governance changeover can begin.

"They have walked in a mine field and presented something that works," said Don Heath, president of the Internet Society, which had proposed its own plan for the future of the domain name system and for setting up worldwide registrars." "The plan is committed to an open process," he added. "We are not producing a constitution; it is setting up a corporation to do the mundane task of assigning names and numbers. But this will set a precedent for Net governance in the future, and this is a corporation that could decide who can be a registry--which some say translates to big dollars."

Note that barring another sharp reversal -- a miracle I would say -- The White House is on the verge of giving Heath possible access to a money stream for ISOC which always hovers near bankruptcy. No wonder Heath is happy. With ICANN's unfettered ability to tax internet users not only for names but for new IP v6 numbers, Heath has been handed a gold mine. ISOC will no longer have to be worried about going out of business while the Clinton administration has lied to the rest of us -- promising openness and delivering a back room deal. (Note that a reliable source assures me that the ISOC Board and Heath are by no means necessarily of the same mind.)

The International White House Big Corporate Political Pawn Game Is the US government ram-roding through the IANA corporation formation as a pawn in meeting its own goals in negotiations and development of an international electronic commerce policy ?

What we find interesting is that the Organization for Economic Co-operation and Development (OECD) and the Government of Canada are hosting a ministerial conference on electronic commerce in Ottawa from 7 to 9 October 1998. The conference will "address key issues surrounding the evolution of electronic commerce and to develop together a set of measures to promote electronic commerce on a global basis" and has as its theme "A Borderless World - Realizing the Potential of Electronic Commerce".

The homepage for the conference is at:

http://www.ottawaoecdconference.org/english/homepage.html

Also note according to:

http://www.ottawaoecdconference.org/english/conference program/thurs.html

That Plenary Session 3 of this conference is entitled

ESTABLISHING THE GROUND RULES FOR GLOBAL ELECTRONIC COMMERCE - THE ROLE OF INTERNATIONAL CO-OPERATION Leading up to the Plenary Panel Session on the work plan of international organizations, This Session provides an opportunity for the conference participants to consider and discuss the potential role for global co-operation, based on visions and perspectives from governments and business. Moderator: Mr. Donald Johnston, Secretary-General, OECD Speakers: Mr. Martin Bangemann, Commissioner, European Commission Ms. Maria Livanos Cattaui, Secretary General, International Chamber of Commerce Mr. Ira Magaziner, Special Advisor to the President, United States Mr. Kaoru Yosano, Minister of International Trade and Industry, Japan

Now here's the catch. In the introduction to Draft 5 of the articles and bylaws <http://www.iana.org/intro5.html> Jon Postal cites input from the International Chamber of Commerce. Where did they come from? Why weren't they heard from before? Postal also does not cite that hereceived input from the European Commission, yet Chris Wilkinson's letter that I published recently shows that he received input from them. Next consider the press release from the government of Canada. It is a Statement of Principles which says

Changes to the Domain Name System (DNS) will have an important impact on the emerging global framework for electronic commerce, a rapidly growing area in which Canada is positioned to become a world leader. As part of the international debate on reform of the Internet Domain Name System, Industry Canada today released a paper entitled Reform of the Domain Name System: Current Developments and Statement of Principles. The Statement of Principles is available on-line at http://e- com.ic.gc.ca/english/documents/dns.html (to be updated).

What's going on? Is DNS a topic of discussion at this ministerial conference? If so, why can't one find it explicitly on the agenda? Is Ira taking electronic commerce away from the small entrepreneurs and delivering it into "lap" of the Global Economy, WIPO, NAFTA, and WTO for dispute settlement? These are the OECD friendly organizations. How open and democratic are the actions of OECD?

What We Need is a Solution which Fosters Stability

It is interesting that the OECD`s plenary session 1, a plenary session with Lou Gerstner, CEO of IBM, Secretary of Commerce Daley, among others, building trust is the key theme. Quoting the agenda:

PLENARY SESSION 1: ROUNDTABLE BUILDING TRUST FOR USERS AND CONSUMERS

Trust is central to any commercial transaction. Developing new kinds of commercial activities in the electronic environment largely hinges on assuring consumers and business that their use of network services is secure, reliable, and verifiable.

But on the new IANA Corp (ICANN) issue, THERE IS NO TRUST. What we have is distrust among the Europeans and the US, distrust among NSI and Dept of Commerce, and distrust among ISOC and many others. What we need is HONEST leadership, and unfortunately I haven't seen any one organization or person rise to the occasion.

Authority Lies at the Edges

In short Internet old timer and wise man Einar Stefferud got it right when he wrote on September 29:

It just occurred to me that if there is no resolution of the authority situation as of 1 Oct, that there will no longer be any existing authoritative central control over the DNS, and that authoritative control will simply devolve to the edges, and that the Internet will keep right on running without IANA controls.

So, the Open Root Server Coalition should continue in its efforts to install its Staging Root (an alternative to the IANA root) as part of an effort to sort out the conflict issues with the collection of contending new non-ccTLDs in support of a collective comprehensive root service that will be edge controlled.

So, while disavowing support for the current attempt to subvert due Internet processes, I support efforts to self organize outside the confines of the White Paper process which appears to have has lost its integrity, and its consensus support.

This does not at all mean that the Internet will collapse, as no one wants to pull the plug on the current DNS servers, or stop assigning IP addresses, or shut down the IETF processes. All these things are already locally supported and can functional just fine without central authority. I know that many people do not believe this is possible, but I believ we are about to witness a global experiment in how the Internet can run just fine without any central authority...

So, Let The Show Begin;-)... Cheers...\Stef

If the administration doesn't bend, let the affected parties go to court. NSI would be foolish to sign the dictat from the White House -

Gordon Cook

Some New Data

ICANN (New IANA) as a Pawn in an Economic Struggle Between US and Europe and Asia

I asked the question a few days ago: what could justify Ira's heavy handed tactics. What stakes could be large enough to risk the stability of the net? Here is an informed hypothesis based on a 90 minutes conversation with an expert source in these areas who has a heavy international background. (I have also reality checked this hypothesis with several knowledgable observers.)

I am beginning to get an idea of what is at stake in the larger sense. Ira, I fear, is using the internet as a pawn in a far bigger game.

The game is is inextricably linked with the privacy statutes of the OECD and the coming October 23th deadline for American companies doing business in Europe and data mining on European citizens as part of their ordinary activities. It is also inextricably linked with the international encryption debate.

I have heard credible allegations that the US government is at such loggerheads with the OECD countries over the use of key recovery encryption and over the unwillingness of american big business to change its ways of gathering data on employees, customers, contractors etc that we are coming to the October 23th deadline with billions of dollars at stake and no solution.

At the same time Ira has for the past three years focused on his mission with Tom Kalil and working through the National Economic and Security Council to setting up the internet as a mechanism for global economic commerce..... touting the net as a means on which, in a few year's time, the majority of the world's economy will depend.

It looks as though Ira's agenda is to do this in such a way that the internet can be controlled by an American based, incorporated, non profit public authority set up under American law with a Board, purposefully established without fiscal restraints and without any oversight or accountability. And with board members who with a smattering of international representation can be made as subserviant as possible to the interests of the large American Corporations. These Board members, through the GIP, will be passing the cup to pay for the expenses of establishing ICANN. Consider Bill Burrington Director of Law and Public Policy and Assistant General Counsel at AOL, a company which huge data holdings. He is the chair of the Washington DC Internetactive Services Association which went on to form the Internet Alliance with membership very simalr to GIP. Burrington is manning the barricades of the companies involved in the privacy dispute with the oecd. (Why should Burrington care? Consider AOL's electronic profiles on its 12 million members) Consider also Andy Sernovitz of AIM whose members have the same general interests and who helped Barb Dooley of the CIX sell out the IFWP process. Did Jon Postel really refuse to attend the Harvard wrap up meeting or did Ira order him not to?

So even if Ira looks heavy handed -- for this agenda to be used as the White House intends-- Ira needs to have his ducks in order in time for the OECD meeting in Canada that begins next week. He needs to demonstrate that he has enough power to have rammed through a solution at home. That is why things have turned nasty during the last week and why the iron fist is becoming seen with the incorporation of ICANN even though, by Ira's own allegedly free process, ICANN should not yet be seen as the winner.

Ira is determined to confront the OECD next week with an Internet that HE and the White House clearly controls and to do so as a bargaining chip to use in getting our way against the Europeans and Asians and Canadians..... on the issues of encryption and privacy statutes. It would be instructive to see the legal basis of the governments arguments being used to get NSI to cave. Could it be that their content might be embarrising?

If SAIC doesn't order NSI to sign Ira's demands by the seventh then Ira and the white house will not be as in control of the internet, as they need to demonstrate themselves to be, in order to use the internet as an american dominated global commerce weapon against the other OECD governments. The American view is that with the internet firmly in command of the White House on American corportate terms, the Asians and Europeans will have no choice but to back off their privacy and the American encryption demands.

Remember also that Europe is trying to launch the Euro in such a way that it becomes the world's reserve currency. One would like to know whether the White House orders are do what ever is necessary to see that this effort fails.

The Europeans and Asians understand perfectly well the power play that Ira is engaged in. They are not surprisingly seething with anger. American arrogance could be doing dangerous things. If we drive Europe and Asia into an economic and political alliance against us, we all will lose. Privacy, and the freedom to live our lives without government and corporate political or economic interference are at stake.

PS: So where do I stand on NSI?

Not surprisingly, my views on NSI in this position paper have caused some accusations: Ivan Pope complained: I'd like to ask Gordon Cook if he has ever been in the pay of Network Solutions? I respond: Absolutely not and you can check that yourself. NSI does have a single subscription to my newsletter. I don't consider that to be in their pay. Now let's be clear about your biases Ivan...Netnames, UK, a DNS registry business that gains from any loss by NSI? You have been a MOUvement supporter. Are you a also CORE registrar? I don't claim to know your vita. Certainly you have your own bias.

Now as to the real issues. Do you buy into the "public authority model" of the Internet that the American government is getting ready to give the world...? You must understand that the new IANA could easily impose egregious charges for names and numbers. That would make us look back fondly on "evil, NSI", wouldn't it?

It may now be dawning on NSI that they have had (still have) bumble- headed, arrogant leadership whose act of ignoring the issues of substance on these mail lists was a grievous mistake which allowed their enemies to succeed in painting them as evil incarnate. And the ineptitude of their PR activity in dealing with the Internet world is legendary.

Their trademark policy, while rational from their point of view when first instituted, is now especially egregious, and ought to be changed so that at the first sign of a challenge by a trademark owner they do not capitulate and throw the rights of their customers to the challenger. If they do not have the good sense to do this on their own, I would support pressure on them to do so.

However, NSI has built up a viable credible business with an infrastructure that works. At $35 a year per domain, their names are cheaper than those of almost every other registry on earth. In my opinion, when would-be competitors aggressively and persistently slam NSI, you have to wonder whether their motivation is a desire to do a genuine public service or simply greed?

Now lets look at the .com issue. The National Science Board as the oversight body of the NSF approved in Feb 97 the end of the cooperative agreement on April 1, 1997. Under this approval NSI would have kept .com. The initial award was made to support a service for the research community (the NSFnet and NREN), the demands of which grew beyond the bounds of that community. However, this growth did not change the legal foundation on which the award had been made. The award was not made as a government function. The general conditions of the award specified that the intellectual property developed under the award became that of the awarded. I make no judgement as to whether or not intellectual property was developed. That may now be adjudicated in court. It was the nature of the award up front that dictated the disposition of the intellectual property and gave NSF the right to walk away at the end and leave NSI in control. The famous clause whereby NSF can ask for a copy of the database was put there ONLY to protect NSF in the event that it did have to rebid the contract at the end of five years. But given the growth of the commercial internet, NSF saw no need to rebid - just as it saw no need to rebid the NSFnet back bone in 1993. NSF's intention NOT to rebid was clear long before NTIA and the White House intervened.

I object to the following:

(1.) The decision of an agency of US Government to pursue the destruction of a private business, to the point of nationalizing 80% of their operations (the percentage is the amount of income provided by .com, org. and .net registration. While NTIA has embarked on such a course, in the opinion of another agency of the US Government, namely the NSF, the destruction of NSI's business was not justifiable. I have explained above why this is the case.

(2.) I cannot sit comfortably with the naked power that the US government is using to destroy such a business. Power exercised in camera, with no justification other than NSI "has a monopoly which it should not have" and "we are going to divest them." Especially when the US government does this in such a manner as to deprive smaller US firms (which clearly do not have a monopoly) of any and all legal property rights which they may have.

Ira made clear the "official" rationale to me for the first time in an interview in July. I am not persuaded by the depth of his argument which does not show why the NSF decision to end the NSI award a year early was in error. If I am going to sign on to the "get NSI posse," it will be only when I am shown evidence that the NSF process that Ihave just outlined was erroneous and that the policies being pursued in camera against NSI by the White House are fair. I have not seen such evidence. If it exists and I am shown it I could possibly change my mind.

You may remember that in the spring of 97, when Tony Rutkowski and Barbara Dooley were after the scalp of IAHC, POC, CORE etc, I demurred from attacking IAHC, POC and CORE. Indeed, I did not make my mind up until last September October 97, by which time, I had come to understand the issues much better and had an opportunity to watch the IAHC/POC/CORE behavior and be repelled by it.

I am fiercely independent. But I also take stands and take sides when I see the little guys being shafted and the big guys using their power behind closed doors to get their way. Up until this post there have been folk who considered me to be a shill for Ira Magaziner. I guess now they will change their tune. I call them as I see them. Have since April 1992. Since I have no advertisers I can afford to do this. I have taken stands before. I am taking a stand now. Independence without taking a stand in the face of an egregious display of governmental power is not, in my book, a virtue.

(3.) Secrecy. If commerce has such a strong case against NSI let it go public. If NTIA really is so sure of its position vis-a-vis NSIlet it state its case and publish its terms. The only consistant goal in NTIA's position has been a desire to punish NSI. This is a privately conducted mugging conducted in camera by the feds against a company that is certainly not loved and is certainly far from perfect, but a company that has done nothing to merit such treatment. Throughout my seven years of publication I have had above all else the credo of openness. To the extent that the internet's business is done behind closed doors I have consistently put in the public domain what information I receive when, in my opinion, a more powerful entity is using its power against a weaker entity and doing so behind locked doors to which the public has no access. In this case my mission is to bring into the public light that information those processes which have purposefully been kept from public scrutiny.

To conclude: I do my damnedest to keep an open mind. Between 1992 and 94 I was a royal pain in the behind to the NSF. I have learned a helluva lot since 1994 and I am surprised that I am not accused of being an "NSF shill" as well as an "Ira shill." But gosh! Let me put your mind at rest. Not only have I never done any work for NSF, including uncompensated work. Those "so and sos" have never even expressed an interest in subscribing to my newsletter - let alone actually paying for one.

Gordon Cook, Editor and Publisher

###

From: "Jim Fleming" <JimFleming@unety.net>
To: "Eric Weisberg" <weisberg@TEXOMA.NET>
Date: 10/3/98 3:45am
Subject: ICANN, IANA and InterNIC

Eric,

Several people have pointed out that one of the main evolutions taking place is that the NSF is
being replaced. The InterNIC and the IANA are separate bodies from the NSF. It may not be good to try to have one organization do it all.

Maybe people should consider a solution where ALL of the major groups play a role. Here is one possible mapping:

NSF Replacement
ICANN.ORG

IANA Replacement
IANA.ORG

InterNIC Replacement
InterNIC.ORG
IS - CORE
DS - ORSC
RS - NSI

One of the early goals of the ICANN organization could be an evaluation of the original InterNIC structure with IS, DS and RS and they could outsource the InterNIC to the above three groups. If the ICANN enforced the original InterNIC structure, then they might get a better result from what the NSF ended up with. The NSF did not keep the InterNIC structure in place for the entire term of the Cooperative Agreement. This may have been one of the reasons why there was a lack of cooperation. Maybe cooperation can be restored with the above structures.

Jim Fleming
Unir Corporation - http://www.unir.com
0:201 .COM

CC: "IFWP Discussion List" <list@ifwp.org>

###

From: "Jim Fleming" <JimFleming@unety.net>
To: "IFWP Discussion List" <list@ifwp.org>
Date: 10/3/98 2:10am
Subject: Re: [ifwp] Send comments to dnspolicy@ntia.doc.gov.

-----Original Message-----
From: Eric Weisberg <weisberg@texoma.net>
To: IFWP Discussion List <list@ifwp.org>
Date: Saturday, October 03, 1998 12:53 AM
Subject: [ifwp] Send comments to dnspolicy@ntia.doc.gov.

The proper place to send copies of such comments is
<dnspolicy@ntia.doc.gov>.

The Dept. of Commerce is recieving comments and will weigh them in determining which proposal best meets the criteria of the White Paper for assuming the duties heretofore performed by the NSF.

@@@@@@@@@@@

Eric,

When you speak of duties performed by the NSF, what exactly do you mean ?

The NSF provided millions of dollars in venture capital start-up funding for the companies involved in the InterNIC. Those companies were General Atomics, AT&T and Network Solutions (NSI). Are you assuming that the proposals should be evaluated based on their ability to reproduce the funding role that the NSF performed ?

Eventually, this funding role was turned around. The NSF became the beneficiary of tens of millions of dollars via 30% of the domain name registration fees. I do not think the NSF has made any money from the sale of IP addresses. Are you assuming that the proposals should be evaluated to determine if they have a similar structure where the tens of millions will flow to the new company ? Would the 30% "tax" be restored by NSI to pay those fees ?

The NSF also attempted to provide management oversight. I say attempted because they clearly dropped the ball. The InterNIC will probably go down in the history of the Internet as the most badly managed NSF project one could imagine. What started out as a cooperative arrangement with three companies, ended up with one company and people outraged at what appeared to be a monopoly position which was mostly a result of the image that the NSF allowed the InterNIC to develop.

Are you assuming that the proposals should be evaluated based on their ability to restore the InterNIC to what it once was ? Should people be looking to see if the IS, DS and RS structure will be put back in place by the new company ? Should people be evaluating the proposals based on their approach to how the COM/NET/ORG TLDs will be handled ?

On this last point, how can one evaluate a proposal if it claims to "punt" all of the key decisions to a later date without any guidance or platform provided ? To be more specific, do you think the proposals should be specific about how they propose to handle the .COM TLD legacy root name server delegations ? If the proposal says "later...we will decide that later" how can one compare that proposal to one that is clear from the start about those sorts of key decisions ?

Jim Fleming
Unir Corporation - http://www.unir.com
0:201 .COM

CC: dnspolicy, psunshin@n...
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From: "Jim Fleming" <JimFleming@unety.net>
To: "IFWP Discussion List" <list@ifwp.org>
Date: 10/3/98 3:15am
Subject: Re: [ifwp] Re: CLINTON ADMINSITRATION TO ESTABLISH PUBLIC

-----Original Message-----
From: Dave Crocker <dcrocker@brandenburg.com>
<snip>

>realize that Postel is a senior member of the Internet research community
>and would have no trouble obtaining funding for doing other work. (I
>haven't checked but believe he already is part of other research
>work/funding.) Hence the assumption that the efforts at seeking funding
>for IANA is the same as his being concerned for himself, or his staff, is
>simply wrong. (In fact, the disparity between the truth and this assertion
>about his motives makes the assertion quite mean-spirited.)
>

Why would Jon Postel state at the past IETF meeting in Chicago that one of the criteria for being a Board member was to be "smart" enough to hire the existing IANA staff ?

Are you saying that Jon Postel and the rest of the IANA people will not be seeking employment with ICANN ?

Will Jon Postel remain on the Board of ARIN ? http://www.arin.net

How about the other companies that Jon Postel is involved with ? Will Jon be stepping down from other Boards and jobs ? Will he still be involved with LN.NET ? What about USC/ISI ?

Also, apparently Jon Postel went to high school with Vinton Cerf. This is supposedly the same high school that your brother Steve Crocker attended. Jon Postel appointed you to the IAHC. Vinton Cerf has been out trying to raise money for the new company. http://www.gip.org What role will Vinton Cerf play if any and the people involved with GIP ? Also, will you or your brother be involved ?

Will these questions be clarified before the U.S. Government makes a decision about the various proposals ?

Jim Fleming
Unir Corporation - http://www.unir.com
0:201 .COM

CC: NTIA.NTIAHQ(dnspolicy),NTIADC40.SMTP40("Ira_C._Mag...

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Date: Sat, 03 Oct 1998 01:01:07 -0400
From: Michael Sondow <msondow@iciiu.org>
To: dnspolicy@ntia.doc.gov, "Int'l Forum on the White Paper" <list@ifwp.org>
Subject: Comments on private sector proposals for new domain name corporation

As regards the proposal from Jon Postel, if the ICANN is a "public benefit" corporation, organized for "charitable and public purposes", and "will be operated exclusively for charitable, educational, and scientific purposes", then why is its initial Board of Directors composed of a financial strategist, a partner in a capital investment firm, the chairman of an industrial association, the president of a holding company, a marketing specialist, the chairman of a telecommunications operators' association, and a management consultant, with two academics for window dressing? There is such a great contradiction here between the direction of the proposed Postel new domain name corporation and its avowed purpose, that the Postel proposal must be seen as having been conceived in bad faith, and is therefore null and void, beyond any consideration of the worth or lack of it of any of its individual articles or bylaws. Indeed, as the Postel bylaws contain no provision for a balance of power or any public accountability, and give up the future of the corporation exclusively into the hands of its directors, the Postel-proposed corporation must bring about the death of the Internet for public interest purposes, and is therefore to be rejected prima facie and it toto.

Regarding the proposal of Ronda Hauban, there is surely much truth in what she says, although it is more of a criticism of the process instigated by the present administration than an outline for a solution to that problem. Nevertheless, as Ms. Hauben says, the abandonment of the Internet by government funding and the consequent withdrawal of the security that such funding has provided to its developers is a betrayal of their work to political and commercial pressures, and will no doubt be seen as such by history.

There remains to consider only the proposal of the Boston Working Group. By its insistence upon a membership structure and other modifications, this proposal goes some way in relieving the lack of accountability inherent in all the proposals by the IANA and the ICANN. Nevertheless, it does not go far enough in stipulating mechanisms to ensure financial accountability and the control and review of fee structures affecting the entities of the Internet infrastructure and the resultant costs to users of Internet services, including the cost of allocation of domain names. Without public review and a balance of power in setting cost and pricing structures, no private corporation managing Internet services can be accountable to the public and respondent to its needs. However, these matters are bridged, at least, in the proposal of the Boston Working Group, which, for this reason and because of its definition of a membership structure and the accountability of its board of directors to this membership, is the only proposal thus far presented from which a final document could be derived. There remains, among other things, to incorporate in it a precise method for selecting directors, and other procedural matters absent in all proposals to date. Such matters cannot be left for decison to an interim board, because that gives too great a power to the interim board and this is in clear contradiction with the transitional nature of that body.

In sum, of the three proposals published by the NTIA, that of the Boston Working Group is the only one which holds out a promise of successful modification so as to form the basis of a responsive entity fulfilling the role designed for it by the Department of Commerce.

###

From: Michael Sondow <msondow@iciiu.org>
To: "dnspolicy@ntia.doc.gov" <dnspolicy@ntia.doc.gov>
Date: 10/3/98 1:09am
Subject: Comments on private sector proposals for new domain name corporation

As regards the proposal from Jon Postel, if the ICANN is a "public benefit" corporation, organized for "charitable and public purposes", and "will be operated exclusively for charitable, educational, and scientific purposes", then why is its initial Board of Directors composed of a financial strategist, a partner in a capital investment firm, the chairman of an industrial association, the president of a holding company, a marketing specialist, the chairman of a telecommunications operators' association, and a management consultant, with two academics for window dressing? There is such a great contradiction here between the direction of the proposed Postel new domain name corporation and its avowed purpose, that the Postel proposal must be seen as having been conceived in bad faith, and is therefore null and void, beyond any consideration of the worth or lack of it of any of its individual articles or bylaws. Indeed, as the Postel bylaws contain no provision for a balance of power or any public accountability, and give up the future of the corporation exclusively into the hands of its directors, the Postel-proposed corporation must bring about the death of the Internet for public interest purposes, and is therefore to be rejected prima facie and in toto.  Regarding the proposal of Ronda Hauban, there is surely much truth in what she says, although it is more of a criticism of the process instigated by the present administration than an outline for a solution to that problem. Nevertheless, as Ms. Hauben says, the abandonment of the Internet by government funding and the consequent withdrawal of the security that such funding has provided to its developers is a betrayal of their work to political and commercial pressures, and will no doubt be seen as such by history.  There remains to consider only the proposal of the Boston Working Group. By its insistence upon a membership structure and other modifications, this proposal goes some way in relieving the lack of accountability inherent in all the proposals by the IANA and the ICANN. Nevertheless, it does not go far enough in stipulating mechanisms to ensure financial accountability and the control and review of fee structures affecting the entities of the Internet infrastructure and the resultant costs to users of Internet services, including the cost of allocation of domain names. Without public review and a balance of power in setting cost and pricing structures, no private corporation managing Internet services can be accountable to the public and respondent to its needs. However, these matters are bridged, at least, in the proposal of the Boston Working Group, which, for this reason and because of its definition of a membership structure and the accountability of its board of directors to this membership, is the only proposal thus far presented from which a final document could be derived. There remains, among other things, to incorporate in it a precise method for selecting directors, and other procedural matters absent in all proposals to date. Such matters cannot be left for decison to an interim board, because that gives too great a power to the interim board and this is in clear contradiction with the transitional nature of that body.

In sum, of the three proposals published by the NTIA, that of the Boston Working Group is the only one which holds out a promise of successful modification so as to form the basis of a responsive entity fulfilling the role designed for it by the Department of Commerce.

Michael Sondow

============================================================
International Congress of Independent Internet Users (ICIIU)
http://www.iciiu.org iciiu@iciiu.org


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From: "Richard J. Sexton" <richard@vrx.net>
Date: 10/3/98 10:27am
Subject: Re: [ifwp] ICANN, IANA and InterNIC

I think we need to seriously consider that the Internet has indeed self organized and that there is not one single organization that is has self organized into.

Both the US government with it's executive, legislative and judicial branches, and the previous Internet administration of NSF, InterNIC, IANA with InterNIC being comprised of RD, DS and IS operated this way.

We don't expect the US government to be one "entity" nor is that the way the current administration of the Internet one "entity".

Perhaps we should not try to fit a square peg in a round hole and try to squeeze everything into one new entity, but should look seriously at the various factions have self organized into and realize thats what folks have decided on, and accept that as the organic development we were expecting, and not be too upset that the end result wasn't what we thought it would look like.

At 02:45 AM 10/3/98 -0500, Jim Fleming wrote:
>Eric,
>
>Several people have pointed out that one of the
>main evolutions taking place is that the NSF is
>being replaced. The InterNIC and the IANA are
>separate bodies from the NSF. It may not be
>good to try to have one organization do it all.
>
>Maybe people should consider a solution where
>ALL of the major groups play a role. Here is
>one possible mapping:
>
>NSF Replacement
> ICANN.ORG
>
>IANA Replacement
> IANA.ORG
>
>InterNIC Replacement
> InterNIC.ORG
> IS - CORE
> DS - ORSC
> RS - NSI
>
>One of the early goals of the ICANN organization
>could be an evaluation of the original InterNIC
>structure with IS, DS and RS and they could
>outsource the InterNIC to the above three groups.
>If the ICANN enforced the original InterNIC
>structure, then they might get a better result from
>what the NSF ended up with. The NSF did not
>keep the InterNIC structure in place for the entire
>term of the Cooperative Agreement. This may have
>been one of the reasons why there was a lack of
>cooperation. Maybe cooperation can be restored
>with the above structures.
>
>
>Jim Fleming
>Unir Corporation - http://www.unir.com
>0:201 .COM

CC: IFWP Discussion List <list@ifwp.org>

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