This response has been prepared in detailed consultation with a broad range of Internet stake holders in Australia, including industry associations, Internet service providers, domain name administrators, regulators, trade mark organisations and experts, consumer organisations and government agencies. There is widespread consensus among these stake holders about the concerns expressed in this paper.

We note and commend the open and cooperative approach of the Department of Commerce in the policy development process to date, and we would urge any further review continue to be undertaken in ongoing close cooperation and consultation with key stake holders, including at the international level. For its part, Australia strongly wishes to be part of that consultative process.

In this regard officials of the Australian National Office for the Information Economy (NOIE) met with Mr Ira Magaziner, Senior Adviser to the President for Policy Development, on Friday 17 April 1998, to discuss the concerns of Australian stake holders with the Green Paper. Many of the concerns expressed in this response were raised with Mr Magaziner. A further meeting took place between Mr Magaziner and representatives of the Australian Internet industry on Saturday 18 April 1998, in Sydney.

At both meetings, Mr Magaziner clarified a number of matters raised in the Green Paper, following questions put to him . In addition discussion took place with Mr Magaziner about specific strategies that might be implemented to address the concerns raised by the Australian Government and Australian stake holders. Therefore, as a result of these constructive meetings, this response, in addition to articulating our original specific concerns with the Green Paper, proposes measures to progress the reform agenda, in the light of discussions and agreement reached with Mr Magaziner.

We applaud the approach of the United States Government in seeking to disengage from governance of the domain name system, and other aspects of Internet technical administration, as proposed in the Green Paper, A Proposal to Improve Technical Management of Internet Names and Addresses.

We believe that the strategic priorities expressed in the Green Paper are generally well-based and worthy of support. In particular we support the guiding principles identified in the Green Paper and agree that:

• stability is required to ensure the continued functionality of the Internet as a global system;
• competition provides an effective means of promoting innovation and delivering greater consumer benefits;
• private bottom up coordination is preferable to government prescription; and
• mechanisms should be established to ensure Internet decision making reflects the views of stake holders world wide.

However we believe that these principles could be better realised, and the benefits of moving to a fully self-regulatory model enhanced, if changes were made to the proposed strategic approach in a number of key areas.

In particular we would stress that a not-for-profit, self-regulatory body, established to provide governance over appropriate domain name matters, should be truly representative of the broad range of Internet stake holders world-wide, and should be structured in a way that enables appropriate responsiveness and accountability to stake holders in the many countries that use the generic top level domain system.

We also believe that the Green Paper does not clearly articulate an appropriate balance between enhancing competition in domain name services, and identifying functions which would more appropriately be managed on a not-for-profit basis in the public trust.

The Green Paper also fails to make reference to the other key process of international domain name reform that has taken place through the development of the generic Top Level Domain Memorandum of Understanding (gTLD MOU). We do not necessarily support the gTLD MOU in its entirety, but believe that there are elements of this process that are, at the very least, worthy of consideration by the US government in developing its strategy for domain name governance.

Below we articulate our specific concerns with the Green Paper, bearing in mind that a number of these concerns have been addressed in discussions with Mr Magaziner.

1. Risk of unduly dominant role for US jurisdiction and interests

The gTLD is a domain name system that is intended for use by all nations. Industry self-governance over this system should reflect this objective, and should be fully inclusive of international stake holders. Failure to provide for real and effective global participation in self-governance would risk fracturing the gTLD as a global system, to the severe detriment of the Internet as a global, ubiquitous network.

Similarly there should be provision within the gTLD governance structure for equitable opportunity to compete in the gTLD service market for companies from all countries that use this domain space. Any governance outcome that provides unfair opportunities for a company (or companies) from a particular jurisdiction, is not acceptable, and is contrary to the principles of free and open global trade.

In this context we note that:

1. The proposals in the Green Paper would place the not-for-profit governing body under US jurisdiction. As a result the body would be subject to the US law and US courts, and, without appropriate measures to ensure adequate rights to non-US interests, could unduly benefit US-based stake holders.
2. Given the current predominant influence of US interests in the gTLD, and given that the governing body is proposed to be under US jurisdiction, it is likely that, unless appropriate measures are put in place, representation on this body could be dominated by United States interests, to the detriment of non-US stake holders.
3. The proposals in the Green Paper would preserve and entrench the current US commercial dominance over domain name service, particularly in the key .com, .net and .org registries, unless appropriate measures are put in place.
4. The proposals in the Green Paper would result in US jurisdiction over the vast majority of inter-jurisdictional trademark disputes, to the disproportionate advantage of US-based trademark holders.
2. Representation and accountability concerns
1. The governing body, as proposed in the Green Paper, does not ensure the appropriate level of broad representation from international stake holders.
2. There is not adequate consideration in the Green Paper of how the governing body should be accountable to national governments.
3. There is no mechanism articulated in the Green Paper for appeal to an appropriate arbitration process for those bodies, companies or individuals disaffected by decisions of the body.
3. Anti-competitive effects
1. There is very little effective portability for end-users between gTLDs, particularly once registration has taken place. Therefore there is very limited opportunity for effective competition between registries. The proposal to allow for-profit registries to provide monopoly service in separate gTLDs, unless closely regulated, is not likely to result in increased competition and enhanced choice for users, but is more likely to lead to anti-competitive outcomes, such as price gouging and customer lock-in.
2. The database of names in the registry system should be owned by the governing body, in trust for the public, and the registry system should be managed by the governing body.
4. Concerns over trademark and dispute resolution
1. The proposals in the Green Paper would result in trademark and dispute resolution being subject predominantly to the US jurisdiction, giving extra-territorial operation to US trademark law;
2. The proposal in the Green Paper that there be multiple registries, each with its own standards and procedures for dispute resolution, is likely to be confusing and difficult for both domain name and trademark holders.
3. The Green Paper does not adequately promote international dispute resolution procedures, which could remove much of the cost and inequity of resolving disputes within particular national jurisdictions.
5. Concerns over transition strategy
1. The Green Paper proposes undefined "policy oversight" powers to the US Government until September 2000. There is no restriction placed on the powers of the US Government in this regard. This would subvert the self-regulatory process, and the role of the governing body.
2. The Green Paper proposes specific US Government action in a number of detailed operational areas. These decisions and actions should be the responsibility of the governing body.

The following proposals have been developed as a result of discussions that have taken place among Australian stake holders, and also from discussion with Mr Magaziner at meetings in Australia on 17 and 18 April, 1998.

1. Operation of the registry system

The registry system should be managed, in the public interest, by the new governing body. Ownership of the database, and the names and numbers held within it, should rest with the governing body. The governing body would not necessarily operate the registry, and could seek to optimise any benefits available from the development of competition in the delivery of registry service, but should only do so within the context of a comprehensive policy framework that provides safeguards against anti-competitive behaviour, that ensures open and transparent tendering processes, and that allows fair competition between registries. It is our understanding from Mr Magaziner that this position is consistent with the current views of the US Administration.

In order to minimise inter-jurisdictional anti-trust litigation, the articles of association (or equivalent instrument) of the governing body should, through bilateral agreement, reflect the key competition policy principles of relevant jurisdictions.

For example, Australia would propose that its policy approach to enhancing overall competition, through limiting competition in one particular area, is driven by the following principles:

1. "to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection." (as reflected in the objectives of the Trade Practices Act 1974);
2. full and open competition should be supported, unless it can be established that there are public benefits, and increased efficiencies, in limiting market entry or competitive activity; and
3. there should be fair representation on boards and other decision-making fora, to enable the views of all market participants and interested persons to be taken into account.
3. Representation on the governing body

User representation on the board of the governing body should be selected by an advisory user group, constituted to provide equitable representation from all regions or countries with a legitimate interest in the gTLD system. Legitimacy could be established through a range of criteria, broadly aimed at identifying the level of per capita Internet adoption and use within countries. This user advisory group should be established with an ongoing charter to discuss and develop policy views on the governance of the gTLD.

We also propose that the term for all board representatives should be limited to a set period, with no capacity for such members to seek additional terms of office, to ensure that particular interests and views are not entrenched over time.

4. Establishing the governing body with effective accountability mechanisms

• ensuring that relevant governments have standing to raise appropriate concerns with the board;
• establishing an administrative appeals process that provides an open, transparent and fair avenue of appeal for disaffected parties, including, if feasible, optimising opportunities for parties to seek redress within their own jurisdiction; and
• ensuring that key principles for fair and open decision-making are reflected in the articles of association (or equivalent instrument) of the governing body.

1. Establishing a structure and charter for the governing body

Neither the US Government, nor any other body, should prescribe detailed operational policies or procedures for the governing body. The limit of US Government involvement, in consultation with other key stake holders, in the development of the new governing body, should be to

1. establish its membership, legal structure and broad powers;
2. establish its broad objectives; and
3. establish principles to guide both its technical and non-technical decision-making, in the best interests of end-users (NB appropriate principles are identified in the body of this document).
2. Transition arrangements

During the transition period the US government should only intervene to alter any decisions of the governing body, as a last resort, in the event that it believes the operational stability and viability of the DNS system is fundamentally threatened. Such action should only be taken after appropriate consultation with both the governing body, and the international Internet community, including relevant governments. Mr Magaziner indicated to Australian Government officials that he was supportive of this approach.

3. Trademark/domain name dispute resolution

(These comments respond specifically to the proposals within the Green Paper, and address those proposals in the same sequence as they are presented in the Paper.)

The title is somewhat misleading: the proposal includes elements that are far broader than purely technical management. For example, policy decisions of the proposed self-governing body for the creation of new gTLDs would clearly need to be based on a wide range of policy considerations, including competition outcomes and consumer benefits, as well as technical matters.

This section refers to the role of the US Government in seeking to promote reform of global domain governance, but omits any reference to the other major international process for domain name reform; that is, the development of the gTLD-MOU, and associated structures to increase competition in the gTLD within a self-governance framework. We believe this is a significant omission, both in this section and in the body of the proposal: we believe it would have been highly instructive for the Green Paper to have articulated the US Government’s views on both the strengths and the weaknesses of the gTLD MOU proposal.

We also believe that an historical perspective of the development of the gTLD name space would have been valuable in this section, particularly in order to highlight that the development of the gTLD as a "de facto" US domain, particularly in the .com TLD, is purely an accident of history, and contrary to the original (and ongoing) objective for its deployment.

A full description of the background to the development of the Green Paper would also have been useful.

We support the four key principles for a new domain name system proposed in the Green Paper. However two additional important principles could be added to this list. They are:

2. Maintaining the public trust

The domain name system provides a fundamental foundation for the operation of the Internet. The database of names, matched to numbers, within the DNS is held and managed by the registry (or registries) in trust for the public of DNS users. This database, and the names in it, is not a commodity to be owned, traded or otherwise exploited by providers of DNS services.

1. Accountability through effective self-regulation

We agree that there are a number of elements of the operation of the global DNS that need to be coordinated and regulated, and other elements that should, to the fullest extent possible, be subject to open competition.

We agree that there needs to be an appropriate level of technical coordination for the effective, reliable and robust operation of the DNS and the Internet. We are in substantial agreement about the range of technical coordination functions proposed in the Green Paper: however it is our view that the fourth proposed technical responsibility, to "coordinate the development of other technical protocol parameters", may well be usurping the legitimate role of the Internet Engineering Task Force. We propose that "development" should be replaced with "assignment", and have been advised by Mr Magaziner that this change will be made.

We propose that the guiding principles for technical policy making should be

1. to maintain the operational stability of the Internet as a ubiquitous global system through ensuring a domain name system that is robust, scalable, redundant, and secure: and
1. in particular, to ensure appropriate coordination of those functions that contribute to ensuring that the domain name system operates as a fully interoperable, globally networked system.

The Green Paper is unclear about what role the governing body should have in non-technical policy areas. All it says is that "overall policy guidance and control of the TLDs......should be vested in a single organisation." We believe that this is statement is inadequate, and that the rationale for this approach needs to be clearly articulated.

The Australian Government believes that the governing body, under its charter to coordinate the registry system, should be responsible for policy development on a range of non-technical standards and rules, relating to areas such as naming rules, consumer protection, and the creation of new gTLDs. We believe that a totally laissez-faire approach to the development and operation of the gTLD would lead to uncertainties and confusion for service providers and users alike, to the detriment, and perhaps ultimately the breakdown, of the utility of the gTLD system.

In order to create a clear, predictable, equitable environment for registries, registrars and end-users, the governing body will need to create a comprehensive policy framework for the creation and operation of gTLDs, including full justification for the standards and rules it proposes.

While the responsibility for creating that detailed operational policy framework (and detailed criteria) should rest with the self-governing body, we believe that the principles, under which this detailed policy framework should be developed, should be articulated within the governing body’s charter. The following indicative principles are proposed to guide the governing body in its policy development:

1. the overall objective should be to ensure a minimalist regulatory environment, and minimum interference with the competitive market for the delivery of domain name services;
1. regulation (including the creation of new gTLDs) should only be undertaken to protect or enhance the overall functionality and effective operation of the gTLD as a name system, including meeting the particular needs of particular user sectors;
1. regulation (including the creation of new gTLDs) should be based on achieving demonstrated benefits to users of the Internet;
1. Regulation (including the creation of new gTLDs) for specific sectors or classes of users should be based on appropriate consultation, at an international level, with stake holders in the sectors affected; and
1. Regulation imposed on particular gTLDs should not result in disadvantage for users of those gTLDs compared with users of comparable (and therefore substitutable) other gTLDs.

We do not support the view, expressed in the Green Paper, that unfettered competition can be allowed in the delivery of registry services (as opposed to registration services). We support the view, widely expressed by others, that the registry function is a natural monopoly and, because domain names are stable, quasi-permanent, and therefore to a large degree non-portable, a multiplicity of new, competing, unregulated registries will not result in increased competition and enhanced choice for users, but in a multiplicity of monopolies, and the real risk of anti-competitive outcomes, such as "price gouging" and customer "lock-in".

We believe that the names held within the database(s) of registries should be held in trust for the public of domain name users, rather than being the property of service providers. We also believe that the registry function should be managed, by the governing body, in the public trust. This means that

1. the database of domain names in the registries should be owned by the governing body rather than by commercial interests ,and should not be subject to commercial exploitation; and
1. the governing body should develop a comprehensive policy framework, based on key principles as proposed in this paper, to ensure that both technical and non-technical standards and rules are developed in the best interests of users.

The governing body could contract with the private sector for the commercial delivery of registry service on its behalf, but, if it does so, it should ensure that measures are put in place to prevent anti-competitive practices and outcomes.

In this respect we reiterate our view that the potential for effective competition in this area is limited by the nature of the registry system itself: that is;

• it is not possible, for technical reasons, to have meaningful registry competition within individual gTLDs;
• competition between registries is diminished by lack of portability of domain names for users, once registration has taken place;
• registry service is largely a standard function, with little opportunity to differentiate product; and
• the development of the registry system to date has resulted in one company (Network Service Inc), which provides service in .com, .net and .org, possessing an inordinate degree of market power.

Policies for the development of competition in registry service therefore need to take into account these limiting factors, as well as the need for the governing body to provide governance over gTLD registries across a range of non-technical matters, in the interests of end-users.

Within this framework we believe that it is possible to achieve a level of competitive delivery of registry service that could provide benefits to users, as well as business opportunities for service providers. Such competition could occur both in tendering for the delivery of registry service in particular gTLDs, and then between registry service providers in comparable gTLDs. While we would not be overly prescriptive about how competition might be enhanced in this area, we would, at the least, propose that the governing body should adopt the following strategies:

• requirement for an open tendering process for the provision of registry service in all gTLDs;
• price caps (at both ends) where appropriate, to prevent both monopoly rents and predatory pricing, while allowing some pricing flexibility to allow price competition, and to reflect increased efficiencies over time;
• contractual arrangements which allow appropriate regular review of service delivery, as well as the capacity to terminate contracts that do not meet strict quality requirements;
• contract terms which balance the need to ensure contestability within gTLDs on a regular basis with the need for service providers to amortise capital investment over a sufficient period; and
• the need to ensure that, to the greatest extent possible, competition takes place between registries on fair and even terms.

It is our view that the proposed structure of the proposed governing body, as outlined in the Green Paper, is inadequate to represent the interests of the broad global community of Internet users.

1. The proposed organisation is accountable only to the US jurisdiction: the organisation should therefore be established under arrangements that require the board to have appropriate regard for any legitimate concerns expressed by international stake holders that their interests are being unfairly ignored or subverted.

• transparency and fairness: appeal processes should ensure objective consideration of complaints, and should be articulated in the governing body’s articles of association (or equivalent instrument);
• accessibility: information about the governing body’s appeal processes should be readily available, and to the greatest extent possible, appeal processes should be located within the appellant’s jurisdiction. Further consideration of the feasibility of the governing body referring appeal processes to the appellant’s local jurisdiction should be undertaken.
• Electronic processes should be an important element of achieving accessibility.

1. There is no clear mechanism in the Green Paper for ensuring that user membership on the board would be broadly representative of the global community of users, and could not be dominated by a particular jurisdiction, or even by a particular sector within a particular jurisdiction.

The Green Paper states that the new governing body should be "funded by domain name registries and regional IP registries". The Green Paper is not clear on what proportion of funding responsibility it proposes should be born by regional IP number registries. These organisations, who are not well-placed to provide significant funding, and which would not be significant beneficiaries of the governance process, should not be required to be major financial contributors to the governance structure.

If the organisation is placed under US jurisdiction, funding for the new governing body should principally be drawn from the domain name registration process. Given that we propose close regulation by the governing body over the operation of registries, we suggest that the most efficient funding method may be a levy on registries, on a per registration basis, which could be factored in by companies when bidding to provide registry service. Such a levy system would be fair and appropriate: there are many precedents at the international level for such an arrangement.

We have concerns with the proposal for the US Government to maintain "policy oversight", potentially until September 2000.

Our major concern is that it is very unclear from the Green Paper as to the extent that this would allow US Government control over decision making processes of the governing body. At one extreme such a "policy oversight" function could be interpreted as allowing a right of veto by the US Government over all decisions of the new body.

We recognise and share the concern of the US Government, and many other key stake holders, about the importance of the DNS and the gTLD as an essential component of the Internet infrastructure, and therefore the priority to maintain it as a stable, reliable service. We support the concept of a transition period in which the US Government would have the right to intervene, if the stability of the system was being fundamentally threatened.

But at the same time we need to promote the integrity of the self-governance process, and to ensure that the decisions of the governing body are not undermined. Therefore the circumstances under which US Government intervention could take place during this transition period need to be carefully prescribed, and limited to "last resort" action to protect the operational stability and viability of the DNS system.

We also propose that agreement be established between the US Government and the governing body that such "last resort" action should only be undertaken after an appropriate level of consultation with both the governing body and with the organisation of users, representing the interests of the international community of users, including relevant governments.

We support the Green Paper proposal that open competition amongst registrars on a global basis should be maximised, and should be bound only by rules and standards (both technical and non-technical) for the operation of gTLDs, that have been developed by the governing body, in the best interests of users, and within a clear, consistent policy framework.

We propose that there should be no limit on the number of registrars, and registrars should be allowed to operate in any number of registries.

The proposal to create five new gTLDs immediately, before the establishment of the governing body, is not supported. Decisions on the creation of new gTLDs should be the responsibility of the new governing body, operating within a policy framework that is based on appropriate principles set out in the organisation’s charter.

Given that we believe that the registry system should be managed by the governing body in the public trust, it follows that the creation of new gTLDs should be on the basis of improving the functionality of the DNS system, rather than to increase business opportunities for new registries. Improving the functionality of the system could include meeting the DNS needs of particular sectors or classes of users, as well as providing alternative name space for classes of users in extensively used domains, such as .com.

The rules and standards for the operation of new gTLDs should be established by the new governing body. Again, such rules and standards should be developed according to appropriate policy principles, and within a clear and consistent policy framework.

The Green Paper states that "existing national registries will continue to administer country-code (cc)TLDs if these national governments seek to assert those rights". We understand that, in a number of jurisdictions, including Australia, country-code governance is still undertaken by individuals under delegation from IANA. It is not clear from the Green Paper whether this authority to delegate would be transferred to the new governing body, and if so, what process is proposed for vesting full (rather than delegated) authority for governance of any particular country-code TLD to an entity (government or otherwise) within that country’s jurisdiction.

To correct this historical anomaly, we propose that delegation powers for the governance of cc TLDs be vested in the new governing body, but that the governing body be required to accede to any request from a national government to transfer authority for ccTLD governance to a body designated by that government, provided that appropriate consultation has taken place with that country’s Internet stake holders. We believe that such a mechanism could remove unfair pressure from voluntary country code administrators, who are now facing significant and weighty decisions, in the face of growing calls to move the governance of ccTLDs to a more professional basis.

For its part, Australia is interested in promoting the aspirations of the Internet sector in this country to move to a self-regulatory model for governance over the .au namespace.

We view trademark and other property dispute resolution issues as critically important to the operation of the DNS, and we support all efforts to deter piracy. We are of the view that trade mark issues are already a significant area of concern among users, and that it is likely that this level of concern is not being reflected in the level of formal disputes, only because of the complexity and uncertainty of the environment in which such disputes can currently be resolved.

We make the general point that the structure of establishing trademark rights does not map smoothly onto the DNS structure, particularly in the gTLD. The fact that the gTLD operates across both national boundaries and industry sectors means that multiple trademark holders could have equally valid claims for a particular name.

Such competing valid claims could lead to an extensive and costly level of disputation, unless the governing body develops a uniform policy framework, that seeks to minimise disputes through appropriate name allocation policies, and that establishes a non-court based system of alternative dispute resolution, preferably through the auspices of an appropriate international agency, such as the WIPO. We recognise that trademark holders should maintain their rights to seek redress in national jurisdictions, should they so wish.

We agree that online dispute resolution procedures, within a defined time frame, could prove effective in reducing the cost and effort of the above processes, bearing in mind that access to the processes identified above should be available in the event that dispute resolution online is not achieved.

We are supportive, in principle, of establishing within the structure and operation of gTLD registries, facilities and processes to allow trademark holders to more easily identify domain name users who may infringe their rights . We also support the onus being placed on domain name applicants to certify their intention to use the domain name, and not infringe the rights of others.

The concept of creating a mechanism for "clearing" trademarks is not adequately explained in the Green Paper, particularly in regard to defining what is a "famous mark". We are therefore unable to comment on this proposal.

We do not support the proposal that each name registry should be able to establish separate trademark protection and dispute resolution measures. While it is acknowledged that different gTLDs may benefit from having additional procedures in this area, variations in approach should be kept to a minimum, to ensure consistency and certainty. Given that we are advocating a registry system managed by the governing body in the public interest, it is appropriate again that coordination in this area be the responsibility of that governing body.

Any decision to review the root server system should be the responsibility of the self-governing body, in the normal execution of its professional responsibilities.

We support the proposal for the US Government to pursue strategies to enhance commercial use of the .us country code name space, as a means of relieving the pressure on commercial domains in the gTLD.

We make no particular comment on the adequacy of the proposed technical standards for registrars and registries, or on the proposed minimum dispute resolution procedures. However we again make the point that that these detailed operational matters should be the responsibility of the governing body, rather than being prescribed at this point by the United States Government.