For your information, Becky Burr, Associate Administrator of NTIA for International Affairs sent the following letter to the Internet Corporation for Assigned Names and Numbers:
Dr. Herb Schorr, Executive Director
USC Information Sciences Institute
4676 Admiralty Way
Marina del Rey, California 90292-6601
Re: Internet Corporation for Assigned Names and Numbers (ICANN)
Dear Dr. Schorr:
On October 2, 1998, the Internet Assigned Numbers Authority (IANA) made a submission on behalf of the Internet Corporation for Assigned Names and Numbers (ICANN)(1) 
in response to the National Telecommunications and Information Administration (NTIA) Statement of Policy entitled "Management of Internet Names and Addresses," 63 Fed. Reg. 31741 (June 5, 1998) (hereinafter the "Statement of Policy" or "White Paper"). The White Paper invited the private sector to come together and form a new, not-for-profit corporation to administer policy for the Internet name and address system (the "domain name system" or "DNS").
Based on a review of ICANN's submission, other public submissions, and on public comments on those submissions, the Department of Commerce regards the ICANN submission as a significant step towards privatizing management of the domain name system. Overall, the submissions we received supported moving forward with the ICANN structure. We note, however, that the public comments received on the ICANN submission reflect significant concerns about substantive and operational aspects of ICANN. We strongly recommend that you review and consider the many thoughtful and constructive comments posted at www.ntia.doc.gov . The submissions of the Boston Working Group and the Open Root Server Confederation, among others, articulate specific concerns, many of which we share. As you refine your proposal, we urge you to consult with these groups and others who commented critically on your proposal to try to broaden the consensus.
The White Paper contemplates that the United States would enter into an agreement based on the principles of stability, competition, private bottom-up coordination and representation. The public submissions and comments indicate that there are remaining concerns in the area of accountability (representational and financial), transparent decision-making processes, conflict of interest, and ICANN's proposed role with respect to country-code top level domains (ccTLDs). These concerns are described below in greater detail.
Under your submission, the Interim board is encouraged but not required to establish an open membership structure. Many commenters expressed the view that the principles of private, bottom-up coordination and representation set out in the White Paper are unlikely to be achieved in the absence of some type of membership-based structure. We believe ICANN should resolve this issue in a way that ensures greater accountability of the board of directors to the Internet community.
Commenters also pointed out that the ICANN submission does not describe a mechanism to ensure financial accountability to the members of the Internet community who will be funding the organization. The absence of transparency and controls in the budget process could impose unnecessary burdens on Internet users and endanger the long term viability of ICANN and thus the stability of the Internet. We are interested in knowing how you plan to address these concerns.
The White Paper envisions that the United States would enter into an agreement with a corporation that is governed on the basis of a sound and transparent decision-making process, which protects against capture by a self-interested faction. Commenters applauded your decision to provide notice of and seek public comment on any policies that substantially affect the operation of the Internet or third parties. But many submissions urged that the Board also regularly explain decisions that do not reach the level of "substantially affecting the interests of the Internet or third parties," suggesting, for example, that such explanations could be included in promptly published minutes of the board and other decision-making meetings.
In general, commenters emphasized the importance of establishing and guaranteeing open and transparent processes and avoiding the appearance of conflicts of interests with respect to the supporting organizations described in the ICANN proposal. For example, some commenters suggested that a system that permits officers and employees of the supporting organizations to serve on the ICANN board of directors threatens the independence of the board and should, accordingly, be prohibited.
The White Paper indicates that the United States is prepared to enter into an agreement with an organization that reflects the geographic and functional diversity of the Internet community. A number of commenters expressed concern about the proposed interim board of directors and called for the establishment of mechanisms to ensure equitable representation of the Internet community, including developing regions, based on a transparent and democratic election process. We are interested in hearing how ICANN intends to address these concerns as additional interim board members are selected and as the process for electing the permanent board is adopted.
One final issue raised relates to our assumption that national governments would continue to have authority to manage and/or establish policy for their own ccTLDs (except, of course, insofar as such policies adversely affect universal connectivity on the Internet). The ICANN submission, however, is silent with respect to ccTLD management, and we would appreciate an elaboration as to ICANN's intentions in this area.
We hope that ICANN is prepared to address the concerns listed above in a manner that is consistent with the principles of stability, competition, bottom-up coordination and representation. The United States intends to move carefully but expeditiously to privatize DNS management. We therefore look forward to hearing ICANN's response to the concerns expressed during the recently completed comment period, and to meeting with you to discuss these issues. Assuming that the concerns described can be resolved satisfactorily, we would then like to begin work on a transition agreement between the United States and ICANN. In keeping with our commitment to the principles of openness and transparency, we plan to continue to facilitate public participation in the transition process.
J. Beckwith Burr
Associate Administrator (Acting)
1. You state in your letter of October 2nd, that ICANN has been formally incorporated but has not elected a board of directors or adopted bylaws. Our response should not be construed as either approval or disapproval of the bylaws as presented or of the proposed composition of the interim board of directors.