Posted for Dr. Donald Telage of Network Solutions, Inc. the operator of the InterNIC Domain Name Registration services, is the following proposal addressing the need for an evolution of Internet governance based in a free market to encourage industry investment, which provides for consumer choice and competition, and which keeps government involvement to a minimum legal framework. I've enclosed a text version of his paper. HTML, PDF, text, MS Word, and RTF versions of the paper may be found at the URL: http://www.netsol.com/papers/internet.html We welcome comments regarding the paper at the address: comments@netsol.com Tom --- Tom Newell tomn@internic.net +1 703 742 4796 Mngr, Info & Educ Svcs InterNIC Registration Services PGP Key fingerprint = 5E 86 3D 13 73 19 69 08 6B 54 6A 7D AD A2 37 6D ################################################# At the April 14, 1997 meeting of the Federal Networking Council Advisory Committee, I presented a proposal for a comprehensive and practical concept for Internet administration. Network Solutions prepared this position paper in response to the initial work of the Internet Society sponsored International Ad Hoc Committee which examined similar issues but ignored the critical functions of Internet governance. Attached is a revised version of that proposal which reflects the many supportive comments of both industry and consumers. It is Network Solutions belief, that the Internet stands poised to make great positive social and economic change to our international community. But for it to occur, the global Internet needs to evolve through free-markets, with open competition and consumer choice. Further, its governing institutions need to be grounded in a simple legal framework with minimal government involvement. This paper outlines an approach which considers the key functions of Internet administration, encourages competition in the provision of registration services, and proposes a realistic structure for the transition of the management of all of these functions and services through appropriate, yet unobtrusive, government oversight. regards, Dr. Donald Telage Senior VP Internet Relations ######################################### Version 1.1 April 17, 1997 http://www.netsol.com/papers/internet.html SECURE INTERNET ADMINISTRATION AND COMPETITION IN DOMAIN NAMING SERVICES As the Internet strives to obtain the same level of stability and cohesiveness as other global communication systems, the performance of certain key administrative functions have become the subject of debate. The most critical of those functions are essential to the stability of the Internet, and need to be performed on an integrated basis. The balance of these functions could be performed by multiple parties in an open competitive environment without jeopardizing the future of the Internet. In this paper, Network Solutions, Inc. presents a comprehensive, consistent and practical concept for Internet administration: 1.) It proposes an integrated approach for secure administration of the key functions of the Internet. These are the management of the top-level routing databases, the allocation of dwindling Internet Protocol (IP) numbers, and the assignment of important network identifiers. The performance of these functions needs to be consolidated in a single integrated entity or organization. 2.) Domain naming services are identified as an administrative service that will benefit from enhanced competition. A model for creating that is presented which will result in increased investments in the Internet, greater choices for Internet users, expanded offerings, and reduced prices for basic services. 3.) Lastly, this paper proposes a realistic structure for the transition of management of all of these functions and services through appropriate, yet unobtrusive, government oversight. This proposed structure provides a badly needed stabilizing sponsorship for all of these Internet administrative functions and services that is required by the growing number of business (and individual) users of the Internet. THE ISSUE - THE INTERNET IN TRANSITION The Economist (October 19, 1996) "The growth of the Internet has been the most astonishing technological phenomena of the last decade of this century. In 1990 only a few academics had heard of it; now, anything up to 50M people use it. In a year's time, that figure could be 100M - so far the network's only constant has been that the number of people tapping into it has doubled every 12 months. If it is to become a commercial success, ... it has to change. Otherwise many of the qualities that brought it popularity will become liabilities." Communications Week International (January 20, 1997) "The debate about domain names is likely to be the last-and therefore the most significant-for the "old" Internet. Once the supply of domain names goes commercial there will be nothing left to debate..." "So the present hue and cry over domain names represents more than just a difference of opinion about a few details. It signifies the end of the old Internet and the arrival of the new. Subconsciously, this is what the debate is really about." As noted by The Economist, there has been an exponential growth in the number of individuals using the Internet. What is not noted is the massive parallel investment made by corporations, large and small, in the Internet for commercial purposes. Whole market segments now depend almost completely on the reliable and assured operation of the Internet for their very existence. The insights expressed by Communications Week International, although somewhat extreme, reflect the emotion that permeates the topic. This emotion must not be allowed to cloud our thinking. It is true that the recent phenomenon of substantial business investment in the Internet for commercial purposes, and the business community's growing reliance on the Internet as a commercial medium, are inconsistent with the informal volunteerism that supported the network's early development and permeates it now. It also is true that these same volunteers, whom we all owe a tremendous debt of gratitude, shaped and guided the Internet through its birth and adolescence. They will continue to provide the technical leadership in the future from universities, government agencies, and businesses, large and small. However, if the future success of the Internet is defined by its stability and continued expansion, then its underlying administration must be properly structured and sponsored by appropriate authority. Further, the major Internet administrative functions must evolve from government-funded research and development activities to enterprises supported by commercial investment. The success of this approach has already been demonstrated by the commercial evolution of the backbone, transmission systems, and access services. This progression to more structure and to commercial funding, however, is counter to the long-standing culture of the Internet, and will be resisted by some simply on principle. To a relatively small percentage of the total number of Internet users, "profit", the "market" , "commercialism" and "sponsorship" are held in disdain. They fear that such change will destroy the Internet. We are convinced that they are mistaken. Change is inevitable, and we believe that it is only through appropriate market economics, and stable governance that the Internet will thrive and reach its full potential. What major Internet functions and services are at issue, what is their current status, and how should each of them evolve? Under what structure would they best prosper? These are the questions that we attempt to answer in this paper. BACKGROUND - GROWTH DEMANDS CHANGE For some years, the single point of authority for Internet names and IP numbers and network identifiers has been the Internet Assigned Numbers Authority (IANA) operating out of the University of Southern California (USC) Information Sciences Institute (ISI). This is currently a four person operation led by Dr. Jon Postel, who has been its director since its inception. (The entire community is indebted to Dr. Postel for his pioneering work.) Throughout this entire period, the IANA has made all decisions concerning the Domain Name System (Domain Name System) and numbers, albeit at the perceived consensus of the "Internet Community." During this period, the IANA has issued more than 200 exclusive franchises to Internet name registrars around the world. This system worked reasonably well while the volume of registrations was very small and the Internet was non-commercial. The end of 1994 brought the beginning of real growth on the Internet. With the rapidly increasing number of users registering for domain names, some of the registries began to impose user fees. On September 14, 1995, the National Science Foundation (NSF) authorized the imposition of user fees for the registration of second-level domain names within the .com, .org, .net, .edu, and .gov top-level domains in the operation known as the InterNIC. In addition to domain name registration, the fees support other critical Internet administrative functions performed by the InterNIC. These are: * Online Internet Information Services for new Internet users worldwide; * Worldwide online lookup service for domain names; * Administration of Internet Protocol (IP) numerical addresses for the Americas; * Management of the .us top-level domain; * Operation of one of the nine root-zone servers worldwide; and * Receipt and review of applications for all new top-level domains and implementation of them, following IANA approval. The imposition of user fees was deemed necessary to fund the administrative support required by the explosion in the number of commercial Internet users registering directly in these top-level domains (TLDs). User fees were implemented on the advice and consent of the NSF. This decision was vehemently opposed by longtime users of the Internet, who had become accustomed to receiving government-subsidized Internet functions and services. Internet name and IP number registrations, information services and directory services had been supplied free of user fees by a series of U. S. government-funded contracts awarded pursuant to the NSF in 1992. Network Solutions, Inc. (NSI), performed without charge all of these functions and supplied all of these services through a competitively awarded contract with the NSF. (NSI is the only TLD registry to operate under a government contract, and the only registry which had to compete successfully to receive its franchise.) After NSI's cost plus government contract with the NSF was amended to eliminate the government subsidy and converted to a user fee-funded approach, NSI became the target of much of the criticism. NSF personnel will privately acknowledge that the commercialization of this activity was critical to the survival of the registration service. NSI's major investment in personnel, hardware and software, and communications systems has allowed these functions and services to keep pace with the triple-digit annual demand for growth in domain name registrations over the last two years. Registrations have risen from less than 200 per month to more than 95,000 per month in less than two years reaching 1.2 million as of this writing. In spite of this growth, these private investments by NSI have allowed the InterNIC to reduce the timeline for registration from approximately four weeks to less than 24 hours. This is a strong example of the power of private investment and commercial incentive to produce enhanced services. Recently, increasing numbers of registration service organizations for top-level country domains have imposed similar annual user fees. The imposition of user fees typically corresponds with improvements in service. Many of these registries are "for-profit" concerns which charge considerably more than the registration fee currently charged by the InterNIC even though they only supply a fraction of the services. Further, registries such as co.uk, under the United Kingdom TLD, blur the distinction between ISO 3166 country codes and "generic" TLDs. The domain co.uk is, in actuality, a "generic" TLD for commercial companies headquartered in the UK. The ISO 3166 country code for Great Britain is .gb. Like .us, it is not yet extensively used. This situation, however, appears to be changing. Even though still subsidized by NSI, commercial fees have been introduced into the .us TLD in the last year. Aspiring entrepreneurs have received (and continue to receive) from the IANA exclusive franchises to register .us domain names in selected geographic regions of the United States, each charging fees that each deems appropriate. Further, this new commercialism has generated dozens of new creative businesses, which supplement and expand registration services. For example, NetNames, as a service bureau, registers domain names for businesses in over 190 countries for a one-time fee. In another example, NameSecure will do a name lookup and reserve available names for their clients. These are just two of the many examples. Numerous companies are entering the market for name reservations and registration. ONE VIEW OF THE FUTURE - THE IAHC In an effort to increase the number of TLDs with international scope and to introduce more competition into the registration of Internet names, the Internet Society (ISOC) assembled a group of 11 individuals to form the so-called International Ad Hoc Committee (IAHC). On December 19, 1996, the IAHC began a dialogue with the Internet community concerning the future direction of domain name registration which culminated with the issuance by IAHC on February 4, 1997 of its final proposal. This paper is NSI's response to the final IAHC proposal and offers an alternative vision of the future. It should be noted that NSI strongly supports the introduction of enhanced competition in domain naming services. We believe the introduction of additional TLDs should be accomplished in a way that creates greater worldwide investment, expanded service offerings, and more choices for Internet consumers. The final IAHC proposal raises a number of important issues for full discussion in a much wider circle (especially the business sector, which was not consulted). Already, the IAHC and the Internet Society have been named in a legal suit to enjoin them from implementing their proposal. Should the proposal move forward, more challenges are sure to come. For those unfamiliar with the proposal, we feel it is defective on five key points: 1. The IAHC proposal does not provide the incentive for TLD registrars to invest in improved services. In calling for "shared TLDs" and geographic market restrictions, the IAHC proposal will curtail the development of a truly competitive environment, and will dilute the effectiveness of market forces. The IAHC proposal does not recognize the need for market branding in the commercial world. Legitimate corporations will not invest time, stockholder capital, and other resources in "shared" brands. 2. The proposal risks the fragile stability of the Internet. The IAHC proposal is too complex to succeed. It calls for an immediate shift to international administrative control by Internet-inexperienced and currently non-existent organizations. It unnecessarily increases the likelihood of failure of the administrative functions and services of the Internet. The development of a reliable North American shared database in the administration of telephone numbers took years. Introduction of shared name registration in the near term is destabilizing. Stability is the critical factor in the growth of the commercial Internet. Proposed changes need to reflect this reality. 3. The IAHC proposal approach is too bureaucratic. The IAHC fails to recognize and trust the ability for market dynamics to proliferate and improve services. It is not a pro-competition proposal; it is an attempt to establish a multi-source, extremely regulated environment for the administration of a small subset of existing TLDs. A multi-layer bureaucracy is not justified. 4. The proposal is narrow and does not address the total situation. While detailed in its discussion of a small subset of the hundreds of currently existing TLDs, the IAHC proposal remains silent on the three truly critical functions of Internet administration: the allocation of IP addresses, the management of Internet identifiers, and the administration of the "dot" ( the root of the TLD structure and the global servers that support it). These three functions are fundamental to any discussion of Internet address administration, and they require neutral oversight, management, and control. (See Figure 1 for the complexity of the current administrative structure.) Further, the IAHC proposal does not even address the vast majority of the currently existing Internet TLDs, many of which are commercial. It is selective and specifically aimed at NSI. 5. The IAHC proposed approach to domain name disputes appears unworkable and will create increased conflicts. The IAHC proposal is overly-ambitious, and assumes that Internet domain name disputes can be dealt with through goodwill and online arbitration. Simultaneous registration of domain names by multiple global registrars will create a global litigation nightmare. The technology for simultaneous time-stamping of registrations for 28 global registrars operating in the same domains will add an enormous dimension to the dispute problem. The IAHC proposal jeopardizes the progress made in stabilizing and managing the explosive growth without providing any tangible benefits. The problem of domain name disputes on the global Internet cannot be adequately resolved by an arbitration body lacking international or at least national judicial authority. The dispute problem requires a body of international law or, at least, civil procedure, that is specifically applicable to domain names and trademarks. Ask the question "Which body of trademark law will govern the online arbitration contemplated in the IAHC proposal?" and observe the thundering silence. Trademark owners world-wide will continue to sue in court for their rights as they have always. We applaud the IAHC for their initial proposal, but we encourage expanded discussion. NSI, and many others, have concluded the IAHC proposal cannot be supported as proposed. The IAHC proposal differs substantially, and deeply, from what we believe is necessary for the Internet to change and to flourish. The IAHC, which holds no legal authority, has proposed a plan which threatens the speed and stability of Internet registration, and offers a complex new bureaucracy without introducing effective competition. The IAHC proposal does not even discuss IP allocation or administration of the "dot". The IAHC proposal is based in regulation and control. Our industry-driven plan is based in free market competition. Figure 1 [ http://www.netsol.com/papers/internic.html ] FIVE GUIDING PRINCIPLES FOR NSI'S PLAN We have set forth a short set of guiding principles to broaden the discussion to encompass all of the important issues. These principles enhance competition and are necessary to secure and safeguard the key functions of the Internet. 1. LIMIT REGULATION Domain name registration should be driven by the marketplace and commercial interests; it should not be unduly regulated. It has been demonstrated time and again that an unregulated or limited regulatory approach is the most cost effective and eliminates the need for publicly-funded or artificially-funded regulatory structures. No other approach will encourage investment in registration and ancillary services with the same intensity. Under this approach, the customer, not a governmental bureaucracy, is king, ensuring the highest levels of service and service offerings. Customer demand creates a built-in incentive to generate improvements in service, the development of additional services, and the most creative solutions to evolving problems. The non-regulatory approach also offers the only possible funding model through which the level of service can expect to meet the level of demand. 2. LIMIT BUREAUCRACY Domain name registration is not, and should not be, a "public trust" managed by newly created, bureaucracies. The notion that TLDs or second-level domain names are a "public trust" is based on a number of misconceptions. It is assumed that second-level domain names are a limited commodity that, unless somehow regulated, will run out. This assumption is unfounded, as the number of second-level domains in each TLD is, for all practical purposes, limitless (37 to the power 26). Even the number of short domain names is significant. There are more than 25,000,000 second-level domain names of a length 12 characters or less in each "generic" TLD for each person on earth (approximately 4 billion). We should not confuse the potential domain name space with such concepts as "radio spectrum," with its inherent physical limitations. What we are actually discussing are appealing monikers, which have the powers of brand identification, and in certain instances have legal trademark implications. Under our vision, TLDs (and second-level domains) will be developed as brands by competitors entering the Internet. Internet entrepreneurs and Internet end users must be allowed to decide the selection of TLDs. There is no need to limit the number of TLDs, or pre-select the TLDs themselves. In fact, market forces, not committees, should determine the most desirable brands. TLD branding and ownership, not bureaucracies, will foster increased choice by Internet consumers and increased investment by TLD providers. 3. MINIMIZE REQUIREMENTS Any requirements for competition for the administration of TLDs (and second-level domains) should be minimized. All who meet minimum technical and financial criteria should be allowed to become a registrar. Random drawings, "lotteries", or restrictions on the number of registrars to administer TLDs is bureaucratic, overly regulatory and contrary to market competition. While such a proposal may appear "fair," it will not generate what is best for Internet end users. Allow anyone with the minimum capabilities to apply to become a registrar. Those who wish to compete should present their qualifications, become a registrar, and allow the market, not a lottery, to select the most capable or cost competitive providers to survive. The Internet should benefit from, not repeat, the lessons of history. As demonstrated in the now abandoned lottery process which created huge arbitrage windfalls for cellular franchise winners, these schemes are unfair. 4. PROTECT CRITICAL FUNCTIONS The administration of the "dot", its associated servers and the allocation of IP addresses create the present stability of the Internet. In contrast to the registration of domain names, these critical administrative functions must be managed in an integrated and cooperative manner. The "dot": The root of the Internet, referred to as the "dot", and the root servers connect domain names and IP numbers on the Internet. Together, the "dot" and its root servers represent the means by which a registrar of one TLD locates and connects with a registrar of another TLD, thus enabling the global Domain Name System to function. For the Internet to be connected and function, there can be only one "dot" and one set of root servers. (Future technology advances may change this, but not in the foreseeable future.) The "dot" and root servers must be managed in a neutral, cooperative, and integrated manner. The management of the "dot" and its associated servers must respond to the needs of its constituency, namely all the registrars for the various TLDs around the world. IP Number and Internet Identifier Assignment: IP address space is limited and consequently must be allocated on an as-needed basis. Unlike domain names, IP addresses are exactly analogous to "radio spectrum." Further, because of the technical realities of routing over the Internet, allocation must be carried out in a manner that preserves the "route-ability" of allocated addresses. This process is highly technical, and is governed by policies and procedures that consider the actual architecture of the Internet at any given point in time. IP allocation also must be managed in a cooperative manner. Correspondingly, the management of IP address space must respond to its constituency, namely the Regional IP Registries, the Internet Service Providers (ISPs) and Internet Access Providers (IAPs), as well as other major commercial users of IP address space. 5. ESTABLISH LEGAL SPONSORSHIP The administration of "dot" and its root servers and the allocation of IP numbers and Internet identifiers need to be anchored in a sponsoring legal authority which provides both legal protection and stability. It is no longer appropriate for these functions to be performed by volunteers. The current, growing crisis of authority in Internet administration needs to be faced squarely. For some years, the Internet Assigned Numbers Authority (IANA) has supplied leadership in this area. The source of the authority of the IANA is poorly understood. Perhaps the best way to explain the role of IANA is to say that the IANA has "historical authority" in matters related to Domain Name System and IP number assignment on the Internet. The growth of commercial interests in the Internet, and the flurry of recent lawsuits threatens to destabilize, if not dismantle, the present structure. The functions of IANA must be transferred and firmly anchored in an official, and impartial, granting and sponsoring authority. Any viable proposal for the Internet must address this issue. THE INTERNET: A SECURE FUTURE WITH COMPETITION & CHOICE This paper proposes a feasible implementation for proper administration of the "dot" and IP number allocation, and an unregulated, competitive environment, one driven by commercial investment realities for registration services. It is a draft and critical evaluation and refinement is invited. It is offered in the spirit of generating informed discussion to secure the best outcome for the Internet. The underlying administrative functions of the Internet are important components of the system. A wrong decision now will affect the Internet and its potential for years to come. The following plan recognizes the realities facing the Internet today, acknowledges the United States' historical and continuing leadership role in the medium, retains as much of the current process as reasonable, and adheres to five guiding principles outlined in the previous section. Finally, the plan, as outlined, is rational and easily implemented. The key points in the NSI proposal are: Transition the important functions now performed by the IANA to a legal authority. Eventually, the functions of the IANA need to be anchored in some international legal authority. It is our opinion that no such organization exists at this time. To allow the time to transition, and to establish the charter for such a sponsoring organization is envisioned, an interim sponsoring organization. A branch of the U. S. Government (perhaps a Federal Advisory Committee) would assume interim authority during a two-year transition period. The functions performed by the IANA relating to the "dot", IP numbers, and network identifiers must be institutionalized, and managed in a way that transcends individual personalities. burden of Internet decisions, and the potential legal exposure, are too great for any one person, or small group. This approach would allow a stable period of transition for public input and new processes to develop and mature structures. It is not unreasonable that the sponsorship of the U. S. government continue through these turbulent times. The Internet was primarily developed and funded by the U.S. Government and Research Community. Although the Internet has become a global communication medium, the U.S. government underwrote the development of the Internet both technically and financially for more than 20 years. In this case, a small amount of government sponsorship acts as a significant and stabilizing anchor for the activity. The growing number of legal actions surrounding the issue of legitimate, legal authority demands such sponsorship. Who has the authority? From where does the authority derive? These questions are being asked more frequently in knowledgeable circles. Select a contractor to manage the "dot" and its root servers. The importance of the "dot" to the functioning of the Domain Name System also requires neutral, stable management. A competitively selected contractor to manage the "dot" would provide accountability and stability. This contractor should: * Manage the "dot" and establish a set root servers for the "dot" world-wide, which may be actually managed by several other contractors to limit vulnerability; * Operate services pertaining only to the data related to the "dot"; * Maintain the data, updates and top-level directories for the "dot"; * Establish the minimum technical and financial requirements for TLD registrars, including both worldwide TLDs and the ISO 3166 country TLDs; and * Authorize the creation of new TLDs and their addition to the global Domain Name System. Allow all interested parties, who meet minimum criteria, to compete in TLD registration. Theoretically, there is no technical reason why the number of TLDs needs to be limited. There can be as many TLDs as there are second-level domains. The following approach is proposed: * All interested parties meeting minimum requirements would be allowed to compete in the TLD registration business. * Specific, individual, and exclusive TLDs would be proposed by each registrar, and would be issued on a first-come, first-served basis (with some limitation, e.g. 3 per registrar); * Each registrar would deploy and operate servers to support their own specific TLDs where they deemed appropriate, or contract this service from others; and * All TLD registrars would be assessed fees, based on business volume, to support the Domain Name System managing contractor. Registrars would establish their own operating procedures, including second-level domain name dispute policies, marketing, service standards, and collateral services consistent with their own brand identity for their own TLDs. Consumers could then select from among widely differing and competing concepts and price/service offerings. Competition will drive the services offered, quality, pricing, contract terms and other discriminators between registrars. Registrar databases would be proprietary. These proposed procedures eliminate the unnecessary complexity of the IAHC proposal, encourage investment by participating registrars, and guarantee an increase in efficiency and customer service. Establish three new Regional IP Registries to supplement RIPE and APNIC. The Regional IP Registries would continue to provide oversight for the management of IP address space and its allocation within their respective regions. The current proposal to establish three new IP registries ARIN, AfriNIC, and ALyCNIC should be accelerated. They are required to provide complete global coverage. Each regional IP registry should: * Allocate IP address space to ISPs and others in its region; * Maintain all data relative to its regional IP allocations; * Manage and assign inverse addressing (IN-ADDR) and Autonomous System Numbers (ASNs) within its region; and * Manage the root zone servers established within its region. * Continue to assess individual ISPs reasonable user and membership fees. CONCLUSION The importance of the issues presented in this paper cannot be over emphasized. The changes for the structure of the Internet which are suggested here are fundamental. Decisions on them will, in essence, define the stability, growth and shape of the Internet for decades to come. Unfortunately, the vast majority of Internet users are oblivious to the facts and these concepts. As a result of its position in the Internet, and its pioneering role in commercializing registration services, Network Solutions has a unique vantage point. It is our intent that this paper will educate the uninformed, and spur the uninvolved without alienating any group. It will take the combined skill of the entire Internet community to craft solutions that lead to the best path to the future.