by James V. DeLong
June 13, 2002

In 1998, the Department of Commerce, working with what is loosely called “the Internet Community,” embarked on a “grand experiment” in public/private governance to manage the Domain Name System (DNS).  It created the Internet Corporation for Assigned Names and Numbers (ICANN).   According to the DoC White Paper, ICANN was to serve as a vehicle through which DNS management could eventually be completely privatized.

Today, ICANN is in deep trouble, accused of becoming autocratic, imperialistic, over-centralized, undemocratic, secretive, unaccountable, and possibly corrupt.  A particular sore point is administration of the process for approving new Top Level Domain (TLD) names – the slowness of the process, its opacity, and its cost.

In fact, ICANN is more than accused.  It is convicted.  Everyone involved is calling for reform -- original supporter Esther Dyson says ICANN is full of “juvenile behavior” and “a real cesspool” – and even President Stuart Lynn accepts the need for change, while asserting that change is on track and needs only time.

At a June 12 hearing before a subcommittee of the Senate Commerce Committee, the issue was whether ICANN will be given a chance to reform.  Its basic charter, the Memorandum of Understanding (MoU) between ICANN and DoC expires in September, and if it is not renewed ICANN is toast.

A recent letter to Assistant Secretary Nancy Victory by a coalition of non-profits (including CEI) calls for DoC to “re-compete” the MoU when it expires.  The theory is that this would force ICANN to either change or relinquish control to companies that DoC deems “better alternatives.”  In addition, Senator Conrad Burns (D-Mont.) is considering legislation to condition MoU renewal on changes that would reduce ICANN’s power to set policy on TLDs while increasing transparency and due process.

However, it is doubtful that either of these approaches would get at the root problem, which is that ICANN has leveraged its authority over TLDs to become a regulatory agency.  As Roger Cochetti, Senior VP of VeriSign, told the Committee, this has “diverted significant resources,” “discouraged innovation,” “replaced marketplace competition with competition among lobbyists to curry favor with ICANN,” and “discouraged investment.”

Realistically, the chances that ICANN can reform itself are zero.  Name a dysfunctional government-protected bureaucracy that successfully reformed itself – ever.  Most supposed reforms only add tiers to the bureaucracy, decrease accountability, paralyze initiative, and increase the frustrations of everyone.

Re-competing is a good idea, but do we really think that the next organization will be immune to the temptations that beset ICANN?

The key to reform is to end the artificial scarcity of TLDs, which is what gives ICANN its power and exposes it to temptation.  Let anyone who wants to create a TLD do so, and reduce the role of ICANN or its successor to registrar and traffic cop.  Last year, ICANN approved seven new TLDs in a proceeding that saw 37 applicants walk away disappointed, and out $50,000 just for the privilege of applying.  Other inventive entrepreneurs are devising ways to circumvent ICANN and set up alternative TLDs.  So the potential for a booming market is there.