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Preliminary Report | Special Meeting of the ICANN Board

Formal Minutes are still to be approved by the ICANN Board.

Note: This Preliminary Report has not been approved by the Board and does not constitute minutes.  It does set forth the unapproved reporting of the resolutions from that meeting. Details on voting and abstentions will be provided in the Minutes, when approved at a future meeting.

NOTE ON ADDITIONAL INFORMATION INCLUDED WITHIN PRELIMINARY REPORT – ON RATIONALES – Where available, a draft Rationale for each of the Board's actions is presented under the associated Resolution. A draft Rationale is not final until approved with the minutes of the Board meeting.

A Special Meeting of the ICANN Board of Directors was held telephonically on 22 July 2021 at 14:30 UTC.

Maarten Botterman, Chair, promptly called the meeting to order.

In addition to the Chair, the following Directors participated in all or part of the meeting: Becky Burr, Ron da Silva, Avri Doria, Rafael Lito Ibarra, Danko Jevtović, Akinori Maemura, Göran Marby (President and CEO), Mandla Msimang, Ihab Osman, Patricio Poblete, Nigel Roberts, León Sánchez (Vice Chair), and Matthew Shears.

The following Directors sent their apologies: Sarah Deutsch and Tripti Sinha.

The following Board Liaisons participated in all or part of the meeting: Harald Alvestrand (IETF Liaison), Manal Ismail (GAC Liaison), Merike Käo (SSAC Liaison), and Kaveh Ranjbar (RSSAC Liaison).

Secretary: John Jeffrey (General Counsel and Secretary).

The following ICANN Executives and Staff participated in all or part of the meeting: Michelle Bright (Board Content Coordination Director), Jennifer Bryce (Review Support and Accountability Project Manager), Xavier Calvez (SVP, Planning & Chief Financial Officer), Franco Carrasco (Board Operations Specialist), Mandy Carver (SVP for Government and Intergovernmental Organization Engagement), Sally Newell Cohen (SVP, Global Communications), David Conrad (Chief Technology Officer), Sally Costerton (Sr. Advisor to President & SVP, Global Stakeholder Engagement), Samantha Eisner (Deputy General Counsel), Larisa Gurnick (VP, Reviews Operations and Accountability), Jamie Hedlund (SVP, Contractual Compliance & Consumer Safeguards), John Jeffrey (General Counsel and Secretary), Aaron Jimenez (Board Operations Specialist), Sheila Johnson (Deputy General Counsel), Vinciane Koenigsfeld (Senior Director, Board Operations), Elizabeth Le (Associate General Counsel), Krista Papac (Complaints Officer), David Olive (SVP, Policy Development Support), Cassia Oliveira (Senior Manager, Office of the CEO), Wendy Profit (Board Operations Senior Manager), Erika Randall (Associate General Counsel), Ashwin Rangan (SVP, Engineering & Chief Information Officer), Lisa Saulino (Board Operations Specialist), Amy Stathos (Deputy General Counsel), Theresa Swinehart (SVP, Global Domains & Strategy), and Gina Villavicencio (SVP, Global Human Resources).

  1. Consent Agenda:
    1. Approval of Minutes
    2. Security and Stability Advisory Committee (SSAC) Member Appointments
    3. Transfers to Reserve Fund and Supplemental Fund for Implementation of Community Recommendations
    4. Operating Fund Investment Policy Update
    5. Los Angeles Office Lease Renewal
    6. Board Committee Charter Amendments
  2. Main Agenda:
    1. Second Security, Stability, and Resiliency (SSR2) Review Team Final Report
  3. Executive Session – CONFIDENTIAL

 

  1. Consent Agenda:

    The Chair opened the meeting and introduced the items on the Consent Agenda. After discussion, the Board took the following actions:

    The following items on the Consent Agenda are approved:

    1. Approval of Minutes

      Resolved (2021.07.22.01), the Board approves the minutes of the 11 March 2021, 25 March 2021, 12 May 2021, and 21 June 2021 Regular and Special Meetings of the ICANN Board.

    2. Security and Stability Advisory Committee (SSAC) Member Appointments

      Whereas, the Board, at Resolution 2010.08.05.07 approved Bylaws revisions that created three-year terms for SSAC members, required staggering of terms, and obligated the SSAC Chair to recommend the reappointment of all current SSAC members to full or partial terms to implement the Bylaws revisions.

      Whereas, in January 2021 the SSAC Membership Committee initiated an annual review of nine SSAC members whose terms are ending 31 December 2021 and submitted to the SSAC its recommendations for reappointments on 11 June 2021.

      Whereas, on 18 June 2021, the SSAC members approved the reappointments.

      Whereas, the SSAC recommends that the Board reappoint the following SSAC members to three-year terms: Jaap Akkerhuis, Patrik Fältström, Ondrej Filip, Jim Galvin, Robert Guerra, Julie Hammer, Ram Mohan, Doron Shikmoni and Suzanne Woolf.

      Whereas, the SSAC Membership Committee, on behalf of the SSAC, requests that the Board should appoint Russ Housley, Jonathan Spring, and Jiankang Yao to the SSAC for terms beginning immediately upon approval of the Board and ending on 31 December 2024.

      Resolved (2021.07.22.02), the Board accepts the recommendation of the SSAC and reappoints the following SSAC members to three-year terms beginning 01 January 2022 and ending 31 December 2024: Jaap Akkerhuis, Patrik Fältström, Ondrej Filip, Jim Galvin, Robert Guerra, Julie Hammer, Ram Mohan, Doron Shikmoni and Suzanne Woolf.

      Resolved (2021.07.22.03), the Board appoints Russ Housley, Jonathan Spring, and Jiankang Yao to the SSAC for terms beginning immediately upon approval of the Board and ending on 31 December 2024.

      Rationale for Resolutions 2021.07.22.02 – 2021.07.22.03

      The SSAC is a diverse group of individuals whose expertise in specific subject matters enables the SSAC to fulfill its role and execute its mission. Since its inception, the SSAC has invited to its membership individuals with deep knowledge and experience in technical and security areas that are critical to the security and stability of the Internet's naming and address allocation systems.

      The SSAC's continued operation as a competent body is dependent on the accumulation of talented subject matter experts who have consented to volunteer their time and energies to the execution of the SSAC mission.

      Russ Housley is the founder and owner of Vigil Security, LLC which provides computer and networking security consulting services. He is a recognized expert in security protocols, system engineering and system security architectures and brings significant knowledge and skills in cryptography. He has chaired the Internet Engineering Task Force (IETF), the Internet Architecture Board (IAB) and has authored or contributed to many Internet standards. Russ served as an SSAC endorsed member of the SSR2 Review Team from June 2018 and was appointed by the Team as its chair.

      Jonathan Spring is a member of the Technical Staff, Computer Emergency Response Team Coordination Centre (CERT/CC) of the Software Engineering Institute, Carnegie Mellon University. He has expertise and experience in incident response and Computer Security Incident Response Team (CSIRT) practices, network and DNS traffic analysis for detecting incidents, situational awareness for contextualizing such incidents, and vulnerability management for reducing incidents. He participates in the Forum of Incident Response and Security Teams (FIRST) and was a SSAC Research Fellow from 2014-2016.

      Jiankang Yao is a research engineer with China Internet Network Information Centre (CNNIC), with his main research interests including Email Address Internationalization (EAI), Internationalized Domain Names (IDN), DNS, Internet naming and addressing. He participates in IETF work, is a member of the IAB, was appointed to the ccNSO Council with effect March 2021, and serves as the Co-Secretary of the Chinese Domain Name Consortium (CDNC).

      This resolution is an organizational administrative function for which no public comment is required. The appointment of SSAC members is in the public interest and in furtherance of ICANN's mission as it contributes to the commitment of the ICANN to strengthen the security, stability, and resiliency of the DNS. The appointment of SSAC members is not anticipated to have any fiscal impact on ICANN org that has not already been accounted for in the budgeted resources necessary for ongoing support of the SSAC.

    3. Transfers to Reserve Fund and Supplemental Fund for Implementation of Community Recommendations

      Whereas, the Operating Fund includes the funds used for ICANN's day-to-day operations and must contain enough funds to cover a minimum of three months of ICANN organization's operating expenses.

      Whereas, periodically, excess funds in the Operating Fund may be transferred to the Reserve Fund to ensure its balance is at or above the minimum target level, as determined and approved by the Board.

      Whereas, a Supplemental Fund for Implementation of Community Recommendations (SFICR) will allow ICANN to segregate resources in support of increasing the capacity of the organization to address projects that are multi-year and focus on community recommendations that are approved or soon to be adopted by the Board but cannot fit within the annual budget.

      Whereas, periodically, if excess funds exist in the Operating Fund after an allocation to the Reserve Fund has been considered or decided, an allocation to the SFICR will be considered based on the project needs identified.

      Whereas, ICANN organization has determined that the balance of the Operating Fund as of 31 May 2021, based on unaudited Financial Statements, contained excess funds.

      Whereas, both ICANN organization and the Board Finance Committee have recommended that the Board approve a US$5,000,000 transfer to the Reserve Fund and a US$15,000,000 transfer to the SFICR from the Operating Fund.

      Resolved (2021.07.22.04), the Board approves the transfer of US$5,000,000 from the Operating Fund to the Reserve Fund.

      Resolved (2021.07.22.05), the Board approves the transfer of US$15,000,000 from the Operating Fund to the SFICR.

      Rationale for Resolutions 2021.07.22.04 – 2021.07.22.05

      As part of ICANN's Investment Policy, the Operating Fund should be at a level of funds to cover a minimum of three months of ICANN organization's operating expenses, and that any amount determined to be in excess may be transferred to the Reserve Fund to ensure its balance is at or above the minimum target level, as determined and approved by the Board. 

      The Supplemental Fund for Implementation of Community Recommendations (SFICR) establishes segregated resources in support of increasing the capacity of the organization to address activities projects that are multi-year and focus on community recommendations that are approved or soon to be adopted by the Board but cannot fit within the annual budget. If the Operating Fund contains excess after an allocation to the Reserve Fund has been considered or decided, an allocation to the SFICR will be determined based on the project needs identified. 

      ICANN organization has evaluated the balance of the Operating Fund as of 31 May 2021 on the basis of its unaudited Financial Statements and has determined that excess funds of US$5,000,000 should be transferred to the Reserve Fund and US$15,000,000 should be transferred to the SFICR.

      This action is consistent with ICANN's mission and is in the public interest as it is important to ensure stability of ICANN organization in the way of a robust Reserve Fund in case use of a Reserve Fund becomes necessary. Furthermore, this action is consistent with ICANN's mission and is in the public interest as the SFICR will fund projects, as approved by the Board, when the size, complexity, and length of the projects create a challenge to be solely funded by recurring funding.

      This action will not have a financial impact on ICANN, and will not have an impact on the security, stability, or resiliency of the domain name system.

      This is an Organizational Administrative function that does not require public comment.

    4. Operating Fund Investment Policy Update

      Whereas, the Operating Fund includes the funds used for ICANN's day-to-day operations and must contain enough funds to cover a minimum of three months of ICANN organization's operating expenses.

      Whereas, the Supplemental Fund for Implementation of Community Recommendations (SFICR) allows ICANN to segregate resources in support of increasing the capacity of the organization to address projects that are multi-year and focus on community recommendations that are approved or soon to be adopted by the Board but do not fit within the annual budget.

      Whereas, both ICANN organization and the Board Finance Committee have recommended that the Board approve an update to the ICANN Investment Policy to allow funds in the Operating Fund and SFICR to be invested in long-term investment instruments with moderate returns and a moderate liquidity level in order to outpace inflation while maintaining a low level of risk.

      Resolved (2021.07.22.06), the Board approves the revised ICANN Investment Policy that, as revised, allows funds in the Operating Fund and SFICR to be invested in long-term, moderate-yield, and moderately liquid investment instruments.

      Rationale for Resolutions 2021.07.22.06

      As part of ICANN's Investment Policy, the Operating Fund should be at a level of funds to cover a minimum of three months of ICANN organization's operating expenses, and that any amount determined to be in excess may be transferred to either the Reserve Fund, to ensure its balance is at or above the minimum target level, or the SFICR to increase the capacity of the organization to address projects that are multi-year and focus on community recommendations that are approved or soon to be adopted by the Board but cannot fit within the annual budget.  In order to outpace inflation while maintaining a low level of risk, ICANN organization and the Board Finance Committee (BFC) recommended that funds in the Operating Fund and SFICR be invested in long-term investment instruments with moderate returns and a moderate liquidity level.

      ICANN org and the BFC recommended this change because funds in the Operating Fund and SFICR are currently not being invested as their eligible investments would not yield worthwhile return. Hence, these funds are not keeping up with inflation and are therefore losing value. The ICANN Investment Policy revisions would allow investments in long-term and moderately liquid instruments, enabling ICANN org to achieve some return and outpace inflation while maintaining a low level of risk due to the nature of the instruments.

      Adopting the suggested modifications to the ICANN Investment Policy is in the best interest of ICANN and its community because it will expand the available investment options to optimize potential returns within acceptable risk parameters, which is also consistent with ICANN's mission.

      This action is very likely to have a positive financial impact on ICANN in that the additional investment options should yield higher earnings.  This action will not have an impact on the security, stability, or resiliency of the domain name system.

      This is an Organizational Administrative function that does not require public comment.

    5. Los Angeles Office Lease Renewal

      Whereas, ICANN's Los Angeles office lease is expiring in June 2022 and ICANN org recommends remaining at the current office location and entering into a new 10-year lease.

      Whereas, the Board Finance Committee has reviewed the financial implications of the lease.

      Whereas, both ICANN organization and the Board Finance Committee have recommended that the Board authorize the President and CEO, or his designee(s), to take all actions necessary to execute a new 10-year lease for ICANN's current Los Angeles office location, and to make all necessary disbursements pursuant to the lease.

      Resolved (2021.07.22.07) the Board authorizes the President and CEO, or his designee(s), to take all necessary actions to execute a new 10-year lease for ICANN's current Los Angeles office location, and to make all necessary disbursements pursuant to the lease.

      Resolved (2021.07.22.08), specific items within this resolution shall remain confidential for negotiation purposes pursuant to Article 3, section 3.5(b) of the ICANN Bylaws until the President and CEO determines that the confidential information may be released.

      Rationale for Resolutions 2021.07.22.07 – 2021.07.22.08

      ICANN organization believes face to face interaction, including that which occurs at its headquarters, is essential to carry out its work and mission. Although the organization has been effectively operating remotely during the pandemic, the goal is to return to offices to support staff, and eventually community, collaboration at ICANN's physical office locations.

      In 2012, ICANN signed a 10-year lease for 30,300 square feet of office space on the third floor of a Class A building in Playa Vista, California. ICANN added 5,782 square feet the following year and added 12,819 square feet in 2016 on the fourth floor of the building, along with tenant improvement customizations such as an interior staircase to connect the third and fourth floors, and a common area corridor on the fourth floor. ICANN now rents about 50,000 square feet total and its lease is set to expire in June 2022.

      In early 2020, ICANN org began evaluating office space options upon the expiration of the current lease. While evaluating properties, ICANN org considered the following criteria:

      • Buildings of similar type and location to the current office
      • ICANN's space requirements, including conference rooms
      • Cost effectiveness
      • Disruption to staff
      • Amenities in the area
      • Proximity to LAX and public transportation
      • Safety and security
      • If ICANN decided to move, the restoration cost to remove the interior staircase and restore the common area corridor on the fourth floor (about US$250,000)

      After thorough consideration of many options, ICANN org began negotiating lease terms with the current landlord. The real estate market for suitable office space locations, such as the current space in Playa Vista, did not drop as much as other areas across the United States as a result of the pandemic. Given the current outlook of the pandemic and much of California reopening, market activity and rental rates have been steadily increasing. Because negotiations started during the pandemic, ICANN org is in a favorable bargaining position with the current landlord.

      [REDACTED – CONFIDENTIAL NEGOTIATION INFORMATION]

      In early 2021, ICANN org evaluated all the parameters affecting the decision to stay at the current Play Vista headquarters or move to another location. The evaluation included consideration of the real estate market conditions set forth above, as well as the current and expected workload the organization is expecting to face, including multiple large, complex and new projects and activities that are expected to have a significant impact on the organization overall and on reshaping several teams specifically.

      Although ICANN may save some money in the long term with some of these alternative options, in the context of workload, ICANN org has recommended staying at the current location to avoid disruption to staff and operations as well as the risks and costs of moving. Staying at the current location maintains the current building's safety and security, its ability to host board and community meetings, in addition to its proximity to airports, hotels, amenities, public transportation, and freeways.

      Given the current market conditions and alternative property options, ICANN org recommended staying at the existing location and entering into a new 10-year lease.  The Board Finance Committee has reviewed the financial implications of the lease and agrees with ICANN org's recommendation.

      Executing the new office lease is in the public interest as it maintains ICANN's presence in Los Angeles where about half of ICANN org's staff is based. ICANN org will be able to continue to carry out ICANN's mission without disruption while maintaining collaboration with community stakeholders and the general public.

      There will be a fiscal impact in average costs per month compared to the final year of the current lease. However, this increase is reasonable given the current real estate market and ICANN will be able to absorb the cost increase.

      Taking this decision will have no anticipated impact on the security, stability, and resiliency of the domain name system.

      This is an Organizational Administrative function that does not require public comment.

    6. Board Committee Charter Amendments

      Whereas, the Board Governance Committee (BGC) is tasked with "periodically review[ing] the charters of the Board Committees, including its own charter and work with the members of the Board Committees to develop recommendations to the Board for any charter adjustments deemed advisable."  (BGC Charter, § II.C.2.)

      Whereas, the BGC has recommended that the Board approve revisions to various sections of the BGC and Board Risk Committee (BRC) charters.

      Resolved (2021.07.22.09), the Board hereby adopts the revised Board Governance Committee Charter.

      Resolved (2021.07.22.10), the Board hereby adopts the revised Board Risk Committee Charter.

      Rationale for Resolutions 2021.07.22.09 – 2021.07.22.10

      The Board is addressing this matter to ensure committee charters are up-to-date and reflect the most current governance requirements and best practices.

      As part of its responsibilities, the BGC is tasked with "periodically review[ing] the charters of the Board Committees, including its own charter and work with the members of the Board Committees to develop recommendations to the Board for any charter adjustments deemed advisable."  (BGC Charter, Sec. II.C.3.)  In this role, the BGC recommended, and the Board agrees, that the Board approve revisions to the BGC and BRC Committee charters to update the relevant sections of the charters to current practices.  And, as it relates to the BRC charter, it now includes reference to oversight of the Risk Appetite Statement.

      This action is consistent with ICANN's Mission and is in the public interest as it is important to ensure that the Board has the necessary Committees, properly tasked with responsibilities, to ensure oversight over the ICANN organization, as the Board deems appropriate. 

      There will be no direct fiscal impact or adverse ramifications on ICANN's strategic and operating plans from the proposed changes to the charters.

      There are no security, stability or resiliency issues relating to the domain name system as the result of this action.

      This decision is an Organizational Administrative Function that does not require public comment.

      All members of the Board present voted in favor of Resolutions 2021.07.22.01, 2021.07.22.02 – 2021.07.22.03, 2021.07.22.04 – 2021.07.22.05, 2021.07.22.06, 2021.07.22.07 – 2021.07.22.08, and 2021.07.22.09 – 2021.07.22.10. Two Board members were unavailable to vote on the Resolutions. The Resolutions carried.

  2. Main Agenda:

    1. Second Security, Stability, and Resiliency (SSR2) Review Team Final Report

      The Board engaged in a discussion about the proposal to take action on the recommendations in the Second Security, Stability, and Resiliency (SSR2) Review Team Final Report as detailed in a scorecard. The Chair noted that this matter has been extensively discussed by the Board under the guidance of the Board's SSR2 Caucus Group. He also noted that the Board Organizational Effectiveness Committee (OEC) recommended that the Board take action on the recommendations in the Final Report as outlined in the scorecard.

      The Board considered the proposed resolutions to take action on the SSR2 Final Report. Several members of the Board expressed their appreciation for the SSR2 Review Team as well as ICANN org, the OEC, and SSR2 Board Caucus Group for all of the work leading up to the Board's action on the 63 recommendations in the SSR2 Final Report.

      Board members also commented on the process of reviews overall. Some Board members suggested that the ICANN community as a whole should take a detailed look at the reviews process to identify possible improvements to avoid the Board being in a position of needing to reject recommendations, for example, because the recommendation cannot be approved in full. In addition, a Board member raised concerns about not tracking recommendations that the Board is rejecting and explained that this approach could potentially hamper community interactions because key information and context would be omitted from ongoing discussions.

      The Board also discussed the need for clear communication to the community about the SSR2 Final Report and the Board's action on the recommendations. After discussion, the Board took the following action:

      Whereas, under Section 4.6 of the ICANN Bylaws, ICANN is obligated to conduct a "periodic review of ICANN's execution of its commitment to enhance the operational stability, reliability, resiliency, security, and global interoperability of the systems and processes, both internal and external, that directly affect and/or are affected by the Internet's system of unique identifiers that ICANN coordinates ('SSR Review')." A community-led review team – the second Security, Stability, and Resiliency (SSR2) Review Team – was announced on 14 February 2017 to fulfill that mandate.

      Whereas, on 28 October 2017, the ICANN Board, in consideration of concerns received, sent a letter to the SSR2 Review Team to suspend its work, pending input from ICANN Supporting Organizations (SOs) and Advisory Committees (ACs) on any need to adjust the scope, terms of reference, work plan, skill set and/or resources allocated to the SSR2 Review.

      Whereas, the suspension generated a dialog between SO/ACs chairs and ICANN Board and led to a request for additional membership on the SSR2 Review Team and the engagement of an external facilitator to assist the review team in resolving issues of scope, membership, and other concerns as raised. On 7 June 2018, ICANN org announced the formal restart of the SSR2 Review Team.

      Whereas, on 24 January 2020, the SSR2 Review Team released a draft report for public comment.

      Whereas, on 25 January 2021, the SSR2 Review Team submitted a final report containing 63 full consensus recommendations to the ICANN Board for consideration.

      Whereas, the SSR2 Review Team Final Report is the culmination of nearly four years of work by 17 review team members, representing over 2,800 hours of meetings and countless more hours of work.1

      Whereas, the SSR2 Review Team Final Report was published for public comment on 28 January 2021 to inform Board action on the report, in accordance with Bylaw requirements. The summary of community input received on the final report highlights a variety of viewpoints, including community views on which recommendations the Board should act on quickly as well as which recommendations the Board should consider rejecting.

      Whereas, the Board has devoted significant time to following the SSR2 Review Team's work, including through the Organizational Effectiveness Committee of the ICANN Board (OEC) and the Board Caucus Group on SSR2 (SSR2 Caucus), to achieve this decision today.

      Whereas, on 20 July 2021, the OEC discussed and approved its recommendation that the Board take action on the recommendations in the SSR2 Review Team Final Report, as enumerated in the Scorecard titled "Final SSR2 Review Team Recommendations – Board Action." The OEC's recommendation was informed by the work of the SSR2 Caucus, which was established and included the Board-appointed members of the SSR2 Review Team. The SSR2 Caucus led the Board's efforts in reviewing the recommendations and ICANN org's assessments and supports the substantive action on the recommendations as provided to the Board.

      Resolved (2021.07.22.11), the Board thanks the members of the SSR2 Review Team for their dedication and work to achieve the SSR2 Review Team Final Report.

      Resolved (2021.07.22.12), the Board takes action on each of the 63 recommendations issued within the SSR2 Review Team Final Report, as specified within the Scorecard titled "Final SSR2 Review Team Recommendations – Board Action." The Board directs ICANN's President and CEO, or his designee(s), to take all actions as directed within that Scorecard.

      Resolved (2021.07.22.13), for the 34 recommendations placed into one of the three pending statuses, the Board commits to take further action on these recommendations subsequent to the completion of steps as identified in the Scorecard. The Board directs the ICANN President and CEO, or his designee(s), to provide to the Board relevant information, as requested in the Scorecard, or periodic updates on progress toward gathering relevant information, starting within six months from this Board action, in order to support further Board action on each recommendation.

      All members of the Board present voted in favor of Resolutions 2021.07.22.11 – 2021.07.22.13. Two members of the Board were unavailable to vote on the Resolutions. The Resolutions carried.

      Rationale for Resolutions 2021.07.22.11 – 2021.07.22.13

      The rationale for Resolutions 2021.07.22.11 – 2021.07.22.13 is available here: https://www.icann.org/en/system/files/bm/rationale-ssr2-22jul21-en.pdf

  3. Executive Session – CONFIDENTIAL:

    The Board held a confidential portion of the session relating to employment matters and specific actions shall remain confidential as an "action relating to personnel or employment matters," pursuant to Article 3, Section 3.5(b) of the ICANN Bylaws.

  4. The Chair called the meeting to a close.

Published on 2 August 2021


1 Based on the SSR2 Fact Sheet dated 31 March 2021: https://community.icann.org/x/S7zRAw

Domain Name System
Internationalized Domain Name ,IDN,"IDNs are domain names that include characters used in the local representation of languages that are not written with the twenty-six letters of the basic Latin alphabet ""a-z"". An IDN can contain Latin letters with diacritical marks, as required by many European languages, or may consist of characters from non-Latin scripts such as Arabic or Chinese. Many languages also use other types of digits than the European ""0-9"". The basic Latin alphabet together with the European-Arabic digits are, for the purpose of domain names, termed ""ASCII characters"" (ASCII = American Standard Code for Information Interchange). These are also included in the broader range of ""Unicode characters"" that provides the basis for IDNs. The ""hostname rule"" requires that all domain names of the type under consideration here are stored in the DNS using only the ASCII characters listed above, with the one further addition of the hyphen ""-"". The Unicode form of an IDN therefore requires special encoding before it is entered into the DNS. The following terminology is used when distinguishing between these forms: A domain name consists of a series of ""labels"" (separated by ""dots""). The ASCII form of an IDN label is termed an ""A-label"". All operations defined in the DNS protocol use A-labels exclusively. The Unicode form, which a user expects to be displayed, is termed a ""U-label"". The difference may be illustrated with the Hindi word for ""test"" — परीका — appearing here as a U-label would (in the Devanagari script). A special form of ""ASCII compatible encoding"" (abbreviated ACE) is applied to this to produce the corresponding A-label: xn--11b5bs1di. A domain name that only includes ASCII letters, digits, and hyphens is termed an ""LDH label"". Although the definitions of A-labels and LDH-labels overlap, a name consisting exclusively of LDH labels, such as""icann.org"" is not an IDN."