ICANN | Fourth Status Report Under JPA/MOU | 15 August 2002

Fourth Status Report Under ICANN/US Government Memorandum of Understanding

(15 August 2002)

Fourth Status Report to the US Department of Commerce

15 August 2002

On June 5, 1998, the United States Government published its Statement of Policy, Management of Internet Names and Addresses, 63 Fed. Reg. 31741(1998) (commonly known as the “White Paper”), declaring its policy to transfer responsibility for functions involving the technical management of the Internet from the U.S. Government and its contractors to a private sector, globally representative, non profit, consensus-based organization. On November 25, 1998, the United States Department of Commerce ("DOC") and the Internet Corporation for Assigned Names and Numbers ("ICANN") entered a Memorandum of Understanding (“MOU”) formally recognizing ICANN as that organization and establishing a joint project under which ICANN and DOC agreed to design, develop, and test the mechanisms, methods, and procedures that should be in place and the steps necessary to transfer the U.S. Government’s technical management responsibilities to ICANN.

The MOU originally provided for the joint project to run for approximately twenty-two months, through 30 September 2000. ICANN provided an initial status report to DOC on 15 June 1999; that report can be found at http://www.icann.org/general/statusreport-15june99.htm. It provided a Second Status Report to DOC on 30 June 2000; that report can be found at http://www.icann.org/general/statusreport-30jun00.htm.

Following the receipt of the Second Status Report and consultations with the DOC, the MOU was amended to extend its term to September 30, 2001, and to adjust the provisions to reflect work that had already been completed. ICANN provided a Third Status report to DOC on 3 July 2002, which can be found at http://www.icann.org/general/statusreport-03jul01.htm. Following the receipt of that report by the DOC, the MOU was amended to extend its term to 30 September 2002.

This report describes the progress under the Amended MOU since that time.

A. General Description of Project

The development of a private sector entity capable of overseeing the management of the Domain Name System (DNS), and of developing consensus-based policies applicable to the DNS, is a uniquely difficult undertaking. No comparable undertaking exists to be used as a model, and the diversity of the interests, economic and other, that must be accommodated in such a body make the effort to create a broadly acceptable organization and processes extremely challenging. Nevertheless, the goal is a worthy one, and thus the MOU provides that “the Parties will jointly design, develop, and test the mechanisms, methods, and procedures that should be in place and the steps necessary to transition management responsibility for DNS functions now performed by, or on behalf of, the U.S. Government to a private-sector, not-for-profit entity.”

The mechanisms, methods, and procedures developed were intended to “achieve the transition without disrupting the functional operation of the Internet.” Upon successful testing, the MOU stated “management of the DNS will be transitioned to the mechanisms, methods, and procedures designed and developed in the DNS Project.”

The general scope of the project was defined as follows:

“In the DNS Project, the Parties will jointly design, develop, and test the mechanisms, methods, and procedures to carry out the following DNS management functions:

a. Establishment of policy for and direction of the allocation of IP number blocks;

b. Oversight of the operation of the authoritative root server system;

c. Oversight of the policy for determining the circumstances under which new top level domains would be added to the root system;

d. Coordination of the assignment of other Internet technical parameters as needed to maintain universal connectivity on the Internet; and

e. Other activities necessary to coordinate the specified DNS management functions, as agreed by the Parties.”

The Parties to the MOU, the United States Department of Commerce and ICANN, originally contemplated that the project would be completed in approximately two years, or by 30 September 2000. The project has proven considerably more difficult than anticipated, however, and the MOU has subsequently been extended twice, each time for a one-year period. The project is still not completed, and it seems clear now that accomplishing the Joint Project's goals will require an ongoing process over an additional period of time.

B. Current Status of the Project

1. ICANN's Ongoing Reform Process

On 24 February 2002, ICANN's President M. Stuart Lynn released a report entitled ICANN: The Case for Reform. In that document, Dr. Lynn described the considerable accomplishments to date of ICANN (most notably, the introduction of both registrar and registry competition, and the creation of a global dispute resolution process for domain names). He also stated, however, that for ICANN to accomplish its mission in the future, there would have to be significant reform in both its organization and its processes. He went on to offer various suggestions for the direction and shape of those reforms.

That report began an intensive period of debate and discussion, within and outside of the traditional ICANN community, about the continued desirability of the Project, and the changes needed to make the Project successful. With respect to the desirability of the Project's goals itself, the vast majority of those expressing opinions agreed with the Project objective, and endorsed the continuation of this difficult effort toward the creation of a global, private-sector body with limited but important responsibilities for the continued stable operation of the DNS.

Similarly, there was near universal agreement with Dr. Lynn's diagnosis of the problems limiting the future potential of ICANN – inadequate participation by key stakeholders, unsatisfactory and ineffective procedures, and a significant shortfall in the funding necessary to effectively carry out ICANN's mission. These deficiencies have become more apparent over the three years of ICANN's existence, and there now appears to be a clear consensus that some restructuring is necessary if ICANN is to be effective in the future.

There was a greater variety of views on exactly what changes are necessary or desirable to fix the identified problems. This is not surprising: as noted earlier, there are no models to copy from, and thus any proposed changes are likely to have different attractions to persons or entities who come at the problem from very different perspectives. In an effort to ensure that all points of view were considered, the ICANN Board created a Evolution and Reform Committee of the Board, chaired by the Vice-Chair of the ICANN Board, Alejandro Pisanty of Mexico.

The ERC, as it has become known, published an Interim Report on 29 April 2002, Working Papers on specific areas of the reform process on 6 May, 7 May and 9 May 2002, a paper titled Recommendations for the Evolution and Reform of ICANN on 31 May 2002, and ICANN: A Blueprint for Reform on 20 June 2002. These documents reflect the evolution of the reform dialogue, beginning with some very general principles and calls for community input, and with each iteration reflecting that input and further analysis by the ERC and others of the alternative solutions to the agreed problems.

On 28 June 2002 at its meeting in Bucharest, the ICANN Board, acting on the basis of the four months of debate, discussion, recommendations and analysis from throughout the ICANN community that followed Dr. Lynn's original suggestions for ICANN reform – and following considerable interaction with the various ICANN stakeholders attending the meeting – approved a resolution that adopted and endorsed the Blueprint as recommended by the ERC. The Board also instructed the ERC to "oversee further detailed implementation and transition work based on the Blueprint for Reform, with the continued involvement and participation of the ICANN community." Finally, and based in significant part on the various public comments provided before and at the Bucharest meeting, it instructed the ERC to "take due account . . . as it moves forward in the implementation process" of the following issues:

  • devise and incorporate specific measures to ensure, to the extent feasible, geographic and cultural diversity in all parts of ICANN structure, which have been key core values of ICANN since its inception, and remain so today, as expressed in the ERC Blueprint for Reform;
  • consider the creation of an At Large Advisory Committee as a potential vehicle for informed participation in ICANN by the broad user community;
  • ensure that the composition and operation of the Nominating Committee in fact represents a balance among all segments of the Internet community;
  • collaborate with critical infrastructure providers and the technical community to further the establishment of effective working relationships; and
  • ensure that ICANN's policy development processes enhance and promote a transparent bottom-up process.

On 15 July 2002, the ERC issued its first status report, which both reported on progress to date and announced the initiation of two assistance groups on specific implementation issues. It also described its intention to provide reports to the community on implementation progress on a monthly basis, leading up to its final recommendations for Board action in Shanghai, which it expects to publish on or about 1 October 2002. The first of these Interim Implementation Reports was published on 1 August 2002, and the next will be published on 1 September 2002.

The ERC expects to follow a process very similar to that used to produce the Blueprint for Reform – the solicitation and receipt of input from all interested persons to the ERC, the publication of that input on a publicly available website, the periodic reporting to the community of the ERC's present thinking on particular implementation topics, and the solicitation of feedback on those reports and any specific issues raised in them. In addition, the ERC will seek assistance from members of the community on specific issues within the implementation process. Issues for which assistance has already been sought include (1) a number of what might be described as accountability issues, including the charter for the Office of Ombudsman, the independent review process for allegations of bylaw violations, and ICANN's Reconsideration Policy, (2) the specific procedures and timelines for the policy development process relating to matters within the primary competence of the Generic Names Supporting Organization, and (3) the evaluation of a possible At Large Advisory Committee as one vehicle for informed public input into ICANN processes and decisions.

Individual Board members, including those serving on the ERC, and ICANN staff are in very regular contact with all of the constituent bodies of ICANN. This includes the Governmental Advisory Committee, whose Communiqué and Statement on ICANN Evolution & Reform in Bucharest was very helpful and has been carefully reviewed by the ERC and the Board, and whose continued input is both solicited and welcome. Through these informal contacts, discussions with individual members of the ICANN community, and review and participation of numerous mailing lists and forums, the ICANN Board and staff seeks to ensure that the views and concerns of all interested persons and entities are understood and taken into account in making recommendations and ultimately decisions about how ICANN will be structured and function in the future. Obviously, given a wide spectrum of different and often conflicting opinions, not all ideas and suggestions can be incorporated, but they are all carefully considered.

The goal of this effort is to ensure that all points of view on these important matters are solicited, welcomed and considered, and that the result of this process will be an ICANN structure and procedures that both enable ICANN to do its work effectively and are the product of the collective thinking of the entire ICANN community. Obviously, the successful conclusion of this effort is essential to the successful completion of many of the remaining tasks set forth for the project in the MOU.

With respect to the particular points raised in the letter from Nancy Victory to Stuart Lynn, dated July 10, 2002, each of these is being specifically addressed in the ongoing reform efforts. The Blueprint for Reform contained a quite precise statement of ICANN's Mission and Core Values; while there will likely be minor adjustments to this document, as described in the First Interim Implementation Report of the ERC issued on 1 August 2002, this articulation has received widespread support, including from the GAC in its Bucharest Statement on ICANN Evolution and Reform. Many of the aspects of ongoing reform – including the creation of an Ombudsman, the consideration of both a Reconsideration Process and an Independent Review Process, and the creation of a staff position whose primary responsibility is to ensure that there is adequate public communication about ICANN activities and clear and complete reports to ICANN bodies of public views on those activities – are designed to improve both the transparency and accountability of ICANN. In addition to those processes, the consideration of the creation of an At Large Advisory Committee would provide a vehicle to ensure that all Internet stakeholders have the opportunity for informed participation in ICANN's activities. The Blueprint includes a variety of steps to ensure an effective advisory role for governments, including a liaison from the GAC to the ICANN Board, and various other liaison relationships between the GAC and other ICANN bodies. And finally, the Blueprint lays out the general outlines of a stable and sufficient funding mechanism to ensure that ICANN has the resources necessary to carry out its mission.

The considerable progress on these and other aspects of ICANN’s reform efforts has been accomplished over a very short period of time for a task of this complexity, namely the past five months. This “re-setting” of ICANN is essential to future progress, and it necessarily has meant that the very limited resources of ICANN have not been focused as intensely on many other tasks. This has probably slowed progress on these other tasks – one consequence of the historical underfunding of ICANN. Nevertheless, progress continues to be made on the specified tasks in the MOU, as detailed below.

2. ICANN's Progress Toward Completion of Specified Tasks

The MOU originally set forth nine specific tasks to which ICANN committed its resources as part of the joint project for the design, development, and testing of the mechanisms for post-transition private-sector technical management of the Internet. (It also provided, as a tenth task, that ICANN collaborate with DOC on other activities as appropriate to achieve the purposes of the joint project, as agreed by the parties.)

Because the mechanisms in several of these tasks had been fully designed, developed, and tested, and were successfully operating to permit private-sector technical management, Amendment 2 of the MOU replaced the original list of tasks with a revised list. While ICANN continues to make progress on most of these tasks, in fact it has become quite clear that ICANN does not have the unilateral ability to complete several of these tasks. Negotiating agreements, by definition, is a multi-lateral, not unilateral, activity. Unless both parties have compatible goals, and share a common perspective on the practical options, reaching agreements will be very difficult, as we have seen to date in certain areas.

The ICANN reform efforts described above are a recognition that the original concept and structure of ICANN requires some adjustment – some fine-tuning, if you will, based on almost four years of experience. We believe that the same is true of the MOU, which after all was crafted based on hopes and expectations at the time of ICANN's creation. We now have a better understanding of the challenges, and a more realistic perception of what can be expected under the circumstances. This calls for revisiting the MOU, and adjusting that set of understandings between ICANN and the Department of Commerce on the basis of our accumulated experience.

The following sets forth the MOU’s description of the revised list of seven specific tasks and describes the progress made to date toward completion of that task: It also highlights those areas where some adjustment to the MOU is appropriate.

Task 1: Continue to provide expertise and advice on private sector functions related to technical management of the DNS.

Status of progress on task 1: This is necessarily an ongoing effort, which will be significantly affected by the current reform efforts. The aim of the reform efforts, in the aggregate, is to enhance ICANN's ability to carry out this particular task, which is the core objective of the MOU. This objective is met if and when ICANN is effectively able to carry out its mission of global coordination of the name and address allocation process. Today, ICANN is only partially meeting that test; following the current reform effort, and assuming good faith on the part of other relevant parties, ICANN should be able to assert that it is fully able to meet this standard.

Among the various actions taken related to this task, ICANN in 1999 entered into a memorandum of understanding with the three then-existing Regional Address Registries (RIRs) to form the Address Supporting Organization (ASO) – the ICANN body primarily responsible for policy development related to address allocation. Pursuant to procedures and standards agreed to between the existing RIRs and ICANN, a fourth RIR, LACNIC, that would represent the Latin American region as a separate registry from the North American region is in process of being formed: final approval by the ICANN Board is expected later this year, and LACNIC would be launched shortly thereafter. (Organizational work toward creation of a separate registry for the Africa region is also underway, but is further from completion.) This will increase the responsiveness and efficiency of the address allocation process, and thus contribute to the goals for which ICANN was created.

Currently, ICANN also has a memorandum of understanding with various Internet standards development organizations that forms the basis for the Protocol Supporting Organization (PSO). If the ICANN reform effort continues along its present course, the PSO would cease to exist, and one or more other mechanisms would be created to serve as a gateway to necessary technical resources.

In addition, in 2000, ICANN and the Internet Engineering Task Force (IETF) entered a Memorandum of Understanding Concerning the Technical Work of the Internet Assigned Numbers Authority, under which the IETF appointed ICANN to perform the protocol-parameter assignment functions (the IANA functions) arising from the technical Internet standards developed by the IETF.

Since their formation, the ASO and PSO have each been responsible for providing, through broad-based procedures set forth by each body, three members of ICANN's Board of Directors. Under the current approach to ICANN reform, the ASO would select two ICANN Directors, and four additional non-voting liaison seats on the Board would be established for representatives of various technically-oriented constituencies or groups.

Under its current reform plan, ICANN would continue (and hopefully improve) the stable and productive relationships that currently exist with the both the Internet standards development organizations and the regional address registries. These relationships allow those organizations to continue their technical work in their respective areas of activity, while bringing them together within the ICANN process to formulate policies that span the areas of activity of multiple organizations.

There remain several areas where additional progress is needed, in creating stable structured relationships with root server operators and with the majority of ccTLD registries. The current reform efforts will enhance ICANN's ability to reach those goals.

Task 2: Work collaboratively on a global and local level to pursue formal legal agreements with the Regional Address Registries (RIRs) to achieve stable relationships that allow them to continue their technical work, while incorporating their policy-making activities into the ICANN process.

Status of progress on task 2: For some time, ICANN and the RIRs have been engaged in developing appropriate understandings between ICANN and each of the RIRs to set forth a mutually acceptable description of the relationship of each to the other. This dialogue has resulted in the creation of a draft agreement between each of the RIRs and ICANN. The draft was ready to be submitted to the Boards of ICANN and of the RIRs when the current reform effort began. All parties have agreed to put on hold further actions on this subject until the reform efforts are completed but, subject to approval of the respective Boards, this draft could form the basis for the more structured relationship between ICANN and the various RIRs that is an important element of this particular task.

Because of the absence of legal agreements between ICANN and the RIRs, the RIRs have, over the past three years, been escrowing their scheduled contributions to the ICANN budget. As a gesture of good faith upon the staff agreement on the draft agreement, the RIRs released half of those escrowed funds to ICANN.

There is good reason to project that this task should be completed in the near future. It should be noted that the lack of an agreement has not jeopardized the collaborative working relationships between ICANN and the address registries in pursuit of tasks that are of key importance to Internet stability.

Task 3: Continue to develop and test the ICANN Independent Review process to address claims by members of the Internet community that they have been adversely affected by decisions in conflict with ICANN's by-laws or contractual obligations. Report on ICANN's experience with the fully implemented reconsideration process and independent review process.

Status of progress on task 3: ICANN's bylaws provide for the establishment of an independent review process by which actions of the ICANN Board alleged to be inconsistent with its bylaws may be subjected to independent third-party review. At its meeting in Cairo, Egypt on March 10, 2000, the ICANN Board adopted an Independent Review Policy that contemplated the formation of a nine-member Independent Review Panel.

The members of the Independent Review Panel were to be nominated by the Independent Review Panel Nominating Committee (IRP Nominating Committee) and are subject to confirmation by a vote of the ICANN Board.

Unfortunately, the IRP Nominating Committee was unable to complete its task. The Committee was unable to agree on candidates of sufficient judicial experience and independence. Indeed, it had difficulty locating candidates with the right qualifications who were willing to serve in this thankless position for no pay; perhaps, in hindsight, this is not surprising.

There is no disagreement that there needs to be an appropriate process to address claims that ICANN has acted inconsistently with either its bylaws or its contractual obligations. The latter can and generally has been addressed in the contracts themselves, with provisions for arbitration of disputes and, in certain circumstances, the right to initiate judicial action. The former has been more contentious, with some arguing for something resembling a Supreme Court of ICANN, and others arguing that it would be inappropriate for some less representative body to be able to overrule decisions of the ICANN Board, presumably the most representative body in ICANN, not because the decision was ultra vires but because the reviewing body disagreed with the Board's conclusion.

As a result, this issue has been a matter of careful attention during the ongoing ICANN reform process. The Blueprint for Reform contemplates that the IRP will be a process permitting non-binding arbitration by an international arbitration body to review any allegation that the Board has acted in conflict with ICANN's bylaws. Of course, ICANN already has in existence a reconsideration policy, under which members of the ICANN community affected by actions of the ICANN staff or Board can seek reconsideration of those actions by the Board. Finally, the Blueprint recommends the creation of an Office of Ombudsman, designed to serve as a vehicle for receiving and, where possible, resolving complaints of those who believe that ICANN or its staff has acted unfairly or inappropriately.

The ERC, charged by the Board with implementing the Blueprint, has received recommendations on these subjects from an assistance group chartered to help the ERC, and has published its tentative views in its First Interim Implementation Report. After receiving and reviewing public comment, the ERC will eventually make a final recommendation to the ICANN Board on the details of this particular review structure.

Task 4: Collaborate with the Department to continue to complete development of a proposed enhanced architecture for root server security, and the development of the following documentation to be used in connection with testing and implementation of the enhanced root-server system architecture:

a. A written description of the enhanced architecture incorporating a dedicated primary root server;
b. A procedural plan for transition to the enhanced architecture;
c. An implementation schedule for transition to the enhanced architecture;
d. Documentation of IANA procedures for root zone editing, root zone generation, and root zone WHOIS service; and
e. An agreement between ICANN and root-server operators that formalizes stable, secure, and professional operation of the root-servers in accordance with the enhanced architecture.

Status of progress on task 4: Work on the documentation is currently in the first of two phases. A subgroup of ICANN's Root Server System Advisory Committee (RSSAC) is working on documenting the root-nameserver system as it currently exists, with focus on security aspects, total system performance, robustness and reliability. An initial draft encompassing the major points of this documentation has been prepared and is being reviewed to determine how it should be augmented. Once this phase is completed, the Committee will turn to developing proposals and procedures for enhancements to ensure that the system continues to provide high-quality, reliable and robust root nameservice for the global Internet.

With regard to (e), there has been some progress made on the form of an undertaking between ICANN and the root server operators themselves, but any such undertaking requires approval by their parent institutions. While this, like similar efforts with the RIRs, has been slowed by the intense focus of the entire ICANN community on the ongoing reform efforts, ICANN remains hopeful that meaningful progress can be made on this task following the completion of the current reform efforts.

Task 5: Following Department of Commerce review and approval of the documentation listed in paragraph 4 above, ICANN shall test and implement the enhanced root-server system architecture, including ICANN's operation of the authoritative root, under appropriate terms and conditions.

Status of progress on task 5: The implementation of this task will follow the completion of task 4.

Task 6: ICANN will continue its efforts to achieve stable agreements with the organizations operating country-code top level domains that cover the delegation and redelegation issues; allocation of global and local policy-formulation responsibility; and the relationships among ccTLD operators and the relevant government or public authority.

Status of progress on task 6: These discussions have continued with representatives of the ccTLD community. ICANN has enhanced its capacity to negotiate such agreements by the hiring of a Counsel for International Affairs and a ccTLD Liaison.

ICANN has to date entered into agreements with 4 ccTLD registries: Australia (.au), Japan (.jp), Burundi (.bi), and Malawi (.mw). Still, this is another issue where progress has been slow. It is important to recognize that, in many cases, there is no obvious motivation for ccTLDs to enter into any such agreements, absent compulsion from their local governments. Given the views of some ccTLDs with regard to participation in global policies, this is a task that is not wholly (or even primarily) within the control of ICANN. We are hopeful the reform efforts, especially the greater coordination with and integration of the Governmental Advisory Committee, will help this process move forward more quickly.

Task 7: ICANN will continue the process of implementing new TLDs including proceeding with a proof of concept or testbed period and continuing design, development, and testing to determine future policy and action, continuing to consider:

a. The potential impact of new TLDs on the Internet root server system and Internet stability.
b. The creation and implementation of minimum criteria for new and existing TLD registries.
c. Potential consumer benefits/costs associated with establishing a competitive environment for TLD registries.
d. Recommendations regarding trademark/domain name policies set forth in the Statement of Policy; recommendations made by the World Intellectual Property Organization (WIPO) and recommendations made by other independent organizations concerning trademark/domain name issues.

Status of progress on task 7: Implementation of this task is well under way.

For nearly the entire time since it was formed, ICANN has devoted a significant part of its activities to the consideration of the establishment of new generic TLDs, as was described in detail in ICANN's Third Status Report. The result of this effort has been the introduction, as of this writing, of seven new generic TLDs, doubling the number of generic TLDs to fourteen. The next stage in this process is to evaluate the effects of those introductions, and to consider the desirability and appropriateness of additional new TLD introductions in the future.

In June 2001 the ICANN Board adopted Resolution [01.74], which directed the President to form and chair a New TLD Evaluation Process Planning Task Force, in order to create a plan to monitor the introduction of these new TLDs and evaluate their performance and their impact on the performance of the DNS. More specifically, the Board directed that the Task Force should recommend:

“(a) a plan for monitoring the introduction of new TLDs and for evaluating their performance and their impact on the performance of the DNS. This assessment should focus in technical, business, and legal perspectives and rely on data gathered as part of the contractual arrangements with the new TLDs as well as other data inputs that can be readily secured; and

“(b) A schedule on which a plan should be executed.”

The Task Force is composed of 11 individuals that had been recommended by ICANN’s affected constituencies. The Task Force has just posted its final report at <http://www.icann.org/committees/ntepptf/final-report-31jul02.htm>, and the Board is expected to act on its recommendation shortly.

Thus, considerable progress under this task has been made, and is continuing.

C. Steps Required for Completion of the Joint Project

The progress toward completion of the Joint Project slowed markedly following the Third Amendment of the MOU. In large part, this reflected the fact that the tasks that were largely or completely within ICANN's control had been completed, and those remaining required the cooperation of various third parties, which has varied dramatically from task to task. In turn, this was a major reason for Stuart Lynn's decision, as the new CEO of ICANN, to call for significant reform of ICANN. Dr. Lynn concluded, after his first year in office, that while real progress had been made, substantial changes were required if ICANN was to continue to make progress in the future. His report, published in February 2002, itself generated the intense and comprehensive rethinking of ICANN's structure and procedures that is schedule to be completed in Shanghai in late October of this year.

Successful completion of this reform process is, in our view, critical to the successful completion of the Joint Project. In addition, we believe that the MOU should also be reformed, both to reflect the different circumstances in which both parties find themselves and to more realistically recognize the steps that need to be taken, and the relative priority of those steps, to fully complete the Joint Project.


15 August 2002

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