Re: [ga] Restructuring Proposal
- To: DannyYounger@cs.com, email@example.com
- Subject: Re: [ga] Restructuring Proposal
- From: "J. William Semich" <firstname.lastname@example.org>
- Date: Sun, 24 Mar 2002 20:57:28 -0500
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I read your proposal with great interest. I agree with much of it, but it
seems very weak on the issue that seems of greatest concern to ICANN right
In light of all the reconsideration being given to ICANN's structure, and
the concerns raised over funding, I think it would be instructive for all
to review some of the same concerns I posted to Ira Magaziner and the NTIA
in Oct., 1998 on the issues of funding ICANN and the dangers of allowing
independent fiscal autonomy at ICANN. Although some of the actual language
in the ICANN bylaws has changed since 1998, the basic issues remain the
same: Who controls the purse strings? And who pays the costs?
That full text of that posting is included below. For my 1998 proposal to
solve the problems of funding and control please see:
I think most of the recommendations made then continue to hold true today,
and should be considered by the Evolution
and Reform Committee and by any others who have efforts underway to
restructure ICANN as well.
From: "J. William Semich (NIC JWS7)" <firstname.lastname@example.org>
Date: 10/3/98 10:19pm
Subject: Lack of Fiscal Accountability in ICANN Proposal
Attached is my first set of comments on the ICANN proposal, in Word 97 format.
Thank you for the opportunity to present my concerns to the interested
parties and stakeholders in this process.
J. William Semich (NIC JWS7)
President and Chief Financial Officer
.NU Domain Ltd
The New IANA-ICANN Bylaws: Who Controls the Money?
By J. William Semich
The latest set of proposed bylaws (version 5) for the New IANA (Internet
Assigned Numbers Authority), released on September 29 at IANA's Web Site at
http://www.iana.org, and currently posted as the ICANN Proposal at
seriously flawed by its lack of fiscal accountability to all of us who will
use its services and pay its fees.
If the bylaws are approved unchanged by the White House as the basis for
the Internet's first independent governance mechanism, the new ICANN
Internet Authority would be able to set a wide range of Internet-related
fees of any amount without constraint, float bonds of any amount which must
be funded by future revenues, as well as collect additional fees of any
amount to invest for undefined possible future needs, all such to be paid
for by you, me and our children, the Internet's users of today and
tomorrow, without their review, approval or control.
The new version of the proposed bylaws for the new Internet Authority was
submitted on October 2, 1998 to Ira Magaziner of the White House and the
Department of Commerce's NTIA, under the terms of the White House "White
Paper" released last June, to create the replacement for the US
Government's current contractual arrangement for management of the
Internet, which is set to expire on Sept. 30, 1998.
But the new bylaws are completely devoid of any provisions to create any
type of fiscal accountability for this, the Internet's first all-powerful,
government-sanctioned independent Authority.
Although the new bylaws make it clear that the source of the new Internet
Authority's revenues will be the Internet's end users and service
providers, it leaves all spending, borrowing, investment and other
financial decision-making solely in the hands of the Corporation's board of
directors, who's members specifically ''have the duty to act in … the best
interests of the Corporation and not as representatives of their Supporting
Organizations, employers or any other organizations or constituencies."
(Article V, Section 8)
Nowhere in the bylaws is the Board of Directors required to consult with
any outside groups, experts, or other interested parties on how best to set
its fees or plan its budget.
Nowhere in the bylaws is there any provision for any kind of independent
budget review or hearing mechanism or approval process for the budget,
borrowing, or any other fiscal decisions;
And nowhere in the bylaws is there any provision for any kind of
independent fee-setting review process or approval mechanism, either by
those who must pay the fees (the Supporting Organizations, who represent
the consumers of the services to be provided by the new Corporation) or by
any independent body of fiscal experts.
All these fiscal decisions are made solely by the new Internet Authority's
own Board of Directors.
The relevant language in the proposed new bylaws makes this absolute power
of the Board clear:
FIRST, it gives the board absolute control over any spending or borrowing
"Article IV, Section 1 (a)
…the powers of the Corporation will be exercised, its property controlled
and its business and affairs conducted by or under the direction of the
SECOND, it gives the board absolute control over the fee setting decisions:
"Article IV, Section 2. FEES AND CHARGES
The Board shall set fees and charges for the services, rights and benefits
provided by the Corporation to the Supporting Organizations and others,
with the goal of fully recovering the reasonable costs of the operation of
the Corporation and establishing reasonable reserves for future expenses
and contingencies reasonably related to the legitimate activities of the
And THIRD, it gives the Board the sole authority and absolute control over
setting its annual budget, with no requirement that it actually meet that
budget or that the budget pass any kind of review process, all this in one
simple line of the new Bylaws:
"Article V, Section 25. ANNUAL BUDGET
The Board shall prepare an annual budget, which shall be published on the
These three phrases are the total extent of any language in the new bylaws
that might be construed as setting ANY spending, fee setting and raising,
budgeting, borrowing, investing or any other fiscal constraints on the
board of an Internet Authority which will be the primary manager of the
single most important communications resource in the world.
Such an all-powerful and fiscally unaccountable organization as would be
created by the new bylaws is a classic textbook "Authority" in its
structure, and that is the crux of my problem with the "final" set of IANA
bylaws released on Sept. 29.
Look closely at any publicly-funded independent Authority in the US and you
will find a self-perpetuating, quasi-governmental organization whose
spending decisions can not be challenged, who spends the public's money
like water, who has all the power over its particular area of activity, but
no accountability to the public.
In the present case of the bylaws for the new Internet Authority, there is
minimal accountability for its policy decisions, and that is cause enough
But there is NO accountability for its borrowing, spending and fee structure.
There needs to be some kind of mechanism in the new entity that will create
a counter-force to the typical Authority's inevitable desire to grow and to
spend more and more money and increase its sway in the world (remember, the
margins in this business are huge. A big budget can "look" small when the
margin is in the double digits) .
The counter-force to spending increases could be a "budget review
committee" solely comprised of the groups that will fund the new Internet
Authority. Or it could be a Finance Committee made up of independent,
world-renowned fiscal experts who have no vested interest in the new
Internet Authority or the Internet per se. Or it could be a committee of
government finance experts with experience bringing public spending into
line. Or it could be some combination of the above.
It would be a real tragedy if, in its first efforts at self-government, the
Internet community were to hand over management of the Internet to yet
another quasi-public Authority, perhaps best defined in an article I
co-authored nearly ten years ago:
"Authorities constitute a permanent, expansionist government, collecting
and spending more and more public money, running up more and more public
debt, and making more and more critical decisions on the public's behalf
with each passing day. And because authorities do all this out of site -
and beyond the control - of the general public, they constitute, finally, a
"Inside the Shadow Government," by John Strahinich and J. William Semich,
cover article, Boston Magazine, November, 1989.
At 02:34 PM 3/23/2002, DannyYounger@cs.com wrote:
>I have prepared a restructuring proposal for consideration by the Evolution
>and Reform Committee. The document is posted at
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