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From: Tom Newell <tomn@internic.net>Subject:      Network Solutions Proposal

X-To:         domain-policy@internic.net
To: Multiple recipients of list DOMAIN-POLICY
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:
We welcome comments regarding the paper at the address:
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
April 17, 1997http://www.netsol.com/papers/internet.html
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
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 fullpotential.
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
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
*  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 yetextensively
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.
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 ]
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.
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.
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 proposalare:
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
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 countryTLDs; 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 andAPNIC.
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  IPregistry
* 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.
CONCLUSIONThe importance of the issues presented in this paper cannot be
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 tocome.
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.