The battle over Internet domain names

¹elecommunication Policy, Vol. 22, No. 2, pp. 89—107, 1998 ( 1998 Elsevier Science Ltd. All rights reserved Printed in Great Britain 0308-5961/98 $19.00#0.00

PII: S0308-5961(97)00062-1

The battle over Internet domain names Global or national TLDs?

Milton L Mueller The paper examines the global controversy over Internet domain names, specifically the choice between top-level domain (TLD) names based on country codes and top-level domain names based on generic terms. The paper describes the historical background of the existing TLD naming scheme and the breakdown in the principles and procedures used to ration domain names. It develops a critique of national TLD names and an argument for expanding the number of global TLDs. Global TLDs are more useful semantically, permit more room for price competition and service innovation, and are more suited to non-territorial basis of Internet communication. More generally, they foster a regime of free international trade in Internet-related services.  1998 Elsevier Science Ltd. All rights reserved. Milton Mueller is Director, Graduate Program in Telecommunications, Syracuse University School of Information Studies, 4-285 Science and Technology Center, Syracuse, NY 13244, USA (Tel: #1 315 443 5616; fax: #1 315 443 5806; e-mail: [email protected]). 1

Minasian, J., The political economy of broadcasting in the 1920s. Journal of Law and Economics, 1969, 12, 391—403; Hazlett, T., The rationality of U.S. regulation of the Broadcast Spectrum. Journal of Law and Economics, 1990, 33, 133—175; Douglas, S., Inventing American Broadcasting, 1899—1920. Johns Hopkins University Press, Baltimore, 1987; McChesney, R. W., The battle for the U.S. Continued on page 90

The emergence of wireless telecommunication after the turn of the century led to contention for what was then a new and rather mysterious resource: radio frequencies. With surprising rapidity, the construction of national legal and regulatory mechanisms to control the distribution of the right to occupy radio frequencies became the basis of new national regimes of communication regulation.1 The institutions that emerged in response to that challenge had lasting effects that spilled over into all forms of telecommunication. Today, the commercialization and expansion of the Internet have created an analogous turning point. In this case, the catalyst of institutional change is the Internet domain name. To end users, Internet addresses (email addresses, Web URLs, etc.) are composed of character strings separated by dots. Each character string represents a domain; the hierarchy of names mirrors the decentralized administrative structure of the Internet. Domain names provide a more persistent identifier than numerical Internet Protocol (IP) addresses, which may change frequently. Domain names also serve as a mnemonic interface between humans and the raw numerals that serve as the actual IP address. It is easier to remember, advertise and key in character strings like yahoo or united.com than sequences of numbers like 198.105.232.6. Figure 1 illustrates and labels the domain name hierarchy. Top-level domains (TLDs) are the two to five characters at the end of an Internet address. TLDs may appear to be an obscure topic, and an unlikely basis for a global controversy. Yet the system for distributing the right to create and manage a TLD is fundamental to the operation of the Internet. Just as the scarcity of radio frequencies provided the problem around which systems of mass media regulation crystallized in the 1920s, so domain naming will be the catalyst of a new system of Internet governance. The problem has already engaged more than a dozen US federal agencies acting through an interagency committee,2 the International Telecommunication Union, the European Union, many Internet users and service providers,3 and the Internet Society. Sometimes

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Battle over Internet domain names: M L Mueller

Figure 1. The domain-name hierarchy.

ferocious debate represents a socio-economic contradiction that can only be resolved through major institutional innovations.4

Continued from page 89 airwaves, 1928—1935. Journal of Communication 4, 1990, 40, 29—57. 2 The National Telecommunication and Information Administration recently issued a request for comments on the issue. See the US Department of Commerce, Request for Comments on the Registration and Administration of Internet Domain Names, Docket No. 970613137-7137-01, 1 July 1997. Nearly 400 comments were filed in response to the notice. 3 For a listserv containing the discussion of domain name issues, see http://www. ar.com/lists/newdom. 4 For a broader discussion of the institutional evolution of the Internet, see Kahin, B. and Keller, J. (eds), Coordinating the Internet. MIT Press, Cambridge MA, 1997. 5 These TLDs are now labeled ‘generic’ TLDs. The use of the term ‘generic’ is a very recent convention. Originally, most people referred to them as ‘international’ TLDs in order to differentiate them from the ‘national’ or country-code TLDs. In 1996, however, the intergovernmental organizations who were exclusively authorized to use the ‘.int’ TLD (e.g. the International Telecommunication Union) objected to this terminology because they wanted to reserve the ‘international’ moniker for themselves. 6 The codes are drawn from an ISO standard (number 3166). In order to avoid determining what entities constitute internationally recognized countries, Internet administrators rely upon ISO IS 3166 Registration Authority and, through it, UN Statistical Office recognition of a country, as the requirement for assignment of a country code.

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Thesis of the paper The domain naming controversy is complex and can be analyzed from several vantage points. This paper focuses on only one aspect of the issue: the choice of national or global names as the basis for Internet naming in the top level. There are currently two different naming structures in the top-level of the Internet. Seven so-called ‘generic’ TLDs are based on a small number of abstract categories that represent types of organizations. The most popular are .com, .org, and .net; I refer to them here as global TLDs or GTLDs.5 The other naming structure is based (roughly) on political geography, and consists of two-letter codes for countries or territories.6 I refer to them as national TLDs or NTLDs. Examples include .cn for the Peoples Republic of China, .uk for Great Britain, and .fr for France. Outside of North America, the vast majority of domain name registrations take place within a national TLD. Within the United States and Canada, on the other hand, most domain name registrations are in the global TLDs. The dichotomy between national and global TLDs is a critical part of the current controversy. Any proposal to reform the domain naming system must first decide whether to expand the number of global TLDs, or retire them altogether and require all domain names to fit within the national TLD scheme. That choice has important economic and political implications, not only because of the different naming structures, but also because of the regulatory and trade implications of delegating authority over top-level domains in these two distinct ways. This paper argues that TLDs should be global, not national, and that the number of global TLDs should be expanded. The exposition proceeds in four steps. f The first section situates the analysis within two bodies of theoretical literature: the new institutional economics and the international regime theory.

Battle over Internet domain names: M L Mueller

f The second section describes the historical background of the existing TLD naming scheme. f The third section traces the breakdown in the old system of rationing domain names caused by the commercialization and global diffusion of the Internet. f The last section evaluates national TLDs and global TLDs from a semantic, economical, and political standpoint. A case is made for expanding global TLDs. It also shows why a choice between national and global TLDs must be made. Two important and closely related issues cannot be handled in this article. This paper does not engage in a detailed analysis and comparison of the various plans for expanding global TLDs. It also does not examine in any depth the legal and policy issues raised by the intersection of domain name assignment and trademark protection. Both of these important subjects warrant separate papers.

Theory: institutions, property rights, and international regimes

7

North, D. C., Institutions, Institutional Change, and Economic Performance. Cambridge University Press, New York; 1990; Alston, L., Eggerston, T. and North, D., Empirical Studies in Institutional Change. Cambridge University Press, New York; 1995. See also Coase, R., ‘The problem of social cost’. Journal of Law and Economics, 1960, 3, 1—44. 8 Organizations are groups of people who act jointly in production or on a task. Institutions are the rules and norms external to the organization that order and constrain their behavior. The theory recognizes that organizations are created to take advantage of the opportunities that a particular institutional framework creates, and that institutions are altered as organizations evolve. In order to analyze and clarify this relationship, the theory requires a clear conceptual distinction between the rules (institutions) and the players (organizations).

In identifying the domain naming system (DNS) as the catalyst of institutional change, I am adopting the theoretical conception of ‘institutions’ and ‘institutional change’ developed by Douglass C. North.7 Commercial development and globalization of the Internet are forcing the organizations that once coordinated the Internet to build an institution around themselves.8 The transformation is driven by inadequate specification of the property rights governing a key resource (domain names). These inadequacies have become increasingly apparent as the Internet grows in scale, globalizes, and moves from the subsidized, non-profit sector into the broader society. The result is an institutional crisis—a breakdown in the legitimacy of the coordinating organizations and a lack of consensus on the principles and norms governing resource rationing. The problem can only be resolved by creating a new institutional framework. What is unique and fascinating about the Internet is that this transformation must take place on a global basis in a world where the most readily available institutional frameworks are national in scope. Domain names are the scarce and valuable resources in question. Scarcity exists because one users’ utilization of a particular character string as a name excludes another user from adopting the same string as an address at the same level of the naming hierarchy. Each domain is managed by a specific organization with the power to delegate names and addresses to people or organizations below them in the hierarchy. Scarcity is most intense at the top level. Technically, the top level of the domain name hierarchy is no different from any other level; hence, there should be room for an almost unlimited number of TLDs. However, the current Internet administrative mechanisms have no defined procedures for expanding the supply of TLDs. Altering the supply of top-level domain names requires international coordination in the selection and delegation of TLD names and modification of the common databases that control Internet traffic routing and name resolution. It also directly affects the supply of domain names at all lower levels. Domain names perform their function by being meaningful; thus, any discussion of domain names as a resource cannot ignore semantics. Both the economics and politics of domain naming are conditioned by the

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9

Cowhey, P., The international telecommunications regime: the political roots of regimes for high technology. International Organization, 1990, 44(2), 171. 10 Cowhey, Ibid; Drake, W. J. and Nicolaidis, K., ‘Ideas, interests, and institutionalization: ‘trade in services’ and the Uruguay Round’. International Organization, 1992, 46(1), 37—100. 11 Drake, W., Territoriality and intangibility: transborder data flows and national sovereignty. in Beyond National Sovereignty, ed. K. Nordenstreng and H. Schiller. Ablex, 1993, p. 268. 12 See e.g. Comer, D., Internetworking with TCP/IP, Vol. 1: Principles, Protocols and Architecture, 3rd edn. Prentice-Hall, Englewood, NJ, 1995, pp. 388—390. 13 RFC-799, Mills, D., Internet name domains. RFC-799, COMSAT, September 1981. RFC 920, Postel, J. and Reynolds, J. Domain requirements. October 1984. STD-13, Mockapetris, P., Domain names— concepts and facilities. ISI, November 1987. 14 ‘[A domain] must be responsibly managed. There must be a responsible person to serve as an authoritative coordinator for domain-related questions. There must be a robust domain name lookup service, it must be of at least a minimum size, and the domain must be registered with the central domain administrator (the Network Information Center (NIC) Domain Registrar)’. RFC 920, Ibid. 15 The document stated that ‘most of the top level names will be very general categories like ‘government’, ‘education’, or ‘commercial’. The motivation is to provide an organization name that is free of undesirable semantics’. Ibid, p. 2.

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associations and correspondences the names create in the minds of Internet users. This is most obvious in the conflicts over trademark protection. But semantic issues also play an important role in other controversies over how to administer and organize the top-level domain. In assessing the emergence of a new institution, I also draw upon the political science literature that applies international regime theory to the telecommunications sector. The definition of a ‘regime’ in this literature corresponds to institutional economics’ definition of an ‘institution’: a regime is a system of principles, norms, rules, and decision-making procedures that states use to solve problems of collective action. International regimes change when new coalitions of business interests and political constituencies ‘successfully challenge domestic regulatory bargains in countries with a significant impact on the world market’.9 Political scientists Peter F. Cowhey and William Drake have analyzed the paradigmatic change currently underway in the organization of the telecommunications sector.10 The old international regime was organized around national PTT monopolies and coordinated by the International Telecommunication Union (ITU). It was bolstered ideologically by the prevailing concept of ‘natural monopoly’ in telecommunications. Its purpose was to ‘preserve sovereignty over national networks, while setting rules for international interconnection and the joint, noncompetitive provision of services’.11 Both writers have described the development of a new ‘epistemic community’ in the 1970s and 1980s that replaced the prevailing paradigm of ‘natural monopoly’ in telecommunications with the concept of ‘trade in services’. This ideological shift led to a new international regime in telecommunications organized around transnational competition, and moved the regime’s institutional center of gravity away from the ITU and towards the World Trade Organization. In many ways, the domain naming controversy is re-enacting this struggle. An older international regime based on national administrative units and coordinated by a sector-specific intergovernmental cartel (the ITU) is contending for power with a regime based on transnational competition and coordinated on the basis of free trade principles.

The historical origins of GTLDs and NTLDs Understanding the political economy of domain naming requires some familiarity with the historical background of the domain naming system. Some descriptions of global and national TLDs imply that the choice was created deliberately to offer more flexibility to users.12 In fact, the bifurcated naming structure was the product of casual afterthought, and represented an uncharacteristic lapse in consistency on the part of early Internet designers. The domain naming system (DNS) took its existing shape between 1981 and 1987.13 The first document to describe what is in effect the system of domain naming that existed until 1997 was RFC 920 (October 1984). The DNS linked domains to organizations and conceived of domain registration as a hierarchy of delegation among organizations.14 As an extension of this logic, RFC 920 created only a few top-level domains that symbolized certain categories of organizations.15 These categories reflected the range of organizations typically encountered by the research community supported by the US government’s Advanced Research Projects Agency (ARPA) and Defense Advanced Research Projects Agency (DARPA):

Battle over Internet domain names: M L Mueller

military (.mil ), commercial (.com), governmental (.gov), and educational (.edu).16 In other words, top-level domains were a rudimentary index, a controlled vocabulary or classification scheme that made addresses easier to remember and provided users with a clearer idea about who or what was on the other end of an Internet address. The concept that TLDs should be limited in number and should index the Internet has proven to be tenaciously persistent, even though it is not technically necessary nor terribly feasible given massive Internet growth since then. Note also that the DNS as originally conceived required a centralized administration point—an authoritative place where domains could be defined and registered. When the Internet was unambiguously a US Government-owned and -funded project, the identity and legitimacy of this ‘central domain registrar’ was not at all problematical. The central authority was the Network Information Center (NIC). Until 1993, the NIC’s managing agency was the Defense Information Systems Agency (DISA). Many of its functions were performed by contractors in industry or higher education.17 One of the most important of these was the Information Sciences Institute of the University of Southern California, which served as the Internet Assigned Numbers Authority (IANA). In 1984, the authors of RFC 920 also proposed the idea of using two-letter country codes as top-level domains for ‘countries’. According to Jon Postel, the longtime director of IANA: . . . the country code TLDs were pretty much an afterthought to a difficult process of coming up with the original generic TLDs. A comment was made that some people might want to have names specific to their own country, and it was pointed out that a convenient list of country codes existed (ISO 3166).18

16 For a time there was also a .arpa TLD and later the .net and .int TLDs were added. 17 Earlier, DISA was named Defense Communications Agency. From 1986 to 1990, NIC functions were outsourced to SRI International of Menlo Park, California. In 1990, DISA reopened bidding and awarded it to Government Systems, Inc., of Virginia. GSI was the corporate precursor of Network Solutions, Inc. 18 Jon Postel, email communication with the author, 4 February 1997. 19 The .uk domain, the first foreign country code to be registered in 1986, is not actually an ISO-3166 code. The ISO standard for the UK is .gb. The Canadian (.ca) domain was registered with IANA in May 1987 and the first registrations were approved in 1988. World Internetworking Alliance, Internet DNS Historical Timeline, http:// www.wia.org/dns-law/pub/timeline.html. 20 For example, ‘username@orgname. us.com’ or ‘[email protected]’

Actual use of country code TLDs began in 1986 and expanded gradually. By 1991, 14 country codes were in use and accounted for 16% of all registered domains.19 Their relative insignificance in the early years tended to obscure the fact that they represented a taxonomy that was logically inconsistent with the GTLD scheme. ISO-3166 was a controlled vocabulary based on the political jurisdictions of national governments. That categorization scheme diverged significantly from the original idea that TLDs represented different types of organizations. A coherent naming hierarchy would have used either of the two for the top level, but not both. (In fact, either one of these two naming principles could have been established as the standard for either the top or the second level.20) More important than the taxonomic contradiction, the creation of NTLDs implied a completely different method of delegating authority over domain naming. National TLDs suggested an Internet in which the first level of delegation would be to national authorities. Presumably, these registrars would be the peers of US government agencies. Logically, then, the US agencies should assign domain names under a .us NTLD. But that is not the way it happened. By 1991 all but three domains in the USA were registered under the GTLDs. The conflict remained latent, however, because the Internet itself was still a closed project of the US military—industrial—educational complex, not a public, open network, and the vast majority of registrants were in the United States.

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Internet commercialization and TLDs The partial commercialization and global diffusion of the Internet from 1992 to 1996 thrust the DNS into a much more complex and demanding social environment. It also pushed the network towards new levels of growth. Table 1 shows the tremendous growth in the number of host computers connected to the Internet from January 1992 to mid-1997. Table 2 shows the number and proportion of domains registered from July 1991 to July 1997. The numbers are broken into three categories representing three different groups of TLDs: f the open, global TLDs, .com, .net, .org; f the national TLDs, including .us; f the TLDs restricted to US registrants, .edu,. mil, .gov. It is evident that the proportional dominance of the Internet by American educational, military, and governmental organizations eroded very quickly. By the middle of 1996, the open, global TLDs registered a peak of 71% of all domains and 38% of all host computers, while the proportion under the .edu, .gov, or .mil TLDs shrank to about 3% of domains and 23% of hosts. Growth put enormous pressure upon the DNS. The eventual result was a breakdown in the legitimacy of the principles and procedures used to ration domain names. By ‘breakdown’ I do not mean that the DNS ceased to function. The crisis was, rather, one of legitimacy and of institutional capacity. Contention for domain names created unprecedented legal, economic, and political conflicts over property rights. These conflicts made it evident that new principles and procedures for allocating domain names, especially authority over TLDs, needed to be established. Yet there was no institutional capacity to define and implement such changes. The crisis manifested itself in the following ways: f It began with delegation of authority over foreign registrations to Network Information Centers (NICs) and national TLD registries outside the US. An increase in the proportion of name registrations outside the US heightened the latent contradiction between GTLDs and NTLDs, while exacerbating confusion about the locus of the authority to construct and implement changes in the way the DNS operated.

Table 1. Number and percentage of Internet hosts by TLD type, 1992–1997. .com, .net, .org Jan 1992 July 1995 July 1996 July 1997

204,587 2,245,776 4,883,697 7,100,508

National TLDs 28% 34% 38% 36%

205,438 2,485,336 5,087,518 8,535,183

.edu, .gov, .mil 28% 37% 39% 44%

316,975 1,910,888 2,909,785 3,904,309

Total 44% 29% 23% 20%

727,000 6,642,000 12,881,000 19,540,000

Source: RFC 1296, Jan. 29, 1992; Network Wizards.

Table 2. Number and percentage of domains by TLD type, 1991–1997. .com, .net, .org July July July July

1991 1995 1996 1997

207 89,404 452,210 1,207,802

National TLDs 32% 60% 71% 70%

104 47,555 167,746 506,493

Source: World Internetworking Alliance, Network Wizards.

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.edu, .gov, .mil 16% 32% 26% 29%

334 12,342 17,006 19,708

Total 52% 8% 3% 1%

645 149,301 636,962 1,734,003

Battle over Internet domain names: M L Mueller

f It continued with widespread adoption of the practice of charging fees for registrations, first in Europe and then in the US. Partial commercialization of the registration function by the National Science Foundation made registration appear to be a profitable business controlled by an exclusive monopoly. f The old Internet policy of handing out domain name registrations for free on a first-come, first-served basis collided head-on with the varying economic value of specific names to specific users. f The rise of unauthorized, competing domain name server companies threatened to destroy altogether the established InterNIC’s control over the central coordinating functions. Each of these points is elaborated below. Charging for registrations

21

‘National Science Foundation Network Information Services Manager(s) for NSFNET and the NREN Project Solicitation’, 19 March, 1992. Available at http://rs.internic.net/nsf/solicitation.html . 22 ‘Network solutions will provide registration services to include the ROOT domain, top-level country domains, and secondlevel domains under.us,.edu,.com,.gov,. org, and.net. In addition, we will register inverse addresses in the special INADDR domain, if required. Administrative and technical points of contact will be included as part of the domain registration’. From modified NSI proposal, October 1992. Available at: http://rs.internic.net/nsf/nis/ proposal-toc.html . 23 The original NSF Project Solicitation had said that it was ‘possible for responders to propose to charge user fees’. See http://rs.internic.net/nsf/solicitation.html.

In 1992, DISA felt that the growing educational use of the Internet and the construction of the National Research and Education Network (NREN) backbone required the shifting of some NIC responsibilities to the National Science Foundation. In March 1992, the National Science Foundation (NSF) announced that it would outsource those parts of the domain name and IP number registration to private companies.21 A five-year contract to run what was dubbed ‘the InterNIC’ was awarded to Network Solutions, Inc. (NSI), General Atomics, and AT & T on 1 January 1993. NSI was given the exclusive right to register second-level domain names in the .com, .org, .gov, .net and .edu TLDs.22 While all three of the InterNIC contractors were for-profit companies, the contract did not represent real privatization of the name-space. The procedures and policies governing domain names remained essentially the same as they had been when registration was performed by the Defense Information Systems Agency: names were handed out for free on a firstcome, first-served basis. Second-level domain names were not viewed as commercial resources, the distribution of which should be carefully managed to preserve value. NSI was simply expected to relieve the government of the operational aspects of registering users. In accordance with this paradigm, NSI set for itself the goal of making domain name registration as fast and as automatic as possible. More fundamentally, the root servers that stored lists of recognized TLDs and provided information about where to resolve domain names were still funded by the government and operated by exclusive government contractors or even by volunteers. Thus, even though access to and use of the Internet was becomingly increasingly open to commercial and private entities after 1990, the central administrative functions were still monopolistic and noncommercial. The real impetus for change came when NSF allowed NSI to charge fees for name registrations. In Europe, a number of TLD registration organizations had already begun charging for services, often assessing very high fees. The number of domain name registration requests handled by NSI went from only 300 per month in 1992 to 45,000 per month by late 1995. The commercial (.com) domain accounted for the bulk of the growth. The constant increase in scale made free registration economically unsustainable, and the commercial nature of the registrants made subsidies politically inappropriate. In September 1995, NSF authorized NSI to charge $50 per year for each second-level name registration in .com, .edu and .org.23 The fees generated an income stream in the tens of millions of

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dollars. As of March 1997, registries serving 67 of the NTLDs charged fees for domain name registrations.24 Charging for registration, however, raised as many questions as it answered. Were the registries making monopoly profits? Some of the European NICs were charging hundreds of dollars and in some cases requiring contributions in the thousands of dollars. If registration was a business, why could not other companies enter the market and compete? What recourse did paying customers have if they did not like the service of the registrar? Globalization of the Internet

24

‘Global Domain Name Status Report’, NetNames, London. March 1997. Available at http://www.netnames.com. 25 The formation of Reseaux IP Europe (RIPE) in 1990 provided a basis for delegating Internet registration authority for Europe. See RFC 1174, ‘IAB recommended policy on distributing internet assignment’. V. Cerf, August 1990; and RFC 1181, ‘RIPE terms of reference’. R. Blokzijl, September 1990. 26 Postel, J., and Cooper, A., RFC 1480, The US domain. June 1993, p. 2.

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During the partial privatization process, the global vs. national status of TLDs became even more confused. After 1990, regional NICs, first in Europe and then in Asia, were established to begin geographically distributing the authority to assign numbers and register domain names.25 Most of the new domain-name applicants outside the US were registered under the two-letter national TLD registries coordinated by these regional organizations. Although the intention behind the original GTLDs had been to register any organization anywhere in the world,26 the new domain-name regime now restricted three of the old GTLDs (.edu, .gov, and .mil) to registrants inside the US, but .com, .org, and .net accepted registrations globally. The opening and commercialization of the Internet produced massive growth in domain name registrations outside the USA. From July 1996 to July 1997, a growing portion of the growth was channeled into the national TLDs (Tables 1 and 2). By July 1997 NTLDs accounted for 44% of all hosts, the largest single portion, and rebounded from 26 to 29% of all domains. Nevertheless, the open, global TLDs owned by NSI attracted a large share of the growth. Companies outside the US could and did register under NSI’s .com TLD and acquire a domain name unencumbered by a country code. Many multinational corporations valued the simplicity and brand appeal of a domain name under .com enough to pay thousands of dollars to acquire names there when necessary. A proportionally significant number of non-profit organizations and Internet service providers found .org and .net attractive as well. Table 3 shows the percentages of registrations in the open, global TLDs from organizations outside the United States as of January 1996. In this situation, the disparity between America’s reliance on GTLDs and the rest of the world’s reliance on NTLDs became increasingly apparent. As domain naming became increasingly contentious the disparity began to take on economic and political overtones. Why should US-based registries be the only ones eligible to register global domains? This was at best an irritating reminder of US dominance of the Internet,

Table 3. Global TLDs in use by non-US organizations, January 1996. Hosts .com .org .net

Domains

Number

Percentage

Number

Percentage

150,000 19,000 126,000

6 7 17

10,200 900 2,200

15 13 45

Source: J. Quarterman, MIDS.

Battle over Internet domain names: M L Mueller Table 4. Top ten NTLDs (number of domains), 1991 – 1997. Rank 1 2 3 4 5 6 7 8 9 10

1991

1995

1997

Country

Domains

Country

Domains

Country

Domains

.AU (Australia) .CA (Canada) .DE (Germany) .NL (Holland) .SE (Sweden) .UK (Gt. Britain) .US (United St.) .CH (Switzerland) .NZ (New Zeal.) .NO (Norway)

29 20 15 11 9 5 3 2 2 2

.JP (Japan) .UK (Gt. Britain) .CA (Canada) .DE (Germany) .US (United St.) .AU (Australia) .FR (France) .IT (Italy) .SE (Sweden) .NO (Norway)

5717 5716 4219 3946 3862 2831 1797 1740 1701 1238

.UK (Gt. Britain) .DE (Germany) .JP (Japan) .DK (Denmark) .AU (Australia) .CA (Canada) .US (United St.) .SE (Sweden) .NL (Holland) .IT (Italy)

76,916 56,059 31,143 30,873 28,523 21,753 21,590 19,745 18,948 17,377

and at worst, a kind of unfair competitive advantage in the market for domain-name registrations.27 The semantic structure of NTLDs made it difficult to break out of this impasse. Why make country codes the taxonomic organizing principle of TLDs, after all, if registrations are distributed regardless of national boundaries? The presence of GTLDs also undermined the ability of NTLD registries to impose consistent policies and regulations upon applicants for names (not necessarily a bad thing!). For example, a Hong Kong high-tech company was told that it needed a certain kind of government license before it could acquire a name under the .hk TLD.28 Instead of acquiring the license, the organization simply registered under .net. Resource contention

27 There was, in fact, a .us TLD, run directly out of the University of Southern California by IANA. This TLD, however, imposed upon users an extensive multilevel categorization scheme based on political geography, and for that reason tended to be used primarily by state government agencies and schools. 28 Under Hong Kong regulations, a public non-exclusive telecommunications service (PNETS) license is required of all valueadded service providers. Holders of these licenses must pay a US $0.0054 per minute ‘interconnection fee’ to the PSTN and an annual licensing fee. 29 There are 22 spaces available to the left of the ‘dot’, and 37 available characters: the 26 letters of the English alphabet, 10 numerals, and the hyphen. 30 Not all character strings are created equal: ‘happy-trails’ is worth more than ‘xfh-ghg23we’. Yet NSI and virtually all other Internet registries in the world charged the same price for both—if they charged anything at all.

The most fundamental problems arose from conflicts over the right to control domain names that matched company names. In other words, contention for name resources began to occur. This happened most notably within .com, but there was also contention for names within the commercial sub-domains of national TLDs outside the United States. Scarcity was not caused by depletion of the name space as such. There are 3722 possible combinations of characters in the second level, more than the estimated number of atoms in the universe.29 The problem was that most users want second-level domain names that are identical, or at least semantically related, to their organization’s name. For such users, the range of options is considerably narrower. Competition for such names struck at the old Internet administration in a far more fundamental way than had the problem of increasing scale. It demonstrated that the economic value of domain names was not primarily a function of the operational costs of registering users and running servers; there was a semantic dimension to the resource that the first-come, first-served principle ignored entirely.30 Even after fees were instituted, the unmanaged method of handing out names created a huge gap between the cost of acquiring names and their potential economic value. It is a fundamental law of economics that large gaps between price and value give rise to arbitrage. In this case, arbitrage took the form of name speculation. Alert individuals registered unused famous company names in the .com domain in the hopes that the registration could be resold. The most well-known example is a Mr D. Toeppen, who registered about 240 domain names such as deltaairlines.com, britishairways.com, crateandbarrell.com, ramadainn.com, eddiebauer.com, greatamerica.com, neiman-marcus.com,

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Toeppen was involved in at least three lawsuits as a result. See Intermatic Inc. v. Toeppen, 1996 US Dist. Lexis 14878, 40 SPQ2d (BNA) 1412 (N.D.Ill,1996); Panavision Int’l L.P. v. Toeppen, 945 F.Supp. 1296,—USPQ2d—(C.D. Cal. 1996); and American Standard Inc. v. Toeppen, 1996 US Dist Lexis 14451 (C.D. Ill., 1996). Desirable domain names were traded for significant sums even when there had been no prior intention of speculation. For example, when Microsoft wanted to acquire slate.com for its web magazine, it had to acquire the domain name through an intermediary for $10,000. Shaw, R., Internet Domain Names: Whose domain is this? Coordination of the Internet. MIT Press, Cambridge, MA, 1997. 32 Proctor and Gamble, for example, registered 36 popular terms related to its products such as pimples.com, diarrhea.com, and dandruff.com. All of these domain names point to the same web page. 33 NSI Domain Name Resolution Policy Statement, 23 July, 1995. Available at ftp://rs.inernic.net/policy/internic/internicdomain-1.txt. 34 There are many examples; among them: Juno Electric, a maker of light fixtures, took steps to attempt to deprive Juno On-line, an email service provider, of the domain name juno.com. An egregious case involves Roadrunner Computer Systems in Santa Fe, New Mexico, an Internet service provider that registered the domain roadrunner.com in May of 1994 was challenged in December 1995 by Time-Warner, owner of the cartoon character Roadrunner. The trademark that was used to challenge the domain name was issued more than a year after the domain name had been issued. For analysis, see Oppedahl, C., How is a domain name like a cow? John Marshall Journal of Computer & Information Law, 1997, 15(3), 437. 35 The Hasbro Toy company attempted to use NSI’s domain name challenge policy to win control of the domains clue.com and perfection.com because the words corresponded to names of its board games. 36 Two grassroots political groups have formed to oppose NSI’s domain-name challenge policy and to lobby for smaller domain-name holders: the Domain-name rights coalition, http://www.domain-name. org/home.html, and the American Association of Domain Names, http://www.domains.org/. 37 http://www.alternic.net. See also http:// www.mcs.net. For narrative accounts in the trade press see Thom Stark, What’s In a Namespace? @Internet, May 1997, available at http://www.boardwatch.com/ MAG/97/MAY /bwm47.htm; or Frezza, B., Top level domain by any other name. 1997, available at http://techweb.cmp.com/nc/ 802/802colfrezza.html . 38 ‘The chief technical officers of two of the largest ISPs on the planet indicated privately to me that unless something Continued on page 99

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northwestairlines.com, ussteel.com, and unionpacific.com.31 Individuals and companies also squatted on common generic terms or names of locations and countries to pre-empt them for their own future use or to profit from their resale.32 The final phase in the breakdown of the old rationing principle occurred when trademark law was invoked as a response to name speculation. When large corporations slow to adopt the Internet found that their name had already been registered, they litigated under trademark law. In order to protect itself against lawsuits in the cheapest and easiest way possible, NSI adopted a policy of unilaterally suspending names that were challenged on trademark grounds until the claims were resolved.33 Trademark protection, however, proved to be a blunt, unsatisfactory instrument. Trademarks vary by jurisdiction, by industry, and by geography; domain names under GTLDs do not. Claiming a right to a domain name under a GTLD on trademark dilution grounds thus pre-empted all other possible uses of the term within that domain. Large corporate trademark holders began to exploit NSI’s policy to take away legitimately acquired domain names from prior registrants.34 Some even tried to use NSI’s policy to attempt to grab ordinary generic terms.35 As noted previously, the issue of how trademark protection and domain names should be reconciled is outside the scope of this paper. The relevant issue here is that trademark litigation represented another departure from the first-come, first-served rationing principle, a modification that, despite its vast potential for abuse, recognized that the economics of domain names is driven by semantics. It is also relevant because the policy NSI adopted to deal with trademark claims in .com was so crude that it generated immense hostility.36 Opposition to the NSI monopoly intensified and the idea of competing name spaces began to surface. Competing name spaces Beginning in January 1996, a group of enterprising Internet Service Providers began to create alternative registries offering domain registrations under new TLDs.37 This included Paul Garrin’s ‘name.space’ alternative registry, Eugene Kashpureff’s ‘AlterNIC’, and later, Karl Denninger’s ‘eDNS’. The new, experimental GTLDs, which used names such as .free, .med, .biz, .inc, .ltd, .xxx and .sex, were more creative than the old InterNIC categories. But they were not recognized by InterNIC root servers, and hence were visible only to the small number of people who knew how to manually reconfigure their DNS stub resolvers to point to the alternative name servers. There was, however, a strong demand for additional top-level domains to compete with .com. If the alternative NICs managed to convince several large Internet Service Providers or the distributors of widely used domain name software to point to the alternative servers in addition to the name servers of InterNIC, critical mass would be established and the new TLDs would start showing up in URLs and email addresses. In fact, there are reports that the alternative name servers came very close to achieving that recognition.38 The effect of such recognition would have been to eliminate InterNIC’s centralized control of the root level of the domain-name space. Some raised the concern that decentralizing the root could lead to user confusion and fragmentation of the Internet. Perhaps more than any other factor, it was fear that InterNIC might lose its centralized control of the root that motivated the Internet Society

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(ISOC) and IANA to form an international committee to propose an institutional structure for the creation and administration of new GTLDs. With the dissolution of the DARPA and NSF contracts on the horizon, IANA and ISOC had developed a business plan to assume private control of the NIC functions and earn money by franchising new TLDs. The appendix describes this franchising concept and some of the other proposals for altering top-level domain naming that surfaced between late 1995 and the present.

The TLD as the catalyst of change At the beginning of 1997 the Internet was faced with fundamental questions about its administration. The future of the TLD was at the center of this storm. The essential issues can be summarized as follows:

Continued from page 98 happened soon, they were going to point to AlterNIC. The person who maintains and distributes the BIND software, the most commonly used domain name software by far, indicated publicly that unless the IAHC moved rapidly, the next release of BIND would have had AlterNIC servers in the shipped cache file’. David Conrad, President, APNIC, email communication with author, 18 February, 1997. 39 A plan drafted by IANA to create 300 new GTLDs (see the appendix) was condemned by many as an attempt by ISOC and IANA to unilaterally privatize and commercialize domain-name administration. Robert Shaw, an advisor at the International Telecommunication Union in Geneva, said ‘Personally, I think this is totally without any legitimacy. The domainname server space is a global resource and neither IANA nor ISOC have the right to appoint themselves as the taxing authority for the root level to the tune of potentially millions of dollars a year’. Quoted in Ken Hart, ‘Net plan masks power bid’, CommunicationsWeek International, 9 September 1996, Issue 170. 40 Complete plan is at http://www.gtldmou.org/. See the appendix for an outline. 41 Anthony Rutkowski, former Internet Society director, FCC official, and ITU official has been harshly critical of the plan, as have the Domain-Names Rights Coalition, the Commercial Internet eXchange, and numerous ISPs. Members of the European Union expressed opposition to elements of the plan. 42 The NTIA Request for Comments specifically requests consideration of whether GTLDs should be phased out; Various comments in the proceeding support this option; e.g. comments of Wolodkin, V., http://www.wia.org/pub/wolodkin-dnsnoicomments.html.

f Should there be more competition for registry services? These questions typically focused on the NSI monopoly, but were sometimes raised in the context of national TLD registries. f If one agrees that there should be more competition, what form should it take? Some advocated the creation of new global TLDs that would be exclusively managed by a registrar. In effect, this was a call for sanctioning new NSI-type registries to compete with .com. Others believed that the authority to register within a TLD should be shared so that users could port their domain name across competing suppliers. f Any attempt to expand the number of GTLDs (or to require shared administration of existing TLDs) faced even tougher questions: Who should decide how many new TLDs to create, and who if anyone would profit from the distribution of these valuable rights? In early 1996, IANA and ISOC attempted to unilaterally place themselves in this role; the effort generated strong opposition.39 A year later they attempted to overcome these criticisms by forming a political alliance with the ITU, the World Intellectual Property Organization (WIPO), and the International Trademark Association (INTA), creating the GTLD-MoU.40 This, too, was rejected as a ‘power grab’ by numerous interests with a legitimate stake in the Internet.41 In short, there was a pervasive lack of legitimacy on the part of existing Internet administrative organizations. Even assuming that the correct policy was known, the Internet lacked the institutional capacity to formulate and implement it. No one had clear property rights over the central coordinating functions. f The trademark issue threw an additional complication into the debate, whether new TLDs were desirable. Some argued that new GTLDs (.inc, .firm, .biz) would ease the problem of name conflicts in the second level by expanding supply. Others argued that adding new GTLDs would worsen the trademark problem by multiplying the number of domains where name speculation and trademark dilution could take place. Still others contended that new GTLDs should be created to reflect the 42 international classifications in which trademark owners can register their goods and services. f The dominance of GTLD registrations within the US represented a massive exception to the NTLD scheme. Concerns about this issue often took the form of a grumbling about the underutilization of the .us TLD. Some observers suggested that the exceptions to the NTLD scheme be abolished.42 Others argued that trademark litigation and

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other legal conflicts pertaining to Internet use would be easier to resolve if Internet domains conformed to traditional jurisdictional boundaries.

National TLDs vs. global TLDs Various proposals for changes in the DNS have been put forward, and there are important differences between them. However, while debating these proposals, it is easy to lose sight of the forest for the trees. Before a choice between specific models can be made, more fundamental questions about the function of top-level domain names and the political economy of the Internet must be resolved. The most immediate and significant issue, in the opinion of this writer, is the relationship between TLD administration and political jurisdictions. A domain name is more than just a mnemonic label; it is also part of the hierarchical delegation of administrative authority over the Internet. National TLDs link these administrative domains to political jurisdictions. Global TLDs on the other hand are independent of political jurisdictions. The difference between these two naming principles is more significant than it seems. As I will argue below, they imply two distinct international regimes for the supply of Internet-related services. The analysis below explores the implications of an Internet administration in which the top-level domains are organized on the basis of national or global names and registrars. We begin by setting out the advantages of a DNS hierarchy based on national TLDs. The purported benefits of national TLDs

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Unfortunately, given the truncated nature of the ISO-3166 codes this is not always easy. More on that later.

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One of the greatest strengths of a system of domain naming based on NTLDs is that it neatly resolves the question—how many TLDs there should be and who gets them? If domain naming is based on global TLDs, an institutional mechanism must be created to ration the number of TLDs and the means of distributing rights to register under them. If TLD names are based on the notion of a ‘country’, on the other hand, there is a clear, external criterion for determining how large the supply of TLDs should be. The number of TLDs is fixed by the number of national political units in the world. While the number of such states is not unchanging or entirely unambiguous, it is quite stable over time. (As the analysis below will argue, this fixity or stability can be considered a weakness as well as a strength.) The issue of who gets to administer the TLD is also fairly easy to resolve within a NTLD scheme. The nation-states themselves are established institutions that (in the vast majority of cases) are able to determine for themselves who gets the right. Indeed, given the semantic correspondences created by a NTLD naming scheme it seems odd, if not downright imperialistic, to give that right to anyone else. From a semantic standpoint (that is, in terms of the meaning conveyed by a TLD to the owner or viewer of a domain name), NTLDs also have some real strengths. Most Internet users are fully cognizant of what a nation-state is and which one they live in. Thus, a TLD naming structure based on national jurisdictions is intuitively clear to users. This assumes, of course, that users are able to establish a correspondence between actual country names and specific two-letter codes.43 As long as that is true, users who view an Internet address can immediately glean information about the organization/user behind the address. More fundamentally, the

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strength of NTLDs is derived from the semantic rigor of the ISO-3166 classification scheme. The ISO 3166 code offers a fixed set of categories that (in almost all cases) is exhaustive and mutually exclusive. That is, given the location of the organization administering the domain, any applicant for a domain can be unambiguously placed into one and only one NTLD. It is evident, however, that this scheme privileges geography, and specifically political geography, above all other criteria in domain naming. Under certain circumstances, this kind of semantic rigor can have important political and legal consequences. If TLDs are based on political geography, it may be easier to resolve jurisdictional issues surrounding legal and commercial conflicts in cyberspace. Domain names would provide a clear criterion for determining which laws and precedents applied to particular cases. International law would apply in transactions between domains in different TLDs. National law would apply to transactions between domains in the same TLD. Here again, the TLD naming structure appears to offer a tidy, unambiguous method for applying rules to the unruly Internet. Critique of NTLDs

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These worldwide TLDs include some of the largest registries in the world, such as .uk (United Kingdom) and .de (Germany). The most recent commercial registry is the .to domain associated with the island nation of Tonga, which operates out of San Francisco, charges fees identical to those charged by NSI. See ‘Global Domain Name Status Report’, note 24 above. See also Network Solutions, Inc., ‘Internet Domain Names System: Myths and Facts’. Available at: http:www.netsol.com/announcements/MYTHS4.html.

The advantages of a naming structure based on national boundaries, however, comes with a high price tag. All of the purported benefits of NTLDs accrue if and only if the assignment of national TLDs to domain name holders is uniform, consistent, and compulsory. A top level structured around national TLDs must be adopted to the exclusion of all other options. Hosts in a given territory must be registered under the TLD of their legal residence or incorporation. Without the global consistency that can only come from systematic, compulsory adoption of NTLDs, the semantic, economic, and legal/political advantages described above evaporate. If, for example, GTLDs co-exist with NTLDs and users can register in whichever one they prefer, the NTLD is no longer a reliable guide to the location of the domain-name holder or the applicable jurisdiction. The same problem arises if there are national TLD registries that do not require local residence to acquire a domain name under their country code. Currently, there are over 60 NTLD registries that do not require local residence or local incorporation.44 Some NTLD administrators actively solicit registrations from other countries in order to make money. To reap the benefits described in the previous section, extra-territorial registrations would have to be ended and the ban policed effectively on a global basis. This presumes a level of uniformity and cooperation that may not exist at the international level. The cost and disruption of a comprehensive migration into NTLDs would be substantial. At best, hundreds of thousands of .com registrants would have to add .us to their domain names; at worst, they would have to be buried deep within its overwrought naming hierarchy. If they were one of the tens of thousands of non-US registrants, they would have to give up their existing name entirely and register under the equivalent of .com maintained under their own country registry. The same name might not be available under that TLD. Many of these non-US businesses chose to register under .com precisely because it did not have a country code attached to it. Migration would therefore not be voluntary, and any attempt to make it compulsory would obviously generate strong opposition.

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45

The .us TLD, for example, has a very complex, four-layer naming hierarchy based on state codes, cities, and so on. See RFC 1480, Postel, J. and Cooper, A. W., The US Domain, June 1993. France has a similar scheme, and China is creating second-level naming categories based on provinces. Some NTLDs already reproduce the categorization scheme of the existing GTLDs at the second level, i.e. there is a .com or .co for commercial entities, .edu, .ac, or.sch for educational organizations, .gov for government organizations, and so on.

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The purported semantic advantages of NTLDs are undermined by the truncated nature of the ISO- 3166 codes. By cramming all country names into a code consisting of only two letters, the classification scheme often produces names that are counter-intuitive or indecipherable. Is .au Austria or Australia? Is .il Iceland, Ireland, or Israel? Why is .ch Switzerland and not China? How many readers of this article can guess what country .mo stands for (hint: it is not Mozambique, Morocco, or Mongolia)? ISO-3166 codes are only marginally better than numbers—and one purpose of the DNS is to get away from numbers. Forcing the entire Internet into NTLDs can only increase the depth and complexity of domain names. Generic classifications will be pushed into the second, third, and even fourth levels of the naming hierarchy. Thus, Internet addresses will have more levels and become longer and harder to use. Moreover, these complex hierarchies will not be standardized. Each country TLD registry will create its own set of second and third-level categories. Because it is usually governmental or academic/research organizations that administer NTLDs, naming structures tend to emphasize geographic and political categories.45 These naming structures are motivated more by an attempt to impose a top-down order upon users than by real user needs or desires. While no one disputes the right of national administrators to create naming structures within their own country, market choices of hundreds of thousands of users have already demonstrated a clear preference for flatter names. Second-level names in .com have traded for prices in tens of thousands of dollars for that reason. If NTLDs are compulsory, users will have no power to express these preferences. Under a compulsory NTLD system, domain names acquire a large amount of legal and political overheads; they begin to take on the characteristics of an article of incorporation. In an increasingly multinational culture and economy, this linkage is problematical. Why should an Internet-based business that is offering itself to a global market be forced to have a country code attached to its domain name? If the domain registration already requires the identification of a responsible operator and legal person, is it not possible to trace the responsible party and applicable jurisdiction regardless of what the domain name is? The issue of how to apply NTLDs to globally distributed businesses and organizations is a fatal flaw in any NTLD scheme that purports to be comprehensive. Consider a corporation with factories or sales offices in fifty countries. In order to maintain the consistency of the NTLD scheme, the office in each country would be required to obtain its own separate domain name registration under the applicable NTLD. This would pose enforcement problems, as many companies would prefer to have one domain with all their branches using third-level domain names defined by and for themselves. Enforcing conformity to the NTLD scheme would probably require highly technical and arbitrary regulatory distinctions to be drawn between internal and external networks. There is also the unwelcome possibility that the desired second-level name will not be uniformly available across all the NTLDs. Variance in the naming structure across national jurisdictions would also create inconveniences for any businesses with a significant number of foreign offices. On the other hand, if separate registrations are not enforced, it will be impossible to maintain the semantic rigor and jurisdictional clarity of the NTLD scheme. One of the biggest advantages of the NTLD scheme is its ability to authoritatively resolve the question—how many TLDs are there and who

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gets them—is also one of its prime weaknesses. Compulsory national registration sets an artificial limit on the supply of TLDs, and in so doing gives national governments the final say on how competitive or open the supply of registrations under a TLD will be. This has important implications for the way the market for Internet services evolves. Privileging national entities in the TLD space not only makes it easier for governments to protect the business of registration from economic competition, it also provides national authorities a bottleneck that can be exploited for purposes of political control. For example, attempts to implement a policy of cultural/economic protectionism by establishing linguistic or culturally based content quotas on the web (ideas that have been broached in Canada and France) could be implemented much more easily under a regime of national TLDs, wherein all the content was tagged with a ‘national origin’ label. It is ironic that a form of ‘Internet nationalism’ would be proposed now, when telecommunications and broadcasting industries are slowly extricating themselves from the constraints and inefficiencies of an international regime organized around national monopolies and intergovernmental organizations. Forcing Internet domains into a hierarchical framework organized around nation-states seems to be totally out of synch with the global, borderless nature of Internet communication, and the regional and local boundaries of language and culture. The eagerness with which the ITU has attempted to gain a strategic role for itself in the administration of Internet resources makes the prospect of Internet nationalism all the more worrying.46 ITU is the representative par excellence of the old regime in telecommunications. ITU is an intergovernmental organization and as such is strongly tied to national governments and national telephone companies. The GTLD-MoU (see the appendix), which the ITU played a major role in formulating and promoting, can be seen as an attempt to incorporate the Internet into the traditional governance model applied to the telecommunication sector.47 In summary, adopting country codes as the exclusive basis for TLDs is much more than simply a neat semantic and procedural solution to the problem of defining TLDs. It is a highly political act with important implications for how the Internet is regulated and how the global market for Internet services evolves. Why an open market for GTLDs is needed

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Tarjanne, P., Internet governance: towards voluntary multilateralism, Speech delivered at ITU Meeting of Signatories of GTLD MoU, Geneva, 29 April, 1997; Shaw, R., Internet domain names and the ITU. Inter.Act Newsletter of the ITU, February 1997. 47 Rutkowski, A. M., ITU Models and the Quest for the Internet. Available at http://www.wia.org/pub/ITU-MoU.html.

Global TLDs act as a rudimentary guide to the function or content associated with an Internet address. But they are not, and cannot be, a substitute for real indexes or catalogues, which require deeper hierarchies and more carefully structured categories. In practice, GTLDs almost always involve second-level domain names that represent the name or brand of a particular organization. That is because commercial users (and many non-profit organizations as well) view their domain name as an extension of their organizational identity. Accordingly, they have a strong incentive to adopt domain names that are as simple as possible—and that means names that have as few levels as possible. A deeper, more contentoriented hierarchy would eliminate many conflicts over names. But such a hierarchy, while appropriate for Usenet newsgroups that organize topics of discussion, would not suit the needs of organizations that want their Internet addresses to be ‘advertisable’ and easily identifiable. Thus, in a competitive, commercialized environment, GTLDs put a premium on

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See NSI NTIA comments, http://www. ntia.doc.gov/ntiahome/domainname/not-emailed/NSI.htm, section C 13.

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a flatter name space. They encourage name—space evolution that is driven by a mnemonic, brand-name-like dynamic. Global TLDs are also inherently transnational in orientation and administration. They are not tied to a particular political jurisdiction. Given the ease with which bits move around the world, an easily remembered, established brand identity in global TLD-space has much greater economic value than if it is purely local or national. This is true even if the content or function of a domain pertains to a specific country. A travel agent that specializes in tours of Africa, would almost certainly prefer Africa.tour to companyname.co.bw. There are numerous arguments in favor of the creation of new global TLDs. The simplest and most fundamental is that it would foster global competition in Internet-related services. New GTLDs opens the door to innovations in Internet addressing and branding. They would encourage experimentation with new naming structures, and make naming conventions and service offerings in TLDs and second-level domain names more responsive to user demands. Creating new TLDs is the most direct and effective way to mitigate conflicts over domain names in the second level. It increases the supply of second-level names. It also discourages name speculation. The ‘trademark-like’ status of second-level domain names has been greatly exaggerated by the artificial restriction on the supply of GTLDs devoted to business. As long as .com was the only game in town, naive Internet users could assume that typing in www.(companyname'.com was a reasonable way to find the web site of a particular company. Browser software reinforced this assumption by automatically filling in .com when users typed in an unadorned company name. In this environment, it was rational (if not ethical) for name speculators to take advantage of the huge gap between the low cost of registrations and the high potential economic value of famous company name registrations under .com. Given the monopolistic status of .com it was also rational (if not legally correct) for the affected companies to see such speculative registrations of their name by third parties as a dilution of their brand identity or trademark. Expansion of the TLD space is the only permanent solution to this problem. As alternatives to .com proliferate, the putative equation of domain names, brand names, and trademarks is progressively weakened. As the number of GTLDs grow, it becomes increasingly unlikely that the mere presence of a famous name in the second or third level of a domain name will attract attention or dilute the value of a brand. Another positive feature of new global TLDs is that it allows large Internet users to internalize control over the entire naming hierarchy. A company with its own TLD, e.g. .ibm, could have complete control over the naming structure at all levels. There is no serious disagreement with the proposition that there could be an almost unlimited number of new TLDs. The only operational constraints pertain to the transitional problems caused by adding too many new names and new registrars at once, before robust procedures for handling the additional demand are in place. The top level of the DNS is structurally analogous to every other level. Just as there can be an extremely large number of second-level domain names, so can there be a large number at the top level.48 User confusion is sometimes cited as a reason to restrain or limit the number of TLDs. This argument is based on the fallacious assumption that top-level domain names necessarily represent categories in

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a taxonomy, and that users will be confused unless the number of categories is limited and the semantic structure controlled. In fact, there is no empirical evidence that users benefit substantially from limits or controls on the number of categories in the top level. No users, not even the most naive, attempt to use TLD categories as an index any more. Users are obviously not confused by the large number of name possibilities in the second and third levels. All that matters is whether the TLD name itself is easy to remember and gives users some semantic cues to the nature of the address (eg .biz, .sex). The idea that controls are necessary is just an historical artifact of the old Internet DNS hierarchy. Is a choice necessary? Some readers may feel that the argument advanced here is based on a false dichotomy. Why can not NTLDs and GTLDs coexist? Both options are indeed part of the status quo. There is no intention to argue that NTLDs should be abolished or forcibly eliminated. In the long term, however, global TLDs and national TLDs are mutually exclusive approaches to domainname structure and policy. If global TLDs are expanded, fundamental changes in the economic and political environment for the administration of Internet domain naming will be set into motion. These changes cannot help but undermine the entire system of national TLD registrars. The semantic integrity, economic viability, and policy leverage of NTLDs will be eroded. An Internet domain naming regime based on global TLDs tells users: ‘domain name registration is a competitive, global business. Take your pick of suppliers. Choose whatever names, naming structures, policies, and services you like. It does not matter where you are located geographically’. National TLDs will be profoundly affected by competition from GTLDs. Many NTLD registries are non-profit organizations; some are still run on a part-time basis by volunteers. New commercial GTLD registries are likely to be more aggressive at marketing, pricing, and service development than existing NTLD registries. As existing registries are pulled into an environment of multinational, commercial competition their naming structures, policies, and prices will have to change. Elaborate hierarchical naming structures, such as those existing in the .us TLD, probably will not win many adherents in the private sector. Providing users a globally competitive choice among GTLDs also makes it more difficult to impose restrictive policies on the allocation of domain names. Unless such policies are driven by real business and legal concerns, Internet users will vote with their feet and register elsewhere. A similar fate awaits attempts to use control of domain names to achieve various kinds of political control over the Internet. As the number of competing global TLDs grows, the qualitative distinction between NTLDs and GTLDs will erode. From an end-user’s point of view, registration within a NTLD will become one of the many possible choices. The ability of NTLDs to compete with new, entrepreneurial GTLD registries will be handicapped, however, by the truncated, often indecipherable ISO-3166 codes. If country TLDs are hard to decode and/or semantically unrelated to the rest of the domain name, few will select them if they have a choice, especially when doing so requires fitting the name into generic second- and third-level categories. In its comments to the NTIA proceedings, NSI argued that since many NTLD registrars will give domain names to applicants not located in their country, there is no distinction between NTLDs and GTLDs, and therefore, users already have plenty of options. The argument is not entirely false, but more than

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a little disingenuous. NSI knows that for businesses seeking a GTLD, country codes are an unattractive and unwanted appendage. In any competition with .com (or newer, even zippier GTLDs), country codes are at an intrinsic disadvantage. The creation of new GTLDs even has the potential to undermine the special status of national TLDs to represent a ‘country’. What is to stop someone from starting a .china TLD, for example? Or a .asia TLD? If registration under TLDs becomes a truly competitive, global business, why should there be only one TLD administration to a country? National governments that attempt to restrict such activities would clearly be engaged in a restraint of trade in Internet-related services. In most countries, Internet service is treated as a value-added service, which usually is not as restricted as basic telecommunication services. Under the 15 February 1997 WTO agreement on trade in telecommunication services, valueadded and many basic telecommunication services will be opened up to foreign competition. Thus, the ability of national governments to impose monopolistic registration and naming policies upon Internet users will not survive long if global TLDs become the norm.

Summary and conclusions A global controversy over the restructuring and expansion of the top-level domain is underway. The debate follows a breakdown in the principles, norms, and procedures used to ration domain names. This paper argues that resolution of this controversy is a critical point in the evolution of an institutional framework for the Internet as a whole. The choice between a national and a global approach to TLD names is particularly important. The paper offers a critique of national TLDs and an argument for expanding the number of global TLDs. Global TLDs are more useful semantically, permit more room for price competition and service innovation, and are more suited to a non-territorial basis of Internet communication. More generally, they foster a regime of free international trade in Internet-related services.

Appendix Models of DNS reform 1. Free-for-all competition Sponsors/supporters AlterNIC, eDNS, name.space, some other US-based ISPs. TLD policy Expand number of global TLDs. Open expansion based on entrepreneurial initiative. Entrepreneurs ‘homestead’ or ‘squat’ on new GTLD names.

Advantages Open entry, market-driven model. Allows for, and has already produced, innovation in naming structures and service concepts. Disadvantages No institutional mechanism for avoiding conflict or limiting squatting rights. Decentralized, bilateral coordination raises possibility that Internet connectivity will be fragmented.

TLD policy IANA/ISOC franchise 300 new global TLDs over five years. Applicants pay a flat fee and a percentage of revenues to IANA/ISOC, who approve and authorize applications and define criteria. Coordination policy Franchising authority ensures that there are no name conflicts, and enforces operational criteria for distribution of TLD management rights.

2. Franchising Coordination policy Name conflicts avoided through voluntary, decentralized coordination of ‘name-server confederations’.

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Sponsors/supporters IANA (Note: support formally withdrawn in 1997 in favor of GTLD-MoU).

Advantages Introduces additional competition for registry services and expands supply of GTLDs.

Battle over Internet domain names: M L Mueller Disadvantages Centralized control of supply and policy. Authority centered in the US Franchising organizations have no formal legal status to issue rights. No institutional mechanisms defined for altering the composition of the franchising authority or changing its policies. 3. The IAHC GTLD-MoU Sponsors/supporters IANA, the Internet Society, ITU, WIPO, INTA, Federal Networking Council.

their names. Defines an institutional framework. Disadvantages Cartel-izes and politicizes GTLD space. NSI is not a member of GTLDMoU. Does not have consensus of Internet community. Public trustee model increases bureaucracy and may be used to limit competition. Gives trademark protection too much influence over domain name assignment. Incorporates the Internet into an international regime dominated by the ITU. 4. NSI Proposal

TLD policy Declares domain name space a ‘public resource’ to be administered as a ‘public trust’. Creates 7 new global TLDs. Registration authority under. GTLDs shared among 28 competing registries that represent different world regions. Recognizes right of national sovereigns to control and administer NTLDs. Subjects second-level domain name assignments to trademark review administered by WIPO; gives owners of internationally famous names sweeping powers to prevent usage of their name in second-level of new GTLDs.

Sponsors/supporters Network Solutions, Inc. TLD policy New TLD registrars authorized by a monopoly ‘DNS manager’ upon application from commercial entities. Applicants must meet minimum technical and financial requirements. TLDs would be ‘exclusive brands’ rather than shared. No fixed limit on number of TLDs.

Coordination policy Creates international governance framework for the administration of the DNS. The framework consists of a Council of Registrars (CORE) and a Policy Oversight Committee (POC) with the authority to add new GTLDs to the root of the DNS, select new domain name registrars, and develop dispute resolution mechanisms over conflicts between parties concerning rights to domain names.

Coordination policy IANA functions moved to a US Govt interim sponsoring organization and eventually transferred to a ‘legally anchored’ International Public Advisory Group (IPAG). The US Govt agency (later, IPAG) selects an exclusive DNS Manager from competing bids. DNS Manager manages the root level of the DNS hierarchy, establishes and operates a global root server system, maintains central databases and lists, authorizes new TLDs.

Advantages Modest expansion of GTLDs. Shared registry model prevents users who change service providers from losing

Advantages Introduces additional competition for registry services and potentially unlimited expansion of GTLD supply.

Separates competitive functions from those which (may be) naturally monopolistic. Reliance on US government in short term maintains stability of centralized coordination but buys time to create firmer legal framework for central body to work within. Disadvantages Monopoly on root level and root server operation and maintenance may not be necessary or optimal. Maintaining US control may cause political and legitimacy problems. Defers toughest institutional issues to creation of IPAG. 5. Trademark TLDs Sponsors/supporters America Online, Simon Higgs, others TLD policy Create 42 new global TLDs reflecting industrial categories for trademark registrations; e.g, .rope, .plas, .chem. Coordination policy No position on institutional mechanisms. Advantages Would reduce some trademark conflicts by categorizing name applicants by industrial category. Disadvantages Based on fallacy that domain names are the same as trademarks. Has few advantages that a large increase in GTLDs would not also bring. Too many businesses already registered in .com and the NTLDs. Does not differentiate trademarks based on jurisdiction and locality. Would not eliminate disputes over use of made-up names (e.g. Exxon).

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