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Improvement of Technical Management of Internet Names and Addresses; Proposed Rule

Docket Number


[Federal Register: February 20, 1998 (Volume 63, Number 34)]
[Proposed Rules]
[Page 8825-8833]
From the Federal Register Online via GPO Access []

[[Page 8825]]

Part IV

Department of Commerce


National Telecommunications and Information Administration


15 CFR Chapter XXIII

Improvement of Technical Management of Internet Names and Addresses;
Proposed Rule

[[Page 8826]]


National Telecommunications and Information Administration

15 CFR Chapter XXIII

[Docket No. 980212036-8036-01]
RIN 0660-AA11

Improvement of Technical Management of Internet Names and

AGENCY: National Telecommunications and Information Administration
(NTIA), Commerce.

ACTION: Proposed rule; request for public comment.


SUMMARY: This document sets forth ways to improve technical management
of the Internet Domain Name System (DNS). Specifically, it describes
the process by which the Federal government will transfer management of
the Internet DNS to a private not-for-profit corporation. The document
also proposes to open up to competition the administration of top level
domains and the registration of domain names.

DATES: Comments must be received by March 23, 1998.

ADDRESSES: Comments may be mailed to Karen Rose, Office of
International Affairs, National Telecommunications and Information
Administration (NTIA), Room 4701, U.S. Department of Commerce, 14th and
Constitution Avenue, N.W., Washington, D.C. 20230 or sent via
electronic mail to Messages to that address will
receive a reply in acknowledgment. Comments submitted in electronic
form should be in ASCII, WordPerfect (please specify version), or
Microsoft Word (please specify version) format. Comments received will
be posted on the NTIA website at Detailed
information about electronic filing is available on the NTIA website, Paper submissions
should include three paper copies and a version on diskette in the
formats specified above.



    Authority: 15 U.S.C. 1512; 47 U.S.C. 902(b)(2)(H); 47 U.S.C. 902
(b)(2)(I); 47 U.S.C. 902(b)(2)(M); 47 U.S.C. 904(c)(1).

I. Introduction

    On July 1, 1997, The President directed the Secretary of Commerce
to privatize, increase competition in, and promote international
participation in the domain name system. Domain names are the familiar
and easy-to-remember names for Internet computers (e.g.
``''). They map to unique Internet Protocol (IP)
numbers (e.g., that serve as routing addresses on the
Internet. The domain name system (DNS) translates Internet names into
the IP numbers needed for transmission of information across the
network. On July 2, 1997, the Department of Commerce issued a Request
for Comments (RFC) on DNS administration (62 FR 35896). This proposed
rule, shaped by over 430 comments received in response to the RFC,
provides notice and seeks public comment on a proposal to transfer
control of Internet domain names from government to a private,
nonprofit corporation.

II. Background

    Today's Internet is an outgrowth of U.S. government investments in
packet-switching technology and communications networks carried out
under agreements with the Defense Advanced Research Projects Agency
(DARPA), the National Science Foundation (NSF) and other U.S. research
agencies. The government encouraged bottom-up development of networking
technologies through work at NSF, which established the NSFNET as a
network for research and education. The NSFNET fostered a wide range of
applications, and in 1992 the U.S. Congress gave the National Science
Foundation statutory authority to commercialize the NSFNET, which
formed the basis for today's Internet.
    As a legacy, major components of the domain name system are still
performed by or subject to agreements with agencies of the U.S.

A. Assignment of Numerical Addresses to Internet Users

    Every Internet computer has a unique IP number. The Internet
Assigned Numbers Authority (IANA), headed by Dr. Jon Postel of the
Information Sciences Institute (ISI) at the University of Southern
California, coordinates this system by allocating blocks of numerical
addresses to regional IP registries (ARIN in North America, RIPE in
Europe, and APNIC in the Asia/Pacific region), under contract with
DARPA. In turn, larger Internet service providers apply to the regional
IP registries for blocks of IP addresses. The recipients of those
address blocks then reassign addresses to smaller Internet service
providers and to end users.

B. Management of the System of Registering Names for Internet Users

    The domain name space is constructed as a hierarchy. It is divided
into top-level domains (TLDs), with each TLD then divided into second-
level domains (SLDs), and so on. More than 200 national, or country-
code, TLDs (ccTLDs) are administered by their corresponding governments
or by private entities with the appropriate national government's
acquiescence. A small set of generic top-level domains (gTLDs) do not
carry any national identifier, but denote the intended function of that
portion of the domain space. For example, .com was established for
commercial users, .org for not-for-profit organizations, and .net for
network service providers. The registration and propagation of these
key gTLDs are performed by Network Solutions, Inc. (NSI), a Virginia-
based company, under a five-year cooperative agreement with NSF. This
agreement includes an optional ramp-down period that expires on
September 30, 1998.

C. Operation of the Root Server System

    The root server system contains authoritative databases listing the
TLDs so that an Internet message can be routed to its destination.
Currently, NSI operates the ``A'' root server, which maintains the
authoritative root database and replicates changes to the other root
servers on a daily basis. Different organizations, including NSI,
operate the other 12 root servers. In total, the U.S. government plays
a direct role in the operation of half of the world's root servers.
Universal connectivity on the Internet cannot be guaranteed without a
set of authoritative and consistent roots.

D. Protocol Assignment

    The Internet protocol suite, as defined by the Internet Engineering
Task Force (IETF), contains many technical parameters, including
protocol numbers, port numbers, autonomous system numbers, management
information base object identifiers and others. The common use of these
protocols by the Internet community requires that the particular values
used in these fields be assigned uniquely. Currently, IANA, under
contract with DARPA, makes these assignments and maintains a registry
of the assigned values.

III. The Need For Change

    From its origins as a U.S.-based research vehicle, the Internet is
rapidly becoming an international medium for commerce, education and
communication. The traditional means

[[Page 8827]]

of organizing its technical functions need to evolve as well. The
pressures for change are coming from many different quarters:
     There is widespread dissatisfaction about the absence of
competition in domain name registration.
     Mechanisms for resolving conflict between trademark
holders and domain name holders are expensive and cumbersome.
     Without changes, a proliferation of lawsuits could lead to
chaos as tribunals around the world apply the antitrust law and
intellectual property law of their jurisdictions to the Internet.
     Many commercial interests, staking their future on the
successful growth of the Internet, are calling for a more formal and
robust management structure.
     An increasing percentage of Internet users reside outside
of the U.S., and those stakeholders want a larger voice in Internet
     As Internet names increasingly have commercial value, the
decision to add new top-level domains cannot continue to be made on an
ad hoc basis by entities or individuals that are not formally
accountable to the Internet community.
     As the Internet becomes commercial, it becomes
inappropriate for U.S. research agencies (NSF and DARPA) to participate
in and fund these functions.

IV. The Future Role of the U.S. Government in the DNS

    On July 1, 1997, as part of the Clinton Administration's Framework
for Global Electronic Commerce, the President directed the Secretary of
Commerce to privatize, increase competition in, and promote
international participation in the domain name system.
    Accordingly, on July 2, 1997, the Department of Commerce issued a
Request for Comments (RFC) on DNS administration, on behalf of an
inter-agency working group previously formed to explore the appropriate
future role of the U.S. government in the DNS. The RFC solicited public
input on issues relating to the overall framework of the DNS system,
the creation of new top-level domains, policies for registrars, and
trademark issues. During the comment period, over 430 comments were
received, amounting to some 1500 pages.1

    \1\ The RFC and comments received are available on the Internet
at the following address: .

    This discussion draft, shaped by the public input described above,
provides notice and seeks public comment on a proposal to improve the
technical management of Internet names and addresses. It does not
propose a monolithic structure for Internet governance. We doubt that
the Internet should be governed by one plan or one body or even by a
series of plans and bodies. Rather, we seek to create mechanisms to
solve a few, primarily technical (albeit critical) questions about
administration of Internet names and numbers.
    We expect that this proposal will likely spark a lively debate,
requiring thoughtful analysis, and appropriate revisions. Nonetheless,
we are hopeful that reasonable consensus can be found and that, after
appropriate modifications, implementation can begin in April, 1998.
Recognizing that no solution will win universal support, the U.S.
government seeks as much consensus as possible before acting.

V. Principles for a New System

    Our consultations have revealed substantial differences among
Internet stakeholders on how the domain name system should evolve.
Since the Internet is changing so rapidly, no one entity or individual
can claim to know what is best for the Internet. We certainly do not
believe that our views are uniquely prescient. Nevertheless, shared
principles have emerged from our discussions with Internet

A. Stability

    The U.S. government should end its role in the Internet number and
name address systems in a responsible manner. This means, above all
else, ensuring the stability of the Internet. The Internet functions
well today, but its current technical management is probably not viable
over the long term. We should not wait for it to break down before
acting. Yet, we should not move so quickly, or depart so radically from
the existing structures, that we disrupt the functioning of the
Internet. The introduction of a new system should not disrupt current
operations, or create competing root systems.

B. Competition

    The Internet succeeds in great measure because it is a
decentralized system that encourages innovation and maximizes
individual freedom. Where possible, market mechanisms that support
competition and consumer choice should drive the technical management
of the Internet because they will promote innovation, preserve
diversity, and enhance user choice and satisfaction.

C. Private, Bottom-Up Coordination

    Certain technical management functions require coordination. In
these cases, responsible, private-sector action is preferable to
government control. A private coordinating process is likely to be more
flexible than government and to move rapidly enough to meet the
changing needs of the Internet and of Internet users. The private
process should, as far as possible, reflect the bottom-up governance
that has characterized development of the Internet to date.

D. Representation

    Technical management of the Internet should reflect the diversity
of its users and their needs. Mechanisms should be established to
ensure international input in decision making.
    In keeping with these principles, we divide the name and number
functions into two groups, those that can be moved to a competitive
system and those that should be coordinated. We then suggest the
creation of a representative, not-for-profit corporation to manage the
coordinated functions according to widely accepted objective criteria.
We then suggest the steps necessary to move to competitive markets in
those areas that can be market driven. Finally, we suggest a transition
plan to ensure that these changes occur in an orderly fashion that
preserves the stability of the Internet.

VI. The Proposal

A. The Coordinated Functions

    Management of number addresses is best done on a coordinated basis.
As technology evolves, changes may be needed in the number allocation
system. These changes should also be undertaken in a coordinated
    Similarly, coordination of the root server network is necessary if
the whole system is to work smoothly. While day-to-day operational
tasks, such as the actual operation and maintenance of the Internet
root servers, can be contracted out, overall policy guidance and
control of the TLDs and the Internet root server system should be
vested in a single organization that is representative of Internet
    Finally, coordinated maintenance and dissemination of the protocol
parameters for Internet addressing will best preserve the stability and
interconnectivity of the Internet.
    We propose the creation of a private, not-for-profit corporation
(the new corporation) to manage the coordinated functions in a stable
and open institutional framework. The new corporation should operate as
a private

[[Page 8828]]

entity for the benefit of the Internet as a whole. The new corporation
would have the following authority:
    1. To set policy for and direct the allocation of number blocks to
regional number registries for the assignment of Internet addresses;
    2. To oversee the operation of an authoritative root server system;
    3. To oversee policy for determining, based on objective criteria
clearly established in the new organization's charter, the
circumstances under which new top-level domains are added to the root
system; and
    4. To coordinate the development of other technical protocol
parameters as needed to maintain universal connectivity on the
    The U.S. government would gradually transfer existing IANA
functions, the root system and the appropriate databases to this new
not-for-profit corporation. This transition would commence as soon as
possible, with operational responsibility moved to the new entity by
September 30, 1998. The U.S. government would participate in policy
oversight to assure stability until the new corporation is established
and stable, phasing out as soon as possible and in no event later than
September 30, 2000. The U.S. Department of Commerce will coordinate the
U.S. government policy role. In proposing these dates, we are trying to
balance concerns about a premature U.S. government exit that turns the
domain name system over to a new and untested entity against the
concern that the U.S. government will never relinquish its current
management role.
    The new corporation will be funded by domain name registries and
regional IP registries. Initially, current IANA staff will move to this
new organization to provide continuity and expertise throughout the
period of time it takes to establish the new corporation. The new
corporation should hire a chief executive officer with a background in
the corporate sector to bring a more rigorous management to the
organization than was possible or necessary when the Internet was
primarily a research medium. As these functions are now performed in
the United States, the new corporation will be headquartered in the
United States, and incorporated under U.S. law as a not-for-profit
corporation. It will, however, have and report to a board of directors
from around the world.
    It is probably impossible to establish and maintain a perfectly
representative board for this new organization. The Internet community
is already extraordinarily diverse and likely to become more so over
time. Nonetheless, the organization and its board must derive
legitimacy from the participation of key stakeholders. Since the
organization will be concerned mainly with numbers, names and
protocols, its board should represent membership organizations in each
of these areas, as well as the direct interests of Internet users.
    The board of directors for the new corporation should be balanced
to equitably represent the interests of IP number registries, domain
name registries, domain name registrars, the technical community, and
Internet users (commercial, not-for-profit, and individuals). Officials
of governments or intergovernmental organizations should not serve on
the board of the new corporation. Seats on the initial board might be
allocated as follows:
     Three directors from a membership association of regional
number registries, representing three different regions of the world.
Today this would mean one each from ARIN, APNIC and RIPE. As additional
regional number registries are added, board members could be designated
on a rotating basis or elected by a membership organization made up of
regional registries. ARIN, RIPE and APNIC are open membership
organizations that represent entities with large blocks of numbers.
They have the greatest stake in and knowledge of the number address
system. They are also representative internationally.
     Two members designated by the Internet Architecture Board
(IAB), an international membership board that represents the technical
community of the Internet.
     Two members designated by a membership association (to be
created) representing domain name registries and registrars.
    Seven members designated by a membership association (to be
created) representing Internet users. At least one of those board seats
could be designated for an individual or entity engaged in non-
commercial, not-for-profit use of the Internet, and one for individual
end users. The remaining seats could be filled by commercial users,
including trademark holders.
     The CEO of the new corporation would serve on the board of
    The new corporation's processes should be fair, open and pro-
competitive, protecting against capture by a narrow group of
stakeholders. Its decision-making processes should be sound and
transparent; the bases for its decisions should be recorded and made
publicly available. Super-majority or even consensus requirements may
be useful to protect against capture by a self-interested faction. The
new corporation's charter should provide a mechanism whereby its
governing body will evolve to reflect changes in the constituency of
Internet stakeholders. The new corporation should establish an open
process for the presentation of petitions to expand board
    In performing the functions listed above, the new corporation will
act much like a standard-setting body. To the extent that the new
corporation operates in an open and pro-competitive manner, its actions
will withstand antitrust scrutiny. Its standards should be reasonably
based on, and no broader than necessary to promote its legitimate
coordinating objectives. Under U.S. law, a standard-setting body can
face antitrust liability if it is dominated by an economically
interested entity, or if standards are set in secret by a few leading
competitors. But appropriate processes and structure will minimize the
possibility that the body's actions will be, or will appear to a court
to be, anti-competitive.

B. The Competitive Functions

    The system for registering second-level domain names and the
management of the TLD registries should become competitive and market-
    In this connection, we distinguish between registries and
registrars. A ``registry,'' as we use the term, is responsible for
maintaining a TLD's zone files, which contain the name of each SLD in
that TLD and each SLD's corresponding IP number. Under the current
structure of the Internet, a given TLD can have no more than one
registry. A ``registrar'' acts as an interface between domain-name
holders and the registry, providing registration and value-added
services. It submits to the registry zone file information and other
data (including contact information) for each of its customers in a
single TLD. Currently, NSI acts as both the exclusive registry and as
the exclusive registrar for .com, .net, .org, and .edu.
    Both registry and registrar functions could be operated on a
competitive basis. Just as NSI acts as the registry for .com, .net, and
.org, other companies could manage registries with different TLDs such
as .vend or .store. Registrars could provide the service of obtaining
domain names for customers in any gTLD. Companies that design Web sites
for customers might, for example, provide registration as an adjunct to
other services. Other companies may perform this function as a stand-
alone business.
    There appears to be strong consensus that, at least at this time,
domain name

[[Page 8829]]

registration--the registrar function--should be competitive. There is
disagreement, however, over the wisdom of promoting competition at the
registry level.
    Some have made a strong case for establishing a market-driven
registry system. Competition among registries would allow registrants
to choose among TLDs rather than face a single option. Competing TLDs
would seek to heighten their efficiency, lower their prices, and
provide additional value-added services. Investments in registries
could be recouped through branding and marketing. The efficiency,
convenience, and service levels associated with the assignment of names
could ultimately differ from one TLD registry to another. Without these
types of market pressures, they argue, registries will have very little
incentive to innovate.
    Others feel strongly, however, that if multiple registries are to
exist, they should be undertaken on a not-for-profit basis. They argue
that lack of portability among registries (that is, the fact that users
cannot change registries without adjusting at least part of their
domain name string) could create lock-in problems and harm consumers.
For example, a registry could induce users to register in a top-level
domain by charging very low prices initially and then raise prices
dramatically, knowing that name holders will be reluctant to risk
established business by moving to a different top-level domain.
    We concede that switching costs and lock-in could produce the
scenario described above. On the other hand, we believe that market
mechanisms may well discourage this type of behavior. On balance, we
believe that consumers will benefit from competition among market
oriented registries, and we thus support limited experimentation with
competing registries during the transition to private sector
administration of the domain name system.

C. The Creation of New gTLDs

    Internet stakeholders disagree about who should decide when a new
top-level domain can be added and how that decision should be made.
Some believe that anyone should be allowed to create a top-level domain
registry. They argue that the market will decide which will succeed and
which will not. Others believe that such a system would be too chaotic
and would dramatically increase customer confusion. They argue that it
would be far more complex technically, because the root server system
would have to point to a large number of top-level domains that were
changing with great frequency. They also point out that it would be
much more difficult for trademark holders to protect their trademarks
if they had to police a large number of top-level domains.
    All these arguments have merit, but they all depend on facts that
only further experience will reveal. At least in the short run, a
prudent concern for the stability of the system requires that expansion
of gTLDs proceed at a deliberate and controlled pace to allow for
evaluation of the impact of the new gTLDs and well-reasoned evolution
of the domain space. The number of new top-level domains should be
large enough to create competition among registries and to enable the
new corporation to evaluate the functioning, in the new environment, of
the root server system and the software systems that enable shared
registration. At the same time, it should not be so large as to
destabilize the Internet.
    We believe that during the transition to private management of the
DNS, the addition of up to five new registries would be consistent with
these goals. At the outset, we propose that each new registry be
limited to a single top-level domain. During this period, the new
corporation should evaluate the effects that the addition of new gTLDs
have on the operation of the Internet, on users, and on trademark
holders. After this transition, the new corporation will be in a better
position to decide whether or when the introduction of additional gTLDs
is desirable.
    Individual companies and consortia alike may seek to operate
specific generic top-level domains. Competition will take place on two
levels. First, there will be competition among different generic top-
level domains. Second, registrars will compete to register clients into
these generic top-level domains. By contrast, existing national
registries will continue to administer country-code top-level domains
if these national government seek to assert those rights. Changes in
the registration process for these domains are up to the registries
administering them and their respective national governments.
    Some have called for the creation of a more descriptive system of
top-level domains based on industrial classifications or some other
easy to understand schema. They suggest that having multiple top-level
domains is already confusing and that the addition of new generic TLDs
will make it more difficult for users to find the companies they are
    Market driven systems result in innovation and greater consumer
choice and satisfaction in the long run. We expect that in the future,
directory services of various sorts will make it easy for users to find
the sites they seek regardless of the number of top-level domains.
Attempts to impose too much central order risk stifling a medium like
the Internet that is decentralized by nature and thrives on freedom and

D. The Trademark Dilemma

    It is important to keep in mind that trademark/domain name disputes
arise very rarely on the Internet today. NSI, for example, has
registered millions of domain names, only a tiny fraction of which have
been challenged by a trademark owner. But where a trademark is
unlawfully used as a domain name, consumers may be misled about the
source of the product or service offered on the Internet, and trademark
owners may not be able to protect their rights without very expensive
    For cyberspace to function as an effective commercial market,
businesses must have confidence that their trademarks can be protected.
On the other hand, management of the Internet must respond to the needs
of the Internet community as a whole, and not trademark owners
exclusively. The balance we strike is to provide trademark holders with
the same rights they have in the physical world, to ensure
transparency, to guarantee a dispute resolution mechanism with resort
to a court system, and to add new top-level domains carefully during
the transition to private sector coordination of the domain name
    There are certain steps that could be taken in the application
process that would not be difficult for an applicant, but that would
make the trademark owner's job easier. For instance, gTLD registrants
could supply basic information--including the applicant's name and
sufficient contact information to be able to locate the applicant or
its representative. To deter the pirating of domain names, the registry
could also require applicants to certify that it knows of no entity
with superior rights in the domain name it seeks to register.
    The job of policing trademarks could be considerably easier if
domain name databases were readily searchable through a common
interface to determine what names are registered, who holds those
domain names, and how to contact a domain name holder. Many trademark
holders find the current registration search tool, who is, too limited
in its functioning to be effective for this purpose. A more robust and
flexible search tool, which features multiple field or string searching
and retrieves similar names, could be

[[Page 8830]]

employed or developed to meet the needs of trademark holders. The
databases also could be kept up to date by a requirement that domain
name registrants maintain up-to-date contact information.
    Mechanisms that allow for on-line dispute resolution could provide
an inexpensive and efficient alternative to litigation for resolving
disputes between trademark owners and domain name registrants. A swift
dispute resolution process could provide for the temporary suspension
of a domain name registration if an adversely affected trademark holder
objects within a short time, e.g. 30 days, of the initial registration.
We seek comment on whether registries should be required to resolve
disputes within a specified period of time after an opposition is
filed, and if so, how long that period should be.
    Trademark holders have expressed concern that domain name
registrants in faraway places may be able to infringe their rights with
no convenient jurisdiction available in which the trademark owner could
file suit to protect those rights. At the time of registration,
registrants could agree that, in the event of a trademark dispute
involving the name registered, jurisdiction would lie where the
registry is domiciled, where the registry database in maintained, or
where the ``A'' root server is maintained. We seek comment on this
proposal, as well as suggestions for how such jurisdictional provisions
could be implemented.
    Trademark holders have also called for the creation of some
mechanism for ``clearing'' trademarks, especially famous marks, across
a range of gTLDs. Such mechanisms could reduce trademark conflict
associated with the addition of new gTLDs. Again, we seek comment on
this proposal, and suggested mechanisms for trademark clearance
    We stop short of proposals that could significantly limit the
flexibility of the Internet, such as waiting periods or not allowing
any new top-level domains.
    We also do not propose to establish a monolithic trademark dispute
resolution process at this time, because it is unclear what system
would work best. Even trademark holders we have consulted are divided
on this question. Therefore, we propose that each name registry must
establish minimum dispute resolution and other procedures related to
trademark considerations. Those minimum procedures are spelled out in
Appendix 2. Beyond those minimums, registries would be permitted to
establish additional trademark protection and trademark dispute
resolution mechanisms.
    We also propose that shortly after their introduction into the
root, a study be undertaken on the effects of adding new gTLDs and
related dispute resolution procedures on trademark and intellectual
property right holders. This study should be conducted under the
auspices of a body that is internationally recognized in the area of
dispute resolution procedures, with input from trademark and domain
name holders and registries. The findings of this study should be
submitted to the board of the new corporation and considered when it
makes decisions on the creation and introduction of new gTLDs.
Information on the strengths and weaknesses of different dispute
resolution procedures should also give the new corporation guidance for
deciding whether the established minimum criteria for dispute
resolution should be amended or maintained. Such a study could also
provide valuable input with respect to trademark harmonization
    U.S. trademark law imposes no general duty on a registrar to
investigate the propriety of any given registration.2 Under
existing law, a trademark holder can properly file a lawsuit against a
domain name holder that is infringing or diluting the trademark
holder's mark. But the law provides no basis for holding that a
registrar's mere registration of a domain name, at the behest of an
applicant with which it has an arm's-length relationship, should expose
it to liability.3 Infringers, rather than registrars,
registries, and technical management bodies, should be liable for
trademark infringement. Until case law is fully settled, however,
registries can expect to incur legal expenses in connection with
trademark disputes as a cost of doing business. These costs should not
be borne by the new not-for-profit corporation, and therefore
registries should be required to indemnify the new corporation for
costs incurred in connection with trademark disputes. The evolution of
litigation will be one of the factors to be studied by the group tasked
to review Internet trademark issues as the new structure evolves.

    \2\ See generally MDT Corp. v. New York Stock Exchange, 858 F.
Supp. 1028 (C.D. Calif. 1994).
    \3\ See Lockheed Martin Corp. v. Network Solutions, Inc., 1997
WL 721899 (C.D. Calif. 11/17/97); Panavision International v.
Toeppen, 1996 U.S. Dist. LEXIS 20744, 41 U.S.P.Q.2d 1310 (C.D.
Calif. 1996).

E. The Intellectual Infrastructure Fund

    In 1995, NSF authorized NSI to assess new domain name registrants a
$50 fee per year for the first two years, 30 percent of which was to be
deposited in a fund for the preservation and enhancement of the
intellectual infrastructure of the Internet (the ``Intellectual
Infrastructure Fund'').
    In excess of $46 Million has been collected to date. In 1997,
Congress authorized the crediting of $23 Million of the funds collected
to the Research and Related Activities Appropriation of the National
Science Foundation to support the development of the Next Generation
Internet. The establishment of the Intellectual Infrastructure Fund
currently is the subject of litigation in the U.S. District Court for
the District of Columbia.
    As the U.S. government is seeking to end its role in the domain
name system, we believe the provision in the cooperative agreement
regarding allocation of a portion of the registration fee to the
Internet Intellectual Infrastructure Fund should terminate on April 1,
1998, the beginning of the ramp-down period of the cooperative

VII. The Transition

    A number of steps must be taken to create the system envisioned in
this paper.
    1. The new not-for-profit organization must be established and its
board chosen.
    2. The membership associations representing (1) registries and
registrars, and (2) Internet users, must be formed.
    3. An agreement must be reached between the U.S. government and the
current IANA on the transfer of IANA functions to the new organization.
    4. NSI and the U.S. government must reach agreement on the terms
and conditions of NSI's evolution into one competitor among many in the
registrar and registry marketplaces. A level playing field for
competition must be established.
    5. The new corporation must establish processes for determining
whether an organization meets the transition period criteria for
prospective registries and registrars.
    6. A process must be laid out for making the management of the root
server system more robust and secure, and, for transitioning that
management from U.S. government auspices to those of the new

A. The NSI Agreement

    The U.S. government will ramp down the NSI cooperative agreement
and phase it out by the end of September 1998. The ramp down agreement
with NSI should reflect the following terms and conditions designed to
promote competition in the domain name space.

[[Page 8831]]

    1. NSI will effectively separate and maintain a clear division
between its current registry business and its current registrar
business. NSI will continue to operate .com, .net and .org but on a
fully shared-registry basis; it will shift operation of .edu to a not-
for-profit entity. The registry will treat all registrars on a
nondiscriminatory basis and will price registry services according to
an agreed upon formula for a period of time.
    2. As part of the transition to a fully shared-registry system, NSI
will develop (or license) and implement the technical capability to
share the registration of its top-level domains with any registrar so
that any registrar can register domain names there in as soon as
possible, by a date certain to be agreed upon.
    3. NSI will give the U.S. government a copy and documentation of
all the data, software, and appropriate licenses to other intellectual
property generated under the cooperative agreement, for use by the new
corporation for the benefit of the Internet.
    4. NSI will turn over control of the ``A'' root server and the
management of the root server system when instructed to do so by the
U.S. government.
    5. NSI will agree to meet the requirements for registries and
registrars set out in Appendix 1.

B. Competitive Registries, Registrars, and the Addition of New gTLDs

    Over the past few years, several groups have expressed a desire to
enter the registry or registrar business. Ideally, the U.S. government
would stay its hand, deferring the creation of a specific plan to
introduce competition into the domain name system until such time as
the new corporation has been organized and given an opportunity to
study the questions that such proposals raise. Should the transition
plan outlined below, or some other proposal, fail to achieve
substantial consensus, that course may well need to be taken.
    Realistically, however, the new corporation cannot be established
overnight. Before operating procedures can be established, a board of
directors and a CEO must be selected. Under a best case scenario, it is
unlikely that the new corporation can be fully operational before
September 30, 1998. It is our view, based on widespread public input,
that competition should be introduced into the DNS system more quickly.
    We therefore set out below a proposal to introduce competition into
the domain name system during the transition from the existing U.S.
government authority to a fully functioning coordinating body. This
proposal is designed only for the transition period. Once the new
corporation is formed, it will assume authority over the terms and
conditions for the admission of new top-level domains.
Registries and New gTLDs
    This proposal calls for the creation of up to five new registries,
each of which would be initially permitted to operate one new gTLD. As
discussed above, that number is large enough to provide valuable
information about the effects of adding new gTLDs and introducing
competition at the registry level, but not so large as to threaten the
stability of the Internet during this transition period. In order to
designate the new registries and gTLDs, IANA must establish equitable,
objective criteria and processes for selecting among a large number of
individuals and entities that want to provide registry services.
Unsuccessful applicants will be disappointed.
    We have examined a number of options for recognizing the
development work already underway in the private sector. For example,
some argue for the provision of a ``pioneer preference'' or other grand
fathering mechanism to limit the pool of would-be registrants to those
who, in response to previous IANA requests, have already invested in
developing registry businesses. While this has significant appeal and
we do not rule it out, it is not an easy matter to determine who should
be in that pool. IANA would be exposed to considerable liability for
such determinations, and required to defend against charges that it
acted in an arbitrary or inequitable manner. We welcome suggestions as
to whether the pool of applicants should be limited, and if so, on what
    We propose, that during the transition, the first five entities
(whether from a limited or unlimited pool) to meet the technical,
managerial, and site requirements described in Appendix 1 will be
allowed to establish a domain name registry. The IANA will engage
neutral accounting and technical consultancy firms to evaluate a
proposed registry under these criteria and certify an applicant as
qualified. These registries may either select, in order of their
qualification, from a list of available gTLDs or propose another gTLD
to IANA. (We welcome suggestions on the gTLDs that should be
immediately available and would propose a list based on that input, as
well as any market data currently available that indicates consumer
interest in particular gTLDs.)
    The registry will be permitted to provide and charge for value-
added services, over and above the basic services provided to
registrars. At least at this time, the registry must, however, operate
on a shared registry basis, treating all registrars on a
nondiscriminatory basis, with respect to pricing, access and rules.
Each TLD's registry should be equally accessible to any qualified
registrar, so that registrants may choose their registrars
competitively on the basis of price and service. The registry will also
have to agree to modify its technical capabilities based on protocol
changes that occur in Internet technology so that interoperability can
be preserved. At some point in the future, the new organization may
consider the desirability of allowing the introduction of non-shared
    Any entity will be permitted to provide registrar services as long
as it meets the basic technical, managerial, and site requirements as
described in Appendix 1 of this paper. Registrars will be allowed to
register clients into any top-level domain for which the client
satisfies the eligibility rules, if any.

C. The Root Server System

    IANA and the U.S. government, in cooperation with NSI, the IAB, and
other relevant organizations will undertake a review of the root server
system to recommend means to increase the security and professional
management of the system. The recommendations of the study should be
implemented as part of the transition process to the new corporation.

D. The .us Domain

    At present, the IANA administers .us as a locality based hierarchy
in which second-level domain space is allocated to states and US
territories.4 This name space is further subdivided into
localities. General registration under localities is performed on an
exclusive basis by private firms that have requested delegation from
IANA. The .us name space has typically been used by branches of state
and local governments, although some commercial names have been
assigned. Where registration for a locality has not been delegated, the
IANA itself serves as the registrar.

    \4\ Management principles for the .us domain space are set forth
in Internet RFC 1480, (

    Some in the Internet community have suggested that the pressure for
unique identifiers in the .com gTLD could be relieved if commercial use
of the .us space was encouraged. Commercial

[[Page 8832]]

users and trademark holders, however, find the current locality-based
system too cumbersome and complicated for commercial use. Expanded use
of the .us TLD could alleviate some of the pressure for new generic
TLDs and reduce conflicts between American companies and others vying
for the same domain name.
    Clearly, there is much opportunity for enhancing the .us domain
space, and the .us domain could be expanded in many ways without
displacing the current geopolitical structure. Over the next few
months, the U.S. government will work with the private sector and state
and local governments to determine how best to make the .us domain more
attractive to commercial users. It may also be appropriate to move the
gTLDs traditionally reserved for U.S. government use (i.e. .gov and
.mil), into a reformulated .us ccTLD.
    The U.S. government will further explore and seek public input on
these issues through a separate Request for Comment on the evolution of
the .us name space. However, we welcome any preliminary comments at
this time.

E. The Process

    The U.S. government recognizes that its unique role in the Internet
domain name system should end as soon as is practical. We also
recognize an obligation to end this involvement in a responsible manner
that preserves the stability of the Internet. We cannot cede authority
to any particular commercial interest or any specific coalition of
interest groups. We also have a responsibility to oppose any efforts to
fragment the Internet, as this would destroy one of the key factors--
interoperability--that has made the Internet so successful.
    Our goal is to seek as strong a consensus as possible so that a
new, open, and accountable system can emerge that is legitimate in the
eyes of all Internet stakeholders. It is in this spirit that we present
this paper for discussion.

VIII. Other Information

Executive Order 12866

    This proposal has been determined not to be significant under
section 3(f) of Executive Order 12866.

Executive Order 12612

    This rule does not contain policies with Federalism implications
sufficient to warrant preparation of a Federalism assessment under
Executive Order 12612.

Regulatory Flexibility Act

    The Assistant General Counsel for Legislation and Regulation of the
Department of Commerce certified to the Chief Counsel for Advocacy, the
Small Business Administration that this proposed rule, if adopted,
would not have a significant economic impact on a substantial number of
small entities as follows:
    We believe that the overall effect of the proposal will be highly
beneficial. No negative effects are envisioned at this time. In fact,
businesses will enjoy a reduction in the cost of registering domain
names as a result of this proposal. In 1995, the National Science
Foundation authorized a registration fee of $50 per year for the first
two years, 30 percent of which was to be deposited in a fund for the
preservation and enhancement of the intellectual infrastructure of the
Internet (the ``Intellectual Infrastructure Fund''). The proposal seeks
to terminate the agreement to earmark a portion of the registration fee
to the Intellectual Infrastructure Fund. We also believe that a
competitive registration system will lead to reduced fees in
registering domain names.
    The proposal is pro-competitive because it transfers the current
system of domain name registration to a market-driven registry system.
Moreover, as the Internet becomes more important to commerce,
particularly small businesses, it is crucial that a more formal and
robust management structure be implemented. As the commercial value of
Internet names increases, decisions regarding the addition of new top-
level domains should be formal, certain, and accountable to the
Internet community. For example, presently, mechanisms for resolving
disputes between trademark holders and domain name holders are
expensive and cumbersome. The proposal requires each name registry to
establish an inexpensive and efficient dispute resolution system as
well as other procedures related to trademark consideration.
    The U.S. government would gradually transfer existing Internet
Assigned Numbers Authority (IANA) functions, the root system and the
appropriate databases to a new not-for-profit corporation by September
30, 1998. The U.S. government would, however, participate in policy
oversight to assure stability until the new corporation is established
and stable, phasing out completely no later than September 30, 2000.
Accordingly, the transition period would afford the U.S. government an
opportunity to determine if the structure of the new corporation
negatively impacts small entities. Moreover, the corporation would be
headquartered in the U.S. and incorporated under U.S. law. Accordingly,
the corporation would be subject to antitrust scrutiny if dominated by
economically interested entities, or if its standards are established
by a few leading competitors.
    As a result, no initial regulatory flexibility analysis has been

Paperwork Reduction Act

    This rule does not contain information collection requirements
subject to the provisions of the Paperwork Reduction Act.
Kathy Smith,
Acting Deputy Assistant Secretary for Communications and Information.

Appendix 1--Recommended Registry and Registrar Requirements

    In order to ensure the stability of the Internet's domain name
system, protect consumers, and preserve the intellectual property
rights of trademark owners, all registries of generic top-level
domain names must meet the set of technical, managerial, and site
requirements outlined below. Only prospective registries that meet
these criteria will be allowed by IANA to register their gTLD in the
``A'' server. If, after it begins operations, a registry no longer
meets these requirements, IANA may transfer management of the domain
names under that registry's gTLD to another organization.
    Independent testing, reviewing, and inspection called for in the
requirements for registries should be done by appropriate certifying
organizations or testing laboratories rather than IANA itself,
although IANA will define the requirements and the procedures for
tests and audits.
    These requirements apply only to generic TLDs. They will apply
to both existing gTLDs (e.g., .com, .edu., .net, .org) and new
gTLDs. Although they are not required to, we expect many ccTLD
registries and registrars may wish to assure their customers that
they meet these requirements or similar ones.
    Registries will be separate from registrars and have only
registrars as their customers. If a registry wishes to act both as
registry and registrar for the same TLD, it must do so through
separate subsidiaries. Appropriate accounting and confidentiality
safeguards shall be used to ensure that the registry subsidiary's
business is not utilized in any manner to benefit the registrar
subsidiary to the detriment of any other registrar.
    Each top-level domain (TLD) database will be maintained by only
one registry and, at least initially, each new registry can host
only one TLD.

Registry Requirements

    1. An independently-tested, functioning Database and
Communications System that:
    a. Allows multiple competing registrars to have secure access
(with encryption and authentication) to the database on an equal
(first-come, first-served) basis.

[[Page 8833]]

    b. Is both robust (24 hours per day, 365 days per year) and
scalable (i.e., capable of handling high volumes of entries and
    c. Has multiple high-throughput (i.e., at least T1) connections
to the Internet via at least two separate Internet Service
    d. Includes a daily data backup and archiving system.
    e. Incorporates a record management system that maintains copies
of all transactions, correspondence, and communications with
registrars for at least the length of a registration contract.
    f. Features a searchable, on-line database meeting the
requirements of Appendix 2.
    g. Provides free access to the software and customer interface
that a registrar would need to register new second-level domain
    h. An adequate number (perhaps two or three) of globally-
positioned zone-file servers connected to the Internet for each TLD.
    2. Independently-reviewed Management Policies, Procedures, and
Personnel including:
    a. Alternate (i.e., non-litigation) dispute resolution providing
a timely and inexpensive forum for trademark-related complaints.
(These procedures should be consistent with applicable national laws
and compatible with any available judicial or administrative
    b. A plan to ensure that the registry's obligations to its
customers will be fulfilled in the event that the registry goes out
of business. This plan must indicate how the registry would ensure
that domain name holders will continue to have use of their domain
name and that operation of the Internet will not be adversely
    c. Procedures for assuring and maintaining the expertise and
experience of technical staff.
    d. Commonly-accepted procedures for information systems security
to prevent malicious hackers and others from disrupting operations
of the registry.
    3. Independently inspected Physical Sites that feature:
    a. A backup power system including a multi-day power source.
    b. A high level of security due to twenty-four-hour guards and
appropriate physical safeguards against intruders.
    c. A remotely-located, fully redundant and staffed twin facility
with ``hot switchover'' capability in the event of a main facility
failure caused by either a natural disaster (e.g., earthquake or
tornado) or an accidental (fire, burst pipe) or deliberate (arson,
bomb) man-made event. (This might be provided at, or jointly
supported with, another registry, which would encourage
compatibility of hardware and commonality of interfaces.)

Registrar Requirements

    Registries will set standards for registrars with which they
wish to do business. The following are the minimal qualifications
that IANA should mandate that each registry impose and test or
inspect before allowing a registrar to access its database(s). Any
additional requirements imposed by registries on registrars must be
approved by IANA and should not affect the stability of the Internet
or substantially reduce competition in the registrar business.
Registries may refuse to accept registrations from registrars that
fail to meet these requirements and may remove domain names from the
registries if at a later time the registrar which registered them no
longer meets the requirements for registrars.
    1. A functioning Database and Communications System that
    a. Secure access (with encryption and authentication) to the
    b. Robust and scalable operations capable of handling moderate
    c. Multiple connections to the Internet via at least two
Internet Service Providers.
    d. A daily data backup and archival system.
    e. A record management system that maintains copies of all
transactions, correspondence, and communications with all registries
for at least the length of a registration contract.
    2. Management Policies, Procedures, and Personnel including:
    a. A plan to ensure that the registrar's obligations to its
customers and to the registries will be fulfilled in the event that
the registrar goes out of business. This plan must indicate how the
registrar would ensure that domain name holders will continue to
have use of their domain name and that operation of the Internet
will not be adversely affected.
    b. Commonly-accepted procedures for information systems security
to prevent malicious hackers and others from disrupting operations.
    3. Independently inspected Physical Sites that features:
    a. A backup power system.
    b. A high level of security due to twenty-four-hour guards and
appropriate physical safeguards against intruders.
    c. Remotely-stored backup files to permit recreation of customer

Appendix 2--Minimum Dispute Resolution and Other Procedures Related to

    1. Minimum Application Requirements.
    a. Sufficient owner and contact information (e.g., names, mail
address for service of process, e-mail address, telephone and fax
numbers, etc.) to enable an interested party to contact either the
owner/applicant or its designated representative; and a
    b. Certification statement by the applicant that:

--It is entitled to register the domain name for which it is
applying and knows of no entity with superior rights in the domain
name; and
--It intends to use the domain name.

    2. Searchable Database Requirements.
    a. Utilizing a simple, easy-to-use, standardized search
interface that features multiple field or string searching and the
retrieval of similar names, the following information must be
included in all registry databases, and available to anyone with
access to the Internet:

--Up-to-date ownership and contact information;
--Up-to-date and historical chain of title information for the
domain name;
--A mail address for service of process;
--The date of the domain name registration; and
--The date an objection to registration of the domain name was

    3. Updated Ownership, Contact and Use Information.
    a. At any time there is a change in ownership, the domain name
owner must submit the following information:

--Up-to-date contact and ownership information; and
--A description of how the owner is using the domain name, or, if
the domain name is not in use, a statement to that effect.

    4. Alternative Dispute Resolution of Domain Name Conflicts.
    a. There must be a readily available and convenient dispute
resolution process that requires no involvement by registrars.
    b. Registries/Registrars will abide by the decisions resulting
from an agreed upon dispute resolution process or by the decision of
a court of competent jurisdiction.
    If an objection to registration is raised within 30 days after
registration of the domain name, a brief period of suspension during
the pendency of the dispute will be provided by the registries.

[FR Doc. 98-4200 Filed 2-19-98; 8:45 am]


February 20, 1998