[NA-Discuss] Does ICANN need to evolve its code of conduct?

ebw at abenaki.wabanaki.net ebw at abenaki.wabanaki.net
Fri Jul 29 16:17:03 UTC 2011

Colleagues, with appologies in advance for the length.

I think that it is preferable in the abstract that the regulated monopoly,
one of the several objects of policy identified in the Green and White
Papers, does not provide staff to, or hire staff from, the DoC -- the
regulating agency, or ICANN -- the delegated entity conducting rule making.

So the departing Chair becoming an empolyee of, or investor in, or both,
a venture intending to comply with the competitive structure, in so far
as new gTLDs "compete" with the legacy monopoly (and thus far, 10 years
after launch, .info has a 6% market share, .biz has a 2% market share),
is not contrary to the competition policy goal expressed in the Green and
White Papers.

In the Affirmation of Commitments, the Department of Commerce observed
there exists "a group of participants that engage in ICANN's processes to
a greater extent than Internet users generally". This observation refers
to the risk of agency capture, and consequent rule making contrary to the
intent of the establishing legislation, which presumably includes the
public interest as identified by the United States Government.

During the tenure of the departing Chair, the record of the Board does
not reflect consideration of a competitive tender of the .NET contract.

As noted above, new gTLDs established in 20001 and 2004, in their total,
have less market share than .NET. The policy, pursued by the Board in
the period when Chaired by the departing Chair, has created material
benefit for entities like, and including, the entity to which he is now
an empolyee or investor or both, while creating no substantive reduction
in the market share held by the incumbent legacy monopoly operator.

Prior to taking an interest in whether there is material benefit to
an officer of the corporation, there is the interest in the material
benefit to the regulated industry. Verisign has done very, very well
during the years the departing Chair lead the ICANN Board.

It has no liabilities under the "cost recovery" model, to bear any cost
in the creation of its competition, it has not been barred from
increasing the number of prior franchises it holds directly, through
the conversion of .NAME from a tenant to a property, is not barred from
increasing the number of future franchises it will hold directly,
and is not barred from increasing the number of future franchises it
will hold indirectly, as tenants, subject of course, to subsequent
unconditional conversion to property. And, as mentioned above, none of
its contracts with ICANN were rebid competitively during the tenure of
the departing Chair. And, through a process as yet undisclosed, it has
been relieved of the structural separation obligation obtained by a prior
Board, under a prior Chair.

This is substantial material benefit for the regulated monopoly.

As marks portfolio managers and governments have observed throughout
the period a policy directly benefiting the incumbent monopoly was
developed and implemented, the primary revenue source for "generic"
new gTLDs is likely to be compelled from marks holders, a source of
revenue the incumbent monopoly currently enjoys.

As a condition for "no harm" to the incumbent monopoly, ending legal
challenges by the incumbent monopoly to abandoned competitive policy
developed by prior Boards lead by prior Chairs, the Board lead by the
departing Chair has simply created a revenue sharing opportunity, to
which the departing Chair now participates.

This is a real problem. The competition policy goals of the United
States are not met by a policy of non-competition and the creation
of a mechanism for revenue sharing by non-competitors through expanded
exploitation of a captive market. The problem doesn't go away or get
better because the captive market is IP holders acting in their own
narrow self interest, and inflicting collateral damage of their own,
limiting the choice of sponsored TLDs in the public interest in the
2004 round to just the Catalan and Postal Union applications.

I think the points of views of governments other than the United States,
whether Canada or China, reasonably place the interests of those
governments ahead of the competitive policy interest of the United
States. Canada has a rational interest in ICANN as a policy venue, but
little or no interest in competition policy affecting COM/NET/NAME,
or namespaces other than .CA. China too has a rational interest in
ICANN as a policy venue, and in the (I'm deliberately not using the
Han script characters or the Pinyan transliteration into Latin script
as I don't think these are widely known outside of China and some
specialists in IDN policy) "com-like", "net-like", "org-like" and
"gov-like" namespaces, in addition to the .CN namespace, but not
directly in competition policy affecting COM/NET/NAME. 

That is, I understand a reason why Byron Holland may have chosen his
issue, and his comparisons with the World Bank's policy, and the policy
of the Federal Government of Canada, to make a point. The "personal
ethics" narrative has the attraction of being uncomplicated, relative
to the competition policy and national public interest narrative.

I don't conclude that a change to ICANN's code of conduct is curative
of the root problem, which Byron identifies only in the exit strategy
of a participant in what appears to be agency capture. I'm personally
quite indifferent to the "next" choices of departed Board Chairs, CEOs
and Vice Presidents, though concerned by the "change or leave" policy
of the most recent CEO hire and its effect on competent senior staff. 

I suggest that members of NARALO, particularly those who view ICANN in
part through the framework of US law, reach out to those in the NARALO
who may not come easily to this framework, and offer their comments
on the necessity of viewing this transition solely as a code of conduct
issue, and the utility of overlooking the benefit to the incumbent
monopoly operator.

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