ICANN's bill for clawing global DNS from Uncle Sam: $7m and counting

Amid failure after failure

Domain-name overseer ICANN is failing in two fundamental tasks, according to the US government, while spending millions of dollars of internet users' money trying to take control of the critical IANA technical contract.

In a letter sent earlier this month from the Senate's Judiciary Committee to the White House new “IP Czar” Daniel Marti, Marti is specifically requested to focus on ICANN and its failure to enforce key agreements with the wider internet.

"There are longstanding concerns within both the business community and the Congress regarding ICANN’s transparency and accountability mechanisms with respect to its existing functions and responsibilities," the letter notes.

"We have heard from a number of stakeholders that domain name registrars are not meeting their contractual obligations with ICANN, and that ICANN itself routinely has failed to prioritize and enforce its agreements."

It then tells Marti: "We urge you to facilitate conversations among rightsholders, registrars, registries, and ICANN to identify mutually agreeable best practices in this important space. We urge that you become actively involved in the interagency process to advocate for strong and effective intellectual property rights in this online environment."

In addition to failing to enforce its contracts with registrars and others, ICANN is also failing short in fulfilling fundamental policies in its flagship dot-word program, according to a letter [PDF] from the chair of the Governmental Advisory Committee (GAC) – which represents the world's governments and in which the US government is a lead player.

It essentially revolves around ICANN allowing dot-thing registries to sell domains like us.word and uk.example – a number of nations don't want these to exist, as domains like *.uk.book undermines the .uk registry somewhat.

"Several GAC members have noted with concern a number of requests from new gTLD registry operators for the release of country and territory names at the second level," the letter reads.

It goes on to highlight the fact that the GAC has repeatedly asked ICANN to address the issue, and notes that it has already "cautioned ICANN not to consider the absence of input from a government as agreement."

In summary, ICANN has made a shambolic effort to balance the concerns of governments against the demands of registries and registrars that want to sell valuable two-letter domains, like eu.blog.

After ICANN started approving the release of the two-letter second-level domains through an obscure technical process, governments complained, eventually leading to the situation where ICANN asked officials to post veto requests via email during a public comment period. The result was a mess with dozens of emails, and an incomprehensible mishmash of requests and blanket refusals.

In an effort to bring some sanity to the situation, the world's governments plan to create their own database, the letter notes, which it will then share with ICANN. In the meantime, it wants ICANN to stop approving requests.


As well as being criticized by governments for failing to carry out compliance and policy processes effectively, ICANN's own board then hung its head in embarrassment for not having included any effective mechanism to question mistakes made in its flagship gTLD program.

In a letter denying a reconsideration request from Booking.com – which wants to own .hotels but has to go up against whoever wants .hoteis – the board noted:

The guidebook provides no means for applicants to provide evidence or make submissions to the [String Similarity Panel] (or any other ICANN body) and to be fully 'heard' on the substantive question of the similarity of their applied-for gTLD strings to others

The response follows a critical report from ICANN's so-called "independent review panel" on the issue which noted that its hands were so closely tied that it wasn't actually able to review the decision. That report led to continued calls for reform of ICANN.

The resolution from ICANN's board notes: "The Board appreciates the IRP Panel comments with respect to ways in which the New gTLD Program processes might improve in future rounds. ICANN will take the lessons learned from this IRP and apply it towards its ongoing assessments of the ways in which it can improve upon its commitments to accountability and transparency."

The acknowledgement of fundamental flaws in its processes follows another decision this week from the independent review panel that said ICANN's staff had broken the organization's own bylaws by refusing to allow a board member to take questions in an argument over the .africa top-level domain.

It demanded that ICANN send its witnesses to a hearing next month or it would "draw the necessary inferences and reach appropriate conclusions regarding that witness’s declaration."


IANA: What's at stake?

The US government contracts non-profit ICANN to run the so-called IANA functions – a body that runs the highest level of the world's DNS, allocates IP addresses, and ensures developers can agree on the same numbers and protocols when writing software that communicates over the 'net. It's what keeps the internet as we know it glued together.

That crucial contract is coming to an end, and because the US wants to step away from ruling the internet like an unelected king, the future of the IANA functions is being explored by a panel of experts called the Community Working Group (CWG). ICANN, of course, would love to run IANA all by itself, simply put.

Despite being lambasted from every side for doing a terrible job, ICANN remains focused on one thing: winning control of the critical IANA contract held by the US government.

It is prepared to spend as much of your money as it needs to in order to get that task accomplished: $7m, in fact.

Under another board resolution, released today, ICANN has approved its own budget pulled from reserves created by the companies that pay the fees that ICANN set for its own program in order to fund the "USG IANA Stewardship Transition initiative."

In the first six months of the process - from July to December 2014 - it spent $1.45m. Of that $471,000 was on "personnel costs", $548,000 in travel and meeting costs, $352,000 in "professional services", and $82,000 in "administrative costs".

ICANN is increasingly under fire for how it is spending potentially hundreds of millions of dollars with limited financial reporting, and which is overseen by the board itself with no independent oversight.

In the past two years, ICANN has increased its staff wages by 10 per cent against a one per cent inflation rate. Its average staff wage is $187,000. In the past year, the organization has expanded its travel budget by 85 per cent to $17m. Board members at the non-profit received on average $90,000 in payments and expenses in fiscal year 2013.

Earlier this month, ICANN's chairman made it clear that the board would itself decide how to spend the $60m ICANN has earned from gTLD auctions it has run to decide ownership rights to contested new top-level domain names. ®

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