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Republicans threaten to derail internet transition

IANA contract getting unwelcome attention

Republican congressmen are increasing their efforts to delay transition of a critical piece of internet infrastructure from the US government to a non-profit organization based in California.

For the third time, a House Appropriations subcommittee has included a provision in a must-pass bill that would prevent the Department of Commerce from using any funds in the transition of the IANA contract from the department to non-profit California organization ICANN.

That approach comes in addition to a series of letters from a number of senators, including Ted Cruz, asking pointed questions of the organization and its links to the Chinese government.

But what is really concerning those in favor of the transition is a letter being circulated on The Hill by Senator Marco Rubio asking for the transition to be delayed until organizational changes at ICANN are in place and tested.

That letter is positive about the two years of work carried out in the lead-up to what is hoped to be a September hand-off, but warns that the resulting changes are "untested" and that ICANN will be operating under a "radically different" structure when/if it assumes control of the contract.

It also warns that the changes to ICANN would provide governments with "new power and authority" – the implication being that countries like China and Russia would start to exert greater control over the internet – and notes that there are still unfinished aspects to the plan, such as a commitment to human rights.

Reflecting a repeated assurance by assistant commerce secretary Larry Strickling that the National Telecommunications and Information Association (NTIA) is able to extend the current contract that it has with ICANN beyond September, Rubio's letter specifically asks Strickling to "consider an extension."

If such an extension were granted, it would move the issue into the next presidency and could well scupper the transition plans altogether if a Republican president is chosen.

Strickling will not want to grant an extension and under a deal developed last year, Congress would be required to pass legislation to prevent the IANA transition from happening. But if Rubio's letter gathers sufficient support, the situation could change.


This is the not the first time Rubio has expressed reservations about the plan. Most significantly, back in July 2014 – four months after the transition was announced – he wrote a letter [PDF] to ICANN outlining a number of reforms that he felt needed to be in place before ICANN could be allowed to take over the IANA contract.

Ironically, ICANN has followed those recommendations almost to a tee and pushed back on anything beyond them that was proposed by the internet community.

In that sense, Rubio's latest letter asking for a delay until those reforms have been embedded and tested is a little disingenuous. There was no mention of testing the reforms before transition could take place in his original letter.

Republicans' continued resistance to the move has been painted – at least in private – as a misguided effort to retain American government control of the internet or a misinformed fear that China will exert increasing control of ICANN and hence of the internet. There has also been an element of partisanship in the complaints, with the plan painted as something pushed by an incompetent Obama Administration.


In reality, however, significant questions do remain over ICANN's suitability to run the IANA contract.

The organization has been extremely resistant to efforts to reform it and has gone out of its way to frustrate and undermine proposals from the internet community that it did not agree with.

Perhaps the clearest example of its self-interested intransigence came when the organization's staff and board simply refused to accept a key recommendation that the internet community be made official members of the organization: a proposal that would have given them a legal right to force ICANN to act on recommendations.

In the end, ICANN forced the community to accept a proposal that retains the board of directors' complete control over any decisions, and which gives no one else a legal right to intervene.

Even before that showdown, the internet community was forced to hire independent legal counsel after ICANN repeatedly argued that a number of proposed reforms were illegal under California law. That legal assessment was later abandoned when it was revealed to have been built on an almost comic interpretation of the law that comprised ignoring the parts of corporate code that didn't fit with its argument, sometimes even with wording contained in the same paragraph.

ICANN was also caught trying to hide several million dollars that it had spent on lobbying firms in Washington DC by putting them under the catch-all term "professional services." It was eventually forced to reveal the expenditure – and who it had paid the millions to – after almost a year of inquiries. Even then it went out of its way to limit the usefulness of the data it provided.

Money, money, money

As well as frustrating reform efforts and hiding its true expenditures, a lack of accountability has also been highlighted in the company's wages. In its most recent tax filing for 2015, 18 employees were paid more than $250,000. Just a few years earlier, there had been only two.

In 2010, ICANN's CFO earned $170,000; in 2015 it was $373,500. A 24 per cent increase each year. In 2010, its COO earned $270,000. For 2015, that rocketed to $737,000 – an annual increase of 35 per cent. Its general counsel has remained the same person but seen his salary rise on average 26 per cent each year from $230,000 in 2010 to $530,000 in 2015.

For those concerned that ICANN is too close to the Chinese government (its former CEO is now fronting a Chinese government internet governance initiative and the company was less than honest about the fact its "engagement center" in Beijing is rented from the government's .cn registry operator) – the revelation that its vice president of "stakeholder engagement" for Asia was paid $508,000 in 2015 is also troubling.

On top of extraordinary wage rises, the ICANN board gave itself a 12.5 per cent increase in pay, taking home $45,000 apiece. That was despite the fact that its own independent compensation report revealed that non-profits typically do not compensate their board members at all, and for those that do, the average compensation was $22,000 – less than half what they decided to pay themselves.

It is no coincidence that the over-inflated salaries occurred at the same time that ICANN reaped a $350m windfall in applications for new top-level domains, whose rules it set and whose $185,000 per application fee it decided. Prior to the program, the entire organization's budget was $60m.

Operational concerns

On top of concerns over accountability and a lack of financial controls, the organization's operational record is also a cause of concern.

ICANN is currently being sued in Los Angeles court for running a sham process in order to award the .africa domain to its preferred bidder and was recently served with an injunction to prevent it from handing over control of that extension despite the legal case.

Previous to the legal case, ICANN lost an independent review of its decision to dismiss the other applicant when it was found to have broken its own bylaws. Not only that, but it was later revealed that ICANN's staff had wrongly interfered in the process and then sought to cover up their involvement, even redacting the official independent report highlighting staff actions. The same legal team then misrepresented how and why those redactions had been made.

In short, while some of the reasons that Republicans are attempting to delay the IANA transition are misguided, the concern over whether the reforms to ICANN will prove sufficient are all too real.

ICANN has been through no less than eight reviews into its lack of accountability and transparency in the past decade. In every case, a list of recommendations was produced and the organization promised far-reaching reforms.

But in every case, the same corporate culture has managed to re-impose itself and undermine the very changes that were designed to cause a turnaround in its behavior.

If Marco Rubio is asking for a delay until this latest set of reforms can be seen to be working, he's not acting irrationally, he's simply noting history. ®

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