The End of the Experiment: Commerce says “I'm the Decider”

It's all over but the shouting. ICANN's 8-year experiment in nongovernmental governance of the Internet's domain name system all but came to an end this last November 30. The U.S. Department of Commerce announced that it, and not ICANN, would be the ultimate “decider” when it comes to dot com. Dot com is the largest and most valuable Internet top level domain, accounting for about 40% of the global market.

Several months ago ICANN and VeriSign had worked out a new .com registry agreement. The agreement proved intensely controversial because it gave VeriSign a renewal expectancy and permitted the company to raise wholesale prices for .com registrations by a maximum of 7 percent a year.

This week the Commerce Department approved that agreement — and simultaneously asserted broad new regulatory powers for itself. In a potentially fatal blow to ICANN's autonomy, Commerce asserted sweeping approval powers over any future Registry Agreement. From now on the Commerce Department – not ICANN's policy making process – will provide the final word on renewal of the lucrative .com license. This approval power extends into the future indefinitely.

Moreover, the Commerce Department's regulatory powers extend to all aspects of future agreements. Not only will Commerce continue to ensure the Internet's “security and stability,” it will now ensure that an agreement provides “reasonable price, terms, and conditions.” That leaves ICANN with little substantive power over .com.

VeriSign's competitors and the registrars who sell .com names at retail are sure to howl in pain over VeriSign's success in gaining “renewal expectancy” and its new price-increase capability. But the real story here is the Commerce Department's institutionalization of its regulatory role, and the tacit vote of no confidence in ICANN and its processes. Only two months after the Commerce Department, ICANN, the EU and many media outlets hailed the new “Joint Project Agreement” with ICANN as a big step toward a fully privatized, autonomous global governance authority, the Commerce Department has basically said that ICANN lacks the legitimacy and authority to act as the steward of the public interest in regulating the world's largest registry. From now on .com operates under US political oversight.

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