People in a glass house throwing stones: EC ICANN Papers 3 & 4

In ICANN Papers 3 and 4, the European Commission goes after

ICANN’s finances and corporate governance. The first thing one notices is that

both papers are brief and superficial; it’s as if the EC has only just

discovered a topic that has been intensely debated since 1998, namely ICANN’s

institutional design. It seems not to

have read a single serious paper about it. The poor results show why one should

not make policy the way the EC has in this case: in isolation, in anger and

without any public consultation.

Paper 3 notes that ICANN’s budget and staff grew

substantially during the past decade, to about US$ 66 million. There are some legitimate

grounds for concern about ICANN’s growth and financial accountability. But

isn’t there something incongruous about the EC’s Directorate General for the

Information Society, whose 2012 budget exceeds 1.6 billion Euros (2.34 billion

US dollars), complaining about the size of a global governance organization that is less than 3 percent of its own? That’s just one division of the EC,

by the way, there are about 15 other directorates. The Information Society

Directorate’s budget has grown by 35% since 2005. And it is fair to ask: how much of ICANN's rising costs are attributable to the EC's and GAC's demands for endless negotiations and re-visiting of decisions already made?

Accountability over ICANN is weak, given that ICANN has

exclusive control of the root. As we have pointed out in an extensive analysis, ICANN lacks most of the normal mechanisms of organizational

accountability: no members, no competition, not much of an appeals process, and

little applicable law outside the California Public Benefit Corporation law. The

Affirmation of Commitments, as we have observed, is basically ICANN reviewing

itself and does not qualify as an accountability mechanism. The EC’s diagnosis,

however, is superficial and does not reference, much less build upon, deeper

analyses that have already been done. Its only idea for accountability is to

speak vaguely of “Creat[ing] some form of independent control mechanism.” Its

basic model for accountability seems to be the relationship it has with the

EURID registry. This is not helpful. Designing oversight authority for one medium-sized

registry that serves a territory ruled by one political authority is easy. The problem with ICANN is that it

is a global governance organization, not a service provider, and any

governmental oversight entity would have to involve over 100 governments. Its decisions would affect not just that tiny

slice of the Internet population who happens to register under .EU, but

billions of very diverse, often competing and conflicting, stakeholders and

interests. It would seem to create precisely the kind of political morass ICANN

was invented to avoid.

That is why ICANN has its own representational and

deliberative processes. And that’s another problem with the EC Paper. It makes

no reference whatsoever to the community of users and businesses already

involved in ICANN. There is no discussion of how they might be enfranchised or

how ICANN might be made accountable to them. It is as if the EC has reverted to

a pre-WSIS, traditional sovereigntist understanding of oversight.

On the financial front, the EC paper puts forward one lousy idea and one

good one. It proposes to “allocate part of excessive surplus and revenue for

charity purposes.” This would make ICANN into a wealth

redistribution machine, intensifying the politics around it and further diverting

it from its basic coordinative mission. Bad idea. But the EC also proposes, “as

a complementary measure,” that “the fees which ICANN charges for its services

could be decreased to limit the growth of revenue.” This is a very good idea, but

it doesn’t make any sense to propose it as a “complement” to a completely

contradictory notion of ICANN as a charity. In fact, reduced fees may even

already be legally required of it due to its nonprofit status.

Paper 4 is a bit more constructive than the others, but once

again the recommendations seem to be quick and dirty. It claims that ICANN’s

corporate governance “does not meet the required standards of independence,

transparency and accountability.” Let’s overlook the fact that an EC Directorate

that secretly developed proposals for major changes in a global institution while pushing the US government

to unilaterally put them into the IANA contract without any public consultation is in no 

position to lecture anyone about “transparency and accountability.” The paper complains

that ICANN’s Accountability and Transparency Review Team recommendations “do

not sufficiently address the more fundamental issue of the independence of

Board members and staff.” It calls for new rules regarding conflict of interest

for Board members and staff.

Some of the new rules it recommends are sensible, such as a

2-year cooling off period before departing Board members can be hired by the

industry. Others are a bit strange. It proposes to pay Board members – but how

is that consistent with those complaints about budget growth? It calls for

prohibiting employees of registries and registrars from being on the Board.

This of course runs against the grain of ICANN as a form of Internet self-regulation.

It calls for the Nominating Committee to actually publish the names of the

candidates it is considering. I fail to see how this would solve any major

problems.

The inconsistencies and contradictions identified above are

symptomatic of the shallow level of thinking that seems to have gone into these

papers.  Of course, the papers were

leaked and it is possible they were nothing more than unripe discussion

documents. But the EC has not planned any public consultation on ICANN, and the

proposed timelines are very short. So it seems likely that these Papers were

developed and designed to influence the IANA contract and private discussions

with the US government. It seems evident that the EC isn’t playing by the rules

of democracy and multi-stakeholderism; it wants to issue orders to ICANN and

(more importantly) to the community of Internet users and service suppliers.