---------- Forwarded message ----------
Date: Mon, 9 Nov 1998 10:01:45 -0800 (PST)
From: Internet Assigned Numbers Authority <iana@ISI.EDU>
To: iana-announce@ISI.EDU
Cc: iana@ISI.EDU
Subject: ICANN Announcement
INTERNET CORPORATION
FOR ASSIGNED NAMES AND NUMBERS
November 6, 1998
J. Beckwith Burr
Associate Administrator (Acting)
National Telecommunications and
Information Administration
United States Department of Commerce
Washington, D.C. 20230
Re: Internet Corporation for Assigned Names and Numbers
Dear Ms. Burr:
On behalf of the Internet Corporation for Assigned Names and Numbers
(ICANN), I am responding to your letter to Dr. Herb Schorr of October 20,
1998. ICANN is prepared to fulfill the mission identified in the White
Paper to allow the management of Internet names and address to be
administered by a new, not-for-profit corporation. We are pleased to have
been recognized by the Department of Commerce as the appropriate entity to
take on that responsibility, and we are eager to get started.
First, a note about the formation of the ICANN Board. On October 25,
1998, the nominees for the ICANN Board met in person and by telephone in
New York. During that meeting, we decided that the most prudent course, in
view of the untimely death of Dr. Jon Postel, was for the ICANN Board to be
officially constituted so that it could complete the mission that Dr.
Postel and many other persons and entities throughout the world have
focused on so diligently since the issuance of the White Paper last June.
We did not wish to be presumptuous, but we believed that this was a
necessary step to enable this process to continue effectively and
expeditiously. Accordingly, the nine At Large members of the Initial Board
have now been duly elected, and I have been elected its Interim Chairman.
In addition, Michael Roberts was named as Interim President and Chief
Executive officer. Mr. Roberts will act for an interim period only and
will not be a candidate for the long-term President and Chief Executive
Officer. Because of Mr. Roberts' office and consistent with the submitted
bylaws, Mr. Roberts was also elected to the Board. The views set forth in
this letter are those of the unanimous Board.
In your letter to Dr. Schorr, you state that the United States is
prepared to "begin work on a transition agreement between the United States
and ICANN" once certain issues described in your letter are satisfactorily
resolved. The ICANN Board has carefully considered each of the issues
raised in your letter and has had a number of discussions concerning those
issues with a variety of interested persons and groups (including
authorized representatives of the two groups whose proposals you
specifically mentioned -- the Boston Working Group and the Open Root Server
Confederation). As a result of this work, we have made certain revisions
to the bylaws that were submitted to you with Dr. Postel's letter of
October 2, 1998 (which for shorthand we will call the "October 2 bylaws").
Those revised bylaws have been adopted by the Board, and we are now
operating pursuant to them. A copy of the bylaws as adopted is attached.
In determining what revisions should be made, we were guided by your
letter, discussions with BWG and ORSC and others, and our own judgment of
what was sensible and workable. We believe we have dealt appropriately
with all the issues raised in your letter, in many instances by adopting
particular changes suggested by BWG, ORSC and other commenters. We have
not made (and indeed could not make) every change suggested by everyone,
because some are conflicting, some are not supported by a consensus of the
Internet community, and some are, in our judgment, not likely to be
effective. We explain below the specific changes that we considered and
those that we made and why. We believe that these changes satisfactorily
respond to the issues raised in your October 20 letter.
In your letter, you specifically identify six areas for further
consideration. I will discuss each of these issues separately.
1. Membership.
The "membership" issue has been perhaps the most widely debated issue
in the discussions that have occurred since the White Paper was issued last
June. In fact, the October 2 bylaws provided that there would be four
separate membership organizations: three specialized Supporting
Organizations that would each elect three Directors, and an At Large
membership that would elect nine directors.
Neither the drafters of the ICANN bylaws nor anyone else has yet been
able to devise a membership structure that is generally accepted to be
appropriate and practical for the At Large membership. For this reason,
the October 2 bylaws provided that if the Initial Board decides that it is
not "possible" to create a "workable" membership structure, it would have
to devise some alternative structure to elect the nine At Large Directors.
Since this caveat has contributed to the concerns on this issue you
reference in your letter, we have eliminated it. The bylaws now make it
clear that the Board has an unconditional mandate to create a membership
structure that will elect the At Large Directors of the Board, as proposed
by the BWG and some other commenters.
We will move directly to devise a workable membership structure and
will seek broad input on how this can be best done. As suggested by the
BWG in a recent conversation, the bylaws as adopted require the creation of
an Advisory Committee on Membership, consisting of Directors and others, to
advise the Board on this issue. We note and appreciate that the ORSC
proposal contained a specific suggestion for implementation of membership
that we will carefully consider, and we assume that others will come
forward with additional ideas and suggestions.
Some remain concerned that the Initial Board could simply amend the
bylaws and remove the membership provisions that we have just described
above. We commit that this will not happen. In addition to our
commitment, the U.S. government has publicly stated that it will maintain
oversight during the transition period, and we fully expect that the
creation of a membership and the transfer of authority to a fully elected
Board will occur before that transition period ends.
2. Financial Accountability.
The various iterations of the proposals that IANA circulated for
comment over the past several months reflect a continuing effort to craft
procedures to make the Board accountable to those it serves in every
respect, including financially. Nevertheless, your letter noted that you
had received some comments asserting that the October 2 bylaws did not
contain mechanisms "to ensure financial accountability to the members of
the Internet community who will be funding the organization." We certainly
agree that such mechanisms are essential. In an effort to be responsive to
these concerns, we have adopted some of the language proposed by the BWG in
terms of the budgeting process (including requirements for identification
of anticipated revenue sources and levels, and provisions requiring
line-item expense budgeting) and we have broadened the disclosure of
payments to directors to include all payments, including reimbursement of
expenses. We also have prohibited the Board from delegating the approval
of the budget to a committee, thereby requiring review of the budget by the
entire Board. In addition, we have collected many of the provisions
relating to this issue in a new Article XI, Section 4, entitled "Fiscal
Controls."
As a result of these changes, the bylaws we have adopted contain the
following specific requirements relating to fiscal accountability:
-- The President must prepare an annual budget and, at least three
months prior to the start of a fiscal year, submit the budget to
the Board. This must include a description of anticipated
revenue sources and, to the extent practical, a line item
description of anticipated material expense items. The Board
must then adopt and publish on the Internet an annual budget.
-- The Board is required to publish at least annually a report
describing its activities, including an audited financial
statement and a description of any payments (including
reimbursements of expenses) made to Directors.
-- The Board can set fees only to recover "reasonable" operating
costs and to establish "reasonable reserves" for future expenses
and contingencies "reasonably related to the legitimate
activities of the corporation." The fees and charges must be
fair and equitable and must be published on the Internet.
-- In general, and of course including financial matters, the Board
is obligated to operate to the maximum extent feasible in an
"open and transparent manner and consistent with procedures
designed to ensure fairness," with significant policies and
procedures widely publicized on the Internet and adopted only
after the Board has received and evaluated comments from the
Internet community.
Because it was featured prominently in the ORSC submission, we
carefully reviewed the notion that the Supporting Organizations should be
largely responsible for, and have a veto right over, the ICANN budget.
Ultimately, we decided that it would not be appropriate for the corporation
to have its budget controlled by someone other than the Board, which will
consist of the elected representatives of the entire Internet community.
At bottom, we do not believe that giving the Supporting Organizations this
power would either promote fiscal accountability or be in the best
interests of the Internet community. Indeed, we do not yet know how the
Supporting Organizations will be structured or organized; it seems likely
that they will differ in important respects. As a result, we are reluctant
to create a system where some as-yet-unformed entities have total control
over the budget of an organization with the important responsibilities of
ICANN.
In addition, the ORSC financial accountability proposals come in the
context of companion provisions that would create a totally different
membership structure from what was proposed in the October 2 bylaws by,
among other things, not permitting the Supporting Organizations to elect
members of the ICANN Board. We have carefully considered this issue, and
concluded that the structure proposed in the October 2 bylaws -- with four
separate membership organizations each electing Directors and thus creating
an ICANN Board with a balanced representation of the various Internet
technical, commercial and user constituencies -- is both appropriate and
supported by the vast majority of Internet stakeholders. Since we
therefore concluded not to accept the ORSC suggestion to change those
provisions that allow the Supporting Organizations to elect members to the
ICANN Board, to adopt the related ORSC provisions on financial issues would
unduly distort the accountability of the new organization.
3. Transparency.
As your letter recognized, the October 2 bylaws contained a number of
provisions intended to promote transparent decision-making and to protect
against capture by a self-interested faction. You particularly noted the
provision that requires notice and public comment on any action that would
substantially affect the operation of the Internet or third parties.
Nevertheless, you noted comments urging explanations of lesser decisions as
well, perhaps through regularly-published minutes.
The ICANN Articles of Incorporation already filed require that ICANN
"operate for the benefit of the Internet community as a whole . . . through
open and transparent processes that enable competition and open entry in
Internet related markets." In addition, the ICANN bylaws as adopted
contain a number of additional specific provisions designed to ensure
openness and transparency. For example, the bylaws direct that:
-- ICANN "operate to the maximum extent feasible in an open and
transparent manner and consistent with procedures designed to
ensure fairness;"
-- that the Initial Board investigate the development of policies
and procedures in addition to those already in the bylaws to
increase public information about and "enhance the ability of
interested persons to provide input to" the Board and Supporting
Organizations; any such policies and procedures must be publicly
posted on the ICANN web site in draft form and adopted only after
receiving and evaluating public comment;
-- all minutes of any ICANN entity must be approved within
twenty-one days and be made publicly available;
-- the Board must publish a calender of scheduled meetings and
advance notice of each Board meeting, along with an agenda;
-- the Board must give broad public notice of any significant policy
decisions, and allow time for public comment on any such policies
prior to adoption;
-- ICANN must facilitate the translation of final documents into
various appropriate languages;
-- the Board is required to adopt provisions to allow
reconsideration of actions;
-- as noted earlier, the Board must publish, at least annually, a
report describing the Board's activities and containing audited
financial statements; and
-- the annual meeting of the Board is open to the public and is to
be held in various venues around the world in recognition of the
global character of ICANN.
These appear to us to be very significant guarantees of openness and
transparency. The BWG proposed that Board minutes be approved within 30
days (while the October 2 bylaws provided that they must be approved
"promptly"); we have adopted that requirement and, in fact, have shortened
the period to 21 days. There were also suggestions that the mandate to the
Board in the bylaws that it adopt a reconsideration process be broadened to
apply to all actions by the Corporation, not just Board actions. We have
accepted this suggestion.
We note that some have questioned our choice of California as a
jurisdiction in which to form ICANN. We have carefully reviewed the
various suggestions of alternative jurisdictions, and while each has
merits, we believe that the well-written and specific nonprofit corporate
laws of California are most consistent with ICANN's goal of creating
maximum accountability and openness.
4. Conflicts of Interest.
Your letter notes that some commentators have emphasized the
importance of establishing open and transparent processes and avoiding the
appearance of conflicts of interests with respect to the Supporting
Organizations. Your letter continues by noting that some commentators have
raised concerns about officers and directors of Supporting Organizations
serving on the ICANN Board.
The ICANN bylaws as adopted provide that all Directors, however
elected, serve in their individual capacity and not as a representative of
any group or entity. It is not clear why this would be any more difficult
to do for an officer of a Supporting Organization than it would be for an
officer or employee of a private corporation (and the Board, as a body of
unpaid volunteers providing service to a non-profit corporation, inevitably
will include such persons). To the extent that any conflicts of interest
arise, the bylaws as adopted treat that issue by requiring that the
Directors disclose, not less than once a year, "all business and other
affiliations which relate in any way to the business and other affiliations
of the Corporation." Additional disclosures are required in order to
address the possibility that a Director might become an "interested
director" or an "interested person" within the meaning of the relevant
California statutes.
The bylaws as adopted also provide that the Board shall (the October 2
bylaws said "may") adopt further policies to address conflict issues, and
we have made it clear in the bylaws as adopted that these policies will
cover the Supporting Organizations as well. Because it is not yet clear
what organizational form the Supporting Organizations will take, or whether
they will even have officers and directors, it seems premature to
articulate detailed conflict of interest rules for them at this time.
Finally, the ICANN bylaws as adopted require that any application for
recognition as a Supporting Organization contain "policies for disclosure
to the Corporation by members of or participants in a Supporting
Organization council of conflicts of interest or other financial interests
in matters within the scope of the Supporting Organization (such conflicts
of interest, however, not necessarily requiring abstention from action)."
The rationale for this provision is that disclosure of any such conflicts
is important for those serving on the bodies charged with making policy
recommendations, but that it would be impractical and unwarranted to
prohibit participation on the councils to anyone with a potential conflict.
As noted above, any Supporting Organization members who became Directors
would automatically fall under the conflicts rules related to Directors.
5. Geographic and Functional Diversity of the Board.
The Board recognizes that the Initial Board is not large enough to
include members from every constituency or geographic region that could
reasonably stake a claim for representation. Indeed, a strenuous effort
was made to name an Initial Board of people that are deliberately not
representative of any particular constituency. Having now spent some time
with the other ICANN directors, I believe I can safely say that each of us
recognizes our unique charge to help make ICANN a globally recognized and
respected entity that is broadly representative in its governance structure
of the worldwide constituencies it represents.
The ICANN bylaws sought to ensure this broad representation by
limiting the number of At Large Directors who could come from any one
geographic region to no more than 50% of the total (as a practical matter,
four out of nine) and by limiting the number of Directors selected by a
Supporting Organization from any one region to no more than two.
Obviously, before all of the nineteen Board members are seated, it is
difficult to say in the abstract that these procedures will or will not
accomplish their goal. The Board is committed to ensuring that this global
entity's permanent governance structure is globally representative, and we
welcome ideas on how to make this happen. We are aware of various
suggestions, such as limiting the aggregate number of Directors from the
Supporting Organizations to no more than half from any one region, or
requiring that at least on Director come from every region. These may be
appropriate aspirational goals, but it is difficult to see how they could
be effectively implemented. We hope to receive specific proposals on how
these or similar goals could be met consistent with the membership election
processes contemplated in the bylaws as adopted.
6. Country Code TLDs.
You asked us to confirm your "assumption that national governments
would continue to have authority to manage and/or establish policy for
their own ccTLDs (except, of course, insofar as such policies adversely
affect universal connectivity on the Internet)." We are happy to confirm
that assumption, but we note that the details of implementation of this
objective may be complex. It may well be that this is an example of an
issue where the Governmental Advisory Committee could provide a useful
forum for discussions and advice to the Board.
* * * * *
In summary, the ICANN Board believes that it has taken the appropriate
steps to respond to the issues raised in your October 20 letter, by making
changes to the October 2 bylaws that reassure everyone in the Internet
community that ICANN will listen to all voices, and carry out its work in
an open and transparent manner. We do not have the ability to make
everyone happy -- as noted, the various suggestions for changes conflicted
in many respects -- but we have gone to great lengths to try to accommodate
the reasonable concerns of those who have expressed interest.
While we have now adopted the attached bylaws, they are not cast in
stone; there will have to be changes to reflect the work of the Initial
Board and to create the permanent governance structure of ICANN. We will
carefully consider any and all suggestions for improvement as we move
forward in this process. Nobody should operate under the illusion that
any issue has been resolved "once and for all." Similarly, nobody should
feel that issues that are important to them and have not been addressed to
their satisfaction cannot be revisited. The process is just beginning.
Our goal, as the Initial Board, is to complete the organizational work
as quickly as possible, and to hand over a fully functioning, properly
representative ICANN to its first elected Board as soon as possible. We
must create an organization that can begin to assume responsibility for the
administration and policies of the Internet name and address system, and
we must do so quickly, openly and effectively. This Board is committed to
accomplishing all of these somewhat conflicting objectives.
We have already had many conversations and consultations with those
who commented on the October 2 bylaws and accompanying material, and we
will have many more as we move through this process. We have announced
our first open meeting for November 14, 1998, in Boston. We will attend a
meeting of the European Panel of Participants in Brussels on November 25,
1998, and we hope to hold a meeting in Asia soon as well. It is now time
to complete the transition process, and we hope we can do so as soon as
possible. As I said at the beginning of this letter, we truly are eager to
get started.
Sincerely,
Esther Dyson
Interim Chairman
On Behalf of the ICANN Board
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