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Internet Commerce Association
1233 West Loop South, Suite 1400
Houston, Texas 77027

November 17, 2006

Honorable Ted Stevens
Chairman, Senate Committee on Commerce, Science and Transportation
508 Senate Dirksen Office Building
Washington, DC 20510

Dear Chairman Stevens:

I am writing on behalf of the Internet Commerce Association (ICA), a new non-profit trade association formed to represent the interests of the professional domain name registrant community. 

The ICA is greatly concerned about an imminent action of the Internet Corporation for Assigned Names and Numbers (ICANN) that threatens to effect permanent and detrimental changes in the fundamental nature of the domain name system (DNS), and respectfully request your immediate intervention on behalf of the global registrant community

Domain names constitute a new form of property that came into existence with the advent of the commercial Internet a decade ago. We estimate that public and private sales of domain names in the secondary market during 2006 will total between $500-700 million, and that the total stand-alone value of existing domain names (without consideration of the online commerce taking place at currently active domains) is between $5-10 billion. We anticipate that both secondary market sales and total domain values will increase sharply over the next few years as the overall demand for quality domains increases, as the liquidity and transparency of the secondary markets improve, and as a growing portion of major advertising expenditures is directed online.

The ICA commends you and the Commerce Committee for your diligent attention to matters concerning the operations and policies of ICANN. The ICA submitted a statement for the record of the September 20th hearing held by the Subcommittee on Trade, Tourism, and Economic Development on “Internet Governance: The Future of ICANN”; that statement was submitted under our original name of Internet Traffic Association. While ICA members presently support the continued governance of the DNS by ICANN, a non-profit corporation, they nonetheless have serious concerns about specific policies undertaken by ICANN as well as that organization’s continuing failure to operate with a requisite level of transparency and accountability.

We were particularly gratified to read the September 29th letter sent by you and Senators Inouye, Smith and Dorgan to Assistant Secretary for Communications and Information John Kneuer. In that letter, you expressed the need for ICANN to demonstrate improvement on issues of accountability and transparency if it is to be “a lasting and sustainable institution”, and to consider the concerns of the broad Internet community before making key decisions. We also share your strong concern regarding the proposed .Com settlement between ICANN and VeriSign, and support your request that the Department of Commerce delay any approval of that proposed agreement until your Committee can more thoroughly review and understand its key components, including presumptive renewal notwithstanding material breaches of the agreement and automatic price increases absent any cost justification. 

Unfortunately, those very same concerns about perpetual monopoly and unjustified price hikes, as well as additional matters of serious import to the future of the Internet, are present in pending proposed agreements for the .Biz, .Info, and .Org top level domains (TLDs). We regret to say that ICANN’s actions on this matter speak much louder than its recent words, uttered in conjunction with the renewal of its Memorandum of Understanding (MOU) with the Commerce Department, committing it to greater accountability and transparency in its operations. In response to more than one thousand comments received from the Internet community on the original version of these agreements, almost all of which were strongly opposed to their adoption, ICANN has chosen to republish them with minor alterations that barely go beyond the cosmetic, and has yet to provide any policy rationale for key provisions of the proposed agreements that would effect permanent changes in fundamental policies of Internet governance. Among these changes would be the allowance of differential pricing by TLD registries, which would be nothing less than an unjustified tax on the property value of domain names and the businesses they host. Our full letter to ICANN of November 14th is attached, and lays out in detail the serious substantive and procedural shortcomings of the proposed agreements. 

The proposed approval of these deeply flawed agreements is scheduled for discussion by the ICANN Board at its meeting of November 22nd, and there is a clear and present danger that the Board will rush to approve them in advance of the full ICANN meeting that will take place from December 2-8 in Sao Paulo, Brazil.

The ICA hereby requests that you and your fellow members of the Commerce Committee immediately convey to both ICANN and the Commerce Department the view that these agreements should not be adopted at this time because they contain the same troubling provisions as the proposed .Com settlement as well as additional controversial and unexplained provisions, and that you further advise them that ICANN’s procedures to date on this matter are thoroughly at odds with its rhetorical commitment to improvements in accountability and transparency.

The ICA appreciates your consideration of our views in regard to these pending TLD agreements. We look forward to participating in the Committee’s “listening sessions” on ICANN-related issues in the 110th Congress, as well as to providing the Committee with a better understanding of our fledgling industry. Please let me know if I can provide any further information in regard to this matter of serious import to ICA and its members.

Bob Martin

Cc: Senators Daniel Inouye, Gordon Smith, and Byron Dorgan

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