Order Code 97-868 STM
Updated April 6, 2005
CRS Report for Congress
Received through the CRS Web
Internet Domain Names:
Background and Policy Issues
Lennard G. Kruger
Specialist in Science and Technology
Resources, Science, and Industry Division
Summary
To navigate the Internet requires using addresses (and corresponding names) that
identify the location of individual computers. As the Internet grew, the method for
allocating and designating those domain names became controversial. The
Administration issued a White Paper in June 1998 endorsing the creation of a new not-
for-profit corporation of private sector Internet stakeholders to administer policy for the
Internet name and address system. On November 25, 1998, the Department of
Commerce (DOC) formally approved a new corporation, called the Internet Corporation
for Assigned Names and Numbers (ICANN). A Memorandum of Understanding
(MOU) between ICANN and DOC has been extended through September 2006. During
this transition period, government obligations will be terminated as most DNS
responsibilities are transferred to the private sector. The 109th Congress will likely
conduct oversight on how the Administration manages and oversees ICANN’s activities
and policies as ICANN strives to meet the conditions of the Department of Commerce
MOU. The 109th Congress is also likely to assess the role of the federal government in
Internet governance, the nature and implications of the transition of the DNS to private
sector ownership, and the role that the international community might play in that
transition.
Background
The Internet is often described as a “network of networks” because it is not a single
physical entity but, in fact, hundreds of thousands of interconnected networks linking
millions of computers around the world. Computers connected to the Internet are
identified by a unique Internet Protocol (IP) number that designates their specific
location, thereby making it possible to send and receive messages and to access
information from computers anywhere on the Internet. Domain names were created to
provide users with a simple location name, rather than requiring them to use a long list
of numbers. For example, the IP number for the location of the THOMAS legislative
system at the Library of Congress is 140.147.248.9; the corresponding domain name is
Congressional Research Service ˜ The Library of Congress

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“thomas.loc.gov”. Top Level Domains (TLDs) appear at the end of an address and are
either a given country code, such as .jp or .uk, or are generic designations (gTLDs), such
as .com, .org, .net, .edu, or .gov. The Domain Name System (DNS) is the distributed set
of databases residing in computers around the world that contain the address numbers,
mapped to corresponding domain names. Those computers, called root servers, must be
coordinated to ensure connectivity across the Internet.
The Internet originated with research funding provided by the Department of Defense
Advanced Research Projects Agency (DARPA) to establish a military network. As its use
expanded, a civilian segment evolved with support from the National Science Foundation
(NSF) and other science agencies. While there are no formal statutory authorities or
international agreements governing the management and operation of the Internet and the
DNS, several entities have played key roles in the DNS. The Internet Assigned Numbers
Authority (IANA) makes technical decisions concerning root servers, determines
qualifications for applicants to manage country code TLDs, assigns unique protocol
parameters, and manages the IP address space, including delegating blocks of addresses
to registries around the world to assign to users in their geographic area. IANA operates
out of the University of Southern California’s Information Sciences Institute and has been
funded primarily by the Department of Defense.
NSF was responsible for registration of nonmilitary domain names, and in 1992 put
out a solicitation for managing network services, including domain name registration. In
1993, NSF signed a five-year cooperative agreement with a consortium of companies
called InterNic. Under this agreement, Network Solutions Inc. (NSI), a Herndon, Virginia
engineering and management consulting firm, became the sole Internet domain name
registration service for registering the .com, .net., and .org. gTLDs.

Recent History
Since the imposition of registration fees in 1995, criticism of NSI’s sole control over
registration of the gTLDs grew. In addition, there was an increase in trademark disputes
arising out of the enormous growth of registrations in the .com domain. There also was
concern that the role played by IANA lacked a legal foundation and required more
permanence to ensure the stability of the Internet and the domain name system. These
concerns prompted actions both in the United States and internationally.
An International Ad Hoc Committee (IAHC), a coalition of individuals representing
various constituencies, released a proposal for the administration and management of
gTLDs on February 4, 1997. The proposal recommended that seven new gTLDs be
created and that additional registrars be selected to compete with each other in the
granting of registration services for all new second level domain names. To assess
whether the IAHC proposal should be supported by the U.S. government, the executive
branch created an interagency group to address the domain name issue and assigned lead
responsibility to the National Telecommunications and Information Administration
(NTIA) of the Department of Commerce (DOC). On June 5, 1998, DOC issued a final
statement of policy, “Management of Internet Names and Addresses.” Called the White
Paper, the statement indicated that the U.S. government was prepared to recognize and
enter into agreement with “a new not-for-profit corporation formed by private sector

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Internet stakeholders to administer policy for the Internet name and address system.”1 In
deciding upon an entity with which to enter such an agreement, the U.S. government
would assess whether the new system ensured stability, competition, private and bottom-
up coordination, and fair representation of the Internet community as a whole.
In effect, the White Paper endorsed a process whereby the divergent interests of the
Internet community would come together and decide how Internet names and addresses
would be managed and administered. Accordingly, Internet constituencies from around
the world held a series of meetings during the summer of 1998 to discuss how the New
Corporation (NewCo) might be constituted and structured. Meanwhile, IANA, in
collaboration with NSI, released a proposed set of bylaws and articles of incorporation.
The proposed new corporation was called the Internet Corporation for Assigned Names
and Numbers (ICANN). After five iterations, the final version of ICANN’s bylaws and
articles of incorporation were submitted to the Department of Commerce on October 2,
1998. Additionally, nine members of ICANN’s interim board were chosen (four
Americans, three Europeans, one from Japan, and one from Australia). On November
25, 1998, DOC and ICANN signed an official Memorandum of Understanding (MOU),
whereby DOC and ICANN agreed to jointly design, develop, and test the mechanisms,
methods, and procedures necessary to transition management responsibility for DNS
functions to a private-sector not-for-profit entity.

The White Paper also signaled DOC’s intention to ramp down the government’s
Cooperative Agreement with NSI, with the objective of introducing competition into the
domain name space while maintaining stability and ensuring an orderly transition. During
this transition period, government obligations were to be terminated as DNS
responsibilities transferred to ICANN. Specifically, NSI committed to the development
of a Shared Registration System that permits all accredited registrars to provide
registration services within the .com, .net., and .org gTLDs. NSI (now VeriSign)
continues to administer the root server system until receiving further instruction from the
government.
Significant disagreements between NSI and ICANN & DOC arose over how a
successful and equitable transition would be made from NSI’s previous status as
exclusive registrar of .com, org. and net. domain names, to a system that allows multiple
and competing registrars. Of particular controversy was NSI’s refusal to sign ICANN’s
accreditation agreement. On September 28, 1999, after nearly a year of negotiations,
DOC, NSI, and ICANN announced a series of formal agreements. NSI agreed to sign an
accreditation agreement with ICANN, but with certain limits and conditions placed on
ICANN decisions that could affect NSI’s business. The agreement stated that NSI retains
control of the .com registry for at least four years; if ownership of NSI’s registry and
registrar operations is fully separated within 18 months (via spinoff or sale to a third party
for example), the term would be extended for four additional years. NSI and all
accredited registrars provide public access to the full database of registered domain names
(the “WhoIs” database). NSI agreed to pay ICANN $1.25 million upon signing the
1 Management of Internet Names and Addresses, National Telecommunications and Information
Administration, Department of Commerce, Federal Register, Vol. 63, No. 111, June 10, 1998,
31741.

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agreement, and agreed to approve an ICANN registrar fee policy as long as NSI’s share
does not exceed $2 million.
On November 10, 1999, ICANN, NSI, and DOC formally signed the agreements,
which provided that NSI (now VeriSign) was required to sell its registrar operation by
May 10, 2001 in order to retain control of the dot-com registry until 2007. In April 2001,
arguing that the registrar business was by then highly competitive, VeriSign reached a
new agreement with ICANN whereby its registry and registrar businesses would not have
to be separated. With DOC approval, ICANN and VeriSign signed the formal agreement
on May 25, 2001. The agreement provided that VeriSign would continue to operate the
.org registry until 2002; the .net registry until June 30, 2005, which prior to that time will
be opened for recompetition unless market measurements indicate that an earlier
expiration date is necessary for competitive reasons; and the .com registry until at least
the expiration date of the current agreement in 2007, and possibly beyond. VeriSign
agreed to enhanced measures (including annual audits arranged by ICANN and made
available to the U.S. government) to ensure that its registry-operation unit gives equal
treatment to all domain name registrars, including VeriSign’s registrar business.
On September 17, 2003, ICANN and the Department of Commerce agreed to extend
their MOU until September 30, 2006. The MOU specifies transition tasks which ICANN
has agreed to address. ICANN will implement an objective process for selecting new Top
Level Domains; implement an effective strategy for multi-lingual communications and
international outreach; and develop a contingency plan, consistent with the international
nature of the Internet, to ensure continuity of operations in the event of a severe disruption
of operations.
Issues
The Department of Commerce (through the National Telecommunications and
Information Administration) remains responsible for monitoring the extent to which
ICANN satisfies the principles of the White Paper as it makes critical DNS decisions. In
the 109th Congress, the Senate Committee on Commerce, Science and Transportation and
the House Committee on Energy and Commerce will likely conduct oversight on how the
Administration manages and oversees ICANN’s activities and policies as it strives to meet
the conditions of the Department of Commerce MOU. The 109th Congress is also likely
to assess the role of the federal government in Internet governance, the nature and
implications of the transition of the DNS to private sector ownership, and the role that the
international community might play in that transition.

Governance. On June 22, 2002, ICANN released a “Blueprint for Reform,” which
calls for a significant restructuring of ICANN. Specifically, the Board of Directors would
be composed of fifteen members: the ICANN President, eight members appointed by a
nominating committee, and six selected by three Supporting Organizations. The reform
blueprint also recommends that ICANN collect a fee of 25 cents per registered domain
name. New bylaws based on the reform proposal were formally adopted by the ICANN
Board at the October 2002 Board meeting in Shanghai. Some in the Internet community
have spoken against the ICANN reforms, asserting that its elimination of elected At-Large
board members precludes effective representation of unaffiliated Internet users. In a
related development, the United Nations, at the December 2003 World Summit on the
Information Society (WSIS), debated and agreed to study the issue of how to achieve

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greater international involvement in the governance of the Internet and the domain name
system. The study is being conducted by the UN’s Working Group on Internet
Governance (WGIG). The United Nations will revisit the issue in November 2005, after
the WGIG study is complete. On December 22, 2004, ICANN announced that it will
contribute $100,000 to help support the WGIG study.
On March 31, 2005, the National Research Council (NRC) released a report entitled,
Signposts in Cyberspace: The Domain Name System and Internet Navigation.2 The report
was mandated by Congress in 1998 (P.L. 105-305) and sponsored by the Department of
Commerce and the National Science Foundation. Among its recommendations, the NRC
concluded that the domain name system should continue to be administered by a
nongovernmental body and not be turned over to an intergovernmental organization. The
report also recommended that before turning over control of the DNS, the Department of
Commerce should seek ways to protect ICANN from undue commercial and political
pressures, and to provide oversight of ICANN's performance.

Top Level Domains. At its July 16, 2000 meeting in Yokohama, the ICANN
Board of Directors adopted a policy for the introduction of new top-level domains
(TLDs), which could expand the number of domain names available for registration by
the public. After considering a total of 47 applications, the ICANN Board selected seven
companies or organizations each to operate a registry for one of seven new TLDs, as
follows: .biz, .aero, .name, .pro, .museum, .info, and .coop. Subsequently, ICANN
considered eleven applications for operating .org after the agreement with VeriSign
expired on December 31, 2002. On October 14, 2002, the ICANN Board selected the
Internet Society’s Public Interest Registry as .org operator. On December 15, 2003,
ICANN formally invited applications from all parties for new TLDs. The application
period closed on March 15, 2004; ten applications were received. ICANN has entered
into negotiations on approving four of the candidate TLDs. Meanwhile, in December
2004, ICANN issued a request for proposals for operating the .net registry. On March 28,
2005, ICANN published an evaluation report identifying Verisign as the highest ranked
applicant for operating the .net registry. ICANN says it will now enter into negotiations
with Versign for operating the .net registry.
Protecting Children on the Internet.
In the 107th Congress, legislation sought
to create a “kids-friendly top level domain name” that would contain only age-appropriate
content. The Dot Kids Implementation and Efficiency Act of 2002 was signed into law
on December 4, 2002 (P.L. 107-317) and authorizes the National Telecommunications
and Information Administration (NTIA) to require the .us registry operator (currently
NeuStar) to establish, operate, and maintain a second level domain within the .us TLD
that is restricted to material suitable for minors.
In the 108th Congress, P.L. 108-21/S. 151 (PROTECT Act), contains a provision
(Sec. 108: Misleading Domain Names on the Internet) which would make it a punishable
crime to knowingly use a misleading domain name with the intent to deceive a person into
viewing obscenity on the Internet. Increased penalties are provided for deceiving minors
into viewing harmful material.
2 Available at [http://books.nap.edu/catalog/11258.html?onpi_newsdoc03312005]

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Trademark Disputes. The increase in conflicts over property rights to certain
trademarked names has resulted in a number of lawsuits. The White Paper called upon
the World Intellectual Property Organization (WIPO) to develop a set of
recommendations for trademark/domain name dispute resolutions, and to submit those
recommendations to ICANN. At ICANN’s August 1999 meeting in Santiago, the board
of directors adopted a dispute resolution policy to be applied uniformly by all ICANN-
accredited registrars. Under this policy, registrars receiving complaints will take no action
until receiving instructions from the domain-name holder or an order of a court or
arbitrator. An exception is made for “abusive registrations” (i.e. cybersquatting and
cyberpiracy), whereby a special administrative procedure (conducted largely online by a
neutral panel, lasting 45 days or less, and costing about $1000) will resolve the dispute.
Implementation of ICANN’s Domain Name Dispute Resolution Policy commenced on
December 9, 1999. Meanwhile, the 106th Congress passed the Anticybersquatting
Consumer Protection Act (incorporated into P.L. 106-113, the FY2000 Consolidated
Appropriations Act). The act gives courts the authority to order the forfeiture,
cancellation, and/or transfer of domain names registered in “bad faith” that are identical
or similar to trademarks, and provides for statutory civil damages of at least $1,000, but
not more than $100,000, per domain name identifier.
WIPO initiated a second study which produced recommendations on how to resolve
disputes over bad faith, abusive, misleading or unfair use of other types of domain names
such as personal names, geographical terms, names of international organizations, and
others. WIPO released its second report on September 3, 2001, recommending that
generic drug names be canceled upon complaint and that international intergovernmental
organization names be subject to a dispute resolution process. WIPO did not recommend
new rules regarding personal, geographical, or trade names.
Privacy. Any entity who registers a domain name is required to provide contact
information (phone number, address, email) which is entered into a public online database
(the “WHOIS” database). Over the past several years, registrants who wish to maintain
their privacy have been able to register anonymously using a proxy service offered by
some registrars. In February 2005, the National Telecommunications and Information
Administration (NTIA) – which has authority over the .us domain name – notified
Neustar (the company that administers .us) that proxy or private domain registrations will
no longer be allowed for .us domain name registrations, and that registrars must provide
correct WHOIS information for all existing customers by January 26, 2006. According
to NTIA, this action will provide an assurance of accuracy to the American public and to
law enforcement officials. The NTIA policy is opposed by privacy groups and registrars
(such as Go Daddy) who argue that the privacy, anonymity, and safety of people
registering .us domain names will be needlessly compromised.
In a related development, during the 108th Congress, the Fraudulent Online Identity
Sanctions Act was incorporated as Title II of H.R. 3632, the Intellectual Property
Protection and Courts Amendments Act of 2004, signed by the President on December
23, 2004 (P.L. 108-482). The act increases criminal penalties for those who submit false
contact information when registering a domain name that is subsequently used to commit
a crime or engage in copyright or trademark infringement.