Commerce Department Keeps Icann as Web’s Address Manager

The U.S. Commerce Department awarded a new contract to the nonprofit managing the Internet’s address system four months after saying the group hadn’t met revised requirements that include a strong conflict-of-interest policy.

The Internet Corporation for Assigned Names and Numbers received the new contract as it oversees a program that may add as many as 1,000 Web suffixes to the right of the dot, to compete with .com. The expansion of so-called top-level domains is opposed by some trademark owners who say it will increase their costs, confuse consumers and fuel online scams.

“The U.S. government has very little leverage to extract change from Icann because there’s no one else that can do these functions,” Nao Matsukata, senior policy adviser for the Coalition Against Domain Name Abuse, a Washington-based group that has criticized aspects of Icann’s expansion program, said in an interview. “It was very hard to imagine anyone that would have the infrastructure and know-how to fulfill that contract.”

Icann has managed the Internet’s address system since 1998. Its new contract runs through Sept. 30, 2015, with an option for two two-year extensions, the Commerce Department’s National Telecommunications and Information Administration said in a news release yesterday.

The agreement with Icann coincides with increasing concern among officials in President Barack Obama’s administration that some countries want the United Nations’ International Telecommunication Union to play a central role in determining Internet policy, potentially jeopardizing free speech online.

Added Requirements

NTIA Administrator Lawrence Strickling in a June 15 speech expressed support for Icann’s decentralized decision-making model in overseeing the Web’s address system while saying that the U.S. wouldn’t shy away from offering constructive criticism to the Marina del Rey, California-based group.

The NTIA on March 10 canceled bids on the new contract, saying that none of the proposals it received -- including Icann’s -- met revised requirements including a strong conflict- of-interest policy and measures to increase transparency and accountability.

Rochelle Cohen, an NTIA spokeswoman, declined to comment today on what Icann changed to meet the contract’s requirements. The NTIA advises Obama on telecommunications issues.

Icann, whose board includes members employed by or with business ties to the domain-name industry, has faced scrutiny of its ethics policies as it prepares to open up the Internet to new suffixes.

Ethics Concerns

The group’s previous chairman, Peter Dengate Thrush, joined a company that plans to invest in the new top-level domains less than a month after the Icann board approved the expansion program in June 2011, sparking criticism from public-interest organizations that cited conflict-of-interest concerns.

U.S. Senator Ron Wyden, an Oregon Democrat, said in September the Commerce Department should include ethics and conflict-of-interest language in a future contract to manage the Internet’s domain-name system.

“We look forward to continuing our work with the multi- stakeholder community to ensure that we operate effectively, transparently and in the global public interest,” Akram Atallah, Icann’s acting chief executive officer, said in an e- mailed statement yesterday.

Atallah, Icann’s chief operating officer, stepped into the CEO role following the departure of Rod Beckstrom, whose term ended July 1. Atallah will stay in the top post until Icann’s new chief executive officer, Fadi Chehade, takes the helm on or before Oct. 1.

‘Close Oversight’

Icann received 1,930 proposals for new words to the right of the dot during an application process this year, including .jpmorgan from JPMorgan Chase & Co. (JPM), .walmart from Wal-Mart Stores Inc. (WMT), and .cialis from Eli Lilly & Co. (LLY) Each application cost $185,000. The first approved extensions may be ready early next year, the group said.

The Association of National Advertisers, which led industry opposition to the domain-name expansion, had asked the Commerce Department to extend Icann’s contract for a shorter period of a year to better monitor the group’s activity, Dan Jaffe, ANA’s group executive vice president of government relations, said in an interview yesterday.

“It’s a key period time when they are rolling out an extraordinary number of top-level domains and there’s a whole range of issues to be resolved,” Jaffe said. “We thought the department should keep close oversight.”

To contact the reporter on this story: Eric Engleman in Washington at eengleman1@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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