12 June 2016

News Review: IANA Transition Has Already Cost ICANN Over $28 Million

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Domain Mondo's review of the past week and look ahead [pdf]:

 While the BIG news this week may have been the 'baked-in-the-cake' report from NTIA, and Capitol Hill's reaction, you may have missed two revealing comments made by a former ICANN staff member and a former ICANN Chairman:
"The endemic problems at ICANN, which are most strongly reflected in its staff and board's intransigence, have also started spreading to the broader ICANN community – a community that is increasingly reliant on the organization's financial support. Over the course of the IANA transition plan's development, that community settled for untested convoluted decision-making processes over solid reform."--Kieren McCarthy, former ICANN staff member, writing in TheRegister.co.uk (emphasis added)
 "If I have any trepidation about the proposal it is associated with its general complexity. As the former chairman of ICANN, I am no stranger to the evolution of ICANN's structure and processes and their relative intricacy. The new proposal adds its own unique aspects to this tendency and it remains to be seen how well the system will work."--Vint Cerf, Vice President and Chief Internet Evangelist at Google, and former ICANN Board Chairman (2000-2007), ACM.org (emphasis added)
ICANN released (pdf) this week to the Cross-Community Working Groups, the IANA Stewardship Transition costs incurred at ICANN (including CCWG-Accountability and CWG-Stewardship) from inception on 1 July 2014 to 31 March 2016. Amounts in chart below are in USD thousands (000's):

Chart of IANA transition costs July 2014 - March 2016
IANA transition costs July 2014 - March 2016
Totals are shown on the last line in the chart above
Staff: $3,834,000
Travel & Meetings: $2,129,000
Telecom & Language Services: $2,983,000
Legal Services $10,793,000
Lobbying the U.S. Government: $1,096,000
Other Professional Services: $2,478,000
Total: $23,312,000 

As expected, law firms took almost half of all the spending. While ICANN is required by U.S. law to disclose what it spends lobbying the U.S. government, it is not required to disclose (and doesn't) what it spends "lobbying" foreign governments, and other "influential" persons and entities. Note however, ICANN has spent heavily in support of 'initiatives' outside its scope and mission, not included in the above amounts.

In addition, from 1 April to 30 June 2016, an additional $5,000,000 (ICANN estimate) has, or will be incurred, bringing the total to more than $28 million ($US) through the end of June.

With CCWG-Accountability Work Stream 2 just now getting underway, and not expected to finish until a year from now, final costs will not be known until sometime next year. If it turns out that the untested, unproven proposals to make ICANN accountable fail, and the world gives up on ICANN, it will have all been in vain.

Also worth noting: as a follow-up to the foreign "lobbying" reference above, ICANN, its directors, officers, and employees, are all subject to the Foreign Corrupt Practices Act (FCPA) (15 U.S.C. § 78dd-1, et seq.), penalties of which include prison terms of up to 5 years. Since ICANN refuses to disclose foreign lobbying expenses and other influence-peddling expenses outside the U.S., anyone (inside or outside of ICANN), with knowledge of possible violations (past, present, or future) of the Foreign Corrupt Practices Act, should contact the U.S. Department of Justice directly: Report a FCPA Violation via email to FCPA.Fraud@usdoj.gov or via fax 202-514-7021.

Likewise, the corruption can also go "the other way," as noted in the NTIA report (p. 170 of 172):
"“Capture” Through Corruption. Recent events have shown that international organizations ... can be “captured” through corruption. Leading officials of such organizations have pleaded guilty to (or have been indicted for) accepting bribes ... Correspondingly, it is at least imaginable that a government or a private actor could bribe the board of ICANN to vote the way it wishes on some hypothetical critical decision." 
Or even bribe an ICANN employee for 'insider information' or for 'favorable treatment' on a pending issue. We already know about the revolving door at ICANN and how it corrupts ICANN decision-making. We also already know of at least one high-ranking ICANN officer, who after resigning due to an undisclosed "conflict of interest," went on to serve as Executive Director of the leading new gTLDs domain name industry association, of which former ICANN President and CEO Fadi Chehade admitted"... this idea of the DNA Association started in some small meetings we were having at the ICANN office where I was a huge early supporter ..."  Wouldn't you like to know of all the 'small meetings' at ICANN offices where things are discussed and decided in secret? Among the many things missed by the ICANN Cross-Community Working Groups involved with the IANA transition and ICANN accountability, is the failure of the ICANN Board and ICANN management to have, and enforce, a corporate-wide conflicts of interest and code of ethics or code of conduct policy, applicable to every ICANN employee, not just Board members, officers and a few "key employees."

Question of the Week:
As noted by @MiltonMueller there is a glaring delay on the IANA transition tentative timeline:
Chart of IANA Stewardship Transition - tentative timeline - updates
The above chart was derived from Congressional testimony on March 17, and the last we heard from ICANN was May 10th: "Root Zone Maintainer Agreement (RZMA) Status update: Discussions between ICANN and Verisign to finalize details of the RZMA are continuing. The two parties have coalesced around many key elements of the agreement and hope to have a final draft by the end of the month. Once the draft RZMA is finalized it will be made publicly available on icann.org."  

The "end of the month" has "come and gone" and now more than a month has passed since the last update, and nothing but silence from ICANN to the global multistakeholder community. Verisign was requesting a 10 year extension of its dot COM registry agreement to run coincident with its new 10-year Root Zone Maintainer Agreement. On April 28, 2016, Verisign's Chairman reported "ICANN and VeriSign are in the final stages of preparing the Root Zone Maintainer Agreement and the .COM Registry Agreement extension documents. We continue to make progress and we'll provide periodic updates as appropriate on our progress towards these objectives."  If there has been a breakdown in negotiations, no one is talking.

Last week it was noted how ICANN and its "partners" a/k/a new gTLD registry operators exploit domain name registrants (see George Kirikos comments), but that's just the tip of the iceberg, here's another way ICANN and its "partners" exploit domain name registrants:
"... we are starting to see more frequent changes to registry pricing and premium name policies, which could possibly affect renewal pricing in the future. One particular situation that created a bit of commotion in the RrSG [Registrar Stakeholder Group] this year was the prospective RRA [Registry-Registrar Agreement] changes brought forth by Vox Populi, the Registry Operator behind .SUCKS. The two problematic changes suggested were to allow the registry the right to amend any and all terms of the RRA with only a 15 day notice to registrars and added language that possibly would haveprevented registrars from voicing their opinion about the .SUCKS extension to potential registrants. The RrSG responded to these alterations by officially objecting to ICANN; an action that eventually resulted in the registry modifying the changes to incorporate more favorable language for registrars. Undoubtedly, we will continue to see many more Registry Operators come forth with changes to policies and agreements over the rest of this year ..."--Mark Monitor New gTLD Quarterly Report Q2 2016 (emphasis added)
Innovation? That same Mark Monitor report cited above, also discloses "the most frequently registered label [second level] in the [new gTLD] .Brand space is HOME; e.g. HOME.BARCLAYS" but 55% of "home.brand" domain names resolve to a .COM domain name, while 18% are an "inactive page," and only 23% resolve to home.brand content page.

Inescapable conclusion: .BRAND new gTLDs are mostly defensive for trademark and branding purposes, but ICANN (at $185,000 + $25,000 annually for each .BRAND new gTLD) is making out like a bandit (while also giving a boost to the registry services industry, the back end operators of each top-level domain or TLD.) It's the kind of shakedown Michael Corleone would have loved.

• Finally, the Mark Monitor report notes:
The general trend of redirecting .Brand domains to existing content on legacy gTLDs (.COM) or ccTLDs continues. We’re also seeing more .Brand domains resolving to content by framing, or displaying, content from other sites. While the user experience with framing may be better than a redirect because the .Brand domain remains visible in the address bar, the practice [framing] doesn’t score well with search engines. Search engines view duplicate content as lower quality and therefore the domain won’t rank as well as the domain with the original unframed content.
•  If you're 'selling' dot COM domains to Chinese buyers, read this post by someone who really knows and understands the Chinese market: Finding Chinese companies for your .com name | coreile.com: "... We know .com is king in China and therefore is frequently the target of domain upgrade by Chinese companies ..."

•  ICANN has announced "the implementation of amendments to the [Domain Name] Transfer Policy and the Transfer Dispute Resolution Policy (TDRP). The amended Transfer Policy is applicable to all gTLD names and ICANN-accredited registrars. The amended TDRP is applicable to all gTLD names, ICANN-accredited registrars, and registries. These new requirements will take effect and will be enforced by ICANN beginning on 1 December 2016."

•  What would an ICANN meeting look like if no one was getting their expenses paid by ICANN to be there? Report on Public Comments on Draft FY17 Operating Plan and Budget and Five-Year Operating Plan Update Now Available - ICANN"The budget is scheduled for adoption when the ICANN Board meets during ICANN56 in Helsinki." Read how ICANN responded to a comment requesting "more travel support" (ICANN's junkets and codependent stakeholders' culture is fed by ICANN paying for an increasing number of stakeholders' travel, accommodations, and per diem expenses, to each ICANN meeting):
"Since the ICANN 33 meeting in Cairo, supported travelers per ICANN meeting have increased over 325% and out of pocket travel costs have increased 250% ... during that time the organization has not examined those increases in a structured way. In view of the expansion of travel support for the last several years and expected changes prompted by the potential IANA Stewardship Transition implementation, the organization intends - in partnership with the community - to conduct a thorough examination of community supported travel in FY17 so that more strategic consideration can be given to levels of travel support among all community activities and groups across the organization."
•  No issues open for comments close this coming week at ICANN.

•  Internet Governance Forum (IGF) newsIGF Retreat 2016 Call for Written Inputs"All stakeholders are invited to send written inputs commenting on issues that will be discussed" at the IGF Retreat (July 14-16, 2016). The guiding questions (based on the the draft agenda) may be reviewed, and responded to, here. The deadline for responding is July 1.

•  This week in tech:

•  Five most popular posts (# of pageviews Sun-Sat) this week on DomainMondo.com:
 Other Reading Recommendations:
  1. 'It's Over'--first the internet, now apps--The app boom is over | Recode.net"... If you are an independent app developer or publisher, you have probably known this for a while, because you have found it very difficult to get people to download your app — the average American smartphone user downloads zero apps per month ... Last month, the top 15 app publishers saw downloads drop an average of 20 percent in the U.S., according to research from Nomura, which relies on data from app tracker SensorTower ... Outside the U.S., the top 15 apps grew by [only] 3 percent last month..."
  2. Ex-iPhone Users in China | ChinaInternetWatch.comPenguin Intelligence, part of Tencent, recently conducted a survey on iPhone losing users in China. Over one-third of China smartphone users would replace smartphones for new ones at least once a year and over three-quarters of Chinese would do so every two years according to the survey. Among iPhone users surveyed, almost half gave up using an iPhone and Huawei is their top replacement choice.
  3. Rethinking a business model: New York Times 'Exploring' Ad-Free Digital Subscription | AdAge.com"CEO Mark Thompson, at IAB Conference, Criticizes Eyeo and Adblock Plus"
  4. The Distraction of Investment Noise | Bloomberg.com"Deciding what to focus on -- and how much attention or weight to give to these issues and events -- is a challenge for traders and investors alike."
  5. Free speech isn't free: Dozens in Russia imprisoned for social media likes, reposts | AP.org and ICYMIhttp://safeinternetforum.ru/en/  Russia discussed with China internet management issues, including China’s Internet sovereignty model and content control of the internet during the 7th International Safer Internet Forum, April 27, 2016, in Moscow. An opening address was given by Lu Wei, "Head of General Office of the CPC Central Committee’s Central Leading Group for Internet Security and Informatization." See also The Best and Worst Internet Experience in the World | technologyreview.com"The system today [in China] has largely shifted from censoring individual news stories to shutting out entire services or platforms." and China's government must pre-approve every single mobile game starting July 1 | techinasia.com.
  6. 1984 commercialized? How Alexa, Siri, and Google Assistant Will Make Money Off You | technologyreview.com
  7. If you've got it, flaunt it, don't hide it: Panama Papers Show How Rich United States Clients Hid Millions Abroad | NYTimes.com
  8. Is the Market Rational After All? | charleshughsmith.blogspot.com"This is the market we have now: dominated by delusional, irrational central planners with unlimited powers to create money out of thin air to fund their manipulations. The only rational response is to trade accordingly: anticipate constant manipulation, anticipate constant bombastic propaganda of the "whatever it takes" variety, and anticipate massive selling of volatility to maintain the ever-so-important illusion that global risks have been disappeared by central banks and central planners."
  9. What if the U.S. Dismantled China’s Internet Firewall? | FPIF.org"The U.S. could retaliate against a massive Chinese cyberattack by blowing up its web censorship ..." But read: The Pentagon's Cybersecurity Priorities Have Not Changed in a Decade | Motherboard.vice.com: "At present, Cybercom is a component of Strategic Command, but its top official is the head of the National Security Agency—arguably a needlessly complicated arrangement. The nebulous command structure also means that Cyber Command never really has to own up to its own failings."
  10. Brexit may be just the beginning: “The Specter of a Break-up Is Haunting Europe” | WolfStreet.com"... it’s perhaps no surprise that senior eurocrats are falling into despondency, despair, and internal bickering ..." NoteBrexit vote is June 23.
  11. Politically correct: The Liberal Blind Spot | NYTimes.com"... As I see it, we are hypocritical: We welcome people who don’t look like us, as long as they think like us ... On campuses at this point, illiberalism is led by liberals. The knee-jerk impulse to protest campus speakers from the right has grown so much that even Democrats like Madeleine Albright, the first female secretary of state, have been targeted ..."--Nicholas Kristof
  12. Read We Were Wrong About Gravity… What Do We Have Wrong Today? | LitHub.com. I suggest turning off the noise and distractions of U.S. Presidential politics. I've told @UnderMyPalm to be prepared to wrap it up (the Election2016 page), if, and when, Bernie drops out, leaving only 2 candidates, each with very high unfavorables, vying for the nation's top elected office. And frankly, the mainstream media have become the worst enablers and PR flacks this year. It's all become such a circus, I don't want to watch, and I have better things to do. I hope you do too.
Have a great week!

-- John Poole, Editor, Domain Mondo


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