[governance] FW: [IP] John Gilmore on ICANN.
Stephanie Perrin
stephanie.perrin at mail.utoronto.ca
Thu May 28 15:59:31 EDT 2015
Thanks, this is very useful.
Stephanie Perrin
On 15-05-28 1:05 AM, Michael Gurstein wrote:
>
> *From:*Dave Farber [mailto:dave at farber.net]
> *Sent:* May 28, 2015 12:09 AM
> *To:* ip
> *Subject:* [IP] John Gilmore on ICANN.
>
> I believe this is not an inaccurate description from a historical
> standpoint. I also attend to agree with many of the points John takes.
>
> Dave
>
> ---------- Forwarded message ----------
> From: "John Gilmore" <gnu at toad.com <mailto:gnu at toad.com>>
> Date: May 27, 2015 6:46 PM
> Subject: Re: [IP] How global DNS could survive in the frozen lands
> outside US control
> To: <dave at farber.net <mailto:dave at farber.net>>
> Cc: "ip" <ip at listbox.com <mailto:ip at listbox.com>>
>
> ICANN has built itself a nice monopoly, with very little outside
> influence or control. Now it wants to reduce that to "zero" outside
> influence or control. The community and the US Government should
> decline to do so. (PS: The community has little or no say over this.)
>
> Back when ICANN was formed in 1998, EFF proposed that ICANN's
> "nonprofit" corporate charter should include some basic protections
> for freedom of speech and press, due process, international human
> rights, transparency, and such. See:
>
> https://w2.eff.org/Infrastructure/DNS_control/ICANN_IANA_IAHC/19980923_eff_new_iana.bylaws
> https://w2.eff.org/Infrastructure/DNS_control/ICANN_IANA_IAHC/19980924_eff_new_iana_pressrel.html
>
> "... any foundation for governance of a communications system, such as
> the Internet, should stand on the fundamental human right of free
> expression. ... What was suppossed to be an excercise in Internet
> democracy has become an excercise in Internet oligarchy" - Barry
> Steinhardt, EFF President
>
> and see generally:
>
> https://w2.eff.org/Infrastructure/DNS_control/ICANN_IANA_IAHC/
>
> ICANN's management and lawyers refused to include any such provisions,
> on the theory that if they were included, then people could succeed in
> suing ICANN if it violated freedom of speech or the press, did things
> to domain holders without due process, or was not transparent about
> its activities. ICANN management wanted the right to violate those
> human rights and public oversight provisions -- and they ultimately
> got it. No court can decide whether ICANN's actions violate
> international human rights law, because ICANN is not required to
> follow international human rights law; it isn't a government and it
> never signed those treaties. It isn't required to follow the US Bill
> of Rights, because it isn't a government. It isn't required to follow
> basic transparency policies like Freedom of Information or Open
> Meetings, except to the extent that the US Government currently
> requires that under their contract with ICANN. It isn't required to
> follow anything but California and US nonprofit law (which it
> deliberately violated anyway, see below). Yes, the sole substantive
> rules that govern ICANN are the same ones that control the struggling
> 2-person environmental group or underfunded health clinic doing a bake
> sale in a nearby park. The creation of an unaccountable ICANN was all
> handled by ICANN's "unpaid volunteer" lawyer, Joe Sims of the Los
> Angeles firm Jones Day, who later, once the gravy train was set up,
> started charging ICANN a good chunk for his ongoing advice. As of
> 2014, ICANN pays Jones Day almost $4 million annually for legal
> services.
>
> ICANN soon started charging domain registrars a fee of 20c per year
> per domain, for doing nothing except protecting itself from outsiders
> and paying itself large wages. ICANN sets the amount of this fee
> itself, and there is nothing that outsiders, or ICANN's customers, can
> do to challenge it or change it. It is currently 18c per transaction,
> and raises about $80 million dollars per year, all of which ICANN
> finds some way to spend on itself and its lawyers. By 2014 it had
> more than 300 employees churning around looking for ways to spend
> money on themselves and their contractors. More than 30 of these
> "nonprofit" employees make more than $250,000 a year or are "paid
> directors", with the CEO wasting $900K/year. It also spent about
> $575K of your domain fees lobbying the government on its own behalf
> ("a staff registered lobbyist and two government affairs firms"). See
> pages 7-9 and 30 and 52-53 of:
>
> https://www.icann.org/en/system/files/files/fy-2014-form-990-31mar15-en.pdf
>
> At one point a single outside critic, Karl Auerbach, slipped onto the
> ICANN Board of Directors. ICANN is (was?) a California nonprofit, and
> the Directors of a nonprofit have responsibility for the acts of the
> nonprofit -- and have rights to oversee its acts. They can inspect
> the physical premises at any time, and can see and copy any documents
> that the business has. Otherwise the theory that the Board is in
> control is a hollow mockery, and California law doesn't allow that.
> ICANN claimed that its Board members could not actually access basic
> information like the financial statements of the organization (how
> much money comes in, how much goes out, and for what reasons). Not
> only did ICANN management refuse. The rest of the ICANN board,
> including Chairman Vint Cerf, refused, and circled the wagons to
> protect ICANN from actual transparency. In 2002, EFF helped Karl file
> a lawsuit under California law to enforce his rights. ICANN contested
> the lawsuit, and Vint filed a declaration with the court in support of
> their position. ICANN lost that lawsuit, and Karl got to look at the
> financial reports -- but did not get to show the finances of this
> "nonprofit" to the public. ICANN immediately revised the procedures
> for electing their board, to make sure that no critic would ever get
> on the board again. However, they did start being more transparent
> about their finances, since these would have to come out in their
> publicly available income tax returns anyway. See:
>
> https://www.eff.org/cases/auerbach-v-icann
> https://www.eff.org/press/releases/icann-director-seeks-court-order-review-records
> https://www.icann.org/resources/pages/fiscal-2014-09-15-en
>
> Fast forward another few years, and ICANN decided to sell new
> top-level domains. The bidding process was completely rigged to
> ICANN's benefit; bidders sent in a non-refundable $185,000 per
> proposed domain and were guaranteed exactly nothing in return. Domain
> speculators sent in a frenzy of money, as expected, and ICANN raked in
> a one-time profit of $350 million. Some of those domains have gone
> live since, and as expected, they have mainly benefited ICANN.
> Recently in 2015 ICANN auctioned off ".app" for $25 million, which it
> says went into a "designated purpose" fund, which ICANN of course has
> sole control over. As with the about $80 million in recurring revenue
> from domain registrars and registries, they have struggled mightily
> but succeeded in finding ways to waste almost all of these hundreds of
> millions on themselves and their buddies. As of 2014, they estimate
> that all but $100M has been spent, and that is carefully hoarded in a
> "Risk Reserve" for "future costs that cannot be estimated" (up to now,
> only $1M in "risk reserve" has been actually spent). In 2014 they
> spent or wasted $17M with Ernst & Young, $16M with KPMG, $8M with "JAS
> Global Advisors", $4M with Interconnect Communications, $2.8M with
> Price Waterhouse, and $2.6M with Chambre de Commerce Internationale,
> all for the new top-level domains program. See:
>
> https://www.icann.org/en/system/files/files/financial-report-fye-30jun12-en.pdf
> https://www.icann.org/en/system/files/files/adopted-opplan-budget-fy14-22aug13-en.pdf
>
> ICANN recently decided that the money it receives for each domain name
> registered does not obligate it to do anything in particular; or as the
> lawyers put it on page 75 of:
>
> https://www.icann.org/en/system/files/files/fy-2014-form-990-31mar15-en.pdf
>
> ICANN HAS DETERMINED THAT THE REGISTRY AND REGISTRAR AGREEMENTS DO
> NOT INCLUDE ANY OBLIGATIONS FOR ICANN THAT PERTAIN TO EACH SPECIFIC
> REGISTRATION OF A DOMAIN NAME. ICANN CONSIDERS THAT ITS CONTRACTUAL
> OBLIGATIONS ARE UNRELATED TO A SPECIFIC DOMAIN NAME REGISTRATION,
> WHICH THEREFORE DOES NOT CREATE SPECIFIC PERFORMANCE OBLIGATIONS
> WHICH WOULD REQUIRE A DEFERRAL OF REVENUE OVER THE DURATION OF THE
> REGISTRATION. AS A RESULT, ICANN HAS CHANGED ITS REVENUE RECOGNITION
> METHOD SO THAT THE TRANSACTION-BASED FEES ARE RECOGNIZED AS REVENUE
> WHEN EACH TRANSACTION OCCURS.
>
> In other words, they specifically state that you are paying them for
> NOTHING when you pay them every year (via your registrar and registry)
> to renew your domain name. The reason you have to pay? Because they
> control the root and they demand payment, not because they are doing
> anything for you.
>
> One minor drag on ICANN's ability to do exactly what it wants has been
> the original US Government contract to run the domain name system.
> Whenever ICANN got a little too crazy, the government would gently
> suggest that perhaps it would re-bid that contract to somebody a
> little less crazy. As far as I can tell from outside, the USG has
> used a very light touch in this process. Anyway, the USG has never
> been particularly unhappy about creating monopolies for the private
> benefit of the monopolies. But nevertheless, the structure galled
> other countries, especially those who want to use international
> institutions dominated by governments to impose their own kind of
> cultural baggage (censorship, wiretapping, etc) on global Internet
> users. Or kleptocrats who could see how any international institution
> that managed to wangle control of ICANN could start extracting free
> money from the Internet; ICANN would just pass the costs down to all
> of us, in a way that we already have no way to contest. So "Get the
> US out of domains" became a rallying cry for a kind of misguided
> leftists in alliance with third world autocrats. That is the current
> "debate" in the multi-decade debacle of ICANN.
>
> To sum it up? If domain users have zero control over ICANN, if
> ordinary domain owners have zero control over ICANN, if ISPs have zero
> control, if domain registrars have zero control, if governments have
> zero control, if even its sinecure board members have zero control,
> then who will have any control over what ICANN does with the domain
> name system that billions of people rely upon? The answer is pretty
> simple: ICANN management and lawyers will have full control, fat
> personal salaries, a pot of hundreds of millions that they're sitting
> on, recurring revenues that are totally set by their fiat, and the
> rest of us will have zip. Any questions?
>
> John Gilmore
> (speaking for myself, not for the Electronic Frontier Foundation)
>
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