4.5 Applying the Framework to Internet Governance

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Subsequent chapters develop a narrative history of Internet governance that applies the theoretical framework described here. It is now possible to follow the structure of the argument in some detail. The following summary should provide the reader with a kind of road map through the historical detail of part II.

First, the growth and commercialization of the Internet created a new resource with substantial value. The resource in question was the domain name space. Second-level domain names acquired commercial value as global locators of Web sites. The policy of charging for domain names, instituted by the National Science Foundation and its contractor Network Solutions in 1995, proved that a significant revenue stream could be generated by the sale of registrations. The business value of second-level domains also heightened the significance of the administration of the root zone. Whoever controlled the definition of the root zone file would be able to authorize new top-level domain registries that could sell domain names to the public.

Second, the specific form that commercialization took turned the domain name space into a common pool resource. Although Network Solutions eventually charged annual fees for domain name registrations, they were relatively small and often uncollected, and it was too costly to discriminate among the thousands of applicants for names. A rule of first-come/first-served-essentially the same as a rule of capture in an open-access common pool resource-determined who got specific name assignments. This led to almost unrestricted appropriation activity, producing many conflicts over rights to particular names. Trademark rights began to be asserted as a principle for privileging certain claims over others, but the application of trademark law, which was national in scope and industry- and use-specific, to domain names, which were global in scope and were governed primarily by a uniqueness requirement, created as many conflicts as it resolved.

In addition to raising questions about the nature of global property rights at various levels of the domain name hierarchy, commercialization led inexorably to the problem of deciding who owned the root. The growing value of second-level domains produced strong and insistent pressures to create new top-level domains. When this demand could not be met because of the contested authority over policymaking for the root, alternative root servers arose that created their own top-level domains, threatening to make the top-level space another unrestricted common pool. In short, in the course of endowing the DNS root with value, the growth of the Internet created a new arena of appropriation activity that demanded a comprehensive institutional solution.

Third, the narrative explores three major barriers to the resolution of the property rights conflicts, which combined to prevent resolution of the problems within existing frameworks and pushed the actors into institutional innovations:

• There was no established, formal organization with clear authority over the root. Despite its origins in the work of U.S. government contractors, authority over the Internet's name and number spaces resided in an informal technical community that was distributed, unincorporated, and international in scope. Moreover, as the root's importance grew, the efforts of various domestic and international organizations to assert formal control over it failed because of attacks on their legal, political, and ethical legitimacy. Thus, the property rights conflicts were not resolved within established frameworks.

• Attempts to define property rights in domain names suffered from major conflicts over the distribution of wealth. The most wrenching of these was the conflict between trademark owners on the one hand and domain name registration businesses and domain name registrants on the other. Trademark owners viewed common pool conditions in the name space as diluting the exclusivity and value of their brand names. The regulation and protections they sought, however, would have increased costs and reduced the market of domain name registries. It also would have expropriated many Internet users and drastically reduced their freedom to employ ordinary words as domain names. The demand of prospective registries for new top-level domains threatened to further erode trademark owners' control over names and increase their costs of monitoring and policing the use of marks. New top-level domains also threatened the exclusivity of existing domain name holders as well as the monopoly privileges of incumbent registries. The conflicts were exacerbated by a lack of information regarding the real economic stakes for various actors.

• Contracting proved to be difficult because of the extreme heterogeneity of the groups involved. In addition to the U.S. government and Network Solutions, eight distinct stakeholder groups became involved: (1) the formally and informally organized Internet technical community, (2) domain name and address registries outside the United States, (3) prospective domain name registries and registrars seeking entry into the market, (4) trademark and intellectual property interests, (5) Internet service providers and other corporations involved in telecommunication and e-commerce, (6) civil liberties organizations concerned with freedom of expression and opposed to the expansion of intellectual property rights, (7) international intergovernmental organizations seeking a role in Internet governance, and (8) governmental actors in a few key nation-states.

New institutions emerged out of this contention. The narrative traces the formation of a dominant coalition among stakeholder groups that was capable of imposing its will on the other participants. The discussion focuses on the formation of the Internet Corporation for Assigned Names and Numbers (ICANN) and its at-large membership, and on a new global system of dispute resolution proposed by the World Intellectual Property Organization (WIPO) and implemented by ICANN.

The framework outlined in this chapter is able to provide a logical explanation for many aspects of the developments. It makes it clear why domain names rather than IP addresses were the point of conflict. It explains why the conflicts were focused on the open top-level domains operated by Network Solutions rather than on country codes or restricted top-level domains. It indicates why institutionalization took place at the global level rather than in the national arena. Finally, it is able to identify which groups were relative winners and losers in the particular property regime that emerged, and explain (retrospectively, of course) why certain proposed property regimes were rejected and others selected.

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