Select Committee on European Scrutiny Twenty-First Report


COM(00) 202

Commission Communication concerning the organisation and management of the Internet, international and European policy issues 1998-2000.

Legal base:
Document originated: 11 April 2000
Forwarded to the Council: 14 April 2000
Deposited in Parliament: 10 May 2000
Department: Trade and Industry
Basis of consideration: EM of 25 May 2000
Previous Committee Report: None
Discussed in Council: Oral presentation made to the May Telecoms Council
Committee's assessment: Politically important
Committee's decision: Cleared, but Government to keep Committee informed of any unwelcome developments

The Commission Communication

  7.1  The Communication covers:

  • recent developments in the organisation and management of the Internet;
  • the transfer of the US government's responsibilities to the Internet Corporation for Assigned Names and Numbers (ICANN);
  • the principal policy issues for both the EU and internationally; and
  • the operational conclusions for the EU.

  7.2  The Internet plays an increasingly important rôle as part of the economic and social infrastructure of Europe and the Commission suggests that the way in which it is expanding is likely to put the capacity of the system under strain. It has taken measures to improve the economy and efficiency of the communications infrastructure for Internet and will continue to monitor the situation. All the eEurope[14] initiatives depend in the last resort on the Internet infrastructure in Europe and worldwide.

  7.3  The Commission notes that the current prices and bandwidth available for Internet users in Europe have led to a significant proportion of European Internet traffic being diverted across the Atlantic and back, with the resultant costs and inefficiencies that this entails becoming a growing problem as Internet use increases. To address this, the Commission says that it intends to pursue a policy of encouraging the roll-out of a high bandwidth Internet backbone across Europe, and calls for Member States to implement speedily the recommendations on leased-line pricing and local loop unbundling.

  7.4  Following the US Government's June 1998 White Paper, ICANN was created and incorporated as a non profit public benefit corporation in the County of Los Angeles, California. Its Articles of Incorporation specify that:

    "ICANN shall operate for the benefit of the Internet community as a whole, carrying out its activities in conformity with relevant principles of international law and applicable international conventions and local law and, ... through open and transparent processes that enable competition and open entry in Internet-related markets".

  7.5  A Memorandum of Understanding signed on 25 November 1998 provided that the US Department of Commerce and ICANN will:

    "... jointly design, develop, and test the mechanisms, methods, and procedures that should be in place and the steps necessary to transition management responsibility for Domain Name System [DNS] functions now performed by, or on behalf of, the US Government, to a private-sector not-for-profit entity".

  7.6  The Commission comments:

    "By October 2000, ICANN should have taken responsibility for co-ordinating the management of the Domain Name System, the allocation of Internet Protocol address spaces, the co-ordination of new Internet protocol parameters and the management of the Internet's root name server system. Although the October 2000 threshold appeared to be distant when the US White Paper was published, in the light of intervening delays, it is now a challenging deadline for all concerned. Significant progress had already been made by the end of 1999, although in the context of its agreements with ICANN and NSI[15], the US Department of Commerce has retained a significant degree of direct authority over ICANN. Exactly how and when the US Government will divest itself of these authorities remains to be seen. In that event, the question will remain as to what extent and how the necessary public policy oversight of ICANN's important functions will be exercised. The Commission has drawn the attention of the US Department of Commerce to the importance of resolving these issues in a timely manner."

  7.7  The Commission comments that the European private sector has played a critical rôle in establishing the EU's position at all levels in the global co-ordination of the infrastructure functions of the Internet: the ICANN Board and Supporting Organisations, the DNS Root Server system, Internet Registries and Registrars and in the Internet Engineering Task Force and the World Wide Web Consortium:

    "Without that commitment, the public policy rôle of the EU and the Member States would be much less effective, if not impossible. Maintaining and deepening European private sector membership and participation in the ICANN organisation is a critical pre-condition for successful participation by the EU both from the point of view of the Internet user community in Europe and from the point of view of public policy".

  7.8  Partly in response to pressure from public authorities worldwide, including the EU, a Governmental Advisory Committee (GAC) to ICANN has been formed which is to:

    "consider and provide advice on the activities of the Corporation as they relate to concerns of governments, particularly matters where there may be an interaction between the Corporation's policies and various laws, and international agreements".

  7.9  The Commission says that, together with the Member States, it participates in the work of the Committee which has provided the ICANN Board with advice on questions such as dispute resolution, geographical diversity and policies for ccTLD[16] Registries. EU participation in these negotiations is co-ordinated in advance through the informal Internet working group convened periodically by the Commission and through the Council Telecommunications Group.

  7.10  The Commission comments that ICANN and the GAC are taking decisions of a kind that governments would, in other contexts, expect to take themselves in the framework of international organisations. However, it says:

    "For the time being, there would appear to be consensus that the nature of the Internet and the speed of events preclude this approach and that the current self-regulatory structure, buttressed by active public policy oversight, is the best available solution."

  7.11  The Commission regrets that developing countries are under-represented on ICANN bodies, as are business users and public sector Internet users such as universities, museums, libraries and local and regional authorities. It calls on the Member States and the European Parliament (EP) to help to ensure an adequate level of participation and representation by all categories of users.

  7.12  Addressing the question of ICANN's authority, the Commission notes that the US Department of Commerce ("DoC") has:

    "... reasserted its rights of supervision over ICANN policies, including any amendments to ICANN's agreements with NSI. Furthermore, ICANN shall not enter into any agreement with any successor registry to NSI for the .COM, .NET and .ORG TLDs without prior approval by US DoC. Should US DoC withdraw its recognition of ICANN or any successor entity by terminating their Memorandum of Understanding, ICANN agrees that it will assign to DoC any rights that ICANN has in all existing contracts with registries and registrars.

    "The broad scope of the powers and authorities reasserted by the US Administration (as recently as November 1999) notwithstanding, the US Department of Commerce has repeatedly reassured the Commission that it is still their intention to withdraw from the control of these Internet infrastructure functions and complete the transfer to ICANN by October 2000.

    "The Commission has confirmed to the US authorities that these remaining powers retained by the United States DoC regarding ICANN should be effectively divested, as foreseen in the US White Paper. The necessary governmental oversight of ICANN should be exercised on a multilateral basis, in the first instance through the Governmental Advisory Committee."

  7.13  Creating and maintaining an environment for neutral international jurisdiction is proving to be even more difficult than had been originally envisaged when this process began in 1998, the Commission says. It asks the Council and the EP to confirm that the EU should continue to play the rôle of participant, co-ordinator and, where necessary, negotiator in the relevant international fora. It identifies in particular, the World Intellectual Property Organisation (WIPO), the International Telecommunications Union, bilateral relations, including with the US government, and the GAC.

  7.14  A number of European policy issues are addressed in the Communication. These, and the Commission's intentions in dealing with them, have been summarised in her EM by the Minister for Small Business and E-Commerce (Ms Patricia Hewitt) as follows:

    "— Internet Domain Name System and Internet Addressing

      "some follow-up to the launch of the public consultation on the new top level domain (TLD).eu is given, with an additional Communication expected to follow before July 2000. The implementation of next generation Internet Addressing, and increased standardisation and harmonisation of approaches to Internet protocols is encouraged by the Commission in view of the projected increases in demand for the Internet and related services.

    "— Intellectual Property Rights

      "the preparation of a code of conduct to address issues such as the abusive registration of domain names (known as cybersquatting) and speculative registration (known as warehousing). The Commission will seek the assistance of Member States in implementing an EU-wide code of conduct to assist in resolving disputes relating to intellectual property rights.

    "— National Country Code Top Level Domains (ccTLDs)

      "including the implementation of ICANN-GAC guidelines, the development by national Registries of registration best practice policies, on which the Commission calls for increased transparency, and preparation and implementation of guidelines for data protection and privacy, are discussed. Approaches to data protection and privacy, will continue to be discussed by the Commission with ICANN and the US Government.

    "— Alternative Dispute Resolution

      "the development and implementation of WIPO recommendations appropriate to top level domain registries operating in the EU.

    "— Competition Policy

      "the Commission will examine agreements and business practices in the area of Internet organisation and management to see if they fall under EU competition rules (Articles 81 and 82), and encourage Member States to ensure that national registry policies are consistent with competition and internal market laws."

The Government's view

  7.15  The Minister says that the UK broadly accepts the Commission's views on how to make the administration and management of the essential infrastructure of the Internet truly international, and to ensure that the EU exerts an influence on ICANN, commensurate with its size. However, she says:

    "...the Commission's proposal for greater harmonisation of Member States' registration policies to encourage transparency, over and above that covered by ICANN best practice, may be of little benefit. Similarly, we are not convinced that the use of WIPO rules in alternative dispute resolution is required as part of best practice for domain name registries.

    "We are content for the Commission to maintain its existing rôle as a participant and co-ordinator for discussions on the management of the Internet in international fora, since this is in line with our general policy of promoting internationally compatible approaches wherever possible. However, whilst we see no major problems with the Commission undertaking negotiations with ICANN about the possible creation of a .eu TLD — subject to this being an alternative to, and not a replacement for, existing ccTLDs, and to its registration policy not being unnecessarily restrictive — we will need to watch carefully their approach to some other fora, such as the International Telecommunications Union; we would not wish to see the Commission taking on a negotiating rôle where currently national delegations are able to formulate their own positions on policy issues without having to agree a common EU position.

    "Some of the activity proposed by the Commission, such as the creation of a .eu TLD, the development of next generation Internet and the infrastructure in general, is included in the Commission's eEurope initiative, which is to be the subject of an Action Plan at the Feira European Council in June."


  7.16  We note the Minister's concern that the Commission should not assume a negotiating rôle in fora, such as the ITU, where national delegations are not at present required to agree a common EU position. We ask her to inform us of any departure from this practice.

  7.17  We also ask the Minister to inform us if the transition of authority for management of the Internet from the US Government to the international body does not proceed in a manner which is acceptable to the UK Government, and what steps she intends to take.

  7.18  We clear the document but ask for these concerns to be borne in mind by the Government.

14  (20858) 14205/99: see HC 23-viii (1999-2000), paragraph 7 (9 February 2000); and (21095) 6978/00: see HC 23-xvi (1999-2000), paragraph 12 (10 May 2000). Back

15  Network Solutions Incorporated, previously a subsidiary of Science Applications Investment Corporation (SAIC) recently acquired by VeriSign, Inc. Back

16   Country Code Top Level Domains. Back

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