Examination of Witnesses (Questions 1300
THURSDAY 8 JUNE 2000
1300. I have just been passed a Financial
Times clipping about a UK company which is actually selling
(Mr Dryden) Sam is our OECD representative on the
GAC (the Government Advisory Committee) of the ICANN.
1301. Is ICANN still the best way of handling
the issue of domain names? And is the harmonisation of intellectual
property rights (IPR) the best method of protection worldwide?
Is the ICANN system still viable? Is there a need to integrate
national governments into ICANN by means of an international treaty?
You can also pick up the FT clipping if you have the opportunity.
(Dr Paltridge) The general answer to the question
is that ICANN is still very much in its initial stages, so you
will find the words "interim" and "initial"
often placed in the ICANN context. The organisation is there to
be shaped in the way that the Internet community and governments
wish it to be shaped. To answer the question, is it still viable
and questions like that, it is really there to be shaped by the
players. As to whether it is viable or not, the short answer is,
the jury is still out. Within the last week, for example, the
various European registries that have authority for domain names
like ".Be" for Belgium or ".Fr" for France
or ".UK" have voted not to contribute to the ICANN budget.
At the moment ICANN is assessing all the registries around the
world because it has running costs. It has assessed them on, for
example, how many domain name registrations they have given out
and it hopes to meet its budget commitments by levying and collecting
money from all the registries around the world. The difficulty
there, in some cases, is that some of the registries are not commercial
entities and in fact do not collect fees themselves. In other
cases we think some registries are actually charging fees that
are too high and they have no competition. Some registries see
no need to give money to ICANN and are calling it a tax. This
is just one very small example of all the controversial issues
that surround domain names. The particular example you have got
here is intellectual property rights. Because the OECD does not
do work on IPR I can refer that question to WIPO because that
is really their area of expertise. Our interest in the domain
name system is because it cuts across all the other issues that
we have talked about this morning: the security and stability
of the Internet and how the Internet is evolving for use in electronic
commerce. Although the intellectual property rights issue has
certainly got the most attention the domain name system really
is the core of the Internet and its stability and efficiency is
important if the Internet is going to be the platform for electronic
commerce. As far as the ".eu.com" situation is concerned,
that same situation has happened in a number of other countries.
For example, in Australia there is a registry that has ".au.com"
and the person sells domain names under that second level domain.
1302. This is different. You are talking about
countries. This is a region.
(Dr Paltridge) That is right.
Lord Faulkner of Worcester
1303. They are a continent.
(Dr Paltridge) In terms of the Internet's addressing
system that is not recognised in the addressing system. The combination
eu.com is the addition of two letters at the second level of the
top level domain name .com. This registration is simply like any
other registration made in the United States under .com. For example,
the OECD's domain name is "oecd.org". That particular
registration was made in the United States with Network Solutions,
a company that administers domain names. That registration is
made in the same way.
1304. That one is from the Financial Times,
yes, but I really come back to the heart of the question that
we are after. It is the application by the Commission for that
if the Member States agree to you trying to help and live with
an ".eu" domain for the whole of Europe and drop the
".uk" and drop ".fr" and all that.
(Dr Paltridge) There are two questions there.
1305. That has raised a fundamental issue for
(Dr Paltridge) I remember when I addressed the first
taxation meeting here in the OECD and explained how the domain
name system worked and explained how people can register under
".com", and that it was not associated with a country.
The first question put to me was, "Can we get rid of .com?
Can we just make it a country based domain name system?"
(Mr Dryden) "So we can tax it"!
(Dr Paltridge) The answer to that was, "All things
are possible but in reality no", because that gate was opened
a long time ago and you would have companies that have built years
of strategy around having a ".com" domain name. The
same thing would apply in the UK. There are companies that have
spent an enormous amount of money building up a ".uk"
brand and they will not want to give that away. The second part
of the question was, could it all be under ".eu"? I
very much doubt it for the same reasons. Could you create a ".eu"?
No problem; that is fine. How the policies would be administered
for ".eu" would be the difficult question.
Chairman: You could presumably add it on to
UK and have ".uk.eu".
1306. But that is just another name.
(Dr Paltridge) It is just a second level. You could
certainly have it. You would not take away the existing ".uk"
names. You could certainly have a second level on ".eu"
which would give businesses and consumers another option to register
Lord Paul: But some people have registered some
names and sold them for colossal money.
1307. And for websites.
(Dr Paltridge) That is another very controversial
area and yes, there have been some domain names that have sold
for millions of dollars.
(Dr Paltridge) That is because some names are now
scarce. I believe that the entire dictionary is now registered
under ".com" so each dictionary word is in fact registered
under ".com". In addition, there are no combinations
of three-letter domain names now left under ".com" that
are not registered. For someone who knows the Internet fairly
well, that may not pose a problem because there are many other
domain names users can register under. However for someone who
is starting up an e-commerce business and does not understand
the Internet very well, they may try to register under ".com"
and find their preferred name is taken. That could be a barrier
because they would not know the other options that are available
on the Internet.
1309. Let us say you registered "sam.com".
What is the significance if somebody wants to buy it from you
and what is its value?
(Dr Paltridge) Yes, I could sell that name. Its value
is really how much someone is prepared to pay.
1310. You have not got an idea?
(Dr Paltridge) It is a "How long is a piece of
string?" question. There have been very high sums paid for
domain names like "business.com", "Internet.com",
1311. "Lastminute.com". I was not
aware that there was ever any talk about doing away with "uk.com",
and "eu.com" as I understood it, but I may be wrong.
It is just a brand new domain name that they wish to register.
(Dr Paltridge) Exactly.
1312. It has nothing to do with amalgamating
the others within it.
(Dr Paltridge) Exactly, that is correct.
1313. Is it possible for you to give some observations
on our last question: what does Brussels need to do to improve
its own policy making processes, so that the achievements of the
Portuguese and French Presidencies in developing and implementing
the eEurope Action Plan are not lost? Is it embarrassing or difficult?
(Mr Dryden) It is a bit, but I think the main single
thing is to increase its focus on the reform of telecom policy
and increase the liberalisation and the competition. It is a delicate
of way of reforming regulation and handling incumbents. There
is still a lot of inertia and the further and faster the liberalisation
process goes we think the better it will be. It is the single
most important thing. It would not cost that much compared to
the economic gains in competitivity and in comparative advantage
with respect to the other countries. If it were to do so then
Sam suggested that it would not be necessary for the trace routeyou
mentioned Brussels and you mentioned Portugal, so Sam looked at
the trace route from Belgium to Portugal and it goes straight
to the US and bounces around the US from New York to California
to Miami, and 23 hops later arrives in Portugal.
(Dr Paltridge) I should just say that it is possible
to see how traffic will traverse the Internet between any two
points on the Internet. What I did there was take the major telecommunication
provider in Belgium and the major telecommunication provider in
Portugal and I ran a trace route across the Internet to see how
the traffic would go from Belgium to Portugal.
Lord Faulkner of Worcester
1314. To see how one would communicate with
(Dr Paltridge) Exactly, how one network would "talk"
to the other, Brussels to the Portuguese Presidency if you like.
What I found was that the traffic went first to New York, then
it bounced across to California, and then it bounced back to Miami
and then back to Portugal simply because
(Mr Dryden) It actually bounced back to New York before
heading to Miami.
(Dr Paltridge) Several years ago this was how most
traffic between European countries went between each other, via
the United States. That is changing now and if I ran the trace
route between most northern European countries at least, the traffic
would stay within Europe. It is a good way to show people the
reform that needs to occur because the reason that this happens
is that the capacity between the US and Europe is less expensive
than the capacity between Belgium and Portugal. It is less expensive
to take that traffic across the Atlantic and bring it back than
to go across Europe.
1315. It is less expensive to fly to New York
than it is to take the train to Manchester.
(Dr Paltridge) But it should not be across to California.
1316. Could I say in conclusion two things?
I am sorry we have not had the opportunity of meeting your tax
expert because our questions on tax were really at the heart of
some of the issues that we want to clarify. I am wondering if
you could prevail upon him to send to us what he intended to say
(Mr Dryden) Certainly.
1317. We could then, if we had some consequential
questions, come back to him to comment or clarify if necessary.
Secondly, John, on behalf of our group and myself I would like
to express our extreme gratitude to you for what can only be described
as a tour de force this morning.
(Mr Dryden) Thank you very much. It was
a pleasure to be of service. You have my e-mail address and phone
number. Please use them if you want any follow-up.
1318. Thanks to Sam too.
(Mr Dryden) Enjoy the rest of your day in Paris with
our French colleagues and have a good trip home.