The NETmundial meeting in Sao Paulo kicked off on the morning of April 23rd and one of the speakers at its Opening Ceremony proclaimed that the Internet was a curious type of “Public Commons” in which private domain registrants should be obligated to pay a fee to fund access, capacity-building, and general bridging of the Internet gap between the developing and developed world. That proposal for turning ICANN into a species of Internet tax collector and transnational development project fund disburser came from Nnenna Nwakanma, identified on the event agenda as a member of Civil Society from Africa. Her remarks received resounding applause from attendees.
Surprisingly, similar remarks came during the same session from World Wide Web developer Tim Berners Lee, who declared that the Internet had become “an essential public utility” and that ICANN should act in the best interest of the global Internet community – a duty that he linked to spending funds devoted to “closing the digital divide”. And that divide has been growing, even in those developing nations identified with technological and economic growth – according to a new Global Information Technology Report from the World Economic Forum “many large emerging nations such as China, Brazil and India saw their rankings drop”.
For the past few weeks those who expressed concerns that US withdrawal from its IANA counterparty role might result in greater Internet censorship, or even a global Internet tax, have been met with ridicule from some quarters. Perhaps their concerns are not so ridiculous. It’s easy to imagine the rationale for a “modest” $1 annual digital development fee levied on each registered domain, and ICANN might welcome the opportunity to build ties to Governmental Advisory Committee (GAC) member nations by doling out development dollars.
How much could such a $1 fee raise? According to VeriSign’s April 2014 Domain Name Industry Brief there are now 271 million registered domains, of which 123.5 million are ccTLDs operated by individual nations and likely to be excluded from such a fee as ICANN has no direct authority over them. That leaves 147.5 million domains at gTLDs and would yield $147.5 million per year. Once the precedent is set it’s a simple step to up the levy in future years – crank it up to $5, add in the natural growth in gTLD registrations accelerated by the rollout of more than a thousand new gTLDs, and you can get close to a billion dollars annually without breaking a sweat. That’s a very tempting target, and one that might well be advocated by ICANN’s own GAC at some point – especially if it switches to a majority vote decisional system as an outcome of the Internet governance evolution initiated at NETmundial.
Even more worrisome – the precedent has already been set! Few realize it, but the 2005 .Net registry operator contract between ICANN and VeriSign contained this language levying a 75 cents per .net domain fee for several purposes, one of which was a restricted fund for helping developing nation stakeholders better participate in ICANN :
Registry-Level Transaction Fee. Commencing on 1 July 2005, Registry Operator shall pay ICANN a Registry-Level Transaction Fee in an amount equal to US$0.75 for each annual increment of an initial or renewal domain name registration and for transferring a domain name registration from one ICANN-accredited registrar to another during the calendar quarter to which the Registry-Level Transaction Fee pertains. ICANN intends to apply this fee to purposes including: (a) a special restricted fund for developing country Internet communities to enable further participation in the ICANN mission by developing country stakeholders, (b) a special restricted fund to enhance and facilitate the security and stability of the DNS, and (c) general operating funds to support ICANN’s mission to ensure the stable and secure operation of the DNS.
ICANN mixed that Transaction Fee into its general revenues and never really provided an accounting of how those funds were allocated. Yet the follow-up 2011 .Net agreement contained almost identical language, with an added proviso that ICANN was not required to segregate the funds or establish separate accounts for the designated purposes:
Registry-Level Transaction Fee. Registry Operator shall pay ICANN a Registry-Level Transaction Fee in an amount equal to US$0.75 for each annual increment of an initial or renewal domain name registration and for transferring a domain name registration from one ICANN accredited registrar to another during the calendar quarter to which the Registry-Level Transaction Fee pertains. ICANN intends to apply this fee to purposes including: (a) a special restricted fund for developing country Internet communities to enable further participation in the ICANN mission by developing country stakeholders, (b) a special restricted fund to enhance and facilitate the security and stability of the DNS, and (c) general operating funds to support ICANN’s mission to ensure the stable and secure operation of the DNS; provided, that ICANN will not be required to segregate funds for any such purpose or establish separate accounts for such funds.
Notwithstanding that provision, the ICANN Board committed to an annual accounting when it approved the 2011 .Net contract:
“Whereas, the .NET agreement provides for a US$0.75 registry-level transaction fee, and ICANN has used the funds to support developing country Internet communities to participate in ICANN, enhancing security and stability of the DNS, and for general operating funds. ICANN commits to provide annual reporting on the use of these funds from .NET transaction fees.” http://www.icann.org/en/groups/board/documents/resolutions-24jun11-en.htm#4.rationale
Yet, so far as we can find, ICANN has never provided such annual reports even though the Board committed to them, and the fee is still siphoned into its general funds. That lack of reporting goes to the ongoing problems of ICANN accountability and transparency.
But, getting back to our original point, two speakers at NETmundial opening session suggested that ICANN needs to allocate more funds to closing the digital divide – and ICANN, as we know, gets the vast majority of its funding through the fees paid by domain registrants to registrars and then up-streamed to registries and ICANN. The great majority of gTLD domain registrants reside in the developed world, and the proposal put forward would have them pay a fee to fund projects in the developing world. So the issue of an ICANN-administered “tax” on registrants isn’t that far-fetched after all and does not require a UN takeover to occur. This important issue bears continued close watch by ICA and others.
Other observations drawn from observing the NETmundial meeting remotely for more than ten hours on its opening day:
Finally, the first day’s Fence Straddler Award goes to President Rousseff for her declaration that there was “no opposition” between the government-dominated multilateral model and the private-sector led multistakeholder model. And the MIA Award goes to ICANN CEO Fadi Chehade, who was the only participant in the Opening Ceremony who did not say a word.
As the afternoon session went on, the discussion finally opened up to attendees, who provided their own multiple suggestions for how the conference output document should be amended. That process will continue into NETmundial’s second and final day. Stay tuned.