REPLY OF THE EUROPEAN COMMUNITY AND ITS MEMBER STATES

TO THE US GREEN PAPER

1. Introduction

The European Community and the Member States have examined the proposals of the US Government for the administration and management of Internet names and addresses (1). They would like to express their interest and concerns on this matter to the Government of the United States.

The European Community and its Member States would wish to emphasise our concern that the future management of the Internet should reflect the fact that it is Already global communications medium and the subject of valid international interest.

The European Union has the responsibility to ensure that communications networks are inter-operable and are developed in a way to promote economic and social cohesion and economic competitiveness.

We would also recall that this matter is referred to in the recent EU-US joint statement on Electronic Commerce in which there ",as agreement for the need for "The creation of a global market-based system of registration allocation and governance of Internet domain names which fully reflects the geographically and functionally diverse nature of the Internet." (Joint EU-US Statement on electronic commerce, 5 December 1997, point 4.v).

The possible decisions that are envisaged in the US Green Paper and the structures that would be put in place are of major significance for the global economy and the Internet community worldwide. Many private and public entities outside the United States will wish to comment and participate in the development of these policies. Accordingly, a deadline for comments of only one month would seem rather short to United States before certain features of these proposals are implemented. (Joint EU-US statement on electronic commerce, 5 December 1997, points 5v and 6). In the view of the European Community and its Member States however, the globalization of the Internet and the importance of an international framework for the long-term organization of the Internet underlines the need to associate a wide range of international interests with future policy in this area. The European Community and its Member States believe that the future of the Internet must be agreed in an international framework.

Issues for further consideration

We wish to illustrate the issues that we wish to draw to your attention by the following examples. This is without prejudice to a more thorough presentation and discussion of the outstanding problems which arise.

International approach:

The Green Paper proposals appear not to recognize the need to implement an international approach, contrary to the mentioned EU-US Commerce.

Jurisdiction:

Contrary to such an international approach, the current US proposals would, in the name of the globalization and privatization of the Internet, risk consolidating permanent US jurisdiction over the Internet as a whole, including dispute resolution and trademark used on the Internet.

- Trademarks:

In the US proposals, trademarks appear as an important motivation for reform, The European Community and its Member States note with interest the ideas canvassed in the Green Paper to improve trademark holders' ability to defend their rights. However, the US proposals do not bring about any significant improvements to the current situation, in particular with regard to the guarantees given to holders of trademark rights when registering domain names.

- Dispute resolution:

In addition to the risk of US urisdiction over all Internet trademark disputes, there is a problem regarding the dispute resolution procedures themselves. During the course of 1997 intensive international efforts, which included the US and the EU, were undertaken in the preparation of a new dispute resolution procedure for the Internet within the framework of the WIPO. The US Green Paper makes no reference to the results of this international approach but however envisages a separate dispute resolution procedure Internet Registries, and a new "study".

Participation:

It will be necessary to take steps to ensure that the private sector in Europe and the rest of the world, including users and industry, fully participates at all relevant levels in the process.

Competition policy aspects:

The reorganization of the Internet management bodies raises several competition policy issues:

* it would appear that IANA would for practical purposes occupy a natural monopoly position with respect to Internet numbers and the Root servers as well as exercise certain regulatory functions. The extent to which it would be indemnified from anti-trust suits is not clear and is probably not adequately codified from the point of view of European competition law.

* the US proposals for structural separation of Registry/Database and Registrar activities within NSI appear not to go far enough to ensure a level playing field and fair competition particularly should the alternative CORE system be unable to create effective competition for NSI in the short term.

Consequently, the European Community reserves its position on the proposal with regard to the possible application of European competition law.

Portability and scaleability:

By analogy with the system of telephone numbering, it would be hi-lily desirable if in the future the Internet Domain Name System could permit portability of Internet names and that the structure of the name-space would permit expansion of the number of names that can be accommodated in the long term, taking account of possible trademark aspects. The question is whether the Internet address aspace as a whole will be able to expand to accomodate continuedrapid growth in the number of users.

The selection of new Registries for the generic Top Level Domains (gTLD's):

During 1997 a new system of gTLD Registries was proposed by the IAHC, modified on the basis of international consultations incuiding recommendations from the Commission and implementation is now well advanced. This new system involves a Policy Oversight Committee (POC) which is the governing body; a Council of Registrars (CORE) which is a not-for-profit association of member Registrars which manages a shared data base for seven new gLTDs. Eighty-eight member Registrars have joined this system, including 35 in the EU. Many thousands of new Domain Names have already been applied for within this system.

The Draft US Proposals make no reference to this system.

3. Proposed approach

It will be important for the European Community and its Member States and the rest international governance of the Internet on the basis of the objective for increased international cooperation on global communications policy, and on the basis of the following specific objectives:

- balanced and equitable international pricate sector participation in Internet governance reflecting an equitable balance of interests and contributions; including adequate procedures for the representation and protection of consumer and user interests;

- ensuring an appropriate level of representation and participation for the responsible international organization in the area of Internet governance in the context of a more general approach to the international consensus regarding the information and communication industries worldwide;

- implementation of the existing guidelines regarding the Domain Name System (DNS) adopted by the Bonn Conference (2), including the introduction of competition in the allocation of existing generic Top Level Domains and conformance with a-reed intellectual property and dispute resolution procedures;

- application of the appropriate competition rules to ensure in particular that the transition to the new structures does not create or strengthen dominant positions of companies and organizations charged with the Governance of the Internet nor that any agreements or practices amongst those companies and organizations prevent. restrict or distort competition;

- ensuring transparency and certainty of the DNS with a view of the orderly administration of taxation and the need to combat fraud;

- fair and transparent financing of Internet organizations including equitable allocation and utilization of the existing Internet Infrastructure Development Fund;

- in the context of the re-allocation of the DNS Root Servers, to attend to their management and operation and particularly how to improve operational security of the system in the event of partial failure, including which data should be distributed and replicated globally to this effect;-periodic review and updating of the arrangements which are put in place.

4. Conclusion

The European Community and its Member States consider that an effort is called for to reach a balance of interests and responsibilities, so that the international character of the Internet is recognized with respect to the relevant jurisdictions around the world.

We recommend that the US Administration limit its direct ragulatory internening in the Internet only to those relationships which fall clearly under existing contracts between the Agencies of the US Government and their contractors and that all other decisions be referred to an appropriate internationally constituted and representative body. In this context, no decision should be taken as to the creation of new gTLDs before an international consensus is reached.

In conclusion, it is the view of the European Community and its Member States that several aspects of the Green Paper will require thorough bilateral and multilateral consideration.

The European Community and its Member States are prepared to participate fully in such decisions as a matter of priority.

(1) "A Proposal to Improve Technical Management of Internet Names and address", published in the US Federal Register, http://www.ntia.dcc.gov/ntiahome/domainname/dnsdrft.htm

(2) Final Declaration of the European Ministerial Conference, Bonn 6-8 July 1997: "Fostering economic growth: developing content and commerce, point 12: Ministers stress the importance of Internet domain names for the development of electronic commerce. They support the principle of an internationally recognized body operating a transparent system of management of the Domain Name System. They consider it imperative to ensure adequate European representation in this system."