Bloomberg News

Internet Overseer Needs to Tighten Conflict Rules, CEO Says

March 12, 2012

The organization that manages the Internet’s address system should strengthen conflict-of-interest rules for its board of directors, the group’s chief executive officer said.

“It is time to further tighten up the rules that have allowed perceived conflicts to exist within our board,” Rod Beckstrom, CEO of the Internet Corporation for Assigned Names and Numbers, said at a meeting of the group in Costa Rica today.

“Icann must place commercial and financial interests in their appropriate context,” said Beckstrom, who plans to step down in July, according to a transcript of the speech. “How can it do this if all top leadership is from the very domain name industry it is supposed to coordinate independently?”

Icann, which manages the Internet’s domain-name system under a U.S. Commerce Department contract, approved a plan in June to consider hundreds more domains such as .apple and .nyc in a move to spur online innovation. The group began accepting applications for new Web suffixes in January for a three-month window ending April 12.

Public-interest organizations, a national advertisers group and a U.S. senator criticized Icann after its previous chairman, Peter Dengate Thrush, joined a company that plans to invest in new domains less than a month after the board approved the expansion in June.

General Electric Co. (GE), Coca-Cola Co. (KO) and more than 50 other U.S. companies oppose the proposed domain expansion, saying it will increase their costs, confuse customers and fuel Internet fraud.

Canceled Bid

The Commerce Department on March 10 canceled its request for proposals on a new contract to manage the Internet’s address system, saying none of the responses it received met its requirements.

The contract’s requirements include having a “robust” conflict of interest policy and increased transparency, according to a notice posted on the website of the Commerce Department’s National Telecommunications and Information Administration.

Beckstrom, speaking at a news conference in Costa Rica today, declined to say whether Icann had submitted a proposal. The nonprofit, based in Marina del Rey, California, has managed the Internet’s address system since 1998.

The Commerce Department extended Icann’s current contract for six months, until Sept. 30. The agency said it would reissue the bid at a later, unspecified date.

Moira Vahey, a spokeswoman for NTIA, declined to comment, citing procurement rules. Mona-Lisa Dunn, a Commerce Department contracting officer, didn’t immediately respond to an e-mailed request for comment.

‘Speaks Volumes’

NTIA’s cancellation of the contract bid “speaks volumes on how serious the problems are with Icann and its continued need to respond responsibly to the clear demands of the stakeholders it purports to represent,” Bob Liodice, president of the Association of National Advertisers, said in an e-mailed statement today.

The trade group has led opposition to Icann’s domain expansion, calling for postponement of the program and later proposing a “Do Not Sell” list to let companies keep their brand names out of it.

Ethics Policies

Icann asked yesterday for public comment on revisions to its conflict-of-interest policy, code of conduct and other standards. The revised conflict-of-interest policy “strengthens procedures for disclosing, processing and evaluating actual and potential conflicts of interest,” according to a memo posted by the organization.

“This is necessary not just to be responsive to the growing chorus of criticism about Icann’s ethics environment but to ensure that absolute dedication to the public good supersedes all other priorities,” Beckstrom said in his speech.

A central challenge for Icann’s next CEO will be “to continue the drive to clarify and cast sunlight on the sometimes murky relationships that exist among board, staff, community and industry,” Beckstrom said.

A total of 254 entities have registered with Icann to apply for new top-level domains, and each of those can apply for up to 50 Web suffixes, Beckstrom said. He declined to name applicants. The list will be published by May 1, he said.

To contact the reporters on this story: Eric Engleman in Washington at eengleman1@bloomberg.net.

To contact the editor responsible for this story: Bernie Kohn at Bkohn2@bloomberg.net.


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