The Worrisome Future of the Internet

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  • From left: Steve DelBianco, Miriam Sapiro, Fadi Chehadé, Gordon Goldstein

  • From left: Steve DelBianco, Miriam Sapiro, Fadi Chehadé, Gordon Goldstein

  • Gordon Goldstein, Silver Lake

  • Miriam Sapiro, Summit Strategies International & The Brookings Institution

  • From left: Steve DelBianco, Miriam Sapiro, Fadi Chehadé

  • Fadi Chehadé, Internet Corporation for Assigned Names and Numbers (ICANN)

  • Steve DelBianco, NetChoice

  • Miriam Sapiro, Summit Strategies International & The Brookings Institution

Panelists

Fadi Chehadé
President and CEO, Internet Corporation for Assigned Names and Numbers (ICANN)

Steve DelBianco
Executive Director, NetChoice

Miriam Sapiro
Principal, Summit Strategies International

Moderator

Gordon Goldstein
Managing Director and Head of External Affairs, Silver Lake


Session Description:
Today’s Internet is in jeopardy as a global system. Post-Snowden, governments increasingly diverge on what kind of Internet ought to operate in their country. This is alarming to those who believe that how the unitary Net works has led to stunning economic progress and business transformation for everyone.

Goldstein: Thank you, David. Very briefly, we have three outstanding panelists this morning to talk about a couple of key issues related to the future of the Internet. To my right is Fadi Chehadé, CEO and president of ICANN, Internet Corporation for Assigned Names and Numbers, plays one of the vital roles in terms of the governance and function of the global Internet. Miriam Sapiro is our former Deputy USTR, United States Trade Representative, now affiliated with Brookings, and I believe also assisting with ICANN and some of their transitional issues. And finally, Steve DelBianco is the head of NetChoice, a Washington trade group. He has also been deeply and intimately involved in the transition issues related to ICANN as one of the members of the Accountability Working Group, which we’ll talk about in a moment, and has testified before Congress multiple times in the past year about these important issues related to the future of the Internet.

Let’s begin by setting the stage for the audience and making sure that everyone has, in a factual sense, an understanding of where we are. A very important transition was announced a year ago. In March of 2014, the Commerce Department announced that it would ultimately relinquish its legal oversight of ICANN and the contractual relationship that exists between the United States government and ICANN, and that ICANN would ultimately be a self-governing entity.

Fadi, let’s begin with you. Why was this transition ultimately necessary for the future of not just the organization that you run, but for the future of a free and open Internet?

Chehadé: For two reasons. The first, in order to complete the globalization of the system that coordinates this critical logical layer of the Internet, we needed to complete that transition. With the US playing a unique role in the affairs of ICANN and the community of ICANN, I think we were facing some very strong oppositions by many governments around the world as to why they didn’t have also an equal or unique role. So by ending the US role in ICANN, we actually end the involvement of governments in our work, leading to the true privatization of this layer, which was the plan all along, since the beginning, when Clinton started that path.

The second reason is very political. If ICANN, which has now grown to have almost 150 governments now attending and actively participating in our work, if ICANN continued to argue for the unique role of the United States, I think we were getting to the point where it would have been very difficult to convince other governments that we won’t give them that kind of role. So we were at the end of that line. And therefore, the signal that the US government has sent that they will step back and help ICANN and the layer ICANN manages become independent and privatized is a very powerful signal that the world is already reacting to in a very good way. Many of the governments that were not aligned with us at the WCIT in 2012—

Goldstein: Explain what that is for the audience.

Chehadé: The WCIT is the big ITU treaty-making conference that occurs every few years, and the last big one in Dubai in December 2012 was actually a very dangerous moment for all of us. The governments were highly polarized there between the US and a few of its allies, and Saudi Arabia, Iran, and Russia, and a few of their allies on each end, and many governments in the middle frankly quite lost as to what to do and to what their position will be. The US saying it’s got to be in the hands of the private sector and multi-stakeholder, Russia and their allies saying, no, this is so important it’s got to be in the hands of governments. And I think if we kept ourselves being tugged between these two sides, versus where we are now, which is to create a middle ground that removes government completely from the leading role, I think we would have found ourselves in a very difficult treaty conference in a few years again.

Goldstein: And indeed, for the benefit of the audience who don’t necessarily track these things, that conference in December 2012 ended with a major schism. There were 89 countries that voted to accede to that treaty, the ITR’s, and there were 55 countries that decided not to, led by the United States, followed by the Europeans and Japan and other countries. So we have this precedent of a global schism with respect to a vision of the role of government with respect to the Internet.

Chehadé: And now instead we have the middle, i.e. Brazil, India, even China, many major players that have now moved to a middle ground that says having the layer that ICANN coordinates with the IETF and the regional Internet registries, not just secure, stable, and resilient, but also independent of direct government control, is a good thing and it maintains one Internet.

Goldstein: I want to turn to the American perspective on this, but let’s follow up on that question about whether we do have a middle. I’m going to ask Steve to address that.

Steve, you recently testified before Congress, and in your testimony, you note that in 2011 Brazil, South Africa, and other countries circulated a draft UN resolution that would have put the critical infrastructure of the Internet under the aegis of the UN. Comment on whether we really do have a middle ground with respect to the role of government and the future of the Internet.

DelBianco: Yeah, the incentives for nations to claim that the UN or an intergovernmental body ought to take the place of that unique US legacy role was a pretty powerful force and it wasn’t going to go away. And what really stoked it into a flaming fire was the Snowden revelations, which provided, without any real connection at all between the DNS layer that Fadi described that ICANN manages and the actual sniffing of traffic and content, which was behind a lot of Snowden’s revelations. It didn’t matter. It was conflated for purposes of shining a brighter light on the US’s legacy role. And it really did force the hand of business and political powers to say maybe now’s the time to finish this transition. Take that excuse, take that gripe off the table. So while that is necessary, it’s nowhere near sufficient to stop the forces behind governments that wanted those ITR regulations, the governments that want to turn to the Internet as the toll collection system that they used for 70 years with the telephone system. Those incentives, financial incentives, will still be there and those who we’ve pulled to the middle successfully, largely due to a lot of Fadi’s great work, they may stay in the middle with respect to the labels layer of ICANN, but they’re not likely to stay in the middle if it doesn’t serve their economic interests or their national interests. There’s some irresistible forces that go far beyond the world that ICANN manages, forces to protect one’s regime through censorship, and the Internet will continue to that no matter what we do with the DNS. There’s powerful incentives for nations, as well to try to limit where their citizens’ data lives. So in the Snowden revelations it became popular for countries to claim, “We’re going to protect my citizens’ data from the NSA and CIA by forcing all of these companies, Google and Facebook, to store all their data on our citizens only in our country.” Brazil was one of the countries that wanted to do that. Sort of a techno-nationalism. And that’s also an irresistible urge, since it pays a lot of dividends for the countries that do so. The country gets to claim it’s protecting the privacy of its citizens, and there’s an economic development program at work, since Google and Facebook are going to buy servers in their country and hire lots of expensive engineers. So that will come back and we’ll have to lean hard on those who are in the middle, but they won’t stay in the middle forever. This is an ongoing battle.

Goldstein: Let’s follow up on that theme. You referred to it as techno-nationalism. Others have referred to it as data-nationalism. In the aftermath of Snowden, there was an acceleration of state governments that imposed local requirements and laws requiring data about their citizens to be stored physically within servers within their own borders, exploding the efficiencies of the cloud and raising the cost of engagement significantly for new entrants and competitors in the Internet.

Miriam, how important is this threat of data localization and the patchwork of local requirements we’re seeing emerging in countries ranging from Vietnam to Australia to France to Kazakhstan, how much of a threat is this to the future of digital trade?

Sapiro: I think it’s a fairly serious threat, Gordon, and it’s one that the US government has been taking quite seriously for some time now. I feel we’re at a very critical point right now in terms of trying to tear down trade barriers, both conventional tariff barriers but also the non-tariff barriers that are much harder to see, and these are some of them. And in a similar sense, we’re also at a very critical point in terms of US and global Internet policy, where there we’re trying to preserve the openness that we have. So in one context we’re trying to create openness that we don’t have now and in the other context we’re trying to preserve the situation, the status quo that we do have now in terms of openness and accessibility.

So I think, you know, when you look at these barriers, some of it is a natural reaction to the Snowden situation that Steve described, which caused tremendous damage in many ways, including to US credibility, and started I think increasingly to question the continuation of the US role in terms of ICANN’s work, even though it’s a very minor administrative role, but it still created these kinds of concerns. So one thing the US has done is approached these governments bilaterally, individually, in terms of explaining why this is really going to ultimately limit your economy, make it much more expensive to use the Internet, to broaden access to the Internet. But that’s very hit or miss. Sometimes you get an audience, sometimes you don’t.

The US, as many know, are in the middle of negotiating three major trade agreements. One is the Transpacific Partnership, which is close to winding down. The other is the Transatlantic Trade and Investment Partnership, which is, well, sort of in the middle. There was a call yesterday by G7 leaders involved in the transatlantic talks to accelerate work immediately and to try and develop an outline of the final agreement by the end of this year. So we may see those talks speed up. There’s also the trade and services negotiations that are going on in Geneva to liberalize service on a more global basis involving over 50 countries. But if you look at each of these agreements, in different ways, they have the potential to keep cross-border data flowing, which is the lifeblood of the global economy, consistent of course with privacy and other considerations, but the basic premise is that cross-border data flows are important and they need to be preserved. Also to fight localization, so governments will not feel that they can solve their problems by demanding the localization of servers, demanding the localization of other aspects of the Internet. And also, with respect to some governments actually taking intellectual property rights and forcing US and other companies who want to do business in their markets to actually transfer intellectual property, including technology.

Goldstein: So with respect to what is referred to as the IANA transition, the transition of the legal oversight of the organization that Fadi leads, there are a number of current developments, some of them within the past 24 hours, that are at play. I’m going to ask Steve and Fadi to help bring us up to speed. Tell us about some of the provisions in the DOTCOM Act and how it might relate to the transition that we’re discussing.

DelBianco: Yeah, Congress was sort of caught by surprise when the Administration decided last March to plan for the relinquishment of that unique government role with ICANN. And I think Congress’ initial reaction was frustration that they hadn’t sort of been consulted properly and we’re given proper respect in that role. A year later, things are dramatically different. Congress has had a chance to watch how the community came together, spending tens of thousands of man-hours developing some very serious proposals of giving the community the same kind of powers that shareholders have in corporation, that voters have over politicians, or that members have over trade associations like mine. And those powers then were laid out in a couple of long proposals, and the community’s commenting on them right now. So right in the middle of that, Congress comes back to the table, the Commerce Committee and Judiciary Committee just two weeks ago, and the Commerce Committee, which has jurisdiction over the Commerce Department, took a long look and said, “What can we do to assist this process in a way that empowers the community to have the kind of accountability that it needs?” And just late last night, the Commerce Committee drafted a bill that suggests that all that needs to happen is for our proposals to come out of the community with consensus, and that those proposals have to meet the conditions that NTIA put forth for the transition about openness and no governmental role. But in addition, they added a key paragraph that says that through bylaws changes ICANN has to implement the community powers that the community has suggested it needs to replace the US role, and that if all that can be certified by the Secretary of Commerce, well then Congress would have 30 days and if it took no action, the transition would occur. So this puts us on a calendar that could potentially put this transition into early 2016, keeping it out of, I think, the political football season of American presidential elections.

Goldstein: Fadi, you and I have spoken frequently about the imperative of creating mechanisms for ICANN that would preclude its political capture by a government or any group of governments and that will sustain its independence over a period not just of years, but hopefully over decades. What about the process that you have been engaged in and that Steve has been engaged in over the past year gives you confidence that you have resolved this issue of political capture and that you have mechanisms that are planned that will decisively mitigate that risk?

Chehadé: The fundamental reason that we have all those governments that would have been the ones elbowing out the US government and trying to take its place, the fundamental reason they are stepping back is because they now understand that the quid pro quo is that the US government will step back, but governments will also all stay back, as they have been in ICANN. Governments at ICANN only have an advisory role. They do not have the ability to create policy. This is remarkable. We have 150 governments and 32 intergovernmental organizations active in ICANN but they all do it in an advisory role. They can only provide advice to the board, which the board then considers.

So first is, in a way, what was the understanding of why the US is stepping back? It wasn’t so the US is replaced. It was precisely so no government takes the place of the US, no intergovernmental organization takes the place of the US. Once that understanding settled in, now we need to strengthen it with belts and suspenders. So for example, I hope with the help of many who are very alert about this in our communities, certainly Steve being a leader in that group, we need to enshrine some of these things in our bylaws. We need to make sure that our bylaws are not changed a year from now, five years from now, to change the role of governments so suddenly they are deciders. We want them to stay in an advisory role. We cannot, nor should we ask governments to leave this environment. We need them involved. We need them to participate and ensure that ICANN’s mission, which is for the public benefit and public interest, is maintained. But so long as we keep the privatization of our layer intact, and frankly at the foundation of the US transition, then I think we’ll be okay.

So strengthening things in the bylaws in places where not even the board can change those bylaws, so these are bylaws that become enshrined in the organization. And secondly, politically making sure that all those governments, hopefully not just today but for the future, appreciate that this layer that ICANN manages, this logical infrastructure of the Internet, is only viable in an open and unified way for the planet. If we don’t have any party controlling that layer, but rather the multi-stakeholder approach where all of us have a hand in it—and I think that understanding is there now, and we will be seeing another major economy in the next few weeks also announcing that it also will now accept that the domain name system and the protocol parameters and the numbers managed by our layer shall stay in the hands of the multi-stakeholder model.

Goldstein: In one moment we’re going to turn to questions from the audience, but I have to ask Steve DelBianco to briefly explain his focus that became the focus of the accountability process on so-called stress tests. You brought this up in your original testimony a year ago, I believe that you designed 26 different stress tests in five different categories. Explain to the audience, if you will, what are these stress tests, and specifically, how would they preclude the political capture of the ICANN board five or ten years from now?

DelBianco: Yeah, the stress test came up at the first set of hearings a year ago, because they provided an excellent way for Congress to vent their concerns and fears without necessarily putting guardrails and parameters on everything we were trying to do to design new accountability mechanisms. So the stress test became a way of describing scenarios that were plausible and asking the question whether the new community accountability mechanisms would answer to those scenarios, would they be able to provide the community the ability to hold the board accountable for its decisions, to challenge and overturn a board motive. And those stress tests include many items, like what would happen if ICANN decided to quit the affirmation of commitments, how do we solve that? Well we design a solution for the bylaws so that that stress test has an answer.

Another was what if the governments themselves, in their advisory role, decided to move to majority voting instead of consensus when they come up with a decision? That’s a little frightening, because at some meetings, 60 or 70 of the governments show up and if a simple majority of 30 can come up with advice, that sort of puts the board and ICANN in a rather tight spot. There are obligations for ICANN to try and find a mutually acceptable solution when the government provides advice. That’s a rather high bar and no other stakeholder in the community has that kind of deference. So the answer to that stress test was to make one small change to the bylaws so that that deference to GAC advice would only be there where their advice came over as a consensus. So we’ll let the GAC change the way it does things, but we raise our obligation to work out a mutually acceptable solution only in cases where the governments have consensus.

Goldstein: Consensus meaning 150 governments agree?

DelBianco: Well we’re going to let them, Gordon, work out what they think consensus is. It may be something less than unanimity. And the rest of the groups at ICANN, we all work out what consensus is. It’s rarely unanimity, but it’s most often a very high bar, well in excess of supermajority.

Goldstein: Miriam, did you have something you wanted to add?

Sapiro: Yeah, I wanted to jump in for a second, because, again, there are different levels of knowledge in the room, but the transition plan was developed at the beginning, as someone mentioned, under the Clinton Administration in the late ‘90s. It’s nearly 20 years later and this has had bipartisan support all along, so during two terms of President Bush and then into President Obama, the continuing commitment of the US government and the Internet stakeholder community has been to do the final transition. So I think of this as the last step. And when ICANN started, people didn’t believe that it—it was brand new, it didn’t have the security and the stability that it needed to be able to operate 100% on its own. But a lot’s happened since I went to my first ICANN meeting about 15 years ago—and probably met Steve then. And so the question today is no organization is perfect, but how does ICANN improve further? And so through the accountability mechanisms that Steve and Fadi are working on, through other means to make sure that ICANN can’t be captured, not only from governments, but also from any particular interest group, is going to be fundamental towards completing this final step.

Goldstein: Very briefly, and then we have to—

Chehadé: I just want to say one thing. We have one bright light from this effort and one risk ahead of us that we should keep very tight attention to. The bright light is how our community came together to actually to actually put the proposal. It’s really frankly for the history books. There aren’t many efforts in history where hundreds—in fact, if you add everybody who contributed online, thousands of people from around the globe participated. Governments, private sector, technical people, academics, everyone participated in putting this proposal together. It is impressive. And anyone who looks as this and says does the multi-stakeholder model work, it works, and here’s one heck of an example that we can show the world and write about. And it also brought the IETF, the regional Internet registries, ICANN, all the people that really make up this layer—because it’s not just ICANN. Some people think it’s just ICANN. We’re just the visible coordinator. But we are all equal participants bound by common principles and mutual commitments. That’s a bright light we should all focus on.

The risk we have is to overcomplicate the transition. That’s a huge risk. Especially when we told the world the reason the US is also moving on is because this community works. Things are working. So it’s incongruent to say it’s working, but yet, in order to do the transition we’re going to turn it upside down. So I think we need to stay calm and consistent. We need to tighten everything. We need to make sure, as Steve said, that we don’t have governments overnight deciding that they will change the way they participate in ICANN. All those things are very welcome and the board and I, all of us, are ready to make these changes.

Having said that, if we overcomplicate this, we have an issue of time and an issue of incongruent messaging. We’re ready, we’re mature, we can continue our role without US oversight, but yet we have to change everything upside down? Don’t match up.

Goldstein: Questions from the audience?

Nelson: I’m Mike Nelson with CloudFlare, also teach at Georgetown. When I worked in the White House back in the ‘90s, we introduced the web to a number of policymakers and they were very confused when we told them that nobody was in charge of the Internet and everybody was in charge of the Internet. Bob Rubin in particular wanted to invest and wanted to know exactly who was in charge.

Clearly, we have the same problem today and we have a lot of companies, particularly the copyright industry, turning to ICANN and saying, “You must be in charge. We’re going to enforce our copyright laws through you.” And we’re seeing a lot more push to use intermediaries like ICANN to enforce copyright laws around the world. Do you see that trend continuing, and are we going to manage to get this right or is every company that is part of the Internet platform going to be a copyright policeman?

Chehadé: The reality is we have to change that trend, because we have not yet separated clearly in the minds of many people the different spheres of Internet governance. I think in the past everybody understood the physical infrastructure sphere, the networks: the ITU, the IETF, the IEEE, GSMA. All these guys have done a fairly good job, including our FCC and its equivalents around the world, kind of governing that layer underneath. Then comes the logical layer which is where we are, and everybody thinks we manage everything, which is a mistake. First of all, not even ICANN manages that layer. ICANN is simply one of the participants. The IETF, the RIRs, the top level domain operators in every country, we’re all a community that is bound by mutual commitments that manages this layer. It’s not ICANN. Now the world is starting to get this. They just don’t want any one government or party controlling it, and I think we’re almost there.

Now comes the third and final major governance layer, what many of us call the industrial or the social layer. That’s everything that happens on the Internet. And because that’s not clear yet, everybody’s coming to us and saying, “Oh, you should police content.” But our effort should be to clarify those fears, make sure people understand where our role starts and stops, the limitations of ICANN’s role, and then invigorate, with innovation, how we manage that top layer. And this is where you hear many of us speak about things like polycentric models, distributed models and things of the sort. But if we don’t energize that layer, where will government go? That’s the question we should ask ourselves, including our own government: where do I go address all those issues on the Internet?

DelBianco: Yeah, keep in mind that a government’s laws are, in its mind, totally appropriate. A government that’s particularly protective of copyright might be very different than a government who wants to protect censorship, they want to censor any criticism of the government. Another might be really worried about prescription drugs that are dispensed without prescription. There are other governments, many who are really concerned about fraud and deception that occurs on the Internet. So these nations understand that the Internet’s just a medium, so just like any other medium, whether it was the phones, television, radio, or anything else, their laws still apply on that medium. So governments turn wherever they can to say, “We want to enforce our laws and we are going to turn to any leverage point we can get. We’ll call Interpol. We’ll try to get a bilateral relationship with another nation to take down a site that’s dispensing denial of service attacks.” And one other leverage point they grab is the layer that ICANN manages, and it’s a rather thin reed that they grab, because all that ICANN administers are contracts with registrars and registries. And in that contract is a relatively new provision that says that if a government or someone tells a registrar about some illegal conduct happening at a domain in the registry, that they need to investigate and respond. So in the ICANN community right now, we’re at the beginning of a long process to figure out what that means to investigate and respond. And that is not a place to hang an enforcement mechanism that will police the content around the planet. ICANN would not be a great leverage point to do that. However, we are going to be relevant to the discussion, since enforcement of contracts means understanding the fact that nations will assert jurisdiction for following their laws, whether you’re online or offline.

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