The Impact of the New gtld Program on the Internet Governance Regimes of Emerging Economies

Transcription

1 The Impact of the New gtld Program on the Internet Governance Regimes of Emerging Economies -China s Domain Name Regulation Revolution Research Paper prepared for the 7th Annual Symposium of Global Internet Governance Academic Network (GigaNet) Hongbin Zhu, Senior International Strategist and Policy Analyst China Internet Network Information Center (CNNIC) zhuhongbin@cnnic.cn

2 1 Introduction The diverse community of hosts, users, and networks relies on the Domain Name System (DNS) to locate Internet services and devices worldwide. This system performs the function of mapping user friendly host names to machine readable Internet Protocol (IP) addresses which are used by computers to identify each other and thereby make data transfers possible. According to the distributed structure of the name space, the DNS is administrated hierarchically by multi-organizations with each administrator exercising control over lower level domains. To be specific, the Internet Corporation for Assigned Names and Numbers (ICANN), a private non-profit organization contracted with the US government, is operating the top of the DNS hierarchy the root zone. According to the contract, ICANN is authorized to develop policies for regulating the root zone and tracking Top Level Domains (TLD), the subordinate level of name space beneath the root in hierarchy. Likewise, the administrator of TLD is charged with responsibility for developing policies for second level domain name allocation and maintaining domain name services. Domain style names are being introduced in the Internet to allow a controlled delegation of the authority and responsibility for adding hosts to the system. This also allows a subdivision of the task of maintaining information about hosts. (Post 1983) It is widely agreed that the DNS policy authorities, such as ICANN and TLD administrators, are true regulatory authorities who bring control to cyberspace. As the higher level domain managers have the leverage to impose policies of selection, usage as well as pricing of domain names under control, the administrator of DNS has an inherent capability to regulate information security, content distribution, online identity and key resources allocation, etc (Mueller 2002). In contrast to the early assumption that cyberspace was ungovernable, DNS provides a centralized controlling point for regulation which manifests policy authority, is legal binding, and has the capacity to issue sanctions as well as jurisdictional capacity (Klein 2002). What is more fascinating, the DNS binds various stakeholders worldwide on the basis of hierarchical control of key resources domain names, so that a global regime emerges, which consists of rights and rules defined by agreements between private organizations, governments and non-profit organizations (Franda 2001). The contention between the global regime and the national regulation is embedded in the DNS system. Generally speaking, the privatized authority

3 and global decentralized infrastructure reinforce free trade principles(mueller, Mathiason et al. 2007). On the other hand, certain states maintain their influence over global institution forming (Drezner 2002). An even more contentious point lies beneath the root, which is the major focus of this paper. The policy authority of TLDs is dichotomized, falling into two categories: the generic TLDs (gtld), such as.com (for Commerce),.net for (for Network), and the country-code TLDs (cctld), such as.cn (for China),.de (for Germany), and.uk (for United Kingdom). In terms of gtlds, ICANN directly contracts with certain private organizations to operate a TLD. Therefore the policy of gtlds is relatively compliant to ICANN s principles which are more market oriented in accordance with the International regime. Meanwhile the cctld has retained some of its distinctiveness and independence from ICANN. Owing to the legacy of Jon Postel, the site of cctld is based on real world geography and symbolically presents national identity. Nation states either control directly or have a good amount of decision power over cctld policies. The cctld therefore becomes an important intermediary for the state to regulate the online environment. Consequently, cctld is likely to favor or inhibit certain practices to promote in-country Internet development and regulate domestic online environment. GTLDs and cctlds have coexisted for decades while certain equilibrium between different regulatory initiatives has been kept because the cctlds and gtlds have occupied differentiated market scope. To be specific, the regulatory power of the state has been retained locally in cctld while the private authority as gtld embodies global features for international coordination. However, this equilibrium is about to be broken. With the stated goal of promoting competition and innovation within domain name space, ICANN has been continuously extending domain name space by delegating new TLDs to various organizations. Especially since the new gtld program launched in early 2012, hundreds of new top level domains are pending delegation to the root. It is estimated that many private enterprises will operate top level domains in the near future in compliance with ICANN s policies. While this expansion of domain name space is underway, the underlying regulatory authority of the TLD has also been more widely dispersed. This massive inclusion of various organizations to administrate the DNS functionality is estimated to impact the Internet regime worldwide, especially with respect to state regulation which relies on cctlds. It is very likely that state regulatory authority will shrink along with cctld s market share which may be cut by the upcoming new gtlds. Therefore, as the

4 intermediary is weakened, the national domain name space will be freed from the state power. In addition, the emerging new gtlds may normalize the free trade principles of the international regime boasted by ICANN. Therefore, in this way, the exogenous institution may have more bargaining power over the local authorities. Regarding to the interaction between national Internet regulation and international institutional change, emerging economies such as the BRIC countries offer comprehensive cases and an alternative perspective for research. As Park (2008) has analyzed, the BRIC countries in nature are developing countries, generally speaking, they are relatively less resourceful and experienced actors in global domain name market competition and institution forming. The governments of BRIC countries may proactively lead national domain name regulation through cctld, so as to protect the infant domestic Internet market and buttress its healthy growth. But when the new gtlds are launched, the barriers to the domestic domain name market will be lower and the natural monopoly of cctld will have broken down. More market oriented actors from the outside world will enter the domestic market competing with the state-oriented cctlds. Consequently, local domain name regulation is likely to be liberalized, so that the national regulatory capacity over Internet, which is highly dependent on cctld, will be dismantled significantly. This shows that the contention between national regulation and international regime is more severe for emerging economies. Meanwhile, as TLD operation requires special expertise and technical bases, enterprises in developing countries may choose to outsource such operations to an experienced DNS operator in another country. This fact will further intensify the local market s dependence on foreign enterprises, which may weaken the state s market autonomy, so state regulation will approach new gtld most actively to avoid its negative effects. On the other hand, although there are significant risks for the BRICs, unlike the other developing countries which act rather passively towards the international regime, they actively attempt to spread their influence to the international market with the aim of pursuing further development opportunities. It is acknowledgeable that new gtlds will drive the online innovation and competition and benefit the local Internet development. More importantly, by actively taking part of the new gtld application process, domestic enterprises may occupy more scarce resources for the further development of the national economy. Furthermore, the new gtlds also provide an opportunity for emerging economies to become more

5 actively involved in global institutional discussions which might improve their global status. For these reasons, rather than being completely resistant to new gtlds and acting passively like other developing countries, the emerging economies may evaluate the pros and cons of new gtlds and develop further regulatory instruments to circumvent the side effects. In short, by analyzing the regulation evolution of emerging economy, we can observe more comprehensive interaction between the International Internet regime and the local regulation and draw further implications for other states. The new gtlds are very recent things and will be launched next few years. There is few literature focusing to the impact of new gtlds to the emerging economies, other than its impact to the cctld pricing change (Rajasekera 2009), stability issues (Weinberg 2002) and the need for trademark protection (Farley 2009) as reasons to be cautious about the new gtlds. But the abundant existing research on domestic industry deregulation and reregulation adopting regime theory and institution economy theory offers an optimal theoretical framework for my analysis (Krasner 1983; Hoskisson, Eden et al. 2000; Reisman 2002; Drezner 2007). As the globalized service demand increases, international regimes and institutions have been formed to coordinate different regulatory issues. The free trade principle underlying the regime inevitably collided with the traditional state control of the domestic market, especially in socialist countries. Although facing strong political resistance, a process of liberalization has been carried out under the pressure of business demand and outside coercion. This process brought competition and foreign capital to the domestic market. For many states undergoing this process, the monopolized industries have been diversified while state control is weakened. However, as the western incumbents are much more resourceful than the emerging economies, the global regime also allows them to engage in rent seeking, which hampers the sustainability of developing countries. Therefore new form of state regulation has evolved to protect the state s interests. Unlike the traditional methods of state planning and direct control, the new regulation focuses on the normalization of regulation and constructing market leadership. In other words, the principle of the state delegating regulatory power to non-government agents (Drezner 2003; Burt 2007). With this historical implication in mind, the introduction of new gtlds which signals the empowerment of the international regime, is also very likely to trigger regulation evolution in emerging economies. From the perspective of China, this paper aims at analyzing the potential

6 evolution of domestic Internet institutions under the circumstance of the emerging new gtld. It is structured as follows: Section 2 aims to explore the tension between national regulation and the Internet, emphasizing the two key issues of autonomy and sustainability. Section 3 provides background information on the traditional domain name regulatory mechanisms which are largely dependent on cctld s policy-making authority. The case of Chinese cctld.cn and its important role in national Internet governance will be studied in Section 4. In Section 5, this paper goes further to explore the impact of new gtlds on the state regulation of emerging economies. Then, in Section 6, drawing from the implications of the evolution of Chinese telecommunication regulation as the state s former strategic response to global institutions, potential ways of local regulatory regime evolution for the domain name space management will be identified and evaluated. Although the research presented here is at an early stage, it will provide some evidence against the potential policy impact of ICANN on emerging economies. The traditional perspective of national Internet regulation focusing on the sovereignty is abandoned and criticized. In a mixed picture, it is clear that, contrary to the predictions of the advocates of a more internationalized Internet space, the state, or at least the public sector will still play an important role in protecting the state s defined interests. 2 State Regulation of the Internet It is predictable that cyber-libertarians will cast strong doubt on the term national sovereignty or state control of the Internet sphere. Indeed, the Internet creates ambiguities for national sovereignty, which brings the notion of freedom from centralized control. The Internet s resistance to the state results from three feature of this global network. First, Internet activities under the control of certain jurisdictions can be easily relocated anywhere else in the world since the transaction costs of communication are so low. As state regulation relies on geographic proximity, businesses and individuals, therefore, can easily bypass any set of control exercised by governing bodies in any single physical location (Johnson 1996). Second, the Internet creates entirely new institutions and property rights frameworks which are built in autonomy from state power. It is the power held by the group of network engineers who made the communication protocols and agreed on the standards that formalized how the Internet

7 works today. The technical protocols and self-regulatory policies emerge from the technical community as de facto regulation mechanisms which are not necessarily related to any government or agencies and may be resistant against the overarching power of the nation state. However, most nation states have to implement standards and rules developed by technicians if networks in their country are to be connected to the Internet (Reidenberg 1996). Third, the Internet epitomizes globalization, commercialization and privatization. New forms of transnational cooperation between the public and the private sector seem to indicate an organizational transformation of traditional statehood. Global privatized institutions and regimes are formed for international coordination, which intensify global inter-dependence. State regulations may produce significant externalities for other members within this network and hence are likely to face pressure from the global regime. Therefore, the state s capacity to use certain regulatory tools within the jurisdiction may be entailed (Delacourt 1997). But in fact, the government and state are not really stepping down from their regulatory role over the Internet as a result of both the virtue of government control and the demand of consumers (Goldsmith and Wu 2006). There are at least three motivations for governments seeking to continue regulating Internet. First, as Internet activities have great externalities for the real world, the government has a responsibility to regulate it for the public good. The technical standards and policies made by private authorities may not be universally consistent with every national regulatory system, especially for emerging countries which are likely to be separate from global institution forming due to lack of awareness. This disparity between the rules of the online and offline world can disrupt the congruity of state regulation and generate disorder in the online environment. For example, the anonymous online environment may facilitate libel expression which violates state tort law. Also, regarding domain names, as they are almost registered on the first come first served basis, certain trademark owners registered nationally may find their intellectual property being infringed in case of cyber-squatting. What is more, the unrestricted access and dissemination of information may also risk the privacy of citizens or the security of the state. The unified global regulatory mechanism has inherent deficiencies when applied to a certain state, which challenges its accountability. In response to the problems mentioned above, citizens may turn to their government which is more legitimate and accountable for regulating the Internet. Meanwhile, the Internet has the potential to deliver substantial economic

8 growth which is too significant to be ignored by the state, especially for emerging economies which seek opportunities for development. The Internet, ever since its commercialization in the mid 1990s, has been an impressive success. The worldwide online population surpassed 2 billion in From America s firstly stressing the importance of the information superhighway, driving the prosperity of the Internet has become one important goal of the state in order to succeed in global economic competition, which triggers policy initiatives to achieve the sustainable and healthy development of Internet industry. The Internet environment resembles the free market environment to a certain extent. Market disorder also occurs in the Internet environment while self-regulation fails to work. This kind of disorder, for example market control by monopoly, can hamper the growth of Internet Industry and state-defined interests, which also drive the state to regulate the Internet. And, furthermore, in order to support the prosperity of the local Internet industry, the state may also initiate preferential policies for local Internet enterprises, providing us with another means of market regulation. Beyond the former two concerns, another important consideration for the state, especially in emerging economies, in maintaining government regulation over Internet relates to autonomy and sustainability. I would prefer not to use the word sovereignty, although much literature used it to explain the incentives for national regulation over the Internet sphere. As for most developing countries, Internet regulation is not so much about retaining traditional territorial control but about surviving the state-defined interests in global competition. Traditionally, Internet standards and policy developing are dominated by a limited number of countries, and, in some aspects, largely by the United States. The rest of the states in the world have to passively enforce standards and intellectual property laws. With this fact in mind, an economy built on the basis of Internet may be disadvantaged and insecure. Therefore, in order to retain the autonomy from dominant power in Internet institutionalizing, the state may also play a leading role in the international institution negotiation for the sake of state-defined interests. For the above concerns the state has been continuously exploring effective mechanisms for bordering or governing the Internet. One effective way is to step into the technology field (Lessig 1999). Because of the dispersed control over operations and resources, an effective way to regulate lies in network structure design. Ideally, bordering a nationalized network and reinforcing the jurisdictional control over online property and

9 behavior can be the most effective solution to maintain the state regulation of cyberspace. But it is controversial for a state to deliberately segment Internet space and recreate barriers so as to enforce state sovereignty. The decentralized structure of the Internet also renders such radical renationalization of Internet space unrealistic. More commonly, the state adopts a more mild regulatory approach by gradually closing the gap between the private authorities and the state authority, online identities andvoffline identities, and the domestic regulation of and global institutions for the Internet. As the state starts to participate directly or indirectly in the process of architecture design, standardization and other national or international institution forming process for the Internet, the state governance of the Internet embedded intangible governance mechanisms into the network (Mueller 2010). As the state and the Internet get mixed up in the process, the state also reinforces its notion of regulation and influence to the Internet space, although in an unconventional way which corresponds to the network structure (Mueller 2010). It is easy to assume that the state has lost its monopoly of authority as this new form of regulation integrates the state with public, private and non-profit organizations. On the contrary, however, the integration strengthened relationship between the Internet and the state will help to bring back and consolidate the notion of state regulation in the Internet space. Compared with its role at the genesis of Internet, the state now has much more regulatory power over the Internet structurally, and the regulatory methods have become more diverse, including methods as delegation of state authority and responsibility to non-state organizations (Drezner 2003) or set national policy for cctlds which combines different actors within the state regulation (Park 2008). Now we come back to the topic of nation-states on the Internet. The point we want to stress is that Internet Governance should not be regarded as a case of de-nationalization or privatization. Even though the Internet is regulated to a significantly lesser degree than "telephone networks", state control of the Internet has been increasing over the last decade and is likely to continue to do so in the near future. The state remains as an important authority with responsibility for state-defined interests. By stressing this point, this paper will go further to examine how state power will help to carry out national strategies for guarding state-defined interests in the globalized world. The regulatory evolution of state regulation of the Internet has granted states with capacity to maintain an active role rather than a passive role for protecting and promoting state-defined interests and eliminate

10 destructive forces. 3 The Virtual National Domain Assuming that features of technology determine the administrative and regulatory system, cctld in the DNS infrastructure represents an obvious point of entry and influence for the nation state on Internet policy matters. This is because addressing schemes for cctld successfully brought the notion of jurisdiction to the Internet space. Unlike the traditional jurisdiction which is framed in terms of physical location and boundaries, cctlds are virtual national domains embedded in the DNS structure. Additionally, these virtual national domains accurately correspond with the real jurisdictions, since each cctld uses a two-character country code identifier drawn from the ISO list. Therefore, correlation between the virtual world and the real world is established by cctlds, which intensify mutual influence between them. What is more, since the DNS hierarchy renders each TLD a central point to administrate and regulate a specific portion ofinternet service provision and users access, as defined by the feature of the respective string. The cctlds, which resemble real nation states, are inherently granted the capacity of framing and influencing national Internet governance. Recognizing the importance of cctld, governments start to nationalize each cctld as sovereign property and divert the state power to the administration of cctld as an agent of regulating the Internet. This offers empirical evidence to exemplify the evolution of state regulation of Internet and nationalization of Internet (Mueller 2002). Originally the cctlds are not different from other generic identifiers such as.com, which express some features of Internet identity and are regulated in the same way by private authorities. Initiated by a small group of engineers under the leadership of Jon Postel, the DNS architecture was built corresponding to the liberal vision of the technical community which constitutes it. Then, the scheme of cctld was created in order to internationalize the domain names which provide national identification for users when communicating with other entities abroad. The early designers of ICANN approached country code spaces with the global market for domain names in mind, instead of the concept of state and political identity. (Park 2008) With this vision, the responsibility and authority of administrating cctld is delegated to non-state actors appointed by Jon Postel.

11 In 1990s, the Internet experienced increasing commercialization, which also led to the wide recognition of domain names as valued property and key resources for the Internet s development. Legal disputes on the right to domain names appeared. Domain names were no longer used just used as identifiers of organizations but as locators for all kinds of objects and pieces of information. The governments are also attracted by the ability to utilize cctlds as a platform for national economic growth and the institutions of civil society brought online, a mediator of national law to be applied to the network, as well as a reflection the "brand" of the country. (Cukier 2002). Consequently, although ad hoc in nature, cctld management, unlike the case of gtlds, started to involve a significant role for government in early adopter Internet states which in effect burgeoned the online economy outside the US. The taking over of the control of cctlds by the nation states was intensified after the ICANN regime was created by the US government in Nation states raised their concerns for ICANN s legitimacy and authority with regard to the US government s oversight role (Christou and Simpson 2009). In order to incorporate the nation states into this international regime, ICANN recognized as the nation states as advisors in their decision making process and created Government Advisory Committee ( GAC ) within its organizational structure. But control over cctlds was still a point of contestation where territorial interest, national symbolism and global access have been key issues. Since the year 2000, as many nation states endeavored to claim national sovereignty over cctlds, thereafter, ICANN started to make the desires of the government of the country corresponding to a cctld a major consideration in all transfer or delegation proceedings with regard to a cctld 1. Since then, some state actors have started to enter into formal agreements with ICANN for administering their virtual national domains. The uptake of cctlds by the states signals the trend of nationalizing the Internet space. And the state s regulation of Internet has been realized by influencing the cctld policy making process. According to the ITU-sponsored cctld study by Prof. Michael Geist, virtually every government that responded either manages, retains direct control, or is contemplating a formalized relationships with their national cctld. 47 percent of responding governments retain ultimate control over their national cctld. On the other hand, only seven percent of respondents indicated no plan for formalize governmental role in their cctld. (Geist 1 See ICANN ICP-1, supra note 33 at icp/icp-3.htm

12 2003) Although there is no doubt that many nation states are now playing an active role in cctld issues, different nation states may interlude the administration of cctld in different depth for the variations in terms of resources available, existing policy, level of development of the sector and historical antecedents (ITU 2008). The governance model may also range from completely government bureaucracies to private sector arrangement with little presence for government. Empirical studies also suggest that cctlds can be also be divided as more state controlled cctlds such as.au.br.ch.cn.dk.es.eu.fi.fr.gr.ie.in.jp.kr.no.sk.us and less state controlled ones such as.at.be.ca.cz.de.hu.is.it.lu.mx.nl.nz.pl.pt.ru.se.tr.uk (Park 2008). Consequently, the rules and policies for registering domain names in the cctlds vary significantly by country. For the BRIC countries, government or public actors intervene in its operation more actively for both local regulation and with the aim of achieving prosperity. They utilize cctld as an indispensable intermediary to regulate the Internet. To be specific, appropriate government authority may supervise the activities of the cctld operator and approve their policy. Meanwhile, domain names registered in a cctld must compliant to the provisions of a general telecommunications law. Furthermore, the government may also exercise its formal or informal influence to DNS functioning through cctld as a dependent or independent national regulatory agent and the front force for competition, so as to maintain regulation over the Internet. However, these methods of Internet governance are still limited by both technical restrictions and by ICANN s power to set delegation policies, which raises even more contention between the international regime and governance at the local level. Any policy change and technical standardization at the international level may impact the cctld greatly so that the state governance of Internet based on cctld is indeed fragile. Indeed the BRIC countries provide a good point of entry to study how ICANN or International Internet institutions penetrate and influence the local Internet governance and forces states governance towards further evolution. In order to illustrate how the emerging economies utilize cctld to regulate the Internet for state defined interests and further analyze evolution of state regulation under the circumstance of upcoming new gtlds, the following part of this paper will bring up the specific case of China and its cctld:.cn.

13 4.CN and Chinese Internet Regulation Chinese Internet governance has been highly criticized by the libertarian school, since China strives to reorder the Internet by licensing and regulating the providers of Internet services in order to make them conform to national policy. Much epistemic analysis has labeled Chinese Internet regulatory model as authoritarianism or nationalism as if China is completely at odds with the globalized Internet network and Internet freedom (Hughes and Wacker 2003; United States Congress House Committee on International Relations 2006). On the other hand, Prof. Milton L. Mueller sovereignty has offered a much more insightful view of Chinese Internet regulation model as network nationalism, which illustrates the inner tension between China s sovereigntism and its need for economic development and productive exchanges with the rest of the world (Mueller 2010). However, all these analysis focuses too much on the Chinese government s concerns over sovereignty issues and the regime clash between different ideologies. This trend might result from the highly public debate over the Internet sovereignty between China and the US. Most existing literatures assume that Internet sovereignty is the most important issue for Chinese Internet regulation, which aims to defend against political subversion directed from outside and interventions by foreign powers. Although these concerns are indeed important to the Chinese government, especially at the early stages, right now it does not completely match the case of Chinese regulation over the Internet. Rather than forming policy in response to the threats of outside forces, a inner strategic concern for the Internet governance of China lies in its status as emerging economy and its goal of sustaining the domestic development, which is a common strategy for most of the emerging countries (Hoskisson, Eden et al. 2000) Ever since the second generation of leadership under Deng Xiaoping launched market-oriented economic reform in 1979 with a single overriding concern for modernization, China has positioned itself fundamentally as a developing country and has sought, thereafter, to promote sustainable economic growth and protect the state s defined interests. Traditional national policies are loosened to support more dynamic productivity, while the state maintains its regulation for sustaining the national prosperity and protect autonomy. To decode the inner incentive of Chinese Internet regulation, 3 major aspects of post-cold war regulatory concept of China have come up. First,

14 China, as an emerging economy, has now deeply joined in the global market. Facing fierce competition, some of infant industries may be at stake. The state regulation methods including licensing, delegation and filtration help to divert priority to local organizations, simplify the competition at the local level, and create many internationally competent enterprises. Second, as the state regulation reduces the risks caused by market disorder while normalizes productive ways of market behavior, the accountability of local enterprises and healthy market environment have become more sustainable. Furthermore, as globalization increases sensitivity to economic interdependence with the developed world, it also diverts the global crisis and institutional failure to the local environment. Especially for developing countries, since they are relatively less advantaged regarding technology, capital resources and literacy of international institution, enterprises in the developed world are likely to seek rent, which means to capture wealth transfers by investing in protectionist policies or favorable subsidies (Tullock 1989). In order to promote the state-defined interests in the more complicated global relationship and sustain economic development, China, like most emerging economies pursuing prosperity, takes a more proactive way to excise its power locally and globally to protect the autonomy of local industry, so that its productivity can be transferred to national prosperity. The Chinese regulation of the Internet at present follows the same pattern mentioned above. The state intervenes to regulate the Internet in order to buttress the national Internet economy s sustainable development more than defend against foreign political threats. cctlds, which are widely recognized as sovereign property provide a perfect governance platform for sustaining state economic growth on the Internet. Then how is the regulation envisioned by governments intending to influence or set national domain-name policies? While the Internet is becoming more and more commercialized supporting considerable amount of economic growth, the regulatory evolution of the Internet has been gradually shed light on the inner motivation of state regulation for national prosperity and development. Historically, the Chinese government has utilized three instruments, including direct control from government agencies, legislation and strategic leadership. Like many other cctlds, operation of.cn originally started form academic research. Professor Qian Tianbai, the pioneer of Internet in China firstly registered the cctld.cn in November At that time due to limited resources available within the jurisdiction, the first.cn server was located in Germany with assistance of Karlsruhe University. The Chinese government

15 did not pose any clear form of regulation on.cn. The DNS at that time was only used for academic research in China and was administrated on an ad hoc basis. In 1994, domestic servers first established in China, the Computer Network Information Center of Chinese Academy of Sciences started to provide registration and resolution services for.cn. Since then the government agency, the Ministry of Posts and Telecommunications officially took over the job of regulating.cn and exercised control over the admonitions of the domain-name space as well the necessary infrastructure. Although the technicians with necessary expertise retained the power to lobby cctld governance policies, at the early stage of Internet regulation, the government strives hardly to retain its direct control of unstoppable Internet and sovereignty over cctld in accordance with the old rules of state planning (Wass 2003). The administration of cctld through a government agency was finally supplemented by corresponding legislation, which is another way for states to regulate. There are pieces of legal documents which formalized the government s regulation of Internet. In February 1996, the Interim Regulation of the People s Republic of China on the Management of International Networking of Computer Information, the first legislative document related to domain names, was issued, which established the Information Working Group of the State Council to regulate Internet-related issues. However, this document did not provide any detailed governance guidelines for domain name space governance and few specifications for domain name regulation in China. With respect to the international trend of taking over the cctld governance under the control of nation state, throughout 1997, the information working group coordinated both the structure and rules for.cn. Then China Internet Network Information Center (CNNIC) was established to administrate and operate.cn according to the Provisional Measures for the Administration of Domain Name Registration on China s Internet Network. Thereafter, detailed restrictive rules were also formed as Detailed Implementation Rules for the Registration of Domain Names on the Internet. These initial regulations filled the national legal gap in domain name registration and usage, which effectively helped to regulate.cn and the domain name market in China. The restrictive policies have effectively limited the domain name contention under.cn. For instance, individuals were not allowed to register.cn names; the foreign registrants needed to have local servers and business branches to register.cn names; the registrant had to register the third level domain with the second level

16 reflective of the organization feature such as.com.cn, and.gov.cn. In this way, the genesis of commercialized online services in China was harbored safely. Many local corporations start their business online in a less competitive environment and the network risks are also minimized. However, there were also some drawbacks to these regulations. As the gtld domain names at the global level are constantly competing with cctld at the national level, the relatively too restrictive cctld governance may be less marketable in the long term. In fact, the percentage of.cn domain name registration in China has declined from about fifty percent to 16 percent in the first 3 years after the legislation was passed. Therefore, in order to sustain the national Internet economy, the Chinese government resorts to the partnership with CNNIC, the non-government organization operating.cn, to influence and provides more flexible means of regulation. As a TLD operator in nature, CNNIC is more sensitive to domain name market demand, therefore coordinating state polices with CNNIC s authority will offer an optimal solution for further driving the local Internet development. And also by exercising state power through non-government authority, this model of regulation also corresponded to the privatized Internet governance tradition and circumvents the direct clash between the state regulation and international regime, which creates space for further international institutional coordination of technologies and policies. CNNIC has been delegated as the administrator of the national domain name space ever since its establishment in the first round of domain name legislation in China. Run by the Chinese Academy of Sciences, the regulation model reflects the original authority held by the technical and academic community. Meanwhile CNNIC continues to take orders from the Ministry of Information Industry (MII) to conduct daily business. In practice, CNNIC Steering Committee, a working group composed of well-known experts, government officials and commercial representatives in domestic Internet community supervises and evaluates the structure, operation and administration of CNNIC. This model enables the close partnership between the technical community and the government so that the government can divert its strategic concern to domain name governance. The non-government organization was formally granted with Internet policy authority ever since CNNIC Implementing Rules of Domain Name Registration was issued in 2002, which is basically a self-regulation policy document for the registry. However, it substituted the Detailed Implementation Rules for the Registration of Domain Names on the Internet, issued by the government working group. Later on, government

17 issued China Internet Domain Name Regulations in 2004 which consolidates the authority of CNNIC for the cctld governance with a domain name registry license. As the only TLD registry operator recognized by the state, CNNIC holds an important market status and authority in China, which reinforces many sorts of self-regulation mechanism over the national domain name space, while the government maintain its influence to the registry. Generally speaking, CNNIC s governance consists of 5 aspects. The government provides strategic guidance as well as legislation to reinforce regulation in these aspects, so as to promote the local Internet prosperity and sustainable development. First, the body is responsible for setting the registration requirement and naming conventions for the domain names beneath the TLD and rejecting domain name applications which do not qualify for such requirements. For example domain name applications which violate the national law will be rejected by the officials from CNNIC. This regulation of name choices may be a somewhat controversial since sometimes for national security reasons and other legal restrictions, free expression can be hampered to a certain extent. But also in this process valuable name resources are reserved for the future proper usage by legitimate local entities. In addition to application forms, CNNIC also reviews proof of ownership of trademarks or authorization in order to avoid string contention. As a developing country, the local organizations may recognize Internet resources fairly late and do not well protect such resources including their own intellectual property such as trademarks, especially in gtlds. Restrictions in cctld can help to minimize profiteering from cybersquatting. As the most valuable gtld domain names are already be occupied by the front runners, the cctld provides an economical space alternatively for the local brands to establish online services. Second, the body guards the information, through stewardship of the Whois database, on users who have registered names under a typical cctld and makes decisions on how much, and what kind, of information on users is made publicly available. CNNIC has received a government order to carry out the national domain name improvement project in As the result of this project, CN now boasts 99% plus Whois accuracy level, higher than any other TLDs in the world since the registry operator conducts very strict pre-registration review of identification proof. This is also a controversial state influence since the form of surveillance clashes with the personal privacy protection. But this transparency also evidently makes.cn

18 susceptible to less domain name abuse compared with the time when the pre-registration review was not carried out. Accountability for.cn domain names is a very important competence for.cn. Third, the registry is responsible for regulating the behavior of the cctld registrar industry, comprised of companies competing, often aggressively, to register a name for a user under the cctld. The domain name registrar industry generates considerable profits and is closely intertwined with diverse Internet service provisions. The registry can stimulate the Internet economy s growth by regulating the registrars. As many other registries, CNNIC uses instruments including setting the price of registrations per name and establishing accreditation contract term sheet for registrar companies to comply with to regulate the registrar. Now CNNIC has contracted with almost 80 domestic registrars and 23 international registrars selling.cn domain names. This global registrar network helps the national domain to achieve further growth and global competence. Fourth, the registry is responsible for hearing complaints from commercial players and customers involved in the cctld business. This has involved matters such as receiving submissions about commercial mal-practice and infringement of claimed legitimate rights to a name, principally trademark but also public sector. As a result of effectively taking steps to mitigate domain name abuse, the Internet environment has becoming more trustworthy and secure for the end-users and this has created new opportunities for online business. Furthermore, CNNIC has take the lead of establishing Anti-Phishing Alliance of China, which coordinate registries, registrars and e-commerce websites, technical experts and other industry actors to solve the phishing websites problem in China. This coordinator position and self-regulatory mechanism also consolidates CNNIC s regulatory authority for Internet services in China and unified the regulation over Internet to protect public interests. Fifth, the registry stands on a forward position on the Internet s development and actively participates in the research work on the domestic Internet development and carries out international communication and cooperation regarding Internet, addressing technologies and administration policies. This is one vital motivation for the government to support CNNIC as a regulator of the national domain name space. As an emerging economy, to express and reinforce the national interests in the global institutionalization process should be one important task the agenda for Chinese government. Especially since the global regime of Internet governance is largely privatized, which emphasis the technology advantage

19 and capital base, market control can be legitimized by unified global institution and free trade principles. So the emerging economy might lose their autonomy for further development. The state needs a competent leading force in technology and international institution negotiation. CNNIC is definitely the chosen organization. The development of Chinese Internationalized Domain Name (IDN) is the most important strategic step towards claim community interests and consolidating the influence of China in the ICANN community. As the authors of RFC 3743, RFC 4713, which are two vital Chinese IDN standards, the Chinese experts from CNNIC have cut through the way to global technical and policy leadership. Now China has become a significant power in ICANN s agenda setting and policies negotiation with great contribution from CNNIC. From all the above aspects, the state of China has utilized the cctld and its self-regulation mechanisms as an indispensable intermediary to regulate the domestic Internet environment in order to promote the growth and sustainability of the state defined interests. This regulatory model can be criticized as nationalism or protectionism, which focuses on the state defined interests. However, rather than to defend against the sovereignty over Internet and the interests of domestic enterprises, I would see this more as a competition strategy for China s emerging economy, which is seeking opportunities for further development and global competence by coordinating state power and community strengths. The state embraces the global network and participates in international competition, negotiation and policy coordination rather than simply resisting to outside influence. As many countries utilize the same strategy in global competition, not necessarily within the field of Internet, the global market will become more and more diversified. 5 The Impact of New gtlds to State Regulation of Internet Now we come to the historical change of the new gtld program. In spite of the ongoing debate among various stakeholders, the new gtld application window was finally opened on Jan.12th, 2012 by ICANN, expanding the current domain name space by allowing any established entity located anywhere in the world to operate a new TLD Registry. This initiative is claimed to be in accordance with the key responsibilities of ICANN-- introducing and promoting competition in the registration of

20 domain names, while ensuring the security and stability of the domain name system (DNS) 2. It is predicted that within 2-3 years, if the reviewal process and the delegation work smoothly, the domain name space will be expanded significantly and the domain name market will become more diverse, bringing more entities into the domain name service arena. Some scholars had long before considered the possibility of periodically introducing new gtlds. They also predicted that the new gtld will provide users with greater choice for domain names, which are shorter, more desirable, and easier to remember. Meanwhile, it also decentralized the registry market and brought more competition at the registry level and control at the user level in order to promote better TLD services. (Fausett 2002; Mueller and McKnight 2004) However, as the first round new gtld application statistics was announced by ICANN in July. It is interesting to compare the objectives with the results. Of a total of 1930 new gtld applications, there are 911 from North America (844 applications from the US), 675 from Europe, 303 from the Asia-Pacific, 24 from Latin America and the Caribbean, and 17 from Africa. The high financial and technical requirements and ICANN s inability to launch effective global communication campaigns has placed developing countries at a significant disadvantage compared to their developed counterparts. Of a total of 1155 applicants, the top ten applicants filed 747 applications, more than twice of the number of the existing TLDs. The high market concentration level has also been implied by the statistics above, which provide further evidence of the disadvantages faced by developing countries. As the valuable and most desirable names go to a few incumbents, the registrants in developing world, who may register domain names in the new gtlds, will be more dependent on the incumbent. This vividly exemplifies how industry incumbents take advantage of their economic power and technical expertise to occupy key resources which may hamper the autonomy and sustainability of emerging economies. If this situation does not change in next few rounds of new gtld applications, this change will, in contrast to its stated goals, encourage international convergence and reduce competition at the registry level. According to the new gtld application guidebook, in order to run a new gtld registry, operators are required to have adequate financial and technical competence to buttress the new gtld application and operation maintenance. New participants in this field are very unlikely have access to 2 See Affirmations of Commitment of ICANN