Select Committee on European Union Minutes of Evidence

Examination of Witnesses (Questions 1300 - 1318)




  1300. I have just been passed a Financial Times clipping about a UK company which is actually selling "".
  (Mr Dryden) Sam is our OECD representative on the GAC (the Government Advisory Committee) of the ICANN.

  1301. Is ICANN still the best way of handling the issue of domain names? And is the harmonisation of intellectual property rights (IPR) the best method of protection worldwide? Is the ICANN system still viable? Is there a need to integrate national governments into ICANN by means of an international treaty? You can also pick up the FT clipping if you have the opportunity.
  (Dr Paltridge) The general answer to the question is that ICANN is still very much in its initial stages, so you will find the words "interim" and "initial" often placed in the ICANN context. The organisation is there to be shaped in the way that the Internet community and governments wish it to be shaped. To answer the question, is it still viable and questions like that, it is really there to be shaped by the players. As to whether it is viable or not, the short answer is, the jury is still out. Within the last week, for example, the various European registries that have authority for domain names like ".Be" for Belgium or ".Fr" for France or ".UK" have voted not to contribute to the ICANN budget. At the moment ICANN is assessing all the registries around the world because it has running costs. It has assessed them on, for example, how many domain name registrations they have given out and it hopes to meet its budget commitments by levying and collecting money from all the registries around the world. The difficulty there, in some cases, is that some of the registries are not commercial entities and in fact do not collect fees themselves. In other cases we think some registries are actually charging fees that are too high and they have no competition. Some registries see no need to give money to ICANN and are calling it a tax. This is just one very small example of all the controversial issues that surround domain names. The particular example you have got here is intellectual property rights. Because the OECD does not do work on IPR I can refer that question to WIPO because that is really their area of expertise. Our interest in the domain name system is because it cuts across all the other issues that we have talked about this morning: the security and stability of the Internet and how the Internet is evolving for use in electronic commerce. Although the intellectual property rights issue has certainly got the most attention the domain name system really is the core of the Internet and its stability and efficiency is important if the Internet is going to be the platform for electronic commerce. As far as the "" situation is concerned, that same situation has happened in a number of other countries. For example, in Australia there is a registry that has "" and the person sells domain names under that second level domain.

  1302. This is different. You are talking about countries. This is a region.
  (Dr Paltridge) That is right.

Lord Faulkner of Worcester

  1303. They are a continent.
  (Dr Paltridge) In terms of the Internet's addressing system that is not recognised in the addressing system. The combination is the addition of two letters at the second level of the top level domain name .com. This registration is simply like any other registration made in the United States under .com. For example, the OECD's domain name is "". That particular registration was made in the United States with Network Solutions, a company that administers domain names. That registration is made in the same way.


  1304. That one is from the Financial Times, yes, but I really come back to the heart of the question that we are after. It is the application by the Commission for that if the Member States agree to you trying to help and live with an ".eu" domain for the whole of Europe and drop the ".uk" and drop ".fr" and all that.
  (Dr Paltridge) There are two questions there.

  1305. That has raised a fundamental issue for ICANN.
  (Dr Paltridge) I remember when I addressed the first taxation meeting here in the OECD and explained how the domain name system worked and explained how people can register under ".com", and that it was not associated with a country. The first question put to me was, "Can we get rid of .com? Can we just make it a country based domain name system?"
  (Mr Dryden) "So we can tax it"!
  (Dr Paltridge) The answer to that was, "All things are possible but in reality no", because that gate was opened a long time ago and you would have companies that have built years of strategy around having a ".com" domain name. The same thing would apply in the UK. There are companies that have spent an enormous amount of money building up a ".uk" brand and they will not want to give that away. The second part of the question was, could it all be under ".eu"? I very much doubt it for the same reasons. Could you create a ".eu"? No problem; that is fine. How the policies would be administered for ".eu" would be the difficult question.

  Chairman: You could presumably add it on to UK and have "".

Viscount Brookeborough

  1306. But that is just another name.
  (Dr Paltridge) It is just a second level. You could certainly have it. You would not take away the existing ".uk" names. You could certainly have a second level on ".eu" which would give businesses and consumers another option to register under "".

  Lord Paul: But some people have registered some names and sold them for colossal money.

Viscount Brookeborough

  1307. And for websites.
  (Dr Paltridge) That is another very controversial area and yes, there have been some domain names that have sold for millions of dollars.

  (Dr Paltridge) That is because some names are now scarce. I believe that the entire dictionary is now registered under ".com" so each dictionary word is in fact registered under ".com". In addition, there are no combinations of three-letter domain names now left under ".com" that are not registered. For someone who knows the Internet fairly well, that may not pose a problem because there are many other domain names users can register under. However for someone who is starting up an e-commerce business and does not understand the Internet very well, they may try to register under ".com" and find their preferred name is taken. That could be a barrier because they would not know the other options that are available on the Internet.

Lord Paul

  1309. Let us say you registered "". What is the significance if somebody wants to buy it from you and what is its value?
  (Dr Paltridge) Yes, I could sell that name. Its value is really how much someone is prepared to pay.

  1310. You have not got an idea?
  (Dr Paltridge) It is a "How long is a piece of string?" question. There have been very high sums paid for domain names like "", "", "".

Viscount Brookeborough

  1311. "". I was not aware that there was ever any talk about doing away with "", and "" as I understood it, but I may be wrong. It is just a brand new domain name that they wish to register.
  (Dr Paltridge) Exactly.

  1312. It has nothing to do with amalgamating the others within it.
  (Dr Paltridge) Exactly, that is correct.


  1313. Is it possible for you to give some observations on our last question: what does Brussels need to do to improve its own policy making processes, so that the achievements of the Portuguese and French Presidencies in developing and implementing the eEurope Action Plan are not lost? Is it embarrassing or difficult?
  (Mr Dryden) It is a bit, but I think the main single thing is to increase its focus on the reform of telecom policy and increase the liberalisation and the competition. It is a delicate of way of reforming regulation and handling incumbents. There is still a lot of inertia and the further and faster the liberalisation process goes we think the better it will be. It is the single most important thing. It would not cost that much compared to the economic gains in competitivity and in comparative advantage with respect to the other countries. If it were to do so then Sam suggested that it would not be necessary for the trace route—you mentioned Brussels and you mentioned Portugal, so Sam looked at the trace route from Belgium to Portugal and it goes straight to the US and bounces around the US from New York to California to Miami, and 23 hops later arrives in Portugal.
  (Dr Paltridge) I should just say that it is possible to see how traffic will traverse the Internet between any two points on the Internet. What I did there was take the major telecommunication provider in Belgium and the major telecommunication provider in Portugal and I ran a trace route across the Internet to see how the traffic would go from Belgium to Portugal.

Lord Faulkner of Worcester

  1314. To see how one would communicate with the other?
  (Dr Paltridge) Exactly, how one network would "talk" to the other, Brussels to the Portuguese Presidency if you like. What I found was that the traffic went first to New York, then it bounced across to California, and then it bounced back to Miami and then back to Portugal simply because—
  (Mr Dryden) It actually bounced back to New York before heading to Miami.
  (Dr Paltridge) Several years ago this was how most traffic between European countries went between each other, via the United States. That is changing now and if I ran the trace route between most northern European countries at least, the traffic would stay within Europe. It is a good way to show people the reform that needs to occur because the reason that this happens is that the capacity between the US and Europe is less expensive than the capacity between Belgium and Portugal. It is less expensive to take that traffic across the Atlantic and bring it back than to go across Europe.

Lord Falconer

  1315. It is less expensive to fly to New York than it is to take the train to Manchester.
  (Dr Paltridge) But it should not be across to California.


  1316. Could I say in conclusion two things? I am sorry we have not had the opportunity of meeting your tax expert because our questions on tax were really at the heart of some of the issues that we want to clarify. I am wondering if you could prevail upon him to send to us what he intended to say to us.
  (Mr Dryden) Certainly.

  1317. We could then, if we had some consequential questions, come back to him to comment or clarify if necessary. Secondly, John, on behalf of our group and myself I would like to express our extreme gratitude to you for what can only be described as a tour de force this morning.

  (Mr Dryden) Thank you very much. It was a pleasure to be of service. You have my e-mail address and phone number. Please use them if you want any follow-up.

  1318. Thanks to Sam too.
  (Mr Dryden) Enjoy the rest of your day in Paris with our French colleagues and have a good trip home.

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