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What We Can Learn from the Privatizations of the Internet Backbone Network and the Domain Name System Washington University Law Review Volume 79 Issue 1 2001 Fool Us Once Shame on You—Fool Us Twice Shame on Us: What We Can Learn from the Privatizations of the Internet Backbone Network and the Domain Name System Jay P. Kesan University of Illinois School of Law Rajiv C. Shah University of Illinois at Urbana-Champaign Follow this and additional works at: https://openscholarship.wustl.edu/law_lawreview Part of the Internet Law Commons Recommended Citation Jay P. Kesan and Rajiv C. Shah, Fool Us Once Shame on You—Fool Us Twice Shame on Us: What We Can Learn from the Privatizations of the Internet Backbone Network and the Domain Name System, 79 WASH. U. L. Q. 89 (2001). Available at: https://openscholarship.wustl.edu/law_lawreview/vol79/iss1/2 This Article is brought to you for free and open access by the Law School at Washington University Open Scholarship. It has been accepted for inclusion in Washington University Law Review by an authorized administrator of Washington University Open Scholarship. For more information, please contact [email protected]. FOOL US ONCE SHAME ON YOU—FOOL US TWICE SHAME ON US: WHAT WE CAN LEARN FROM THE PRIVATIZATIONS OF THE INTERNET BACKBONE NETWORK AND THE DOMAIN NAME SYSTEM JAY P. KESAN* RAJIV C. SHAH** I. INTRODUCTION.......................................................................................91 A. The Importance of the Internet’s Privatizations............................93 B. Summary of Our Thesis..................................................................95 II. THE HISTORY OF THE NATIONAL SCIENCE FOUNDATION NETWORK (NSFNET)..............................................................................................99 A. Early Computer Networks ...........................................................101 B. Early History of the NSFNET ......................................................103 1. The Vision and Origins of the NSFNET ..............................104 2. Governmental Advocacy for the NSFNET...........................106 3. Construction of the NSFNET...............................................107 C. Privatizing the NSFNET ..............................................................111 1. Commercial Use of the NSFNET.........................................112 2. Creation of Advance Network Services (ANS) to Manage the NSFNET.........................................................................113 3. National Science Foundation’s (NSF) Planning for the NSFNET Privatization.........................................................114 D. Privatization as the Dominant Policy Approach.........................117 III. THE PROBLEMS WITH ADVANCED NETWORK SERVICES (ANS).........120 A. A Backroom Deal Gives Control of the NSFNET to ANS ...........120 B. How ANS Took Advantage of the Public.....................................122 C. How ANS Stifled Competition......................................................124 D. Congressional Hearings Regarding the Management of the NSFNET .......................................................................................125 E. Lessons Learned from the ANS Debacle .....................................127 * Assistant Professor, College of Law and Institute of Government and Public Affairs, University of Illinois at Urbana-Champaign. ** Graduate Student, Institute of Communications Research, University of Illinois at Urbana- Champaign. The helpful comments provided by Rochelle Dreyfuss, Brian Kahin, Andy Leipold, Mark Lemley, Robert McChesney, Jim Pfander, Malla Pollack, and David Post have benefited this Article. This research is supported by a grant from the National Science Foundation (ITR-0081426). 89 Washington University Open Scholarship p 89 Kesan.doc 7/17/01 3:33 PM 90 WASHINGTON UNIVERSITY LAW QUARTERLY [VOL. 79:89 IV. REDESIGNING THE INTERNET FOR PRIVATIZATION..............................130 A. General Background on a Privatization Process........................131 B. The Lack of Guidance for the NSF ..............................................133 C. The NSF Decides the Details.......................................................135 D. The Draft Solicitation for Public Comment.................................137 E. The Revised Solicitation...............................................................140 F. Limitations of the Redesign..........................................................141 V. THE CONSEQUENCES OF THE NSF’S REDESIGN FOR PRIVATIZATION: THE CHANGING RELATIONSHIP BETWEEN THE GOVERNMENT, THE PRIVATE SECTOR, AND “CODE”...........................................................143 A. Lack of Competition in the Backbone Industry............................143 1. Problems with Interconnecting at the Public Network Access Points (NAPs)...........................................................144 2. How the Lack of an Interconnection Policy Affects Backbone Services ...............................................................147 3. How Network Effects Reduce Competition for Backbone Services ................................................................................151 4. Lack of Competition in the Backbone Industry: Past, Present, and Future .............................................................154 B. A Potential Problem with Private Sector Management of the Internet .........................................................................................156 C. The Redesign: A Lost Opportunity to Address Societal Concerns ......................................................................................159 D. Lessons Learned from the Privatization of the Internet’s Backbone......................................................................................165 VI. PRIVATIZATION OF THE DOMAIN NAME SYSTEM (DNS).....................167 A. Background on the DNS ..............................................................168 B. A Short History of the DNS..........................................................169 1. Early History of the DNS.....................................................170 2. Proposals for New Top Level Domains (TLDs)..................171 3. Creation of the Internet Corporation for Assigned Names and Numbers (ICANN) ........................................................174 C. Problems with the Management of the DNS................................176 1. Transparency in Decision Making ......................................176 2. Accountability and Public Input ..........................................178 3. Problems with Network Solutions, Inc. (NSI)......................181 a. NSI’s “Jackpot Amendment” ......................................181 b. Competition on NSI’s Terms .......................................183 D. Déjà Vu All Over Again: Problems with the Privatization of the DNS ..............................................................................................185 https://openscholarship.wustl.edu/law_lawreview/vol79/iss1/2 p 89 Kesan.doc 7/17/01 3:33 PM 2001] PRIVATIZATIONS OF THE INTERNET 91 VII. AN ANALYSIS OF THE PRIVATIZATIONS OF THE INTERNET BACKBONE AND THE DOMAIN NAME SYSTEM (DNS)........................188 A. Problems Occurring During the Privatization Processes...........189 1. The Procedural Problems in the Privatization Processes...189 2. The Government’s Inadequate Management of Competition..........................................................................191 3. The Government’s Problems with “Code” .........................194 B. The Consequences of the Problems with the Privatizations........196 1. Lack of Competition for Backbone Services........................196 2. Lack of Competition in the DNS..........................................198 C. How to Prevent These Problems from Reoccurring and Remedying Their Effects on Competition ....................................200 1. The Role of Procedures in Privatizations............................201 a. The Need for Transparency, Public Input, and Accountability..............................................................201 b. The Need to Treat All Competitors Fairly...................202 2. How to Manage Competition in a Privatization..................203 a. When the Government Should Privatize......................203 b. The Use of Cooperative Agreements...........................204 c. Issue of Network Effects and Interconnection Policies.........................................................................204 i. Interconnection Policies in the Telecommunications Industry .............................205 ii. Interconnection Policies for Backbone Services................................................................206 iii. Interconnection Polices for the DNS...................207 3. Ensuring “Code” Supports Competition and Societal Interests................................................................................207 a. “Code” and Competition ............................................208 b. “Code” and Societal Interests.....................................211 D. The Limitations of Decentralized Rulemaking During the Privatizations ...............................................................................213 VIII. CONCLUSION .......................................................................................216 I. INTRODUCTION The Internet has transformed our everyday life. Already in the United States, more than 100 million people use the Internet for communication with Washington University Open Scholarship p 89 Kesan.doc 7/17/01 3:33 PM 92 WASHINGTON UNIVERSITY LAW QUARTERLY [VOL. 79:89 friends and family, as an information source,
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