ICANN|ARCHIVES

Internet Corporation for Assigned Names and Numbers

[NOTE: This document is a staff report, not an ICANN policy. As such, it is not authoritative and should not be relied on by any party. Following public comment and discussion, the ICANN Board may take action on the recommendations in this report at its Santiago meeting, August 26. Comments should be sent to membership@icann.org.]

I. Introduction

By resolution at its Berlin meeting, the ICANN Board asked staff to review the Membership Advisory Committee (MAC) report and commentary and make recommendations to the Board for consideration at its Santiago, Chile meeting on an implementation plan that is responsive to the MAC's suggestions.

In Berlin, the Board adopted four general principles dealing with creation of an At Large membership for ICANN:

1. "Members" should be individuals, and only "members" should vote for At Large Directors.

2. The election process for At Large Directors should take place in stages, to allow for adjustments in the process based on experience.

3. At Large Directors should be geographically diverse and broadly representative of the Internet user community.

4. The costs of At Large membership should be borne by the At Large members.

For the reasons discussed below, there is one other core principle that the staff recommends the Board adopt:

5. There should be a general parity between At Large "members" of ICANN and other stakeholders participating in ICANN through the Supporting Organizations with respect to matters such as initiation and approval of changes to the bylaws and means for seeking relief with respect to ICANN actions.

The original notion of a "membership" was to provide a vehicle for participation in the ICANN process for those who would not be able to meaningfully participate through the Supporting Organizations. Since individuals can participate in the SOs indirectly (either through entities such as the DNSO General Assembly or through organizations such as ISOC or IETF), it could be argued that a membership is unnecessary for this purpose. Still, because the SOS are largely technical bodies, and none of them at this time permits individuals as such to be voting members, the rationale for an "At Large" membership for individuals remains persuasive.

On the other hand, it would not make sense for individual users of the Internet to be able to make policy decisions or otherwise dictate ICANN policies or procedures to the exclusion of the infrastructure providers, technical experts and various name interests that make up the SOS

Therefore, the staff recommends that the Board adopt the concept that a general parity between the powers and authority of the At Large members and those of SO participants should be maintained, in the context of the somewhat different roles of those groups (e.g., the different Directors to be selected by them and the policy role of the SOS). This would mean, for example, that to the extent that members had any authority with respect to ICANN bylaw amendments, such authority would be shared with the SOS Similarly, At Large members and SO participants should have similar rights to reconsideration and review of ICANN actions (whether through the processes afforded by ICANN or through lawsuits). This principle would also be relevant in determining whether At Large members are considered statutory or non-statutory members under California law, which affects the determination of the rights and powers of At Large members, as described in greater detail below and in a separate document.

The remainder of this staff report discusses outstanding issues related to the ICANN At Large membership and, consistent with the principle set forth above, makes a series of recommendations, some of which will require the approval of resolutions at the Santiago meeting. A summary of the recommendations requiring Board resolutions may be found in the final section. The report, along with an accompanying analysis from counsel, will be posted for public comment prior to the meeting.

II. At Large Membership Council

The Membership Advisory Committee's report and commentary suggested "that the Board convene a new committee to assist in ongoing AL membership issues such as outreach, recruitment, authentication, and election procedures." Subsequently, in its Berlin membership resolution, the Board asked for a staff recommendation on a continuing role for a membership advisory body.

The staff recommends that the Board adopt the concept of an At Large Membership Council, with duties and responsibilities to the At Large membership and to the ICANN Board analogous to those of the Supporting

Organization Councils and their respective organizations. Some of its advisory responsibilities to the Board might include:

• planning and participating in outreach and recruitment of a broad and numerous membership;
• recommending ways in which individual Internet users can have a more direct role in the ICANN policy-making process;
• design of efficient membership authentication and election procedures;
• monitoring and supervising of At Large Membership elections, to assure that they are conducted openly and fairly.

Although development of SO policy recommendations is the principal responsibility of the SO responsible for the relevant subject matter, the At Large Membership Council could provide a means to express the views of Internet users on those recommendations.

In the interests of being responsive to the immediate needs of proceeding with creation of the At Large membership electorate and related outreach efforts, at least some of the initial members of the At Large Membership Council should be appointed by Board resolution at its Santiago meeting. A decision on a permanent mechanism for populating the At Large Membership Council can be made at the Los Angeles meeting based on public comment and advice from the Council itself.

The ICANN bylaws provide that ICANN Directors are to represent the entire range of Internet stakeholders, and not simply the constituencies from which they are selected. This should be just as true for the At Large Directors as it is for the Directors selected by the SOS, and will be more likely to be achieved if the At Large Directors do not feel that they are the only representatives of the user community. In addition, an At Large Membership Council formed now could materially assist the Board in resolving the details of creation of the At Large membership and the election of the At Large Directors. A number of specific issues to which a Membership Council might give attention are noted in the following sections of this report.

III. At Large Membership Criteria

Although the Board has already agreed with the MAC that membership should be limited to individuals, that could mean any interested person, or it could be limited to individuals that meet certain pre-set criteria. While there are a large number of possibilities, the most obvious potential limitation would be the possession of a domain name. After all, ICANN is concerned with the Domain Name System, and as such the holders of domain names are directly affected by DNS policy and technical decisions. Domain name holders are readily identifiable, and at least arguably more likely to be knowledgeable about the issues before ICANN than users of the Internet in general.

But the range of individuals affected by ICANN's policy decisions on DNS and other issues extends well beyond the population of domain name holders. Many individuals who care deeply about DNS, IP addressing, protocol parameter assignment, and the root server system do not hold their own domain name. Additionally, many domain names are held by organizations and, especially with respect to smaller organizations, there would be a number of practical difficulties in distinguishing among individual interests and corporate interests if holding a domain name were to be the test for At Large membership. In addition, to limit membership to domain name holders would shut off opportunities for most individual users to participate in ICANN.

Balancing these considerations, the staff recommends that membership be open to all individuals, without regard for whether they are domain name holders or not. However, reflecting the MAC recommendations, the minimum criteria for At Large membership should be (i) a commitment to participate, (ii) an Internet electronic mail address, (iii) a postal mail address, (iv) verifiable citizenship and residency, and (v) ability to support the costs of ICANN At Large membership when a cost recovery mechanism is identified and approved.

IV. Creating the At Large Membership

In Berlin, the Board accepted in principle the notion that there should be a "sunrise" provision in the membership criteria -- i.e., that a minimum number of members should exist before any election process for At Large Directors begins. The rationale for this is that the At Large Directors should be, to the extent possible, broadly representative of Internet users. Without a numerous and globally diverse electorate, it will be difficult to achieve that objective. The staff concludes that 5000 members is obtainable and would constitute a minimal indication of representativeness. Accordingly, the staff recommends that the threshold for creating a membership electorate should be 5000 individuals.

It is not obvious that 5000 individuals will quickly sign up to be ICANN members without a significant outreach effort. Notwithstanding the intense focus on ICANN by a relatively small number of individuals, that number is far less than 5000, and most individual users are probably not even aware that ICANN exists. The MAC recommended an organized and staffed outreach effort; the staff concurs and recommends that the necessary human and financial resources be identified and approved at the Santiago meeting.

The At Large Membership Council could play a major role in this effort.

In order to facilitate the rapid recruitment of a large and diverse membership base, the staff believes that consideration should also be given to membership partnership arrangements with a number of existing Internet-related membership organizations. Such arrangements might include automatic ICANN At Large membership for members of the other Internet-related membership organizations, or the ability for ICANN to send a specific invitation to their members to join ICANN's membership electorate.

Among the considerations in forming an At Large membership is cost to members. Any financial burden on an individual At Large member presents a potential conflict between the goal of attracting as many members as possible and the fact that charging a membership fee will deter some individuals from becoming members. There are also other, countervailing consequences of membership fees; for example, it is likely that fees will produce a more committed membership, which is likely to translate into a larger participation in the At Large election process. In addition, more committed members are more likely to participate generally, making it easier to achieve a quorum in any circumstances in which that may be necessary. It is at least arguable that charging a membership fee will reduce the potential (or at a minimum, increase the cost) of capture of the membership by a committed minority. On the other hand, it can be argued that a membership fee may facilitate capture by discouraging many Internet users, with a broad diversity of interests and viewpoints, from becoming members. It should also be noted that the collection of a membership fee, which might further some membership goals, has the downside of increasing the administrative costs of the At Large membership.

The staff, recognizing these inherent conflicts, nevertheless believes that an ad hoc and temporary solution should be adopted to allow the membership outreach and initial election process to move forward promptly. To that end, it recommends that a source or sources of one time funding for the At Large membership be vigorously sought, and that, if such a source can be found, membership fees for the initial round of elections of the nine At Large directors be waived. It is further recommended that the At Large Membership Council be asked to propose a long-range funding strategy for the At Large membership.

V. At Large Election Process

The staff recommends that the At Large Director election process should begin only after a membership pool of the recommended size and diversity has been formed. The Board may wish to publicly report on the demographic characteristics of the membership pool as part of its pre-election actions.

Once an At Large electorate pool meeting the appropriate criteria has been achieved, the staff recommends that At Large elections should take place in at least two separate election events. The first election would select three At Large Directors, with the remaining six to be selected in a subsequent election, using procedures modified to the extent thought appropriate or necessary based on an analysis of the process and results of the first election.

Within this recommended election structure of three positions first and six positions second, the Board will need to determine what type of seats, i.e., with which diversity requirements, and what length of term are to be assigned.

Because of the time required to conduct the At Large membership outreach and formation activities, the staff believes that - in parallel with the membership formation - it should continue to develop recommendations on the exact details of election procedures for consideration by the Board at its November meeting in Los Angeles. At that time, the Board will know or be in a better position to predict whether and when the minimum At Large electorate size will be reached. The advice of the proposed At Large Membership Council on nomination and election procedures would also be very helpful.

VI. Diversity and Representation

Both the MAC and the Board have discussed diversity and representation issues affecting the selection of ICANN At Large Directors. Although many concerns about desirable representation characteristics of ICANN Directors have been voiced, primary attention has been given to geographic diversity. Two approaches have been discussed: all AL Directors elected by regional electorates, and all AL Directors elected by a single worldwide electorate, with requirements for geographic diversity among those elected. Each of these methods has advantages and disadvantages. Regionalization is generally designed to protect minority interests, but its implementation can be cumbersome and may result in the overrepresentation of some minorities at the expense of others. A single electorate voting for all At Large seats gives stronger weight to the democratic principle of one person - one vote but in the present situation of uneven development of the Internet in different regions of the world it is possible that a single pool would lead to most or all of the At Large Directors being elected from the United States, Europe and Japan.

A working compromise was proposed by the staff in Berlin that provided for five At Large Directors to be elected from each of the existing five geographic areas defined in the ICANN Bylaws, and four to be elected from a single pool of nominations on a worldwide basis. Details remain to be worked out. The staff believes that additional public comment on the Director diversity issue is appropriate, to be followed by Board discussion in Santiago, with a decision made either at the Santiago meeting or at the Los Angeles meeting. This is another area in which the advice of the At Large Membership Council would be valuable.

VII. At Large Membership Costs

Because of the number of still unresolved issues associated with At Large membership, it is very difficult to make any precise cost estimates of implementing the membership program. Examples of assumptions which affect the development of administrative procedures and systems and associated costs include:

• Is At Large "membership" to include any of the standard features of association membership, or is it to be essentially limited to an elections procedure?
• Is the At Large membership computer system to be designed to handle financial transactions, including credit cards, or will it contain only personal information on the members required to validate membership, along with a voting module?
• Are the procedures and related computer systems and software to have robust anti-fraud and independent third party verification features built in, or will such protections be handled manually by a volunteer Elections Committee?
• Should computer systems and software be sought on a volunteer or pro-bono basis, or must they be procured through standard systems specification and contract procedures and related enforceable remedies for non-performance?
• Should ICANN staff assume a permanent At Large membership and hire a permanent staff person to assume responsibility for member contacts and the routine support of At Large membership activities and elections? [There is no present provision for either a staff person or an At Large membership expense in the FY99-00 budget.]

During previous MAC and Board discussions, estimates of startup and ongoing annual At Large membership costs have ranged from a few thousand to hundreds of thousands of dollars. These large variations no doubt result from varying personal opinions on assumptions such as those noted above.

It is not reasonably possible to pin down all of the uncertainties associated with implementation of At Large membership at this time. The previous discussions by the MAC, the ICANN Board, and contributions by the

public during the Singapore and Berlin meetings have progressively narrowed the range of desirable membership features, and the forthcoming Santiago meeting should further this process through public comment and Board discussion, which will permit more accurate estimates of funding requirements for At Large membership costs.

In other sections of this report, staff recommends that the Board take action in Santiago to: (i) begin the membership creation process, (ii) begin an At Large membership outreach effort, (iii) form an At Large Membership Council and seek its advice on remaining membership issues, and (iv) seek and/or identify a source of one time funding to support these activities.

The Board need not, at this time, make decisions about long term membership program parameters and associated costs, so long as the approximate amounts are recognized as a commitment of future budgets. Non-profit membership associations in the U.S. commonly spend $25 to $50 per member per year to support direct membership expenses. If ICANN were to reach and stabilize at the level of 5000 At Large members, and if its At Large membership program was typical of other membership organizations, then it would be committed to an annual expense of $125,000 to $250,000. A variety of decisions could cause this number to vary up or down.

However, dealing only with essential out of pocket costs for the next three to six months, and assuming that decisions on the assumption questions above are neither at the "quick and dirty" end of the range, nor at the "completely bulletproof" end of the range, then the staff believes that a budget of approximately $100,000 for (i) a temporary but full time staff person to administer the At Large membership program and support the At Large Membership Council, (ii) the services of a full time technical staff person to develop and implement the necessary initial At Large membership computer support, (iii) the services of a full time professional membership consultant to design and coordinate the outreach program, and (iv) incremental computer and miscellaneous administrative expenses would be sufficient.

It should be clearly recognized that the recommended amount substantially understates the full cost of initiating the program because it includes neither the budgeted time of current ICANN staff and counsel, nor the many hours of unpriced - but "priceless" - time of ICANN volunteers. But it offers an avenue for continuing forward into the deployment phase of the At Large membership program for which the Board may be able to find funding.

VIII. Rights of Members

There is an important legal issue here. Under California law, a nonprofit corporation can, but need not, have "members." If it chooses to have members, those members can be so-called statutory members, with rights as set forth in California law, or they can be non-statutory members, with powers specified in the Articles and Bylaws. Even if an organization has statutory members, it may limit or condition various powers of such members. Thus, a threshold decision for ICANN is what powers or "rights" should its members have and how should they be exercised?

Consistent with the staff's recommendation that At Large members have no greater rights than other participants in ICANN, and consistent with the MAC recommendation that members should not have the right to bring derivative actions (a right of statutory members under California law), it may be appropriate to establish the ICANN membership in a way that does not create statutory members under California law. This issue is complex and involves significant underlying legal issues, an analysis of which is contained in a separate document.

IX. Summary of Recommendations

The foregoing sections of this report make the following staff recommendations requiring Board actions by resolution on At Large membership issues to be taken at the forthcoming Santiago Board meeting.

Recommendation II.1: The Board should create an At Large Membership Council with duties and responsibilities to the At Large membership and to the ICANN Board analogous to those of the Supporting Organization Councils and their respective organizations. Some of its advisory responsibilities to the Board might include:

• planning and participating in outreach and recruitment of a broad and numerous membership;
• recommending ways in which individual Internet users can have a more direct role in the ICANN policy-making process;
• design of efficient membership authentication and election procedures;
• monitoring and supervising of At Large Membership elections, to assure that they are conducted openly and fairly.

Recommendation II.2: At least some of the initial members of the At Large Membership Council should be appointed by Board resolution at its Santiago meeting.

Recommendation III.1: ICANN At Large membership should be open to any individual who meets the following minimum membership criteria: (i) a commitment to participate, (ii) an Internet electronic mail address, (iii) a postal mail address, (iv) verifiable citizenship and residency, and (v) ability to support the costs of ICANN At Large membership when a cost recovery mechanism is identified and approved.

Recommendation IV.1: The threshold for creating an At Large membership electorate should be 5000 individuals.

Recommendation IV.2: An organized, staffed and funded outreach effort should be initiated to assist in attracting at least 5000 At Large members of ICANN.

Recommendation IV.3: A source or sources of one time funding for the At Large membership should be vigorously sought; if such a source can be found, membership fees for the initial round of elections of the nine At Large directors should be waived.

Recommendation V.1: Subject to review, revision and an implementing resolution at the ICANN Annual Meeting in Los Angeles in November, the election of At Large Directors should take place in at least two separate election events. The first election would select three At Large Directors, with the remaining six to be selected in a subsequent election, using procedures modified to the extent thought appropriate or necessary based on an analysis of the process and results of the first election.

Recommendation VI.1: Subject to further review, revision and an implementing resolution at the ICANN Annual Meeting in Los Angeles in November, geographic diversity among At Large Directors should be achieved by electing five Directors from each of the existing five geographic areas defined in the ICANN Bylaws, and four from a single pool of nominations on a worldwide basis.

Recommendation VII.1: Subject to the receipt and availability of funds in the amount of at least $100,000, the Interim President/CEO should be directed to immediately undertake the implementation of Phase I of the At Large Membership program, comprising the following minimum components: (i) a temporary but full time staff person to administer the At Large membership program and support the At Large Membership Council, (ii) the services of a full time technical staff person to develop and implement the necessary initial At Large membership computer support, (iii) the services of a full time professional membership consultant to design and coordinate the outreach program, and (iv) incremental membership computer and administrative expenses.