ICANN on the verge of financial collapse

The private, non-profit group tapped by the Commerce Department to create competition in the domain name registration business is broke and in danger of not being able to function beyond the end of August. The group has asked for and received an offer of private sector fund-raising support from a White House official; if those solicitations were actually made, the actions might violate federal law.

The organisation is known as the Internet Corporation for Assigned Names and Numbers, or ICANN.

In a 7 June email from Mike Roberts, ICANN's interim president and CEO, to officials from IBM and MCI Worldcom, Roberts says: "Reality suggests that unless there is an immediate infusion of $500,000 (£310,000) to $1m, there won't be a functioning ICANN by the end of August."

ICANN is charged with overseeing the move to competition in the domain name registration business from the current government-sponsored monopoly handled by Network Solutions. ICANN has raised the ire of many in the Internet community for overstepping its mandate and setting up the groundwork for a United Nations-like structure for Internet governance.

Congress has recently taken ICANN to task over several of its policies, causing the organisation to abandon or modify some of its plans, such as a proposed imposition of a $1 fee on every new Internet domain name registered and the practice of holding closed door board meetings.

During a recent congressional hearing, ICANN's Roberts testified that the organisation was about $800,000 in debt and scrambling for additional funding. ICANN's fiscal year 1999-2000 budget is $5.9m.

According to emails from ICANN officials, the organisation has gone hat-in-hand looking for a cash infusion from high-profile companies such as IBM and MCI Worldcom.

MCI Vice President Vint Cerf wrote in one email to ICANN board members that he had contacted officials at his own company and those of IBM looking to come up with $1m in "bridge" funding, which ICANN could pay back "at a later time under reasonable terms".

Cerf suggested keeping the funding quiet while a new ICANN fund raising campaign was kicked off "knowing that we have the ability to back up the campaign with a rescue effort in the short term". Cerf also suggests that the campaign be based on the notion that "ICANN must succeed or Internet will be in jeopardy. This ought to play well with any company whose stock price is dependent on a well-functioning Internet".

In addition to hitting up large companies, ICANN also has enlisted the help of the White House. In a 15 June email, Joe Sims, ICANN's attorney, says that he and Esther Dyson, ICANN's interim chairman, met privately with Thomas Kalil, the senior director for science and technology issues on the White House's National Economic Council, to enlist Kalil's help in soliciting funds from the private sector on ICANN's behalf.

Kalil "promised to do what he could to encourage private donations", Sims wrote. ICANN's Roberts, in a 17 June email to Kalil, writes: "Tom -- pleased to hear about your offer of help." Roberts promises to send Kalil a "private and confidential financial statement" that outlines ICANN's financial standing. Roberts asks for a fax number where he can send the information, "if you'll give me a number for a machine where the schedule won't get loose."

Such solicitations by a government official on behalf of a private organisation would be prohibited by US law. Kalil said he had "no comment" on whether he made such solicitations and said he had "no comment" on why he couldn't comment. Roberts is on vacation and could not be reached for comment.

The issue of ICANN's precarious finances and the involvement of the White House in its fund-raising efforts also has drawn the interest of Congress. A letter Wednesday to ICANN's Dyson from Commerce Committee Chairman Thomas Bliley questions the "propriety of the involvement of White House personnel in ICANN's fund-raising activities". Bliley asks ICANN to provide his committee with all correspondence with anyone in the executive branch, including the Office of the President and whether those persons were acting in an official or personal capacity.

Bliley earlier sharply criticised Sims, ICANN's lawyer, for having discussions with a lawyer in the antitrust division of the Justice Department regarding putting pressure on ICANN to work more closely with NSI to help speed up the commercialisation of the domain name registration process. NSI is currently being investigated by the Justice antitrust division.

In an email message to prospective funders of ICANN, John Patrick, IBM's vice president of Internet technology, writes: "Not to sound alarmist but if ICANN fails e-buiness/e-anything is in jeopardy."

That dire outlook, however, isn't universally held.

If ICANN goes out of business, "the Internet is saved from a regulatory fiasco," said Tony Rutkowski, president of NGI Associates, an Internet services consulting firm. "A lot of people's resources get redirected to more useful endeavours, and the Internet's administration continues to function quite well, thank you," said Rutkowski, who is an outspoken critic of ICANN.

The domain name registration system would continue as it is now, said Karl Auerbach, an engineer for Cisco Systems. At most there would be "momentary panic, nothing long term", Auerbach said.