Public Comments on the "Consultation Paper on the Review on Administration and Assignment of Internet Domain Names and Internet Protocol Addresses in Hong Kong"

I) Comments on Consultation Paper

We have reviewed the Consultation Paper and found ourselves agreed on most of the future arrangements for the administration and assignment of Internet domain suggested by the Task Force. However, there are concerns for a number of the arrangements that we would like to address to below.

With regards to:
a) The corporation should gradually transform into membership-based organisation with its directors elected from its members.

The suggestion of a membership-based organisation is generally accepted as the membership income can provide financial support to the daily operation of the organisation. In addition, members of the organisation could have a voice in the board of directors.

However, a number of issues have to be considered

• the prerequisites to becoming a member
• the responsibility of setting the membership fee
• the rights of the directors

These should be addressed before a membership-based model would conclude to be most suitable to the corporation. Otherwise, conflict of self-interest against interest of the corporation might exist.

We suggest to the Task Force that a well-defined membership handbook should be compiled, which specifies the roles and responsibilities of members and directors within the corporation.

b) The registration from .com.hk, .org.hk and .net.hk domain names may engage agents to perform some of the routine registration work.

The suggestion of engaging agents for domain name registration is not generally accepted since monopoly or oligopoly may emerge as a result. That is definitely not healthy to the industry as a whole. At the same time, the criteria of selecting agents could be very subjective which creates tension within the industry. Therefore we suggest the Task Force to continue the existing practice of having a single registrar for domain names.

However, agents such as ISPs and Web Hosting companies should remain exclusive in application of domain names. Public mass is not suggested to apply domains directly from the registrar with the following considerations:

• Lack of knowledge of individuals in domain application procedures such as filling in IP addresses
• Unfairness to local DNS owners when their IP addresses are being misused by a third party
• Protection of exclusive right of agents because a large portion of the agents?profit comes from domain name application
• Room should be given for development and expansion of agents
• Better knowledge of agents on provision of information and education to public mass based on the established working relationship

c) A reserved list of domain names consisting of well-known international trademarks, service marks and brand names as well as some other names which are of restricted use, making reference to the reserved lists prepared by other ccTLD registration authorities, may be drawn up.

Although a reserved list as described above could reduce cyber-squatting, a list as such could be difficult and subjective to form. In addition, we suggest that domain names registration should not be bounded by conservative constraints in a market-driven economy like Hong Kong. Regarding cyber-squatting, we believe the existing practice of the HKNIC regarding trademarks intellectual property rights is appropriate and therefore shall not be changed.

d) The 2nd-level domain category being selected for a particular domain name application should correspond to the business nature of the applicant.

This suggestion is generally not accepted, as it would be too subjective and difficult to determine the relationship between the business nature and the domain name.

Businesses shall reserve the rights in determining which domain name is the best to represent their business nature or to promote their brand names. Their decisions should not be restricted or determined by a third party i.e. domain name registrar, which is not in the specific fields of interest and not in a position to subjectively decide whether a particular domain name should correspond to certain business nature of the applicant.

Furthermore, we believe this suggestion will lead to disunite domain name registration. Take a newly emerged private competitor SARNic for instance. This company owns the .hk.com domain and it begins selling domain names to any individual or company with no limit to the number of domains registered. The presence of SARNic has misled a number of end users to believe that such is an official registrar, but in fact, it is not. The response from the market has reflected the fact that the supply of domain names is insufficient to meet the market demand. In order to avoid misleading messages, a simple and flexible application procedure is strongly recommended. In addition, lenience application regulation is essential for ISP and Web Hosting companies to create business opportunities.

e) The domain name applicant should declare, when making an application, that to its best knowledge, the domain name applied for does not infringe upon the intellectual property rights of a 3rd party.

The suggestion of such declaration might not serve the purpose of protecting the intellectual property rights of a third party as it is far too ambiguous to declare "to one's best knowledge".? In addition, customers might concern the meaning of this declaration, the consequence of signing, and the definition of all kinds, making this clause difficult to be enforceable.

Moreover, there are difficulties involved in the implementation. For example, the issues on extra costs spent on explaining and educating end users regarding this declaration. Experience has told us most end users are very concerned about legal responsibilities, which will hinder them from applying domain names. In other words, this declaration is only at a disadvantage to the agents when they are dealing with clients. Therefore, we suggest maintaining the existing practice, which specifies that trademarks are protected under intellectual property rights.

f) Each organisation should be allowed to register more than one domain name under .hk.

This suggestion is totally agreed upon by us as it creates flexibility to an organization. However, we believe that an upper limit of the number of domain names to be registered by each organisation should be determined. With reference to the upper limit posed by CNNIC, we believe that allowing a maximum of 50 domain names for each organization is an acceptable standard to follow.

From an economic point of view, an increase of domain name registration will bring registrar sufficient funding, particularly when a self-financing body is proposed. Network Solutions?Registrar registered for a record of 161 percent increase in domain name registration for the fourth quarter of 1999. Meanwhile, they also reported a record of net revenue amount to US$75.9 million for the last quarter of 1999, increased by 143 percent, as compared to US$31.3 million for the same quarter a year ago. With this reference, we believe deregulation not only creates flexibility and convenience to organizations but also contributes to the economic growth.

g) Each individual resident of HK should be allowed to register one domain name in a new 2nd-level domain category under .hk.

Same to the suggestion in f), we agree to this new arrangement as it encourages the public mass on web-site deployment. With reference to the existing practice in Korea, a separate 2nd-level domain name, pr.kor, is given to all individual registrations. However, we are once again concerned about the number of domain names that each individual be allowed to register. We would prefer to restrict registrations from 5 to 10 names in contrast to only 1 name as suggested by the Task Force for better flexibility on domain name usage.

With Governmental promotion on the Internet and E-commerce development, more domain names for either business or individual should be allowed to complement such development. It can create confusion to public as Internet development is being encouraged while many restrictions are still being imposed. South Korea can be a good example in this scenario. Lenience regulations on domain name registration enable South Korea to remain a world leader in domain name registration in the Year 2000, left alone that of The States. Regarding this growing Internet community, Network Solutions has done a breakthrough move on adding Korean language support for dot com registration. This encourages more Korean users to utilize the Internet as well as on E-Commerce solution development.

II) Other suggestions by UDomain

Being one of the key players in the domain name registration industry for years, UDomain has both the experience and the expertise to the domain name service and is ready to give further comments to the Task Force for consideration:

a) Domain details modification

The time needed for modification of domain details is too long (around 7 days) which is considered a barrier to the economic growth. With reference to the transfer time for .com domain name, 3-5 days would be adequate. This period can even be shortened to 1 day in some special cases when users require an urgent transfer with proof of domain ownership.

b) Domain name ownership

The existing domain name ownership is unclear as to whom be the administrative contact person. With reference to the case of Network Solutions in the US, domain names are under the ownership of Network Solutions rather than that of the domain name users. Should an agent of a registrar have the ownership of a customer's domain names, it is a critical matter to be discussed and defined by the Task Force in Hong Kong.

c) Trademark names

In order to resolve the conflicts and disputes on trademark names, we suggest that these names be registered under first level domains, for example www.nike.hk.